Exhibit 10.1


 


LASALLE NATIONAL LEASING
CORPORATION


 


MASTER
LEASE AGREEMENT


 


THIS MASTER LEASE AGREEMENT
(this “Lease”)
is made as of June 29, 2004, between LASALLE NATIONAL LEASING CORPORATION
(“Lessor”)
and PERRY JUDD’S INCORPORATED (“Lessee”).


 


Lessee desires to lease from
Lessor the equipment and other property (the “Equipment”) described in each
Equipment Schedule executed pursuant to this Lease (each, a “Schedule”)
incorporating by reference the terms and conditions of this Lease (the term “Lease”
shall also include any Riders to this Lease entered into with respect to such
Schedule).  Certain definitions and
construction of certain of the terms used in this Lease are provided in
Section 19 hereof.


 


For good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties to this Lease agree as follows:


 


1.     AGREEMENT TO LEASE; TERM.  This Lease is effective as of the date
specified above.  By entering into a
Schedule, Lessor leases the Equipment described therein to Lessee, and Lessee
leases such Equipment from Lessor, in each case, subject to the terms and
conditions in this Lease and such Schedule and all of the other documents
and agreements executed in connection herewith (collectively, the “Lease
Documents”).  Each Schedule,
incorporating the terms and conditions of this Lease, will constitute a
separate instrument of lease.  The term
of lease with respect to each item of Equipment leased under a
Schedule shall commence on the date of execution of such Schedule and
continue for the term provided in that Schedule.


 


2.     RENT.  Lessee shall pay Lessor (a) the rental
installments (“Basic Rent”) as and when specified in each Schedule, without
demand, and (b) all of the other amounts payable in accordance with this Lease,
such Schedule and/or any of the other Lease Documents (“Other
Payments”, and together with the Basic Rent, collectively, the “Rent”).  Upon Lessee’s execution thereof, the related
Schedule shall constitute a non-cancelable net lease, and Lessee’s
obligation to pay Rent, and otherwise to perform its obligations under or with
respect to such Schedule and all of the other Lease Documents, are and
shall be absolute and unconditional and shall not be affected by any
circumstances whatsoever, including any right of setoff, counterclaim,
recoupment, deduction, defense or other right which Lessee may have against
Lessor, the manufacturer or vendor of the Equipment (the “Suppliers”), or anyone else,
for any reason whatsoever (each, an “Abatement”).  Lessee agrees that all Rent shall be paid in accordance with
Lessor’s or Assignee’s written direction. 
Time is of the essence.  If any
Rent is not paid within five (5) days of the due date, Lessor may collect, and
Lessee agrees to pay, interest (accruing at the “Late Charge Rate” specified
in the related Schedule) with respect to the amount in arrears for the period
such amount remains unpaid (the “Late Charge”).


 


3.     REPRESENTATIONS, WARRANTIES AND
AGREEMENTS OF LESSEE.  Lessee
represents, warrants and agrees that, as of the effective date of this Lease
and of each Schedule: (a) Lessee has the form of business organization
indicated, and is and will remain duly organized and existing in good standing
under the laws of the state specified, under Lessee’s signature and is duly
qualified to do business wherever necessary to perform its obligations under
the Lease Documents, including each jurisdiction in which the Equipment is or
will be located.  Lessee’s legal name is
as shown in the preamble of this Lease; and Lessee’s Federal Employer
Identification Number and organizational number are as set forth under Lessee’s
signature.  Within the previous six (6)
years, Lessee has not changed its name, done business under any other name, or
merged or been the surviving entity of any merger, except as disclosed to
Lessor in writing. (b) The Lease Documents (1) have been duly authorized by all
necessary action consistent with Lessee’s form of organization, (2) do not
require the approval of, or giving notice to, any governmental authority, (3)
do not contravene or constitute a default under any applicable law, Lessee’s
organizational documents, or any agreement, indenture, or other instrument to
which Lessee is a party or by which it may be bound, and (4) constitute legal,
valid and binding obligations of Lessee enforceable against Lessee, in
accordance with the terms thereof.  (c)
There are no pending actions or proceedings to which Lessee is a party, and
there are no other pending or threatened actions or proceedings of which Lessee
has knowledge, before any court, arbitrator or administrative agency, which,
either individually or in the aggregate, would have a Material Adverse
Effect.  As used herein, “Material
Adverse Effect” shall mean (i) a materially adverse effect on the
business, condition (financial or otherwise), operations, performance or
properties of Lessee, or (ii) a material impairment of the ability of


 


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Lessee to perform its obligations under or
remain in compliance with such Schedule or any of the other Lease
Documents.  Further, Lessee is not in
default under any financial or other material agreement that, either
individually, or in the aggregate, would have the same such effect.  (d) All of the Equipment covered by such Schedule is
located solely in the jurisdiction(s) specified in such Schedule.  (e) Under the applicable laws of each such
jurisdiction, such Equipment consists (and shall continue to consist) solely of
personal property and not fixtures. 
Such Equipment is removable from and is not essential to the premises at
which it is located.  (f) The financial
statements of Lessee (copies of which have been furnished to Lessor) have been
prepared in accordance with generally accepted accounting principles
consistently applied (“GAAP”), and fairly present Lessee’s
financial condition and the results of its operations as of the date of and for
the period covered by such statements, and since the date of such statements
there has been no material adverse change in such conditions or
operations.  (g) With respect to any
Collateral, Lessee has good title to, rights in, and/or power to transfer all
of the same. (h)  The Supplier is not an
affiliate of Lessee.  (i)  The Supply Contract (as such term is
hereinafter defined) represents an arms’ length transaction and the purchase
price for the Equipment specified therein is the amount obtainable in an arms’
length transaction between a willing and informed buyer and a willing and
informed seller under no compulsion to sell.


 


4.     FURTHER ASSURANCES AND OTHER COVENANTS.  Lessee agrees as follows: (a) Lessee will
furnish (or caused to be furnished) Lessor with (1) the balance sheet,
statement of income and statement of retained earnings of Perry Judd’s
Holdings, Inc. (“Guarantor”), prepared in accordance with GAAP, certified by a
recognized firm of certified public accountants, within one hundred twenty
(120) days of the close of each fiscal year of Guarantor, (2) Guarantor’s
quarterly financial report (other than for Guarantor’s fourth (4th)
quarter) certified by the chief financial officer of Guarantor, within sixty
(60) days of the close of each fiscal quarter of Guarantor (other than for
Guarantor’s fourth (4th) quarter), and (3) all of Lessee’s and
Guarantor’s Forms 10-K and 10-Q, if any, filed with the Securities and Exchange
Commission (“SEC”) as and when filed (by furnishing these SEC forms, or
making them publicly available in electronic form, Lessee shall be deemed to
have satisfied the requirements of clauses (1), (2) and (3)). (b) Lessee shall
obtain and deliver to Lessor and/or promptly execute or otherwise authenticate
any documents, filings, waivers (including any landlord and mortgagee waivers),
releases and other records, and will take such further action as Lessor may reasonably
request in furtherance of Lessor’s rights under any of the Lease
Documents.  Lessee irrevocably
authorizes Lessor to file UCC financing statements (“UCCs”), and other filings
with respect to the Equipment or any Collateral.  Without Lessor’s prior written consent, Lessee agrees not to file
any corrective or termination statements or partial releases with respect to
any UCCs filed by Lessor pursuant to this Lease. (c) Lessee shall provide
written notice to Lessor: (1) thirty (30) days prior to any change in Lessee’s
name or jurisdiction or form of organization; (2) promptly upon the occurrence
of any Event of Default (as defined in Section 15) or event which, with
the lapse of time or the giving of notice, or both, would become an Event of
Default (a “Default”); and (3) promptly upon Lessee becoming aware of any
alleged violation of applicable law relating to the Equipment or this Lease.


 


5.     CONDITIONS PRECEDENT.  Lessor’s agreement to purchase and lease any
Equipment under a Schedule, is conditioned upon Lessor’s determination that all
of the following have been satisfied: (a) Lessor having received the following,
in form and substance reasonably satisfactory to Lessor: (1) evidence as to due
compliance with the insurance provisions of Section 11; (2) if requested,
lien searches in the jurisdiction of Lessee’s organization, and wherever else
Lessor deems appropriate; (3) UCCs, real property waivers and all other filings
required by Lessor; (4) a certificate of an appropriate officer of Lessee
certifying: (A) resolutions duly authorizing the transactions contemplated in
the applicable Lease Documents, and (B) the incumbency and signature of the
officers of Lessee authorized to execute such documents; (5) if requested by
Lessor, an opinion of counsel for Lessee as to each of the matters set forth in
sub-parts (a) through (c) of Section 3; (6) the only manually executed
original of the Schedule, and counterpart originals of all other Lease
Documents; (7) all purchase documents pertaining to the Equipment (collectively,
the “Supply
Contract”); (8) if requested by Lessor, good standing certificates
from the jurisdiction of Lessee’s organization and the location of the
Equipment, and evidence of Lessee’s organizational number; and (9) such other
documents, agreements, instruments, certificates, opinions, and assurances, as
Lessor reasonably may require.  (b) All
representations and warranties provided by Lessee in favor of Lessor in any of
the Lease Documents shall be true and correct on the effective date of the related
Schedule (Lessee’s execution and delivery of the Schedule shall
constitute Lessee’s acknowledgment of the same).  (c) There shall be no Default or Event of Default under the
Schedule or any other Lease Documents. The Equipment shall have been delivered
to and accepted by Lessee, as evidenced by the Schedule, and shall be in the
condition and repair required hereby; and on the effective date of such
Schedule Lessor shall have received an interest in the Equipment described
therein, free and clear of any claims, liens, attachments, rights of others and
legal processes (“Liens”).


 


6.     ACCEPTANCE UNDER LEASE.  Lessor hereby appoints Lessee as Lessor’s
agent for the sole purpose of accepting delivery of the Equipment from the
Supplier.  Upon delivery, Lessee shall
inspect and, if conforming to the condition required by the applicable Supply
Contract, accept the Equipment and execute and deliver to Lessor a Schedule


 


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describing such Equipment. The Schedule will
evidence Lessee’s unconditional and irrevocable acceptance under the
Schedule of the Equipment described therein.  However, if Lessee fails to accept delivery of any item of the
Equipment, or accepts such Equipment but fails to satisfy any or all of the
other conditions set forth in Section 5, Lessor shall have no obligation
to purchase or lease such Equipment.  In
such event, Lessor’s rights shall include, among other things, the right to
demand that Lessee (a) fully assume all obligations as purchaser of the
Equipment, with the effect of causing Lessor to be released from any liability
relating thereto, (b) immediately remit to Lessor an amount sufficient to
reimburse it for all advance payments, costs, taxes or other charges paid or
incurred with respect to the Equipment (including any of such amounts paid by
Lessor to Supplier under the Supply Contract or as a reimbursement to Lessee),
together with interest at the Late Charge Rate accruing from the date or dates
such amounts were paid by Lessor until indefeasibly repaid by Lessee in full,
and (c) take all other actions necessary to accomplish such assumption.


 


7.     USE AND MAINTENANCE.  (a) Lessee shall (1) use the Equipment
solely in the continental United States and in the conduct of its business, for
the purpose for which the Equipment was designed, in a careful and proper
manner, and shall not permanently discontinue use of the Equipment; (2)
operate, maintain, service and repair the Equipment, and maintain all records
and other materials relating thereto, (A) in accordance and consistent with (i)
the Supplier’s recommendations and all maintenance and operating manuals or
service agreements, whenever furnished or entered into, including any
subsequent amendments or replacements thereof, issued by the Supplier or
service provider, (ii) the requirements of all applicable insurance policies,
(iii) the Supply Contract, so as to preserve all of Lessee’s and Lessor’s
rights thereunder, including all rights to any warranties, indemnities or other
rights or remedies, (iv) all applicable laws, and (v) the prudent practice of
other similar companies in the same business as Lessee, but in any event, to no
lesser standard than that employed by Lessee for comparable equipment owned or
leased by it; and (B) without limiting the foregoing, so as to cause the
Equipment to be in good repair and operating condition and in at least the same
condition as when delivered to Lessee hereunder, except for ordinary wear and
tear resulting despite Lessee’s full compliance with the terms hereof; (3)
provide written notice to Lessor not less than thirty (30) days after any
change of the location of any Equipment (or the location of the principal
garage of any Equipment, to the extent that such Equipment is mobile equipment)
as specified in the Equipment Schedule; and (4) not attach or incorporate the
Equipment to or in any other property in such a manner that the Equipment may
be deemed to have become an accession to or a part of such other property.  (b) Within a reasonable time, Lessee will
replace any parts of the Equipment which become worn out, lost, destroyed,
damaged beyond repair or otherwise unfit for use, by new or reconditioned
replacement parts which are free and clear of all Liens and have a value,
utility and remaining useful life at least equal to the parts replaced
(assuming that they were in the condition required by this Lease).  Any modification  or addition to the Equipment
that is required by this Lease shall be made by Lessee.  A first priority security interest to all
such parts, modifications and additions to the Equipment immediately shall vest
in Lessor, without any further action by Lessor or any other person, and they
shall be deemed incorporated in the Equipment for all purposes of the related
Schedule.  Unless replaced in accordance
with this Section, Lessee shall not remove any parts originally or from time to
time attached to the Equipment, if such parts are essential to the operation of
the Equipment, are required by any other provision of this Lease or cannot be
detached from the Equipment without materially interfering with the operation
of the Equipment or adversely affecting the value, utility and remaining useful
life which the Equipment would have had without the addition of such parts.  Except as permitted in this Section, Lessee
shall not make any material alterations to the Equipment.  (c) Upon forty-eight (48) hours’ notice,
Lessee shall afford Lessor and/or its designated representatives access to the
premises where the Equipment is located for the purpose of inspecting such
Equipment and all applicable maintenance or other records relating thereto at
any reasonable time during normal business hours; provided, however, if a
Default or Event of Default shall have occurred and then be continuing, no notice
of any inspection by Lessor shall be required. 
If any discrepancies are found as they pertain to the general condition
of the Equipment, Lessor will communicate these discrepancies to Lessee in
writing.  Lessee shall then have thirty
(30) days to rectify these discrepancies at its sole expense. Lessee shall pay
all expenses of a re-inspection by Lessor’s appointed representative, if
corrective measures were required.


 


8.     DISCLAIMER; QUIET ENJOYMENT.  (a)  THE EQUIPMENT IS LEASED HEREUNDER “AS IS, WHERE
IS”.  LESSOR SHALL NOT BE DEEMED TO HAVE
MADE, AND HEREBY DISCLAIMS, ANY REPRESENTATION OR WARRANTY, EITHER EXPRESS OR
IMPLIED, AS TO THE EQUIPMENT, INCLUDING ANY PART, OR ANY MATTER WHATSOEVER,
INCLUDING, AS TO EACH ITEM OF EQUIPMENT, ITS DESIGN, CONDITION,
MERCHANTABILITY, FITNESS FOR ANY PARTICULAR PURPOSE, TITLE, ABSENCE OF ANY
PATENT, TRADEMARK OR COPYRIGHT INFRINGEMENT OR LATENT DEFECT (WHETHER OR NOT
DISCOVERABLE BY LESSEE), COMPLIANCE OF SUCH ITEM WITH ANY APPLICABLE LAW,
CONFORMITY OF SUCH ITEM TO THE PROVISIONS AND SPECIFICATIONS OF ANY PURCHASE
DOCUMENT OR TO THE DESCRIPTION SET FORTH IN THE RELATED SCHEDULE OR ANY OF
THE OTHER LEASE DOCUMENTS, OR ANY INTERFERENCE OR INFRINGEMENT (EXCEPT AS
EXPRESSLY PROVIDED IN SECTION 8(b)), OR ARISING FROM ANY COURSE OF DEALING
OR USAGE OF TRADE, NOR SHALL LESSOR BE LIABLE, FOR ANY INDIRECT, INCIDENTAL,
SPECIAL OR CONSEQUENTIAL DAMAGES OR FOR


 


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STRICT
OR ABSOLUTE LIABILITY IN TORT; AND LESSEE HEREBY WAIVES ANY CLAIMS ARISING OUT
OF ANY OF THE FOREGOING. Without limiting the
foregoing, Lessor will not be responsible to Lessee or any other person with
respect to, and Lessee agrees to bear sole responsibility for, any risk or
other matter that is the subject of Lessor’s disclaimer; and Lessor’s agreement
to enter into this Lease and any Schedule is in reliance upon the freedom
from and complete negation of liability or responsibility for the matters so
waived or disclaimed herein or covered by the indemnity in this Lease.  So long as no Event of Default has occurred,
Lessee may exercise Lessor’s rights, if any, under any warranty with respect to
the Equipment.  Lessee’s exercise of
such rights shall be at its sole risk, shall not result in any prejudice to
Lessor, and may be exercised only during the term of the related Schedule.  Lessee shall not attempt to enforce any such
warranty by legal proceeding without Lessor’s prior written approval (which
such approval shall not be unreasonably withheld).  (b)  Lessor warrants that
during the term of each Schedule, so long as no Event of Default has occurred,
Lessee’s possession and use of the Equipment leased thereunder shall not be
interfered with by Lessor or anyone rightfully claiming an interest through
Lessor.  The preceding warranty is in
lieu of all other warranties by Lessor, whether written, oral or implied, with
respect to this Lease or the Equipment. 
Any actual or purported breach of this warranty shall not give rise to any
Abatement, but Lessee may bring a direct cause of action against Lessor for any
actual damages directly resulting from any such breach.


 


9.     FEES AND TAXES.  Lessee agrees to: (a) (1) if permitted by
law, file in Lessee’s own name or on Lessor’s behalf, directly with all
appropriate taxing authorities all declarations, returns, inventories and other
documentation with respect to any personal property taxes (or any other taxes
in the nature of or imposed in lieu of property taxes) due or to become due
with respect to the Equipment, and if not so permitted by law, to promptly
notify Lessor and provide it with all information required in order for Lessor
to timely file all such declarations, returns, inventories, or other
documentation, and (2) pay on or before the date when due all such taxes assessed,
billed or otherwise payable with respect to the Equipment directly to the
appropriate taxing authorities; (b) (1) pay when due as requested by Lessor,
and (2) defend and indemnify Lessor on a net after-tax basis against liability
for all license and/or registration fees, assessments, and sales, use,
property, excise, privilege, value added and other taxes or other charges or
fees now or hereafter imposed by any governmental body or agency upon the
Equipment or with respect to the manufacture, shipment, purchase, ownership,
delivery, installation, leasing, operation, possession, use, return, or other
disposition thereof or the Rent hereunder (other than taxes on or measured
solely by the net income of Lessor); and (c) indemnify Lessor against any penalties,
charges, interest or costs imposed with respect to any items referred to in
clauses (a) and (b) above (the items referred to in clauses (a), (b), and (c)
above being referred to herein as “Impositions”).  Any Impositions which are not paid when due and which are paid by
Lessor shall, at Lessor’s option, become immediately due from Lessee to
Lessor.  Notwithstanding anything
contained herein to the contrary, Lessee shall not be responsible hereunder for
any Imposition which arises directly and solely as a result of Lessor’s own
gross negligence or willful misconduct.


 


10.   TITLE; GRANTING CLAUSE.  (a) Lessee and Lessor intend that each
Schedule, incorporating by reference the terms of this Lease, constitutes the
retention of a security interest by Lessor in the Equipment described therein
and not a true “lease” as defined in the UCC. 
(b) In order to secure the prompt payment of the Rent and all of the
other amounts from time to time outstanding with respect hereto and to each
Schedule, and the performance and observance by Lessee of all of the provisions
hereof and thereof and of all of the other Lease Documents, Lessee hereby
collaterally assigns, grants, and conveys to Lessor, a security interest in and
lien on all of Lessee’s right, title and interest in and to all of the
following (whether now existing or hereafter created, and including any other
collateral described on any rider hereto; the “Collateral”): (1) the
Equipment described in such Schedule or otherwise covered thereby
(including all inventory, fixtures or other property comprising the Equipment),
together with all related software (embedded therein or otherwise) and general
intangibles, all additions, attachments, accessories and accessions thereto
whether or not furnished by the Supplier; (2) all subleases, chattel paper,
accounts, security deposits, and general intangibles relating thereto, and any
and all substitutions, replacements or exchanges for any such item of Equipment
or other collateral, in each such case in which Lessee shall from time to time
acquire an interest; and (3) any and all insurance and/or other proceeds of the
property and other collateral in and against which a security interest is
granted hereunder.  The collateral
assignment, security interest and lien granted herein shall survive the
termination, cancellation or expiration of each Schedule until such time
as Lessee’s obligations thereunder and under the other Lease Documents are
fully and indefeasibly discharged.  (c)
If a court of competent jurisdiction determines that any Schedule is a
sale and extension of credit, a lease intended for security, a loan secured by
the Equipment described in such Schedule, or other similar arrangement, any
obligation to pay Basic Rent or any Other Payment, to the extent constituting the
payment of interest, shall be at an interest rate that is equal to the lesser
of the maximum lawful rate permitted by applicable law or the effective
interest rate used by Lessor in calculating such amounts.  (d) Lessee hereby acknowledges and agrees that,
to the extent that Lessor’s participation in any purchase and lease of an item
or items of Equipment pursuant to this Lease constitutes a financing of
Lessee’s acquisition of such item or items of Equipment, Lessee’s repayment of
the amounts of such financing shall apply on a “first-in/first-out” basis so
that portions of the amounts of such financing used to purchase such item or
items of Equipment


 


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shall be deemed repaid in the chronological
order of the use of such amounts to purchase the same. (e) In order to secure
the prompt payment and performance as and when due of all of Lessee’s
obligations (both now existing and hereafter arising) under each Schedule,
Lessee hereby grants to Lessor a second priority security interest in all of
Lessee’s now owned or hereafter acquired or arising: Accounts; Chattel Paper:
Documents; Equipment; General Intangibles (including Payment Intangibles);
Goods; Instruments; Inventory; Data Processing Records and Systems; all
accessions and additions to, parts and appurtenances of, substitutions for and
replacements of any of the forgoing; and to the extent not otherwise included,
all Proceeds and products of any and all of the forgoing (including insurance
proceeds).  Capitalized terms used in
this Section 10(e) shall have the meaning given such terms in any security
agreement executed and delivered by Lessee in favor of LaSalle Bank National
Association (the “Bank”) after the date of this Lease (the “Security Agreement”).  In furtherance of the forgoing, Lessee shall
execute and deliver to Lessor, to be recorded at Lessee’s expense, such UCC
financing statements and other documents and instruments as reasonably may be
required by Lessor; and Lessee further agrees that the provisions of the
Security Agreement shall be deemed incorporated herein as fully as if set forth
herein, applicable to Lessor (provided, however, any remedy provisions thereof
shall not be effective unless the Security Agreement is terminated in accordance
with its terms).  Notwithstanding
anything contained herein to the contrary, so long as no Default or Event of
Default has occurred and is continuing, if the Bank is no longer a party to the
Security Agreement, the second priority security interest granted in favor of
Lessor pursuant to this Section 10(e) shall automatically terminate
without further action required by Lessee.


 


11.   INSURANCE.  Upon acceptance under a Schedule, until the
Equipment is returned to Lessor in accordance with this Lease, Lessee shall
maintain all-risk insurance coverage with respect to the Equipment insuring
against, among other things: (a) any casualty to the Equipment (or any portion
thereof), including loss or damage due to fire and the risks normally included
in extended coverage, malicious mischief and vandalism, for not less than the
full replacement value of the Equipment; and (b) any commercial liability
arising in connection with  the Equipment, including both bodily
injury and property damage with a combined single limit per occurrence of not
less than the amount specified in the Schedule; having a deductible reasonably
satisfactory to Lessor.  The required
insurance policies (including endorsements) shall (i) be in form and amount
reasonably satisfactory to Lessor, and written by insurers of recognized
reputation and responsibility satisfactory to Lessor (but such insurer shall
carry a current rating by A.M. Best Company of at least “A” for a general
policyholder and a financial rating of at least “VIII”), (ii) be endorsed to
name Lessor as an additional insured (but without responsibility for premiums),
(iii) provide that any amount payable under the required casualty coverage
shall be paid directly to Lessor as sole loss payee, (iv) provide for thirty
(30) days’ written notice by such insurer of cancellation, material change, or
non-renewal; and (v) provide that in respect of the interests of Lessor in such
policies, the insurance shall not be invalidated by any action or inaction of
Lessee or any other person operating or in possession of the Equipment
regardless of any breach or violation of any warranties, declarations or
conditions contained in such policies by or binding upon Lessee or any other
person operating or in possession of the Equipment.  Lessee agrees that it shall obtain and maintain such other
coverages (including pollution coverage), or cause adjustments to be made to
the scope, amount or other aspects of the existing coverages, promptly upon
Lessor’s request, as and when Lessor deems such additional coverages or
modifications to be appropriate in light of any changes in applicable law,
prudent industry practices, Lessee’s anticipated use of the Equipment or other
pertinent circumstances.


 


12.   LOSS AND DAMAGE.  (a) At all times until the Equipment is
returned to Lessor in accordance with this Lease, Lessee shall bear the risk of
loss, theft, confiscation, taking, unavailability, damage or partial
destruction of the Equipment and shall not be released from its obligations
under any Schedule or other Lease Document in any such event. (b) Lessee
shall provide prompt written notice to Lessor of any Total Loss or any material
damage to the Equipment.  Any such
notice must be provided together with any damage reports provided to any
governmental authority, the insurer or Supplier, and any documents pertaining
to the repair of such damage, including copies of work orders, and all invoices
for related charges. (c) Without limiting any other provision hereof, Lessee
shall repair all damage to any item of Equipment from any and all causes, other
than a Total Loss, so as to cause it to be in the condition and repair required
by this Lease. (d) A “Total Loss” shall be deemed to have
occurred to an item of Equipment upon: (1) the actual or constructive total
loss of any item of the Equipment, (2) the loss, disappearance, theft or
destruction of any item of the Equipment, or damage to any item of the
Equipment that is uneconomical to repair or renders it unfit for normal use, or
(3) the condemnation, confiscation, requisition, seizure, forfeiture or other
taking of title to or use of any item of the Equipment or the imposition of any
Lien thereon by any governmental authority. 
On the next Rent payment date that is within sixty-five (65) days
following a Total Loss (a “Loss Payment Date”), Lessee shall pay to
Lessor the Basic Rent due on that date plus the Stipulated Loss Value of the
item or items of the Equipment with respect to which the Total Loss has
occurred (the “Lost Equipment”), together with any Other Payments due hereunder
with respect to the Lost Equipment. 
From the date the Total Loss occurs until such time as all sums set
forth in this clause (d) are paid in full to Lessor, Lessee shall continue to
pay Rent to Lessor in accordance with the terms of this Lease. Upon making such
payment, (i) Lessee’s obligation to pay future Basic Rent shall terminate
solely with respect to the items of Lost Equipment so paid for, but Lessee
shall remain liable for, and


 


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pay as and when due, all Other Payments, and
(ii) Lessor shall convey to Lessee all of Lessor’s right and interest in the
Lost Equipment, “AS IS WHERE IS”, but subject to the requirements of any third
party insurance carrier in order to settle an insurance claim.  As used in this Lease, “Stipulated Loss Value” shall
mean the product of the Total Invoice Cost of the Lost Equipment, times the
percentage factor applicable to the Loss Payment Date, as set forth in the
Schedule of Stipulated Loss Values incorporated in such Schedule.  After the final rent payment date of the
original term or any renewal term of a Schedule, the Stipulated Loss Value
shall be determined as of the last rent payment date during the applicable term
of such Schedule, and the applicable percentage factor shall be the last
percentage factor set forth in the Schedule of Stipulated Loss Values
incorporated in such Schedule.  (e)
Lessor shall be under no duty to Lessee to pursue any claim against any person
in connection with a Total Loss or other loss or damage. (f) If Lessor receives
a payment under an insurance policy required under this Lease in connection
with any Total Loss or other loss of or damage to an item of Equipment, and
such payment is both unconditional and indefeasible, then provided Lessee shall
have complied with the applicable provisions of this Section, Lessor shall
either (1) if received pursuant to a Total Loss, remit such proceeds to Lessee
up to an amount equal to the amount paid by Lessee to Lessor as the Stipulated
Loss Value, or credit such proceeds against any amounts owed by Lessee pursuant
to Section 12(d), or (2) if received with respect to repairs made pursuant
to Section 12(c), remit such proceeds to Lessee up to an amount equal to
the amount of the costs of repair actually incurred by Lessee, as established
to Lessor’s satisfaction.


 


13.   REDELIVERY.  (a) If an Event of Default occurs with
respect to a Schedule and Lessee is required to return the Equipment
described on such Schedule to Lessor, Lessee shall return such Equipment
to Lessor free and clear of all Liens whatsoever, to such place(s) within the
continental United States as Lessor shall specify.  Lessee shall provide, at its expense, transit insurance for the
redelivery period in an amount equal to the replacement value of such Equipment
and Lessor shall be named as the loss payee on all such policies of
insurance.  Lessee shall cause: (1) the
Supplier’s representative or other qualified person acceptable to Lessor (the “Designated
Person”) to de-install such Equipment in accordance with the
Supplier’s specifications (as applicable) and pack such Equipment properly and
in accordance with the Supplier’s recommendations (as applicable); and (2) such
Equipment to be transported in a manner consistent with the Supplier’s
recommendations and practices (as applicable). 
Upon return, such Equipment shall be: 
(i)  in the same condition as
when delivered to Lessee under the related Schedule, ordinary wear and tear
excepted; (ii) mechanically and structurally sound, capable of performing the
functions for which such Equipment was originally designed, in accordance with
the Supplier’s published and recommended specifications (as applicable); (iii)
redelivered with all component parts in good operating condition (and all components
must meet or exceed the Supplier’s minimum recommended specifications, unless
otherwise agreed by Lessor in writing); (iv) redelivered with all software and
documentation necessary for the operation of such Equipment for the performance
of the functions for which such Equipment was originally designed (whether or
not such software is embedded in or otherwise is a part of such Equipment); and
(v)  cleaned and cosmetically
acceptable, with all Lessee-installed markings removed and all rust, corrosion
or other contamination having been removed or properly treated, and in such
condition so that it may be immediately installed and placed in service by a
third party.  Upon delivery, such
Equipment shall be in compliance with all applicable Federal, state and local
laws, and health and safety guidelines. 
Lessee shall be responsible for the cost of all repairs, alterations,
inspections, appraisals, storage charges, insurance costs, demonstration costs
and other related costs necessary to cause such Equipment to be in full
compliance with the terms of this Lease. 
(b) If requested by Lessor, Lessee shall also deliver all related
records and other data to Lessor, including all records of maintenance,
modifications, additions and major repairs, computerized maintenance history,
and any maintenance and repair manuals (collectively, the “Records”).  All manuals or other documents delivered to
Lessor that are subject to periodic revision will be fully up-to-date and
current to the latest revision standard of any particular manual or document.
In the event any such Records are missing or incomplete, Lessor shall have the
right to cause the same to be reconstructed at Lessee’s expense. (c) In
addition to Lessor’s other rights and remedies hereunder, if such Equipment and
the related Records are not returned in a timely fashion, or if repairs are
necessary to place any item of Equipment in the condition required in this
Section, Lessee shall (i) continue to pay to Lessor per diem rent at the last
prevailing lease rate under the applicable Schedule with respect to such
item of Equipment, for the period of delay in redelivery, and/or for the period
of time reasonably necessary to accomplish such repairs, and (ii) pay to Lessor
an amount equal to the aggregate cost of any such repairs.  Lessor’s acceptance of such rent on account
of such delay and/or repair does not constitute an extension or renewal of the
term of the related Schedule or a waiver of Lessor’s right to prompt
return of such Equipment in proper condition. 
Such amount shall be payable upon the earlier of Lessor’s demand or the
return of such Equipment in accordance with this Lease. (d) Without limiting
any other terms or conditions of this Lease, the provisions of this
Section are of the essence of each Schedule, and upon application to any
court of equity having jurisdiction, Lessor shall be entitled to a decree
against Lessee requiring Lessee’s specific performance of its agreements in
this Section.


 


14.   INDEMNITY.  Lessee shall indemnify, defend and keep
harmless Lessor and any Assignee (as defined in Section 17), and their
respective agents and employees (each, an “Indemnitee”), from and against any and all
Claims (other than


 


6

















 


such as may directly and proximately result
from the actual, but not imputed, gross negligence or willful misconduct of
such Indemnitee), by paying, on a net after-tax basis, or otherwise discharging
same, when and as such Claims shall become due.  Lessee agrees that the indemnity provided for in this
Section includes the agreement by Lessee to indemnify each Indemnitee from
the consequences of its own simple negligence, whether that negligence is the
sole or concurring cause of the Claims, and to further indemnify each such
Indemnitee with respect to Claims for which such Indemnitee is strictly
liable.  Lessor shall give Lessee prompt
notice of any Claim hereby indemnified against and Lessee shall be entitled to
control the defense of and/or to settle any Claim, in each case, so long as (a)
no Default or Event of Default has occurred and is then continuing, (b) Lessee
confirms, in writing, its unconditional and irrevocable commitment to indemnify
each Indemnitee with respect to such Claim, (c) Lessee is financially capable
of satisfying its obligations under this Section, and (d) Lessor approves the
defense counsel selected by Lessee.  The
term “Claims”
shall mean all claims, allegations, harms, judgments, settlements, suits,
actions, debts, obligations, damages (whether incidental, consequential or
direct), demands (for compensation, indemnification, reimbursement or
otherwise), losses, penalties, fines, liabilities (including strict liability),
charges that Lessor has incurred or for which it is responsible, in the nature
of interest, Liens, and costs (including attorneys’ fees and disbursements and
any other legal or non-legal expenses of investigation or defense of any Claim,
whether or not such Claim is ultimately defeated or enforcing the rights,
remedies or indemnities provided for hereunder, or otherwise available at law
or equity to Lessor), of whatever kind or nature, contingent or otherwise,
matured or unmatured, foreseeable or unforeseeable, by or against any person,
arising on account of (1) any Lease Document, including the performance, breach
(including any Default or Event of Default) or enforcement of any of the terms
thereof, or (2) the Equipment, or any part or other contents thereof, any
substance at any time contained therein or emitted therefrom, including any
hazardous substances, or the premises at which the Equipment may be located
from time to time, or (3) the ordering, acquisition, delivery, installation or
rejection of the Equipment, the possession or any property to which it may be
attached from time to time, maintenance, use, condition, ownership or operation
of any item of Equipment, and by whomsoever owned, used, possessed or operated,
during the term of any Schedule with respect to that item of Equipment,
the existence of latent and other defects (whether or not discoverable by
Lessor or Lessee) any claim in tort for negligence or strict liability, and any
claim for patent, trademark or copyright infringement, or the loss, damage,
destruction, theft, removal, return, surrender, sale or other disposition of
the Equipment, or any item thereof, including Claims involving or alleging
environmental damage, or any criminal or terrorist act, or for whatever other
reason whatsoever.  If any Claim is made
against Lessee or an Indemnitee, the party receiving notice of such Claim shall
promptly notify the other, but the failure of the party receiving notice to so
notify the other shall not relieve Lessee of any obligation hereunder.


 


15.   DEFAULT.  A default shall be deemed to have occurred
hereunder and under a Schedule upon the occurrence of any of the following
(each, an “Event of Default”): 
(a) non-payment of Basic Rent within five (5) days after it is due; (b)
non-payment of any Other Payment within five (5) days after it is due; (c)
failure to maintain, use or operate the Equipment in compliance with applicable
law; (d) failure to obtain, maintain and comply with all of the insurance
coverages required under this Lease; (e) any transfer or encumbrance, or the
existence of any Lien, that is prohibited by this Lease; (f) a payment or other
default by Lessee under any loan, lease, guaranty or other financial obligation
to Lessor or its affiliates which default entitles the other party to such
obligation to exercise remedies; (g) a payment or other default by Lessee under
any material loan, lease, guaranty or other material financial obligation to
any third party which default has been declared; (h) an inaccuracy in any
representation or breach of warranty by Lessee (including any false or
misleading representation or warranty) in any financial statement or Lease
Document, including any omission of any substantial contingent or unliquidated
liability or Claim against Lessee; (i) the commencement of any bankruptcy,
insolvency, receivership or similar proceeding by or against Lessee or any of
its properties or business (unless, if involuntary, the proceeding is dismissed
within sixty (60) days of the filing thereof) or the rejection of this Lease or
any other Lease Document in any such proceeding; (j) the failure by Lessee
generally to pay its debts as they become due or its admission in writing of
its inability to pay the same; (k) Lessee shall (1) enter into any transaction
of merger or consolidation, unless Lessee shall be the surviving entity (such
actions being referred to as an “Event”), unless the surviving entity is
organized and existing under the laws of the United States or any state, and
prior to such Event: (A) such person executes and delivers to Lessor (x) an
agreement satisfactory to Lessor, in its sole discretion, containing such
person’s effective assumption, and its agreement to pay, perform, comply with
and otherwise be liable for, in a due and punctual manner, all of Lessee’s
obligations having previously arisen, or then or thereafter arising, under any
and all of the Lease Documents, and (y) any and all other documents,
agreements, instruments, certificates, opinions and filings requested by
Lessor; and (B) Lessor is satisfied as to the creditworthiness of such person,
and as to such person’s conformance to the other standard criteria then used by
Lessor when approving transactions similar to the transactions contemplated in
this Lease; (2) cease to do business as a going concern, liquidate, or
dissolve; or (3) sell, transfer, or otherwise dispose of all or substantially
all of its assets or property; (l) if Lessee is privately held and effective
control of Lessee’s voting capital stock/membership interests/partnership
interests, issued and outstanding from time to time, is not retained by the
present holders (unless Lessee shall have provided thirty (30) days’ prior
written notice to Lessor of the proposed disposition and Lessor shall


 


7

















 


have consented thereto in writing); or (m) if
Lessee is a publicly held corporation and there is a material change in the
ownership of Lessee’s capital stock, unless Lessor is satisfied as to the
creditworthiness of Lessee and as to Lessee’s conformance to the other standard
criteria then used by Lessor for such purpose immediately thereafter; (n) there
occurs a default or anticipatory repudiation under any guaranty executed in
connection with this Lease; (o) failure to satisfy the requirements of any
financial covenants set forth herein, or in any rider to this Lease or any
Schedule; or (p) breach by Lessee of any other covenant, condition or agreement
(other than those in items (a)-(o)) under this Lease or any of the other Lease
Documents that continues for thirty (30) days after Lessor’s written notice to
Lessee (but such notice and cure period will not be applicable unless such
breach is curable by practical means within such notice period).


 


16.   REMEDIES.  (a) If an Event of Default occurs with
respect to any Schedule, the Lessor thereunder may (in its sole discretion)
exercise any one or more of the following remedies with respect to such
Schedule and any or all other Schedules to which such Lessor is then a
party: (1) proceed at law or in equity, to enforce specifically Lessee’s
performance or to recover damages; (2) declare each such Schedule in
default, and terminate each such Schedule or otherwise terminate Lessee’s
right to use the Equipment and Lessee’s other rights, but not its obligations,
thereunder and Lessee shall immediately assemble, make available and, if Lessor
requests, return the Equipment to Lessor in accordance with the terms of
Section 13 of this Lease; (3) enter any premises where any item of
Equipment is located and take immediate possession of and remove (or disable in
place) such item (and/or any unattached parts) by self-help, summary
proceedings or otherwise without liability; (4) use Lessee’s premises for
storage without liability; (5) sell, re-lease or otherwise dispose of any or
all of the Equipment, whether or not in Lessor’s possession, at public or
private sale, with or without notice to Lessee, and apply or retain the net
proceeds of such disposition, with Lessee remaining liable for any deficiency
and with any excess being for the account of Lessee; (6) enforce any or all of
the preceding remedies with respect to any related Collateral, and apply any
deposit or other cash collateral, or any proceeds of any such Collateral, at
any time to reduce any amounts due to Lessor; (7) demand and recover from
Lessee all Liquidated Damages and all Other Payments whenever the same shall be
due; and (8) exercise any and all other remedies allowed by applicable law,
including the UCC.  As used herein, “Liquidated
Damages” shall mean the liquidated damages (all of which, Lessee
hereby acknowledges, are damages to be paid in lieu of future Basic Rent and
are reasonable in light of the anticipated harm arising by reason of an Event
of Default, and are not a penalty) described in the first sentence of
Section 16(b).


 


(b)  If an Event of Default occurs with respect to any Schedule, upon
demand, Lessee shall pay to Lessor an amount calculated as the Stipulated Loss
Value of the Equipment (determined as of the next rent payment date after the
date of the occurrence of the subject Event of Default), together with all
other Rent due with respect to the related Schedule as of such
determination date, and all Enforcement Costs (defined in Section 16(c)),
less a credit for any disposition proceeds, if applicable pursuant to the
application provisions in the next sentence. 
If Lessor demands the Liquidated Damages under this Section 16(b),
and recovers and sells the Equipment, any proceeds received in good and
indefeasible funds shall be applied by Lessor, with respect to the related
Schedule: first, to pay all Enforcement Costs, to the extent not
previously paid; second, to pay to Lessor an amount equal to any unpaid
Rent due and payable, together with the liquidated damage amounts specified in
this Section 16(b), to the extent not previously paid; third, to
pay to Lessor any interest accruing on the amounts covered by the preceding
clauses, at the Late Charge Rate, from and after the date the same becomes due,
through the date of payment; and fourth, (A) if the Lessor under such
Schedule is also the Lessor under any other Schedules (whether by
retaining the same, or as Assignee), to satisfy any remaining obligations under
any or all such other Schedules, or (B) if such Lessor is not the Lessor under
any other Schedule, or if Lessee’s obligations to such Lessor under such other
Schedules have been fully and indefeasibly satisfied, to reimburse Lessee for
such amounts to the extent paid by Lessee as liquidated damages pursuant to
this Section 16(b).


 


(c)  A termination of any Schedule shall occur only upon written
notice by Lessor to Lessee.  Unless
already specifically provided for in Section 16(b), if an Event of Default
occurs with respect to any Schedule, Lessee shall also be liable for all of the
following (“Enforcement Costs”): (1) all unpaid Rent due before, during or
after exercise of any of the foregoing remedies, and (2) all reasonable legal
fees (including consultation, drafting notices or other documents, expert
witness fees, sending notices or instituting, prosecuting or defending
litigation or arbitration) and other enforcement costs and expenses incurred by
reason of any Default or Event of Default or the exercise of Lessor’s rights or
remedies, including all expenses incurred in connection with the return or
other recovery of any Equipment in accordance with the terms of this Lease or
in placing such Equipment in the condition required hereby, or the sale,
re-lease or other disposition (including but not limited to costs of
transportation, possession, storage, insurance, taxes, lien removal, repair,
refurbishing, advertising and brokers’ fees), and all other pre-judgment and
post-judgment enforcement related actions taken by Lessor or any actions taken
by Lessor in any bankruptcy case involving Lessee, the Equipment, or any other
person.  Late Charges shall accrue with
respect to any amounts payable under this Section for as long as such
amounts remain outstanding, and shall be paid by Lessee upon demand.  No right or remedy is exclusive and each may
be used


 


8

















 


successively and cumulatively.  Any failure to exercise the rights granted
hereunder upon any Default or Event of Default shall not constitute a waiver of
any such right.  The execution of a
Schedule shall not constitute a waiver by Lessor of any pre-existing
Default or Event of Default.  With
respect to any disposition of any Equipment or Collateral pursuant to this
Section, (i) Lessor shall have no obligation, subject to the requirements of
commercial reasonableness, to clean-up or otherwise prepare the same for
disposition, (ii) Lessor may comply with any applicable law in connection with
any such disposition, and any actions taken in connection therewith shall not
be deemed to have adversely affected the commercial reasonableness of any
disposition thereof, (iii) Lessor may disclaim any title or other warranties in
connection with any such disposition, (iv) if Lessor purchases any of the
Equipment or Collateral at a public or private sale pursuant hereto, Lessor may
pay for the same by crediting some or all of Lessee’s obligations under any
Schedule, and (v) Lessee shall remain responsible for any deficiency remaining
after Lessor’s exercise of its remedies and application of any funds or credits
against Lessee’s obligations under any Schedule, and Lessee shall be entitled
to any excess after such application.


 


17.   ASSIGNMENT.  (a) LESSEE SHALL NOT ASSIGN, DELEGATE,
TRANSFER OR ENCUMBER ANY OF ITS RIGHTS OR OBLIGATIONS HEREUNDER OR UNDER ANY
SCHEDULE, OR ITS LEASEHOLD INTEREST OR ANY COLLATERAL, SUBLET THE EQUIPMENT OR
OTHERWISE PERMIT THE EQUIPMENT TO BE OPERATED OR USED BY, OR TO COME INTO OR
REMAIN IN THE POSSESSION OF, ANYONE BUT LESSEE.  Without limiting the foregoing, (1) Lessee may not attempt to
dispose of any of the Equipment, and (2) Lessee shall (A) maintain the
Equipment free from all Liens, other than Permitted Liens, (B) notify Lessor
immediately upon receipt of notice of any Lien affecting the Equipment, and (C)
defend Lessor’s interest in the Equipment. 
A “Permitted
Lien” shall mean any Lien for Impositions, Liens of mechanics,
materialmen, or suppliers and similar Liens arising by operation of law,
provided that any such Lien is incurred by Lessee in the ordinary course of
business, for sums that are not yet delinquent or are being contested in good
faith and with due diligence, by negotiations or by appropriate proceedings
which suspend the collection thereof and, in Lessor’s sole discretion, (i) do
not involve any substantial danger of the sale, forfeiture or loss of the
Equipment or any interest therein, and (ii) for the payment of which adequate
assurances or security have been provided to Lessor.  No disposition referred to in this Section shall relieve
Lessee of its obligations, and Lessee shall remain primarily liable under each
Schedule and all of the other Lease Documents. (b) Lessor may at any time
with or without notice to Lessee grant a security interest in, sell, assign,
delegate or otherwise transfer (an “Assignment”) all or any part of its
interest in the Equipment, this Lease or any Schedule and any related
Lease Documents or any Rent thereunder, or the right to enter into any
Schedule, and Lessee shall perform all of its obligations thereunder, to the
extent so transferred, for the benefit of the beneficiary of such Assignment
(such beneficiary, including any successors and assigns, an “Assignee”).  Lessee agrees not to assert against any
Assignee any Abatement (without limiting the provisions of Section 2) or
Claim that Lessee may have against Lessor, and Assignee shall not be bound by,
or otherwise required to perform any of Lessor’s obligations, unless expressly
assumed by such Assignee.  Lessor shall
be relieved of any such assumed obligations. 
If so directed in writing, Lessee shall pay all Rent and all other sums
that become due under the assigned Schedule and other Lease Documents
directly to the Assignee or any other party designated in writing by Lessor or
such Assignee.  Lessee acknowledges that
Lessor’s right to enter into an Assignment is essential to Lessor and,
accordingly, waives any restrictions under applicable law with respect to an
Assignment and any related remedies. 
Upon the request of Lessor or any Assignee, Lessee also agrees (i) to
promptly execute and deliver to Lessor or to such Assignee an acknowledgment of
the Assignment in form and substance satisfactory to the requesting party, an
insurance certificate and such other documents and assurances reasonably
requested by Lessor or Assignee, and (ii) to comply with all other reasonable
requirements of any such Assignee in connection with any such Assignment.  Upon such Assignment and except as may
otherwise be provided herein, all references in this Lease to “Lessor” shall
include such Assignee.  (c) Subject
always to the foregoing, this Lease and each Schedule shall inure to the
benefit of, and are binding upon, Lessee’s and Lessor’s respective successors
and assigns (and, without limiting the foregoing, shall bind all persons who
become bound as a “new debtor” to this Lease and any Schedule, as set forth in
UCC Section 9-203(e)).


 


18.   MISCELLANEOUS.  (a) This Lease, each Schedule, any Riders
hereto or thereto and any commitment letter between the parties, constitute the
entire agreement between the parties with respect to the subject matter hereof
and thereof and shall not be amended or modified in any manner except by a
document in writing executed by both parties. 
(b) Any provision of this Lease that 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.  (c) The
representations, warranties and agreements of Lessee herein shall be deemed to
be continuing and to survive the execution and delivery of this Lease, each
Schedule and any other Lease Documents. 
With respect to each Schedule, the obligations of Lessee under Sections
8, 9, 10, 12, 13 and 14 hereof, together with any of Lessee’s obligations under
the other provisions of this Lease (as incorporated therein) which have accrued
but not been fully satisfied, performed or complied with prior to the
expiration or earlier cancellation or termination of such Schedule, shall


 


9

















 


survive the expiration or earlier
cancellation or termination thereof. 
(d) All of Lessee’s obligations hereunder and under any
Schedule shall be performed at Lessee’s sole expense.  Lessee shall reimburse Lessor promptly upon
demand for all expenses incurred by Lessor in connection with (1) any action
taken by Lessor at Lessee’s request, or in connection with any option, (2) the filing
or recording of real property waivers and UCCs, (3) any Enforcement Costs not
recovered pursuant to Section 16, (4) all inspections, and (5) all lien
search reports (and copies of filings) requested by Lessor.  If Lessee fails to perform any of its
obligations with respect to a Schedule, Lessor shall have the right, but shall
not be obligated, to effect such performance, and Lessee shall reimburse
Lessor, upon demand, for all expenses incurred by Lessor in connection with
such performance.  Lessor’s effecting
such compliance shall not be a waiver of Lessee’s default.  All amounts payable under this Section, if
not paid when due, shall be paid to Lessor together with interest thereon at
the Late Charge Rate.  (e) Lessee
irrevocably appoints Lessor as Lessee’s attorney-in-fact (which power shall be
deemed coupled with an interest) to execute, endorse and deliver any documents
and checks or drafts relating to or received in payment for any loss or damage
under the policies of insurance required by this Lease, but only to the extent
that the same relates to the Equipment. 
(f) LESSOR AND LESSEE HEREBY WAIVE TRIAL BY JURY IN ANY ACTION OR
PROCEEDING TO WHICH LESSEE AND/OR LESSOR MAY BE PARTIES ARISING OUT OF OR IN
ANY WAY PERTAINING TO THIS LEASE.  (g)
All notices (excluding billings and communications in the ordinary course of
business) hereunder shall be in writing, personally delivered, delivered by
overnight courier service, sent by facsimile transmission (with confirmation of
receipt), or sent by certified mail, return receipt requested, addressed to the
other party at its respective address stated below the signature of such party
or at such other address as such party shall from time to time designate in
writing to the other party; and shall be effective from the date of receipt.  (h) This Lease shall not be effective unless
and until accepted by execution by an officer of Lessor at the address, in the
State of Maryland (the “State”), as set forth below the signature
of Lessor.  THIS LEASE AND ALL OF THE
OTHER LEASE DOCUMENTS, AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
AND THEREUNDER, SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE (WITHOUT REGARD TO THE CONFLICT
OF LAWS PRINCIPLES OF THE STATE), INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, REGARDLESS OF THE LOCATION OF THE EQUIPMENT.  The parties agree that any action or
proceeding arising out of or relating to this Lease may be commenced in any
state or Federal court in the State, and agree that a summons and complaint
commencing an action or proceeding in any such court shall be properly served
and shall confer personal jurisdiction if served personally or by certified
mail to it at the mailing address below Lessee’s signature, or as it may
provide in writing from time to time, or as otherwise provided under the laws
of the State.  (i) This Lease and all of
the other Lease Documents may be executed in counterparts.  Photocopies or facsimile transmissions of
signatures shall be deemed original signatures and shall be fully binding on
the parties to the same extent as original signatures. The transfer or
possession of the “Original” of this Lease shall be irrelevant to the full or
collateral assignment of, or grant of security interest in, any Schedule;
provided, however, no security interest in any Schedule may be created
through the transfer, possession or control, as applicable, of any counterpart
of such Schedule other than the original thereof, which shall be
identified as the document or record (as applicable) marked “Original” and all
other counterparts shall be marked “Duplicate”.  (j) If Lessor is required by the terms hereof to pay to or for
the benefit of Lessee any amount received as a refund of an Imposition or as
insurance proceeds, Lessor shall not be required to pay such amount, if any
Default has occurred and not been cured or any Event of Default shall have
occurred and not been waived by Lessor. 
In addition, if Lessor is required by the terms hereof to cooperate with
Lessee in connection with certain matters, such cooperation shall not be
required if a Default or Event of Default has then occurred and is
continuing.  (k) To the extent Lessor is
required to give its consent or approval with respect to any matter, the
reasonableness of Lessor’s withholding of such consent shall be determined
based on the then existing circumstances; provided, that Lessor’s withholding
of its consent shall be deemed reasonable for all purposes if (i) the taking of
the action that is the subject of such request, might result (in Lessor’s
discretion), in (A) an impairment of Lessor’s rights or interests hereunder or
under any Schedule or other Lease Document, or to the Equipment, or (B)
expose Lessor to any Claims or Impositions, or (ii) Lessee fails to provide promptly
to Lessor any filings, certificates, opinions or indemnities required by Lessor
as a condition to such consent.


 


19.   DEFINITIONS AND RULES OF CONSTRUCTION.  (a) The following terms when used in this
Lease or in any of the Schedules have the following meanings: (1) “affiliate”:
with respect to any given person, shall mean (i) each person that directly or
indirectly owns or controls, whether beneficially or as a trustee, guardian or
other fiduciary, five (5) percent or more of the voting stock, membership interest
or similar equity interest having ordinary voting power in the election of
directors or managers of such person, (ii) each person that controls, is
controlled by, or is under common control with, such person, or (iii) each of
such person’s officers, directors, members, joint venturers and partners.  For the purposes of this definition,
“control” of a person means the possession, directly or indirectly, of the
power to direct or cause the direction of its management or policies, whether
through the ownership of voting securities, by contract or otherwise; (2) “applicable
law” or “law”: any law, rule, regulation, ordinance,
order, code, common law, interpretation, judgment, directive, decree, treaty,
injunction, writ, determination, award, permit or similar norm or decision of
any governmental


 


10

















 


authority; (3) “AS IS, WHERE IS”: AS IS, WHERE
IS, without warranty, express or implied, with respect to any matter
whatsoever; (4) “business day”: any day, other than a Saturday, Sunday, or
legal holiday for commercial banks under the laws of the state of the Lessor’s
notice address; (5) “governmental authority”: any federal,
state, county, municipal, regional or other governmental authority, agency,
board, body, instrumentality or court, in each case, whether domestic or
foreign; (6) “person”: any individual, corporation, limited liability
entity, partnership, joint venture, or other legal entity or a governmental
authority, whether employed, hired, affiliated, owned, contracted with, or
otherwise related or unrelated to Lessee or Lessor; and (7) “UCC”
or “Uniform
Commercial Code”: the Uniform Commercial Code as in effect in the
State or in any other applicable jurisdiction; and any reference to an
article (including Article 2A) or section thereof shall mean the
corresponding article or section (however termed) of any such
applicable version of the Uniform Commercial Code.  (b) The following terms when used herein or in any of the
Schedules shall be construed as follows: (1) “herein,” “hereof,”
“hereunder,”
etc.: in, of, under, etc. this Lease or such other Lease Document in which such
term appears (and not merely in, of, under, etc. the section or provision
where the reference occurs); (2) “including”: means including without
limitation unless such term is followed by the words “and limited to,” or
similar words; and (3) “or”: at least one, but not necessarily only
one, of the alternatives enumerated. 
Any defined term used in the singular preceded by “any” indicates any
number of the members of the relevant class. 
Any Lease Document or other agreement or instrument referred to herein
means such agreement or instrument as supplemented and amended from time to
time.  Any reference to Lessor or Lessee
shall include their permitted successors and assigns.  Any reference to an applicable law shall also mean such law as
amended, superseded or replaced from time to time.


 


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OF THIS PAGE INTENTIONALLY LEFT BLANK]


 


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IN WITNESS WHEREOF, the parties
hereto have caused this Master Lease Agreement to be duly executed, under seal,
as of the day and year first above set forth.


 


 


	
  LASALLE NATIONAL LEASING CORPORATION

  	
   

  	
  PERRY JUDD’S INCORPORATED

  
	
  Lessor

  	
   

  	
  Lessee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
  [SEAL]

  	
   

  	
  By:

  	
   

  	
  [SEAL]

  
	
  Name:

  	
   

  	
   

  	
  Name: 
  Verne F. Schmidt

  
	
  Title:

  	
   

  	
   

  	
  Title: 
  Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  One West Pennsylvania Avenue

  	
   

  	
   

  	
  575 West Madison Street

  
	
   

  	
  Suite 1000

  	
   

  	
   

  	
  Waterloo, WI  53594

  
	
   

  	
  Towson, Maryland 21204

  	
   

  	
   

  
	
   

  	
  Facsimile: 
  410-769-9313

  	
   

  	
  Facsimile: 
  920-478-1848

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Form of Organization:  Corporation

  
	
   

  	
   

  	
  Jurisdiction of Organization:  Delaware

  
	
   

  	
   

  	
  Organizational No. 2465768

  
	
   

  	
   

  	
  Federal Employer Identification No.
  51-0365772

  
											



 


12

















 


LASALLE NATIONAL LEASING CORPORATION


 


RIDER
NO. 1


 


To and part of Master Lease
Agreement dated as of the 29th day of June, 2004 (the “Lease”),
between LASALLE NATIONAL LEASING CORPORATION, its successors and assigns
(“Lessor”), and PERRY JUDD’S INCORPORATED, its successors and permitted assigns
(“Lessee”).


 


TERMINATION RENTAL
PREMIUM.  Upon the expiration of the
term of this Lease, Lessee promptly shall pay to Lessor without notice or
demand therefor and together with all other amounts then due and payable
hereunder, in cash, a Termination Rental Premium of One Dollar ($1.00).  Upon receipt by Lessor of the Termination
Rental Premium, Lessor shall deliver to Lessee a bill of sale transferring and
assigning to Lessee without recourse or warranty, except (with respect to the
status of the interest conveyed) in respect of Lessor’s acts, all of Lessor’s
rights and 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 or any other
matters.


 


 


	
  LASALLE NATIONAL LEASING CORPORATION

  	
   

  	
  PERRY JUDD’S INCORPORATED

  	
   

  
	
  Lessor

  	
   

  	
  Lessee

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
  [SEAL]

  	
   

  	
  By:

  	
   

  	
  [SEAL]

  
	
  Name:

  	
   

  	
   

  	
  Name: 
  Verne F. Schmidt

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title: 
  Chief Financial Officer

  	
   

  
									



 


13

















 


RIDER
NO. 2


 


To and part of Master Lease Agreement dated
as of the 29th day of June, 2004 (the “Lease”), between LASALLE
NATIONAL LEASING CORPORATION, its successors and assigns (“Lessor”), and PERRY
JUDD’S INCORPORATED, its successors and permitted assigns (“Lessee”).


 


EARLY TERMINATION OPTION.  Provided that no Default or Event of Default
has then occurred, Lessee shall have the option to terminate the Lease with
respect to all but not less than all of the Equipment described on all Schedules
executed pursuant to this Lease upon the following terms and conditions:


 


(1)  If Lessee desires to exercise this option, it shall give Lessor
written notice of its exercise of this option to terminate at least sixty (60)
days before the effective date of termination (the “Termination Date”).  The Termination Date may be the
twenty-fourth (24th) anniversary of the Base Lease Commencement Date
with respect to the first Schedule to be executed under this Lease, or any
subsequent anniversary date thereof.


 


(2)  The notice shall be effective with respect to all Schedules
executed pursuant to this Lease, provided that the Termination Date with
respect to any Schedule may not be earlier than the twenty-fourth (24th)
anniversary of the Base Lease Commencement Date with respect to such Schedule.


 


(3)  On the Termination Date, Lessee shall pay to Lessor all Rent and
other sums then due on such date and Lessee shall pay to Lessor, in cash, the
Termination Value of such Equipment as of such date (together with all taxes,
charges and other costs incurred by Lessor in connection with such termination,
if any).


 


As used herein, “Termination
Value” means the product of the Total Invoice Cost (as specified on the
appropriate Schedule) of the item of Equipment, and the applicable percentage
factor set forth on the Schedule of Termination Values attached to the
applicable Schedule.  Termination Value
shall be determined as of the Termination Date with respect to such item or items
of Equipment, after payment of any Rent due on such date, and the applicable
percentage factor shall be that which is set forth with respect to the most
recent Rent payment actually paid.


 


 


	
  LASALLE NATIONAL LEASING CORPORATION

  	
   

  	
  PERRY JUDD’S INCORPORATED

  	
   

  
	
  Lessor

  	
   

  	
  Lessee

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
  [SEAL]

  	
   

  	
  By:

  	
   

  	
  [SEAL]

  
	
  Name:

  	
   

  	
   

  	
  Name: 
  Verne F. Schmidt

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title: 
  Chief Financial Officer

  	
   

  
									



 


14

















 


RIDER
NO. 3


 


To and part of Master Lease Agreement dated
as of the 29th day of June, 2004 (the “Lease”), between LASALLE
NATIONAL LEASING CORPORATION, its successors and assigns (“Lessor”), and PERRY
JUDD’S INCORPORATED, its successors and permitted assigns (“Lessee”).


 


GUARANTOR. 
Lessor’s obligations under the Lease are further conditioned upon Lessor
having received the following, in form and substance satisfactory to
Lessor:  (1)  the Master Lease Guaranty (the “Guaranty”), duly executed by
Perry Judd’s Holdings, Inc. (the “Guarantor”); (2) an opinion of counsel for
Guarantor as to each of the matters set forth in sub-parts (a)(1) and (2), (b)
and (c) of Section 4 of the Guaranty; and (3) a certificate of Guarantor’s
Secretary certifying:  (a) resolutions
of Guarantor’s Board of Directors duly authorizing the undertaking to guarantee
the payment and performance of the obligations of Lessee under the Lease, and
(b) the incumbency and signature of the officers of Guarantor authorized to
execute the Guaranty.


 


 


	
  LASALLE NATIONAL LEASING CORPORATION

  	
   

  	
  PERRY JUDD’S INCORPORATED

  	
   

  
	
  Lessor

  	
   

  	
  Lessee

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
  [SEAL]

  	
   

  	
  By:

  	
   

  	
  [SEAL]

  
	
  Name:

  	
   

  	
   

  	
  Name: 
  Verne F. Schmidt

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title: 
  Chief Financial Officer

  	
   

  
									



 


15

















 


RIDER
NO. 4


 


To and part of Master Lease Agreement dated
as of the 29th day of June, 2004 (the “Lease”), between LASALLE
NATIONAL LEASING CORPORATION, its successors and assigns (“Lessor”), and PERRY
JUDD’S INCORPORATED, its successors and permitted assigns (“Lessee”).


 


SECURITY DEPOSIT.  Lessee shall have paid to Lessor, either
before or concurrently with the execution of the initial Schedule, a security
deposit in the amount of Ten Thousand Dollars ($10,000.00).  This security deposit shall be held by
Lessor during the term and any renewal term, if applicable, of the Lease as security
for the full payment and performance of all terms, conditions and obligations
of Lessee hereunder and under any and all Schedules.  Such deposit shall not excuse the performance at the time and in
the manner prescribed of any obligation of Lessee or cure a default of
Lessee.  Lessor may, but shall not be
required to, apply such security deposit towards discharge of any overdue
obligation of Lessee.  Lessor shall be
entitled to commingle such deposit with any of its own funds and shall have no
obligation to pay any interest or other income on such deposit to the
Lessee.  If Lessor shall apply any of
the deposit towards any obligations of Lessee under the Lease, Lessee shall,
upon demand, pay to Lessor an amount necessary to return the deposit to the sum
specified above.


 


In furtherance thereof, Lessee
hereby grants to Lessor a security interest in the cash comprising the security
deposit from time to time, together with the proceeds thereof, to secure the
prompt payment as and when due of all indebtedness, and the prompt performance
as and when due of all obligations, of Lessee now or hereafter required under
the Lease.


 


If no Default or Event of
Default has then occurred, upon the first to occur of either: (x)
$11,250,000.00 worth of Equipment having been funded by Lessor and commencement
of the Lease or (y) the expiration or earlier termination of the term or any
renewal term, if applicable (whichever is later), of the Lease, the balance of
such security deposit then held by Lessor shall promptly be paid to Lessee and
the security interest granted herein shall terminate.


 


 


	
  LASALLE NATIONAL LEASING CORPORATION

  	
   

  	
  PERRY JUDD’S INCORPORATED

  	
   

  
	
  Lessor

  	
   

  	
  Lessee

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
  [SEAL]

  	
   

  	
  By:

  	
   

  	
  [SEAL]

  
	
  Name:

  	
   

  	
   

  	
  Name: 
  Verne F. Schmidt

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title: 
  Chief Financial Officer

  	
   

  
									



 


16

















 


RIDER
NO. 5


 


To and part of Master Lease Agreement dated
as of the 29th day of June, 2004 (the “Lease”), between LASALLE
NATIONAL LEASING CORPORATION, its successors and assigns (“Lessor”), and PERRY
JUDD’S INCORPORATED, its successors and permitted assigns (“Lessee”).


 


A.    ADDITIONAL REPRESENTATIONS AND
WARRANTIES OF LESSEE FOR SALE-LEASEBACK. 
Lessee represents and warrants that: 
(1) The sale of those certain items of equipment specified on the
schedule attached to each Equipment Bill of Sale (collectively the “Bill
of Sale”) executed by Lessee, and the execution, delivery and performance of
the Bill of Sale (a) have been duly authorized by all necessary corporate
action on the part of Lessee; (b) do not require the consent of any stockholder,
trustee or holders of any indebtedness of Lessee except such as have been duly
obtained; and (c) do not and will not contravene any law, governmental rule,
regulation or order now binding on Lessee, or the charter or by-laws of Lessee,
or contravene the provisions of, or constitute a default under, or result in
the creation of any lien or encumbrance upon the property of Lessee under, any
indenture, mortgage, contract or other agreement to which Lessee is a party or
by which it or its property is bound. 
(2) The Bill of Sale transfers to Lessor a valid interest in the
equipment described on the schedule attached thereto free and clear of any
and all encumbrances, liens, charges or defects.  No filing or recordation must be made, no notice must be given,
and no other action must be taken with respect to any state or local
jurisdiction, or any person, in order to preserve to Lessor all the rights
transferred by the Bill of Sale.


 


B.     ADDITIONAL
AUTHORIZATION.  Lessor’s obligations
under the Lease are further conditioned upon Lessor having received the Bill of
Sale and an opinion of counsel for Lessee as to the matters set forth in
paragraph A above.


 


 


	
  LASALLE NATIONAL LEASING CORPORATION

  	
   

  	
  PERRY JUDD’S INCORPORATED

  	
   

  
	
  Lessor

  	
   

  	
  Lessee

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
  [SEAL]

  	
   

  	
  By:

  	
   

  	
  [SEAL]

  
	
  Name:

  	
   

  	
   

  	
  Name: 
  Verne F. Schmidt

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title: 
  Chief Financial Officer

  	
   

  
									



 


17