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EX.10-W
MASTER LEASE AGREEMENT
Dated as of
December 30, 1996
Between
NATIONAL CITY BANK,
FOR ITSELF AND AS AGENT FOR CERTAIN PARTICIPANTS,
Lessor
and
BRUSH ▇▇▇▇▇▇▇ INC.,
Lessee
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MASTER LEASE AGREEMENT
TABLE OF CONTENTS
Page
I. LEASING................................................................................................ 1
II. TERM, RENT AND PAYMENT................................................................................. 2
III. TAXES.................................................................................................. 3
IV. REPORTS................................................................................................ 4
V. DELIVERY, USE, REPLACEMENT, SUBSTITUTION AND OPERATION................................................. 6
VI. SERVICE................................................................................................ 8
VII. STIPULATED LOSS VALUE AND CASUALTY OCCURRENCE.......................................................... 9
VIII. LOSS OR DAMAGE......................................................................................... 10
IX. INSURANCE.............................................................................................. 10
X. RETURN OF EQUIPMENT.................................................................................... 11
XI. DEFAULT................................................................................................ 12
XII. ASSIGNMENT............................................................................................. 15
XIII. NET LEASE; NO SET-OFF, ETC............................................................................. 17
XIV. INDEMNIFICATION........................................................................................ 17
XV. NO WARRANTY; DISCLAIMERS............................................................................... 18
XVI. REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSEE.................................................... 19
XVII. OWNERSHIP FOR TAX PURPOSES; GRANT OF SECURITY INTEREST; USURY SAVINGS.................................. 22
XVIII. END OF LEASE OPTIONS................................................................................... 24
XIX. MISCELLANEOUS.......................................................................................... 26
XX. CHOICE OF LAW; JURISDICTION............................................................................ 29
XXI. CHATTEL PAPER.......................................................................................... 30
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XXII. EARLY TERMINATION...................................................................................... 30
XXIII. GENERAL FINANCIAL STANDARDS............................................................................ 31
XXIV. COVENANTS.............................................................................................. 32
XXV. CERTAIN DEFINITIONS.................................................................................... 37
XXVI. CONDITIONS TO FUNDING.................................................................................. 45
EXHIBIT NO. 1 - DISBURSEMENT SCHEDULE
ANNEX A - DESCRIPTION OF DISBURSEMENT EQUIPMENT
EXHIBIT NO. 2 - EQUIPMENT SCHEDULE
ANNEX A - DESCRIPTION OF EQUIPMENT
ANNEX B - ASSIGNMENT OF PURCHASE ORDERS
ANNEX C - CERTIFICATE OF ACCEPTANCE
ANNEX D - STIPULATED LOSS AND TERMINATION VALUE TABLE
ANNEX E - AMORTIZATION SCHEDULE
ANNEX F - RETURN PROVISIONS
EXHIBIT NO. 3 - COMPLIANCE CERTIFICATE
EXHIBIT NO. 4 - LIST OF EQUIPMENT AND EQUIPMENT COST
EXHIBIT NO. 5 - DISBURSEMENT FUNDING NOTICE
EXHIBIT NO. 6 - FORM OF ASSIGNMENT OF PURCHASE ORDERS
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MASTER LEASE AGREEMENT
THIS MASTER LEASE AGREEMENT, dated as of December 30, 1996
("AGREEMENT"), between NATIONAL CITY BANK, FOR ITSELF AND AS AGENT FOR CERTAIN
PARTICIPANTS, with an office at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
(hereinafter called, together with its successors and assigns, if any,
"LESSOR"), and BRUSH ▇▇▇▇▇▇▇ INC., an Ohio corporation with its mailing address
and chief place of business at ▇▇▇▇▇ ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
(hereinafter called "LESSEE").
WITNESSETH:
I. LEASING:
(a) This Agreement shall be effective from and after the date of
execution hereof. Subject to the terms and conditions set forth in this
Agreement, Lessor agrees (i) to make disbursements to Vendors in respect of
interim or progress payments of the Acquisition Cost of the equipment (the
"DISBURSEMENT EQUIPMENT", which term shall also include, prior to the Basic Term
Commencement Date, all equipment described in a Certificate of Acceptance
executed and delivered by Lessee) described in Annex A to any Disbursement
Schedule hereto in the form of Exhibit 1 (each being a "DISBURSEMENT SCHEDULE"),
provided that any initial disbursement made on the date of this Agreement may be
made directly to Lessee to reimburse Lessee for interim or progress payments on
Disbursement Equipment made by Lessee to Vendors so long as the amount of that
initial disbursement made by Lessor is less than $8,000,000, and (ii) to fund
the payment of the Acquisition Cost of and to lease to Lessee, and Lessee agrees
to lease from Lessor, the equipment (the "EQUIPMENT") described in Annex A to
any Equipment Schedule hereto in the form of Exhibit 2 (each being an "EQUIPMENT
SCHEDULE") (a Disbursement Schedule and an Equipment Schedule are sometimes
hereinafter referred to as a "SCHEDULE"). Terms defined in a Schedule and not
otherwise defined herein shall have the meanings ascribed to them in that
Schedule. Certain capitalized terms used in this Agreement shall have the
meaning ascribed thereto in Section XXV.
(b) The obligation of Lessor to make disbursements in respect of the
Equipment and the Disbursement Equipment and to lease the Equipment to Lessee
shall be subject to the conditions set forth in Section XXVI. Immediately upon
final acceptance of all of the Disbursement Equipment that constitutes one of
the units of equipment described in Exhibit 4, Lessee shall execute and deliver
to Lessor a Certificate of Acceptance, in the form of Annex C to the form of the
Equipment Schedule hereto, covering all of that Equipment. As of the Basic Term
Commencement Date, Lessee shall execute and deliver to Lessor an Equipment
Schedule relating to all of the equipment described in all of the Certificates
of Acceptance delivered to Lessor by Lessee.
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(c) If on the Basic Term Commencement Date, any item of Disbursement
Equipment described in any Disbursement Schedule has not been completed,
delivered and installed at the ▇▇▇▇▇▇ Project, and accepted by Lessee as
evidenced by a Certificate of Acceptance delivered to Lessor ("EXCLUDED
DISBURSEMENT EQUIPMENT"), then Lessee shall immediately pay to Lessor an amount
equal to all accrued and unpaid Interim Rent due in respect of that Excluded
Disbursement Equipment plus all amounts disbursed by Lessor in respect of that
Excluded Disbursement Equipment (the "EXCLUDED DISBURSEMENT EQUIPMENT PAYMENT").
Upon receipt by Lessor of any Excluded Disbursement Equipment Payment, Lessor
agrees, upon Lessee's reasonable request and at Lessee's expense, to execute any
instrument necessary to evidence Lessee's ownership of the Excluded Disbursement
Equipment and any Purchase Order to the extent that it relates to the Excluded
Disbursement Equipment, free and clear of any rights of Lessor hereunder, that
is the subject of that payment, including a ▇▇▇▇ of sale.
II. TERM, RENT AND PAYMENT:
(a) The term of this Agreement (the "TERM") shall be the Interim Lease
Term, the Basic Term and, if exercised by Lessee, any Renewal Term pursuant to
Section XVIII(b) hereof, as specified in the applicable Schedule.
(b) The obligation of Lessee to pay the rent payable hereunder during
the Term, as provided in the Equipment Schedule (the "RENT"), shall commence on
the Basic Term Commencement Date, and Lessee's right to use the Disbursement
Equipment and the Equipment shall commence on the date of Lessor's first
disbursement in respect of any Disbursement Schedule (the "DISBURSEMENT
COMMENCEMENT DATE"). At the end of each Interim Interest Period, the Interim
Rent that accrued during that Interim Interest Period shall become part of the
Capitalized Lessor's Cost outstanding under that Disbursement Schedule upon
which Interim Rent will accrue during the next Interim Interest Period, and at
the end of the Interim Lease Term, shall become part of the Lessor's Capitalized
Cost under the Equipment Schedule, as the case may be. Anything to the contrary
set forth in this Lease notwithstanding, if the aggregate unpaid Interim Rent
accrued under all Disbursement Schedules at any time exceeds five million nine
hundred twenty thousand dollars ($5,920,000), Lessee shall immediately pay to
Lessor an amount equal to such excess.
(c) Rent and other amounts due Lessor under this Lease shall be paid to
Lessor by wire transfer of immediately available funds to National City Bank -
Cleveland, Cleveland, Ohio, ABA # ▇▇▇▇▇▇▇▇▇, Commercial Loan Operations, Account
No. 151804 (Brush ▇▇▇▇▇▇▇ Lease Agreement dated 12/30/96), or to such other
account as Lessor may direct in writing; and shall be effective upon receipt if
received by Lessor on or prior to Noon, Cleveland, Ohio, time on a Business Day;
payments received after Noon, Cleveland, Ohio, time shall be deemed for purposes
of this Agreement to be received on the next succeeding Business Day. Payments
of Rent shall be in the amount set forth in, and due in accordance with, the
provisions of the applicable Schedule. So long as no Potential Default or
Default exists, in no event shall any Rent payments then due and payable be
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refunded to Lessee. If Rent is not paid within five (5) days of its due date,
Lessee agrees to pay a late charge of Five Cents ($0.05) per dollar on, and in
addition to, the amount of such Rent but not exceeding the lawful maximum, if
any.
III. TAXES
(a) Lessee shall have no liability for taxes imposed by the United
States of America or any state or political subdivision thereof or by any
foreign government which are on or measured by the net income of Lessor.
Notwithstanding the foregoing, Lessee shall pay, indemnify and hold Lessor, the
Participants, their agents, employees, successors and assigns harmless on a net
after-tax basis (after taking into account any tax benefit or credit received by
such indemnified person) from any increase in Taxes (as hereinafter defined)
based upon or measured by such indemnified person's net or gross income and any
franchise taxes imposed or levied by the United States of America or any state
or political subdivision thereof or by any foreign government as a result of
characterizing the transactions under this Lease as anything other than a
secured loan for purposes of calculating those Taxes. Lessee will promptly
notify Lessor and each other indemnified person of all reports or returns
required to be made with respect to any Tax with respect to which Lessee is
required to provide indemnification hereunder, and at Lessee's expense, will
promptly provide Lessor with all information necessary for the making and timely
filing of any reports or returns by Lessor or any other indemnified person. If
Lessor or any other indemnified person requests that any such reports or returns
related to this Lease be prepared and filed by Lessee, then Lessee, at its
expense, will prepare and file the same if permitted by applicable law to file
the same, and if not so permitted, Lessee, at its expense, shall provide all
information requested by Lessor to prepare and file such reports or returns and
Lessee shall forward immediately available funds for payment of any Tax due, to
Lessor or any other indemnified person, as applicable, at least ten (10) days in
advance of the date such payment is to be paid.
(b) Subject to Paragraph (a), Lessee shall report (to the extent that
it is legally permissible) and pay promptly all taxes, fees and assessments due,
imposed, assessed or levied against any Disbursement Equipment or Equipment (or
the purchase, ownership, delivery, leasing, possession, use or operation
thereof), against this Agreement (or any rentals or receipts hereunder), against
any Schedule, or otherwise against Lessor or Lessee in respect of this Lease by
any foreign, federal, state or local government or taxing authority during or
related to the term of this Agreement, including, without limitation, all
license and registration fees, and all sales, use, personal property, excise,
gross receipts, franchise, stamp or other taxes, imposts, duties and charges,
together with any penalties, fines or interest thereon (all hereinafter called
"TAXES"). Lessee shall (i) reimburse Lessor upon receipt of written request for
reimbursement for any Taxes charged to or assessed against Lessor (on an
after-tax basis), (ii) on request of Lessor, submit to Lessor written evidence
of Lessee's payment of Taxes, (iii) on all tax reports or tax returns in respect
of Taxes show the ownership of any Disbursement Equipment and Equipment by
Lessee, and (iv) send a copy of all reports or returns pertaining to personal
property taxes to Lessor.
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(c) Subject to Paragraph (a), Lessee hereby agrees to indemnify, save
and keep harmless Lessor, the Participants, their agents, employees, successors
and assigns, from and against any and all Taxes charged to or assessed against
any of them. Lessee shall, at its expense and upon request of Lessor, defend any
actions based on, or arising out of, any Taxes with counsel reasonably
satisfactory to Lessor. Lessee shall reimburse any indemnified party for any
amounts expended by it in connection with any of the foregoing or pay such
amounts directly within ten (10) Business Days after the date Lessor sends
notice to Lessee requesting payment thereof, together with a written itemization
of those amounts. Lessee shall not be obligated to indemnify Lessor under this
Section for any Taxes that are attributable to a transfer by Lessor of any
Disbursement Equipment or Equipment or any interest therein, unless such
transfer arises as a result of (1) the existence of a Default, or (2) the
exercise by Lessee of its options pursuant to Sections XVIII(c) or (d) or
Section XXII hereof, or (3) the exercise by Lessee of its option pursuant to
Section V(d) hereof, or (4) the occurrence of a Casualty Occurrence (as
hereinafter defined).
IV. REPORTS:
(a) Lessee will promptly notify Lessor in writing after receipt of
notice of any Tax or other lien, mortgage, security interest, claim, charge or
other right or encumbrance (collectively, a "LIEN") shall attach to any
Disbursement Equipment or Equipment, of the full particulars thereof and of the
location of such Disbursement Equipment or Equipment on the date of such
notification.
(b) Lessee will furnish to Lessor and to each Participant (as
hereinafter defined), except as otherwise provided in Paragraph (iii) below:
(i) within forty-five (45) days after the end of each of the
first three quarter-annual periods of each of Lessee's fiscal years,
balance sheets of Lessee and its Subsidiaries as at the end of that
period and their income statements and surplus reconciliations for the
year to the end of that period, all prepared (but unaudited) on a
consolidated basis, on a comparative basis with the prior year (as to
the consolidated statements only), in accordance with GAAP (except as
disclosed therein) and in form and detail reasonably satisfactory to
Lessor;
(ii) as soon as available (and in any event within ninety (90)
days after the end of each of Lessee's fiscal years), a complete copy
of the annual audit report (including without limitation the
consolidated financial statements of Lessee and its Subsidiaries and
notes thereto) of Lessee for that year, which shall be
(1) prepared on a consolidated basis, on a comparative
basis with the prior year, in accordance with GAAP
(except as disclosed therein) and in form and detail
reasonably satisfactory to Lessor, and
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(2) certified (without qualification as to GAAP) by Ernst
& Young LLP, or any other independent public
accountants selected by Lessee and reasonably
satisfactory to Lessor;
(iii) concurrently with each delivery of financial statements
pursuant to Paragraph (b)(i) or (b)(ii), furnish to Lessor a
certificate, substantially in the form of Exhibit 3, by Lessee's chief
financial officer
(1) certifying that to the best of such officer's
knowledge and belief, (i) those financial statements
fairly present in all Material respects the financial
condition and results of operations of Lessee and its
Subsidiaries in accordance with GAAP, subject, in the
case of interim financial statements, to routine
year-end audit adjustments and (ii) no Default or
Potential Default then exists or, if any does, a
brief description thereof and Lessee's intentions in
respect thereof, and
(2) setting forth the calculations necessary to determine
whether or not Lessee and its Subsidiaries are in
compliance with the general financial standards set
forth in Section XXIII;
(iv) promptly when filed (in final form) or sent, a copy
of
(1) each registration statement, Form 10-K annual report,
Form 10-Q quarterly report, Form 8-K current report
or similar document filed by Lessee with the
Securities and Exchange Commission (or any similar
federal agency having regulatory jurisdiction over
Lessee's securities) or with any securities exchange,
and
(2) each proxy statement, annual report, certificate,
notice or other document sent by Lessee to the
holders of any of its securities (or any trustee
under any indenture which secures any of its
securities or pursuant to which such securities are
issued); and
(v) forthwith upon the written request of Lessor or any
Participant such other information about the financial condition,
properties and operations of Lessee or any of its Subsidiaries,
including, without limitation, Pension Plans and obligations in respect
of Environmental Laws, as Lessor or any Participant may from time to
time reasonably request.
(c) Lessee will permit Lessor and any Participant to inspect any
Disbursement Equipment and Equipment during normal business hours and, upon
three (3) Business Days' prior written notice to Lessee, will use its reasonable
efforts to procure the cooperation of any third party that is in possession of
any premises where any of the Disbursement Equipment or Equipment is located to
permit such inspections. In connection with any such inspection, Lessor and the
Participants agree to observe
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Lessee's standard rules with respect to operation and safety. If any failure by
Lessee to perform or observe any obligation in respect of any Equipment or
Disbursement Equipment, as the case may be, under this Agreement is found as a
result of an such inspection, Lessor will communicate that information to Lessee
in writing and Lessee shall have ten (10) days to correct that failure, at its
sole expense; provided, however, if during that period Lessee shall commence
corrective action that, if begun and prosecuted with due diligence, cannot be
completed within a period of ten (10) days, then that ten-day period shall be
extended, but not more than sixty (60) additional days, to the extent necessary
to enable Lessee to diligently complete that corrective action. Lessee shall pay
all reasonable expenses of an inspection by a Lessor-appointed expert to
determine if any action is required to correct any failure in respect of the
Disbursement Equipment or Equipment described in the preceding sentence.
(d) Subject to the other terms of this Lease, Lessee will keep the
Equipment at the Equipment Location (specified in the applicable Schedule), or
with the prior written approval of Lessor, at any other location within the
continental United States of America; Lessee shall immediately notify Lessor of
any relocation of Equipment. In connection with any permitted relocation of the
Equipment within the continental United States of America, Lessee shall provide
to Lessor, at Lessee's expense, such documents and instruments as reasonably may
be required by Lessor to protect the interest of Lessor in the Equipment. Upon
the written request of Lessor not more than once per calendar quarter, Lessee
will notify Lessor and each Participant forthwith in writing of the location of
all Equipment as of the date of such notification. In addition, prior to the
Basic Term Commencement Date, upon the written request of Lessor not more than
once per calendar quarter, Lessee will notify Lessor and each Participant
forthwith in writing of the location of all Disbursement Equipment as of the
date of such notification.
(e) Lessee will promptly and fully report to Lessor and each
Participant in writing if any Disbursement Equipment or Equipment with a fair
market value in excess of Two Hundred Fifty Thousand Dollars ($250,000) is lost
or damaged, or if any Disbursement Equipment or Equipment is involved in an
accident causing, directly or indirectly, personal injury or property damage in
an amount that could reasonably be expected to exceed Two Hundred Fifty Thousand
Dollars ($250,000).
V. DELIVERY, USE, REPLACEMENT, SUBSTITUTION AND OPERATION:
(a) The parties acknowledge that the Equipment or Disbursement
Equipment, as the case may be, will be in Lessee's possession as of the date of
the execution and delivery by Lessee to Lessor of a Certificate of Acceptance in
respect of that Equipment or Disbursement Equipment, as the case may be.
(b) Lessee agrees that the Equipment will be used by Lessee solely in
the conduct of its business (which business, for all purposes of this Agreement,
shall be deemed to include Lessee's operation of the Equipment to manufacture
goods for Subsidiaries and Affiliates of Lessee and for other Persons with whom
Lessee has entered
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into a written agreement to do so) and in a manner complying with all applicable
federal, state, and local laws and regulations, and any applicable insurance
policies.
(c) Lessee will keep the Disbursement Equipment and Equipment free and
clear of all Liens other than (1) those that relate to the interest of Lessor
hereunder, and with respect to the Disbursement Equipment, to the claims of the
Vendor in possession thereof, (2) those arising from the rights and interest of
Lessee in any Sublease that has been assigned to Lessor, (3) Liens for fees,
taxes, levies, duties or other governmental charges of any kind, or Liens of
mechanics, materialmen, laborers, employees or suppliers and similar Liens
arising by operation of law incurred by Lessee in the ordinary course of
business and not relating to Indebtedness for Borrowed Money, in all cases for
sums that are not yet delinquent or are being contested in good faith by
appropriate proceedings which suspend the collection thereof (provided, however,
that such proceedings do not involve any substantial danger (as determined in
Lessor's sole discretion) of the sale, forfeiture or loss of the Disbursement
Equipment or Equipment or any interest therein), and (4) Liens arising out of
any judgments or awards against Lessee that have been adequately bonded, in
Lessor's sole discretion, to protect Lessor's interest or with respect to which
a stay of execution has been obtained pending an appeal or a proceeding for
review. The Liens described in clauses (1) through (4) hereof are referred to as
"PERMITTED LIENS". Lessee will defend, at its own expense, Lessor's interest in
the Disbursement Equipment and Equipment from all claims, Liens or legal
processes. Lessee will also notify Lessor and each Participant immediately upon
receipt of notice of any Lien, attachment or judicial proceeding affecting the
Disbursement Equipment and the Equipment, whether in whole or in part.
(d) Provided that no Default or Potential Default shall then exist,
Lessee, at Lessee's expense, may elect to replace or substitute a unit of
Equipment (a "SUBSTITUTED ITEM") with another unit of Equipment (a "REPLACEMENT
ITEM"). Each Replacement Item shall be free and clear of all Liens and shall
have, as reasonably determined by Lessor, at least the value, utility and
remaining useful life and be in as good an operating condition as the
Substituted Item, assuming that the Substituted Item had been maintained in
accordance with the provisions of this Agreement. Lessee shall notify Lessor
within fifteen (15) days after the end of each quarter of Lessee's fiscal year
as to all items of Equipment having been replaced during such quarter,
identifying the Substituted Items and the Replacement Items for each relevant
Equipment Location. Lessee shall execute and deliver to Lessor an Assignment of
Purchase Orders and an amended Annex A to the applicable Schedule with respect
to each Replacement Item, together with such documents and instruments as
reasonably may be required by Lessor in connection with such replacement,
including (without limitation) Uniform Commercial Code financing statements or
statements of amendment to be filed at Lessee's expense. Upon compliance by
Lessee with the provisions hereof, (1) Lessor will transfer to Lessee, on an AS
IS, WHERE IS BASIS, without recourse or warranty, express or implied, of any
kind whatsoever, all of Lessor's interest in and to the Substituted Item and (2)
Lessor agrees, upon Lessee's reasonable request and at Lessee's expense, to
execute and deliver any instrument necessary to evidence Lessee's ownership of
the Substituted Item, including a ▇▇▇▇ of sale or
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Uniform Commercial Code statements of termination or partial release as
reasonably may be required in order to terminate any interest of Lessor in and
to such Substituted Item. Lessor shall not be required to make and may
specifically disclaim any representation or warranty as to the condition of the
Substituted Item and any other matters (except that Lessor shall warrant that it
conveyed whatever interest it received in such Substituted Item free and clear
of any Lien created by Lessor).
(e) Subject to Lessee performing and observing all of its obligations
hereunder on its part to be performed and observed and provided no Default or
Potential Default shall have occurred, and subject to any sublessee under a
Sublease permitted hereby performing and observing all of the covenants and
conditions of the applicable Sublease on its part to be performed and observed,
neither Lessor nor any person acting by, through or under Lessor, shall take any
actions to interfere with Lessee's quiet enjoyment of the Equipment during the
Term.
VI. SERVICE
(a) Lessee will, at its sole expense, maintain each unit of Equipment
in good operating order, repair and condition and in accordance with Lessee's
customary practices, but in no event less than industry standards, normal wear
and tear excepted. Lessee agrees that the Equipment will be used and operated
solely in the conduct of its business, free from all contaminants (outside of
the reasonable and ordinary use for such Equipment by Lessee), and in compliance
with any and all insurance policy terms, conditions and provisions and with all
statutes, laws and regulations of any federal, state or local governmental
authority or instrumentality applicable to the use and operation of the
Equipment, including Environmental Laws and noise and pollution laws (including
notifications and reports). Lessee shall affix in a prominent position on each
unit of Equipment, and shall use its reasonable efforts to cause each Person
(other than Lessee) in possession of any Disbursement Equipment to affix in a
prominent position on that Disbursement Equipment, plates, tags or other
identifying labels showing the interest therein of Lessor. In addition, Lessee
will, at its sole expense, maintain the Equipment under a preventive maintenance
program by qualified professionals who possess a working knowledge of the
mechanical operation of the Equipment, including electrical systems, motors,
drives, controls, accessories, lubricants and all other items necessary to make
the Equipment operate to its original or enhanced specifications (and who may be
employees of Lessee). Lessee shall maintain a maintenance log with respect to
each item of the Equipment showing all routine and non-routine maintenance and
repairs. Such log shall list, in summary form, maintenance, repairs or
modifications performed on the Equipment, the date of any and all of such
service and by whom the service was performed. This log shall be made available
to Lessor at Lessor's request.
(b) Without the prior written consent of Lessor, Lessee will not and
will not permit any other person to affix or install any accessory, equipment or
device on any Equipment if such addition will impair the value, originally
intended function or use of such Equipment; provided that Lessee, at its own
expense, will affix or install any accessory, equipment or
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device on any Equipment that may be necessary, from time to time, to comply in
all Material respects with any applicable laws or regulations or any provision
of any insurance policy required to be maintained under Section IX hereof. All
additions, repairs, parts, supplies, accessories, equipment, and devices
furnished, attached or affixed to any Equipment which are not readily removable
shall be made only in compliance with applicable law, shall be free and clear of
all Liens (except for Permitted Liens), and immediately, without further action,
upon being attached or affixed to the Equipment shall become the property of
Lessor. Lessee will not, without the prior written consent of Lessor and subject
to such conditions as Lessor may reasonably impose for its protection, affix or
install the Equipment to or in any other personal property. In addition, Lessee
will not, without the prior written consent of Lessor and subject to such
reasonable conditions as Lessor may impose for its protection, affix any
Equipment to any real property in such a manner as to become a fixture or part
of that real property. Lessor hereby declares its intent that, notwithstanding
the means of attachment, no Equipment attached to any real property shall be
deemed a fixture or part of that real property, which declaration shall be
irrevocable, without Lessor's consent.
(c) Any alterations or modifications to the Equipment that may, at any
time during the term of this Agreement, be required to comply with any
applicable law, rule or regulation shall be made by Lessee at the expense of
Lessee.
VII. STIPULATED LOSS VALUE AND CASUALTY OCCURRENCE:
On and after the Basic Term Commencement Date, Lessee shall promptly
and fully notify Lessor in writing if any unit of Equipment shall be or become
lost, stolen, destroyed, irreparably damaged in the reasonable determination of
Lessee, or permanently rendered unfit for use from any cause whatsoever (each
such occurrence being hereinafter called a "CASUALTY OCCURRENCE"). On the later
of the Rent Payment Date next succeeding a Casualty Occurrence or ninety (90)
days after such Casualty Occurrence (the "PAYMENT DATE"), Lessee shall either
(as selected by Lessee if no Default or Potential Default has then occurred, or
if a Default or Potential Default has occurred, as selected by Lessor, except
that in that case Lessee may be required to make replacement in accordance with
(a) below only with Lessee's consent):
(a) execute and deliver a purchase order to replace within a reasonable
period of time the unit of Disbursement Equipment or Equipment having suffered
the Casualty Occurrence with equipment having an equal or greater value and
utility, free and clear of all Liens, other than any Permitted Lien, and shall
deliver to Lessor an assignment of that purchase order in form satisfactory to
Lessor, an Equipment Schedule, such Uniform Commercial Code financing statements
or statements of amendment and such other documents, instruments, filings and
certificates as reasonably may be requested by Lessor with respect to any
replacement Disbursement Equipment or Equipment, or otherwise in accordance with
the provisions of Section V(d) hereof; or
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(b) pay Lessor the sum of (i) the Stipulated Loss Value of such unit
calculated in accordance with Annex D of the Equipment Schedule as of the Rent
Payment Date next preceding the date of such payment; (ii) all rental and other
amounts which are due hereunder as of the Payment Date; and (iii) the Break
Amount. For purposes hereof, "BREAK AMOUNT" shall mean the amount of any loss or
expense incurred by Lessor or any Participant relating in any way to its funding
of this Lease on a LIBOR Rate basis as a result of the moneys paid pursuant to
this Paragraph (b) on a date that is not a Rent Payment Date, and to pay Lessor
or that Participant, as the case may be, as liquidated damages for any such loss
or expense, an amount (discounted to the present value in accordance with
standard financial practice at a rate equal to the Treasury Yield) equal to
interest computed on the moneys paid pursuant to this Paragraph (b) from the
payment date thereof to the next Rental Payment Date at a rate equal to the
difference of the contract LIBOR Rate less the Treasury Yield, all as determined
by Lessor or that Participant, as the case may be, in its reasonable discretion.
Determinations by Lessor and each Participant for purposes hereof shall be
conclusive, absent manifest error. "TREASURY YIELD" means the annual yield on
direct obligations of the United States of America having a principal amount and
maturity similar to that of the amount being paid. Upon payment of all sums due
hereunder, the Term of this Lease as to such unit shall terminate and (except in
the case of the loss, theft or complete destruction of such unit) Lessor shall
be entitled to recover possession of such unit.
VIII. LOSS OR DAMAGE:
Lessee hereby assumes and shall bear the entire risk of any loss,
theft, damage to, or destruction of, any unit of Equipment from any cause
whatsoever (a) from the time the Equipment is shipped to Lessee, and (b) with
respect to any Disbursement Equipment, from the time that Lessee is obligated to
do so under the terms of the Purchase Order relating to that item of
Disbursement Equipment.
IX. INSURANCE:
Lessee agrees, at its own expense, to keep all Disbursement Equipment
and Equipment insured for such amounts, and with deductible amounts, as
specified in Paragraph D of the applicable Schedule and against such hazards as
Lessor may reasonably require, including, but not limited to, insurance for
damage to or loss of such Disbursement Equipment and Equipment ("CASUALTY
INSURANCE") and liability coverage for personal injuries, death or property
damage, with Lessor named as additional insured and with a loss payable clause
in favor of Lessor, as its interest may appear, irrespective of any breach of
warranty or other act or omission of Lessee. All such policies shall be with
companies, and on terms, reasonably satisfactory to Lessor. Lessee agrees to
deliver to Lessor evidence of insurance reasonably satisfactory to Lessor. In
the event that any of such insurance policies referred to in this Section IX
shall now or hereafter provide coverage on a "claims-made" basis, Lessee shall
continue to maintain such policies in effect for a period of not less than three
(3) years after the expiration of the Term. The provisions of co-insurance
clauses in Lessee's insurance policies shall not be in effect.
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Except as expressly provided otherwise in the second succeeding sentence, Lessee
hereby appoints Lessor as Lessee's exclusive attorney-in-fact to make proof of
loss and claim for insurance, and to make adjustments with insurers and to
receive payment of and execute or endorse all documents, checks or drafts in
connection with payments made as a result of such insurance policies. Any
expense of Lessor in adjusting or collecting insurance shall be borne by Lessee.
Lessee may make adjustments with insurers (a) so long as no Default or Potential
Default exists, with respect to claims for damage to any unit of Equipment where
the repair or replacement costs do not exceed Five Hundred Thousand Dollars
($500,000), or (b) with Lessor's prior written consent. Said policies shall
provide that the insurance may not be altered or cancelled by the insurer until
after thirty (30) days prior written notice to Lessor. Provided that no Default
or Potential Default has then occurred and is continuing, upon receipt of
evidence reasonably satisfactory to Lessor that repairs are being or have been
made to the Disbursement Equipment or the Equipment or that the Disbursement
Equipment or Equipment is being or has been replaced, as the case may be,
Lessor, at Lessee's option, will apply any insurance proceeds received by Lessor
on account of such loss to the cost of such repairs or replacement then having
been made or, if on or after the Basic Term Commencement Date a Casualty
Occurrence has then occurred hereunder with respect thereto, to Lessee's
obligation to pay the Stipulated Loss Value in accordance with Section VII(b)
hereof. During the existence of a Default or Potential Default, Lessor may, at
its option, apply proceeds of insurance, in whole or in part, to (i) repair or
replace Disbursement Equipment or Equipment or any portion thereof, or (ii)
satisfy any obligation of Lessee to Lessor hereunder. So long as no Default or
Potential Default exists and all amounts then due and owing to Lessor under this
Lease have been paid, any insurance proceeds remaining after the repair or
replacement of the damaged Disbursement Equipment or Equipment, or after the
application of insurance proceeds, in the case of Disbursement Equipment, to all
amounts disbursed by Lessor in respect of that Disbursement Equipment plus all
accrued and unpaid Interim Rent due in respect of that Disbursement Equipment,
and in the case of Equipment, to the Capitalized Lessor's Cost in respect of
that Equipment, will be made available to Lessee.
X. RETURN OF EQUIPMENT:
(a) Upon the expiration or termination of the Term of this Agreement,
unless Lessee shall have exercised its renewal option pursuant to Section
XVIII(b) hereof, or its purchase option pursuant to Section XVIII(d) hereof,
Lessee shall promptly, at its own cost and expense: (i) perform any testing and
repairs required to place the affected units of Equipment in Materially the same
condition as when received by Lessee (reasonable wear and tear excepted) and in
good working order for their originally intended purpose; (ii) if
deinstallation, disassembly or crating is required, cause such units to be
deinstalled, disassembled and crated by an authorized manufacturer's
representative or such other service person as is reasonably satisfactory to
Lessor; and (iii) return such units, free and clear of all Liens (except for
Permitted Liens arising pursuant to clause (1) of Section V(c) hereof), to a
location within the continental United States of America as Lessor shall direct.
Lessee acknowledges and agrees to the provisions set forth in Annex F to the
Equipment Schedule.
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(b) Until Lessee has paid all moneys due Lessor under Section XVIII(c),
Lessee's Rent payment obligation and all other obligations under this Agreement
shall continue from month to month notwithstanding any expiration or termination
of the Term. Lessor may terminate such continued leasehold interest upon ten
(10) days' prior written notice to Lessee. In addition to the Interim Rents and
Rents, Lessor shall have all of its other rights and remedies available as a
result of Lessee's failure to perform or observe those obligations.
XI. DEFAULT:
(a) The occurrence of any of the following shall constitute a default
("DEFAULT") under this Agreement:
(i) If any Rent or Interim Rent or any other amount due Lessor
or any Participant shall not be paid in full promptly when the same becomes due
and payable and shall remain unpaid for five (5) consecutive days thereafter or,
if earlier, on the expiration of the Term,
(ii) If any representation, warranty or statement made in this
Agreement or in any Schedule or any other Document or any other certificate,
report, notice or other writing delivered to Lessor in respect of this Agreement
shall be false or erroneous in any Material respect when made or deemed made,
(iii) If Lessee fails to perform or observe (1) any of its
obligations in Section IX or Section XXIII or Section XXIV, (2) any of its
obligations under the Assignment of Purchase Orders or any other Document or B.
W. Alloy, Ltd. shall fail to perform or observe any of its obligations under the
Assignment of Purchase Orders or any other Document to which it is a party, or
(3) or any of its other obligations in this Agreement (other than those referred
to in clauses (i) and (iii)(1) and (iii)(2) above) and that failure shall not
have been fully corrected within thirty (30) days after the giving of written
notice to Lessee by Lessor that it is to be remedied, provided, however, if
during that thirty-day period Lessee shall commence corrective action that, if
begun and prosecuted with due diligence, cannot be completed within a period of
thirty (30) days, then that thirty-day period shall be extended, but not more
than an additional forty (40) days, to the extent necessary to enable Lessee to
diligently complete that corrective action,
(iv) If, in respect of any existing or future Indebtedness for
Borrowed Money (regardless of maturity) or Funded Indebtedness now owing or
hereafter incurred by Lessee or any Subsidiary of Lessee, there should occur or
exist under its original provisions (except for any amendment made prior to the
date of this Agreement but without giving effect to any amendment, consent or
waiver after the date of this Agreement) any event, condition or other thing
which constitutes, or which with the giving of notice or the lapse of any
applicable grace period or both would constitute, a default which accelerates
(or permits any creditor or creditors or representative thereof to accelerate)
the maturity of
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any Indebtedness for Borrowed Money or Funded Indebtedness; or if any
Indebtedness for Borrowed Money (regardless of maturity) or Funded Indebtedness
(other than any payable on demand) shall not be paid in full at its stated
maturity; or if any Indebtedness for Borrowed Money or Funded Indebtedness
payable on demand shall not be paid in full on demand therefor,
(v) If (a) any Subsidiary of Lessee shall commence any
Insolvency Action of any kind or admit (by answer, default or otherwise) the
Material allegations of, or consent to any relief requested in, any Insolvency
Action of any kind commenced against that Subsidiary by its creditors or any
thereof, or (b) any creditor or creditors shall commence against that Subsidiary
any Insolvency Action of any kind which shall remain in effect (neither
dismissed nor stayed) for thirty (30) consecutive days,
(vi) If (a) Lessee shall discontinue operations, or (b) Lessee
shall commence any Insolvency Action of any kind or admit (by answer, default or
otherwise) the Material allegations of, or consent to any relief requested in,
any Insolvency Action of any kind commenced against Lessee by its creditors or
any thereof, or (c) any creditor or creditors shall commence against Lessee any
Insolvency Action of any kind which shall remain in effect (neither dismissed
nor stayed) for thirty (30) consecutive days,
(vii) If any person or group of persons acting in concert
shall beneficially own more than twenty percent (20%) of Lessee's outstanding
voting capital stock except that this subsection shall not apply to any person
who, with the associates and affiliates of that person, is the record and
beneficial owner of not less than five percent (5%) of Lessee's outstanding
voting capital stock at the date of this Agreement,
(viii) If any Equipment is illegally used, or if an Event
of Default shall have occurred under or in respect of the Credit Agreement,
(ix) One or more judgments for the payment of money (excluding
any judgment that is insured by an insurance carrier that has acknowledged in
writing, in form and substance satisfactory to Lessor, its liability for the
full amount of that judgment) shall have been entered against Lessee or any of
its Subsidiaries which judgment or judgments exceed Five Million Dollars
($5,000,000) in the aggregate, and such judgment or judgments shall have
remained undischarged and unstayed for a period of forty-five (45) consecutive
days,
(x) This Agreement or any Schedule or any Assignment of
Purchase Orders or other Document or term or provision hereof or thereof shall
cease to be in full force and effect, or Lessee shall purport to terminate
(except in accordance with the terms thereof), repudiate, declare voidable or
void or otherwise contest, this Agreement or any Schedule or any Assignment of
Purchase Orders or any other Document or term or provision hereof or thereof or
any obligation or liability of Lessee hereunder or thereunder, or
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(xi) Lessee shall abandon the construction or operation of the
▇▇▇▇▇▇ Project, or the construction of the ▇▇▇▇▇▇ Project is not substantially
completed by the Basic Term Commencement Date, or the ▇▇▇▇▇▇ Project is not in
operation and producing product in commercially saleable quantities by June 15,
1999.
(b) Upon the occurrence of a Default
(i) other than a Default described in Paragraph (a)(v) or
(a)(vi) above, and in addition to all other rights and remedies which Lessor may
have, at law, in equity or otherwise, Lessor may, by written notice to Lessee
declaring a Default, require Lessee, or
(ii) described in Paragraph (a)(v) or (a)(vi) above, and in
addition to all other rights and remedies which Lessor may have, at law, in
equity or otherwise, a Default shall automatically be deemed declared and
without presentment, demand, protest or notice of any kind, all of which are
hereby waived, Lessee shall,
forthwith pay to Lessor (A) as liquidated damages for loss of a bargain and not
as a penalty, the Stipulated Loss Value of the Equipment (calculated in
accordance with Annex D to the applicable Schedule as of the Rent Payment Date
next preceding the declaration of acceleration or the acceleration, as the case
may be), or during the Interim Lease Period, an amount equal to all funds
disbursed by Lessor in respect of Disbursement Equipment, and (B) all accrued
and unpaid Interim Rents and all Rents and other sums then due hereunder. Upon
receipt by Lessor of all moneys described in the preceding sentence, Lessor
agrees, upon Lessee's reasonable request and at Lessee's expense, to execute any
instrument necessary to evidence Lessee's ownership of the Equipment, including
a ▇▇▇▇ of sale. If Lessee fails to pay the amounts specified in the preceding
sentence, then, at the request of Lessor, Lessee shall comply with the
provisions of Section X hereof, and for purposes of this Section XI(b), all
references to Equipment shall be deemed to include any Disbursement Equipment to
the extent of Lessee's interest therein. Lessee hereby authorizes Lessor to
enter, with or without legal process, any premises where any Equipment is
located and take possession thereof. Lessor may, but shall not be required to,
sell Equipment at private or public sale, in bulk or in parcels, with or without
notice, and without having the Equipment present at the place of sale; or Lessor
may, but shall not be required to, lease, otherwise dispose of or keep idle all
or part of the Equipment; and Lessor may use Lessee's premises (or Lessee will
assign in good faith its right to permit the use of any premises where any of
the Equipment is located, as applicable) for any or all of the foregoing without
liability for rent, costs, damages or otherwise. The proceeds of any sale, lease
(including any rentals, whether under any Sublease or otherwise, accruing and
received in good and indefeasible funds after a Default) or other disposition,
if any, of any Collateral shall be applied in the following order of priorities:
(1) to pay all of Lessor's costs, charges and expenses incurred in taking,
removing, holding, repairing and selling, leasing or otherwise disposing of any
Collateral; then, (2) to the extent not previously paid by Lessee, to pay Lessor
all sums due from Lessee under this Agreement; then (3) to reimburse to Lessee
any sums previously paid by Lessee as liquidated damages pursuant to the first
sentence of this Section XI(b); and (4) any surplus shall be paid to Lessee.
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Lessee shall pay any deficiency in clauses (1) and (2) upon demand of Lessor.
Lessee hereby agrees to use its reasonable efforts after a Default to cause any
sublessee under a Sublease or any party having an interest in the premises at
which the Equipment is located to permit Lessor to have a period of twelve (12)
months in which to sell the Equipment at any such site. During such period,
Lessee shall continue to insure and maintain the Equipment as provided herein
and shall provide Lessor and its authorized representatives and prospective
purchasers access to the Equipment for remarketing purposes in accordance with
Section IV(c). The parties acknowledge and agree that the second preceding
sentence shall not in any manner restrict Lessor's right to sell the Equipment
off site from the Equipment Locations, at any time after the occurrence of a
Default hereunder.
(c) In addition to the foregoing rights, after a Default Lessor may
terminate the lease as to any or all of the Equipment, and in the event of a
Default described in Paragraph (a)(v) or (a)(vi) in this Section XI prior to the
Basic Term Commencement Date, the Lease shall automatically terminate as to all
of the Equipment and Disbursement Equipment and any obligation of Lessor to fund
disbursements under Section XXVI shall automatically terminate.
(d) The foregoing remedies are cumulative, and any or all thereof may
be exercised in lieu of or in addition to each other or any remedies at law, in
equity, or under statute. To the extent permitted by law, Lessee waives notice
of sale or other disposition (and the time and place thereof), and the manner
and place of any advertising. If permitted by law, Lessee shall pay reasonable
attorneys' fees actually incurred by Lessor in enforcing the provisions of this
Lease and any ancillary documents. Waiver of any Default or Potential Default
shall not be a waiver of any other or subsequent Default or Potential Default.
XII. ASSIGNMENT:
(a) LESSEE SHALL NOT ASSIGN, MORTGAGE, SUBLET OR HYPOTHECATE ANY
DISBURSEMENT EQUIPMENT OR EQUIPMENT OR THE INTEREST OF LESSEE HEREUNDER WITHOUT
THE PRIOR WRITTEN CONSENT OF LESSOR. Notwithstanding the foregoing, Lessee may
sublease specific items of the Equipment to any Subsidiary or Affiliate of
Lessee or, with the prior written consent of Lessor, which will not be
unreasonably withheld, any other Person subject to the following terms and
conditions:
(1) each sublease or rental agreement in respect of any Equipment (a
"Sublease") must be in writing, must be in form and substance reasonably
satisfactory to Lessor, and must contain a provision pursuant to which that
Sublease may not be amended or modified without the prior written consent of
Lessor, which will not be unreasonably withheld;
(2) no Sublease shall extend beyond the Maximum Lease Term;
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(3) Lessee shall maintain in its possession an original executed copy
of each and every Sublease, and shall stamp the original executed copy of each
Sublease in its possession promptly upon execution thereof with a legend
reading: "This Agreement has been assigned for collateral security purposes to,
and is subject to a security interest in favor of, National City Bank, for
itself and as agent for certain participants";
(4) the Equipment subject to the Sublease must remain located at the
Equipment Location (specified in the applicable Schedule), or with the prior
written approval of Lessor, at any other location within the continental United
States of America, and if that Equipment is moved to another location, Lessee
shall provide to Lessor within fifteen (15) days after the end of each quarter,
a report that discloses the location of that Equipment; and
(5) Lessee shall, and shall cause any sublessee to, execute and deliver
such instruments (including Uniform Commercial Code financing statements or such
other instruments necessary to create and protect Lessor's security and other
interests in the Equipment) as may be reasonably requested by Lessor in
connection with any Sublease.
No subleasing by Lessee will reduce any of the obligations of Lessee hereunder
or the rights of Lessor hereunder, and all of the obligations of Lessee
hereunder shall be and remain primary and shall continue in full force and
effect as the obligations of a principal and not of a guarantor or surety.
Lessee promptly shall reimburse Lessor for all expenses incurred by Lessor in
connection with any Sublease.
(b) Lessor may, with the consent of Lessee (which consent will not be
unreasonably withheld), assign this Agreement or any Schedule, or the right to
enter into any Schedule or sell a participation interest in this Agreement or
any Schedule in an amount not less than five million dollars ($5,000,000);
provided that no consent of Lessee is necessary if the assignment or
participation is to be made or granted to an Affiliate of Lessor or to an
existing Participant. Lessee agrees that it will pay all Rent and other amounts
payable under each Schedule to Lessor named therein; provided, however, if
Lessee receives written notice of an assignment permitted hereby from Lessor,
Lessee will pay all Rent and other amounts payable under any assigned Schedule
to such assignee or as instructed by Lessor. Each Schedule, incorporating by
reference the terms and conditions of this Agreement, constitutes a separate
instrument of lease, and Lessor named therein or its assignee shall have all
rights as "Lessor" thereunder separately exercisable by such named Lessor or
assignee as the case may be, exclusively and independently of Lessor or any
assignee with respect to other Schedules executed pursuant hereto. Without
limiting the generality of the foregoing, the grant of security interest in
Section XVII(b) hereof shall, as it relates to the Equipment or Disbursement
Equipment leased under each Schedule (and to the proceeds and other Collateral
referred to in Section XVII(b)), be deemed to have been granted solely to Lessor
named therein, or to its assignee, as applicable and such Equipment and
Disbursement Equipment (and other related Collateral) shall not be deemed to
collateralize Lessee's obligations under any of the Schedules to which such
named Lessor or assignee, as the case may be, is not a party. Lessee further
agrees to confirm in writing receipt of a notice of assignment as reasonably may
be
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requested by assignee. Lessee hereby waives and agrees not to assert against
any such assignee any defense, set-off, recoupment, claim or counterclaim which
Lessee has or may at any time have against Lessor or any other person for any
reason whatsoever.
(c) Lessee acknowledges that it has been advised that National City
Bank is acting hereunder for itself and as agent for certain third parties (each
being herein referred to as a "PARTICIPANT" and, collectively, as the
"PARTICIPANTS"); that the interest of Lessor in this Agreement, the Schedules,
related instruments and documents and/or the Equipment and Disbursement
Equipment may be conveyed to, in whole or in part, and may be used as security
for financing obtained from, one or more third parties, subject to the
provisions of (b) above (the "SYNDICATION"). Lessee agrees reasonably to
cooperate with Lessor in connection with the Syndication, including the
execution and delivery of such other documents, instruments, notices, opinions,
certificates and acknowledgments as reasonably may be required by Lessor or such
Participant.
(d) Anything to the contrary set forth herein notwithstanding, no
assignee or Participant hereunder shall be a direct competitor of Lessee or an
Affiliate of such a competitor. As used herein, "AFFILIATE" shall mean any
person that directly or indirectly, through one or more intermediaries, controls
or is controlled by, or is under common control with, such person.
(e) Subject always to the foregoing, this Agreement inures to the
benefit of, and is binding upon, the permitted successors and assigns of the
parties hereto.
(f) Lessor, and any assignee or Participant by virtue of obtaining an
interest herein, hereby agrees to keep confidential (i) any manufacturing
procedures and processes and other trade secrets of Lessee and (ii) any other
manufacturing information of Lessee designated by it as confidential, provided
that the foregoing shall not preclude Lessor from furnishing any trade secret or
other information (i) as may be required by order of any court or requested by
any governmental agency, (ii) to any actual or prospective assignee of its
rights arising out of or in connection with this Agreement or actual or
prospective Participant, so long as such prospective assignee or Participant to
whom disclosure is made agrees to be bound by the provisions of this Section
XII(f), (iii) to anyone if it shall have been already publicly disclosed (other
than in contravention of this Section XII(f)), (iv) to the extent reasonably
required in connection with the exercise of any right or remedy under this
Agreement or applicable law, and (iv) to its legal counsel, auditors and
accountants.
XIII. NET LEASE; NO SET-OFF, ETC.:
This Agreement is a net lease. Lessee's obligation to pay Rent, Interim
Rent and other amounts due hereunder shall be absolute and unconditional. Lessee
shall not be entitled to any abatement or reductions of, or set-offs against,
Rent, Interim Rent or other amounts due hereunder, including, without
limitation, those arising or allegedly arising out of claims (present or future,
alleged or actual, and including claims arising out of strict
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liability in tort or negligence of Lessor) of Lessee against Lessor under this
Agreement or otherwise. This Agreement shall not terminate and the obligations
of Lessee shall not be affected by reason of any defect in or damage to, or loss
of possession, use or destruction of, any Equipment or Disbursement Equipment
from any cause whatsoever. It is the intention of the parties that Rents,
Interim Rents and other amounts due hereunder shall continue to be payable in
all events in the manner and at the times set forth herein unless the obligation
to do so shall have been terminated pursuant to the express terms hereof.
XIV. INDEMNIFICATION:
(a) Lessee hereby agrees to indemnify, save and keep harmless Lessor,
the Participants, their agents, employees, successors and assigns, from and
against any and all losses, damages, penalties, injuries, claims, actions and
suits, including court costs and reasonable legal expenses, of whatsoever kind
and nature, in contract or tort, and including, but not limited to, Lessor's
strict liability in tort, arising out of (i) the selection, manufacture,
purchase, acceptance or rejection of Equipment or Disbursement Equipment, the
ownership of Equipment or Disbursement Equipment during the Term, and the
delivery, lease, possession, maintenance, use, condition, return or operation of
the Equipment or Disbursement Equipment (including, without limitation, latent
and other defects, whether or not discoverable by Lessor or Lessee and any claim
for patent, trademark or copyright infringement or environmental damage), (ii)
the condition of Equipment or any Disbursement Equipment sold or disposed of
after use by Lessee, any sublessee or any employee of Lessee, or (iii) the
failure of Lessee to perform or observe any obligation under this Agreement or
any other Document, or otherwise in respect of any Equipment or Disbursement
Equipment or Document. Lessee shall, at its expense and upon request of Lessor,
defend any actions based on, or arising out of, any of the foregoing with
counsel reasonably satisfactory to Lessor. Lessee shall reimburse any
indemnified party for any amounts expended by it in connection with any of the
foregoing or pay such amounts directly within five (5) days after the date
Lessor sends notice to Lessee requesting payment thereof.
(b) Notwithstanding the foregoing Paragraph (a), in the event any
action described in Paragraph (a) is based on or involves exposure to beryllium
particles, then Lessee shall have the right, at its expense and upon notice to
the indemnified party, to assume the defense of that action with counsel
reasonably satisfactory to that indemnified party. In any such action, the
indemnified party shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such indemnified party
unless Lessee and the indemnified party shall have mutually agreed in writing to
the retention of such counsel.
(c) All of Lessor's rights, privileges and indemnities contained in
this Section shall survive the expiration or other termination of this Agreement
and the rights, privileges and indemnities contained herein are expressly made
for the benefit of, and shall be enforceable by, Lessor and its successors and
permitted assigns.
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XV. NO WARRANTY; DISCLAIMERS:
LESSEE ACKNOWLEDGES THAT IT HAS SELECTED THE EQUIPMENT AND DISBURSEMENT
EQUIPMENT WITHOUT ANY ASSISTANCE FROM LESSOR, ITS AGENTS OR EMPLOYEES. LESSEE
ACCEPTS ALL EQUIPMENT ON AN AS IS, WHERE IS BASIS. LESSOR DOES NOT MAKE, HAS NOT
MADE, NOR SHALL BE DEEMED TO MAKE OR HAVE MADE, ANY WARRANTY OR REPRESENTATION,
EITHER EXPRESS OR IMPLIED, WRITTEN OR ORAL, WITH RESPECT TO THE EQUIPMENT OR
DISBURSEMENT EQUIPMENT LEASED HEREUNDER OR ANY COMPONENT THEREOF, INCLUDING,
WITHOUT LIMITATION, ANY WARRANTY AS TO DESIGN, COMPLIANCE WITH SPECIFICATIONS,
QUALITY OF MATERIALS OR WORKMANSHIP, MERCHANTABILITY, FITNESS FOR ANY PURPOSE,
USE OR OPERATION, SAFETY, PATENT, TRADEMARK OR COPYRIGHT INFRINGEMENT, OR TITLE.
All such risks, as between Lessor and Lessee, are to be borne by Lessee. Without
limiting the foregoing, Lessor shall have no responsibility or liability to
Lessee or any other person with respect to any of the following (i) any
liability, loss or damage caused or alleged to be caused directly or indirectly
by any Equipment or Disbursement Equipment, any inadequacy thereof, any
deficiency or defect (latent or otherwise) therein, or any other circumstance in
connection therewith; (ii) the use, operation or performance of any Equipment or
Disbursement Equipment or any risks relating thereto; (iii) any interruption of
service, loss of business or anticipated profits or consequential damages; or
(iv) the delivery, operation, servicing, maintenance, repair, improvement or
replacement of any Equipment or Disbursement Equipment. If, and so long as, no
Default under this Agreement has occurred, Lessee shall be, and hereby is,
authorized during the Term to assert and enforce, at Lessee's sole cost and
expense, from time to time, in the name of and for the account of Lessor or
Lessee or both, as their interests may appear, whatever claims and rights Lessor
may have against any supplier of the Equipment or Disbursement Equipment.
XVI. REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSEE:
Lessee hereby represents, warrants and covenants to Lessor that on the
date hereof and on the date of execution of each Schedule:
(a) Lessee has adequate power and authority to enter into, and perform
and observe its obligations under, this Agreement, each Schedule, each
Assignment of Purchase Orders to which it is a party and all other agreements,
instruments, documents and other writings related to this Agreement
(collectively, the "DOCUMENTS"). Lessee is a duly organized and validly existing
Ohio corporation in good standing. Lessee is duly qualified to do business
wherever necessary to carry on its present business and operations, including
the jurisdiction(s) where the Equipment is or is to be located except where
failure to be so qualified would not have a Material adverse effect on the
financial condition of Lessee or on the ability of Lessee to perform and observe
its obligations under this Agreement.
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(b) The Documents have been duly authorized, executed and delivered by
Lessee and constitute valid, legal and binding agreements, enforceable in
accordance with their terms, except to the extent that the enforcement of
remedies therein provided may be limited under applicable bankruptcy and
insolvency laws or under general principles of equity.
(c) No approval, consent, license, registration, or withholding of
objection is required from any governmental authority or instrumentality with
respect to the execution and delivery by Lessee of any of the Documents, or the
performance or observance by Lessee of any of its obligations under the
Documents, including, without limitation, the use and operation of the
Equipment.
(d) The execution and delivery by Lessee of any of the Documents, and
the performance or observance by Lessee of any of its obligations under the
Documents, will not: (i) violate any judgment, order, law or regulation
applicable to Lessee or any of its properties, or violate any provision of
Lessee's articles of incorporation, charter or code of regulations or by-laws;
or (ii) result in any breach of or constitute a default under, or result in the
creation of any Lien upon any Equipment or any Disbursement Equipment pursuant
to, any indenture, mortgage, deed of trust, bank loan or credit agreement or
other instrument (other than this Agreement) to which Lessee is a party or by
which any of its properties is bound.
(e) There is no litigation or proceeding pending or threatened in court
or before any commission, board, other administrative agency, or arbitrator
against or affecting Lessee or any of its properties, which if successful might
have a Material adverse effect on the ability of Lessee to fulfill its
obligations under this Agreement or have a Material adverse effect on Lessee.
(f) The Equipment or Disbursement Equipment, as the case may be,
accepted under any Certificate of Acceptance is and at all times will remain
tangible personal property.
(g) Lessee has delivered to Lessor Lessee's annual audit report
(including, without limitation, all financial statements therein and notes
thereto and the accompanying accountants' certificate) prepared as at December
31, 1995, and annual audit reports for each of Lessee's two (2) next preceding
fiscal years (each having been certified by Ernst & Young LLP) and Lessee's
unaudited interim financial statements prepared as of September 30, 1996. Each
of the financial statements referred to in the preceding sentence has been
prepared in accordance with GAAP applied on a basis consistent with those used
by it during its then next preceding full fiscal year except to the extent, if
any, specifically noted therein and fairly presents in all Material respects
(subject to routine year end audit adjustments in the case of the unaudited
financial statements) the consolidated financial condition of Lessee and its
Subsidiaries as of the date thereof (including a full disclosure of Material
contingent liabilities, if any) and the consolidated results of their
operations, if any, for the fiscal period then ended. There has been no Material
adverse
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change in the financial condition, properties or business of Lessee and
its Subsidiaries viewed on a consolidated basis since December 31, 1995 nor any
change in their accounting procedures or fiscal year since the end of Lessee's
latest full fiscal year covered by those statements.
(h) The Equipment will at all times be used for commercial or business
purposes. No portion of the Acquisition Cost or any other expense in respect of
any Equipment will be paid with proceeds of the Port Authority Bonds or the
proceeds of the State Loan. No provision of any Purchase Order may be amended,
modified or waived without the prior written consent of Lessor, which consent
may not be unreasonably withheld. There are no Liens on any of the real property
that constitutes a portion of the ▇▇▇▇▇▇ Project, except for a leasehold
mortgage on the property described in the Port Authority Lease securing the
payment and performance of the Port Authority Bonds and the State Loan.
(i) The operations of Lessee and its Subsidiaries are in full
compliance with all Material requirements imposed by law, whether federal, state
or local, and whether statutory, regulatory or other, including (without
limitation) all occupational safety and health laws and zoning ordinances, but
excluding Environmental Laws. Each of Lessee and each of its Subsidiaries is in
compliance in all Material respects with all Environmental Laws including,
without limitation, all Environmental Laws in all jurisdictions in which it owns
or operates, or has owned or operated, a facility or site, arranges or has
arranged for disposal or treatment of hazardous substances, solid waste or other
wastes, accepts or has accepted for transport any hazardous substances, solid
waste or other wastes or holds or has held any interest in real property. No
litigation or proceeding arising under, relating to or in connection with any
Environmental Law is pending or threatened against Lessee or any of its
Subsidiaries, or any real property in which any of them holds or has held an
interest or which is or has been operated by any of them, and no investigation
or inquiry which would subject Lessee or any Subsidiary to any liability under
any Environmental Law by any governmental agency or authority, individual or
other person or entity is pending or, to the best knowledge of any of them,
threatened against any of them, or any real property in which any of them holds
or has held an interest or which is or has been operated by any of them. No
release, threatened release or disposal of hazardous waste, solid waste or other
wastes is occurring, or has occurred, on, under or to any real property in which
Lessee or any of its Subsidiaries holds any interest or performs any of its
operations, in violation of any Environmental Law or which would subject Lessee
or any of its Subsidiaries to any liability under any Environmental Law, which
violation or liability, together with other outstanding liabilities of Lessee
and its Subsidiaries in respect of Environmental Laws, would Materially and
adversely affect the business, properties or financial condition of Lessee and
it Subsidiaries viewed on a consolidated basis. Further, no release, threatened
release or disposal of any hazardous substance is occurring, or has occurred,
on, under or to any real property in which Lessee or any of its Subsidiaries
holds any interest or performs any of its operations, in violation of any
Environmental Law which violation or liability, together with other outstanding
liabilities of all of them in respect of Environmental Laws, would Materially
and adversely affect the business, properties or financial condition of Lessee
and its Subsidiaries viewed on a consolidated basis. As used in this subsection,
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"litigation or proceeding" means any Material demand, claim, notice, suit, suit
in equity, action or administrative action whether brought by any governmental
agency or authority, individual or other person or entity or otherwise.
(j) No Material Accumulated Funding Deficiency exists in respect of any
of the Pension Plans of Lessee or any of its Subsidiaries. No Reportable Event
has occurred in respect of any such Pension Plan which is continuing and which
constitutes grounds either for termination of the plan or for court appointment
of a trustee for the administration thereof.
(k) Lessee is not an "investment company", or a company "controlled" by
an "investment company", within the meaning of the Investment Company Act of
1940, as amended.
(l) Lessee and each of its Subsidiaries has filed all federal, state
and local tax returns which are required to be filed by it and paid all taxes
due as shown thereon (except to the extent, if any, permitted by Section
XXIV(a)). The Internal Revenue Service has audited (or the relevant limitations
period has expired with respect to) Lessee's tax returns through the year ended
December 31, 1988 and the Internal Revenue Service has not alleged any Material
default by Lessee in the payment of any tax Material in amount or threatened to
make any assessment in respect thereof which has not been reflected in the
Financial Statements.
(m) Lessee has not changed within the six (6) months preceding the date
of this Agreement (i) the name or identity of Lessee or its corporate structure,
by reorganization or otherwise, or (ii) the address of Lessee referred to in the
following sentence. As of the date hereof, the chief place of business and chief
executive office of Lessee are located at ▇▇▇▇▇ ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇.
VII. OWNERSHIP FOR TAX PURPOSES; GRANT OF SECURITY INTEREST; USURY
SAVINGS:
(a) Lessor and Lessee intend that for federal, state and local tax
purposes, including, without limitation, personal property taxes, Lessor will
treat Lessee as the owner of the Equipment and any Disbursement Equipment (to
the extent of its interest therein). Accordingly, Lessor agrees (i) to treat
Lessee as the owner of the Equipment and Disbursement Equipment (to the extent
of its interest therein) on its federal, state and local tax returns, (ii) not
to take actions or positions inconsistent with such treatment on or with respect
to its federal, state and local tax returns, and (iii) not claim any tax
benefits available to an owner of the Equipment or Disbursement Equipment on or
with respect to its federal, state and local tax returns, all so long as legally
permissible; the foregoing undertakings by Lessor shall not be violated by
Lessor's taking a tax position through inadvertence so long as such inadvertent
tax position is reversed by Lessor promptly upon its discovery. Lessor shall in
no event be liable to Lessee if Lessee fails to realize any of the tax or
accounting benefits available to the owner of the Equipment or Disbursement
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Equipment, unless (x) Lessor has breached its undertakings set forth in the
second sentence of this Section XVII(a), and (y) such breach is the direct cause
of Lessee's failure to secure any such benefits.
(b) In order to secure the prompt payment of the Rent, Interim Rent and
all of the other amounts from time to time outstanding under and with respect to
the Schedules, and the performance and observance by Lessee of all the
agreements, covenants and provisions of the Schedules (including, without
limitation, all of the agreements, covenants and provisions of this Lease that
are incorporated herein), this Agreement and the other Documents, Lessee hereby
grants to Lessor a first priority security interest in all of its right, title
and interest in and to, and assigns to Lessor for collateral security purposes
all of Lessee's right, title and interest in and to, the following, whether now
owned or hereafter existing and wherever located (the "COLLATERAL"): (1) the
Equipment and Disbursement Equipment described in the Schedules, together with
all additions, attachments, improvements, accessories and accessions thereto
whether or not furnished by the Vendor of the Equipment and any and all
substitutions, replacements or exchanges therefor, in each such case in which
Lessee shall from time to time acquire an interest and in each case only from
and after the date on which attached to the Equipment or Equipment substituted,
replaced or exchanged for the Equipment; (2) any Sublease of any of the
Equipment and all extensions and renewals thereof, and all rentals and other
sums due, now or hereafter, thereunder; (3) to the extent the Equipment or
Disbursement Equipment covered by this Agreement may constitute or be deemed to
be Lessee's inventory (solely to such extent, the "INVENTORY"), such Inventory;
(4) all Purchase Orders and general intangibles and contract rights in respect
of the Purchase Orders and the Equipment or Disbursement Equipment and the
maintenance, use and operation thereof (including, without limitation, all
rights of Lessee to receive monies due and to become due under or pursuant to
any Purchase Orders or such general intangibles and contract rights and all of
the rights of Lessee to terminate, and to perform, compel performance and
otherwise exercise all remedies under, such Purchase Orders, general intangibles
and contract rights); (5) all documents, books and records in respect of
Equipment, Disbursement Equipment and Inventory; and (6) all cash and noncash
proceeds and products of any and all of the foregoing (including, without
limitation, proceeds which constitute property of the types described in clauses
(1) through (5) above) and all payments under any insurance (whether or not
Lessor is the loss payee thereof), indemnity, warranty or guaranty, payable by
reason of loss or damage to or otherwise with respect to any of the foregoing
Collateral. After a Default hereunder, Lessor may notify any sublessee of the
Equipment to pay directly to Lessor all rentals and other sums accrued and
payable after such Default, or to become payable, under the applicable Sublease,
and Lessee hereby authorizes and directs any such sublessee to pay such sums to
Lessor upon the giving of such notice. If, after the occurrence of a Default and
the giving of such notice by Lessor, any remittance with respect to any Sublease
of the Equipment is received by Lessee, such remittances immediately will be
delivered to Lessor endorsed to the order of Lessor and, to the extent any such
remittance is for an amount in excess of the sum payable pursuant to any
Sublease for the use or operation of the Equipment, such excess amount promptly
shall be remitted by Lessor to Lessee. If the remittance is in a form which
precludes an
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endorsement, Lessee shall hold all such funds in trust for Lessor
and immediately pay the amount of the remittance to Lessor. Lessee hereby
appoints Lessor its attorney-in-fact to negotiate any remittance which is
received by Lessor from any sublessee with respect to any Sublease of the
Equipment after a Default has occurred, and which is made payable to Lessee.
(c) It is the intention of the parties hereto to comply with any
applicable usury laws to the extent that any Schedule is determined to be
subject to such laws; accordingly, it is agreed that, notwithstanding any
provision to the contrary in any Schedule or this Lease, in no event shall any
Schedule require the payment or permit the collection of interest in excess of
the maximum amount permitted by applicable law. If any such excess interest is
contracted for, charged or received under any Schedule or this Lease, or in the
event that all of the principal balance shall be prepaid, so that under any of
such circumstances the amount of interest contracted for, charged or received
under any Schedule or this Lease shall exceed the maximum amount of interest
permitted by applicable law, then in such event (1) the provisions of this
paragraph shall govern and control, (2) neither Lessee nor any other person or
entity now or hereafter liable for the payment hereof shall be obligated to pay
the amount of such interest to the extent that it is in excess of the maximum
amount of interest permitted by applicable law, (3) any such excess which may
have been collected shall be either applied as a credit against the then unpaid
principal balance or refunded to Lessee, if no Default or Potential Default
exists, at the option of Lessee, and if a Default or Potential Default exists,
at the option of Lessor, and (4) the effective rate of interest shall be
automatically reduced to the maximum lawful contract rate allowed under
applicable law as now or hereafter construed by the courts having jurisdiction
thereof. It is further agreed that, without limitation of the foregoing, all
calculations of the rate of interest contracted for, charged or received under
any Schedule or this Lease which are made for the purpose of determining whether
such rate exceeds the maximum lawful contract rate, shall be made, to the extent
permitted by applicable law, by amortizing, prorating, allocating and spreading
in equal parts during the period of the full stated term of the indebtedness
evidenced hereby, all interest at any time contracted for, charged or received
from Lessee or otherwise by Lessor in connection with such indebtedness;
provided, however, that if any applicable state law is amended or the law of the
United States of America preempts any applicable state law, so that it becomes
lawful for Lessor to receive a greater interest per annum rate than is presently
allowed, Lessee agrees that, on the effective date of such amendment or
preemption, as the case may be, the lawful maximum hereunder shall be increased
to the maximum interest per annum rate allowed by the amended state law or the
law of the United States of America (but not in excess of the interest rate
contemplated hereunder).
(d) Lessee shall notify Lessor in writing at least forty-five (45) days
prior to any change in the name or corporate structure of Lessee. Lessee shall
keep its chief place of business and chief executive office, at the location
therefor specified in Section XVI(m), or upon forty-five (45) days' prior
written notice to Lessor, at such other location in a jurisdiction in which all
actions reasonably required by Lessor to protect its interest in the Collateral
have been taken.
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XVIII. END OF LEASE OPTIONS:
Provided that no Default or Potential Default has occurred under this
Agreement, Lessee shall have the option, upon the expiration of the Term, to
return, or to purchase, or to renew the Term of this Agreement with respect to,
all (but not less than all) of the Equipment leased under all Schedules executed
hereunder upon and subject to the following terms and conditions.
(a) [Intentionally omitted]
(b) Renewal. So long as Lessee shall not have exercised its option to
return the Equipment or its purchase option pursuant to this Section, Lessee
shall have the option, upon the expiration of the Basic Term of the first
Schedule to be executed under this Agreement, or upon the expiration of each
Renewal Term (excluding the seventh Renewal Term), to renew the Agreement with
respect to all, but not less than all, of the Equipment leased under all
Schedules executed hereunder for a Renewal Term at the Renewal Term Rent.
(c) Return. So long as Lessee shall not have exercised its option to
renew the Agreement or its purchase option pursuant to this Section, Lessee
shall have the option, upon the expiration of the Term, to return all (but not
less than all) of the Equipment described on all Schedules executed hereunder,
to Lessor upon the following terms and conditions: If Lessee desires to exercise
this option, Lessee shall (i) pay to Lessor on the last day of the Term with
respect to each individual Schedule, in addition to the scheduled Rent then due
on such date and all other sums then due hereunder, a terminal rental adjustment
amount equal to the Fixed Purchase Price of such Equipment, and (ii) return the
Equipment to Lessor in accordance with Section X hereof. Thereafter, upon return
of all of the Equipment described on all Schedules executed hereunder, Lessor
and Lessee shall arrange for the commercially reasonable sale, scrap or other
disposition of the Equipment. Upon satisfaction of the conditions specified in
this Paragraph (c), Lessor will transfer, on an AS IS, WHERE IS BASIS, without
recourse or warranty, express or implied, of any kind whatsoever, all of
Lessor's interest in and to the Equipment. Lessor shall not be required to make
and may specifically disclaim any representation or warranty as the condition of
such Equipment and other matters (except that Lessor shall warrant that it has
conveyed whatever interest it received in the Equipment free and clear of any
Liens created by Lessor). Lessor, at Lessee's expense, shall execute and deliver
to Lessee such Uniform Commercial Code statements of termination and any other
documents as reasonably may be requested by Lessee in order to terminate any
interest of Lessor in and to the Equipment. Upon the sale, scrap or other
disposition of the Equipment contemplated by this Section XVIII(c), Lessor shall
promptly thereafter pay to Lessee an amount equal to the Residual Risk Amount
(as specified in the Equipment Schedule or Equipment Schedules, as the case may
be) of the Equipment (less all reasonable costs, expenses and fees, including
storage, reasonable and necessary maintenance and other remarketing fees
incurred in connection with the sale, scrap, or disposition of such Equipment as
described
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in writing to Lessee) plus all proceeds, if any, of such sale, scrap or other
disposition in excess of the applicable Residual Risk Amount of the Equipment
and applicable taxes, if any. In the event that the proceeds of such sale, scrap
or other disposition of such Equipment are less than the applicable Residual
Risk Amount of that Equipment and applicable taxes, if any (for purposes of this
Paragraph, a "shortfall"), Lessor shall also pay to Lessee an amount equal to
the shortfall multiplied by .07095 multiplied by a fraction, the numerator of
which is equal to the number of days from and including the expiration of the
Term to, but excluding, the date of such sale, scrap or other disposition and
the denominator of which is equal to 360. If the sale, scrap or disposition of
any Equipment has not occurred within twelve (12) months after the expiration of
the Term, then at Lessee's option, to be exercised by notice to Lessor within
thirty (30) days after the end of that twelve-month period, Lessor agrees (i) to
pay promptly to Lessee an amount equal to the Residual Risk Amount (as specified
in the Equipment Schedule or Equipment Schedules, as the case may be) of that
Equipment plus interest thereon in an amount equal to that Residual Risk Amount
multiplied by .07095 multiplied by a fraction, the numerator of which is equal
to the number of days from and including the expiration of the Term to, but
excluding, the date such amount is paid and the denominator of which is equal to
360 (less all reasonable costs, expenses and fees, including storage, reasonable
and necessary maintenance and other remarketing fees incurred by Lessor as
described in writing to Lessee), in which case Lessor thereafter shall be
entitled to retain all proceeds from the sale, scrap or other disposition of
that Equipment, or (ii) to transfer that Equipment to Lessee in full
satisfaction of any obligation of Lessor to pay Lessee an amount equal to the
Residual Risk Amount for that Equipment.
(d) Purchase. So long as Lessee shall not have exercised its option to
renew the Agreement or its option to return the Equipment pursuant to this
Section, Lessee shall have the option, upon the expiration of the Term, to
purchase all (but not less than all) of the Equipment described on all Schedules
executed hereunder upon the following terms and conditions: If Lessee desires to
exercise this option with respect to the Equipment, Lessee shall pay to Lessor
on the last day of the Term with respect to each individual Schedule, in
addition to the scheduled Rent (if any) then due on such date and all other sums
then due hereunder, in cash the purchase price for the Equipment so purchased,
determined as hereinafter provided. The purchase price of the Equipment shall be
an amount equal to the Fixed Purchase Price of such Equipment (as specified on
the Schedule), plus all taxes and charges upon such sale and all other
reasonable and documented expenses incurred by Lessor in connection with such
sale, including, without limitation, any such expenses incurred based on a
notice from Lessee to Lessor that Lessee intended to return any such items of
Equipment. Upon satisfaction of the conditions specified in this Paragraph,
Lessor will transfer, on an AS IS, WHERE IS BASIS, without recourse or warranty,
express or implied, of any kind whatsoever, all of Lessor's interest in and to
the Equipment. Lessor shall not be required to make and may specifically
disclaim any representation or warranty as to the condition of such Equipment
and other matters (except that Lessor shall warrant that it has conveyed
whatever interest it received in the Equipment free and clear of any Lien
created by Lessor). Lessor shall execute and deliver to Lessee such Uniform
Commercial Code statements of termination and any other
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documents as reasonably may be requested by Lessee in order to terminate any
interest of Lessor in and to the Equipment.
(e) Notice of Election. Lessee shall give Lessor and each Participant
written notice of its election of the options specified in this Section not less
than one hundred eighty (180) days nor more than three hundred sixty-five (365)
days before the expiration of the Basic Term or any Renewal Term of the first
Schedule to be executed under this Agreement. Such election shall be effective
with respect to all Equipment described on all Schedules executed hereunder. If
Lessee fails timely to provide such notice, without further action Lessee
automatically shall be deemed to have elected (1) to renew the Term of this
Agreement pursuant to Paragraph (b) of this Section if a Renewal Term is then
available hereunder, or (2) to purchase the Equipment pursuant to Paragraph (d)
of this Section if a Renewal Term is not then available hereunder.
XIX. MISCELLANEOUS:
(a) EACH OF LESSEE AND LESSOR HEREBY UNCONDITIONALLY WAIVES ITS RIGHTS
TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF,
DIRECTLY OR INDIRECTLY, THIS LEASE, ANY OF THE OTHER DOCUMENTS, ANY DEALINGS
BETWEEN LESSEE AND LESSOR RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION OR
ANY RELATED TRANSACTIONS, OR THE RELATIONSHIP THAT IS BEING ESTABLISHED BETWEEN
LESSEE AND LESSOR, OR BOTH. The scope of this waiver is intended to be all
encompassing of any and all disputes that may be filed in any court (including,
without limitation, contract claims, tort claims, breach of duty claims, and all
other common law and statutory claims). THIS WAIVER IS IRREVOCABLE, MEANING THAT
IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY
TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
LEASE, ANY OTHER DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO
THIS TRANSACTION OR ANY RELATED TRANSACTION. In the event of litigation, this
Agreement may be filed as a written consent to a trial by the court.
(b) Any cancellation or termination by Lessor, pursuant to the
provision of this Agreement, any Schedule, supplement or amendment hereto, or
the lease of any Equipment or Disbursement Equipment hereunder, shall not
release Lessee from any then outstanding obligations to Lessor hereunder.
(c) All Equipment and Disbursement Equipment shall at all times remain
personal property of Lessee regardless of the degree of its annexation to any
real property and shall not by reason of any installation in, or affixation to,
real or personal property become a part thereof.
(d) Time is of the essence of this Agreement. Lessor's failure at any
time to require strict performance by Lessee of any of the provisions hereof
shall not waive or diminish Lessor's right thereafter to demand strict
compliance therewith.
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(e) Lessee agrees, upon Lessor's reasonable request, to execute any
instrument necessary or expedient for filing, recording or perfecting the
interest of Lessor under this Agreement. Lessor shall, to the extent requested
by Lessee and at Lessee's expense, cooperate with Lessee to allow Lessee to
obtain the contemplated tax benefits of this Agreement, including, without
limitation, the filing of any statement with respect to tax abatements or other
requirements.
(f) Except to the extent otherwise expressly permitted hereunder or
thereunder, all notices, requests, demands, directions and other communications
(collectively "notices") under this Agreement shall be in writing (including
telexed and telecopied communication) and shall be sent by first-class mail,
return receipt requested, or by nationally-recognized next-day courier, or by
telex or telecopier (with confirmation in writing mailed first-class or sent by
such an overnight courier), or by personal delivery. All notices shall be sent
to the applicable party at the address stated above or in accordance with the
last unrevoked written direction from such party to the other party hereto, in
all cases with postage or other charges prepaid; and all notices and other
deliveries to any Participant shall be made to the address for that Participant
most recently provided by Lessor in writing to Lessee. Any such properly given
notice to Lessor or Lessee shall be effective on the earliest to occur of
receipt, telephone confirmation of receipt of telex or telecopy communication,
one (1) Business Day after delivery to a nationally-recognized next-day courier,
or three (3) Business Days after deposit in the mail.
(g) This Agreement and any Schedule and Annexes thereto constitute the
entire agreement of the parties with respect to the subject matter hereof. NO
VARIATION OR MODIFICATION OF THIS AGREEMENT, OR ANY WAIVER OF ANY OF ITS
PROVISIONS OR CONDITIONS, SHALL BE VALID UNLESS IN WRITING AND SIGNED BY AN
AUTHORIZED REPRESENTATIVE OF THE PARTIES HERETO. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
(h) The representations, warranties and covenants of Lessee herein
shall be deemed to survive the closing hereunder. On and prior to the Basic Term
Commencement Date, Lessor's obligations to fund and lease specific items of
Equipment and Disbursement Equipment shall be conditioned upon Lessee providing
to Lessor such information with respect to Lessee's financial condition as
Lessor may reasonably require, and Lessor being satisfied that there shall have
been no Material adverse change in the business or financial condition of Lessee
from the date of execution hereof. The obligations of Lessee under Sections III,
X, XIV, XIX(a), XIX(l) and XIX(m), those obligations of Lessee that accrue
during the term of this Agreement, and obligations which by their express terms
survive the termination of this Agreement, shall survive the termination of this
Agreement.
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(i) In case of a failure of Lessee to comply with any provision of this
Agreement, Lessor shall have the right, but shall not be obligated, to effect
such compliance, in whole or in part; and all moneys spent and expenses and
obligations incurred or assumed by Lessor in effecting such compliance (together
with interest thereon at the rate specified in Paragraph (j) of this Section)
shall constitute additional Rent due to Lessor within five (5) days after the
date Lessor sends written notice to Lessee requesting payment. Lessor's
effecting such compliance shall not be a waiver of Lessee's default.
(j) Any Rent, Interim Rent or other amount not paid to Lessor when due
hereunder (after any applicable grace period therefor) shall bear interest, both
before and after any judgment or termination hereof, at the lesser of the Daily
Lease Rate Factor then in effect plus two percent (2%) per annum or the maximum
rate allowed by law.
(k) Any provisions in this Agreement and any Schedule or other Document
which are in conflict with any statute, law or applicable rule shall be deemed
omitted, modified or altered to conform thereto. Furthermore, if any provision
in this Agreement or any Schedule or any other Document shall for any reason be
or become illegal, void or unenforceable, that illegality, voiding or
unenforceability shall not affect any other provision hereof or thereof.
(l) Lessee agrees to pay on demand all reasonable costs and expenses
incurred by Lessor in connection with the preparation, execution, delivery,
filing, recording, amendment and administration of any of the Documents,
including, without limitation, the reasonable fees and out-of-pocket expenses of
counsel for Lessor, and all costs and expenses, if any, in connection with the
enforcement of any of the Documents. In addition, Lessee shall pay any and all
stamp and other taxes and fees payable or determined to be payable in connection
with the execution, delivery, filing and recording of any of the Documents and
the other documents to be delivered under the Documents, and agrees to save
Lessor harmless from and against any and all liabilities with respect to or
resulting from any delay attributed to Lessee in paying or failing to pay such
taxes and fees.
(m) If there shall occur and be continuing any Default or if this Lease
is terminated, Lessor and each Participant shall have the right at any time to
set off against and to appropriate and apply toward the payment of the
obligations of Lessee then owing, whether or not the same shall then have
matured, any and all deposit balances then owing by Lessor or that Participant
to or for the credit or account of the Companies or any thereof, including but
not limited to all deposits (whether time or demand, general or special,
provisionally credited or finally credited, whether or not evidenced by a
certificate of deposit) and whether now or hereafter maintained, all without
notice to or demand upon Lessee or any other person, all such notices and
demands being hereby expressly waived.
XX. CHOICE OF LAW; JURISDICTION
(a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY, AND
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CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF OHIO (WITHOUT
REGARD TO THE CONFLICT OF LAWS PRINCIPLES OF SUCH STATE), INCLUDING ALL MATTERS
OF CONSTRUCTION, VALIDITY AND PERFORMANCE, REGARDLESS OF THE LOCATION OF THE
EQUIPMENT OR DISBURSEMENT EQUIPMENT EXCEPT TO THE EXTENT THAT THE VALIDITY OR
PERFECTION OF THE SECURITY INTEREST HEREUNDER, IN RESPECT OF ANY PARTICULAR
PROPERTY, ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF
OHIO.
(b) EACH OF LESSEE AND LESSOR HEREBY IRREVOCABLY AND
UNCONDITIONALLY:
(i) SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED
STATES FEDERAL OR OHIO STATE COURT SITTING IN CUYAHOGA COUNTY, OHIO, IN
ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR ANY SCHEDULE OR ANY DOCUMENT AND HEREBY IRREVOCABLY AGREES THAT ALL
CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT
MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN
INCONVENIENT FORUM. NOTHING HEREIN SHALL IMPAIR THE RIGHT OF LESSOR TO
BRING PROCEEDINGS AGAINST LESSEE IN THE COURTS OF ANY OTHER
JURISDICTION TO ENFORCE ANY INTEREST OR CLAIM IN RESPECT OF ANY ITEM OF
EQUIPMENT OR DISBURSEMENT EQUIPMENT, IN WHICH CASE LESSEE SHALL HAVE NO
RIGHT TO ASSERT ANY COUNTERCLAIM IF THE PROCEEDING IS IN ANY COURT
LOCATED OUTSIDE OF CUYAHOGA COUNTY, OHIO; and
(ii) CONSENTS AND AGREES TO SERVICE OF ANY SUMMONS, COMPLAINT
OR OTHER LEGAL PROCESS BY REGISTERED OR CERTIFIED U.S. MAIL, POSTAGE
PREPAID, TO THE PARTIES IN ACCORDANCE WITH SECTION XIX(f), AND CONSENTS
AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE IN EVERY RESPECT VALID
AND EFFECTIVE SERVICE (BUT NOTHING HEREIN SHALL AFFECT THE VALIDITY OR
EFFECTIVENESS OF PROCESS SERVED IN ANY OTHER MANNER PERMITTED BY LAW).
(c) LESSEE HEREBY IRREVOCABLY AND UNCONDITIONALLY CONSENTS AND AGREES
THAT ANY JUDICIAL PROCEEDING BY LESSEE AGAINST LESSOR OR ANY AFFILIATE THEREOF
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED
TO, OR CONNECTED WITH THIS AGREEMENT OR ANY SCHEDULE OR ANY DOCUMENT SHALL BE
BROUGHT ONLY IN A COURT IN CUYAHOGA COUNTY, OHIO.
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XXI. CHATTEL PAPER:
To the extent that any Schedule would constitute chattel paper, as such
term is defined in the Uniform Commercial Code as in effect in any applicable
jurisdiction, no security interest therein may be created through the transfer
or possession of this Agreement in and of itself without the transfer or
possession of the original of a Schedule executed pursuant to this Agreement and
incorporating this Agreement by reference; and no security interest in this
Agreement and a Schedule may be created by the transfer or possession of any
counterpart of the Schedule other than the original thereof, which shall be
identified as the document marked "Original" and all other counterparts shall be
marked "Duplicate".
XXII. EARLY TERMINATION
On or after the second anniversary of the date of this Agreement,
Lessee may, so long as no Default or Potential Default hereunder has occurred
and is continuing, terminate this Agreement as to all (but not less than all) of
the Equipment described on all Schedules executed hereunder, as of a Rent
Payment Date ("TERMINATION Date") upon at least thirty (30) days' prior written
irrevocable notice to Lessor.
(a) On the Termination Date, Lessee shall pay to Lessor in cash the
purchase price for the Equipment, determined as hereinafter provided. The
purchase price of the Equipment shall be an amount equal to the sum of (A) the
Termination Value (calculated as of the Termination Date) for the Equipment,
plus (B) all taxes and charges upon sale, plus (C) all Rent and other sums due
and unpaid as of the Termination Date. Upon satisfaction of the conditions
specified in this Paragraph (a), Lessor will transfer, on an AS IS, WHERE IS
BASIS, all of Lessor's interest in and to the Equipment. Lessor shall not be
required to make and may specifically disclaim any representation or warranty as
to the condition of such Equipment and other matters (except that Lessor shall
warrant that it has conveyed whatever interest it received in such Equipment
free and clear of any Lien created by Lessor). Lessor shall execute and deliver
to Lessee such Uniform Commercial Code statements of termination as reasonably
may be required in order to terminate any interest of Lessor in and to the
Equipment.
(b) For the purposes of this Section XXII, the terms "expenses" and
"charges upon sale" as used in Paragraph (a) shall include, without limitation,
all reasonable legal fees, commissions, filing costs, administrative charges (as
described below) and other charges incurred or payable by Lessor in connection
with the transactions contemplated therein. Lessor agrees to provide Lessee with
a written statement detailing such amounts if so requested by Lessee. Lessee
acknowledges and agrees that it shall pay and otherwise be fully responsible for
all such amounts.
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XXIII. GENERAL FINANCIAL STANDARDS:
Lessee agrees that so long as this Agreement remains in effect and
thereafter until all obligations of Lessee hereunder shall have been paid and
performed in full, Lessee will observe each of the following:
(a) Lessee will not suffer or permit the consolidated Tangible Net
Worth of the Companies at any time to be less than one hundred seventy million
six hundred ninety-six thousand dollars ($170,696,000) plus an amount equal to
forty percent (40%) of the Company's annual earnings for the four fiscal
quarters ending December 31, 1996 and each December 31 thereafter; provided,
that if annual earnings for any fiscal year are a negative figure, the annual
earnings for the fiscal year in question shall be treated as zero (0) for the
purposes of this Paragraph (a).
(b) Lessee will not suffer or permit the Companies' Funded Indebtedness
at any time to exceed an amount equal to the Leverage Multiplier (as hereinafter
defined) times the Companies' EBITDA for the four consecutive fiscal quarters
most recently ended, all as determined on a consolidated basis. As used herein,
"LEVERAGE MULTIPLIER" means (i) from the date of this Agreement to December 30,
1999, inclusive, 3.00, and (ii) on and after December 31, 1999, 2.75.
(c) Lessee will not at any time suffer or permit the ratio of (a) the
aggregate of the EBITDA of the Companies for the four consecutive fiscal
quarters most recently ended, to (b) the aggregate Interest Expense of the
Companies for that period, to be less than 5.00 to 1:00, all as determined on a
consolidated basis.
(d) Lessee will not suffer or permit the Funded Indebtedness of the
Companies, at any time, to exceed an amount equal to the Required Multiplier (as
hereinafter defined) times the sum of the Funded Indebtedness of the Companies
plus the Tangible Net Worth of the Companies, all as determined on a
consolidated basis. As used herein, "REQUIRED MULTIPLIER" means (i) from the
date of this Agreement to December 31, 2000, inclusive, 0.50, and (ii) on and
after January 1, 2001, 0.45.
XXIV. COVENANTS
Lessee agrees that so long as this Agreement remains in effect and
thereafter until all obligations of Lessee hereunder shall have been paid and
performed in full, Lessee will perform and observe, and will cause each
Subsidiary of Lessee to perform and observe, each of the following provisions on
their respective parts to be complied with, namely:
(a) Each Company will pay in full
(i) prior in each case to the date when penalties for the
nonpayment thereof would attach, all taxes, assessments and
governmental charges and levies for which it may be or become subject;
and
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(ii) prior in each case to the date the claim would become
delinquent for non-payment, all other lawful claims (whatever their
kind or nature) which, if unpaid, might become a Lien upon its
property;
provided, that no item need be paid so long as and to the extent that (1) it is
contested in good faith and by timely and appropriate proceedings which are
effective to stay enforcement thereof or (2) with respect to items not exceeding
five hundred thousand dollars ($500,000) in the aggregate, it is being
negotiated in good faith with the relevant governmental authority.
(b) Each Company will at all times keep true and complete financial
records in accordance with GAAP and, without limiting the generality of the
foregoing, make appropriate accruals to reserves for estimated and contingent
losses and liabilities, and will maintain a fiscal year ending December 31.
(c) Each Company will permit Lessor at all reasonable times
(i) to examine that Company's properties and its
financial records and to make copies of and extracts from such records
and
(ii) to consult with that Company's officers, employees,
accountants, actuaries, trustees and plan administrators in respect of
its financial condition, properties and operations and the financial
condition of its Pension Plans, each of which parties is hereby
authorized to make such information available to Lessor to the same
extent that it would to that Company.
(d) Each Company will
(i) keep itself and all of its insurable properties insured at
all times to such extent, with such deductibles, by such insurers and
against such hazards and liabilities as is generally and prudently done
by other business enterprises respectively similar to the Companies,
except that if a more specific standard is provided in any Schedule or
other Document, the more specific standard shall prevail; and
(ii) forthwith upon Lessor's written request, cause an
appropriate officer to deliver to Lessor a certificate setting forth,
in form and detail satisfactory to Lessor, such information about that
insurance, all as Lessor may from time to time reasonably request.
(e) Each Company will at all times maintain its corporate existence,
rights and franchises; provided, however, that this Paragraph shall not prevent
any dissolution and liquidation of any Subsidiary or any merger or consolidation
permitted by Section XXIV(k).
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(f) Each Company will comply with all applicable occupational safety
and health laws and Environmental Laws and every other law (whether statutory,
administrative, judicial or other and whether federal, state or local) and every
lawful governmental order if non-compliance with such law or order would
Materially and adversely affect the business, properties or financial condition
of the Companies viewed on a consolidated basis; provided, that in the event of
any alleged non-compliance, no Company shall be in default under this Paragraph
(f) if and to the extent that it notifies Lessor and
(i) within thirty (30) days after the non-compliance becomes
apparent or is alleged, appropriate corrective measures are commenced
and such measures are diligently pursued to the satisfaction of Lessor,
or
(ii) the alleged non-compliance is contested in good faith by
timely and appropriate proceedings which are effective to stay
enforcement thereof.
No Company will cause or permit the release or disposal of hazardous waste,
solid waste or other wastes on, under or to any real property in which such
Company holds any interest, or performs any of its operations, in violation of
any Environmental Law. Lessee shall defend, indemnify and hold Lessor harmless
from and against any and all liabilities, losses, damages, costs and expenses of
any kind (including, without limitation, the reasonable fees and disbursements
of counsel) arising out of or resulting from any Company's non-compliance with
any Environmental Law.
(g) Each Company will maintain all fixed assets necessary to its
continuing operations in good working order and condition, ordinary wear and
tear excepted.
(h) No Company will
(i) make or keep any investment in any notes, bonds or other
obligations of any kind for the payment of money or make or have
outstanding at any time any advance or loan to anyone, or
(ii) be or become a Guarantor of any kind;
provided, that this Paragraph shall not apply to
(A) any existing or future advance to an officer or
employee of any Company in the normal course of
business and consistent with past practice,
(B) any endorsement of a check or other medium of payment
for deposit or collection, or any similar transaction
in the normal course of business,
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(C) any investment in an existing or future Subsidiary,
(D) any Guaranty by Lessee of Funded Indebtedness of any
Company to the extent that such Funded Indebtedness
of that Company is otherwise permitted by this
Agreement,
(E) investments in notes, bonds or other obligations of
persons (other than Subsidiaries) in which Lessee
has an equity investment, provided that the
aggregate amount of such investments, excluding any
equity investments permitted by Paragraph (k) below,
do not exceed fifteen million dollars ($15,000,000),
(F) guarantees not otherwise permitted hereby, in an
amount not to exceed twenty million dollars
($20,000,000) outstanding at any time,
(G) any existing or future Receivable of any Company so
long as such Receivable arises from the sale of
goods or services in the normal course of such
Company's business and is consistent with such
Company's past practice, or
(H) any existing or future investment in Eligible
Investments.
(i) No Company will create, assume or have outstanding at any time any
Indebtedness for Borrowed Money or any Funded Indebtedness of any kind if after
giving effect to such Indebtedness for Borrowed Money or Funded Indebtedness,
Lessee would be in non-compliance with any of the financial standards set forth
in Section XXIII.
(j) No Company will
(i) lease any property as lessee or acquire or hold any
property subject to any land contract, inventory consignment (except
for any Company that deals in precious metals which are subject to any
consignment arrangement in effect as of the date of this Agreement, and
replacements, renewals or extensions thereof) or other title retention
contract, or
(ii) sell or otherwise transfer any Receivables, whether
with or without recourse, or
(iii) suffer or permit any property (whether real, personal or
mixed and whether tangible or intangible, including, without
limitation, inventory and accounts receivable) now owned or hereafter
acquired by it to be or become encumbered by any Lien, except that the
Equipment may be subject to the Permitted Liens, as described in
Section V(c);
provided, that this Paragraph shall not apply to
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(A) any tax Lien, or any Lien securing workers' compensation or
unemployment insurance obligations, or any mechanics', carrier's
or landlord's Lien, or any Lien arising under ERISA, or any
security interest arising under article four (bank deposits and
collections) or five (letters of credit) of the Uniform Commercial
Code, or any similar Lien, except that this clause (A) shall apply
only to Liens arising by operation of law (whether statutory or
common law) and in the ordinary course of business and shall not
apply to any Lien that secures any indebtedness for borrowed money
or any guaranty thereof or any obligation that is in Material
default in any manner (other than any default contested in good
faith by timely and appropriate proceedings effective to stay
enforcement of the Lien in question),
(B) zoning or deed restrictions, public utility easements, minor title
irregularities and similar matters having no adverse effect as a
practical matter on the ownership or use of any of the property in
question,
(C) any Lien securing or given in lieu of surety, stay, appeal or
performance bonds, or securing performance of contracts or bids
(other than contracts for the payment of money borrowed), or
deposits required by law or governmental regulations or by any
court order, decree, judgment or rule or as a condition to the
transaction of business or the exercise of any right, privilege or
license, except that this clause (C) shall not apply to any
Lien or deposit securing an obligation that is in Material default
in any manner (other than any default contested in good faith by
timely and appropriate proceedings effective to stay enforcement
of the Lien in question),
(D) any lien securing only the Rent, Interim Rent or other obligations
of Lessee hereunder,
(E) any Lien (each, a "Purchase Money Security Interest") which is
created or assumed in purchasing, leasing, constructing or
improving any real property or equipment or to which any such
property is subject when purchased, provided that (1) the Purchase
Money Security Interest shall be confined to the aforesaid
property, (2) the indebtedness secured thereby does not exceed
the total cost of the purchase, construction or improvement,
(3) any such indebtedness, if repaid in whole or in part, cannot
be reborrowed and (4) the aggregate amount of such indebtedness
incurred in any fiscal year cannot exceed ten million dollars
($10,000,000),
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(F) any lease, other than any capitalized lease (it
being agreed that a capitalized lease is a Lien
rather than a lease for the purposes of this
Agreement) or the Port Authority Lease, so long as
the aggregate annual rentals under all such leases
of all the Companies do not exceed six million five
hundred thousand dollars ($6,500,000),
(G) any Lien which (together with the indebtedness
secured thereby) is fully disclosed in the Financial
Statements,
(H) any financing statement perfecting a security
interest that would be permissible under this
Paragraph, or
(I) the sale by Brush ▇▇▇▇▇▇▇ Japan Ltd. of any of its
Receivables provided the sale of such Receivables
occurs in the normal course of its business and is
consistent with its past practice and that any
indebtedness arising in connection therewith is
permitted by Paragraph (i) above.
(k) No Company will
(i) be a party to any merger or consolidation, or
(ii) be or become a party to any joint venture or partnership,
or make or keep any investment in any other stocks or other equity
securities of any kind or otherwise acquire all or substantially all of
the assets of another person, except that this clause (ii) shall not
apply to (A) Lessee's existing investments in the stocks and other
equity securities of existing or future Subsidiaries, (B) any other
investment reflected in the Financial Statements, or (C) acquisitions
of assets of persons or equity investments made in persons, other than
Subsidiaries, after the date of this Agreement in an aggregate amount,
excluding investments permitted by Paragraph (h) above, not to exceed
forty-five million dollars ($45,000,000) in the aggregate during any
fiscal year of Lessee, provided, that of that amount not more than
twenty million dollars ($20,000,000) in the aggregate is paid by the
Companies in cash during any fiscal year, or
(iii) lease as lessor, sell, sell-leaseback or otherwise
transfer (whether in one transaction or a series of transactions) all
or any substantial part of its fixed assets (other than in respect of
the Port Authority Lease and chattels that shall have become obsolete
or no longer useful in its present business with a fair market value
not exceeding ten million dollars ($10,000,000) in the aggregate during
any fiscal year), or the capital stock of any Subsidiary of Lessee
(other than the sale of all of the capital stock of one or more
Subsidiaries of Lessee that own assets with a fair market value not
exceeding ten million dollars ($10,000,000) in the aggregate during any
fiscal
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year so long as Lessor, within ten (10) Business Days of receipt of
notice of the proposed sale, notifies Lessee in writing that Lessor
believes the proposed sale could have a Material adverse effect on the
consolidated financial condition of the Companies);
provided, that if no Default or Potential Default shall then exist and if none
would thereupon begin to exist, this Paragraph (k) shall not apply (y) to any
merger or consolidation of any Subsidiary of Lessee with any other Subsidiary of
Lessee so long as a Subsidiary of Lessee is the surviving entity or to any
merger or consolidation of any wholly owned Subsidiary of Lessee with Lessee so
long as Lessee is the surviving corporation, or (z) to any dissolution and
liquidation of a Subsidiary of Lessee, or any transfer of assets between
Subsidiaries of Lessee or from any Subsidiary of Lessee to Lessee.
XXV. CERTAIN DEFINITIONS
(a) Any accounting term used in this Agreement shall have the meaning
ascribed thereto by GAAP, subject, however, to such modification, if any, as may
be provided in this Section XXV or elsewhere in this Agreement.
(b) As used in this Agreement and in any Schedule and other
Document, except where the context clearly requires otherwise,
Accumulated Funding Deficiency shall have the meaning ascribed thereto
in section 302(a)(2) of ERISA;
Acquisition Cost of each item of Equipment or Disbursement Equipment,
as the case may be, means an amount equal to the sum of (i) the total
cost paid by Lessor for such item of Equipment, plus (ii) all costs and
expenses approved and paid by Lessor in connection with the
engineering, delivery and installation of such item of Equipment;
Business Day means (a) with respect to the LIBOR Rate, a day on which
banks in the London Interbank Market deal in United States of America
dollar deposits and on which banking institutions are generally open
for domestic and international business in Cleveland, Ohio, and in New
York City and (b) in any other case, any day other than a Saturday or a
Sunday or a public holiday or other day on which banking institutions
located in Cleveland, Ohio, are authorized by law or other governmental
action to close;
Company refers to Lessee or to a Subsidiary of Lessee, as the
case may be, and Companies refers to Lessee and its Subsidiaries;
Contingent Obligation means any direct or indirect liability,
contingent or otherwise, with respect to any Funded Indebtedness,
lease, dividend, letter of credit, banker's acceptance or other
obligation of another Person incurred to provide assurance to
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the obligee of such obligation that such obligation will be paid or
discharged, that any agreements relating thereto will be complied
with, or that the holders of such obligation will be protected (in
whole or in part) against loss in respect thereof;
Credit Agreement means the Amended and Restated Credit Agreement, dated
as of December 13, 1994, among Lessee, Lessor, in its capacity as
Agent, and the banks parties thereto, as the same may be amended or
modified from time to time;
Default is defined in Section XI;
EBIT means for any period, with respect to Lessee and its Subsidiaries,
the sum of (a) the Net Income for such period plus (b) the Interest
Expense for such period plus (c) charges against income for taxes for
such period, all on a consolidated basis;
EBITDA means for any period, with respect to Lessee and its
Subsidiaries, the sum of (a) EBIT plus (b) the charges against income
for depreciation for such period plus (c) the charges against income
for amortization for such period, plus (d) other non-cash charges for
such period, minus (e) any and all non-cash credits to Net Income, all
as determined on a consolidated basis in accordance with GAAP;
Eligible Investments means any of the following investments (each
reference to a "rating category" of either Moody's or Standard & Poor's
shall refer to a rating category of such corporation without regard to
gradations within ratings):
(i) obligations issued or guaranteed as to full and timely
payment by the United States of America or by any person controlled or
supervised by or acting as an instrumentality of the United States of
America pursuant to authority granted by Congress;
(ii) obligations issued or guaranteed by any state or
political subdivision thereof and rated in the highest rating category
(if rated as short-term obligations) or the second highest rating
category (if rated as long-term obligations) by Moody's or Standard &
Poor's;
(iii) commercial or finance paper rated in the highest rating
category by Moody's or Standard & Poor's;
(iv) deposit accounts, bankers' acceptances, certificates of
deposit or bearer deposit notes in any bank that is a party to the
Credit Agreement or any bank affiliated with any such bank or any other
financial institution reasonably acceptable to Lessor and with a
reported capital and surplus of not less than $50,000,000, the debt
obligations (or, in the case of the principal bank in a bank holding
company, debt obligations of the bank holding company) of which are
rated by Moody's or Standard & Poor's not lower than the second highest
rating category (if rated as long-term
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obligations) or the second highest rating category (if rated as
short-term obligations);
(v) repurchase agreements secured fully by obligations of the
type specified in clause (i) and issued by any government bond dealer
reporting to, trading with and recognized as a primary dealer by, the
Federal Reserve Bank of New York;
(vi) interests in a unit investment trust composed of
obligations rated in the highest rating category, whether rated as
short-term or long-term obligations, by Moody's or Standard & Poor's;
(vii) money market mutual funds, rated in the highest rating
category by Moody's or Standard & Poor's, and invested solely in
obligations or securities described in clause (i), (ii), (iii) or (v)
above; and
(viii) investment agreements other than repurchase agreements
with banks or bank holding companies or other qualified providers which
have ratings assigned to their long-term unsecured obligations by
Moody's or Standard & Poor's which are not lower than the second
highest rating category for long-term debt or which have ratings
assigned to their short-term obligations by Moody's or Standard &
Poor's in the highest rating category for short-term debt;
▇▇▇▇▇▇ Project means the construction and equipping of an alloy
strip mill to be leased by Lessee from the ▇▇▇▇▇▇-▇▇▇▇▇ County Port
Authority and located at ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇;
Environmental Laws mean all laws, ordinances, rules and regulations
pertaining to environmental matters, including, without limitation,
solid waste disposal, toxic substances, hazardous substances, hazardous
materials, hazardous waste, toxic chemicals, pollutants, contaminants,
and air or water pollution and to the storage, use, handling,
transportation, discharge and disposal (including spills and leaks) of
gaseous, liquid, semi-solid or solid materials (all terms pertaining to
Environmental Laws not defined in this Agreement shall have the
meanings ascribed thereto in the respective Environmental Laws);
ERISA means the Employee Retirement Income Security Act of 1974 (P.L.
93-406) as amended from time to time; and in the event of any amendment
affecting any section thereof referred to in this Agreement, that
reference shall be a reference to that section as amended,
supplemented, replaced or otherwise modified;
Financial Statements means the financial statements of the Companies
described in Section XVI(g);
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Funded Indebtedness of a Person shall mean, without duplication:
(a) all Indebtedness for Borrowed Money of such Person and all
other obligations of such Person for the deferred purchase price of
property or services (including, without limitation, all obligations
contingent or otherwise of such Person in connection with acceptance,
letter of credit or similar facilities and in connection with any
agreement to purchase, redeem or otherwise acquire for value any
capital stock of such Person, or agreement to purchase, redeem or
otherwise acquire for value any rights or options to acquire such
capital stock, now or hereafter outstanding);
(b) all indebtedness created or arising under any sale and
leaseback arrangement, conditional sale or other title retention
agreement with respect to property owned or acquired by such Person
(whether or not the rights and remedies of the seller or lender under
such agreement in the event of default are limited to repossession or
sale of such property);
(c) All obligations secured by a Lien on property owned by
such Person (whether or not assumed) (without regard to any limitation
of the rights and remedies of the holder of such Lien or the lessor
under any lease to repossession or sale of such property), excluding
the State Loan and the Port Authority Lease; and
(d) All obligations of such Person under a product financing
or similar arrangement described in paragraph 8 of FASB Statement of
Accounting Standards No. 49 or any similar requirement of GAAP;
GAAP means generally accepted accounting principles applied in a manner
consistent with those used in the Financial Statements;
Guarantor means any Person that is liable for any Contingent
Obligation; and Guaranty or guaranty means the obligation of a
Guarantor; provided, however, that the amount of any Guaranty shall be
deemed to be equal to the outstanding amount of the obligation that is
guaranteed thereby or such lesser amount to which the maximum exposure
of the Guarantor may be contractually limited in writing;
Indebtedness for Borrowed Money of a Person shall mean at any time, all
indebtedness required by GAAP to be reflected as indebtedness on such
Person's balance sheet, including as appropriate, all indebtedness (i)
in respect of any money borrowed; (ii) under or in respect of any
Guaranty (whether direct or indirect) of any money borrowed; (iii)
evidenced by any loan or credit agreement, promissory note, debenture,
bond, or other similar written obligation for borrowed money or (iv)
arising under any lease that is, or is required under GAAP to be,
capitalized on the balance sheet of such Person at such time, and any
obligations of such Person under any Synthetic Lease;
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Insolvency Action means either (a) a pleading of any kind filed by the
person, corporation or entity (an "insolvent") in question to seek
relief from the insolvent's creditors, or filed by the insolvent's
creditors or any thereof to seek relief of any kind against that
insolvent, in any court or other tribunal pursuant to any law (whether
federal, state or other) relating generally to the rights of creditors
or the relief of debtors or both, or (b) any other action of any kind
commenced by an insolvent or the insolvent's creditors or any thereof
for the purpose of marshalling the insolvent's assets and liabilities
for the benefit of the insolvent's creditors; and "Insolvency Action"
includes (without limitation) a petition commencing a case pursuant to
any chapter of the federal bankruptcy code, any application for the
appointment of a receiver, trustee, liquidator or custodian for the
insolvent or any substantial part of the insolvent's assets, and any
assignment by an insolvent for the general benefit of the insolvent's
creditors;
Interest Expense means, for any period, with respect to Lessee and its
Subsidiaries, the aggregate amount of interest expense for such period
on the aggregate principal amount of any Funded Indebtedness, including
capitalized interest, as determined on a consolidated basis in
accordance with GAAP;
Material means material as determined by Lessor in its reasonable
exercise of its discretion;
Maximum Acquisition Cost means with respect to the aggregate
Acquisition Cost of the Equipment under all of the Schedules,
$56,080,000;
Moody's means ▇▇▇▇▇'▇ Investors Service, Inc., and its successors and
assigns;
Net Income means net income as determined on a consolidated basis in
accordance with GAAP, after taxes and after extraordinary items, but
without giving effect to any gain from any re-appraisal or write-up of
any asset;
Pension Plan means a defined benefit plan (as defined in section 3(35)
of ERISA) of the Companies or any thereof and includes, without
limitation, any such plan that is a multi-employer plan (as defined in
section 3(37) of ERISA) applicable to any of the Companies' employees;
Person or persons means any individual, corporation, company, entity,
partnership, joint venture, association, joint stock company, trust,
trustee(s) of a trust, unincorporated organization, or governmental
authority or agency;
Port Authority Bonds means the Taxable Project Development Revenue
Bonds, Series 1996 (Brush ▇▇▇▇▇▇▇ Inc. Project) issued, sold and
delivered by the ▇▇▇▇▇▇-▇▇▇▇▇ County Port Authority to The Prudential
Insurance Company of America in the principal amount of $13,100,000;
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46
Port Authority Lease means the Lease, dated as of October 1, 1996,
between the ▇▇▇▇▇▇-▇▇▇▇▇ County Port Authority, as lessor, and Lessee,
as lessee, relating to certain real and personal property located at
the ▇▇▇▇▇▇ Project;
Potential Default means an event, condition or thing which constitutes,
or which with the lapse of any applicable grace period or the giving of
notice or both would constitute, a Default referred to in Section XI
and which has not been appropriately waived in writing in accordance
with this Agreement or fully corrected, prior to becoming an actual
Default, to the full satisfaction of Lessor;
Purchase Order means any and all purchase orders, agreements, documents
or other writings that evidence or otherwise relate to the purchase of
any item of Equipment;
Receivable means a claim for money due or to become due, whether
classified as an account, instrument, chattel paper, general
intangible, incorporeal hereditament or otherwise, and any proceeds of
the foregoing;
Reportable Event has the meaning ascribed thereto by ERISA;
Standard & Poor's means Standard & Poor's Rating Service, a Division of
The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., and its successors and assigns;
State Loan means the Taxable State of Ohio Revenue Note (Brush ▇▇▇▇▇▇▇
Inc. Project) (the "Note") in the principal amount of $5,000,000
issued, sold and delivered by the ▇▇▇▇▇▇-▇▇▇▇▇ County Port Authority to
the Director of Development of the State of Ohio pursuant to the Loan
Agreement, dated as of October 1, 1996, between those Persons;
Subsidiary means a corporation or other business entity of which shares
constituting a majority of its outstanding capital stock (or other form
of ownership) or constituting a majority of the voting power in any
election of directors (or shares constituting both majorities) are (or
upon the exercise of any outstanding warrants, options or other rights
would be) owned directly or indirectly at the time in question by the
corporation in question or another "subsidiary" of that corporation or
any combination of the foregoing;
Synthetic Lease means any lease that is considered a financing for
federal income tax purposes, but is considered an operating lease for
purposes of GAAP, including, without limitation, this Lease;
Tangible Net Worth means (a) book net worth, less (b) such assets of
the Companies, on a consolidated basis, as consist of good will, costs
of businesses over net assets acquired, patents, copyrights,
trademarks, mailing lists, catalogues, bond discount, underwriting
expense, organizational expenses and intangibles
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47
(except that intangibles such as treasury stock which shall have
already been deducted from book net worth shall not be deducted
again), all as determined on a consolidated basis in accordance with
GAAP; and
Vendor means the manufacturer or other seller of any item of
Equipment.
The foregoing definitions shall be applicable to the respective plurals of the
foregoing defined terms.
(c) The following terms are defined in the text of this Agreement
where indicated:
Affiliate has the meaning set forth in Section XII(d).
Assignment of Purchase Orders has the meaning set forth in Section
XXVI(a)(viii), or means an Assignment of Purchase Orders otherwise
attached to any Schedule, or means both, as the context may require.
Break Amount has the meaning set forth in Section VII(b).
Casualty Insurance has the meaning set forth in Section IX.
Casualty Occurrence has the meaning set forth in Section VII.
Collateral has the meaning set forth in Section XVII(b)
Default has the meaning set forth in Section XI.
Disbursement Commencement Date has the meaning set forth in Section
II(b).
Disbursement Equipment has the meaning set forth in Section I.
Disbursement Funding Notice has the meaning set forth in Section
XXVI(b).
Disbursement Schedule has the meaning set forth in Section I.
Documents has the meaning set forth in Section XVI(a)
Equipment has the meaning set forth in Section I.
Equipment Schedule has the meaning set forth in Section I.
Excluded Disbursement Equipment has the meaning set forth in Section
I(c).
Excluded Disbursement Equipment Payment has the meaning set forth in
Section I(e).
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48
Inventory has the meaning set forth in Section XVII(b).
Leverage Multiplier has the meaning set forth in Section XXIII(b).
Lien has the meaning set forth in Section IV(a).
Participant has the meaning set forth in Section XII(c).
Payment Date has the meaning set forth in Section VII.
Permitted Liens has the meaning set forth in Section V(c).
Rent has the meaning set forth in Section II(b).
Replacement Item has the meaning set forth in Section V(d).
Required Multiplier has the meaning set forth in Section XXIII(d).
Schedule has the meaning set forth in Section I.
Sublease has the meaning set forth in Section XII(a).
Substituted Item has the meaning set forth in Section V(d).
Syndication has the meaning set forth in Section XII(c).
Taxes has the meaning set forth in Section III(b).
Term has the meaning set forth in Section II(a).
Termination Date has the meaning set forth in Section XXII.
Treasury Yield has the meaning set forth in Section VII(b).
XXVI. CONDITIONS TO FUNDING
(a) Lessor shall have no obligation to make the initial disbursement
for the Acquisition Cost for any Equipment or any Disbursement Equipment unless
each of the following conditions is fulfilled to the satisfaction of Lessor:
(i) Lessor shall have received a written opinion of counsel to
Lessee dated the date of such initial disbursement, in form and
substance satisfactory to Lessor;
45
49
(ii) Lessor shall have received: (1) a copy of Lessee's
articles of incorporation, certified by the Secretary of State of the
State of Ohio, no earlier than the tenth (10th) day prior to the date
of such initial disbursement, and Code of Regulations accompanied by a
Secretary's or Assistant Secretary's certificate, dated the date of
such initial disbursement stating that such articles of incorporation
and Code of Regulations are in full force and effect and have not been
amended since the date thereof; (2) a certificate of good standing from
the Secretary of State of the State of Ohio, dated no earlier than the
tenth (10th) day prior to the applicable date, with respect to Lessee;
and (3) a copy of resolutions of Lessee's board of directors
authorizing the execution, delivery and performance by Lessee of this
Lease and all other transactions herein contemplated and each of the
documents, instruments and agreements required or contemplated hereby
or thereby to which it is or will be a party, accompanied by a
Secretary's or Assistant Secretary's certificate of Lessee dated such
applicable date (A) stating that each of such resolutions are in full
force and effect and has not been amended since the date of their
adoption and (B) certifying as to the incumbency and specimen
signatures of the officers of Lessee, who are authorized to execute and
deliver on behalf of Lessee this Lease and the documents, instruments
and agreements contemplated hereby or thereby, as applicable;
(iii) Lessor shall have received a certificate from the chief
executive officer or chief financial officer of Lessee to the effect
that the representations and warranties of Lessee contained herein and
in any certificate of Lessee delivered pursuant hereto are true and
correct on and as of such date with the same effect as though made on
and as of such date and that no Default or Potential Default shall have
occurred;
(iv) Lessor shall have received certificates of insurance,
loss payable endorsements and other evidence that Lessee has complied
with the provisions of Section IX;
(v) Lessor shall have received evidence satisfactory to it
that appropriate instruments have been filed in all jurisdictions
necessary to perfect properly the security interest in the Equipment
and other Collateral created by this Lease including, without
limitation, Section XVII(b) (including financing statements and fixture
filings under the Uniform Commercial Code naming Lessee as debtor and
naming B.W. Alloy, Ltd. as debtor), subject to no recorded Liens with
respect to the Equipment (other than those Liens created by Lessor) and
such other collateral in such jurisdictions;
(vi) Lessor shall have received an Agreement from the
▇▇▇▇▇▇-▇▇▇▇▇ County Port Authority and a Mortgagee's Agreement from
National City Bank, as trustee, and The Prudential Life Insurance
Company of America and a Mortgagee's Agreement from the Director of
Development of the State of Ohio, which
46
50
agreements, among other matters, waive any lien or security interest
in the Equipment, all in form and substance satisfactory to Lessor;
(vii) Each of the applicable Documents shall have been
executed and delivered and shall be in full force and effect according
to its respective terms and all fees due and payable to Lessor have
been paid;
(viii) Lessor shall have received a signed Assignment of
Purchase Orders in substantially the form of Exhibit 6 hereto (the
"ASSIGNMENT OF PURCHASE ORDERS") from B.W. Alloy, Ltd. and Lessee; and
(ix) Lessor shall have received such other documents,
opinions, certificates and waivers, in form and substance satisfactory
to Lessor, as Lessor may reasonably require.
(b) Lessor shall have no obligation to make a disbursement for the
Acquisition Cost for any item of Disbursement Equipment or Equipment unless the
conditions set forth in (a) above and each of the following conditions is
fulfilled to the satisfaction of Lessor:
(i) No Default or Potential Default has occurred;
(ii) All representations and warranties of Lessee are true and
correct, including the representations and warranties set forth in the
applicable Schedule, as of the date thereof as though made on that
date, and there has been no Material adverse change in the financial
condition, properties or business of Lessee;
(iii) Such item constitutes part of the Equipment described on
Exhibit 4 hereto, is free from damage and free of all Liens, other than
any Lien specifically excepted in Section V(c);
(iv) The disbursement date is not later than the Last Delivery
Date, and if any part of that disbursement will constitute the final
payment for an item of equipment that has been accepted by Lessee,
Lessor has received a Certificate of Acceptance executed and delivered
by Lessee relating to that equipment;
(v) The Acquisition Cost of such item, when added to the
aggregate Acquisition Cost of all other Disbursement Equipment and
Equipment disbursed under this Agreement shall not exceed the Maximum
Acquisition Cost;
(vi) Lessor has received an appropriate Disbursement Schedule
for such item of Disbursement Equipment, in form and substance
satisfactory to Lessor, duly executed by Lessee, and which is covered
by the fully signed Assignment of Purchase Orders, which assignment has
been consented to by the Vendor of that
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51
Equipment in a form reasonably satisfactory to Lessor, together with a
copy of the Purchase Order or Purchase Orders relating to that
Disbursement Equipment;
(vii) All licenses, registrations, permits, consents and
approvals required by federal, state or local laws or by any
governmental authority or instrumentality in connection with Lessor's
ownership of, and the delivery, acquisition, installation, use and
operation of, such Equipment or Disbursement Equipment that are
receivable on the proposed date of disbursement and that are necessary
at the stage of installation, use or operation of the Equipment on that
date shall have been obtained to the satisfaction of Lessor, and Lessee
knows of no reason why any permits, consents or approvals not
receivable or not necessary on that date will not be issued when
receivable and necessary; and
(viii) Lessor shall have received a fully executed
Disbursement Funding Notice in the form of Exhibit 5 (each being a
"DISBURSEMENT FUNDING NOTICE") with respect to such Disbursement
Equipment or Equipment not later than ten (10) Business Days prior to
the proposed date of the disbursement with the amount to be disbursed
in respect of any Disbursement Funding Notice not being less than one
million dollars ($1,000,000); provided that (A) the day of the
disbursement shall occur on a Business Day that is not later than the
Last Delivery Date, and (B) such Disbursement Funding Notice shall
specify the proposed date of the disbursement, the aggregate
Acquisition Cost to be funded on such date and the list of Disbursement
Equipment or Equipment to be funded by Lessor on such date, and is
accompanied by invoices supporting the Acquisition Cost of the
Disbursement Equipment or Equipment designated in such Disbursement
Funding Notice.
Lessor may not submit more than one (1) Disbursement Funding Notice during each
calendar month.
(c) On or prior to the Basic Term Commencement Date, Lessor shall have
received a written opinion of counsel to Lessee dated the date of the Basic Term
Commencement Date, in form and substance reasonably satisfactory to Lessor and
at Lessee's expense, to the effect that the Equipment Schedule dated as of that
date has been executed and delivered by a duly authorized officer of Lessee and
constitutes the legal, valid and binding obligation of Lessee, enforceable
against Lessee in accordance with its terms.
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52
IN WITNESS WHEREOF, Lessee and Lessor have caused this Master Lease
Agreement to be executed by their duly authorized representatives as of the date
first above written.
LESSOR: LESSEE:
NATIONAL CITY BANK, BRUSH ▇▇▇▇▇▇▇ INC.
FOR ITSELF AND AS AGENT FOR
CERTAIN PARTICIPANTS
By: By:
Name: Name:
Title: Title:
49
53
EXHIBIT NO. 1
DISBURSEMENT SCHEDULE
SCHEDULE NO. ______
DATED THIS ________ DAY OF _____________, 199__
TO MASTER LEASE AGREEMENT DATED AS OF December 30, 1996
Lessor & Mailing Address: Lessee & Mailing Address:
NATIONAL CITY BANK, BRUSH ▇▇▇▇▇▇▇ INC.
FOR ITSELF AND AS AGENT FOR ▇▇▇▇▇ ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ PARTICIPANTS ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
This Disbursement Schedule is executed pursuant to, and incorporates by
reference the terms and conditions of, and capitalized terms not defined herein
shall have the meanings assigned to them in, the Master Lease Agreement
identified above ("Agreement;" said Agreement and this Schedule being
collectively referred to as "Lease"). This Disbursement Schedule, incorporating
by reference the Agreement, constitutes a separate instrument of lease.
A. Disbursement Equipment.
Pursuant to the terms of the Lease, Lessor agrees to fund disbursements
in respect of the Disbursement Equipment listed on Annex A attached hereto and
made a part hereof.
B. Financial Terms.
1. Capitalized Lessor's Cost: $
----------------------------
(on the date of this Schedule)
2. Daily Lease Rate Factor: LIBOR Rate plus sixty (60) basis
points per annum
3. Basic Term: The three-year period commencing on the Basic
Term Commencement Date
4. Basic Term Commencement Date: The earlier of (a) the date
that Lessee designates as the Basic Term Commencement Date
in a written notice to Lessor, or (b) December 15, 1998.
1
54
5. Equipment Location: Lessee's plant at ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇.
6. Lessee Federal Tax ID No.: ▇▇-▇▇▇▇▇▇▇
7. Maximum Lease Term: The Term shall not exceed twelve (12)
years.
8. Last Delivery Date: The earlier of November 15, 1998 or the
Basic Term Commencement Date.
C. Interim Term and Interim Rent.
1. Interim Rent. For the period from and including the Disbursement
Commencement Date to the Basic Term Commencement Date ("Interim Lease Term"),
rent ("Interim Rent") shall accrue on the Capitalized Lessor's Cost in an amount
equal to the product of the Daily Lease Rate Factor times the Capitalized
Lessor's Cost of the Disbursement Equipment times the number of days in the
Interim Interest Period. Interest shall be calculated on the basis of a 360 day
year for the actual number of days elapsed. Interim Rent shall accrue during
each Interim Interest Period and, at the end of each Interim Interest Period,
shall be added to and become part of the Lessor's Capitalized Cost outstanding
under this Disbursement Schedule, unless otherwise paid as provided in the
Agreement.
2. Disbursement Equipment. Lessee represents, warrants and
covenants as follows with respect to the Disbursement Equipment listed on Annex
A attached hereto:
(i) To the best of its knowledge, the Disbursement
Equipment will be completed, shipped and delivered to
Lessee, and installed at the Equipment Location on or
prior to the Last Delivery Date;
(ii) Each item of Disbursement Equipment constitutes a
portion or unit of the Equipment described on Annex A
attached hereto; and
(iii) The Purchase Order or Purchase Orders relating to
that Disbursement Equipment require the disbursement
of funds in an amount equal to the Capitalized
Lessor's Cost, and Lessee has received invoices for
those funds.
As used in this Schedule, the following terms shall have the following
meanings:
"Interim Interest Period" or "Interest Period" shall mean the period
beginning on the date of this Schedule and ending on the same day of each month
thereafter during the Interim Lease Term.
2
55
"Interest Rate" shall mean that percentage per annum calculated as the
sum of the LIBOR Rate redetermined monthly, plus sixty (60) basis points.
"LIBOR Rate" shall mean, with respect to any Interim Interest Period
occurring during the term of the Lease, an interest rate per annum equal at all
times during such Interim Interest Period to the quotient of (1) the rate per
annum as determined by Lessor at which deposits of U.S. Dollars in immediately
available and freely transferable funds are offered at 11:00 a.m. (London,
England time) two (2) Business Days before the commencement of such Interim
Interest Period to major banks in the London interbank market for a period of
one (1) month and in an amount equal or comparable to the Capitalized Lessor's
Cost, divided by (2) a number equal to 1.00 minus the aggregate (without
duplication) of the rates (expressed as a decimal fraction) of the LIBOR Reserve
Requirements current on the date three (3) Business Days prior to the first day
of the Interim Interest Period.
"LIBOR Reserve Requirements" shall mean the daily average for the
applicable Interest Period of the maximum rate applicable to Lessor or its
Participants at which reserves (including, without limitation, any supplemental,
marginal and emergency reserves) are imposed during such Interest Period by the
Board of Governors of the Federal Reserve System (or any successor) on
"Eurocurrency liabilities", as defined in such Board's Regulation D (or in
respect of any other category of liabilities that include deposits by reference
to which the interest rates on Eurodollar loans is determined or any category of
extensions of credit or other assets that include loans by non-United States
offices of any lender to United States residents), having a term equal to such
Interest Period, subject to any amendments of such reserve requirement by such
Board or its successor, taking into account any transitional adjustments
thereto.
If at any time Lessor or any Participant (or, without duplication, the
bank holding company of which such Participant is a subsidiary) determines that
either adequate and reasonable means do not exist for ascertaining the LIBOR
Rate, or it becomes impractical for Lessor or any Participant to obtain funds to
make or maintain the financing hereunder with interest at the LIBOR Rate, or
Lessor or any Participant reasonably determines that, as a result of changes to
applicable law after the date of execution of the Agreement, or the adoption or
making after such date of any interpretations, directives or regulations
(whether or not having the force of law) by any court, governmental authority or
reserve bank charged with the interpretation or administration thereof, it shall
be or become unlawful or impossible to make, maintain, or fund the transaction
hereunder at the LIBOR Rate, then Lessor promptly shall give notice to Lessee of
such determination and Lessor and Lessee shall negotiate in good faith a
mutually acceptable alternative method of calculating the Interest Rate and
shall execute and deliver such documents as reasonably may be required to
incorporate such alternative method of calculating the Interest Rate in this
Schedule, within thirty (30) days after the date of Lessor's notice to Lessee.
If the parties are unable mutually to agree to such alternative method of
calculating the Interest Rate in a timely fashion, (a) effective on the
commencement of the next succeeding Interest Period or the date that it becomes
impractical for Lessor or any Participant to maintain the financing
3
56
hereunder with interest at the LIBOR Rate as aforesaid, as the case may be, the
Interest Rate shall become a floating rate equal to the Federal Funds Rate plus
sixty (60) basis points, and (b) on the Rent Payment Date next succeeding the
expiration of such thirty (30) day period Lessee shall purchase all (but not
less than all) of the Disbursement Equipment described on all Disbursement
Schedules executed pursuant to the Agreement and shall pay to Lessor, in cash,
the purchase price for the Disbursement Equipment so purchased, determined as
hereinafter provided. (As used herein, "Federal Funds Rate" means the rate of
interest, as reasonably determined by Lessor, paid by or available to Lessor for
the purchase of "federal funds" at the time or times in question on a daily
overnight basis.) The purchase price of the Disbursement Equipment shall be an
amount equal to all amounts disbursed by Lessor in respect of that Disbursement
Equipment, together with all rent and other sums then due on such date, plus all
taxes and charges upon sale and all other reasonable and documented expenses
incurred by Lessor in connection with such sale. Upon satisfaction of the
conditions specified in this Paragraph, Lessor will transfer, on an AS IS, WHERE
IS BASIS, all of Lessor's interest in and to the Disbursement Equipment. Lessor
shall not be required to make and may specifically disclaim any representation
or warranty as to the condition of the Disbursement Equipment and other matters
(except that Lessor shall warrant that it conveyed whatever interest it received
in such Disbursement Equipment free and clear of any Lien created by Lessor).
Lessor shall execute and deliver to Lessee such Uniform Commercial Code
statements of termination as reasonably may be required in order to terminate
any interest of Lessor in and to the Disbursement Equipment.
3. Lessee shall pay to Lessor, for the account of each Participant,
from time to time, the amounts as such Participant may determine to be necessary
to compensate it for any costs which such Participant determines are
attributable to its making or maintaining its interest in the Lease and the
Disbursement Equipment (the "Interest") or any reduction in any amount
receivable by such Participant in respect of any such Interest (such increases
in costs and reductions in amounts receivable being herein called "Additional
Costs"), resulting from any Regulatory Change (as defined below) which:
(i) changes the basis of taxation of any amounts payable to
Lessor for the account of such Participant in respect of such Interest
(other than taxes imposed on or measured by the overall net income of
such Participant in respect of the interest by the jurisdiction in
which such Participant has its principal office or its lending office);
or
(ii) imposes or modifies any reserve, special deposit or
similar requirements relating to any extensions of credit or other
assets of, or any deposits with or other liabilities of, such
Participant; or
(iii) imposes any other condition affecting this Lease or
any Interest.
For purposes hereof, "Regulatory Change" shall mean any change after the date of
this Lease in United States federal, state or foreign law or regulations
(including, without limitation, Regulation D of the Board of Governors of the
Federal Reserve System (or any
4
57
successor), as amended or supplemented from time to time) or the adoption or
making after such date of any interpretation, directive or request applying to a
class of banks including any Participant or under any United States federal,
state or foreign law and whether or not failure to comply therewith would be
unlawful) by any court or governmental or monetary authority charged with the
interpretation or administration thereof. In addition, whenever Lessee shall
revoke any Disbursement Funding Notice or shall for any other reason fail to
take a disbursement pursuant thereto or shall fail otherwise to comply
therewith, then, in each case on the demand of Lessor or any Participant, Lessee
shall pay that Person such amount as will compensate it for any loss, cost or
loss of profit incurred by it by reason of its liquidation or reemployment of
deposits or other funds.
Without limiting the effect of the foregoing Paragraph (but without
duplication), Lessee shall pay to Lessor, for the account of each Participant,
from time to time on request such amounts as such Participant may determine to
be necessary to compensate such Participant (or, without duplication, the bank
holding company of which such Participant is a subsidiary) for any costs which
it determines are attributable to the maintenance by such Participant (or any
lending office or such bank holding company), pursuant to any law or regulation
or any interpretation, directive or request (whether or not having the force of
law) of any court or governmental or monetary authority (i) following any
Regulatory Change or (ii) implementing any risk-based capital guideline or
requirement (whether or not having the force of law and whether or not the
failure to comply therewith would be unlawful) heretofore or hereafter issued by
any government or governmental or supervisory authority implementing at the
national level the Basle Accord (including, without limitation, the Final
Risk-Based Capital Guidelines of the Board of Governors of the Federal Reserve
System (12 C.F.R. Part 208, Appendix A; ▇▇ ▇.▇.▇. ▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇ ▇) and the
Final Risk-Based Capital Guidelines of the Office of the Comptroller of the
Currency (12 C.F.R. Part 3, Appendix A)), of capital in respect of such
Participant's Interest (such compensation to include, without limitation, an
amount equal to any reduction of the rate of return on assets or equity of such
Participant (or any lending office or bank holding company) to a level below
that which such Participant (or any lending office or bank holding company)
could have achieved but for such law, regulation, interpretation, directive or
request). For purposes of this Paragraph, "Basle Accord" shall mean the
proposals for risk-based capital framework described by the Basle Committee on
Banking Regulations and Supervisory Practices in its paper entitled
"International Convergence of Capital Measurement and Capital Standards" dated
July 1988, as amended, modified and supplemented and in effect from time to time
or any replacement thereof.
Each Participant shall notify Lessee of any event occurring after the
date of this Lease that will entitle such Participant to compensation under the
preceding two Paragraphs as promptly as practicable, but in any event within
thirty (30) days, after such Participant obtains actual knowledge thereof;
provided, that (i) if such Participant fails to give such notice within thirty
(30) days after it obtains actual knowledge of such an event, such Participant
shall, with respect to compensation payable pursuant to the preceding two
Paragraphs in respect of any costs resulting from such event, only be entitled
to payment under the referenced Paragraphs for costs incurred from and after the
date thirty (30) days
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58
prior to the date that such Participant does give such notice, and (ii) such
Participant will designate a different lending office for the Interest if such
designation will avoid the need for, or reduce the amount of, such compensation
and will not, in the sole opinion of such Participant, be disadvantageous to
such Participant. Each Participant will furnish to Lessee a certificate setting
forth the basis and amount of each request by such Participant for compensation
under the preceding two Paragraphs. Determinations and allocations by each
Participant for purposes of the preceding two Paragraphs shall be conclusive,
absent manifest error.
D. Insurance.
1. Public Liability: $1,000,000 total liability per occurrence and
$2,000,000 in the aggregate, with excess liability in umbrella form of
$10,000,000 per occurrence and in the aggregate, with a maximum deductible
amount of (a) $1,500,000 per occurrence or (b) an amount equal to $1,500,000 per
occurrence plus the amount of any reserves specifically allocated by Lessee for
this type of liability that are satisfactory to Lessor, but in no event greater
than $2,500,000 per occurrence.
2. Casualty and Property Damage: An amount equal to the higher of the
full replacement cost of each unit of Disbursement Equipment or the amounts
disbursed by Lessor in respect of each unit of Disbursement Equipment, with a
maximum deductible amount of $1,000,000 per occurrence.
This Schedule is not binding or effective with respect to the Agreement
or Equipment until executed on behalf of Lessor and Lessee by an authorized
representative of Lessor and Lessee, respectively.
IN WITNESS WHEREOF, Lessee and Lessor have caused this Schedule to be
executed by their duly authorized representatives as of the date first above
written.
LESSOR: LESSEE:
NATIONAL CITY BANK, BRUSH ▇▇▇▇▇▇▇ INC.
FOR ITSELF AND AS AGENT FOR
CERTAIN PARTICIPANTS
By: By:
Name: Name:
Title: Title:
59
ANNEX A
TO
DISBURSEMENT SCHEDULE NO. ______
DATED THIS ______ DAY OF ______________, 199__
TO MASTER LEASE AGREEMENT DATED AS OF December 30, 1996
DESCRIPTION OF DISBURSEMENT EQUIPMENT
Type and
Serial Model of Number Cost per
Vendor Numbers Equipment of Units Unit
Initials:
-------------- -----------
Lessor Lessee
1
60
EXHIBIT NO. 2
EQUIPMENT SCHEDULE
SCHEDULE NO. ______
DATED THIS ________ DAY OF _____________, 199__
TO MASTER LEASE AGREEMENT DATED AS OF December 30, 1996
Lessor & Mailing Address: Lessee & Mailing Address:
NATIONAL CITY BANK, BRUSH ▇▇▇▇▇▇▇ INC.
FOR ITSELF AND AS AGENT FOR ▇▇▇▇▇ ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ PARTICIPANTS ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
This Equipment Schedule is executed pursuant to, and incorporates by reference
the terms and conditions of, and capitalized terms not defined herein shall have
the meanings assigned to them in, the Master Lease Agreement identified above
("Agreement;" said Agreement and this Schedule being collectively referred to as
"Lease"). This Equipment Schedule, incorporating by reference the Agreement,
constitutes a separate instrument of lease.
A. Equipment.
Pursuant to the terms of the Lease, Lessor agrees to acquire and lease
to Lessee the Equipment listed on Annex A attached hereto and made a part
hereof.
B. Financial Terms.
1. Capitalized Lessor's Cost: $
------------------------------
(being an amount equal to funds disbursed and Interim
Rent accrued and unpaid in respect of the Equipment and its
parts and components during the Interim Lease Period)
2. Daily Lease Rate Factor: LIBOR Rate plus sixty (60) basis
points per annum
3. Basic Term: The three-year period commencing on the Basic
Term Commencement Date
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4. Basic Term Commencement Date: The earlier of (a) the date that Lessee
designates as the Basic Term Commencement Date in a written notice to
Lessor, or (b) December 15, 1998.
5. Equipment Location: Lessee's plant in ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇.
6. Lessee Federal Tax ID No.: ▇▇-▇▇▇▇▇▇▇
7. Lessee agrees and acknowledges that the Capitalized Lessor's Cost of
the Equipment as stated on the Schedule is equal to the fair market
value of the Equipment on the date hereof.
8. Renewal Term: Each Renewal Term will consist of a one-year period, and
subject to Section XVIII(b), Lessee may elect up to seven (7) Renewal
Terms.
9. Maximum Lease Term: The Term shall not exceed twelve (12) years.
10. Stipulated Loss Values: See Annex D.
11. Termination Values: See Annex D.
12. Assumed Interest Rate: __________% (which will be determined three (3)
Business Days before the date of execution of this Schedule).
13. Last Delivery Date: The earlier of November 15, 1998 or the Basic Term
Commencement Date.
C. Term and Rent.
1. Basic Term and Renewal Term Rent. Commencing on the Basic Term
Commencement Date and payable, in arrears, on the same day of each quarter
thereafter (each, a "Rent Payment Date") during the Basic Term ("Basic Term
Rent") and any Renewal Term ("Renewal Term Rent"), Lessee shall pay as Rent
quarterly installments of (a) interest on the unamortized portion of the unpaid
Capitalized Lessor's Cost as of the immediately preceding Rent Payment Date
(after application of the Rent paid on such date) at the Interest Rate for the
Interest Period following such immediately preceding Rent Payment Date and (b)
of principal in the principal amounts described on the Amortization Schedule
attached as Annex E. Interest shall be calculated on the basis of a 360 day year
for the actual number of days elapsed. Said Rent consists of principal and
interest components, such principal components being as provided in the
Amortization Schedule attached hereto as Annex E.
As used herein, the following terms shall have the following meanings:
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62
"Interest Period" shall mean the period beginning on the Basic Term
Commencement Date and ending on the next Rent Payment Date, and each subsequent
quarterly period.
"Interest Rate" shall mean that percentage per annum calculated as the
sum of the LIBOR Rate redetermined quarterly, plus sixty (60) basis points.
"LIBOR Rate" shall mean, with respect to any Interest Period occurring
during the term of the Lease, an interest rate per annum equal at all times
during such Interest Period to the quotient of (1) the rate per annum as
determined by Lessor at which deposits of U.S. Dollars in immediately available
and freely transferable funds are offered at 11:00 a.m. (London, England time)
two (2) Business Days before the commencement of such Interest Period to major
banks in the London interbank market for a period of three (3) months and in an
amount equal or comparable to the Capitalized Lessor's Cost, divided by (2) a
number equal to 1.00 minus the aggregate (without duplication) of the rates
(expressed as a decimal fraction) of the LIBOR Reserve Requirements current on
the date three (3) Business Days prior to the first day of the Interest Period.
"LIBOR Reserve Requirements" shall mean the daily average for the
applicable Interest Period of the maximum rate applicable to Lessor or its
Participants at which reserves (including, without limitation, any supplemental,
marginal and emergency reserves) are imposed during such Interest Period by the
Board of Governors of the Federal Reserve System (or any successor) on
"Eurocurrency liabilities", as defined in such Board's Regulation D (or in
respect of any other category of liabilities that include deposits by reference
to which the interest rates on Eurodollar loans is determined or any category of
extensions of credit or other assets that include loans by non-United States
offices of any lender to United States residents), having a term equal to such
Interest Period, subject to any amendments of such reserve requirement by such
Board or its successor, taking into account any transitional adjustments
thereto.
If at any time Lessor or any Participant (or, without duplication, the
bank holding company of which such Participant is a subsidiary) determines that
either adequate and reasonable means do not exist for ascertaining the LIBOR
Rate, or it becomes impractical for Lessor or any Participant to obtain funds to
make or maintain the financing hereunder with interest at the LIBOR Rate, or
Lessor or any Participant reasonably determines that, as a result of changes to
applicable law after the date of execution of the Agreement, or the adoption or
making after such date of any interpretations, directives or regulations
(whether or not having the force of law) by any court, governmental authority or
reserve bank charged with the interpretation or administration thereof, it shall
be or become unlawful or impossible to make, maintain, or fund the transaction
hereunder at the LIBOR Rate, then Lessor promptly shall give notice to Lessee of
such determination and Lessor and Lessee shall negotiate in good faith a
mutually acceptable alternative method of calculating the Interest Rate and
shall execute and deliver such documents as reasonably may be required to
incorporate such alternative method of calculating the Interest Rate in this
Schedule, within thirty (30) days after the date of Lessor's notice to Lessee.
If the parties
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63
are unable mutually to agree to such alternative method of calculating the
Interest Rate in a timely fashion, (a) effective on the commencement of the next
succeeding Interest Period or the date that it becomes impractical for Lessor or
any Participant to maintain the financing hereunder with interest at the LIBOR
Rate as aforesaid, as case may be, the Interest Rate shall become a floating
rate equal to the Federal Funds Rate plus sixty (60) basis points, and (b) on
the Rent Payment Date next succeeding the expiration of such thirty (30) day
period Lessee shall purchase all (but not less than all) of the Equipment
described on all Schedules executed pursuant to the Agreement and shall pay to
Lessor, in cash, the purchase price for the Equipment so purchased, determined
as hereinafter provided. (As used herein, "Federal Funds Rate" means the rate of
interest, as reasonably determined by Lessor, paid by or available to Lessor for
the purchase of "federal funds" at the time or times in question on a daily
overnight basis.) The purchase price of the Equipment shall be an amount equal
to the Stipulated Loss Value of such Equipment calculated in accordance with
Annex D as of the date of payment, together with all rent and other sums then
due on such date, plus all taxes and charges upon sale and all other reasonable
and documented expenses incurred by Lessor in connection with such sale. Upon
satisfaction of the conditions specified in this Paragraph, Lessor will
transfer, on an AS IS, WHERE IS BASIS, all of Lessor's interest in and to the
Equipment. Lessor shall not be required to make and may specifically disclaim
any representation or warranty as to the condition of the Equipment and other
matters (except that Lessor shall warrant that it conveyed whatever interest it
received in such Equipment free and clear of any Lien created by Lessor). Lessor
shall execute and deliver to Lessee such Uniform Commercial Code statements of
termination as reasonably may be required in order to terminate any interest of
Lessor in and to the Equipment.
2. If the Rent Payment Date or any Rent Payment Date is not a Business
Day, the Rent otherwise due on such date shall be payable on the immediately
preceding Business Day.
3. Lessee shall pay to Lessor, for the account of each Participant,
from time to time the amounts as such Participant may determine to be necessary
to compensate it for any costs which such Participant determines are
attributable to its making or maintaining its interest in the Lease and the
Equipment (the "Interest") or any reduction in any amount receivable by such
Participant in respect of any such Interest (such increases in costs and
reductions in amounts receivable being herein called "Additional Costs"),
resulting from any Regulatory Change (as defined below) which:
(i) changes the basis of taxation of any amounts payable to
Lessor for the account of such Participant in respect of such Interest
(other than taxes imposed on or measured by the overall net income of
such Participant in respect of the interest by the jurisdiction in
which such Participant has its principal office or its lending office);
or
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64
(ii) imposes or modifies any reserve, special deposit or
similar requirements relating to any extensions of credit or other
assets of, or any deposits with or other liabilities of, such
Participant; or
(iii) imposes any other condition affecting this Lease or
any Interest.
For purposes hereof, "Regulatory Change" shall mean any change after the date of
this Lease in United States federal, state or foreign law or regulations
(including, without limitation, Regulation D of the Board of Governors of the
Federal Reserve System (or any successor), as amended or supplemented from time
to time) or the adoption or making after such date of any interpretation,
directive or request applying to a class of banks including any Participant or
under any United States federal, state or foreign law and whether or not failure
to comply therewith would be unlawful) by any court or governmental or monetary
authority charged with the interpretation or administration thereof.
Without limiting the effect of the foregoing Paragraph (but without
duplication), Lessee shall pay to Lessor, for the account of each Participant,
from time to time on request such amounts as such Participant may determine to
be necessary to compensate such Participant (or, without duplication, the bank
holding company of which such Participant is a subsidiary) for any costs which
it determines are attributable to the maintenance by such Participant (or any
lending office or such bank holding company), pursuant to any law or regulation
or any interpretation, directive or request (whether or not having the force of
law) of any court or governmental or monetary authority (i) following any
Regulatory Change or (ii) implementing any risk-based capital guideline or
requirement (whether or not having the force of law and whether or not the
failure to comply therewith would be unlawful) heretofore or hereafter issued by
any government or governmental or supervisory authority implementing at the
national level the Basle Accord (including, without limitation, the Final
Risk-Based Capital Guidelines of the Board of Governors of the Federal Reserve
System (12 C.F.R. Part 208, Appendix A; ▇▇ ▇.▇.▇. ▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇ ▇) and the
Final Risk-Based Capital Guidelines of the Office of the Comptroller of the
Currency (12 C.F.R. Part 3, Appendix A)), of capital in respect of such
Participant's Interest (such compensation to include, without limitation, an
amount equal to any reduction of the rate of return on assets or equity of such
Participant (or any lending office or bank holding company) to a level below
that which such Participant (or any lending office or bank holding company)
could have achieved but for such law, regulation, interpretation, directive or
request). For purposes of this Paragraph, "Basle Accord" shall mean the
proposals for risk-based capital framework described by the Basle Committee on
Banking Regulations and Supervisory Practices in its paper entitled
"International Convergence of Capital Measurement and Capital Standards" dated
July 1988, as amended, modified and supplemented and in effect from time to time
or any replacement thereof.
Each Participant shall notify Lessee of any event occurring after the
date of this Lease that will entitle such Participant to compensation under the
preceding two Paragraphs as promptly as practicable, but in any event within
thirty (30) days, after such Participant obtains actual knowledge thereof;
provided, that (i) if such Participant fails to
5
65
give such notice within thirty (30) days after it obtains actual knowledge of
such an event, such Participant shall, with respect to compensation payable
pursuant to the preceding two Paragraphs in respect of any costs resulting from
such event, only be entitled to payment under the referenced Paragraphs for
costs incurred from and after the date thirty (30) days prior to the date that
such Participant does give such notice, and (ii) such Participant will designate
a different lending office for the Interest if such designation will avoid the
need for, or reduce the amount of, such compensation and will not, in the sole
opinion of such Participant, be disadvantageous to such Participant. Each
Participant will furnish to Lessee a certificate setting forth the basis and
amount of each request by such Participant for compensation under the preceding
two Paragraphs. Determinations and allocations by each Participant for purposes
of the preceding two Paragraphs shall be conclusive, absent manifest error.
D. Insurance.
1. Public Liability: $1,000,000 total liability per occurrence and
$2,000,000 in the aggregate, with excess liability in umbrella form of
$10,000,000 per occurrence and in the aggregate, with a maximum deductible
amount of (a) $1,500,000 per occurrence or (b) an amount equal to $1,500,000 per
occurrence plus the amount of any reserves specifically allocated by Lessee for
this type of liability that are satisfactory to Lessor, but in no event greater
than $2,500,000 per occurrence.
2. Casualty and Property Damage: An amount equal to the higher of
the Stipulated Loss Value or the full replacement cost of the Equipment, with a
maximum deductible amount of $1,000,000 per occurrence.
E. Fixed Purchase Price and Residual Risk Amount
Fixed Purchase Price Residual Risk Amount
(Percent of Capitalized (Percent of Capitalized
End of Lessor's Cost) Lessor's Cost)
Basic Term 100.0000% 12.3800%
Renewal Term 1 92.1681% 10.7393%
Renewal Term 2 83.7655% 9.8982%
Renewal Term 3 74.7508% 8.9959%
Renewal Term 4 64.8705% 8.1000%
Renewal Term 5 54.0542% 6.9760%
Renewal Term 6 42.4499% 5.8051%
Renewal Term 7 30.0000% 4.5588%
The Fixed Purchase Price and Residual Risk Amount are each expressed as a
percentage of the Capitalized Lessor's Cost of the Equipment.
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66
This Schedule is not binding or effective with respect to the Agreement
or Equipment until executed on behalf of Lessor and Lessee by an authorized
representative of Lessor and Lessee, respectively.
IN WITNESS WHEREOF, Lessee and Lessor have caused this Schedule to be
executed by their duly authorized representatives as of the date first above
written.
LESSOR: LESSEE:
NATIONAL CITY BANK, BRUSH ▇▇▇▇▇▇▇ INC.
FOR ITSELF AND AS AGENT FOR
CERTAIN PARTICIPANTS
By: By:
Name: Name:
Title: Title:
7
67
ANNEX A
TO
SCHEDULE NO. ______
DATED THIS ______ DAY OF ______________, 199__
TO MASTER LEASE AGREEMENT DATED AS OF December 30, 1996
DESCRIPTION OF EQUIPMENT
Type and
Serial Model of Number Cost per
Vendor Numbers Equipment of Units Unit
Initials:
------------- -----------
Lessor Lessee
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ANNEX B
TO
SCHEDULE NO. ______
DATED THIS ______ DAY OF _______________, 199__
TO MASTER LEASE AGREEMENT DATED AS OF December 30, 1996
ASSIGNMENT OF PURCHASE ORDERS
[See Exhibit No. 6 to Master Lease Agreement]
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ANNEX C
TO
SCHEDULE NO. ______
DATED THIS _______ DAY OF __________________, 199___
TO MASTER LEASE AGREEMENT DATED AS OF December 30, 1996
CERTIFICATE OF ACCEPTANCE
To: National City Bank,
for Itself and as Agent for Certain Participants
Pursuant to the provisions of the above Schedule and Master Lease
Agreement (collectively, the "LEASE"; capitalized terms used but not defined
herein have the meanings ascribed thereto in the Lease), Lessee hereby certifies
and warrants that (a) all equipment listed in the attached invoice or invoices
(the "Equipment") is in good condition, installed (if applicable), and in
working order; and (b) Lessee accepts the Equipment for all purposes of the
Lease, each Purchase Order relating to the Equipment and all attendant
documents.
Lessee does further certify that as of the date hereof (i) no Default
or Potential Default has occurred; and (ii) the representations and warranties
made by Lessee pursuant to or under the Lease are true and correct on the date
hereof.
BRUSH ▇▇▇▇▇▇▇ INC.
By:
Name:
Authorized Representative
Dated: , 199__
---------------------
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ANNEX D
TO
SCHEDULE NO. _________
DATED THIS ______ DAY OF ______________, 199__
TO MASTER LEASE AGREEMENT DATED AS OF December 30, 1996
STIPULATED LOSS AND TERMINATION VALUE TABLE
NO. OF RENT PAYMENT DATE STIPULATED LOSS AND
(after Basic Term Commencement Date) TERMINATION VALUE*
1 100.0000%
2 100.0000%
3 100.0000%
4 100.0000%
5 100.0000%
6 100.0000%
7 100.0000%
8 100.0000%
9 100.0000%
10 100.0000%
11 100.0000%
12 100.0000%
13 98.0934%
14 96.1529%
15 94.1780%
16 92.1681%
17 90.1225%
18 88.0407%
19 85.9219%
20 83.7655%
21 81.5709%
22 79.3374%
23 77.0642%
24 74.7508%
25 72.3963%
26 70.0000%
27 67.4578%
28 64.8705%
29 62.2373%
30 59.5574%
31 56.8300%
32 54.0542%
33 51.2292%
34 48.3540%
35 45.4279%
36 42.4499%
37 39.4190%
38 36.3344%
39 33.1950%
40 30.0000%
Initials:
------------ ---------------
Lessor Lessee
------------------------
*The Stipulated Loss Value and Termination Value for any unit of
Equipment shall be equal to the Capitalized Lessor's Cost of such unit
multiplied by the appropriate percentage derived from the above table. In the
event that the Lease is for any reason extended, then the last percentage figure
shown above shall control throughout any such extended term.
71
ANNEX E
TO
SCHEDULE NO. _________
DATED THIS _____ DAY OF ______________, 199__
TO MASTER LEASE AGREEMENT DATED AS OF December 30, 1996
AMORTIZATION SCHEDULE
NO. OF RENT
PAYMENT DATE PERCENT OF PERCENT OF
(after Basic Term PRINCIPAL REMAINING PRINCIPAL
Commencement Date) PAYABLE* BALANCE*
1 0.0000% 100.0000%
2 0.0000% 100.0000%
3 0.0000% 100.0000%
4 0.0000% 100.0000%
5 0.0000% 100.0000%
6 0.0000% 100.0000%
7 0.0000% 100.0000%
8 0.0000% 100.0000%
9 0.0000% 100.0000%
10 0.0000% 100.0000%
11 0.0000% 100.0000%
12 0.0000% 100.0000%
13 1.9066% 98.0934%
14 1.9405% 96.1529%
15 1.9749% 94.1780%
16 2.0099% 92.1681%
17 2.0456% 90.1225%
18 2.0818% 88.0407%
19 2.1188% 85.9219%
20 2.1564% 83.7655%
21 2.1946% 81.5709%
22 2.2335% 79.3374%
23 2.2732% 77.0642%
24 2.3135% 74.7508%
25 2.3545% 72.3963%
26 2.3963% 70.0000%
27 2.5422% 67.4578%
28 2.5873% 64.8705%
29 2.6332% 62.2373%
30 2.6799% 59.5574%
31 2.7274% 56.8300%
32 2.7758% 54.0542%
33 2.8250% 51.2292%
34 2.8751% 48.3540%
35 2.9261% 45.4279%
36 2.9780% 42.4499%
37 3.0309% 39.4190%
38 3.0846% 36.3344%
39 3.1393% 33.1950%
40 3.1950% 30.0000%
Initials:
------------ -----------
Lessor Lessee
------------------------
*The Principal, and the Outstanding Principal Balance as of any Rent
Payment Date payment (assuming the principal payments due on each Rental Payment
Date are paid when due), shall be equal to the Capitalized Lessor's Cost of the
Equipment multiplied by the appropriate percentage derived from the above table.
72
ANNEX F
TO
SCHEDULE NO. _________
DATED THIS ______ DAY OF ______________, 199___
TO MASTER LEASE AGREEMENT DATED AS OF December 30, 1996
RETURN PROVISIONS: In addition to the provisions provided for in Section X of
this Lease, and provided that Lessee has elected not to exercise its purchase
option pursuant to Section XVIII(d) of the Lease, Lessee shall, at its expense:
(a) at least one hundred eighty (180) days and not more than three
hundred sixty-five (365) days prior to expiration or earlier termination of the
Lease, provide to Lessor a detailed inventory of all components of the
Equipment. The inventory should include, but not be limited to, a listing of
models and serial numbers for all components comprising the Equipment;
(b) at least one hundred eighty (180) days prior to expiration or
earlier termination of the Lease, upon receiving reasonable notice from Lessor,
provide or cause the vendor(s) or manufacturer(s) to provide to Lessor the
following documents: (i) one set of service manuals, blueprints, process flow
diagrams and operating manuals including replacements and/or additions thereto,
such that all documentation is completely up-to-date; (ii) one set of documents,
detailing Equipment configuration, operating requirements, maintenance records,
and other mechanical data concerning the set-up and operation of the Equipment,
including replacements and/or additions thereto, such that all documentation is
completely up-to-date;
(c) at least one hundred eighty (180) days prior to expiration or
earlier termination of the Lease, upon receiving reasonable notice from Lessor,
make the Equipment available for on-site operational inspections by potential
purchasers, under power, and provide personnel, power and other requirements
necessary to demonstrate electrical and mechanical systems for each item of the
Equipment;
(d) at least ninety (90) days prior to expiration or earlier
termination of the Lease, cause the manufacturer's representative or qualified
equipment maintenance provider, acceptable to Lessor (the "Authorized
Inspector"), to perform a comprehensive physical inspection, including testing
all material and workmanship of the Equipment and if during such inspection,
examination and test, the Authorized Inspector finds any of the material or
workmanship to be defective or the Equipment not operating within the
manufacturer's specifications, then Lessee shall repair or replace such
defective material and, after corrective measures are completed, Lessee will
provide for a follow-up inspection of the Equipment by the Authorized Inspector
as outlined in the preceding Paragraph;
(e) have each item of Equipment returned with an in-depth field service
report detailing said inspection as outlined in Subsection (d) above. The report
shall certify that
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the Equipment has been properly inspected, examined and tested and is operating
within the manufacturer's specifications;
(f) permit Lessor to videotape the Equipment "under power" at Lessee's
or at any facility where any Equipment is located at a time during normal
working hours mutually agreeable to Lessor and Lessee prior to deinstallation;
(g) have any repairs made to the Equipment in a professional and
workmanlike manner. Any Equipment enhancements or additions will revert to
Lessor upon expiration or earlier termination of the Lease and shall not affect,
in an adverse manner, the Fair Market Value of the Equipment at Lease
expiration. Such additions or enhancements shall be made only with prior written
approval of Lessor (whose approval shall not unreasonably be withheld);
(h) have the Equipment returned in good appearance with adequate
protective coatings over all surfaces as originally painted or coated, and the
Equipment shall be free from rust, and shall be in good, complete working order;
(i) have the Equipment cleaned (including the removal of all beryllium)
and approved by the necessary governmental agencies which regulate the use and
operation of such Equipment so as to be available for immediate use;
(j) properly remove all Lessee installed markings which are not
necessary for the operation, maintenance or repair of the Equipment; and
(k) provide for the deinstallation and packing of the Equipment to
include, but not be limited to, the following: (i) all process fluids shall be
removed from the Equipment and disposed of in accordance with the then current
waste disposal laws and regulations. At no time are materials which could be
considered hazardous waste by any regulatory authority to be shipped with
machinery; (ii) all internal fluids such as lube oil and hydraulic fluid are to
be filled to operating levels; filler caps are to be secured and disconnected
hoses are to be sealed to avoid spillage; (iii) the manufacturer's
representative shall deinstall and match ▇▇▇▇ all Equipment in accordance with
the specifications of the manufacturer; (iv) the Equipment shall be packed
properly and in accordance with the manufacturer's recommendations; (v) Lessee
shall provide for the transportation of the Equipment in a manner consistent
with the manufacturer's recommendations and practices to any locations within
the United States of America as Lessor shall direct; and shall have the
Equipment unloaded at such locations; and (vi) Lessee shall obtain and pay for a
policy of transit insurance for the redelivery period in an amount equal to the
replacement value of the Equipment, and Lessor shall be named as the loss payee
on all such policies of insurance.
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74
EXHIBIT NO. 3
COMPLIANCE CERTIFICATE
-----------, ----
To: National City Bank, for itself and as
Agent for certain Participants
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Subject: Master Lease Agreement, dated as of December 30, 1996, between
National City Bank, for itself and as Agent for certain
Participants, as lessor, and Brush ▇▇▇▇▇▇▇ Inc., as lessee
(the "Lease Agreement")
Greetings:
Pursuant to Section IV(b)(iii) of the Lease Agreement and in
my capacity as the chief financial officer of Brush ▇▇▇▇▇▇▇ Inc., I hereby
certify that to the best of my knowledge and belief (capitalized terms used, but
not defined herein shall have the meanings ascribed thereto in the Lease
Agreement):
1. The financial statements of the Companies accompanying this letter
are true and complete and fairly present in all Material respects their
consolidated financial condition as of _____________________, _____
(the "Closing Date") and the consolidated results of their operations
for the fiscal period then ending,
2. No Default or Potential Default under the Lease Agreement
exists *[except for those which, together with our intentions in
respect thereof, are set forth in Exhibit One to this Certificate],
and
3. As indicated by the calculations below, the Companies are
*[not] in full compliance with Sections XXIII(a) through (d),
inclusive.
[* - In (b) and (c), delete the bracketed language if inapplicable.]
(a) The actual amount of the Companies' Tangible Net Worth at
the Closing Date is equal to or is greater than the required amount.
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75
$170,696,000
plus $__________ 40% of $_________ annual earnings
accumulated from
December 31, 1996 to the
end of the preceding
fiscal year(see Section
XXIII(a))
sum $__________ required amount
$__________ actual Tangible Net Worth as of the Closing
Date
(b) The Funded Indebtedness of the Companies does not exceed
an amount equal to the Leverage Multiplier times the Companies' EBITDA for the
four consecutive fiscal quarters most recently ended -- the Leverage Multiplier
being (i) from the date of the Lease Agreement to December 30, 1999, inclusive,
3.00, and (ii) on and after December 31, 1999, 2.75.
$__________ Funded Indebtedness
divided by $__________ EBITDA
$______________ EBIT
$______________ Depreciation
$______________ Amortization
quotient __________
(c) The ratio of (i) the aggregate of the Companies' EBITDA
for the four consecutive fiscal quarters most recently ended, to (ii) the
aggregate Interest Expense of the Companies for that period, to be less 5.00 to
1:00, all as determined on a consolidated basis.
ratio of $__________ EBITDA
$______________ EBIT
$______________ Depreciation
$______________ Amortization
to $__________ Interest Expense
ratio ______ to ______
(d) The Funded Indebtedness of the Companies does not exceed
an amount equal to the Required Multiplier times the sum of the Companies'
Funded Indebtedness plus the Companies' Tangible Net Worth -- the Required
Multiplier being (i) from the date of the Lease Agreement to December 31, 2000,
inclusive, 0.50, and (ii) on and after January 1, 2001, 0.45.
2
76
$_________ Funded Indebtedness
divided by $_________ Funded Indebtedness plus Tangible Net Worth
quotient _________
BRUSH ▇▇▇▇▇▇▇ INC.
By:
Title:
3
77
EXHIBIT NO. 4
LIST OF EQUIPMENT AND ACQUISITION COST
TOTAL
PURCHASE ORDER NO. ACQUISITION
EQUIPMENT AND VENDOR COST
1. Walking Beam Furnace EX90006/Seco-Warwick $2,130,000.00
2. Hot Mill EX90003/▇▇▇▇▇▇ Engineering $14,600,000.00
3. ▇▇▇▇ Aging Furnace EX90012/RAD-CON Inc. $2,400,000.00
4. Slab Mill EX90007/Integrated Industrial Systems $7,750,000.00
5. Finish Pickle Line EX90010/SMS Process Lines $5,270,000.00
6. Four-High Rolling Mill EX90002/▇▇▇▇▇▇ Engineering $9,590,000.00
7. Anneal/Pickle Line 1. EX90009/SMS Process $11,150,000.00
Lines
Anneal/Pickle Line
2. EX90008/Drever Company
Cont. Anneal Line
8. Degreasing Line EX90011/SMS Process Lines $3,190,000.00
TOTAL $56,080,000.00
78
EXHIBIT NO. 5
FORM OF FUNDING NOTICE
National City Bank, for itself and as Agent
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ______________
Gentlemen and Ladies:
Reference is made to the Master Lease Agreement, dated as of
December 30, 1996 (as amended and supplemented from time to time, the "Lease")
between NATIONAL CITY BANK, FOR ITSELF AND AS AGENT FOR CERTAIN PARTICIPANTS, as
Lessor, and BRUSH ▇▇▇▇▇▇▇ INC., as Lessee. Capitalized terms used herein and not
otherwise defined shall have the meaning set forth in the Lease.
The undersigned hereby gives notice to Lessor pursuant to
Section XXVI(b) of the Lease of its request for a disbursement of funds. In
connection with therewith, Lessee sets forth the following information:
(i) Date of disbursement:
(ii) Acquisition Cost to be funded:
(iii) Items of equipment to be funded by Lessor on
the date of disbursement and identification of those
items that have been accepted by Lessee: See Annex A
(iv) True and correct copies of invoices, or other such
evidence approved in advance by Lessor, for items of
Disbursement Equipment described in clause (iii)
above are attached hereto.
(v) True and correct wire transfer instructions for, and
the funds to be disbursed to, each Vendor are set
forth in Annex B hereto.
Very truly yours,
BRUSH ▇▇▇▇▇▇▇ INC., as Lessee
By:
Name:
79
Title:
80
EXHIBIT NO. 6
FORM OF ASSIGNMENT OF PURCHASE ORDERS
ASSIGNMENT OF PURCHASE ORDERS
THIS ASSIGNMENT OF PURCHASE ORDERS (this "Agreement"), dated
as of December 30, 1996, made by B.W. ALLOY, LTD., an Ohio limited liability
company ("BWA"), and BRUSH ▇▇▇▇▇▇▇ INC., an Ohio corporation ("Lessee") (BWA and
Lessee hereinafter sometimes collectively referred to as "Assignors" and
individually as an "Assignor"), in favor of NATIONAL CITY BANK, FOR ITSELF AND
AS AGENT FOR CERTAIN PARTICIPANTS (hereinafter called, together with its
successors and assigns, if any, "Lessor").
Recitals:
A. Lessee and Lessor have entered into a Master Lease
Agreement, dated as of December 30, 1996 (together with all schedules and
exhibits thereto and as the same may be amended, modified, supplemented,
renewed, extended, substituted or replaced from time to time, the "Equipment
Lease"), whereby Lessor, subject to certain conditions, will lease to Lessee
from time to time certain equipment described in the Schedules (as defined in
the Equipment Lease) executed and delivered by Lessee to Lessor from time to
time (collectively, the "Equipment") (capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned to them in the
Equipment Lease); and
B. To secure the payment of rent and the payment and
performance of all of Lessee's obligations and liabilities under the Equipment
Lease, including all Schedules thereto (collectively, the "Liabilities"), Lessor
has required that Lessee grant to Lessor a security interest in all of Lessee's
right, title and interest in and to, and assign to Lessor for collateral
security purposes all of Lessee's right, title and interest in and to, the
Collateral (as defined in the Equipment Lease and herein); and
C. BWA (the membership interests of which are owned by Lessee
and a wholly owned subsidiary of Lessee) has entered into the Purchase Orders
described on Exhibit A hereto (as amended, modified or supplemented from time to
time, collectively the "Purchase Orders" and individually a "Purchase Order"),
and the Purchase Orders relate to the Equipment that is to be subject to the
Equipment Lease; and
D. Under the Equipment Lease and subject to certain conditions
therein, Lessor has agreed to disburse funds to the various vendors under the
Purchase Orders (collectively, the "Vendors") when and as requested by Lessee;
and
81
E. The Equipment is to be delivered to an alloy strip mill
located at ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇, the real property on which such mill is located is owned by Lessee,
subject to a ground lease and the Port Authority Lease, and Lessee has
guaranteed to the Vendors the performance by BWA of its obligations under the
Purchase Orders; and
F. The obligations of Lessor to lease the Equipment to Lessee
under the Equipment Lease are subject to the condition precedent, among others,
that Assignors execute and deliver this Agreement.
NOW, THEREFORE, as an inducement to Lessor to lease the
Equipment to Lessee under the Equipment Lease, and intending to be legally bound
hereby, Assignors hereby agree with Lessor as follows:
1. Assignment of Rights under Purchase Orders. Each Assignor
hereby assigns, transfers, conveys and sets over to Lessor all of Assignor's
rights in, to and under the Purchase Orders, including any liens and security
interests granted to or for the benefit of Assignor securing the obligations of
any Vendor or any other Person to Assignor under any Purchase Orders and any
guarantees of or letters of credit securing any such obligations, and including,
without limitation, the following:
(a) the right to take title to the Equipment;
(b) all amounts payable to Assignor under or with respect to
any Purchase Order or as a result of the exercise of any claim, right,
privilege or remedy in respect thereof, including cash and non-cash
proceeds;
(c) all claims, rights, privileges and remedies on the part of
Assignor, whether arising by contract or by statute or at law or in
equity or otherwise, arising under or in connection with any Purchase
Order; and
(d) all rights of Assignor to exercise any election or option
or to give or receive any notice, consent, waiver or approval under or
in respect of the Purchase Orders, and the right (but not the
obligation) to do any and all other things Assignor is entitled to do
thereunder;
together with full power and authority, in the name of Assignors or otherwise,
to enforce, collect, receive and receipt for any and all of the foregoing;
provided, however, that until a Default or Potential Default has occurred and is
continuing, Assignors may exercise all of their respective rights, powers,
privileges and remedies under the Purchase Orders to the extent not prohibited
by this Agreement or any other Document, and in connection therewith, Lessor
agrees to execute such agreements, instruments and other documents and otherwise
take any action reasonably requested by Lessee, all at the expense of Assignors.
82
The assignment of rights provided for herein shall be
effective immediately upon the execution and delivery of this Agreement and
shall not be conditioned upon the occurrence of any Default or Potential Default
or any default under the Purchase Orders or of any other contingency or event.
In order to secure the prompt payment of the Liabilities from
time to time outstanding, and the performance and observance by Assignors of all
the obligations of Assignors hereunder and under the other Documents, each
Assignor hereby grants to Lessor a first priority security interest in all of
its right, title and interest in and to, and assigns to Lessor for collateral
security purposes all of that Assignor's right, title and interest in and to,
the following, whether now or hereafter acquired and wherever located (the
"Collateral"): (1) The Purchase Orders, and any and all other purchase orders,
agreements, documents or other writings that evidence or otherwise relate to the
purchase of any item of Equipment, and any general intangibles and contract
rights in respect of the Equipment, the maintenance, use and operation of the
Equipment, and the Purchase Orders (including, without limitation, all rights of
Assignor to receive monies due and to become due under or pursuant to any
Purchase Orders, general intangibles and contract rights and all of the rights
of Assignor to terminate, and to perform, compel performance and otherwise
exercise all remedies under the Purchase Orders, general intangibles and
contract rights); (2) The Equipment described in the Purchase Orders and the
equipment otherwise subject to the Equipment Lease, or otherwise described in
any Disbursement Schedule or Equipment Schedule to the Equipment Lease,
including, without limitation, the equipment described in Exhibit B hereto, and
any components, parts and work-in-process in respect thereof, whether or not in
the possession or control of any Assignor, together with all additions,
attachments, improvements, accessories and accessions thereto and any and all
substitutions, replacements or exchanges therefor; (3) Any sublease of any of
the Equipment and all extensions and renewals thereof, and all rentals and other
sums due, now or hereafter, thereunder; (4) To the extent the Equipment may
constitute or be deemed to be inventory (solely to such extent, the
"Inventory"), such Inventory; (5) All documents, books and records in respect of
the Equipment and Inventory; and (6) All cash and non-cash proceeds and products
of any and all of the foregoing (including, without limitation, proceeds which
constitute property of the types described in clauses (1) through (5) above and
all payments under any insurance (whether or not Lessor is the loss payee
thereof), indemnity, warranty or guaranty, payable by reason of loss or damage
to or otherwise with respect to any of the foregoing property).
2. Payment of Assigned Sums. Assignors hereby presently,
unconditionally and irrevocably direct each Vendor, upon receipt of notice from
Lessor directing such Person to do so, to pay all moneys assigned pursuant to
Section 1 to Lessor at such place as Lessor shall direct in writing to such
Person and to Lessee.
3. Appointment of Lessor as Attorney with Respect to Purchase
Orders. Each Assignor hereby irrevocably (to the fullest extent permitted under
applicable law) constitutes Lessor, its successors and assigns, the true and
lawful attorney in fact of Assignor, coupled with an interest, with full power
(in the name of Assignor or otherwise),
83
during the existence of any Default or Potential Default: (a) to exercise any
rights, powers and remedies of Assignor under or relating to any Purchase Order,
(b) to make any payment to any other party to any Purchase Order as Lessor may
deem necessary or appropriate thereunder, (c) to require, demand, receive and
give acquittance for any sums or moneys payable to Assignor under or in
connection with any Purchase Order, or any letter of credit or other security
therefor or guarantee thereof, and to endorse any checks or other instruments or
orders in connection therewith, (d) to file any claims or to take any action or
institute any proceedings on behalf of any Assignor which Lessor may deem to be
necessary or advisable under the circumstances, and (e) generally, to do,
execute and perform any other act, matter, document or thing whatsoever that in
the opinion of Lessor ought to be done, executed or performed under or in
connection with any Purchase Order, as fully as Assignor could do in such
situation. Any and all reasonable sums expended by or on behalf of Lessor for
any of the foregoing purposes shall be part of the Liabilities secured by the
Collateral, shall be described in writing to Lessee, and shall be repaid by
Assignors, on a joint and several basis, to Lessor within five (5) days of the
date Lessor sends written notice to Lessee requesting payment, with interest
thereon at the rate provided in Section XIX(j) of the Equipment Lease until
paid. Assignors agree that, upon the occurrence and during the continuation of a
Default or Potential Default, Lessor may exercise any election or option or give
any notice, consent, waiver or approval under, or deliver any requisition for
payment under, or take any other action in respect of, any of the Purchase
Orders without requirement of any approval of or action by either of them, but
each Assignor will nevertheless execute and deliver any instrument reasonably
requested by Lessor to be executed and delivered by Assignor in connection with
the exercise by Lessor of any such election or option or the giving by Lessor of
any such notice, consent, waiver or approval or the taking by Lessor of any such
other action.
4. Rights and Duties of Assignors. Notwithstanding any other
provision of this Agreement, Assignors shall have the right, but not to the
exclusion of Lessor, to receive from the parties to each Purchase Order all
notices and other communications and copies of all documents and all information
which such parties are permitted or required to give or furnish to any Assignor.
Each Assignor will furnish to Lessor copies of all such notices, communications,
documents and information (other than routine items delivered in the ordinary
course of business) promptly after receipt thereof by Assignor. Assignors at
their expense will perform and comply in all material respects with all the
terms of each Purchase Order to be performed or complied with by them, will
maintain each Purchase Order (so long as no Default or Potential Default has
occurred and is continuing) in full force and effect, will do all things
necessary to keep unimpaired all of their respective material rights, powers and
remedies thereunder and to prevent any forfeiture or impairment thereof, will
enforce each Purchase Order in all material respects in accordance with its
respective terms to the extent such enforcement will not require unreasonable
efforts on the part of Assignors, and will take all such action to that end or
to enforce any Purchase Order as from time to time may be reasonably requested
by Lessor. Without the prior written consent of Lessor, which consent will not
be unreasonably withheld, Assignor will not (a) amend, supplement, modify,
cancel, terminate or otherwise change any term or provision of any Purchase
Order, (b) give or join in any waiver or consent in respect of any
84
Purchase Order, (c) subordinate or surrender any Purchase Order or consent to or
accept any subordination or surrender thereof, or permit any condition or event
to exist or occur which would, or would entitle any other party to any Purchase
Order to, terminate, cancel or surrender the same, (d) settle or compromise any
claim against any party to any Purchase Order or any other Person arising out of
or in respect of any Purchase Order, or submit or consent to the submission to
arbitration of any dispute or disagreement arising out of or in respect of any
Purchase Order (except to the extent the terms of such Purchase Order obligate
an Assignor to submit to arbitration), (e) waive any material default under or
material breach of any Purchase Order or (f) take any other action in connection
with any Purchase Order which would have the effect of impairing the value of
the rights of Assignors or Lessor thereunder or interest therein.
5. No Release or Assumption, etc.; Lessor Not Liable Under
Purchase Orders. Anything contained herein or in the Purchase Orders to the
contrary notwithstanding, (a) Assignors shall at all times remain solely liable
under the Purchase Orders to perform all of the duties and obligations of any
Assignor thereunder to the same extent as if this Agreement had not been
executed, (b) neither this Agreement nor any action or inaction on the part of
any Assignor or Lessor shall constitute an assumption of any obligations of any
Assignor under the Purchase Orders by Lessor, and (c) Lessor shall not have any
obligation or liability under the Purchase Orders or otherwise by reason of or
arising out of this Agreement (other than to the extent due to the gross
negligence or intentional misconduct of Lessor), nor shall Lessor be required or
obligated in any manner to perform or fulfill any obligation of any Assignor
under or in respect of the Purchase Orders.
6. Representations, Warranties and Covenants. Each Assignor
represents and warrants to Lessor that (a) it has not assigned, transferred,
mortgaged, pledged or otherwise encumbered any of its right, title and interest
hereby assigned to any other Person and no part of such right, title and
interest hereby assigned is subject to any Lien, (b) each Purchase Order is a
legal, valid and binding obligation of BWA and, to its knowledge, the Vendor
that is party thereto, enforceable in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency or other similar
laws of general application affecting the enforcement of creditors' rights or by
general principles of equity limiting the availability of equitable remedies,
(c) no Purchase Order has been amended, modified or supplemented except for such
amendments, modifications or supplements specifically described in Exhibit A
hereto, and (d) it has paid all sums required to be paid by it prior to the date
hereof under the terms of the Purchase Orders and no default exists by BWA or,
to its knowledge, any other party under any of the Purchase Orders. Each
Assignor covenants that, so long as this Agreement shall not have been
terminated, it will not assign or pledge, or create or suffer to exist any Lien
on any of its right, title or interest hereby assigned.
7. Further Assurances, Compromise, etc. At any time and from
time to time, upon the request of Lessor, each Assignor, at its expense, shall
promptly and duly execute and deliver any and all such further instruments and
documents as Lessor may
85
reasonably deem desirable in order to obtain the full benefits of this Agreement
and of the rights, powers and remedies herein granted.
8. Amendments and Waivers. This Agreement may not be
amended, waived, discharged or terminated except to the extent specifically set
forth in a writing manually signed by or on behalf of Assignors and Lessor in
accordance with Section XIX(g) of the Equipment Lease.
9. Remedies Cumulative. The rights and remedies of Lessor
under this Agreement are cumulative and not exclusive of any other rights or
remedies available to Lessor hereunder, under the Equipment Lease or any other
Document, at law, or otherwise (including without limitation the rights and
remedies of a secured party under the Ohio Uniform Commercial Code, which
Assignors agree Lessor shall have).
10. Location; Notice of Change of Address. The chief place of
business and chief executive office of each Assignor and the office where
Assignor keeps its records concerning the Purchase Orders, the original copies
of the Purchase Orders and each item are located at ▇▇▇▇▇ ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇. Each Assignor shall keep its chief place of business and
chief executive office at the location therefor specified in this Section 10, or
upon forty-five (45) days' prior written notice to Lessor, at such other
location in a jurisdiction in which all actions required by Section 7 shall have
been taken with respect to the Purchase Orders.
11. Consent of BWA, as Sublessee. With respect to the
Sublease, dated as of October 1, 1996 (as the same may be amended, modified or
extended from time to time, the "Sublease"), between Lessee, as sublessor, and
BWA, as sublessee, BWA covenants, agrees, represents and warrants as follows:
(a) BWA waives all rights which it now or hereafter may have,
under the laws of the State of Ohio or by virtue of the Sublease, to claim or
assert any lien on or right, claim or title to, any of the Collateral which now
or hereafter may be located on the premises subject to the Sublease (the
"Premises").
(b) BWA agrees that (i) the Equipment is and shall remain
personal property of Lessee notwithstanding the manner or mode of the attachment
of any item of Equipment to the Premises and (ii) the Equipment is not and shall
not become or be deemed to be fixtures.
(c) In the event of any Default, Lessor may (subject to the
terms and provisions of the Equipment Lease and this Agreement and in accordance
with applicable law) remove the Equipment and any other item of Collateral or
any part thereof from the Premises without objection, delay, hindrance or
interference by BWA and, in such case, BWA will make no claim or demand
whatsoever against any of the Collateral. In the event of any Default, BWA
agrees that, without any charge, expense, rent or fee being charged to Lessor,
BWA will (i) cooperate with Lessor in its efforts to assemble or remove or
assemble
86
and remove any or all of the Collateral located on the Premises; (ii)
permit Lessor to enter and occupy the Premises to remove, appraise, display,
maintain, prepare for sale or lease or other disposition, repair, or lease,
transfer, sell or otherwise dispose of, or to do any combination of the
foregoing in respect of, the Collateral; and (iii) not hinder Lessor's actions
in enforcing its security interest in any or all of the Collateral.
(d) BWA acknowledges and agrees that Lessor shall not be
deemed a lessee of the Premises for purposes of the Sublease and shall have no
further responsibility to BWA under the Sublease or other agreement or
instrument for any obligation or liability of Lessee thereunder.
(e) Lessor may, without affecting the validity of this
Agreement, extend, amend or in any way modify the terms of payment or
performance of the Equipment Lease and any of the obligations without the
consent of BWA and without giving notice thereof to BWA.
12. Miscellaneous. All notices under the provisions of this
Agreement shall be given and shall be effective as provided in Section XIX(f) of
the Equipment Lease and any notice to BWA shall be deemed given if delivered to
Lessee. This Agreement may be executed in any number of counterparts and by the
different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed an original, but all such counterparts shall
constitute but one and the same instrument. This Agreement shall be governed by,
construed, and enforced in accordance with the laws of the State of Ohio,
without regard to conflict of laws principles, except as required by mandatory
provisions of law.
[Remainder of page intentionally left blank]
87
IN WITNESS WHEREOF, Assignors have caused this Agreement to be
duly executed and delivered as of the date first above written.
B.W. ALLOY, LTD.
By:
--------------------------------
Title:
-----------------------------
BRUSH ▇▇▇▇▇▇▇ INC.
By:
-------------------------------
Title:
----------------------------
ACCEPTED:
NATIONAL CITY BANK, FOR ITSELF
AND AS AGENT FOR CERTAIN PARTICIPANTS
By:
----------------------------
Title:
--------------------------
88
EXHIBIT A TO ASSIGNMENT OF PURCHASE ORDERS
1. Purchase Order No. EX90006, dated 5 November, 1996, of B.W. Alloy, Ltd. and
Seco-Warwick, as the vendor, and related documents referenced therein.
2. Purchase Order No. EX90008, dated 4 December, 1996, of B.W. Alloy, Ltd. and
Drever Company, as the vendor, and related documents referenced therein.
3. Purchase Order No. EX90009, dated 25 November, 1996, of B.W. Alloy, Ltd. and
SMS Process Lines, as the vendor, and related documents referenced therein.
4. Purchase Order No. EX90010, dated 25 November, 1996, of B.W. Alloy, Ltd. and
SMS Process Lines, as the vendor, and related documents referenced therein.
5. Purchase Order No. EX90011, dated 25 November, 1996, of B.W. Alloy, Ltd. and
SMS Process Lines, as the vendor, and related documents referenced therein.
6. Purchase Order No. EX90012, dated 6 December, 1996, of B.W. Alloy, Ltd. and
RAD-CON Inc., as the vendor, and related documents referenced therein.
7. Purchase Order No. EX90007, dated 23 October, 1996, as amended by Change
Order #001, dated 9 December, 1996, of B.W. Alloy, Ltd. and Integrated
Industrial Systems, as the vendor, and related documents referenced therein.
8. Purchase Order No. EX90002, dated 10 December, 1996, of B.W. Alloy, Ltd. and
▇▇▇▇▇▇ Engineering, as the vendor, and related documents referenced therein.
9. Purchase Order No. EX90003, dated 10 December, 1996, of B.W. Alloy, Ltd. and
▇▇▇▇▇▇ Engineering, as the vendor, and related documents referenced therein.
89
EXHIBIT B TO ASSIGNMENT OF PURCHASE ORDERS
EQUIPMENT PURCHASE ORDER NO. TOTAL PRICE
AND VENDOR
1. Walking Beam Furnace EX90006/Seco-Warwick $2,130,000
2. Hot Mill EX90003/▇▇▇▇▇▇ Engineering $14,600,000
3. ▇▇▇▇ Aging Furnace EX90012/RAD-CON Inc. $2,400,000
4. Slab Mill EX90007/Integrated Industrial Systems $7,750,000
5. Finish Pickle Line EX90010/SMS Process Lines $5,270,000
6. Four-High Rolling Mill EX90002/▇▇▇▇▇▇ Engineering $9,590,000
7. Anneal/Pickle Line 1. EX90009/SMS Process Lines $11,150,000
Anneal/Pickle Line
2. EX90008/Drever Company
Cont. Anneal Line
8. Degreasing Line EX90011/SMS Process Lines $3,190,000
TOTAL $56,080,000
90
GRM0446\01278\96008\LEASE15