LEASE AGREEMENT
dated as of March 26, 1997
by and among
FLEET NATIONAL BANK,
not in its individual capacity but solely
in its capacity as Owner Trustee for
ZENITH ELECTRONICS EQUIPMENT OWNER TRUST 1997-I,
as Lessor,
and
ZENITH ELECTRONICS CORPORATION,
as Lessee,
Leveraged Lease of
certain Television Picture Tube, Computer Monitor Tube
and Other Television Related Manufacturing Equipment
NOTE: CERTAIN RIGHTS OF THE LESSOR UNDER THIS
LEASE AGREEMENT AND IN THE EQUIPMENT LEASED
HEREUNDER HAVE BEEN ASSIGNED TO AND ARE SUBJECT TO
A SECURITY INTEREST IN FAVOR OF FIRST SECURITY
BANK, NATIONAL ASSOCIATION, IN ITS CAPACITY AS
INDENTURE TRUSTEE, UNDER AND TO THE EXTENT SET
FORTH IN THE TRUST INDENTURE AND SECURITY
AGREEMENT DATED AS OF MARCH 26, 1997, BETWEEN
FLEET NATIONAL BANK, IN ITS CAPACITY AS OWNER
TRUSTEE FOR THE OWNER TRUST, AND FIRST SECURITY
BANK, NATIONAL ASSOCIATION, IN ITS CAPACITY AS
INDENTURE TRUSTEE, AS SUCH TRUST INDENTURE AND
SECURITY AGREEMENT MAY BE AMENDED, MODIFIED OR
SUPPLEMENTED FROM TIME TO TIME IN ACCORDANCE WITH
THE PROVISIONS THEREOF. THIS LEASE AGREEMENT HAS
BEEN EXECUTED IN SEVERAL COUNTERPARTS. NO
SECURITY INTEREST IN THE LESSOR'S RIGHT, TITLE AND
INTEREST IN AND TO THIS LEASE AGREEMENT AND THE
EQUIPMENT LEASED HEREUNDER MAY BE CREATED THROUGH
THE TRANSFER OR POSSESSION OF ANY COUNTERPART
OTHER THAN THE ORIGINAL COUNTERPART OF THIS LEASE
AGREEMENT CONTAINING THE RECEIPT THEREFOR EXECUTED
BY FIRST SECURITY BANK, NATIONAL ASSOCIATION, IN
ITS CAPACITY AS INDENTURE TRUSTEE, ON THE
SIGNATURE PAGE THEREOF.
[TABLE OF CONTENTS IN BACK OF DOCUMENT]
LEASE AGREEMENT
This LEASE AGREEMENT (this "Lease") is
entered into as of March 26, 1997, by and among
FLEET NATIONAL BANK, a national banking
association, not in its individual capacity,
except as otherwise specified herein, but solely
in its capacity as Owner Trustee for THE ZENITH
ELECTRONICS EQUIPMENT OWNER TRUST 1997-I under a
Trust Agreement dated as of March 26, 1997, for
the benefit of the Owner Participant named
therein, as Lessor, and ZENITH ELECTRONICS
CORPORATION, a Delaware corporation, as Lessee.
I. ARTICLE
Definitions and Usage
A. SECTION Definitions and Usage. Unless
the context otherwise requires, capitalized terms
used herein shall have the respective meanings
assigned to them, whether directly or indirectly
by reference, in Appendix A to the Participation
Agreement, and the rules of usage set forth in
such Appendix A shall likewise govern this Lease.
I. ARTICLE
Lease of Equipment
A. SECTION Lease of Equipment; Lease
Supplements. Subject to the terms and conditions
hereof, on the Equipment Closing Date, the Lessor
hereby agrees (subject to the terms and conditions
set forth in the Participation Agreement) to
purchase from the Lessee pursuant to a ▇▇▇▇ of
Sale and simultaneously to lease to the Lessee,
and the Lessee hereby agrees to sell to the Lessor
pursuant to a ▇▇▇▇ of Sale and to lease from the
Lessor, for the term referred to in Section 2.2
hereof, the Items of Equipment specified on
Schedule V to the Participation Agreement, on the
terms more particularly set forth in the Lease
Supplement and Schedule of Equipment, the forms of
which are attached hereto as Schedule A and
Schedule B, delivered on the Equipment Closing
Date, the execution and delivery of which shall
constitute acceptance of the Items of Equipment
described therein for all purposes of this Lease
and such Items of Equipment shall be subject to
the terms of this Lease from the date thereof.
A. SECTION Lease Term. Immediately upon
satisfaction of all applicable conditions
described in Article III of the Participation
Agreement on the Equipment Closing Date, without
necessity of any further act or evidence by any
party hereto, each Item of Equipment specified on
the Schedule of Equipment attached to the Lease
Supplement delivered on the Equipment Closing Date
shall be deemed delivered to the Lessor and leased
by the Lessor to the Lessee for the Base Term and,
if the Lessee elects to exercise its renewal
option pursuant to Article XVI hereof, for any
Renewal Term, in either case, all pursuant to the
terms of this Lease, unless this Lease shall have
been earlier terminated in accordance with its
terms.
I. ARTICLE
Rent
A. SECTION Basic Rent. With respect to
each Item of Equipment, the Lessee shall pay to
the Lessor Basic Rent commencing on the first Rent
Payment Date specified in the Lease Supplement and
related Schedule of Equipment and continuing on
each Rent Payment Date thereafter for the duration
of the Base Term for such Schedule of Equipment in
an amount equal to the product of (a) the
applicable percentage specified for such Rent
Payment Date in the Lease Supplement and (b) the
Lessor's Cost for such Item. The Lease Supplement
shall indicate whether an installment of Basic
Rent is payable in advance or in arrears. The
Lessor and the Lessee agree that for tax purposes
each installment of Basic Rent that is indicated
as payable in advance will be allocated for tax
purposes over the six-month period beginning on
the Rent Payment Date on which such advance
payment is scheduled to be made, and each
installment of Basic Rent that is indicated as
payable in arrears will be accrued over the six-
month period ending on the Rent Payment Date on
which such arrears payment is scheduled to be
made.
A. SECTION Supplemental Rent. The Lessee
shall pay promptly to the Lessor, or to the Person
entitled thereto as expressly provided herein or
in any other Operative Document, any and all
Supplemental Rent as the same shall become due and
payable, including any interest payable at the
Overdue Rate as provided in Section 3.5 hereof.
The Lessee shall also pay as Supplemental Rent
amounts equal to all amounts payable by the Owner
Trustee under the Trust Indenture as Make Whole
Premium Amounts, as well as fees and expenses,
indemnities or expense reimbursements (other than
those resulting from the gross negligence or
willful misconduct of the Owner Trustee).
A. SECTION Minimum Amount of Basic Rent
Payments. The amount of Basic Rent payable on
each Rent Payment Date shall in no event be less
than the amount required to pay the amount of
principal of, and interest on, the Notes scheduled
to be paid on such Rent Payment Date. The
Casualty Value and Termination Value for each Item
of Equipment payable on any date in accordance
with the terms hereof, whether or not adjusted
pursuant to Section 3.7 hereof and Article IX of
the Participation Agreement, shall in no event be
less than the principal amount of the Notes equal
to the Loan Value of such Items plus any accrued
and unpaid interest (other than, in the case of
any such date which is also a Rent Payment Date,
interest due on such Rent Payment Date). The EBO
Price payable on the EBO Date for the Items of
Equipment described in any Lease Supplement and
related Schedule of Equipment, whether or not
adjusted pursuant to Section 3.7 hereof and
Article IX of the Participation Agreement, shall
in no event be less than the principal amount of
the Notes plus any accrued and unpaid interest.
A. SECTION Method of Payment. All Rent
(other than Excluded Payments) payable to the
Lessor at any time prior to termination of the
Indenture shall be paid by the Lessee on behalf of
the Lessor directly to the Indenture Trustee at
the Indenture Trustee Office or such other place
in the U.S. as the Indenture Trustee shall specify
in a written notice to the Lessee at least five
(5) Business Days prior to the date such payment
is due; provided, that all Rent (other than
Excluded Payments) payable to the Lessor after
receipt by the Lessee of notice from the Indenture
Trustee stating that the Indenture has been
terminated following full satisfaction of the
Notes and all other amounts due thereunder and
under the Indenture shall be paid to the Lessor at
its office set forth in Schedule I to the
Participation Agreement or at such other place in
the U.S. as the Lessor shall specify in a written
notice to the Lessee at least five (5) Business
Days prior to the date such payment is due. All
Excluded Payments shall be made at all applicable
times (and whether or not the Lien of the
Indenture shall have been discharged) to the
Person entitled thereto as provided herein or in
the applicable Operative Document, at the office
of such Person as set forth in Schedule I to the
Participation Agreement or at such other office in
the U.S. as such Person entitled thereto shall
specify in a written notice to the Lessee. All
payments of Supplemental Rent shall be paid to the
Person entitled thereto at the office of such
Person set forth in Schedule I to the
Participation Agreement or at such other office in
the U.S. as such Person entitled thereto shall
specify in a written notice to the Lessee at least
five (5) Business Days prior to the date such
payment is due. Each payment of Rent shall be
made by the Lessee in immediately available funds
prior to 11:30 a.m., New York time at the place of
payment, on the date when such payment shall be
due.
A. SECTION Late Payment. In the event
any Rent shall not be paid on its due date to any
Person, the Lessee shall pay to the appropriate
Person on demand, as Supplemental Rent, interest
(to the extent permitted by Applicable Law) on
such overdue amount from the due date thereof
(without regard to any grace period) to the date
of payment thereof at the Overdue Rate.
A. SECTION Net Lease; No Set-off,
Counterclaims, etc. THIS LEASE IS A NET LEASE, AND
NOTWITHSTANDING ANY PROVISION OF THIS LEASE OR OF
ANY OTHER OPERATIVE DOCUMENT TO THE CONTRARY, THE
LESSEE'S OBLIGATION TO PAY ALL PAYMENTS OF RENT AS
AND WHEN THE SAME SHALL BECOME DUE AND PAYABLE IN
ACCORDANCE WITH THE TERMS OF THIS LEASE AND ANY
OTHER OPERATIVE DOCUMENT SHALL BE ABSOLUTE AND
UNCONDITIONAL AND SHALL NOT BE SUBJECT TO ANY
ABATEMENT OR DIMINUTION BY SET-OFF, DEDUCTION,
COUNTERCLAIM, RECOUPMENT, AGREEMENT, DEFENSE,
SUSPENSION, DEFERMENT, INTERRUPTION OR OTHERWISE,
AND UNTIL SUCH TIME AS ALL RENT REQUIRED TO BE
PAID UNDER THIS LEASE OR ANY OTHER OPERATIVE
DOCUMENT SHALL HAVE BEEN PAID, THE LESSEE SHALL
NOT HAVE ANY RIGHT TO TERMINATE THIS LEASE, OR TO
BE RELEASED, RELIEVED OR DISCHARGED FROM ITS
OBLIGATION TO MAKE, AND SHALL NOT SUSPEND, REDUCE
OR DISCONTINUE, ANY PAYMENT OF RENT, FOR ANY
REASON WHATSOEVER (EXCEPT AS MAY BE EXPRESSLY
PROVIDED HEREIN), including, without limitation:
1. any default,
misrepresentation, negligence, misconduct or other
action or inaction of any kind by any Lessor
Party, the Lessee, the Guarantor or any other
Person, whether under or in connection with this
Lease, any other Operative Document or any other
agreement relating to this Lease or in connection
with any unrelated transaction;
1. the insolvency, bankruptcy,
reorganization or cessation of existence, or
discharge or forgiveness of indebtedness of any
Person referred to in clause (a) above;
1. the invalidity,
unenforceability or impossibility of performance
of this Lease or any other Operative Document for
any reason;
1. any defect in the title,
condition, design, operation or fitness for use
of, or any Lien or other restriction of any kind
upon, all or any part of any Item of Equipment,
any loss or destruction of, or damage to, any Item
of Equipment or any interruption in or cessation
of the ownership, possession, operation or use of
any Item of Equipment for any reason whatsoever;
1. any restriction, prevention or
curtailment of or interference with any Item of
Equipment or the use thereof or any part thereof
for any reason whatsoever, including, without
limitation, by any Governmental Authority;
1. any Applicable Law now or
hereafter in force;
1. any failure to obtain any
required Governmental Action for a transfer of
rights or title to the Lessor, the Lessee or any
other Person;
1. any amendment or other change
of, or any assignment of any rights under, any
Operative Document, or any waiver or other action
or inaction under or in respect of any Operative
Document, or any exercise or nonexercise of any
right or remedy under or in respect of any
Operative Document, including, without limitation,
the exercise of any foreclosure or other remedy
under the Indenture or this Lease or the sale of
any Item of Equipment or any portion thereof or
interest therein; or
1. any other cause, circumstance,
happening or event whatsoever, foreseen or
unforeseen, whether similar or dissimilar to any
of the foregoing.
The Lessee hereby waives and hereby agrees to
waive at any future time at the request of the
Lessor, to the extent now or then permitted by
Applicable Law, any and all rights that the Lessee
may have or that at any time hereafter may be
conferred upon either of them, by statute,
regulation or otherwise, to terminate, cancel,
quit or surrender this Lease other than in
accordance with the express terms hereof. If for
any reason whatsoever this Lease shall be
terminated other than in accordance with the
express terms hereof in whole or in part, by
operation of law or otherwise, the Lessee
nonetheless agrees to the extent permitted by
Applicable Law or unless the Lessor has
repossessed, retaken or required redelivery of the
Equipment, to pay to the Lessor (or, in the case
of Supplemental Rent, to the Person entitled
thereto as provided herein or in the applicable
Operative Document) an amount equal to each Rent
payment at the time and in the manner such payment
would have become due and payable in accordance
with the terms hereof had this Lease not been
terminated in whole or in part. Each Rent payment
shall be final and the Lessee agrees not to seek
to recover all or any part of any such payment
(except for amounts paid to a Lessor Party which
such Lessor Party in good faith agrees have been
paid in error) from any Lessor Party for any
reason under any circumstance whatsoever.
A. SECTION Adjustments to Basic Rent,
Casualty Value, Termination Value and EBO Price.
Basic Rent, Casualty Value, Termination Value, and
the EBO Price shall be adjusted when required by
and in accordance with Article IX of the
Participation Agreement, and an appropriate Lease
Supplement shall be executed and delivered to
reflect all such adjustments.
A. SECTION Accrued Basic Rent. Subject
to Section 3.3 hereof, on any date that, pursuant
to the terms of any Operative Document, the Lessee
is obligated to pay Accrued Basic Rent, the Lessee
shall not be obligated to pay that portion, if
any, of Accrued Basic Rent that has already been
paid by the Lessee in connection with a payment of
Casualty Value or Termination Value on or before
such date.
I. ARTICLE
Representations, Warranties and Agreements as to
Equipment
A. SECTION Disclaimer of Warranties. AS
BETWEEN THE LESSOR AND THE LESSEE, DELIVERY OF A
LEASE SUPPLEMENT PURSUANT TO ARTICLE II HEREOF
SHALL BE CONCLUSIVE PROOF OF ACCEPTANCE BY THE
LESSEE OF EACH ITEM OF EQUIPMENT SPECIFIED ON THE
RELATED SCHEDULE OF EQUIPMENT AS BEING IN
COMPLIANCE WITH ALL REQUIREMENTS OF THIS LEASE.
THE LESSOR LEASES AND THE LESSEE TAKES EACH SUCH
ITEM OF EQUIPMENT AND EACH COMPONENT PART THEREOF
"AS IS" AND "WHERE IS", AND THE LESSEE
ACKNOWLEDGES THAT NONE OF THE LESSOR PARTIES HAS
MADE, NOR SHALL BE DEEMED TO HAVE MADE, ANY
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS
TO THE TITLE, VALUE, COMPLIANCE WITH
SPECIFICATIONS, CONDITION, MERCHANTABILITY,
DESIGN, QUALITY, DURABILITY, OPERATION OR FITNESS
FOR USE OR PURPOSE OF EACH SUCH ITEM OF EQUIPMENT
OR ANY COMPONENT PART THEREOF OR ANY OTHER
REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR
IMPLIED, WITH RESPECT TO EACH SUCH ITEM OF
EQUIPMENT OR ANY COMPONENT PART THEREOF OR
OTHERWISE, IT BEING AGREED THAT ALL RISKS INCIDENT
THERETO ARE TO BE BORNE, AS BETWEEN THE LESSOR AND
THE LESSEE, BY THE LESSEE IN THE EVENT OF ANY
DEFECT OR DEFICIENCY IN ANY SUCH ITEM OF EQUIPMENT
OR ANY COMPONENT PART THEREOF, OF ANY NATURE
WHETHER PATENT OR LATENT, AND THAT NONE OF THE
LESSOR PARTIES SHALL HAVE ANY RESPONSIBILITY OR
LIABILITY WITH RESPECT THERETO, except that the
Lessor hereby represents, warrants and covenants
that each such Item of Equipment shall be free of
Lessor Liens on the Equipment Closing Date. The
provisions of this Section 4.1 have been
negotiated, and the foregoing provisions are
intended to be a complete exclusion and negation
of any other warranties made by any Lessor Party,
express or implied, with respect to any Item of
Equipment or any component part thereof, whether
arising pursuant to the UCC or any other
Applicable Law now or hereafter in effect or
otherwise. Nothing contained in this Section 4.1
shall in any way diminish or otherwise affect any
right the Lessee may have with respect to any Item
of Equipment against any third Person. None of
the Lessor Parties shall at any time be required
to inspect any Item of Equipment or any component
part thereof, and any actual inspection by any
Lessor Party shall not be deemed to affect or
modify the provisions of this Section 4.1.
A. SECTION Lessee To Exercise Certain
Rights. The Lessor hereby authorizes the Lessee,
at the Lessee's expense, to exercise in the name
of and on behalf of the Lessor and the Lessee, as
their interests may appear, the right and power to
deal with any Seller or manufacturer (including
agents and consultants thereof) of any Item of
Equipment or any component part thereof and the
right to enforce (by legal action or otherwise)
against such Seller or manufacturer all rights,
powers and privileges of the Lessor and to receive
all benefits of the Lessor with respect to such
Seller or manufacturer, under any express or
implied warranty or indemnity or otherwise;
provided, that the Lessee shall indemnify each
Indemnified Person and hold each such Indemnified
Person harmless from and against any and all
claims, costs, expenses, damages, losses and
liability incurred or suffered by such Indemnified
Person in connection with, as a result of, or
incidental to, any action or inaction by the
Lessee pursuant to the above authorization;
provided, further, that if a Material Default or
an Event of Default shall have occurred and be
continuing the Lessor may terminate the authority
of the Lessee under this Section 4.2. Any amount
paid under any such warranty or other such claim
or in lieu of performance of any such warranty or
claim shall be paid over, held and applied as set
forth in Section 9.2 or 9.3, as applicable. After
the end of the Lease Term with respect to any Item
of Equipment (except with respect to any Item of
Equipment that the Lessee shall have purchased
pursuant to Article X or XVII hereof) or after the
termination of this Lease with respect to such
Item of Equipment pursuant to Article XIV, (a) the
Lessee shall have no further rights, powers,
privileges or benefits under this Section 4.2 and
(b) all amounts payable by any Seller or
manufacturer referred to above paid thereafter
shall be paid to, and retained by, the Lessor or
any other Person as shall then be the owner of the
Item of Equipment as to which such payment is
made.
I. ARTICLE
Liens; Quiet Enjoyment
A. SECTION Liens. The Lessee shall not
directly or indirectly create, incur, assume or
suffer to exist any Lien (other than Permitted
Liens) on any Item of Equipment or the Trust
Estate or the Trust Indenture Estate. The Lessee
will promptly, at its own expense, take such
action as may be necessary duly to discharge any
such Lien. The Lessee's obligations under this
Section 5.1 with respect to any such Lien on any
Item of Equipment resulting from a claim arising
prior to the termination of this Lease with
respect to such Item of Equipment shall survive
such termination.
A. SECTION Quiet Enjoyment.
Notwithstanding any other provision of this Lease,
so long as no Event of Default shall have occurred
and be continuing, as between the Lessee and the
Lessor, the Lessee shall have the exclusive rights
to possession and control of all Items of
Equipment and neither the Lessor nor any Person
acting or claiming through the Lessor will take
any action that shall interfere with the peaceful
and quiet enjoyment or the possession and use or
non-use of any Item of Equipment by the Lessee,
and the Lessee shall have the right to possess and
use or not use such Item of Equipment in its sole
discretion, subject always to the terms and
conditions of this Lease. The foregoing is not
intended to limit the inspection rights of the
Items of Equipment granted by the Lessee pursuant
to Sections 8.3 and 12.1 hereof.
A. SECTION Personal Property. The Lessee
and the Lessor agree for the purposes of this
Lease that each Item of Equipment and every part
thereof and title thereto is and shall be
considered as and shall remain personal and not
real property to all Persons and for all purposes.
The Lessee and the Lessor agree that each Item of
Equipment and every part thereof and title thereto
is severed and shall be and shall remain severed
from any real property and is readily movable and,
even if physically attached to such property, it
is the intention of the Lessee and the Lessor that
each Item of Equipment and every part thereof and
title thereto (a) shall retain the character of
personal property, (b) shall be removable, (c)
shall be treated as personal property with respect
to the rights of all Persons whomsoever, (d) shall
not become part of any real property and (e) by
virtue of its nature as personal property, shall
not be affected in any way by any instrument
dealing with any real property.
I. ARTICLE
Operation; Maintenance
A. SECTION Operation and Maintenance.
The Lessee shall at all times at its own expense
during the Lease Term applicable to each Item of
Equipment:
1. use each Item of Equipment for
its intended purpose and purposes incidental or
reasonably related thereto and permit each such
Item to be used or operated only by qualified
personnel and in accordance with good business
practice;
1. keep and maintain in proper
order all appropriate books, records and title
documents relating to each Item of Equipment, all
services rendered and all funds expended for
operation and maintenance of each such Item and
the acquisition, construction and installation of
Modifications thereto and the payment of the
purchase price of such Modifications, all in
accordance with the standards applied by the
Lessee with respect to similar equipment owned or
leased by it in the U.S.;
1. operate the Equipment on a
continuous basis, in a manner consistent with the
Lessee's normal operating procedures, and maintain
each such Item in good operating condition in
accordance with (i) the standards applied by
Lessee with respect to similar equipment owned or
leased by it in the U.S., (ii) industry practice,
(iii) prudent operating and maintenance standards
and (iv) the manufacturer's required maintenance
procedures and in accordance with all warranties
and required insurance policies;
1. inspect, service, maintain,
store, use, operate, repair, replace, modify and
improve each Item of Equipment in compliance in
all material respects with Applicable Law
(including all applicable environmental and
occupational safety laws) and in a manner which
would not subject any Lessor Party to any criminal
liability, and in compliance in all material
respects with all applicable Governmental Actions
and in compliance with all insurance required by
this Lease and the other Operative Documents;
provided, that as long as no Material Default or
Event of Default shall have occurred and be
continuing, the Lessee may in good faith by
appropriate proceedings contest the validity or
application of any such Applicable Law in any
reasonable manner which does not involve any risk
of the imposition of criminal liability on any
Lessor Party or any material risk of the sale,
forfeiture or loss of the Equipment or any part or
interest therein or title thereto, or any material
risk of any fine, penalty, or other imposition
upon the Lessor Parties for which the Lessee has
not acknowledged its obligation to indemnify the
Lessor Parties pursuant to the Operative
Documents; provided, that the Lessee shall
promptly give the Lessor notice of any contest
relating to any Item or group of Items of
Equipment having a Lessor's Cost equal to or
greater than $1,000,000; and
1. in case of any damage to any
Item of Equipment, other than damage constituting
an Event of Loss, whether or not any insurance
proceeds on account of such damage shall be
sufficient for the purpose, the Lessee shall at
its own expense, promptly commence and complete
the repair of such Item of Equipment (and in any
event complete such repair before the end of the
Lease Term or any earlier termination) so as to
restore such Item to its fair market value,
residual value, condition, remaining useful life,
and utility immediately prior to such
damage(assuming such Item was then in the
condition and state of repair required to be
maintained by the terms of this Lease), with such
alterations and additions as may be made at the
Lessee's election pursuant to and subject to the
conditions of Section 6.4 hereof.
A. SECTION Replacement of Parts;
Substitution of Items. (a) If any part that was
originally incorporated or installed in or
attached to any Item of Equipment at the time such
Item was accepted hereunder, or any part
thereafter incorporated or installed in or
attached to such Item of Equipment in replacement
of or substitution for such original part or any
such replacement part shall become worn out, lost,
stolen, destroyed, seized, confiscated, damaged
beyond repair or otherwise permanently rendered
unfit for use, the Lessee, at its own expense,
shall promptly replace such part, or cause the
same to be replaced, by a replacement part which
is free and clear of all Liens and of such
quality, and in such manner that such Item of
Equipment shall be in as good an operating
condition as, and have a fair market value,
residual value, condition, remaining useful life
and utility at least equivalent to the fair market
value, residual value, condition, remaining useful
life and utility of, such Item of Equipment
immediately prior to such replacement of such part
(assuming such Item of Equipment was, at the time
of such replacement, in the condition and state of
repair required by the terms hereof); provided
that such replacement or substitution does not
cause any Item of Equipment to constitute "limited
use property" within the meaning of Rev. Procs.
75-21 and 79-48, as amended. Any such part
removed from an Item of Equipment shall remain the
property of the Lessor, no matter where located,
until such part shall be replaced by a part which
has been incorporated or installed in or attached
to such Item of Equipment and which meets the
requirements for replacement specified in the
preceding sentence. Immediately upon a
replacement part becoming incorporated or
installed in or attached to an Item of Equipment
as above provided, without further act, (a) title
to the replaced part shall thereupon vest in the
Lessee, free and clear of all rights of the
Lessor, and shall no longer be part of such Item
of Equipment hereunder, (b) title to such
replacement part shall thereupon vest in the
Lessor, free and clear of all Liens (except for
Permitted Liens), (c) such replacement part shall
become subject to this Lease and to the Lien of
the Indenture and be deemed part of such Item of
Equipment for all purposes to the same extent as
the parts originally incorporated or installed in
or attached to such Item of Equipment and (d) the
Lessor shall assign to the Lessee all claims it
may have against any other Person arising from the
event which gave rise to the replacement. The
Lessee shall provide the Lessor with a ▇▇▇▇ of
Sale or other conveyance document for each
replacement part the cost of which exceeds
$100,000. In all events, all replacement parts
with respect to an Item of Equipment shall be so
replaced at or before the required time of return
of such Item of Equipment in accordance with the
terms of Section 8.2 hereof.
(b) So long as no Material Default or
Event of Default has occurred and is continuing
the Lessee shall have the right at any time, with
respect to any Item of Equipment that has become
obsolete or surplus to the Lessee's operating
requirements as determined by the Lessee in its
reasonable business judgment, upon giving at least
ninety (90) days' prior written notice (which
notice shall specify the Item to be replaced and
the date of such replacement and shall contain a
certification signed by a Responsible Officer of
the Lessee on behalf of the Lessee that such Item
has become obsolete or surplus to the Lessee's
operating requirements as determined by the Lessee
in its reasonable business judgment, other than as
a result of an Event of Loss), to substitute
equipment of substantially like kind and of equal
or greater value, utility, economic life and
residual value, for such Item or Items of
Equipment hereunder assuming that such Item or
Items of Equipment to be replaced was then in the
condition and state of repair required to be
maintained under the terms of this Lease, provided
that the aggregate Lessor's Cost of all Items
substituted for pursuant to this Section 6.2(b)
shall not exceed $10,000,000. The Lessee's right
to so replace any Item shall be subject to the
fulfillment, at the Lessee's cost and expense, of
the conditions set forth in Section 9.1(b)
(including, without limitation, Section 9.1(b)(v))
and to the further condition that the Item or
Items of Equipment being replaced is being
disposed of to a Person other than a Non-Bidding
Party (as defined in Section 7.3). Upon
satisfaction of such conditions, (i) this Lease
shall continue with respect to any replacement
Item, and (ii) the Lessor shall convey "as is"
"where is", without recourse or warranty (except
as to the ability and authority of the Lessor to
transfer and convey such Item free and clear of
Lessor Liens).
A. SECTION Relocation. So long as such
relocation would not of itself result in a Default
or an Event of Default, the Lessee may relocate
any Item of Equipment to any location within the
U.S. of (1) the Lessee, or (2) any sublessee
pursuant to a sublease permitted hereunder without
the prior consent of the Lessor and the Indenture
Trustee; provided, that in any event the Lessee
shall have provided to each of the Lessor Parties
(a) written notice of the intention to relocate
such Item of Equipment in accordance with the
terms hereof at least thirty (30) days prior to
the date such relocation is commenced, (b) such
UCC financing statements and other documents as
may be necessary or advisable to maintain and
perfect the interest of the Lessor therein and the
Lien of the Indenture thereon, (c) evidence that
such Item is covered by the insurance required by
Section 20.1 hereof at such new location, (d) an
acknowledgment from the owner of the facility to
which such Item is relocated to the effect that
such owner shall acquire no interest in such Item
by virtue of such Item being installed in such
facility, (e) an opinion of counsel that such
relocation does not impair or adversely affect the
ownership of such Item by the Lessor and that the
financing statements and other documents described
in clause (b) above have been duly filed or
recorded in all public offices wherein such
filings or recordings are necessary to protect the
validity and effectiveness of this Lease and the
Indenture, including the maintenance of the
perfection of the Lien of the Indenture Trustee
thereon, and (f) evidence satisfactory to the
Lessor Parties that such relocation shall have no
adverse tax consequences to them. All reasonable
costs and expenses (including Fees and Expenses)
incurred by the Lessor Parties in connection with
any relocation shall be paid by the Lessee.
A. SECTION Modification.
1. The Lessee shall at its
expense make any Modification to any Item of
Equipment required (i) by Applicable Law or in
order to operate, maintain, service, store, or use
(or, if applicable, to dispose of or transport)
such Item in accordance with Applicable Law, as
soon as practicable after any such requirement may
arise or (ii) in order for the Lessee to comply
with the provisions of this Lease, any insurance
required by this Lease or any other Operative
Document or the requirements of the manufacturer
of such Item (all such Modifications being
referred to herein as "Required Modifications");
provided, that the Lessee may, so long as no
Material Default or Event of Default shall have
occurred and be continuing, in good faith by
appropriate proceedings contest the validity or
application of any Applicable Law in any
reasonable manner which does not involve any risk
of the imposition of criminal liability on any
Lessor Party, or any risk of the sale, forfeiture
or loss of such Item or any part or interest
therein or title thereto, or any material risk of
any fine, penalty or other imposition upon any of
the Lessor Parties not involving criminal
liability for which the Lessee has not
acknowledged its obligation to indemnify the
Lessor Parties pursuant to the Operative
Documents, but only so long as the Lessee
simultaneously contests the validity or
application of such Applicable Law with respect to
all other similarly affected Items of Equipment
operated by the Lessee and located at the same
location. The Lessee shall promptly give the
Lessor notice of any contest relating to any Item
or group of Items of Equipment having a Lessor's
Cost equal to or greater than $1,000,000. All
Required Modifications shall be completed in a
good and workmanlike manner and in all events
prior to the termination of the Lease with respect
to any such Item or group of Items of Equipment.
So long as no Material Default or Event of Default
has occurred and is continuing, the Lessee at its
expense, from time to time, may make any
Modification to any Item that the Lessee in its
reasonable discretion may deem desirable in the
proper conduct of the Lessee's business (all such
Modifications which are not Required Modifications
being referred to herein as "Optional
Modifications"); provided, that the Lessee shall
not have the right to make any such Optional
Modification (i) that would diminish the then fair
market value, residual value, condition, remaining
useful life or utility of such Item immediately
prior to such Optional Modification, assuming the
applicable Item was then in the condition and
state of repair required to be maintained by the
terms of this Lease or (ii) would result in the
Item of Equipment, becoming "limited use property"
within the meaning of Rev. Procs. 75-21 and 79-48,
as amended. All Optional Modifications shall be
completed in a good and workmanlike manner, with
reasonable dispatch.
If requested by the Lessee, the Lessor
will be given the opportunity to consider
financing the cost of any Modification, but will
not be obligated in any manner to finance the cost
of any Modification. If the Lessor does provide
any such financing, the Lessee and the Lessor
shall execute a Lease Supplement covering such
Modification and adjusting the Basic Rent,
Casualty Value, Termination Value, and EBO Price
to reflect such financing in accordance with the
terms of Section 9.4 of the Participation
Agreement.
1. Title to each Modification
shall vest as follows:
a) in the case of (A) each
Required Modification or other Nonseverable
Modification, whether or not the Lessor shall have
financed or provided financing (in whole or in
part) for such Modification, and (B) each
Modification which shall have been financed by the
Lessor, the Lessor shall, without further act,
effective on the date such Modification shall have
been incorporated into the modified Item of
Equipment, acquire title to such Modification free
and clear of all Liens other than Permitted Liens;
or
a) in the case of each
Severable Modification not financed by the Lessor
and not a Required Modification, the Lessee shall
retain title to such Modification and the Lessee
may (subject to the provisions of Section 6.4(c))
remove such Modification at its expense at any
time so long as the modified Item of Equipment
remains in or is restored by the Lessee to the
condition required by this Lease.
Immediately upon title to a Modification
vesting in the Lessor pursuant to this Section
6.4(b), such Modification shall, without further
act, become subject to this Lease and to the Lien
of the Indenture and be deemed part of the
applicable Item for all purposes. In the case of
clause (ii) of this Section 6.4(b), if the Lessee
has not elected to exercise its Purchase Option,
the Lessor shall have the right, upon sixty (60)
days' written notice to the Lessee, to purchase
any such Severable Modification (other than a
Severable Modification which may not be so sold
without breach of an existing contract or license
to which the Lessee or such Modification,
respectively, is a party or subject) at its Fair
Market Sales Value, determined if necessary by the
Appraisal Procedure, upon termination of this
Lease with respect to such Item.
1. Subject to compliance with
Applicable Law, the Lessee may remove, at its
expense, any Severable Modification not purchased
by the Lessor; provided, that the Lessee, at its
expense shall repair any damage to such Item
caused by such removal so as not to diminish the
fair market value, residual value, condition,
remaining useful life or utility of such Item
immediately prior to the Modification (assuming
such Item was then in the condition and state of
repair required by this Lease); provided, further,
that in the event the Lessee shall not have
removed any Severable Modification to which the
Lessee shall have title as provided in
Section 6.4(b)(ii) prior to the end of the Lease
Term applicable to the modified Item of Equipment,
title to such Severable Modification shall vest in
the Lessor upon the expiration of such Lease Term.
I. ARTICLE
Obsolescence Termination
A. SECTION Item Obsolescence. Unless a
Material Default or an Event of Default shall have
occurred and be continuing, the Lessee shall have
the right to terminate the Lease with respect to
any Item or Items of Equipment having a minimum
aggregate Lessor's Cost of $1,000,000 at any time
during the Base Term after the third anniversary
of the Equipment Closing Date, on a Rent Payment
Date for such Item (an "Obsolescence Termination
Date") upon giving at least ninety (90) days'
prior written notice (subject to revocation as
described below) to the Lessor and the Indenture
Trustee (which notice shall specify the Item to be
terminated and the Obsolescence Termination Date
and shall be accompanied by the written consent of
the Guarantor to such termination) (the
"Termination Notice"), which Termination Notice
shall contain a certification signed by a
Responsible Officer of the Lessee on behalf of the
Lessee that such Item has become (a) obsolete or
surplus to the Lessee's operating requirements as
determined by the Lessee in its reasonable
business judgment, other than as a result of an
Event of Loss, or (b) uneconomic to operate due to
burdensome governmental regulations, and the
Lessee has provided an Officer's Certificate to
the Lessor and the Indenture Trustee to such
effect in each case. The Lessee may, with the
written consent of the Guarantor, rescind its
Termination Notice as to any Item of Equipment no
later than forty-five (45) days prior to the
scheduled Obsolescence Termination Date so long as
no binding contract for the sale of such Item
exists; provided, that the Lessor has not
exercised its election to retain such Item of
Equipment pursuant to Section 7.2 hereof. The
total number of such rescissions during the Lease
Term shall not exceed two (2).
A. SECTION Retention by Lessor. At any
time within thirty (30) days after receipt by the
Lessor and the Indenture Trustee of a Termination
Notice, the Lessor may give the Lessee notice of
its irrevocable election to retain any such Item.
If the Lessor shall have elected to retain any
such Item in accordance with the preceding
sentence, on the Obsolescence Termination Date for
such Item (a) the Lessee shall deliver to the
Lessor such Item of Equipment in accordance with
the conditions for return set forth in Section 8.2
hereof, (b) the Lessee shall pay to the Lessor or,
so long as the Indenture has not been discharged
in accordance with its terms, the Indenture
Trustee, by EFT (i) if such Obsolescence
Termination Date is also a Rent Payment Date, any
Accrued Basic Rent due on or prior to such
Obsolescence Termination Date with respect to such
Item of Equipment, and (ii) any other unpaid
Supplemental Rent (including the Make Whole
Premium Amount payable on such date under the
Indenture on the aggregate amount of Notes related
to Items of Equipment subject to such termination,
but not including any Casualty Value or
Termination Value) due on or prior to such
Obsolescence Termination Date with respect to such
Item of Equipment plus all other sums due and
payable on such Obsolescence Termination Date to
the Lenders by the Lessor under the Indenture, the
Participation Agreement or the Notes, but not
including the principal amount of any such Notes,
and (c) the Lessor shall pay to the Indenture
Trustee by EFT an amount sufficient to pay a
principal amount of the Notes equal to the Loan
Value for such Item of Equipment. Subject to the
receipt by the Indenture Trustee of such funds,
upon return by the Lessee of such Item of
Equipment to the Lessor pursuant to clause (a)
above, such Item of Equipment shall cease to be
leased hereunder or subject to the provisions of
any other Operative Document. If the Lessor fails
to make the full amount of such payment to the
Indenture Trustee, (i) the Lessee may make such
payment on the Obsolescence Termination Date
(together with all other amounts payable by the
Lessee under this Section 7.2) plus an amount
equal to the equity portion of the Termination
Value as of such date for such terminated Items,
in which event all liability of the Lessee to pay
Rent for such Item of Equipment following such
Obsolescence Termination Date shall cease, the
Lease Term with respect to such Item of Equipment
shall cease and the Lessor will be obligated to
convey title to such Item of Equipment to the
Lessee (without representation or warranty except
as to the Lessor's ability and authority to
conduct such transfer and convey title to such
Item free and clear of Lessor Liens) and (ii) if
the Lessee elects not to make the payment
described in clause (i) on the Obsolescence
Termination Date, the Lessor shall thereafter no
longer be entitled to exercise its election to
retain such Item of Equipment. If the Lessee
elects not to make the payment contemplated in
clause (i) of the preceding sentence, this Lease
shall continue in full force and effect with
respect to such Item of Equipment, and the Lessor
shall retain its rights under this Section 7.2
with respect to any future Termination Notices.
Notwithstanding any election by the Lessor to
retain an Item of Equipment, the Lessee shall pay
all reasonable costs and expenses (including Fees
and Expenses) of all Lessor Parties relating to
the termination of the obligation of the Lessee to
lease such Item of Equipment or any revocation
thereof; provided, that the Lessee shall not be
liable for any costs and expenses incurred by the
Lessor after such termination or to modify such
Equipment for any purpose other than to ensure
that the condition of such Equipment complies with
that required hereunder or, except as set forth in
clause (i) above, as a result of the Lessor's
failure to make any payment to the Indenture
Trustee.
B. SECTION Bids for Terminated Items.
During the period from the giving of such
Termination Notice for any Item of Equipment until
ten (10) days prior to the Obsolescence
Termination Date and so long as the Lessor shall
not have exercised its option pursuant to
Section 7.2 to retain such Item, the Lessee, as
non-exclusive agent for the Lessor and at the
Lessee's expense, shall use its best efforts to
obtain the highest possible bids from Persons
other than the Lessee, the Guarantor, any of their
respective Affiliates or Tax Affiliates or any
Person acting on behalf of or in conjunction with
such parties in connection with such bid
(collectively, the "Non-Bidding Parties") to
purchase such Item of Equipment on the
Obsolescence Termination Date, and the Lessee
shall during such period, from time to time at the
request of the Lessor, inform the Lessor in
writing of the results of its efforts and shall
notify the Lessor in writing, at least ten (10)
days prior to the scheduled Obsolescence
Termination Date, of the amount of each such bid
(which may include bids to purchase such Item of
Equipment for scrap or salvage only) that has
theretofore been submitted and the name and
address of the party submitting such bid. Each
such bid (a "Qualifying Bid") (a) shall be a bona
fide bid for payment in full in cash, and
(b) shall not involve any consideration to be
received by any of the Non-Bidding Parties from
the purchaser or be connected, directly or
indirectly, with any transaction between the
purchaser and any of the Non-Bidding Parties. The
Lessor and the Owner Participant shall have the
right, directly or through agents or brokers, to
solicit bids, to inspect any bid received by the
Lessee or to submit a bid itself, but shall be
under no duty to make or solicit bids or to
inquire into the efforts of the Lessee to obtain
bids.
If, other than as a result of the Lessor's
election to retain such Item of Equipment as
provided in Section 7.2 hereof, neither the Lessor
nor the Lessee shall have received any Qualifying
Bid as to any Item of Equipment on or prior to the
tenth day before the scheduled Obsolescence
Termination Date, the Termination Notice as to
such Item of Equipment shall be deemed to be
rescinded and such Item of Equipment shall remain
subject to this Lease. If the Termination Notice
is deemed rescinded pursuant to the preceding
sentence, this Lease shall continue as to such
Item in full force and effect, without in any way
prejudicing the right of the Lessee to terminate
the Lease at a later date with respect thereto;
provided, that such continuation shall constitute
a rescission for purposes of Section 7.1 hereof.
In such event, the Lessee shall reimburse the
Lessor Parties for all reasonable fees and
expenses (including Fees and Expenses) incurred in
connection with any such rescission of a
Termination Notice.
If the Lessor or the Lessee shall have
received a Qualifying Bid on or prior to the tenth
day before the Obsolescence Termination Date, the
Lessor shall on the Obsolescence Termination Date,
provided the conditions of Section 7.4 hereof
shall have been met, transfer the Item of
Equipment to which such bid relates to the bidder
that shall have submitted the highest Qualifying
Bid for such Item of Equipment upon receipt in
immediately available funds of the amount
specified in such bid. For so long as the
Indenture has not been discharged in accordance
with its terms, such funds shall be paid directly
to the Indenture Trustee for application as
provided in Section 3.02(c) of the Indenture and,
thereafter, shall be paid to the Lessor. The
Lessee shall certify to the Lessor and the Owner
Participant that the conditions of the first
paragraph of this Section 7.3 with respect to the
Qualifying Bid have been met, including that the
bidder is not a Non-Bidding Party. Such transfer
and assignment shall be without any
representation, warranty or recourse whatsoever
except as to the Lessor's ability and authority to
conduct the transaction and convey title to such
Item of Equipment free and clear of Lessor Liens.
The Lessor shall execute and deliver such
documents evidencing such transfer and take such
further action as the purchaser shall reasonably
request. All out-of-pocket costs and expenses
(including Fees and Expenses, any sales
commissions, and any sales, transfer or similar
taxes) of the Lessor Parties incurred in
connection with any sale and transfer of any Item
of Equipment pursuant to this Article VII shall be
paid by the Lessee.
A. SECTION Conditions of Termination;
Effect of Termination. As conditions to the
transfer by the Lessor of any Item on the
applicable Obsolescence Termination Date to the
successful bidder pursuant to the last paragraph
of Section 7.3 hereof, (a) any necessary
Governmental Actions in connection therewith shall
have been obtained by and at the expense of the
Lessee, (b) the Lessee shall on such Obsolescence
Termination Date pay to the Lessor or, so long as
the Indenture has not been discharged in
accordance with its terms, the Indenture Trustee
the sum of (i) if such Obsolescence Termination
Date is also a Rent Payment Date, any Accrued
Basic Rent due with respect to such Item of
Equipment as of such Obsolescence Termination Date
and (ii) the excess, if any, of the Termination
Value for such Item of Equipment, computed as of
such Obsolescence Termination Date, over (x) the
net proceeds actually realized by the Lessor from
any sale thereof or, (y) so long as the Indenture
has not been discharged in accordance with its
terms, the funds actually received by the
Indenture Trustee, and (c) the Lessee shall on
such Obsolescence Termination Date pay to the
Lessor or, so long as the Indenture has not been
discharged in accordance with its terms, the
Indenture Trustee the sum of (i) any Make Whole
Premium Amount payable on such Obsolescence
Termination Date pursuant to the Indenture, (ii)
any other Rent (including any amounts for costs
and expenses payable by the Lessee as required in
the immediately preceding paragraph) with respect
to such Item of Equipment due and unpaid as of
such Obsolescence Termination Date and (iii) any
penalties, premium or other amounts payable under
the Indenture or the Notes in connection with the
principal amount of the Notes being prepaid on
such date (the amounts payable pursuant to
clauses (b) and (c) collectively, the
"Obsolescence Termination Payment"). Upon payment
by the Lessee of all Obsolescence Termination
Payments as to any terminated Item of Equipment,
the obligation of the Lessee to pay Basic Rent
with respect to such Item of Equipment shall
terminate, such Item of Equipment shall no longer
be subject to this Lease and the Lease Term with
respect to such Item of Equipment shall end. If,
other than as a result of the Lessor's election to
retain such Item of Equipment as provided for in
Section 7.2 and the compliance by the Lessor and
the Lessee with their respective obligations in
connection therewith, on or as of the Obsolescence
Termination Date no sale of such Item of Equipment
shall have occurred or the Lessee shall not have
complied in full with this Section 7.4, this Lease
shall continue in full force and effect with
respect to such Item of Equipment in accordance
with the terms hereof without prejudice to the
Lessee's right to exercise its termination right
under Section 7.1 hereof thereafter and the Lessee
shall pay the expenses (including Fees and
Expenses) incurred by the Lessor Parties in
connection with the proposed sale.
I. ARTICLE
Return of Equipment
A. SECTION Notice of Return. Unless the
Lessee exercises its renewal option under
Article XVI or its purchase options under Article
X or XVII the Lessee shall provide the Lessor with
irrevocable written notice of its decision to
return, and shall return, all Items of Equipment
to the Lessor at the end of the Lease Term thereof
at least three hundred sixty (360) days prior to
the expiration of the Lease Term.
A. SECTION Return of Equipment.
1. Upon termination of this Lease
with respect to an Item of Equipment pursuant to
Article VII or in connection with the exercise by
the Lessor of its remedies under Article XIV
hereof, or at such other time as required under
this Lease, the Lessee shall, at the Lessee's
risk, cost and expense, dismantle each affected
Item of Equipment in accordance with appropriate
methods and procedures for de-installation,
identify such Item with appropriate tags and
markings, crate (in a manner appropriate for the
safe and proper shipment of such Equipment) and
catalogue all such Items, and deliver such Items
to the Lessor at an agreed upon Return Location in
the manner appropriate for handling Items of
Equipment of that type.
1. At the time of return, each
Item of Equipment shall be, at the cost and
expense of the Lessee (i) free and clear of all
Liens other than Owner Participant Liens and
Lessor Liens, (ii) cleaned to the reasonable
satisfaction of the Lessor, (iii) in the condition
originally delivered to the Lessor (subject to
normal wear and tear permitted by the terms
hereof), (iv) in compliance with the maintenance
and operations provisions of this Lease,
(v) detoxified or decontaminated, if applicable,
to allow for subsequent use in full compliance
with Applicable Law, (vi) properly identified with
labels, tags, plates or by any other method
providing clear identification, and (vii) properly
assembled except to the extent disassembly is
necessary or appropriate for the purposes of
crating and delivering the Equipment in accordance
with appropriate methods and procedures for
de-installation. Simultaneously with the return
of any Item or part thereof, the Lessee shall
deliver to the Lessor the plans and specifications
with respect to such Item, all operating,
maintenance, repair and inspection software,
records, manuals, logs, plans, specifications,
drawings, schedules and similar papers (and any
documents and Governmental Actions relating to
environmental matters) relating to such Item
necessary or useful for the continued operation
and maintenance of such Item, and title documents
and copies of operating permits with respect to
such Item; provided, that the Lessee shall not be
required to provide any of the foregoing
documents, Governmental Actions and records unless
(i) the Lessee either actually has possession of
or reasonable access to the foregoing documents,
Governmental Actions and records, (ii) the
foregoing documents, Governmental Actions and
records are necessary for the normal use,
operation or maintenance of such Item in full
compliance with Applicable Law, or (iii) the
foregoing documents, Governmental Actions and
records should have been retained in accordance
with the Lessee's normal document retention
policies or as otherwise expressly required under
the terms of this Lease.
If for any reason the Lessee shall not have
returned the applicable Item of Equipment as
required by the provisions of this Article VIII on
the required day, the Lessee shall pay to the
Lessor on demand additional Basic Rent for such
Item of Equipment on a per diem basis for each day
after such day until full compliance with this
Article VIII, which Basic Rent shall be in an
amount per diem equal to the greater of (1) the
average daily rate of Basic Rent for such Item of
Equipment payable during the Base Term and (2) the
Fair Market Rental Value for such Item of
Equipment. The rights set forth in the preceding
sentence shall not limit the Lessor's rights to
exercise any remedy permitted to be exercised
under Article XIV hereof with respect to any
continuing Event of Default, including the Event
of Default resulting from the Lessee's failure to
deliver the Equipment as required by the
provisions of this Article VIII. Without limiting
the generality of any of the other terms of this
Lease or the Participation Agreement, the Lessee
shall be liable for any costs and expenses
(including Fees and Expenses) incurred by the
Lessor Parties as a result of the failure of the
Lessee duly to perform and comply with any of the
terms of this Article VIII.
A. SECTION Marketing of Returned Item.
The Lessee agrees that during the last twelve (12)
months of the Lease Term with respect to each Item
of Equipment, it will cooperate in all reasonable
respects with efforts of the Lessor to lease or
sell such Item of Equipment, including aiding
qualified potential lessees or purchasers by
providing reasonable access at the location where
the relevant Equipment is then located to the
applicable Item of Equipment as then being used
and to the records relating to maintenance and
performance thereof for inspection thereof during
normal business hours upon prior written notice to
the Lessee; provided, that such cooperation shall
be subject to the Clean Room Operating Procedures
and Section 22.1 hereof, and provided further,
that it is understood that Lessee's obligation
hereunder to provide such access shall be only at
such times and under such circumstances as are
reasonably appropriate in connection with Lessor's
marketing efforts.
A. SECTION Governmental Approvals. The
Lessee shall use its best efforts, at the expense
of the Lessor, in transferring or obtaining all
Governmental Actions which may be necessary for
the Lessor or its designee, as the case may be, to
operate, lease or purchase any returned Item of
Equipment.
A. SECTION Additional Parts. At any time
after the Lessee has notified the Lessor that it
has determined not to renew this Lease pursuant to
Article XVI or purchase the Equipment pursuant to
Article X or XVII, or the Equipment is otherwise
to be returned to the Lessor, the Lessee shall at
the Lessor's request, advise the Lessor of the
nature and condition of all Severable
Modifications owned by the Lessee pursuant to
Section 6.4(b)(ii) hereof which the Lessee has
removed or intends to remove from the Equipment in
accordance with Section 6.4(c) hereof. The Lessee
may elect to retain any Severable Modification not
purchased or purchasable by Lessor pursuant to the
last paragraph of Section 6.4(b). The Lessee may
(and shall, if so directed by Lessor), at its sole
cost and expense, remove from any Item any other
Severable Modification which is not owned by the
Lessor in accordance with the provisions of
Section 6.4(b)(ii) hereof and which is not
purchased by the Lessor pursuant to Section
6.4(b); provided, that any such Modification not
removed pursuant to this Section 8.5 shall be
deemed to be part of the Item to which it relates
for all purposes hereof and title to such
Modification shall thereupon vest in the Lessor
free and clear of all Liens, other than Lessor
Liens and Owner Participant Liens.
I. ARTICLE
Loss, Destruction, Condemnation, Damage, etc.
A. SECTION Replacement; Payment of
Casualty Value.
1. Upon the occurrence of an
Event of Loss, or an event which with the passage
of time would become an Event of Loss, with
respect to any Item of Equipment, the Lessee shall
promptly give the Lessor and the Indenture Trustee
notice thereof and notify the Lessor and the
Indenture Trustee within forty-five (45) days
thereafter which of the following options the
Lessee shall perform with respect thereto:
a) the Lessee shall
replace the Item of Equipment which suffered the
Event of Loss as soon as practicable, but in any
event within one (1) year from the date of such
Event of Loss, with a replacement Item of
Equipment which has a then fair market value,
residual value, condition, remaining useful life
and utility at least equal to the fair market
value, residual value, condition, remaining useful
life and utility of the Item of Equipment which
suffered the Event of Loss immediately prior to
such Event of Loss (assuming such Item of
Equipment was then in the condition and state of
repair required by this Lease); provided, that
(A) in the case of any replacement which cannot
practicably be effected within ninety (90) days
from the occurrence of such Event of Loss, the
Lessee shall provide to the Lessor and the
Indenture Trustee an Officer's Certificate setting
forth in reasonable detail the date on which such
replacement Item is expected to become available
and the reasons that such replacement cannot be
effected within such ninety (90) day period, and
(B) the Lessee agrees to indemnify the Owner
Participant, in a manner satisfactory to such
Owner Participant in its sole discretion exercised
in good faith (including, without limitation, with
respect to collateral arrangements, if any), for
any adverse tax consequences from such replacement
and provide to the Owner Participant an Officer's
Certificate to such effect; or
a) the Lessee shall pay
to the Lessor or, so long as the Indenture has not
been discharged in accordance with its terms, the
Indenture Trustee on a date as of which monthly
Casualty Values are determined (a "Loss Payment
Date") and specified by the Lessee, which shall be
a Loss Payment Date within the earlier of (A) the
later of (1) forty five (45) days after the
occurrence of the Event of Loss and (2) three (3)
Business Days after receipt of insurance proceeds,
and (B) ninety (90) days after the occurrence of
the Event of Loss, the amounts required to be paid
by Section 9.1(d) hereof;
provided, that if a Material Default or an Event
of Default shall have occurred and be continuing,
the Lessee may elect only the option set forth in
clause (ii) above, and failure of the Lessee to
make an election within the time period specified
above shall be deemed an election of the option
set forth in clause (ii) above.
1. The Lessee's right to replace
any Item as provided in Section 9.1(a) above shall
be subject to the fulfillment, at the Lessee's
cost and expense, of the following conditions
precedent:
a) each of the Lessor
Parties shall have received an Officer's
Certificate of the Lessee to the effect that as of
the date of such replacement no Material Default
or Event of Default shall have occurred and be
continuing;
a) on the date of such
replacement, the following documents shall have
been duly authorized, executed and delivered by
the respective party or parties thereto and shall
be in full force and effect, and an executed
counterpart of each thereof shall have been
delivered to each of the Lessor Parties:
(A) a Lease Supplement with a
Schedule of Equipment covering the replacement
Item;
(B) so long as the Indenture
shall not have been discharged and satisfied, an
Indenture Supplement covering the replacement
Item;
(C) a full warranty (as to
title) ▇▇▇▇ of sale, in substantially the same
form as the ▇▇▇▇ of Sale delivered with respect to
the Item being replaced, covering the replacement
Item, executed by the Seller thereof or the
Lessee, if it then owns such replacement Item, in
favor of the Lessor;
(D) evidence of the filing in
such places as are deemed reasonably necessary by
the Lessor and the Indenture Trustee of (1) so
long as the Indenture shall not have been
discharged, such UCC financing statements and
fixture filings covering the security interests
created by the Indenture, and (2) such
"precautionary" UCC financing statements and
fixture filings covering the leasehold interests
created by this Lease, as are deemed necessary and
desirable by the Lessor and the Indenture Trustee
to protect the ownership interest of the Lessor
and the Lien and security interest of the
Indenture Trustee in the replacement Item;
(E) an opinion, satisfactory
in form and substance to each of the Lessor
Parties, of the Lessee's independent outside
counsel (or other counsel satisfactory to the
Lessor Parties) (1) as to the effectiveness,
validity and enforceability of the documents
referred to in clauses (A) through (D) above and
the filing and recordation of the documents
described in clause (D) above;
a) on such replacement date,
the Lessor shall receive good title to the
replacement Item, free and clear of Liens (other
than Permitted Liens described in clauses (a)-(c)
in the definition thereof);
a) each of the Lessor
Parties shall have received upon reasonable
request certain information with respect to the
replacement Item, with such information to include
descriptions of the fair market value, residual
value, condition, remaining useful life and
utility of such Item (including an appraisal if
requested by any Lessor Party); and
a) either (A) the Owner
Participant shall have received an opinion of
independent tax counsel (selected by the Owner
Participant and reasonably acceptable to the
Lessee) reasonably satisfactory to the Owner
Participant to the effect that there shall be no
adverse tax consequences resulting from such
replacement, or (B) the Lessee shall have agreed
to indemnify the Owner Participant, in a manner in
form and substance satisfactory to the Owner
Participant in its sole discretion exercised in
good faith, which determination shall include the
adequacy of the collateral therefor, if any, for
any such adverse tax consequence, provided, that
the Owner Participant shall be obligated to accept
such an indemnity only if the Owner Participant
shall have determined that it is more likely than
not that no such adverse tax consequences will
occur.
1. Upon satisfaction of the
conditions set forth in Section 9.1(b), (i) this
Lease shall continue with respect to any
replacement Item as though no Event of Loss had
occurred, (ii) the Lessor shall convey "as is"
"where is", without recourse or warranty (except
as to the ability and authority of the Lessor to
transfer and convey such Item free and clear of
Lessor Liens and Owner Participant Liens), to the
Lessee all right, title and interest of the Lessor
in and to the Item being replaced by executing and
delivering to the Lessee such bills of sale and
other documents and instruments as the Lessee may
reasonably request to evidence such conveyance,
and (iii) the Lessor shall assign to the Lessee
all claims it may have against any other Person
arising from the event which gave rise to the
replacement.
1. If an Event of Loss occurs
with respect to any Item of Equipment and the
Lessee has elected not to replace or does not
replace (or is not entitled pursuant to this
Section 9.1 to replace) such Item as provided
in Section 9.1(a)(i), the Lessee shall pay or
cause to be paid to the Lessor or, so long as the
Indenture has not been discharged in accordance
with its terms, the Indenture Trustee in
immediately available funds on the Loss Payment
Date specified by the Lessee pursuant to Section
9.1(a)(ii), an amount equal to (A) if such Loss
Payment Date is also a Rent Payment Date, any
Accrued Basic Rent payable on such Loss Payment
Date with respect to the Item suffering the Event
of Loss, together with all unpaid Basic Rent, if
any, payable on or before such Loss Payment Date,
plus (B) all unpaid Supplemental Rent (except for
Casualty Value) due on or before such Loss Payment
Date, plus (C) the Casualty Value for the Item
suffering the Event of Loss as of such Loss
Payment Date, plus (D) in the case of an Event of
Loss described in clause (h) of the definition
thereof, any Make Whole Premium Amount payable on
such date pursuant to the Indenture. Upon
compliance by the Lessee with this paragraph (d)
and receipt of a discharge of the Lien of the
Indenture with respect to the Item suffering such
Event of Loss, the Lessor shall transfer such Item
to the Lessee on an "as is" "where is" basis, free
and clear of all Lessor Liens and Owner
Participant Liens, without any other recourse to,
or representation or warranty (except as to the
ability and authority of the Lessor to convey and
transfer such Item free and clear of Lessor Liens
and Owner Participant Liens), expressed or
implied, by the Lessor or the Owner Participant by
executing and delivering to the Lessee such bills
of sale and other documents or instruments that
the Lessee may reasonably request to evidence such
conveyance. Upon the compliance with the
provisions of this paragraph (d) with respect to
such Item, the Lessee's obligation to pay Basic
Rent with respect to such Item shall cease, but
the Lessee's obligation to pay any applicable
Supplemental Rent, before, on or after such date
shall remain unchanged.
A. SECTION Application of Payments Upon
an Event of Loss. Subject to the provisions of
Section 9.4 hereof, any payments received at any
time by the Lessor or by the Lessee with respect
to an Item of Equipment (including insurance
proceeds or warranty payments but excluding
Excluded Payments) from any Governmental Authority
or other Person as a result of the occurrence of
an Event of Loss with respect to such Item of
Equipment shall be applied as follows:
1. any such payment received at
any time by the Lessee shall be promptly paid to
the Lessor or, so long as the Indenture has not
been discharged in accordance with its terms, the
Indenture Trustee for application pursuant to the
following provisions of this Section 9.2, except
that the Lessee may retain any amounts which the
Lessor shall at such time be obligated to pay to
the Lessee under such provisions;
1. (i) if the Lessee has elected
to replace such Item of Equipment pursuant
to Section 9.1(a)(i), such payments shall be held
by the Lessor or, so long as the Indenture has not
been discharged in accordance with its terms, the
Indenture Trustee and applied to pay, or reimburse
the Lessee for the payment of, the cost of
replacing such Item of Equipment, upon
satisfaction of the conditions set forth in
Section 9.1(b), or (ii) if the Lessee has elected
or is deemed to have elected the option set forth
in Section 9.1(a)(ii), so much of such payments as
shall not exceed all amounts required to be paid
by the Lessee pursuant to Section 9.1(d) hereof
shall be held by the Lessor or, so long as the
Indenture shall not have been discharged in
accordance with its terms, the Indenture Trustee
and shall be applied in reduction of the Lessee's
obligation to pay such amounts if not already paid
by the Lessee, or, if already paid by the Lessee,
shall be applied to reimburse the Lessee for its
payment of such amounts; and
1. the balance, if any, of such
payments remaining thereafter, shall be allocated
among the Lessor, the Lessee and other Persons
having a claim thereto as their respective
interests may appear.
A. SECTION Seizure, Requisition,
Application of Payments Not Relating to an Event
of Loss. In the event of a loss, condemnation,
confiscation, theft or seizure of, or requisition
of title to or use of, or damage to, any Item of
Equipment or any part thereof not resulting in an
Event of Loss, the Lessee shall promptly notify
the Lessor and the Indenture Trustee thereof and
all obligations of the Lessee under this Lease
with respect to such Item of Equipment shall
continue to the same extent as if such event had
not occurred. Subject to the provisions of
Section 9.4 hereof and the obligations of the
Lessee under Article VI hereof, insurance
proceeds, governmental awards, warranty payments
or other payments received at any time by the
Lessor or the Lessee from any insurer under
insurance carried by the Lessee, any Governmental
Authority or other Person with respect to any
loss, condemnation, confiscation, theft or seizure
of, or requisition of title to or use of, or
damage to any Item of Equipment or any part
thereof not constituting an Event of Loss shall be
paid to the Lessor or, so long as the Indenture
has not been discharged in accordance with its
terms, the Indenture Trustee, and applied to pay,
or reimburse the Lessee for (a) the payment of the
cost of repairing or replacing such Item of
Equipment, upon receipt of evidence reasonably
satisfactory to the Lessor and the Indenture
Trustee that such Item has been restored to the
condition required by the terms of this Lease, and
(b) any Rent accruing during the period for which
such Item was lost, condemned, confiscated,
stolen, seized or requisitioned, with the balance
to be retained by the Lessor.
A. SECTION Applications During Default or
Event of Default. Any amount that shall be
payable to the Lessee pursuant to this Lease
arising out of any insurance, warranty,
governmental award or otherwise received in
respect of the Equipment shall not be paid to the
Lessee or, if it shall have been previously paid
to the Lessee, shall not be retained by the Lessee
but shall be paid to the Lessor or, so long as the
Indenture has not been discharged in accordance
with its terms, the Indenture Trustee, if at the
time of such payment any Default or Event of
Default shall have occurred and be continuing. In
such event, all such amounts shall be paid to and
held by the Lessor or the Indenture Trustee, as
the case may be, in trust as security for the
obligations of the Lessee to make payments under
any other Operative Document or to pay Rent
hereunder or applied by the Lessor or the
Indenture Trustee, as the case may be, toward
payment of any of such obligations of the Lessee
at the time due hereunder or under such other
Operative Document. At such time as there shall
not be continuing any Default or Event of Default,
all such amounts at the time held by the Lessor or
the Indenture Trustee, as the case may be, in
excess of the amount, if any, that the Lessor or
the Indenture Trustee, as the case may be, shall
have elected to apply as above provided shall be
paid to the Lessee.
A. SECTION Application of Article VI.
Article VI shall not apply to any Item of
Equipment after an Event of Loss has occurred with
respect to such Item of Equipment; provided, that
the foregoing shall not limit the obligation of
the Lessee under Article VI hereof with respect to
any replacement Item of Equipment.
I. ARTICLE
Early Buy-Out Option
A. SECTION Early Buy-Out.
1. So long as no Material Default
or Event of Default shall have occurred and be
continuing, and so long as Zenith of Texas
simultaneously gives notice of its intent to
exercise its early buy-out option under the
Mexican Lease, the Lessee shall have the right,
with the written consent of the Guarantor, upon
not more than three hundred sixty (360) days' nor
less than one hundred eighty (180) days'
irrevocable notice to the Lessor prior to the EBO
Date(the "EBO Notice Date"), to purchase on the
EBO Date either (i) all, but not less than all,
Items of Equipment at the EBO Price applicable to
each such Item or (ii) the Owner Participant's
interest in the Trust Estate, at a price equal to
the EBO Price applicable to each such Item less
the amount of such EBO Price comprising the amount
allocated for the prepayment of the Notes. If the
Lessee has elected to purchase the Equipment, the
Lessee may elect to pay the EBO Price for the
Equipment either by (i) paying such amount to the
Lessor by EFT or (ii) (A) paying to the Lessor by
EFT an amount equal to the aggregate EBO Price for
all Equipment less the amount of each EBO Price
comprising the amount allocated for the prepayment
of the Notes and (B) assuming the Lessor's
liability under the Notes in accordance with and
subject to Section 2.17 of the Indenture. If the
Lessee has elected to acquire the Owner
Participant's interest in the Trust Estate, the
Lessee shall do so by paying to the Owner
Participant by EFT the amount specified in clause
(ii) (A) above. In addition, the Lessee shall be
obligated (i) to pay on the EBO Date with respect
to each such Item (A) Accrued Basic Rent as of the
applicable EBO Date, and (B) all other Rent due
and payable on or prior to such EBO Date
including, without limitation, if the Notes are to
be prepaid, the Make Whole Premium Amount, if any,
with respect to the Notes being prepaid on such
EBO Date, and (ii) pay all amounts due with
respect to the exercise of the early buy-out
option under the Mexican Lease.
1. If the Lessee shall have
elected the EBO Option as set forth in
Section 10.1(a), payment by the Lessee of the
amounts payable pursuant to Section 10.1(a) hereof
shall be made by EFT on the EBO Date against
delivery (after payment by the Lessee of such
amounts) of (i) in the case of a purchase of the
Equipment rather than the Owner Participant's
interest in the Trust Estate, (A) a ▇▇▇▇ of sale
transferring and assigning to the Lessee all
right, title and interest of the Lessor in and to
the Items of Equipment being purchased on such EBO
Date free and clear of Lessor Liens, Owner
Participant Liens and (unless the Lessee has
elected to assume the Lessor's liability under the
Notes) the Lien of the Indenture, without other
recourse, representation or warranty (except as to
the Lessor's ability to conduct such transfer and
convey such Items free and clear of such Liens)
and, on an "as is" "where is" basis and (B) unless
the Lessee has elected to assume the Lessor's
liability under the Notes, an instrument executed
by the Lessor and the Indenture Trustee (in
recordable form) terminating its respective
interests in the Items of Equipment; and (ii) in
the case of a purchase of the Owner Participant's
interest in the Trust Estate, an agreement
executed by the Owner Participant transferring
such interest to the Lessee, either in
substantially the form set forth as Appendix F to
the Participation Agreement or in such other form
agreed upon by the Owner Participant and the
Lessee.
1. After the Lessee has timely
given the notice described in Section 10.1(a) but
before the EBO Date, the Lessee shall be entitled
to all of its rights set forth in Article IX upon
the occurrence of an Event of Loss with respect to
any Item.
I. ARTICLE
Assignment and Sublease
A. SECTION Lessee Assignments and
Subleases. Lessee shall not assign or transfer
any Item of Equipment or its interest therein
without the prior written consent of the Lessor
and the Indenture Trustee. Notwithstanding the
foregoing, provided that no Material Default or
Event of Default exists at the commencement of
such sublease, the Lessee may sublease some or all
of the Items of Equipment pursuant to a sublease
which (a) shall be for a term not extending beyond
the Lease Term, and (b) shall be made expressly
subordinate to the rights of the Owner-Trustee and
the Indenture Trustee; provided, (i) that the
terms of the sublease or the location of the
Equipment pursuant to such sublease would not
result in an Event of Default hereunder, and (ii)
the sublease would not result in adverse tax
consequences to the Lessor and (iii) the Lessee
shall assign to the Lessor the Lessee's rights
under any sublease to secure its obligations
hereunder in a manner reasonably satisfactory to
the Lessor. The rights of any sublessee who
receives possession by reason of a sublease
permitted by this Section 11.1 shall be subject
and subordinate to, and any sublease permitted by
this Section 11.1 shall be made expressly subject
and subordinate to the terms of this Lease,
including, but not limited to, the Lessor's rights
to repossession pursuant to Section 14 of this
Lease and to avoid such sublease upon such
repossession. No such sublease shall in any way
discharge or diminish any of the Lessee's
obligations hereunder, and the Lessee shall remain
primarily liable hereunder for the performance of
all the terms of this Lease to the same extent as
if such sublease had not occurred.
A. SECTION Lessor Assignments. Except
for transfers pursuant to the terms of the
Operative Documents, the Lessor shall not transfer
or assign any part of its right, title and
interest in this Lease or any Item of Equipment
leased hereunder without the prior written consent
of the Indenture Trustee and, so long as no
Material Default or Event of Default has occurred
and is continuing, the Lessee and the Guarantor;
provided, that the Lessor may transfer or assign
any part of its right, title and interest in this
Lease or any Item of Equipment leased hereunder to
(a) the Indenture Trustee pursuant to the
Indenture and (b) a successor owner trustee
permitted by the Operative Documents, in each case
without consent; provided, further, that any such
permitted transfer or assignment shall be subject
to all of the terms and conditions of this Lease
and the other Operative Documents.
I. ARTICLE
Inspection
A. SECTION Inspection. So long as no
Default or Event of Default has occurred and is
continuing, each of the Lessor Parties may at its
own expense, upon reasonable prior notice to the
Lessee during the normal business hours of the
Lessee, no more frequently than once in any
calendar year, inspect (subject to the Clean Room
Operating Procedures and Section 22.1 hereof) the
Items of Equipment and the books and records of
the Lessee relating to the maintenance and
performance of such Items of Equipment and make
copies and extracts therefrom, and may discuss
such matters with the Lessee's officers; provided,
that the rights of the Lenders and Indenture
Trustee under this Section may only be exercised
by them in a group visit; provided, further, that
the rights of the Owner Participant (and if there
shall be more than one Owner Participant, the
rights of such Owner Participants) and the Owner
Trustee under this Section may only be exercised
by them in a group visit. Upon the occurrence and
during the continuance of a Default or Event of
Default, each of the Lessor Parties may inspect
the Items of Equipment and such books and records
at any time, which inspections shall be at the
expense of the Lessee; provided, that (a) Lessee
is notified at least twenty-four (24) hours prior
to any such inspection, (b) each of the Lessor
Parties agrees to comply with the Clean Room
Operating Procedures, and (c) each of the Lessor
Parties agrees to maintain the confidentiality of
all nonpublic information disclosed to such Person
in the course of any such visit or inspection in
accordance with Section 22.1 hereof. The Lessor
and the Indenture Trustee also shall have the
right to obtain information regarding the
condition and state of repair of any Item of
Equipment, compliance by the Lessee with
Article VI hereof and the absence of a Default or
an Event of Default (including all information
necessary duly to determine the Fair Market Sales
Value and the Fair Market Rental Value of each
Item of Equipment as and when required to be
determined under this Lease). None of the Lessor
Parties shall have any duty to make any inspection
or inquiry or shall incur any liability or
obligation by reason of not making any such
inspection or inquiry nor shall any such
inspection or inquiry reduce the Lessee's
liabilities under the Operative Documents.
I. ARTICLE
Events of Default
A. SECTION Events of Default. Each of
the following events shall constitute an Event of
Default:
1. the Lessee shall fail to make
any payment of (i) Casualty Value, Termination
Value, EBO Price, Purchase Option Price, Accrued
Basic Rent or, to the extent not included in such
foregoing amounts, any Make-Whole Premium Amount
payable concurrently therewith pursuant to the
terms hereof when due, (ii) Basic Rent when due
and such failure shall continue unremedied for a
period of five (5) Business Days after the date
due and (iii) Supplemental Rent (other than in
respect of Casualty Value, Termination Value, EBO
Price, Purchase Option Price or Make Whole Premium
Amount or payments under the Tax Indemnity
Agreement) for a period of ten (10) Business Days
after the Lessee has received notice demanding
payment of such Supplemental Rent which is due; or
2. the Lessee shall fail to
perform or observe any covenant, condition or
agreement set forth in Article VIII (Return of
Equipment), Section 9.1(a) (replacement following
Event of Loss), Section 11.1 (Lessee Assignments),
Article XX (Insurance) or Section 18.2 (Notice of
Default) hereof, or Section 5.3(g) of the
Participation Agreement (Mergers), the Guarantor
shall fail to perform or observe any covenant,
condition or agreement set forth in Section 8(b)
and 8(c) of the Guaranty (and in the case of a
failure of the Guarantor to perform or observe its
obligations under Section 8(b) of the Guaranty, to
the extent such failure is solely the result of a
dilution of the Guarantor's ownership or voting
control of the Lessee by virtue of the exercise of
options, warrants or conversion rights to acquire
common stock of the Lessee, such failure shall
continue unremedied or a period of five (5)
Business Days or, if approval of the Bank of Korea
is required for the Guarantors to purchase
additional common stock of the Lessee, thirty (30)
days); or
1. the Lessee or the Guarantor
shall fail to perform or observe any other
covenant, condition or agreement to be performed
or observed by it under any of the Operative
Documents to which it is a party (other than any
such covenant, condition or agreement in the Tax
Indemnity Agreement) to which it is a party and
such failure shall continue unremedied for a
period of thirty (30) days after notice thereof
shall have been given to the Lessee or the
Guarantor, as applicable, by either the Lessor,
or, so long as the Indenture shall be in effect,
the Indenture Trustee; provided, that the
continuation of any such failure (other than a
failure curable by payment of money or a failure
of the Guarantor to perform or observe any
covenant, condition or agreement set forth in
Section 8(a) of the Guaranty) for a period longer
than such thirty (30) day period shall not
constitute an Event of Default if (i) such default
is curable but cannot be cured within such thirty
(30) day period and (ii) the Lessee or the
Guarantor is diligently pursuing the cure of such
default; provided, further, that any such failure
(other than a failure curable by payment of money)
shall constitute an Event of Default if such
failure is not cured within the earlier of the
last day of the Lease Term and ninety (90) days
from the date notice thereof has been given to the
Lessee or the Guarantor, as applicable; or
1. any representation or warranty
made by the Lessee or the Guarantor in any of the
Operative Documents to which it is a party (other
than any such representation and warranty
contained in the Tax Indemnity Agreement) or in
any statement, report, schedule, notice or other
writing furnished by the Lessee or the Guarantor
in connection therewith shall prove to have been
false or incorrect in any material respect at the
time made or given and remains a misrepresentation
or breach of warranty which is adverse to the
Lessor Parties at the time discovered; provided,
that no such misrepresentation or breach of
warranty shall constitute an Event of Default if
(i) such misrepresentation or breach of warranty
was not intentional and is curable and (ii) the
Lessee or the Guarantor is diligently pursuing the
cure of such misrepresentation or breach of
warranty within ninety (90) days after such Person
has received notice thereof and upon such cure the
original misrepresentation shall not remain
material and adverse; or
1. the Lessee or the Guarantor
(i) shall commence a voluntary Insolvency
Proceeding, (ii) shall seek the appointment of a
trustee, receiver, liquidator, sequestrator,
custodian or other similar official of the Lessee
or the Guarantor or any substantial part of its
property, (iii) shall acquiesce in or consent to
any such relief or to the appointment of or taking
possession by any such official in an involuntary
Insolvency Proceeding commenced against it, (iv)
shall make a general assignment for the benefit of
creditors, or (v) shall fail generally to pay its
undisputed debts as they become due; or
1. an involuntary Insolvency
Proceeding shall be commenced against the Lessee
or the Guarantor seeking liquidation,
reorganization or other relief with respect to
such Person or its debts under any bankruptcy,
insolvency or other similar law now or hereafter
in effect or seeking the appointment of a trustee,
receiver, liquidator, assignee, sequestrator,
custodian or other similar official of it or any
substantial part of its property, and such
involuntary case or other proceeding shall remain
undismissed or unstayed for a period of sixty (60)
consecutive days; or
1. the Guaranty shall for any
reason become invalid, not binding or
unenforceable or repudiated in any manner by the
Guarantor thereunder; or
1. an "Event of Default" under
and as defined in the Mexican Lease shall have
occurred and be continuing.
I. ARTICLE
Remedies
A. SECTION Remedies. Upon the occurrence
of any Event of Default and at any time thereafter
so long as the same shall be continuing, the
Lessor may, at its option, by notice to the
Lessee, declare this Lease to be in default;
provided, that upon the occurrence of an Event of
Default described in Section 13.1(e) or (f), this
Lease shall automatically be in default without
notice thereof to the Lessee or the Guarantor, and
at any time thereafter the Lessor may do one or
more of the following with respect to each Item of
Equipment as the Lessor in its sole discretion
shall elect, to the full extent permitted by
Applicable Law:
1. The Lessor may, by notice to
the Lessee, terminate this Lease.
1. The Lessor may (i) make
written demand that the Lessee shall, at the
Lessee's expense, return all Items of Equipment to
the Lessor in the manner and condition required by
Article VIII as if such Items of Equipment were
being returned at the end of the Lease Term, and
the Lessor shall not be liable for the
reimbursement of the Lessee for any costs and
expenses incurred by the Lessee in connection
therewith or (ii) at the Lessee's expense, but
subject to the Clean Room Operating Procedures and
to the procedures set forth below, enter upon the
site where such Items of Equipment are located and
take immediate possession of any or all of such
Items of Equipment or any part thereof (to the
exclusion of the Lessee) and remove such Items of
Equipment from the site without liability accruing
to the Lessor for or by reason of such entry or
taking of possession or removal, and the Lessee
hereby grants to the Lessor such access to the
facilities of the Lessee where the Items of
Equipment are or may be located (including,
without limitation, any "clean room") as may be
necessary for the Lessor properly to package and
prepare the Items of Equipment for removal.
During the existence and continuation of any Event
of Default, the Lessee shall cause the Equipment
to be operated or not to be operated as may be
agreed with the Lessor, the Lessee shall cooperate
with the Lessor in effecting an orderly
disposition of the Equipment and the Lessor shall
not be entitled to remove Equipment other than in
connection with a reasonable orderly progression
of dismantlement set out and agreed to by the
Lessor and effectuated by the Lessee.
1. The Lessor (whether or not the
Lessor shall have exercised or shall thereafter at
any time exercise its rights under paragraphs (b)
and (d) of this Section 14.1), by notice to the
Lessee specifying a payment date not earlier than
ten (10) days nor more than thirty (30) days from
the date of such notice, may require the Lessee to
pay to the Lessor and the Lessee hereby agrees
that it will pay to the Lessor, on the payment
date specified in such notice, which date shall be
a date on which monthly Casualty Values are
determined (the "Determination Date"), as
liquidated damages for loss of a bargain, and not
as a penalty, and in lieu of any further payments
of Basic Rent and Renewal Rent hereunder in
respect of the Items of Equipment specified by
Lessor (which may be all or only part of such
Items), an amount (reduced by any amounts
previously paid by the Lessee pursuant to
paragraph (e) below in respect of such Items)
equal to the sum of (i) all unpaid Accrued Basic
Rent as of the Determination Date, plus (ii) an
amount equal to the Casualty Value for all such
Items calculated as of the Determination Date,
together with interest, if any, at the Overdue
Rate on the amount of such Accrued Basic Rent and
Casualty Value from the Determination Date as of
which Accrued Basic Rent and Casualty Value is
computed until the date of actual payment; and
upon such payment of liquidated damages and all
other Rent then due and payable hereunder, the
Lessor shall transfer all such Items of Equipment
(without any representation, recourse or warranty
whatsoever other than the ability and authority of
the Lessor to conduct such transfer and convey
title to such Items free and clear of Owner
Participant Liens and Lessor Liens) to the Lessee
and the Lessor shall execute and deliver such
documents evidencing such transfer and take such
further action as the Lessee shall reasonably
request.
1. The Lessor or any agent may
sell any Item of Equipment at public or private
sale, as the Lessor may determine, or may
otherwise dispose of, hold, use, operate, lease
(whether for a period greater or less than the
balance of what would have been the Base Term or
any Renewal Term applicable to such Item of
Equipment, as the case may be) to any third party
or keep idle such Item of Equipment, all on such
terms and conditions and at such place or places
as the Lessor may determine in its sole discretion
and free and clear of all rights of the Lessee and
without any duty to account to the Lessee with
respect to such action or inaction or any proceeds
with respect thereto except as hereinafter set
forth in this Section 14.1. If the Lessor shall
have effected a disposition for value of any such
Item of Equipment pursuant to this paragraph (d)
(and prior thereto shall not have exercised its
rights under paragraph (e) below with respect to
such Item unless the Lessor has not been paid
thereunder and has rescinded such exercise), the
Lessor may demand that the Lessee pay the Lessor
on a Determination Date, and the Lessee hereby
agrees to pay to the Lessor, as liquidated damages
for the loss of a bargain and not as a penalty, in
lieu of all Basic Rent and Renewal Rent with
respect to such Item of Equipment due after the
date on which such disposition shall occur, an
amount equal to the sum of (A) all unpaid Accrued
Basic Rent as of such Determination Date, plus (B)
the amount, if any, by which the Casualty Value of
such Item of Equipment, computed as of the
Determination Date, shall exceed the net proceeds
of such disposition, plus (C) interest at the
Overdue Rate on the amount of such Accrued Basic
Rent and deficiency from the Determination Date as
of which the Casualty Value shall have been
computed until the date of actual payment plus
(D) all other Rent then due and payable hereunder.
1. Whether or not the Lessor
shall have exercised, or shall thereafter at any
time exercise, any of its rights under paragraph
(d) above with respect to an Item of Equipment,
the Lessor may, at any time prior to the time that
such Item of Equipment shall have been transferred
to the Lessee pursuant to paragraph (c) above or
sold by the Lessor pursuant to paragraph (d)
above, demand that the Lessee pay to the Lessor,
and the Lessee hereby agrees to pay to the Lessor
on the first Business Day occurring at least ten
(10) days after, in the case of clause (A) or (B)
below, the determination of the Fair Market Sales
Value or Fair Market Rental Value, as the case may
be, or in the case of clause (C) below, the later
of the date of such demand and the date of
determination of the amount due thereunder, as
liquidated damages for loss of a bargain and not
as a penalty (in lieu of all payments of Basic
Rent becoming due after the payment date), an
amount with respect to each specified Item of
Equipment equal to the sum of (i) all unpaid
Accrued Basic Rent with respect to such Item due
as of the relevant date set forth above plus (ii)
whichever of the following amounts the Lessor, in
its sole discretion, shall specify in such notice
(together with interest on such amount at the
Overdue Rate from the scheduled payment date to
the date of actual payment): (A) an amount equal
to the excess, if any, of the Casualty Value for
such Item, computed as of the Rent Payment Date
applicable to such Item next preceding the date on
which such payment is due, over the Fair Market
Rental Value of such Item of Equipment for the
remainder of the Base Term or the Renewal Term
applicable to such Item, as the case may be, after
discounting such Fair Market Rental Value
semiannually (effective on the applicable Rent
Payment Dates) to present worth as of the
scheduled payment date at the Debt Rate, or if no
Notes shall be outstanding, the Reference Rate, or
(B) an amount equal to the excess, if any, of the
Casualty Value for such Item of Equipment as of
such Rent Payment Date over the Fair Market Sales
Value of such Item of Equipment, or (C) an amount
equal to the excess of (1) the present value as of
such Rent Payment Date specified in such notice of
all installments of Basic Rent with respect to
such Item until the end of the Base Term (or the
Renewal Term, as the case may be, if such demand
for payment is made during a Renewal Term)
applicable to such Item, discounting semi-annually
at the applicable rate specified in clause (A),
over (2) the present value as of such Rent Payment
Date of the Fair Market Rental Value of such Item
of Equipment until the end of the applicable Base
Term or the Renewal Term, as the case may be,
discounted semi-annually at such applicable rate,
plus (iii) all other Rent then due and payable
hereunder.
1. The Lessor may exercise any
other right or remedy which may be available to it
under Applicable Law or proceed by appropriate
court action to enforce the terms hereof or to
recover damages for the breach hereof or to
rescind this Lease.
The Lessor may exercise one or more
remedies in respect of some Items of Equipment and
one or more other remedies in respect of other
Items of Equipment, and that the total amounts
specified to be paid by Lessee under this Section
14.1 shall be aggregate amounts determined by
adding the specified amounts individually
determined in the case of each Item of Equipment.
No termination of this Lease, in whole or in
part, or exercise of any remedy under this
Article XIV shall, except as specifically provided
herein, relieve the Lessee of any of its
liabilities and obligations hereunder, all of
which then outstanding shall survive such
termination, repossession or exercise of remedy.
In addition, the Lessee shall be liable for any
and all unpaid Supplemental Rent (including Make
Whole Premium Amount) due hereunder before, after
or during the exercise of any of the foregoing
remedies, including all Fees and Expenses and
other costs and expenses incurred by any Lessor
Party by reason of the occurrence of any Event of
Default or the exercise of the remedies of the
Lessor with respect thereto. At any sale of any
Item of Equipment or any part thereof pursuant to
this Article XIV, any Lessor Party may bid for and
purchase such property.
A. SECTION Lessor Rights. To the fullest
extent permitted by Applicable Law, each and every
right, power and remedy herein specifically given
to the Lessor or otherwise in this Lease shall be
cumulative and shall be in addition to every other
right, power and remedy herein specifically given
or now or hereafter existing at law, in equity or
by statute, and each and every right, power and
remedy whether specifically given herein or
otherwise existing may be exercised from time to
time and as often and in such order as may be
deemed expedient by the Lessor, and the exercise
or the beginning of the exercise of any power or
remedy shall not be construed to be a waiver of
the right to exercise at the same time or
thereafter any other right, power or remedy. No
delay or omission by the Lessor in the exercise of
any right, power or remedy or in the pursuit of
any remedy shall impair any such right, power or
remedy or be construed to be a waiver of any
default on the part of the Lessee or to be an
acquiescence therein. No express or implied
waiver by the Lessor of any Event of Default shall
in any way be, or be construed to be, a waiver of
any future or subsequent Event of Default.
I. ARTICLE
Right to Perform for Lessee
A. SECTION Right To Perform. If the
Lessee or the Guarantor shall fail to make any
payment of Rent required to be made by them
hereunder or shall fail to perform or comply with
any of their other agreements contained herein or
in any other Operative Document or in any other
agreement entered into in connection therewith,
the Lessor may (but shall have no duty to do so)
make such payment or perform or comply with such
agreement, and the amount of such payment and the
amount of all expenses of the Lessor (including
Fees and Expenses) incurred in connection with
such payment or the performance of or compliance
with such agreement, as the case may be, together
with interest thereon at the Overdue Rate, shall
be deemed Supplemental Rent, payable by the Lessee
upon demand. This Section 15.1 is not, however,
intended in any way, as between the Owner
Participant and the Lessor, on the one hand, and
the Indenture Trustee and the Lenders, on the
other hand, to expand or otherwise vary the cure
rights of the Owner Participant and the Lessor as
set forth in Section 4.03 of the Indenture, or the
limitations on the exercise thereof therein set
forth. Further, no such payment or performance by
the Lessor shall be deemed to waive any Event of
Default or relieve the Lessee of their respective
obligations hereunder.
A. SECTION Lessor as Lessee's Agent and
Attorney. Without in any way limiting the
obligations of the Lessee or the Lessor hereunder,
the Lessee hereby irrevocably appoints the Lessor
as its agent and attorney-in-fact hereunder, with
full power of substitution and authority solely to
the extent necessary to permit the Lessor, at any
time at which the Lessee is obligated to deliver
any Item of Equipment to the Lessor, to demand and
take such Item of Equipment in the name and on
behalf of the Lessee from whomsoever shall be in
control thereof at that time.
I. ARTICLE
Renewal Options
A. SECTION Renewal Notice.
1. Not less than three hundred
sixty (360) days before expiration of the Base
Term or an existing Renewal Term (each such date a
"Renewal Notice Date"), so long as Zenith of Texas
simultaneously gives notice of its intent to
exercise its renewal option under the Mexican
Lease, the Lessee may deliver to the Lessor a
notice (the "Renewal Notice") of the Lessee's
election to renew this Lease in respect of all,
but not less than all, Items of Equipment for a
renewal period of two (2) years, or such other
period of time as the Lessor and the Lessee shall
mutually agree (the "Renewal Term"); provided,
however, that the Lessee shall be entitled to
elect no more than two Renewal Terms.
1. The Lessee shall pay Rent (the
"Renewal Rent") during each Renewal Term equal to
the aggregate Fair Market Rental Value of such
Items of Equipment, determined as set forth in
Section 16.3.
1. In the event the Lessee elects
to renew this Lease, the Renewal Term for each
Schedule of Equipment will commence on the day
immediately following the expiration of the Base
Term or the then current Renewal Term and continue
until the end of the Renewal Term.
2. A Renewal Notice, once given,
shall be irrevocable and any option to renew this
Lease shall expire if the Lessee does not deliver
a Renewal Notice by the applicable Renewal Notice
Date.
1. Notwithstanding the foregoing,
the Lessee shall have no right to renew this Lease
if (i) any Material Default or Event of Default
exists on the Renewal Notice Date or the
commencement of the Renewal Term or (ii) the
Lessee has already given irrevocable notice
pursuant to Article X or XVII to purchase such
Items of Equipment.
A. SECTION Lease Supplement; Renewal
Rent. If the Lessee shall have elected to renew
this Lease with regard to the Equipment, the
Lessee and the Lessor shall execute a Lease
Supplement for each Schedule of Equipment
specifying the Renewal Rent and Casualty Values
with respect to each Item; provided, that the
Lessee shall be obligated to pay Renewal Rent at
the Fair Market Rental Value even if a Lease
Supplement is not executed. Casualty Values for
each Item of Equipment during each Renewal Term
shall be equal initially to the Fair Market Sales
Value for each such Item on the last day of the
Base Term or the preceding Renewal Term, as
applicable, decreasing on the last day of each
month during the Renewal Term by an amount equal
to the quotient of (a) the excess of the Fair
Market Sales Value for each Item on the last day
of the Base Term or the preceding Renewal Term, as
applicable, over the Fair Market Sale Value of
such Item on the last day of the Renewal Term
divided by (b) the number of months in the Renewal
Term.
A. SECTION Determination of Fair Market
Rental Value. The Fair Market Rental Value and
Fair Market Sales Value for each Item of Equipment
during each Renewal Term, shall be mutually agreed
by the Lessor and the Lessee or, failing such
agreement, determined by the Appraisal Procedure,
in either case determined at least sixty (60)
Business Days prior to commencement of such
Renewal Term. Renewal Rent shall be payable in
semi-annual installments in arrears. All other
terms of this Lease and the other Operative
Documents shall continue in full force and effect
during each such Renewal Term in accordance with
the provisions hereof and thereof.
I. ARTICLE
Purchase Options
A. SECTION Purchase Notice.
1. Not less than three hundred
sixty (360) days before expiration of the Base
Term or, any Renewal Term (any such date a
"Purchase Notice Date"), so long as Zenith of
Texas simultaneously gives notice of its intent to
exercise its purchase option under the Mexican
Lease and the Guarantor consents in writing to
such election to purchase, the Lessee may deliver
to the Lessor a notice of the Lessee's election to
purchase all, but not less than all, Items of
Equipment at a purchase price equal to (i) in the
case of a purchase at the end of the Base Term,
the aggregate Fair Market Sales Value of such
Items of Equipment at the end of the Base Term,
and (ii) in the case of a purchase at the end of
any Renewal Term, the aggregate Fair Market Sales
Value of such Items of Equipment at the end of
such Renewal Term.
1. The notice of the Lessee to
purchase all Items of Equipment shall be
irrevocable and the option to purchase shall
expire if the Lessee does not deliver a purchase
notice before the date three hundred sixty (360)
before the end of the Lease Term.
1. Notwithstanding the foregoing,
the Lessee shall have no right to purchase the
Equipment if (i) any Material Default or Event of
Default exists on the applicable Purchase Notice
Date or any Material Default or Event of Default
exists on the applicable purchase date or (ii) on
or prior to such Purchase Notice date the Lessee
has already given irrevocable notice pursuant to
Article XVI to renew this Lease at the end of the
Base Term or the then effective Renewal Term;
provided, however, that the Lessee' election to
renew the Lease shall not preclude the Lessee from
exercising the Purchase Option as of the end of
the Renewal Term so elected, subject to the
foregoing conditions.
A. SECTION Transfer of Item. At the
expiration of the Lease Term, if the Lessee shall
have elected to purchase the Items of Equipment
pursuant to Section 17.1 hereof and shall have
paid all Rent then due and payable hereunder, the
Lessor shall transfer (without any representation,
recourse or warranty whatsoever except as to the
ability and authority of the Lessor to conduct
such transfer and convey title to such Items free
and clear of Lessor Liens) all such Items of
Equipment to the Lessee against payment by the
Lessee of the applicable purchase price in
immediately available funds and the Lessor shall
execute and deliver such documents evidencing such
transfer and take such further action as the
Lessee shall reasonably request.
A. SECTION Determination of Fair Market
Sales Value. In the event the Lessee elects to
purchase the Equipment under this Article XVII,
the Fair Market Sales Value of each Item of
Equipment shall be mutually agreed to by the
Lessee and the Lessor or, failing such agreement,
determined in accordance with the Appraisal
Procedure, in either case determined at least
sixty (60) Business Days prior to the end of the
Base Term or the then effective Renewal Term, as
applicable.
I. ARTICLE
Further Assurances
A. SECTION Further Action by Lessee. The
Lessee, at its expense, shall promptly and duly
execute and deliver to each of the Lessor Parties
such documents and assurances and take such
further action as the Lessor (and, for so long as
the Indenture shall be in effect, the Indenture
Trustee) may from time to time reasonably request
in order to carry out more effectively the intent
and purpose of this Lease and the other Operative
Documents and to establish and protect the rights
and remedies created or intended to be created in
favor of the Lessor hereunder and thereunder, to
establish, perfect and maintain the right, title
and interest of the Lessor in and to the Items of
Equipment and the Lien and security interest in
the Trust Indenture Estate provided for in the
Indenture, subject to no Lien other than Permitted
Liens, including, if reasonably requested by any
of the Lessor Parties, the recording or filing of
counterparts or appropriate memoranda hereof, or
of such financing statements or other documents
with respect to the Equipment and the Lessor
agrees to execute and deliver promptly such of the
foregoing financing statements or other documents
as may require execution by the Lessor. The
Lessee agrees to cause the timely execution,
delivery and filing of continuation statements as
to the financing statements theretofore filed so
as to preserve the security interest in the Trust
Indenture Estate. To the extent permitted by
Applicable Law, the Lessee hereby authorizes any
such financing statements to be filed without the
necessity of the signature of the Lessee or copies
of this Lease to be filed in lieu of any such
financing statements, without the necessity of
notice to the Lessee.
A. SECTION Notice of Default or Event of
Default. Promptly after learning of the
occurrence or existence of any Default or Event of
Default, the Lessee shall so notify the Lessor
and, for so long as the Indenture shall be in
effect, the Indenture Trustee and set forth in
reasonable detail the circumstances surrounding
such Default or Event of Default and shall specify
what actions the Lessee have taken or intend to
take to cure such Default or Event of Default.
A. SECTION Information Regarding Items.
The Lessee shall promptly furnish the Lessor and,
for so long as the Indenture shall be in effect,
the Indenture Trustee information at such times
and in such format as is regularly produced by the
Lessee concerning the condition, maintenance and
use of the Items of Equipment as the Lessor or the
Indenture Trustee may reasonably request.
I. ARTICLE
Trust Indenture Estate as Security for Lessor's
Obligations to Lenders
A. SECTION Assignment to Indenture
Trustee. In order to secure the indebtedness
evidenced by the Notes issued or to be issued by
the Lessor pursuant to the Indenture, the
Indenture, among other things, provides for the
assignment (to the extent provided therein) by the
Lessor to the Indenture Trustee of its right,
title and interest to the Equipment, the Guaranty
and this Lease and for the creation of a Lien and
security interest in favor of the Indenture
Trustee for the benefit of the holders of the
Notes in and to the Trust Indenture Estate as
described in the Granting Clauses of the
Indenture. The Lessee hereby (a) acknowledges and
consents to such assignment pursuant to the terms
of the Indenture and (b) agrees to pay directly to
the Indenture Trustee all amounts of Rent (other
than Excluded Payments) due to the Lessor
hereunder or under any other Operative Document
that shall be required to be paid to the Indenture
Trustee pursuant to the Indenture or any other
Operative Document. Any payment by the Lessee to
the Indenture Trustee, as aforesaid, of any amount
payable hereunder shall constitute payment of such
amount for all purposes of this Lease. The Lessee
agrees that the right of the Indenture Trustee to
receive such payments hereunder shall not be
subject to any defense, counterclaim, set-off or
other right or defense or claim which the Lessee
may be able to assert against the Lessor or any
other Person in an action brought on this Lease.
Without limiting the generality of the foregoing,
unless and until the Lessee shall have received
written notice from the Indenture Trustee that the
Indenture has been discharged, subject to the
provisions of Section 6.10 of the Indenture, the
Lessee hereby agrees that the Indenture Trustee
shall have the right to exercise the rights of the
Lessor under this Lease to give consents,
approvals, waivers, notices or the like, to make
elections, demands or the like and to take any
other discretionary action under this Lease as
though named as the Lessor herein and, except as
specifically permitted by said Section 6.10, no
amendment or modification of, or waiver by or
consent of the Lessor in respect of, any of the
provisions of this Lease shall be effective unless
the Indenture Trustee shall have joined in such
amendment, modification, waiver or consent or
shall have given its prior written consent
thereto. Notwithstanding such assignment of this
Lease and the Guaranty, the obligations of the
Lessor to the Lessee to perform the terms and
conditions of this Lease in accordance with the
terms hereof shall remain in full force and
effect.
I. ARTICLE
Insurance
A. SECTION Insurance.
1. Obligation to Insure. The
Lessee shall at all times carry and maintain, at
its expense, (i) "all-risk" property insurance on
the Equipment including, without limitation,
flood, earthquake, windstorm and boiler and
machinery perils (and business interruption
coverage) in a minimum amount equal to the greater
of replacement value or the Casualty Value
thereof, and (ii) commercial general liability
insurance including, without limitation, broad
form property damage, bodily injury, premise and
operations, blanket contractual for oral and
written contracts, sudden and accidental pollution
caused by a hostile fire and products/completed
operations in accordance with industry standards
in an amount no less than $40,000,000.
1. Terms of Insurance Policies.
Any insurance policies carried in accordance with
Section 20.1(a) hereof covering the Equipment, and
any policies taken out in substitution or
replacement for any such policies, as applicable,
(i) in the case of property insurance, shall name
the Indenture Trustee as the loss payee with
respect to the Equipment so long as the Indenture
has not been discharged in accordance with its
terms and, if the Indenture has been so
discharged, shall name the Owner Trustee as the
loss payee with respect to the Equipment, (ii) in
the case of liability insurance, shall name the
Lessor Parties as additional insureds (the
"Additional Insureds"), (iii) may provide for
self-insurance to the extent permitted in
Section 20.1(c) hereof, (iv) shall be primary
without any right of contribution from any other
insurance which is carried by or may be available
to protect the Additional Insureds, (v) shall
provide that in respect of the Additional
Insureds' interest in such policies the insurance
shall not be invalidated by any action or inaction
of the Lessee and shall insure the respective
interests of the Additional Insureds regardless of
any breach or violation by the Lessee of any
warranty, declaration or condition contained in
such policy (except for nonpayment of premiums),
(vi) shall provide that the Additional Insureds
are not liable for any insurance premiums,
(vii) shall provide that if the insurers cancel
such insurance for any reason whatsoever, or if
any material change is made in such insurance
which adversely affects the interests of any
Additional Insured, or if such insurance lapses,
such cancellation, change or lapse shall not be
effective as to the Additional Insureds for thirty
(30) days (or 10 days in the case of cancellation
or lapse for nonpayment of premiums) after receipt
by the Additional Insureds of written notice by
such insurers of such cancellation, change or
lapse, (viii) shall otherwise contain terms and
conditions, including without limitation, the
payment of deductible in connection with any such
insurance, that are reasonably satisfactory to the
Lessor Parties, (ix) shall provide for each
insurer's waiver of its right of subrogation
against the Lessor, and (x) shall provide for
liability insurance having "cross-liability" and
"severability of interest" endorsements.
1. Self-Insurance by Lessee. The
Lessee may self-insure under a program applicable
to all similarly situated equipment operated by
the Lessee, but in no case shall the
self-insurance with respect to the Equipment
exceed (i) $1,000,000 with respect to all-risk
property insurance, (ii) $1,000,000 with respect
to general liability insurance and (iii)
$5,000,000 with respect to product liability
insurance.
1. Reports, Notices, Etc. The
Lessee shall provide to the Lessor and the
Indenture Trustee (i) on the Equipment Closing
Date, the insurance certificates to be provided on
the Equipment Closing Date, (ii) annually and at
least five (5) days prior to the expiration or any
modification of the Lessee's relevant insurance
policies (A) no-default insurance certificates and
(B) a signed report of an insurance broker or
insurer reasonably acceptable in form and
substance to the Lessor and the Indenture Trustee,
stating in reasonable detail the types of coverage
and limits carried and maintained on the Equipment
and certifying that such insurance complies with
the terms and conditions of this Lease. The
Lessee will cause such insurance broker or insurer
to advise the Lessor Parties in writing promptly
of any default in the payment of any premium and
of any other act or omission on the part of the
Lessee of which it has knowledge and which might
invalidate, cause cancellation of or render
unenforceable all or any part of any insurance
carried by the Lessee Party with respect to the
Equipment or the any Item thereof.
(e) Payment of Proceeds. All insurance
proceeds received by or payable to the Lessor on
account of any damage to or destruction of the
equipment or any part thereof (less the actual
costs, fees and expenses incurred in the
collection thereof), other than any damage or
destruction constituting an Event of Loss, shall
be paid over to Lessee or as it may direct from
time to time as repair and restoration progresses
to pay (or reimburse the Lessee for) the cost of
repair and restoration of the Equipment, but only
upon the written request of the Lessee accompanied
by appropriate evidence reasonably satisfactory to
the Lessor that the sum requested is a proper item
for such cost and has been paid or will be applied
to the payment of a sum then due and payable;
provided, however, that if a Material Default or
Event of Default shall have occurred and be
continuing any such amount shall not be paid over
to the Lessee, but shall be applied as provided in
Section 9.4 hereof. Upon receipt by the Lessor of
evidence reasonably satisfactory to it that repair
and restoration has been completed and the cost
thereof paid in full, the balance, if any, or such
proceeds shall be promptly paid over or assigned
to the Lessee or as it may direct unless a Default
shall have occurred and be continuing, in which
case such balance shall be applied as provided in
Section 9.4 hereof.
(f) Additional Insurance by Lessor. At
any time, any Lessor Party may at its own expense
and for its own account carry insurance with
respect to the Equipment; provided, that such
insurance does not increase the cost of or
interfere with the Lessee's ability to obtain
insurance with respect to the Equipment. Any
insurance payments received from policies
maintained by such Lessor Party pursuant to the
previous sentence shall be retained by such Lessor
Party without reducing or otherwise affecting the
Lessee's obligations hereunder.
(g) Right of Lessor to Provide
Insurance. If the Lessee does not procure any
insurance required by this Section 20.1, then the
Lessor may, but shall not be obligated to, procure
such insurance, and the Lessee shall pay the
premiums thereon to the Lessor promptly upon
demand. The Lessor shall not, by the fact of
approving, disapproving, accepting, preventing,
obtaining, or failing to obtain any such
insurance, incur any liability for the form or
legal sufficiency of insurance policies, or
solvency of insurers with respect to payment of
losses, and the Lessee shall assume full
responsibility therefor and all liability with
respect thereto.
I. ARTICLE
Owner Trustee
A. SECTION Successor Trustee; Co-Trustee.
In the case of the appointment of any successor
trustee pursuant to the terms of the Trust
Agreement, such successor trustee (in its capacity
as Owner Trustee on behalf of the Owner Trust)
shall, upon written notice by such successor
trustee to the Lessee, succeed to all the rights,
duties, powers, obligations and title of the
Lessor hereunder and under the other Operative
Documents and shall be deemed to be the Lessor and
the legal owner (in each case, on behalf of the
Owner Trust) of the Equipment for all purposes
hereof and each reference herein and in the
Operative Documents to the "Lessor" shall mean any
such successor trustee. The Lessor or any
successor trustee from time to time serving as the
Lessor hereunder may from time to time appoint one
or more trustees or separate trustees pursuant to
the terms of the Trust Agreement to exercise or
hold any of or all the rights, powers and title of
the Lessor hereunder. No such appointment of any
successor trustee, trustee or separate trustee
shall require any consent or approval by the
Lessee or shall in any way alter the terms of this
Lease or the obligations of the Lessee or the
Lessor hereunder. The appointment of one
successor trustee, trustee or separate trustee
shall not exhaust the right to appoint further
successor trustees, trustees and separate trustees
pursuant to the Trust Agreement, but such right
may be exercised repeatedly so long as this Lease
may be in effect.
I. ARTICLE
Confidentiality
A. SECTION Confidentiality. The Lessor
Parties agree to take normal and reasonable
precautions in accordance with their normal
procedures and exercise due care to maintain the
confidentiality of all information relating to the
Lessee, the Guarantor and their respective
Affiliates, which has been identified as
confidential by the Lessee or the Guarantor, and
neither the Lessor Parties nor any of their
Affiliates shall use any such information for any
purpose or in any manner other than pursuant to
the terms contemplated by this Lease; except to
the extent such information (a) was or becomes
generally available to the public other than as a
result of a disclosure by the Lessor Parties, or
(b) was or becomes available on a non-confidential
basis from a source other than the Lessee or the
Guarantor; provided, that such source is not bound
by a confidentiality agreement with either the
Lessee or the Guarantor known to the Lessor
Parties; and provided, further, that any Lessor
Party may disclose such information (i) at the
request or pursuant to any requirement of any
Governmental Authority to which such Lessor Party
is subject or in connection with an examination of
such Lessor Party by any such Governmental
Authority including, without limitation, the
National Association of Insurance Commissioners
and any other industry regulators, (ii) pursuant
to subpoena or other court process, (iii) when
required to do so in accordance with the
provisions of any Applicable Law, (iv) to each
Lessor Party's independent auditors and other
professional advisors and (v) to any Person and in
any proceeding necessary in any Lessor Party's
judgment to protect such Lessor Party's interests
in connection with any claim or dispute involving
the Lessor Party. Notwithstanding the foregoing,
the Lessee authorizes the Lessor Parties to
disclose to any participant or assignee or
purchaser of Equipment (each, a "Transferee"), to
any prospective Transferee and to any Affiliate,
such financial and other information in the Lessor
Parties' possession concerning the Lessee, the
Guarantor or their respective Affiliates which has
been delivered to the Lessor Parties pursuant to
this Lease or the Participation Agreement;
provided, that unless otherwise agreed by the
Lessee or the Guarantor, as applicable, the
Transferee agrees in writing to such Lessor
Parties to keep such information confidential to
the same extent required of the Lessor Parties
hereunder.
I. ARTICLE
Miscellaneous
A. SECTION Documentary Conventions. This
Lease shall be governed by, and construed in
accordance with, all the Documentary Conventions;
provided, however, that no amendment, supplement,
or modification of this Lease which would have the
effect of (a) increasing the amount of, or
bringing forward in time the due date for any
payment obligation of the Lessee, (b) amending the
Guarantor's express rights of consent set forth in
Articles VII and X, (c) amending this Section 23.1
or (d) reducing any period of time set forth in
Section 13.1 for the cure or remedy of any Default
described therein, shall be effective as against
the Guarantor unless made by an instrument in
writing signed by the Guarantor.
A. SECTION Effective Upon Delivery. This
Lease shall take effect upon delivery hereof.
A. SECTION Intent to Treat as a Lease.
This Lease constitutes an agreement of lease as to
the Equipment, and nothing herein shall be
construed as conveying to the Lessee any right,
title or interest in or to the Equipment except as
lessee.
SECTION 23.4 Investment of Funds. Any
moneys held by the Lessor (or, so long as the Lien
of the Indenture shall remain in effect, the
Indenture Trustee) as security hereunder for
future payments to Lessee shall, until paid to the
Lessee, be invested by the Lessor (or, so long as
the Lien of the Indenture shall remain in effect,
the Indenture Trustee) as the Lessee may from time
to time direct in writing (and in absence of a
written direction by Lessee or if a Default or an
Event of Default shall have occurred and be
continuing, there shall be no obligation to invest
such moneys but such moneys may be invested as
directed by the Owner Participant in Permitted
Investments. There shall be promptly remitted to
the Lessee or its order (but no more frequently
than monthly) any gain (including interest
received) realized as a result of any such
investment (net of any fees, commissions and other
expenses, if any, incurred in connection with such
investment) unless a Default or an Event of
Default shall have occurred and be continuing.
The Lessee shall be responsible for any net loss
realized as a result of any such investment and
shall reimburse the Lessor (or, so long as the
Lien of the Indenture shall remain in effect, the
Indenture Trustee) for any such net loss on
demand.
SECTION 23.5 Limited Liability of Lessor.
It is expressly agreed and understood that all
representations, warranties and undertakings of
the Lessor hereunder shall be binding upon the
Lessor only in its capacity as Owner Trustee under
the Trust Agreement and the institutions or
Persons acting as the Lessor shall not be liable
hereunder to their individual capacity for any
breach thereof, except for their gross negligence
or willful misconduct or for breach of its
covenants, representations and warranties
contained herein, to the extent expressly
covenanted or made in their individual capacity.
Except as provided in the previous sentence
as relates solely to the liability of the
institutions or Persons acting as the Lessor for
its own gross negligence or willful misconduct,
any claims based on or in respect of any liability
of the Lessor under this Lease shall be enforced
only against the Trust Estate and not against any
other tangible or intangible assets, properties or
funds of (i) Fleet in its individual capacity (ii)
any shareholder or beneficiary of Fleet as Owner
Trustee or in its individual capacity or any
director, officer, employee or agent of Fleet as
Owner Trustee or in its individual capacity (or
any legal representative, heir, estate, successor
or assign of any thereof), (iii) any predecessor
or successor partnership or corporation (or other
entity) of Fleet in its individual capacity or any
of its shareholders or beneficiaries, either
directly or through Fleet or its shareholders or
any predecessor or successor partnership or
corporation of their shareholders, officers,
directors, employees or agents (other than entity)
or (iv) any other Affiliate of any of the
foregoing, or any director, officer, employee or
agent of any thereof.
SECTION 23.6. Identification of Equipment.
No later than September 30, 1997, the Lessee shall
(i) number and tag each Item of Equipment
identifying it as being owned by the Owner Trustee
and (ii) provide a written report confirming the
completion of such tagging and specifying the
numbers assigned to each Item of Equipment.
[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]
IN WITNESS WHEREOF, intending to be legally
bound, the parties hereto have each caused this
Lease Agreement to be duly executed as of the date
first above written.
FLEET NATIONAL BANK,
not in its individual capacity
but solely as Owner Trustee, on behalf
of THE ZENITH ELECTRONICS EQUIPMENT OWNER
TRUST 1997-I, as LESSOR
By:
Name:
Title:
ZENITH ELECTRONICS CORPORATION,
as LESSEE
By:
Name:
Title:
[BELONGS IN FRONT PART OF DOCUMENT]
TABLE OF CONTENTS
Page
ARTICLE IDefinitions and Usage 1
SECTION 1.1 Definitions and Usage 1
ARTICLE IILease of Equipment 1
SECTION 2.1 Lease of Equipment; Lease
Supplements 1
SECTION 2.2 Lease Term 1
ARTICLE IIIRent 2
SECTION 3.1 Basic Rent. 2
SECTION 3.2 Supplemental Rent 2
SECTION 3.3 Minimum Amount of Basic Rent Payments 2
SECTION 3.4 Method of Payment 3
SECTION 3.5 Late Payment 3
SECTION 3.6 Net Lease; No Set-off, Counterclaims, etc. 3
SECTION 3.7 Adjustments to Basic Rent,
Casualty Value,Termination Value and EBO Price 5
SECTION 3.8 Accrued Basic Rent 5
ARTICLE IV
Representations, Warranties and Agreements as to
Equipment 6
SECTION 4.1 Disclaimer of Warranties. 6
SECTION 4.2 Lessee To Exercise Certain Rights 6
ARTICLE VLiens; Quiet Enjoyment 7
SECTION 5.1 Liens. 7
SECTION 5.2 Quiet Enjoyment 7
SECTION 5.3 Personal Property. 8
ARTICLE VIOperation; Maintenance 8
SECTION 6.1 Operation and Maintenance. 8
SECTION 6.2 Replacement of Parts 9
SECTION 6.3 Relocation. 11
SECTION 6.4 Modification. 12
ARTICLE VIIObsolescence Termination 14
SECTION 7.1 Item Obsolescence 14
SECTION 7.2 Retention by Lessor 14
SECTION 7.3 Bids for Terminated Items 16
SECTION 7.4 Conditions of Termination;
Effect of Termination 17
ARTICLE VIIIReturn of Equipment 18
SECTION 8.1 Notice of Return 18
SECTION 8.2 Return of Equipment 18
SECTION 8.3 Marketing of Returned Item. 20
SECTION 8.4 Governmental Approvals 20
SECTION 8.5 Additional Parts 20
ARTICLE IXLoss, Destruction, Condemnation, Damage, etc. 21
SECTION 9.1 Replacement; Payment of Casualty Value. 21
SECTION 9.2 Application of Payments Upon an Event of Loss. 24
SECTION 9.3 Seizure, Requisition,
Application of Payments Not Relating to an Event of Loss. 25
SECTION 9.4 Applications During Default or Event of Default 25
SECTION 9.5 Application of Article VI 26
ARTICLE XEarly Buy-Out Option 26
SECTION 10.1 Early Buy-Out. 26
ARTICLE XIAssignment and Sublease 27
SECTION 11.1 Lessee Assignments and Subleases. 27
SECTION 11.2 Lessor Assignments. 28
ARTICLE XIIInspection 28
SECTION 12.1 Inspection. 28
ARTICLE XIIIEvents of Default 29
SECTION 13.1 Events of Default. 29
ARTICLE XIVRemedies 31
SECTION 14.1 Remedies. 31
SECTION 14.2 Lessor Rights. 35
ARTICLE XVRight to Perform for Lessee 35
SECTION 15.1 Right To Perform. 35
SECTION 15.2 Lessor as Lessee's Agent and Attorney 36
ARTICLE XVIRenewal Option 36
SECTION 16.1 Renewal Notice. 36
SECTION 16.2 Lease Supplement; Renewal Rent 37
SECTION 16.3 Determination of Fair Market Rental Value 37
ARTICLE XVIIPurchase Options 37
SECTION 17.1 Purchase Notice 37
SECTION 17.2 Transfer of Item. 38
SECTION 17.3 Determination of Fair Market Sales Value 38
ARTICLE XVIIIFurther Assurances 39
SECTION 18.1 Further Action by Lessee 39
SECTION 18.2 Notice of Default or Event of Default 39
SECTION 18.3 Information Regarding Items. 39
ARTICLE XIXTrust Indenture Estate as Security for
Lessor's Obligations to Lenders 40
SECTION 19.1 Assignment to Indenture Trustee. 40
ARTICLE XXInsurance 41
SECTION 20.1 Insurance 41
ARTICLE XXIOwner Trustee 43
SECTION 21.1 Successor Trustee; Co-Trustee 43
ARTICLE XXIIConfidentiality 44
SECTION 22.1 Confidentiality. 44
ARTICLE XXIIIMiscellaneous 45
SECTION 23.1 Documentary Conventions. 45
SECTION 23.2 Effective Upon Delivery. 45
SECTION 23.3 Intent to Treat as a Lease. 45
SECTION 23.4 Investment of Funds. 45
SECTION 23.5 Limited Liability of Lessor. 45
SECTION 23.6 Identification of Equipment. 46
List of Schedules
Schedule A: Form of Lease Supplement
Schedule B: Form of Schedule of Equipment