Exhibit
10.1
MASTER
LEASE AGREEMENT
dated
as of
August
21,
2009
THIS
MASTER LEASE AGREEMENT (as
amended, supplemented or otherwise modified from time to time, this
"Agreement" ) is between General Electric
Capital Corporation (together with its successors and assigns,
if any, "Lessor" ) and Masland Carpets, LLC (
"Lessee" ). Lessor has an office at 10 Riverview
Drive, Danbury, CT 06810-6268. Lessee is a Limited Liability
Company organized and existing under the laws of the state of
Georgia. Lessee's mailing address and chief executive office
is 2208 S. Hamilton Street, Dalton, GA 30721. This Agreement
contains the general terms that apply to the leasing of certain
equipment and personal property (the "Equipment" ) from
Lessor to Lessee. Additional terms that apply to the
Equipment and financial terms in relation to the lease of the
Equipment (term, rent, options, etc.) shall be contained on an
equipment schedule (each a "Schedule" , and collectively the
"Schedules" ). This Agreement together with any
Schedule shall constitute the "Lease" for any Equipment.
Capitalized terms used but not defined in this Agreement
shall have the meanings assigned to such terms set forth in the
applicable Schedule(s).
1.
LEASING:
(a)
Subject
to the terms and conditions set forth below, Lessor agrees to lease
to Lessee, and Lessee agrees to lease from Lessor, the Equipment
described in any Schedule signed by both parties.
(b)
Lessor
shall purchase Equipment from the manufacturer or supplier (
"Supplier" ) and lease it to Lessee if on or before the Last
Delivery Date Lessor receives (i) a Schedule for the Equipment,
(ii) evidence of insurance which complies with the requirements of
Section 9, and (iii) such other documents as Lessor may reasonably
request. Each of the documents required above must be in form
and substance satisfactory to Lessor. Lessor hereby appoints
Lessee its agent for inspection and acceptance of the Equipment
from Supplier. Once the Schedule is signed, Lessee may not cancel
the Schedule.
2.
TERM,
RENT AND PAYMENT:
(a)
The
rent ( "Rent" ) payable for the Equipment and Lessee's right
to use the Equipment shall begin on the earlier of (i) the date
when Lessee signs the Schedule and accepts the Equipment or (ii)
when Lessee has accepted the Equipment under a Certificate of
Acceptance ( "Lease Commencement Date" ). The term of
the Lease for any Equipment shall commence on the Basic Lease
Commencement Date and shall continue, unless earlier cancelled or
terminated pursuant to the provisions of the applicable Schedule
(the "Term" ). If any term is extended or renewed, the
word "Term" shall be deemed to refer to all extended or
renewal terms, and all provisions of this Agreement shall apply
during any such extension or renewal terms, except as may be
otherwise specifically provided in writing.
(b)
Lessee
shall pay rent to Lessor at its address stated above, unless
otherwise directed by Lessor. Each payment of Rent (each a
"Rent Payment" ) shall be in the amount set forth in,
payable at such intervals and due in accordance with the provisions
of the applicable Schedule. If any Interim Rent and/or any
Advance Rent is payable in respect of any Equipment, such Interim
Rent and/or Advance Rent shall be set forth in the applicable
Schedule and shall be due and payable in accordance with the terms
of the Schedule. Upon Lessor's receipt of the Interim Rent
and the Advance Rent, (i) the Interim Rent shall be applied to the
Rent Payment due for the Interim Period, if any, set forth in the
Schedule, and (ii) the Advance Rent shall be applied to the first
Rent Payment due for the Basic Term, and (iii) the remaining
balance, if any, shall be applied to the next scheduled Rent
Payment under such Schedule. In no event shall any Interim
Rent, Advance Rent or any other Rent Payments be refunded to
Lessee. If Lessor does not receive from Lessee payment in
full of any scheduled Rent Payment or any other sum due under any
Lease within ten (10) days after its due date, Lessee agrees to
pay, a late fee equal to five percent (5%) on such unpaid Rent
Payment or other sum, but not exceeding any lawful maximum.
Such late fee will be immediately due and payable, and is in
addition to any other costs, fees and expenses that Lessee may owe
as a result of such late payment.
3.
RENT
ADJUSTMENT:
(a)
If,
solely as a result of Congressional enactment of any law
(including, without limitation, any modification of, or amendment
or addition to, the Internal Revenue Code of 1986, as amended, (
"Code" )), the maximum effective corporate income tax rate
(exclusive of any minimum tax rate) for calendar-year taxpayers (
"Effective Rate" ) is higher than thirty-five percent (35%)
for any year during the Term for any Lease, then Lessor shall have
the right to increase such rent payments by requiring payment of a
single additional sum. The additional sum shall be equal to
the product of (i) the Effective Rate (expressed as a
decimal)
for such year less 0.35 (or, in the event that any adjustment has
been made hereunder for any previous year, the Effective Rate
(expressed as a decimal) used in calculating the next previous
adjustment) times (ii) the adjusted Termination Value (defined
below), divided by (iii) the difference between the new Effective
Rate (expressed as a decimal) and one (1). The adjusted
Termination Value shall be the Termination Value (calculated as of
the first rental due in the year for which such adjustment is being
made) minus the Tax Benefits that would be allowable under Section
168 of the Code (as of the first day of the year for which such
adjustment is being made and all future years of the Term for any
Lease). The Termination Values and Tax Benefits are defined
on the Schedule. Lessee shall pay to Lessor the full amount
of the additional rent payment on the later of (i) receipt of
notice or (ii) the first day of the year for which such adjustment
is being made.
(b)
Lessee's
obligations under this Section 3 shall survive any expiration,
cancellation or termination of any Lease.
4.
TAXES
AND FEES:
(a)
If
permitted by law, Lessee shall report and pay promptly all taxes,
fees and assessments due, imposed, assessed or levied against any
Equipment (or purchase, ownership, delivery, leasing, possession,
use or operation thereof), this Agreement (or any rents or receipts
hereunder), any Schedule, Lessor or Lessee, by any domestic or
foreign governmental entity or taxing authority during or related
to the Term of any Lease, 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 (collectively "Taxes" ). Lessee shall
have no liability for Taxes imposed by the United States of America
or any state or political subdivision thereof which are on or
measured by the net income of Lessor except as provided in Sections
3 and 14(c). Lessee shall promptly reimburse (on an after tax
basis) Lessor for any Taxes charged to or assessed against Lessor.
Lessee shall show Lessor as the owner of the Equipment on all
tax reports or returns, and send Lessor a copy of each report or
return and evidence of Lessee's payment of Taxes upon
request.
(b)
Lessee's
obligations, and Lessor's rights, privileges and indemnities,
contained in this Section 4 shall survive the expiration or other
cancellation or termination of this Agreement.
5.
REPORTS:
(a)
If any
tax or other lien shall attach to any Equipment, Lessee will notify
Lessor in writing, within ten (10) days after Lessee becomes aware
of the tax or lien. The notice shall include the full particulars
of the tax or lien and the location of such Equipment on the date
of the notice.
(b)
Lessee
will deliver or make available to Lessor, Lessee's and any
Guarantor's, if applicable, complete financial statements prepared
in accordance with generally accepted accounting principles,
consistently applied, certified by a recognized firm of certified
public accountants within ninety (90) days of the close of each
fiscal year of Lessee, together with a certificate of an authorized
officer of Lessee stating that such officer has reviewed the
activities of Lessee and that to the best of such officer's
knowledge, there exists no Event of Default or event which with
notice or lapse of time (or both) would become an Event of Default.
In addition, Lessee will deliver to Lessor copies of Lessee's
and any Guarantor's, if applicable, quarterly financial report
certified by the chief financial officer of Lessee, within ninety
(90) days of the close of each fiscal quarter of Lessee.
Lessee will deliver or make available to Lessor all Forms
10-K and 10-Q, if any, filed with the Securities and Exchange
Commission within thirty (30) days after the date on which they are
filed. As long as: i) Lessee remains a wholly-owned
subsidiary of The Dixie Group, Inc.; and ii) The Dixie Group, Inc.
remains publicly traded and is a corporate guarantor of
Lessee’s payment and performance obligations under this
Agreement; then copies of Form 10-K and Form 10-Q for
The Dixie Group, Inc. will satisfy the financial statement delivery
requirements set forth in this section 5(b), if
provided within the time periods specified in this section
for the delivery of quarterly and annual
financial reports.
(c)
Lessor
may inspect any Equipment during normal business hours after giving
Lessee reasonable prior notice.
(d)
Lessee
will keep the Equipment under any Lease at the Equipment Location
specified in the applicable Schedule and will give Lessor at least
five (5) business days prior written notice of any relocation of
such Equipment. If Lessor asks, Lessee will promptly notify
Lessor in writing of the location of any Equipment.
(e)
If any
Equipment is lost or damaged (where the estimated repair costs
would exceed the greater of ten percent (10%) of the original
Equipment cost or fifty thousand and 00/100 dollars ($50,000)), or
is otherwise involved in an accident causing personal injury
requiring hospital admission and/or (as the case may be)
requiring federal, state or local government reporting (including
without limitation to the Occupational Safety and Health
Administration) and/or (as the case may be) causing third
party property damage in excess of fifty thousand dollars
($50,000), Lessee will promptly and fully report the event to
Lessor in writing within ten (10) days of the occurrence of any
such incident.
(f)
Upon
Lessor’s request, Lessee will provide within ten (10) days of
such request, copies of the insurance policies or other evidence
required by the terms hereof.
(g)
Upon
reasonable request by Lessor, Lessee will furnish a certificate of
an authorized officer of Lessee stating that he has reviewed the
activities of Lessee and that, to the best of his knowledge, no
Event of Default or event which with notice or lapse of time (or
both) would become an Event of Default within thirty (30) days of
Lessor's request.
(h)
Lessee
will promptly notify Lessor of any change in Lessee's state of
incorporation or organization, in any case within thirty (30) days
of such change.
(i)
Upon
reasonable request by Lessor, Lessee will provide Lessor such other
reports or information in relation to the Equipment and the
maintenance thereof.
6.
DELIVERY,
USE AND OPERATION:
(a)
All
Equipment shall be shipped directly from Supplier to Lessee (unless
the Equipment is being leased pursuant to a sale-leaseback
transaction in which case Lessee represents and warrants that it is
in possession of the Equipment as of the Lease Commencement
Date).
(b)
Lessee
agrees that the Equipment will be used by Lessee solely in the
conduct of its business, and in a manner complying with all
applicable laws, regulations and insurance policies, and in
compliance with manufacturer’s recommendations. Lessee
further agrees that it shall not discontinue use of any Equipment
for more than one hundred twenty (120) consecutive days unless
otherwise permitted under the terms of the corresponding Schedule.
.
(c)
Lessee
will not (i) move any Equipment from the location specified on the
Schedule, without the prior written consent of Lessor, or (ii) part
with possession of any of the Equipment (except to Lessor or for
maintenance or repair). The foregoing notwithstanding,
provided Lessee is not subject to an Event of Default under this
Agreement, Lessee may relocate the Equipment to other facilities
operated by it or by its parent company (The Dixie Group, Inc.), or
wholly-owned subsidiaries of its parent company within the
continental United States; provided, Lessee (i) provides Lessor
with at least five (5) business days prior written notice of such
proposed relocation, including the address and operator of such
facility, (ii) delivers to Lessor prior to relocation any
information, instruments or documents reasonably required to
protect the interest of Lessor in the Equipment, including without
limitation, UCC filings, sublease consents and landlord or
mortgagee waivers with respect to the new location, and (iii)
indemnifies and holds harmless Lessor from any additional tax, fees
or other charges resulting from the relocation of the Equipment.
Upon the written request of Lessor, Lessee will notify Lessor
forthwith in writing of the location of any Equipment as of the
date of such notification.
(d)
Lessee
will keep the Equipment free and clear of all liens, claims and
encumbrances other than those which result from acts of
Lessor.
(e)
Lessor
shall not disturb Lessee's quiet enjoyment of the Equipment during
the term of the Agreement unless an Event of Default has occurred
and is continuing under this Agreement.
7.
MAINTENANCE:
(a)
Lessee
will, at its sole expense, maintain each unit of Equipment in good
operating order and repair, normal wear and tear excepted.
Lessee shall also maintain the Equipment in accordance with
manufacturer's recommendations. Lessee shall make all
alterations or modifications required to comply with any applicable
law, rule or regulation during the Term of any Lease. If
Lessor requests, Lessee shall affix plates, tags or other
identifying labels showing ownership thereof by Lessor. The
tags or labels shall be placed in a prominent position on each unit
of Equipment.
(b)
Lessee
will not attach or install anything on any Equipment that will
impair the originally intended function or use of such Equipment
without the prior written consent of Lessor. All additions,
parts, supplies, accessories, and equipment ( "Additions" )
furnished or attached to any Equipment that are not readily
removable shall become the property of Lessor. All Additions
shall be made only in compliance with applicable law. Lessee
will not attach or install any Equipment to or in any other
personal or real property without the prior written consent of
Lessor.
8.
STIPULATED
LOSS VALUE: If for
any reason any unit of Equipment becomes worn out, lost, stolen,
destroyed, irreparably damaged or unusable ( "Casualty
Occurrences" ) Lessee shall promptly and fully notify Lessor in
writing. Lessee shall pay Lessor the sum of (i) the
Stipulated Loss Value (see Schedule) of the affected unit
determined as of the rent payment date prior to the Casualty
Occurrence; and (ii) all rent and other amounts which are then
due
under
this Agreement on the Payment Date (defined below) for the affected
unit. The "Payment Date" for purposes of this Section
8 shall be the next scheduled Rent Payment date after the Casualty
Occurrence. Upon payment of all sums due hereunder, the term
of the Lease as to such unit shall terminate.
9.
INSURANCE:
(a)
Lessee
shall bear the entire risk of any loss, theft, damage to, or
destruction of, any unit of Equipment from any cause whatsoever
from the time the Equipment is shipped to Lessee.
(b)
Lessee
shall secure and maintain in effect at its own expense throughout
the Term of any Lease of the Equipment, insurance for such amounts
and against such hazards as Lessor may reasonably require.
All such policies shall be with companies, and on terms,
reasonably satisfactory to Lessor. The insurance shall
include coverage for damage to or loss of the Equipment, liability
for personal injuries, death or property damage. Lessor shall be
named as additional insured 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. The insurance
shall provide for liability coverage in an amount equal to at least
ONE MILLION U.S. DOLLARS ($1,000,000.00) total liability per
occurrence, unless otherwise stated in any Schedule. The
casualty/property damage coverage shall be in an amount equal to
the full replacement cost of the Equipment and shall have
deductible amounts acceptable to Lessor. Notwithstanding anything
in this Section 9(b) to the contrary, as long as Lessee is not
subject to an Event of Default under this Agreement, Lessee may
assume a deductible exposure of up to TWO HUNDRED FIFTY THOUSAND
DOLLARS ($250,000) in the aggregate per occurrence under the
physical damage insurance coverages required to be maintained under
the Agreement. No insurance shall be subject to any
co-insurance clause. The insurance policies shall provide that the
insurance may not be altered or canceled by the insurer until after
thirty (30) days written notice to Lessor. Lessee agrees to
deliver to Lessor evidence of insurance reasonably satisfactory to
Lessor.
(c)
Lessee
hereby appoints Lessor as Lessee's 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 insurance payments.
Lessor shall not act as Lessee's attorney-in-fact unless Lessee is
in default. Lessee shall pay any reasonable expenses of
Lessor in adjusting or collecting insurance. Lessee will not
make adjustments with insurers except (provided Lessee is not
subject to an Event of Default under this Agreement) with respect
to claims for damage to any unit of Equipment where the repair
costs for such unit of Equipment are less than ten percent (10%) of
the original Equipment cost (as stipulated in the applicable
Schedule for such Equipment). Lessee may, at its option
(unless Lessee is subject to an Event of Default, in which case
Lessor may, at its option) apply proceeds of insurance, in whole or
in part, to (i) repair or replace Equipment or any portion thereof,
or (ii) satisfy any obligation of Lessee to Lessor under this
Agreement.
10.
RETURN
OF EQUIPMENT:
(a)
Upon
the expiration, cancellation or termination of this Agreement or
any Lease (including any cancellation or termination pursuant to
Section 17 hereof or any cancellation or termination occurring
after or in connection with an Event of Default hereunder), Lessee
shall perform any testing and repairs required to place the units
of Equipment in the same condition and appearance as when received
by Lessee (reasonable wear and tear excepted) and in good working
order for the original intended purpose of the Equipment. If
required the units of Equipment shall be deinstalled, disassembled
and crated by an authorized manufacturer's representative or such
other service person as is reasonably satisfactory to Lessor.
Lessee shall remove installed markings that are not necessary
for the operation, maintenance or repair of the Equipment.
All Equipment will be cleaned, cosmetically acceptable, and
in such condition as to be immediately installed into use in a
similar environment for which the Equipment was originally intended
to be used. All waste material and fluid must be removed from
the Equipment and disposed of in accordance with then current waste
disposal laws. Lessee shall return the units of Equipment to
a location within the continental United States as Lessor shall
direct. 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. The transit insurance
must name Lessor as the loss payee. Lessee shall pay for all
costs to comply with this Section 10.
(b)
Until
Lessee has fully complied with the requirements of Section 10(a)
above, Lessee's rent payment obligation and all other obligations
under this Agreement shall continue from month to month
notwithstanding any expiration, cancellation or termination of the
lease term. Lessor may terminate Lessee's right to use the
Equipment upon ten (10) days notice to Lessee.
(c)
Lessee shall provide to Lessor a detailed inventory of all
components of the Equipment including model and serial numbers.
Lessee shall also provide an up-to-date copy of all other
documentation pertaining to the Equipment. All service
manuals, blue prints, process flow diagrams, operating manuals,
inventory and maintenance records shall be given to Lessor at least
ninety (90) days and not more than one hundred twenty (120) days
prior to lease cancellation or termination.
(d)
Lessee
shall make the Equipment available for on-site operational
inspections by potential purchasers at least one hundred twenty
(120) days prior to and continuing up to lease cancellation or
termination. Lessor shall provide Lessee with reasonable
notice prior to any inspection. Lessee shall provide
personnel, power and other requirements necessary to demonstrate
electrical, hydraulic and mechanical systems for each item of
Equipment.
11.
DEFAULT
AND REMEDIES:
(a)
Lessee
shall be in default under this Agreement and under any Lease upon
the occurrence of any of the following (each an "Event of
Default" , and collectively, the "Events of Default"
):
(i)
Lessee
fails to pay within ten (10) days after its due date, any Rent or
any other amount due under this Agreement or any Lease;
(ii)
Lessee
breaches any of its insurance obligations under this Agreement or
any other Document (as defined in Section 16 hereof);
(iii)
Lessee
breaches any of its other obligations under any Lease (other than
those described in Section 11(a)(i) and (ii) above), and fails to
cure that breach within thirty (30) days after written notice from
Lessor;
(iv)
any
representation, warranty or covenant made by Lessee or any
guarantor or surety for the obligations under any Lease (each a
"Guarantor" , and collectively, the "Guarantors" ) in
connection with this Agreement or under any Lease shall be
materially false or materially misleading;
(v)
any
Equipment is illegally used;
(vi)
Lessee
or any Guarantor becomes insolvent or ceases to do business as a
going concern;
(vii)
if
Lessee or any Guarantor is a natural person, any death or
incompetency of Lessee or such Guarantor;
(viii)
a
receiver is appointed for all or of any part of the property of
Lessee or any Guarantor, or Lessee or any Guarantor makes any
assignment for the benefit of its creditors;
(ix)
Lessee
or any Guarantor files a petition under any bankruptcy, insolvency
or similar law, or in the event an involuntary petition is filed
against Lessee or any Guarantor under any bankruptcy or insolvency
laws and in the event of an involuntary petition, such petition is
not dismissed within forty-five (45) days of the filing
date;
(x)
Lessee
or any Guarantor breaches or is in default under any other
agreement by and between Lessor (or any of its affiliates or parent
entities) on the one hand, and Lessee or such Guarantor (or any of
their respective parent or affiliates) on the other hand; provided
however that any such default under this Section 11(a)(x) is not
solely related to a material adverse change in Lessee’s
financial condition;
(xi)
any
Guarantor revokes or attempts to revoke its obligations under its
guaranty or any related document to which it is a party, or fails
to observe or perform any covenant, condition or agreement to be
performed under such guaranty or other related document to which it
is a party;
(xii)
Lessee
or any Guarantor defaults under any other agreement, document or
instrument to which Lessee or any Guarantor is a party or by which
Lessee or any Guarantor or any of their respective properties is
bound, creating or relating to any obligations owed to a party
other than Lessor (or any of Lessor’s affiliates or
parent companies) (each a “ Third Party Obligation
” and collectively the “ Third Party Obligations
”) (i) in excess of $3,000,000 if the
payment or maturity of such Third Party Obligation(s) may be
accelerated in consequence of such event of default or demand for
payment of such Third Party Obligation(s) may be made; or (ii) an
acceleration occurs of the payment or maturity of any Third
Party Obligation(s) in excess of $1,500,000 ; provided
however that any such default under this Section 11(a)(xii) is not
solely related to a material adverse change in Lessee’s or
any Guarantor's financial condition;
(xiii)
there
is any dissolution or termination of existence of Lessee or any
Guarantor; or
(xiv)
there
is any merger, consolidation or change in controlling
ownership of Lessee or any Guarantor, or either Lessee or any
Guarantor sells or leases all, or substantially all, of its
assets.
The
default declaration shall apply to all Schedules unless
specifically excepted by Lessor.
(b)
Upon
the occurrence of any Event of Default and so long as the same
shall be continuing, Lessor may, at its option, at any time
thereafter, exercise one or more of the following remedies set
forth in this Section 11, as Lessor in its sole discretion shall
lawfully elect. (i) Upon the request of Lessor, Lessee shall
immediately comply with the provisions of Section 10(a), (ii)
Lessee shall authorize Lessor to peacefully enter any premises
where any Equipment may be and take possession of the Equipment,
(iii) Lessee shall immediately pay to Lessor without further demand
as liquidated damages, for loss of a bargain and not as a
penal
