MASTER LEASE
AGREEMENT
(OFF BALANCE SHEET -
SYNTHETIC)
THIS MASTER LEASE AGREEMENT, dated as of October 14, 2003
("Agreement"), between General Electric Capital Corporation, with
an office at 1000 Windward Concourse, Suite 403, Alpharetta,
Georgia 30005 (hereinafter called, together with its
successors and assigns, if any, "Lessor"), and THE DIXIE GROUP,
INC., a Corporation organized and existing under the laws of the
State of Tennessee (the "State") with its mailing address and
chief place of business at 185 S. Industrial Blvd.; Calhoun,
Georgia 30701 (hereinafter called "Lessee").
WITNESSETH:
I.
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 and the property ("Equipment") described in Annex A to
any schedule hereto ("Schedule"). Terms defined in a Schedule and
not otherwise defined herein shall have the meanings ascribed to
them in such Schedule.
(b)
The obligation of Lessor to lease the Equipment to Lessee under any
Schedule shall be subject to receipt by Lessor, prior to the Lease
Commencement Date (with respect to such Equipment), of each of the
following documents in form and substance satisfactory to Lessor:
(i) a Schedule relating to the Equipment then to be leased
hereunder, (ii) a evidence satisfactory to Lessor of ownership of
the Equipment, (iii) evidence of insurance which complies with the
requirements of Section X, and (iv) such other documents as Lessor
may reasonably request. As a further condition to such obligations
of Lessor, Lessee shall execute and deliver to Lessor a Certificate
of Acceptance (in the form of Annex C to the applicable Schedule)
covering such Equipment Upon execution by Lessee of any Certificate
of Acceptance, the Equipment described thereon shall be deemed to
have been delivered to, and irrevocably accepted by, Lessee for
lease hereunder.
II.
TERM, RENT AND PAYMENT:
(a)
The rent payable hereunder and Lessee's right to use the Equipment
shall commence on the date of execution by Lessee of the
Certificate of Acceptance for such Equipment ("Lease Commencement
Date"). The term of this Agreement shall be the period specified in
the applicable Schedule. If any term is extended, the word "term"
shall be deemed to refer to all extended terms, and all provisions
of this Agreement shall apply during any extended terms, except as
may be otherwise specifically provided in writing.
(b)
Rent shall be paid to Lessor at its address stated above, except as
otherwise directed by Lessor. Payments of rent shall be in the
amount set forth in, and due in accordance with, the provisions of
the applicable Schedule. If one or more Advance Rentals are
payable, such Advance Rental shall be (i) set forth on the
applicable Schedule, (ii) due upon acceptance by Lessor of such
Schedule, and (iii) when received by Lessor, applied to the first
rent payment and the balance, if any, to the final rental
payment(s) under such Schedule. In no event shall any Advance
Rental or any other rent payments be refunded to Lessee. If rent is
not paid within ten days of its due date, Lessee agrees to pay a
late charge of five cents ($0.05) per dollar on, and in addition
to, the amount of such delinquent rent but not exceeding the lawful
maximum, if any.
III.
Intentionally Deleted.
IV.
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. Lessee shall
report (to the extent that it is legally permissible) and pay
promptly all other taxes, fees and assessments due, imposed,
assessed or levied against any Equipment (or the purchase,
ownership, delivery, leasing, possession, use or operation
thereof), this Agreement (or any rentals or receipts hereunder),
any Schedule, Lessor or Lessee by any foreign, federal, state or
local government or taxing authority during or related to the term
of this Agreement, including, without limitation, all license and
registration fees, and all sales, use, personal property, excise,
gross receipts, franchise, stamp or other taxes, imposts, duties
and charges, together with any penalties, fines or interest thereon
(all hereinafter called "Taxes"). Lessee shall (i) reimburse Lessor
upon receipt of written request for reimbursement for any Taxes
charged to or assessed against Lessor, (ii) on request of Lessor,
submit to Lessor written evidence of Lessee's payment of Taxes,
(iii) on all reports or returns show the ownership of the Equipment
by Lessor, and (iv) send a copy thereof to Lessor.
V.
REPORTS:
(a)
Lessee will notify Lessor in writing, within ten days after any tax
or other lien shall attach to any Equipment, of the full
particulars thereof and of the location of such Equipment on the
date of such notification.
(b)
Lessee will within 95 days of the close of each fiscal year of
Lessee, deliver to Lessor, Lessee's balance sheet and profit and
loss statement, certified by a recognized firm of certified public
accountants. Upon request Lessee will deliver to Lessor quarterly,
within 95 days of the close of each fiscal quarter of Lessee, in
reasonable detail, copies of Lessee's quarterly financial report
certified by the chief financial officer of Lessee. Lessee may
satisfy the foregoing obligations by providing copies of its filed
Form 10-K and Form 10-Q.
(c)
Lessee will permit Lessor to inspect any Equipment during normal
business hours.
(d)
Lessee will keep the Equipment at the Equipment Location (specified
in the applicable Schedule) and will promptly notify Lessor of any
relocation of Equipment. The foregoing notwithstanding, Lessee may
relocate the Equipment to other facilities operated by it or by its
wholly-owned subsidiaries within the continental United States;
provided, Lessee (i) promptly notifies Lessor in writing of the new
location, (ii) delivers to Lessor prior to relocation any
instruments or documents reasonably required to protect the
interest of Lessor in the Equipment, including without limitation,
UCC filings, 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.
(e)
Lessee will promptly and fully report to Lessor in writing if any
Equipment is lost or damaged (where the estimated repair costs
would exceed 10% of its then fair market value), or is otherwise
involved in an accident causing personal injury or property
damage.
(f)
Within 60 days after any 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, there exists no default (as described in Section XIV) or
event which with notice or lapse of time (or both) would become
such a default.
(g)
Lessee will promptly notify Lessor of any change in Lessee's state
of incorporation or organization.
VI.
CONTROL AND OPERATION:
(a)
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 federal, state, and local laws and regulations.
(b)
EXCEPT AS PROVIDED IN SUBPARAGRAPH (1) BELOW, LESSEE SHALL NOT
ASSIGN, ENCUMBER OR TRANSFER, OR IN ANY WAY DISPOSE, THE EQUIPMENT
OR OF ALL OR ANY PART OF ITS RIGHTS OR OBLIGATIONS UNDER THIS LEASE
OR ANY SCHEDULE OR ENTER INTO ANY SUBLEASE OF ALL OR ANY PORTION OF
ANY EQUIPMENT WITHOUT THE PRIOR WRITTEN CONSENT OF LESSOR.
(1)
Sublease . So long as (i) no Default or Event of Default
shall have occurred and be continuing, and (ii) Lessee complies
with the provisions of this Section VI (b), Lessee may sublease the
Equipment to a wholly-owned subsidiary of Lessee (a "Permitted
Sublessee"), provided that each of the following conditions is
satisfied prior to any subleasing pursuant to this Section VI(b):
(i)
a sublease to a Permitted Sublessee ("Permitted Sublease") shall
(A) not contain terms inconsistent with the terms of this Lease
except that it may impose additional or more stringent obligations
on any Permitted Sublessee than are imposed on Lessee under this
Lease; (B) provide that no further subleases of the Equipment by
such Permitted Sublessee shall be permitted; (C) provide that in no
event shall the term of the Permitted Sublease extend beyond the
Expiration Date;
(ii)
the Permitted Sublease shall provide that, (A) the Permitted
Sublease is subject and subordinate to this Agreement in all
respects, and the rights of the Permitted Sublessee under the
Permitted Sublease are subject and subordinate in all respects to
the rights of Lessor under this Lease; (B) prior to delivery of the
Equipment to the Permitted Sublessee the Permitted Sublessee shall
provide an acknowledgement to Lessor in form and substance
satisfactory to Lessor, confirming its agreement to this Section
VI(c) and confirming that its rights to possession of the Equipment
under the Permitted Sublease will terminate immediately, and that
it will redeliver the Equipment immediately to Lessor upon
notification from Lessor, that an Event of Default has occurred and
is continuing and that Lessor has, as a result thereof, terminated
Lessee's right to possession of the Equipment under this Lease (the
"Subordination Acknowledgement"); (C) Lessee may terminate such
Permitted Sublease following the occurrence of an Event of Default
under this Lease where Lessor has terminated the leasing of the
Equipment under this Lease as a result thereof; (D) upon notice by
Lessor or Lessee to the Permitted Sublessee of an Event of Default
by Lessee under the Lease, all payments under the Permitted
Sublease shall be made to the Lessor;
(iii)
Lessee shall grant to Lessor an assignment by way of security
interest in favor of Lessor in Lessee's right, title and interest
under the Permitted Sublease (and any security interest in the
subleased Equipment granted to the Lessee thereunder), in form and
substance satisfactory to Lessor. Lessee shall cause the Permitted
Sublessee to deliver to Lessor an acknowledgment of such security
interest. Such acknowledgment shall be in form and substance
acceptable to Lessor;
(iv)
Lessee shall remain primarily liable for the performance of its
obligations under this Lease to the same extent as if no Permitted
Sublease had been entered into; to the extent that the Permitted
Sublessee properly (in the sole judgment of the Lessor) performs a
non-monetary obligation under the Permitted Sublease, Lessor agrees
that such performance shall discharge Lessee's corresponding
obligation under this Lease;
(v)
Lessee and each Permitted Sublessee shall cooperate with Lessor in
connection with the execution and filing of any documents
(including Uniform Commercial Code financing statements naming
permitted Sublessee, as debtor, Lessee, as secured party, and
Lessor, as assignee) required by Lessor to be executed and filed
from time to time with any governmental agency, registry or
authority in order to protect the interests of Lessor in the
Equipment, this Lease, any Permitted Sublease and/or to ensure the
validity, enforceability or priority thereof; Lessee shall be
responsible for the costs of any such filings;
(vi)
Lessee will pay to Lessor on demand all reasonable out of pocket
expenses payable or incurred by Lessor in connection with the
review and approval of any documentation required in connection
with the subleasing of the Equipment; and
(vii) promptly
after its execution, Lessee shall provide Lessor with the executed
original of the Permitted Sublease with constitutes the chattel
paper copy so that possession thereof perfects a security interest
in such chattel paper under the Uniform Commercial Code.
(c)
Lessee will keep the Equipment free and clear of all liens and
encumbrances other than those which result from acts of Lessor.
VII.
SERVICE:
(a)
Lessee will, at its sole expense, maintain each unit of Equipment
in good operating order, repair, condition and appearance in
accordance with manufacturer's recommendations, normal wear and
tear excepted. Lessee shall, if at any time requested by Lessor,
affix in a prominent position on each unit of Equipment plates,
tags or other identifying labels showing ownership thereof by
Lessor.
(b)
Lessee will not, without the prior consent of Lessor, affix or
install any accessory, equipment or device on any Equipment if such
addition will impair the originally intended function or use of
such Equipment. All additions, repairs, parts, supplies,
accessories, equipment, and devices furnished, attached or affixed
to any Equipment which are not readily removable shall be made only
in compliance with applicable law, including Internal Revenue
Service guidelines, and shall become the property of Lessor. Lessee
will not, without the prior written consent of Lessor and subject
to such conditions as Lessor may impose for its protection, affix
or install any Equipment to or in any other personal or real
property.
(c)
Any alterations or modifications to the Equipment that may, at any
time during the term of this Agreement, be required to comply with
any applicable law, rule or regulation shall be made at the expense
of Lessee.
VIII.
STIPULATED LOSS VALUE:
Lessee shall promptly and fully notify Lessor in writing if any
unit of Equipment shall be or become worn out, lost, stolen,
destroyed, irreparably damaged in the reasonable determination of
Lessee, or permanently rendered unfit for use from any cause
whatsoever (such occurrences being hereinafter called "Casualty
Occurrences"). On the rental payment date next succeeding a
Casualty Occurrence (the "Payment Date"), Lessee shall pay Lessor
the sum of (x) the Stipulated Loss Value of such unit calculated as
of the rental next preceding such Casualty Occurrence ("Calculation
Date"); and (y) all rental and other amounts which are due
hereunder as of the Payment Date. Upon payment of all sums due
hereunder, the term of this lease as to such unit shall terminate
and , any right, title or interest of Lessor in and to such unit
shall be transferred to Lessee on an AS-IS WHERE IS basis without
warranty, and Lessee shall be entitled to all applicable insurance
proceeds.
IX.
LOSS OR DAMAGE: Lessee hereby assumes and shall bear the entire
risk of any loss, theft, damage to, or destruction of, any unit of
Equipment from any cause whatsoever.
X.
INSURANCE:
Lessee agrees, at its own expense, to keep all Equipment insured
for such amounts and against such hazards as Lessor may require,
including, but not limited to, insurance for damage to or loss of
such Equipment and liability coverage for personal injuries, death
or property damage, with Lessor named as additional insured and
with a loss payable clause in favor of Lessor, as its interest may
appear, irrespective of any breach of warranty or other act or
omission of Lessee. All such policies shall be with companies, and
on terms, satisfactory to Lessor. Lessee agrees to deliver to
Lessor evidence of insurance satisfactory to Lessor. No insurance
shall be subject to any co-insurance clause. Physical damage
insurance will have a $250,000.00 deductible, and Lessee will
consult with Lessor before any increase in such deductible amount.
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 payments made as a
result of such insurance policies. Any expense of Lessor in
adjusting or collecting insurance shall be borne by Lessee. Lessee
will not make adjustments with insurers except (i) with respect to
claims for damage to any unit of Equipment where the repair costs
do not exceed 10% of such unit's fair market value, or (ii) with
Lessor's written consent. Said policies shall provide that the
insurance may not be altered or cancelled by the insurer until
after thirty (30) days written notice to Lessor. Provided no
default has occurred and is continuing, Lessee shall have the right
to adjust all claims and to deal with all carriers with respect to
claims; 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) to satisfy any
obligation of Lessee to Lessor hereunder.
XI.
EARLY TERMINATION OPTION
So long as no default has occurred and is continuing hereunder,
Lessee shall have the right to terminate any Schedule to the Lease
with respect to all but not less than all of the Equipment on or
after the First Termination Date (specified in the applicable
Schedule), as of a rent payment date ("Early Termination Date")
upon at least 90 days prior written notice to Lessor.. On the Early
Termination Date, Lessee shall pay to Lessor (a) the Prepayment
Penalty stipulated on the applicable Schedule, plus (b) the "Early
Purchase Option Price" which shall be equal to the Stipulated Loss
Value corresponding to the Early Termination Date times the
Lessor's Capitalized Cost, plus (c) all Rent for such Equipment due
and unpaid as of, together with Rent accrued through, the Early
Termination Date, plus (d) all taxes, including, but not limited
to, sales and transfer taxes due in connection with such sale, plus
(e) all other sums then due and payable under the Lease by Lessee.
(the total amounts in each event shall be referred to as the "Early
Termination Price"). Upon Lessor's receipt of the Early Termination
Price, the lease of such Equipment shall terminate and Lessor, via
a bill of sale and/or other reasonably necessary documentation,
shall transfer to Lessee all of Lessor's right, title and interest
in and to such Equipment. The transfer of Lessor's right, title and
interest in and to such Equipment to Lessee shall be on an "AS-IS,
WHERE-IS" basis, and as except as expressly provided herein, with
no representations or warranties (express or implied) as to any
matter whatsoever. Anything in this Section XI notwithstanding, if
the Lessor does not receive the Early Termination Price on the
Early Termination Date according t
