MASTER EQUIPMENT LEASE AGREEMENT NO. 6430
DATED AS JANUARY 4, 2000
BETWEEN INSIGHT INVESTMENTS, CORP., LESSOR
AND LMKI, INC., LESSEE
THIS MASTER EQUIPMENT LEASE AGREEMENT ("Master Lease") is between INSIGHT
INVESTMENTS, CORP., a California corporation having its principal place of
business at 000 Xxxxx Xxxxx Xxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxxxx 00000
("Lessor"), and LMKI, Inc. , a Nevada corporation, having its principle place of
business at 0000 X. Xxxxx Xxx, Xxxxx 000, Xxxxx Xxx, XX 00000 ("Lessee").
Lessor, by its acceptance hereof, agrees to lease to Lessee, and Lessee agrees
to lease from Lessor, in accordance with the terms and conditions hereinafter
set forth, the equipment and features, together with all replacements, parts,
repairs, additions, attachments and accessories incorporated therein
(collectively called the "Equipment" and individually called a "Unit") described
in each related equipment schedule ("Schedule") which is executed from time to
time by Lessor and Lessee. Each Schedule shall refer to and incorporate by
reference this Master Lease and, when signed by Lessor and Lessee, shall
constitute a separate lease ("Lease") for the Equipment therein described on the
terms and conditions stated therein and, to the extent not inconsistent with
such Schedule, on the terms and conditions stated in this Master Lease.
SECTION 1. DEFINITIONS.
(A) "BASE TERM" shall mean the full consecutive calendar months set forth on the
Schedule commencing with and including the month in which the Base Term Date
shall occur. The Lease may be terminated by either Lessor or Lessee at the end
of said Base Term, provided 120 days prior written notice of such termination is
delivered to the other party, otherwise the Lease shall remain in full force and
effect. Thereafter, the Lease may be terminated by either Lessor or Lessee at
the end of any month provided 120 days' prior written notice of such termination
is delivered to the other party by the party desiring termination. Periods of
each such extension of the Base Term of a Lease shall not be less than one
hundred twenty (120) days.
(B) "BASE TERM DATE" shall mean the day of the month coincident with (a) the
date of installation by the manufacturer or manufacturers of the Equipment
(collectively, the "Manufacturer") and acceptance by the Lessee of all Units or
(b) the date set forth on the related Schedule as "Base Term Date", whichever
shall later occur. If such date is on a day other than the first day of a month,
the Base Term Date shall be the first day of the first month after such date.
(C) "COMMENCEMENT DATE" shall mean the earlier of (i) the date upon which the
first Unit shall have been installed, and certified by the Manufacturer as ready
for Lessee's first use, or (ii) the date upon which the first Unit shall have
been accepted by the Lessee.
1
(D) The terms "BASE RENT", "OVERDUE RATE", "BASE RENT DATES", and "STIPULATED
LOSS VALUE" shall have the meaning, if any, set forth in each Schedule.
SECTION 2. TERM OF LEASE The term of this Master Lease shall commence on the
date accepted by Lessor and shall continue until the date of expiration or
termination of the term, or any renewal thereof, of all Leases. The term of a
Lease ("LEASE TERM") shall commence upon the Commencement Date and shall
continue in full force thereafter until the Lease is terminated by Lessee upon
not less than 120 days prior written notice to Lessor; provided, however, that:
(A) a Lease shall in no event be terminated as to any Unit prior to the last day
of the last full calendar month of the Base Term; and (B) that the Lease has not
been earlier terminated by Lessor as hereinafter provided. If the Unit has not
been returned to the designated location within seven (7) days of the
termination date set forth in Lessee's written notice or Lessee fails to
deinstall and ship the Unit on the termination date, then any written notice of
termination delivered by Lessee shall become void, and the Schedule shall
continue in accordance with its terms and the terms of this Master Lease.
SECTION 3. RENTAL CHARGES & TAXES The Base Rent for Equipment shall commence on
the Base Term Date and shall be due and payable, together with all other amounts
arising under the related Lease which are then due and payable by Lessee
(collectively "Additional Rent"), at Lessor's address set forth above, or such
other address as Lessor may designate in writing, without notice or demand, on
the Base Rent Dates until the Equipment shall be returned to Lessor in
accordance with the provisions herein. In addition, Lessee shall pay as prorata
rent on the Base Term Date one-thirtieth (1/30) of the Base Rent for each day
from, and including, the Commencement Date to, and excluding, the Base Term
Date.
Lessee covenants and agrees to pay, and discharge before the same becomes due,
to the appropriate taxing authority all taxes, fees and other charges of any
nature whatsoever (together with any related interest, fines or penalties
collectively, "Impositions") now or hereafter imposed, assessed or payable
during the Lease Term (excepting only federal, state and local taxes measured
solely by the net income of Lessor or any franchise tax upon Lessor measured by
Lessor's capital, capital stock or net worth) by any federal, state, county or
local government or taxing authority upon or with respect to: (i) any Unit; (ii)
the leasing, ordering, purchase, sale, ownership, use, operation, return or
other disposition of any Unit; (iii) the Base Rent or Additional Rent for each
Unit; (iv) the leasing of any Unit. Lessee shall, to the extent permitted by
law, cause all Impositions to be billed to Lessee. Lessee shall, at its expense,
timely file all forms and returns and timely do all things required to be done
in connection with the levy, assessment and payment of any Impositions. Upon
Lessor's request, Lessee shall submit written evidence to Lessor of the payment
of all Impositions required to be paid by Lessee hereunder promptly after such
payment. If Lessor pays any Imposition, Lessee shall, when billed by Lessor,
reimburse Lessor for any such payment and any expenses incurred in the
preparation and filing of any tax returns relating to such Imposition. Lessee
shall inform Lessor as to any governmental jurisdiction imposing personal
property taxes on ownership or use of the Equipment, and as to the amount of
such taxes.
2
Lessee's obligation to pay all amounts due and to become due under any Lease
shall be absolute and unconditional and shall not be subject to any abatement,
reduction, defense, counterclaim, set-off, or recoupment, including without
limitation any present or future claim against Lessor, the Manufacturer, or any
other person or entity; and the respective obligations and rights of Lessee and
Lessor and its assignees under Leases shall not terminate or diminish for any
reason, including without limitation any defect in, or any destruction or loss
of use of, any Unit.
SECTION 4. USE OF EQUIPMENT. Each Unit shall be kept by Lessee in its sole
possession and control and will be used only by Lessee's qualified employees in
compliance with: (A) all applicable laws, statutes and regulations; (B) the
Manufacturer's expressed warranties, specifications and anticipated use of the
Equipment; and (C) the terms of the insurance policies pertaining to the
Equipment and its use. Each Unit will at all times be located at the location
stated in the related Schedule and will not be removed therefrom without the
prior written consent of Lessor. All costs and expenses of every nature that may
be incurred in connection with the permitted movement of the Equipment between
locations shall be borne by Lessee. Lessee will not make, or permit to be made
any alteration or addition to the Equipment (other than manufacturer's approved
engineering changes) without the prior written consent of Lessor. Lessor shall
not be liable for any loss, damage or expense of any kind or nature whatsoever
and howsoever, directly or indirectly, caused (including, without limitation,
any loss of business by: (i) any Unit; (ii) the use, maintenance, repair,
service or adjustment thereof; (iii) any delay or failure to provide any
maintenance, repair, service or adjustment thereto; or (iv) any interruption of
service or loss of use thereof.
SECTION 5. LOSS OR DAMAGE TO EQUIPMENT AND INSURANCE. Lessee shall be
responsible for, and assumes the entire risk of the Equipment being lost,
damaged, destroyed, stolen or otherwise rendered unfit or unavailable for use
("Event of Loss") from the date of its shipment to Lessee until the date of
return to, and receipt of possession by, Lessor. Upon the occurrence of an Event
of Loss to any Unit, Lessee shall give Lessor immediate notice thereof and the
Lease to which such Equipment is subject shall continue in full force and effect
without abatement in the Base Rent applicable thereto. Lessee shall determine,
and notify Lessor, within fifteen (15) days after the date of the occurrence of
such Event of Loss whether such Unit can be repaired. In the event Lessee
determines that such Unit can be repaired, Lessee shall, at its expense, cause
such Unit to be promptly repaired. If any Unit is lost, destroyed, stolen,
damaged beyond repair or rendered unfit or unavailable for use for a period of
time extending beyond the date of expiration of the applicable Base Term, Lessee
shall promptly notify Lessor and shall, at Lessee's option, either (i) replace
such Unit with a like item by the same manufacturer in good repair, condition
and working order (the "Replacement Unit") within thirty (30) days of such Event
of Loss, the title to which shall immediately vest in Lessor free and clear of
all liens, claims and encumbrances, and which Replacement Unit shall be subject
to the Schedule for the Unit replaced, or, (ii) pay to Lessor on the next Base
Rent Date an amount equal to the percentage set forth in the Stipulated Loss
Value Table (attached hereto as Attachment A) opposite the applicable Base Rent
Date multiplied by Lessor's cost of such Unit. Upon receipt by Lessor of such
payment, and all other amounts then due and payable by Lessee to Lessor
pertaining to said Unit, Lessee's obligation to pay further Base Rent for such
Unit shall cease, but the Lease shall continue in full force and effect as to
all remaining Equipment subject to the Lease.
3
Lessee shall, at its sole expense, cause the Equipment to be insured by
insurance companies acceptable to Lessor against all risks of loss or damage for
the Lease Term for not less than the greater of the replacement or Stipulated
Loss Value of the Equipment and shall carry comprehensive general liability and
property damage insurance in amounts of not less than $1,000,000.00 per
occurrence covering Lessee, the Equipment and its use. Lessee shall cause Lessor
to be provided with Certificates of Insurance, and other reasonable evidence of
insurance coverage in form acceptable to Lessor, which names Lessor, and any
assignee of Lessor's right, title or interest in the Equipment or the Lease
("Lessor's Assignee"), as loss payees and additional insureds, as their
interests may appear in the Lease. Lessee shall timely pay the premiums for all
insurance coverage and shall deliver evidence thereof to Lessor, together with
industry-standard loss payable endorsements thereon whereby each insurer agrees
that it will give to Lessor: (A) not less than thirty (30) days prior written
notice of cancellation or material alteration in said coverage; and (B) the
right to make payment of premiums without obligation. The proceeds of such
insurance, at the option of Lessor, shall be applied to the replacement,
restoration or repair of the Equipment, or to payment of the obligations of
Lessee under the related Lease. Lessee hereby appoints Lessor as Lessee's
attorney-in-fact to make claims for, receive payment of, and execute and endorse
all documents, checks or drafts for, loss or damage under any said insurance
coverage.
SECTION 6. MAINTENANCE AND RETURN. Lessee shall, at its expense: (A) obtain and
keep in full effect, throughout the term of a Lease, a contract from the
Manufacturer (or other maintenance organization authorized by Manufacturer)
providing for not less than prime shift maintenance service and repairs and, at
the request of Lessor, provide Lessor with a copy thereof; (B) otherwise
maintain the Equipment in good working order and appearance; (C) supply all
parts, supplies, utilities and a suitable installation site, necessary for the
proper operation of the Equipment as specified by the Manufacturer; and (D) make
all necessary or recommended adjustments, engineering changes and repairs
thereto. Lessee will grant access to the Equipment, and all records relating to
the use and maintenance thereof, subject to Lessee's reasonable security
requirements, to Lessor, Lessor's Assignee, their agents and the organization
providing maintenance services for the Equipment during normal working hours for
inspection, repair, maintenance, installation or required engineering changes
and for any other reasonable purposes. Lessee shall immediately notify Lessor of
all details concerning any accident arising out of the alleged or apparent
improper manufacture, functioning or operation of any Unit. Lessee will at all
times cooperate with the Manufacturer so as to permit the prompt installation of
all engineering changes to the Equipment as and when determined necessary or
desirable by the Manufacturer. Upon receipt of written request from Lessee, and
so long as the related Lease shall remain in force, Lessor shall take all
reasonable action requested by Lessee to enforce any manufacturer or vendor
warranty, express or implied, issued or applicable to the Equipment, which is
enforceable by Lessor in its own name, provided, however, that Lessor shall not
be obligated to resort to litigation to enforce any such warranty unless Lessee
4
shall pay all expenses in connection therewith. Similarly, if any such warranty
shall be enforceable by Lessee in its own name, Lessee hereby agrees, upon
receipt of written request from Lessor and so long as the related Lease shall
remain in force, to take all reasonable action requested by Lessor to enforce
any such warranty, provided, however, that Lessee shall not be obligated to
resort to litigation to enforce any such warranty unless Lessor shall pay all
expenses in connection therewith. Lessor hereby assigns to Lessee any warranty
rights which Lessor may have against the Manufacturer, to the extent such
warranty rights are assignable. With respect to such warranty rights as are not
assignable, Lessor hereby appoints Lessee as its agent and attorney-in-fact for
the purpose of enforcing such warranty rights at Lessee's expense.
Before a Lease shall be terminated, Lessee shall, at its sole expense, cause the
Equipment to be certified for a continuing prime shift maintenance agreement by
the Manufacturer, deinstall and pack each Unit separately in the original boxes
or crates in accordance with the Manufacturer's specifications and deliver every
Unit to Lessor, clean and in the same condition as when delivered to Lessee by
the Manufacturer, ordinary wear and tear excepted, at such location as Lessor
shall designate.
SECTION 7. TITLE. Each Unit shall remain personal property of, and title thereto
shall remain in, Lessor or Lessor's Assignee exclusively. Lessee shall have only
a leasehold right to use the Equipment in accordance with the terms and
conditions of this Master Lease as it relates to a Lease and shall have no other
right, title or interest in or to, or right to purchase or otherwise acquire
title to or ownership of, a Lease or any Unit subject thereto, except as may be
expressly set forth in the related Schedule. All accessions, substitutions,
replacement parts and additions (including, without limitation, all feature
additions or model changes, as those terms are defined by the Manufacturer)
incorporated in or affixed to the Equipment shall be the property of Lessor. At
its expense, Lessee shall immediately notify Lessor of any pending or threatened
claim of, and protect and defend Lessor's good and marketable title to the
Equipment against, all persons claiming against or through Lessee and keep the
Equipment free from any claim, legal process or encumbrance whatsoever,
including without limitation, liens, attachment, levies and executions (except
any placed thereon by or through Lessor or Lessor's Assignee). Lessee
indemnifies Lessor against, and shall not create, incur, assume or suffer to
exist, any mortgage, lien, pledge or other encumbrance or attachment of any kind
whatsoever (except any placed thereon by or through Lessor or Lessor's Assignee)
upon, affecting or regarding the Equipment or the related Lease, or any interest
of Lessor or Lessor's Assignee. Upon Lessor's request, Lessee shall execute, or
cause to be executed by any other party, and deliver to Lessor such further
instruments or assurances as Lessor deems necessary or advisable for the
confirmation or perfection of Lessor's right, title or interest hereunder. In
order to perfect Lessor's security interest in the Equipment in the event a
Lease is determined to be a security agreement, Lessee authorizes Lessor, at
Lessee's expense, to cause the Lease, or any statement or other instrument
reflecting Lessor's interests in the Equipment, including Uniform Commercial
Code financing statements, to be filed or recorded, or re-filed or re-recorded,
and Lessee grants Lessor the right to execute any such statement or instrument
on behalf of Lessee. Lessee agrees to pay, or reimburse Lessor, for any
searches, filing, recording or stamp fees, expenses or taxes arising from the
filing or recording of any such instrument or statement. Lessee represents and
warrants that the Equipment is, and at all times be and remain, personal
property and not a fixture notwithstanding the manner in which any Unit may now
be, or hereafter become, affixed to real property or any improvement thereon. If
Lessor provides Lessee with labels, Lessee shall affix labels to any and all
Units, shall keep the same affixed in a prominent place and shall not permit
said labels to be removed or concealed.
5
SECTION 8. DISCLAIMER OF WARRANTIES. LESSOR MAKES NO DIRECT OR INDIRECT
WARRANTIES, GUARANTIES OR REPRESENTATIONS, EXPRESSED OR IMPLIED, OF ANY KIND OR
NATURE WHATSOEVER, WITH RESPECT TO THE EQUIPMENT INCLUDING, WITHOUT LIMITATION,
THE MERCHANTABILITY, VALUE, QUALITY, CONDITION, CAPACITY, DESIGN, MATERIAL,
WORKMANSHIP, SUITABILITY FOR LESSEE'S PURPOSE, FITNESS FOR A PARTICULAR PURPOSE,
COMPLIANCE WITH REQUIREMENTS OF ANY APPLICABLE LAW, RULE, SPECIFICATION OR
CONTRACT, PATENT OR TRADEMARK INFRINGEMENT OR PATENT DEFECTS OR, WITH RESPECT TO
THE LEASES, TREATMENT OF ANY LEASE FOR TAX OR ACCOUNTING PURPOSES. Lessee
selected the Equipment, its size and design and, as between Lessor and Lessee,
Lessee leases the Equipment in "as is" condition. Lessor shall in no event be
responsible or liable for any damages, including without limitation, direct,
indirect, special, incidental or consequential damages or losses of business or
profits, resulting from or relating to the Lease, the Equipment or any products
manufactured thereby. Further, notwithstanding Lessor's acceptance of any order
or supplemental order, Lessor is not the Manufacturer or its agent and shall not
be responsible or liable for any such damages or losses, restitution, specific
performance or other remedy in the event Manufacturer or any vendor of the
Equipment fails to timely deliver any Unit to Lessor or Lessee for any reason or
in any manner or respect breaches or fails to perform its contract with Lessor.
SECTION 9. TRANSPORTATION AND INSTALLATION. Lessee shall pay all costs of
transportation, rigging, drayage, in-transit insurance, installation,
deinstallation and other charges related to delivery of the Equipment to and
from Lessee.
SECTION 10. NO WAIVER. Time is of the essence and Lessor's failure or delay at
any time to require strict performance by Lessee of any of the provisions of a
Lease shall not diminish or waive Lessor's right to demand strict compliance
therewith or with any other provision. Waiver of any default shall not waive any
other contemporaneous or subsequent default. Lessor's rights under a Lease are
cumulative and not exclusive and may be exercised successively or concurrently
and in addition to any rights or remedies available at law or in equity.
SECTION 11. QUIET ENJOYMENT Lessor warrants to Lessee that Lessee shall be
entitled to quietly hold, possess and use the Equipment subject to the terms of
this Lease so long as Lessee is not in default hereunder, without interference
by Lessor, Lessor's Assignee, their creditors or any other person claiming
through, under or against Lessor or Lessor's Assignee.
6
SECTION 12. DEFAULT AND REMEDIES. The occurrence of any one of the following
events ("Event of Default") shall constitute a default under any Lease: (A)
Lessee fails to pay Base Rent or Additional Rent on or before five (5) days
after the date upon which said amounts are due; (B) any information,
representation, warranty or financial statement is false or misleading as of the
date it was given to Lessor by or on behalf of Lessee; (C) Lessee fails to
observe or perform any term, condition, obligation, agreement or covenant set
forth in the Master Lease or any Lease and such failure continues for a period
of ten (10) days after written notice thereof is given to Lessee; (D) Lessee
assigns a Lease or sells, transfers, removes, encumbers, subleases, lends,
abandons or parts with possession of any Unit, or attempts to do, or suffers or
permits, any of the foregoing, except as expressly consented to by Lessor; (E)
Lessee or any guarantor of Lessee's obligations to Lessor ("Guarantor") ceases
doing business as a going concern or merges with, or a substantial portion of
Lessee's assets are acquired by, any other entity; (F) Lessee or any Guarantor,
or their shareholders or partners, take any act of dissolution or liquidation;
(G) Lessee or any Guarantor (i) becomes insolvent, (ii) fails or admits in
writing its inability or unwillingness to pay its debts as they become due,
(iii) makes an assignment for the benefit of creditors, (iv) applies for,
acquiesces in or consents to the appointment of any receiver, trustee or other
custodian for it or any substantial part of its property, or such receiver,
trustee or other custodian is appointed without its application or consent and
such appointment continues undischarged for a period of sixty (60) days; (H) any
bankruptcy, reorganization, debt arrangement or other case or proceeding under
any bankruptcy or insolvency law, dissolution or liquidation proceeding or other
law or statute for the relief of debtor's, is commenced in respect of Lessee or
any Guarantor and, if such case or proceeding is not commenced by Lessee, it is
consent to or acquiesced in by Lessee or any Guarantor, or remains undismissed
for more than sixty (60) days, or if Lessee or any Guarantor takes any action to
authorize, or in furtherance of, any of the foregoing; (I) an event of Default
by Lessee under any other Lease; (J) a Unit or any other substantial asset of
Lessee is seized, attached or levied upon; (K) if Lessee or Guarantor is a
natural person, the death of the Lessee or Guarantor; or (L) an event of default
or event which, with the giving of notice or the passage of time, or both, would
constitute an event of default under any other lease or any other agreement
between Lessor and Lessee. Upon the occurrence of an Event of Default, Lessor
may at its option, do any or all of the following:
(a) without notice to Lessee, declare immediately due and payable by Lessee, as
liquidated damages for loss of a bargain and not as a penalty, an amount equal
to the present value of all remaining payments of Base Rent to become due during
the remaining Lease Term of the Lease, or any period then in effect, as of the
due date of the last Base Rent received by Lessor discounted at the rate
("Default Rate") set forth in the related Schedule, which amount, together with
all accrued and unpaid payments of Base Rent, Additional Rent and any other sums
due and payable for all periods up to and including the date on which Lessor
receives the total of such amount, shall be immediately payable by Lessee; (b)
at Lessor's option and with notice to Lessee, terminate the Lease in default;
(c) regardless of whether the Lease in default is terminated, take possession of
7
any or all Units or render them unusable and, for this purpose, enter upon any
premises where any Unit is located without notice, court order or other process
of law and without any liability to Lessee or any other party for any damage,
loss, cause of action or claim; (d) regardless of whether the Lease in default
is terminated, require Lessee to deliver any or all Units to Lessor in
accordance with Section 6 hereof; (e) sell, dispose of, hold, use or re-lease
any Unit as Lessor in its sole discretion may determine (without giving
preference to any sale, re-lease or other disposition of any Unit or similar
equipment owned or leased by Lessor) by public or private disposition; (f)
proceed by appropriate court actions at law or in equity to enforce performance
by Lessee of the terms and conditions of the Lease or to recover damages from
Lessee for any breach thereof; (g) convert all Base Rent due and to become due,
together with Additional Rent and any other sums due and payable or to become
due and payable into common stock of Lessee at the stock's market value as of
the date of default.
Upon any sale, re-lease or other disposition of any Unit, Lessor shall apply to
all of Lessee's obligations under the defaulted Lease: (x) in the case of a
sale, the proceeds of the sale less the estimated fair market value of such Unit
as of the date of such sale; (y) in the case of a re-lease, the present value of
the rental due thereunder for a period co-terminus with the scheduled expiration
date of the Lease Term or applicable renewal thereof, discounted at the interest
rate at which said re-lease is financed; or (z) if the re-lease of the Unit is
not financed, Lessee shall receive no credit for the re-lease rents but,
instead, shall pay Lessor forthwith all remaining obligations under the
defaulted Lease and, upon such payment, Lessor will remit to Lessee such
re-lease rents as they are received. Lessee shall be liable for the deficiency
balance payable under a defaulted Lease, together with all costs, expenses,
losses, and damages, including without limitation, all court costs and
attorneys' fees and expenses, incurred by Lessor, Lessor's Assignee or any other
party in repossessing, moving, reconditioning, selling, re-leasing or otherwise
recovering or disposing of any Unit, or in enforcing the terms and conditions of
any Lease or Lessor's interests, or the priority thereof, in any Lease or the
Equipment. All proceeds of any disposition of the Equipment in excess of
Lessee's obligations under the Lease shall be the property of Lessor.
To the extent permitted by applicable law, Lessee hereby waives any and all
rights and remedies conferred upon a lessee by Sections 2A-401 and 2A-402, and
Sections 2A-508 through 2A-522 of the Illinois Uniform Commercial Code,
including without limitation, Lessee's rights to: (i) cancel, terminate,
repudiate or rescind any Lease; (ii) suspend performance of any of its
obligations; (iii) reject or revoke acceptance of any Unit; (iv) recover damages
or rent or the Equipment from Lessor for any breaches of warranty or for any
other reason, or deduct any damages from any rent or other sums due Lessor; (v)
obtain a security interest in the Equipment in Lessee's possession or control
for any reason, (vi) sell or otherwise dispose of the Equipment, or claim any
expenses in connection therewith; (vii) deduct all or any part of any claimed
damages resulting from Lessor's default, if any, under any Lease; (viii) accept
partial delivery of the Equipment; (ix) "cover" by making any purchase or lease
or contract to purchase or lease equipment in substitution for those due from
Lessor; (x) recover any general, special, incidental or consequential damages,
for any reason whatsoever; (xi) specific performance, replevin, detinue,
sequestration, claim, delivery or the like for any Equipment identified to any
Lease. To the extent permitted by applicable law, Lessee further waives any
rights now or hereafter conferred by statute or otherwise which may require
Lessor to sell, lease or otherwise use any Equipment in mitigation of Lessor's
damages hereunder or which may otherwise limit or modify any of Lessor's rights
or remedies hereunder.
8
SECTION 13. ASSIGNMENT. Lessee acknowledges and agrees that Lessor entered into
this Master Lease, and may enter into any Lease, in anticipation of assigning,
mortgaging or otherwise transferring its right, title or interest in a Lease
and/or the Equipment subject thereto to Lessor's Assignee without notice to, or
consent of, Lessee. Lessee further acknowledges that each Lease is a net Lease
and is noncancellable except as expressly provided herein. Accordingly, Lessor
and Lessee agree that upon such assignment, Lessee shall: (A) upon Lessor's
request, acknowledge such assignment in writing by executing a notice of
assignment furnished by Lessor; (B) promptly pay all Base Rent and Additional
Rent to Lessor's Assignee and Lessee's obligation to make such payments shall be
absolute and unconditional and shall not be subject to any claim, defense,
set-off, deduction, counterclaim or recoupment, including without limitation any
present or future claim against Lessor, the Manufacturer or any other person or
entity or any defect in, or any destruction or loss of use of, any Unit; (C) not
permit the Lease so assigned to be amended or any of the terms or conditions
thereof waived without the prior written consent of Lessor's Assignee; and (D)
not require Lessor's Assignee to perform any obligation of Lessor under such
Lease. Any Lessor's Assignee may reassign its rights and interests with the same
effect as the assignment by Lessor described herein. Lessor shall not be
relieved of any of its obligations hereunder by any assignment unless expressly
assumed by Lessor's Assignee and consented to by Lessee, which consent shall not
be unreasonably withheld.
LESSEE SHALL NOT ASSIGN ITS INTERESTS UNDER ANY LEASE OR TRANSFER OR SUBLEASE
ANY UNIT SUBJECT THERETO WITHOUT LESSOR'S PRIOR WRITTEN CONSENT. NO PURPORTED
ASSIGNMENT, TRANSFER OR SUBLEASE BY LESSEE SHALL IN ANY MANNER RELIEVE LESSEE OF
ANY OF ITS OBLIGATIONS HEREUNDER, AND LESSEE SHALL REMAIN PRIMARILY LIABLE TO
PERFORM ALL OF THE TERMS AND CONDITIONS HEREUNDER AND UNDER ALL LEASES
NOTWITHSTANDING ANY PURPORTED ASSIGNMENT, TRANSFER OR SUBLEASE.
SECTION 14. LESSEE'S INDEMNIFICATIONS. Lessee indemnifies and saves Lessor
harmless from, and agrees to defend Lessor against, any and all claims, actions,
proceedings, injuries, deaths, expenses, losses, damages (whether direct,
indirect, special, incidental or consequential) and liabilities, including all
court costs and attorneys' fees and expenses, arising in connection with the
Equipment and any Lease, including without limitation, the manufacture,
selection, purchase, delivery, possession, use, operation, maintenance, leasing
and return of the Equipment, acts of Lessee in failing to maintain the Equipment
in good repair or patent, trademark or copyright infringement. Lessee shall
immediately notify Lessor of any pending or threatened claim arising from any of
the foregoing.
SECTION 15. LESSEE'S PERFORMANCE AND EXECUTION. Lessee represents and warrants
to Lessor that (A) the execution and performance of this Master Lease and each
Lease hereto has been and will be duly authorized by Lessee and that, upon
execution by Lessee and acceptance by Lessor of this Master Lease and each
Lease, such Lease will constitute a valid obligation enforceable against Lessee
in accordance with its terms, subject to applicable bankruptcy, reorganization
or other similar laws affecting the enforceability generally of the rights of
9
creditors or lessors; (B) that neither the execution of this Master Lease, nor
any Lease, nor the due performance thereof by Lessee will result in a breach of,
or constitute a default under or violation of Lessee's certificate or articles
of incorporation or bylaws (or other documents of organization or any agreement
to which Lessee is a party or by which any interest of Lessee may be affected;
(C) Lessee is duly organized and in good standing under the laws of its
jurisdiction of organization and is and will continue to be duly qualified to do
business and in good standing in any jurisdiction where any of the Equipment
shall be located; (D) the person executing this Master Lease on behalf of Lessee
has been, and each person executing a Schedule, at the time of such execution,
shall be authorized to do so; (E) any and all financial statements and other
information with respect to Lessee furnished by Lessee to Lessor will be, when
furnished, and will remain at the time of execution of any Schedule, true and
correct without any misleading omissions, excepting any changes which have been
disclosed in a written notice to Lessor; and (F) to the best of Lessee's (or
Lessee's counsel's) knowledge, there are no actions, suits, or proceedings
pending before any court, administrative agency, arbitration tribunal or
governmental body which will, if determined adversely to Lessee, materially
affect its ability to perform its obligations under this Master Lease, each
Schedule or any related agreement to which it is a party.
SECTION 16. ADDITIONAL INFORMATION. Lessee shall promptly deliver to Lessor the
following documentation as and when requested by Lessor: (A) copies of quarterly
financial statements as published in reports filed with the Securities and
Exchange Commission or, if none, such financial information, including Lessee's
balance sheets and income statements, and such other current financial
information with respect to the financial condition and operations of Lessee as
Lessor may from time to time request; (B) a certificate of the resolutions of
the board of directors of Lessee duly authorizing or ratifying this Master Lease
or any Schedule; (C) a certificate of incumbency setting forth the names and
signatures of those persons authorized to execute this Master Lease or any
Schedule on behalf of Lessee; (D) landlord's and mortgagee's waivers in form and
substance satisfactory to Lessor and Lessor's Assignee with respect to any
premises upon which any Unit is located; (E) an opinion of the legal counsel of
Lessee as to the matters set forth in Subsections 15(A) through 15(D) hereof,
and as to such other matters as Lessor reasonably may request; (F) such
documentation confirming the execution of any Lease necessary or desirable to
effect any assignment, perfect any interest of Lessor or any Lessor's Assignee,
or for such other purposes relating to any Lease or any assignment thereof as
Lessor may reasonably request; and (G) such additional instruments, information
or assurances as Lessor or Lessor's Assignee may reasonably request concerning
Lessee in order to enable Lessor to determine whether the covenants, terms and
provisions of any Lease have been complied with by Lessee and to confirm and
perfect this Master Lease and Lessor's rights hereunder. If such request for
documentation is made prior to the delivery of any Unit, receipt by Lessor of
such documentation shall be a condition precedent to Lessor's acceptance of the
related Lease.
SECTION 17. LESSOR'S DISCHARGE OF LESSEE'S OBLIGATIONS. In the event Lessee
fails to comply with any provision of a Lease, Lessor has the right, but not the
obligation, to effect such compliance on behalf of Lessee upon five (5) days
prior written notice to Lessee. In such event, all monies advanced or extended
by Lessor, and all expenses incurred by Lessor in affecting such compliance,
shall be deemed to be Additional Rent and shall be paid by Lessee to Lessor on
the next Base Rent Date.
10
SECTION 18. PAST DUE PAYMENTS. Any payment of Base Rent, Additional Rent or
Stipulated Loss Value payable to Lessor under a Lease which is not paid when due
shall accrue interest until the date of receipt by Lessor of such payment at the
rate equal to the lesser of one and one-half percent (1.5%) of such past due
amounts per month or any portion thereof, or the maximum rate permitted by
applicable law.
SECTION 19. INCOME TAX BENEFITS. This Master Lease has been entered into with
the expectation that Lessor shall be entitled to such deductions, credits and
other benefits as are provided to an owner of personal property under the
Internal Revenue Code of 1986 (the "Code") including, without limitation, (A)
deductions for accelerated depreciation of the Equipment permitted under the
Accelerated Cost Recovery System provided for by the Code based upon a five-year
useful life, or such other useful life as is specified on the applicable
Schedule, employing Accelerated Cost Recovery System for recovery property
placed in service after December 31, 1986 ("Depreciation Deduction"); and (B)
deductions under Section 163 of the Code in an amount not less than the amount
of interest paid or accrued by Lessor on any indebtedness incurred by Lessor in
financing its purchase of the Equipment ("Interest Deduction") (all such
deductions and other benefits, as applicable, collectively referred to
hereinafter as the ("Deductions"). If, with respect to the Equipment, by reason
of any changes in the Code or regulations pertaining thereto after the
Commencement Date of any Lease or any act, failure to act or misrepresentation
of Lessee, Lessor shall lose or not have available or there shall be disallowed
or recaptured with respect to Lessor, all or any portion of the Deductions for
any taxable year of Lessor ("Tax Loss"), then Lessee shall pay to Lessor and
shall indemnify and hold Lessor harmless from any claim against or loss suffered
by Lessor arising out of such Tax Loss. With respect to the Interest Deduction
and the Depreciation Deduction, the Tax Loss shall be determined by multiplying
the sum of the maximum federal and applicable state corporate income tax rates
times the amount of the Interest Deduction and the Depreciation Deduction not
available to Lessor. With respect to any Tax Loss, all interest, and penalties
which may be assessed against Lessor by the federal or any applicable state
taxing authority and Lessor's reasonable attorney's fees shall be included. The
applicable state corporate income tax rate shall be the rate of the state in
which the greatest value of Equipment, based on Lessor's cost of such Equipment,
is located. Lessee shall be liable to indemnify Lessor against any Tax Loss only
if: (i) Lessor gives Lessee notice of a Tax Loss; (ii) Lessor permits Lessee, at
its expense, to defend Lessor against such Tax Loss in administrative and
judicial proceedings (including suits for refund of taxes erroneously assessed);
and (iii) Lessor cooperates fully with Lessee in any such defense. In the event
of a successful suit for refund of tax for which Lessee has indemnified Lessor
pursuant to this Section, Lessor shall immediately pay over to Lessee in cash an
amount equal to the amount of such refund but not more than the amount paid by
Lessee to Lessor by way of such indemnity. For purposes of this Section only,
Lessor shall include any corporation with which Lessor files a consolidated
federal or state income tax return. All of Lessor's rights under this Section 19
shall survive termination of this Lease.
11
SECTION 20. NOTICES. Any notice or other communication relating to a Lease shall
be hand-delivered or mailed by certified mail, return receipt requested, to
Lessor or Lessee at its address above shown or at any later address last known
to the sender. Any notice or other communication mailed as aforesaid shall be
deemed to have been given three (3) days after the date mailed. In the event
Lessor terminates any Lease with regard to some Units but not all of the
Equipment, Lessor shall advise Lessee in writing of those Units which remain
subject to the Lease and the Base Rent payable in respect of such Units. Upon
Lessee's receipt of such written notice, such Lease shall, without further
action, be deemed amended to the extent set forth in such notice.
SECTION 21. SURVIVABILITY. All representations, warranties, indemnities and
covenants contained in this Master Lease and any Schedule shall continue in full
force and effect and shall survive notwithstanding the full payment of all
amounts due hereunder and thereunder or the termination of Lessee's right of
possession and/or the taking of possession by Lessor of any Unit.
SECTION 22. CONSTRUCTION. This Master Lease and the rights and obligations of
the parties hereunder shall in all respects be governed by, and construed in
accordance with, the internal laws of the State of California, including all
matters of interpretation, construction, enforcement, 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
exclusively in any State or Federal court of competent jurisdiction in the State
of California and each party agrees 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
its address designated pursuant hereto, or as otherwise provided under the laws
of the State of California. THE PARTIES HERETO WAIVE THE RIGHT TO TRIAL BY JURY
TO EXTENT SUCH RIGHT MAY BE WAIVED.
SECTION 23. BENEFIT TO PARTIES AND SUCCESSORS. This Master Lease shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors, representatives and (to the extent specified in any assignment)
Lessor's Assignees.
SECTION 24. COUNTERPARTS, PERFECTION OF SECURITY INTERESTS. This Master Lease
and each Schedule may be executed in three (3) counterparts marked Counterpart
No.1, Counterpart No. 2 and Counterpart No. 3, each counterpart constituting an
original but all together one and the same instrument and contract. To the
extent, if any, that a Schedule constitutes chattel paper (as such term is
defined in the Uniform Commercial Code) no security interest may be created
through the transfer and possession of any Counterpart other than that
designated "Counterpart No. 1.
12
SECTION 25. SEVERABILITY. The titles of the sections of this Master Lease are
for convenience only and shall not define or limit any of the terms or
provisions hereof. Any provision of this Master Lease or any Lease prohibited
by, or unlawful or unenforceable under, any applicable law of any jurisdiction
shall be ineffective as to such jurisdiction to the extent of such prohibition,
without invalidating the remaining provisions hereof or thereof; provided,
however, that where the provisions of any such applicable law may be waived,
they are hereby waived by Lessee and Lessor to the full extent permitted by law.
SECTION 26. ENTIRE AGREEMENT AND AMENDMENTS.
This Master Lease, and each Schedule into which this Master Lease is
incorporated by reference, constitutes the entire agreement between Lessor and
Lessee with respect to the Equipment and supersede any other oral or written
agreement pertaining thereto. This Master Lease or any Lease may be amended or
modified only by a writing signed by the parties hereto, or their respective
successors and assignees.
IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease to be executed by
their duly authorized representative as of the date accepted by Lessor.
Lessor: Lessee:
INSIGHT INVESTMENTS, CORP. LMKI, INC.
----------
By: By:
-----------------------------------------
Title: Title:
--------------------------------------
ACCEPTED BY LESSOR AS OF:
Date:
THIS IS COUNTERPART NO. ___ OF THREE (3) SERIALLY NUMBERED COUNTERPARTS.
To the extent that an Equipment Schedule constitutes chattel paper under the
Uniform Commercial Code no security interest may be created through the transfer
and possession of any counterpart other than counterpart No. 1.
