EXHIBIT 99.3
MASTER LEASE AGREEMENT
dated as of June 28, 1996
by and between
COMDISCO, INC., as Lessor
and
MICRUS, a New York general partnership, as Lessee
TABLE OF CONTENTS
Page
1. PROPERTY LEASED. 1
2. TERM. 1
3. RENT AND PAYMENT. 1
4. SELECTION AND WARRANTY AND DISCLAIMER OF WARRANTIES. 1
4.1. Selection.. 1
4.2. Warranty and Disclaimer of Warranties 2
5. TITLE AND ASSIGNMENT. 2
5.1. Title.. 2
5.2. Relocation or Sublease 2
5.3. Assignment by Lessor to a Secured Party 3
5.4. Assignment by Lessor to Assignee and Participants. 4
5.5. Restrictions on Lessor, Assignee, Secured Party
and the Participants. 5
6. NET LEASE AND TAXES AND FEES. 6
6.1. Net Lease. 6
6.2. Taxes and Fees 6
6.3. Reservation of Right. 6
7. CARE, USE AND MAINTENANCE, ATTACHMENTS AND
RECONFIGURATIONS AND INSPECTION BY LESSOR. 6
7.1. Care, Use and Maintenance. 6
7.2. Attachments and Reconfigurations. 7
7.3. Inspection by Lessor 7
8. REPRESENTATIONS AND WARRANTIES OF LESSEE. 7
9. DELIVERY AND RETURN OF EQUIPMENT. 7
10. LABELING. 8
11. INDEMNITY. 8
12. RISK OF LOSS. 9
13. DEFAULT, REMEDIES AND MITIGATION. 9
13.1. Default 9
13.2.Remedies: 11
13.3.Mitigation
14. Intentionally Omitted. 11
15. ADDITIONAL PROVISIONS. 11
15.1. Entire Agreement. 11
15.2. No Waiver. 12
15.3. Binding Nature. 12
15.4. Survival of Obligations. 12
15.5. Notices 12
15.6. Applicable Law 12
15.7. Severability. 12
15.8. Counterparts 13
15.9. Additional Documents. 13
15.10. Electronic Communications 13
15.11. Scope of Liability 13
15.12. Confidentiality: 13
15.13. Definitions. 14
MASTER LEASE AGREEMENT
MASTER LEASE AGREEMENT (this "Master Lease") dated as of June
28, 1996, by and between COMDISCO, INC. ("Lessor") and MICRUS, a
New York general partnership ("Lessee").
IN CONSIDERATION of the mutual agreements described below,
the parties agree as follows (all capitalized terms are defined in
Section 15.13):
0.XXXXXXXX LEASED.
Lessor hereby leases to Lessee and Lessee hereby leases from
Lessor, subject to the terms and conditions of this Master Lease,
the items of equipment (the "Equipment") described in the lease
schedules executed or to be executed hereunder (each a
"Schedule"). Each Schedule shall constitute a separate and
independent lease and contractual obligation of Lessee and shall
incorporate the terms and conditions of this Master Lease and any
additional provisions contained in such Schedule. In the event of
a conflict between the terms and conditions of this Master Lease
and any additional provisions of such Schedule, the additional
provisions of such Schedule shall prevail with respect to such
Schedule only.
2.TERM.
On the Commencement Date Lessee will be deemed to accept the
Equipment (a) as evidenced by Lessee's delivery of a Lease
Schedule in the form of Exhibit A to Lessor or (b) in the case of
Lessee's delivery of a Lease Schedule in the form of Exhibit B as
evidenced by Lessee's delivery of a Commencement Certificate in
the form of Exhibit C to Lessor, and by such delivery of a Lease
Schedule under (a) above or of a Lease Schedule and a Commencement
Certificate under (b) above, as applicable, Lessee will be bound
to its rental obligations for each item of Equipment ("Item"), and
the term of a Schedule ("Term") will begin and continue through
the Initial Term. Except as set forth in a Schedule, no
termination may be effective prior to the expiration of the
Initial Term.
0.XXXX AND PAYMENT.
Rent is due and payable in advance, in immediately available
funds, on the first day of each Rent Interval to the Paying Agent
at the location specified in the Schedule or such other payee and
location as specified by Lessor by written notice to Lessee not
less than 30 days prior to the applicable payment date. Interim
Rent is due and payable within 30 days after invoice. If any
payment is not made when due, Lessee will pay interest at the
Overdue Rate.
4.SELECTION AND WARRANTY AND DISCLAIMER OF WARRANTIES.
4.1. Selection. Lessee acknowledges that it has selected the
Equipment and disclaims any reliance upon statements made by
Lessor.
4.2. Warranty and Disclaimer of Warranties. Lessor warrants
to Lessee that, so long as no Event of Default exists, Lessor will
not disturb Lessee's quiet and peaceful possession and
unrestricted use of each Item. To the extent permitted by the
manufacturer, Lessor assigns to Lessee during the term of the
Schedule any manufacturer's warranties for each Item. LESSOR
MAKES NO OTHER WARRANTY, EXPRESS OR IMPLIED, AS TO ANY MATTER
WHATSOEVER, INCLUDING, WITHOUT LIMITATION, THE MERCHANTABILITY OF
EACH ITEM OR ITS FITNESS FOR A PARTICULAR PURPOSE. Lessor is not
responsible for any liability, claim, loss, damage or expense of
any kind (including strict liability in tort) caused by each Item
except for any loss or damage caused by the negligent acts of
Lessor. In no event is Lessor responsible for special, incidental
or consequential damages.
5.TITLE AND ASSIGNMENT.
5.1. Title. Lessee holds the Equipment subject and
subordinate to the rights of the, Lessor, any Assignee and any
Secured Party. If an Event of Default exists or Lessor has
requested in writing of Lessee and Lessee has failed to respond
within 10 days to such request, Lessee authorizes Lessor, as
Lessee's agent, to prepare, execute and file in Lessee's name
precautionary Uniform Commercial Code financing statements showing
the interest of the, Lessor, and any Assignee or Secured Party in
the Equipment and to insert serial numbers in Schedules as
appropriate. Except as provided in Sections 5.2 and 7.2 hereof
and a Schedule, Lessee will, at its expense, keep the Equipment
free and clear of any liens or encumbrances of any kind (other
than Permitted Liens) and will indemnify and hold Lessor, any
Assignee and any Secured Party harmless from and against any loss
caused by Lessee's failure to do so.
5.2. Relocation or Sublease. Upon prior written notice to
Lessor, Lessee may relocate any Item to any location within the
continental United States, provided (i) such Item will not be
used by an entity exempt from federal income tax, and (ii) all
additional costs (including any administrative fees, additional
taxes and insurance coverage) are reconciled and promptly paid by
Lessee. Lessee shall have and retain throughout the Term with
respect to any Item control over the operation and use of such
Item, and may, so long as no Event of Default exists, without the
consent of Lessor, assign Lessee's interest in this Master Lease
or sublease, license, transfer control of, or permit any other
person to use, all or any part of any Item or Items during the
Term, subject to the following terms and conditions:
(i) Lessee shall remain primarily liable to Lessor for the
performance of all the terms of this Master Lease to the same
extent as if such assignment, sublease or arrangement had not
occurred, and the Guaranty shall remain in full force and
effect against Guarantor;
(ii) such assignment, sublease or arrangement shall be in
compliance with all applicable laws;
(iii) such assignment, sublease or arrangement as to any Item
shall not extend beyond the stated Term with respect to such
Item as then in effect for such Item, and any rights created
thereby in an Item shall be fully subject and subordinate to
this Master Lease;
(iv) such assignment, sublease or arrangement shall be to
Guarantor or to a solvent affiliate of Lessee, Guarantor or
International Business Machines Corporation ("IBM"),
organized under the laws of any state of, and located in, the
United States;
(v) such assignment, sublease or arrangement shall not
subject Lessor to any regulation by any governmental agency;
(vi) Lessee shall give prior written notice to Lessor of any
such assignment, sublease or arrangement;
(vii) Lessee shall obtain and deliver to Lessor such Uniform
Commercial Code financing statements executed by the assignee
or sublessee and Lessee, as reasonably may be required by
Lessor, to be filed at Lessee's expense; and
(viii) all reasonable costs and expenses (including
attorney's fees and expenses) incurred by Lessor in
connection with such assignment, sublease or arrangement
shall be paid by Lessee.
No relocation or sublease will relieve Lessee of any of its
obligations under this Master Lease and the relevant Schedule.
Upon the dissolution of Lessee, Lessee may assign its leasehold
interest in this Master Lease in its entirety to Guarantor, IBM or
a solvent subsidiary of either thereof, or to a solvent general
partnership of which IBM or a solvent subsidiary of IBM is the
managing general partner; provided that (1) the Guaranty survives
any such assignment to Guarantor or its solvent subsidiary and
remains in full force and effect against Guarantor or, if such
assignment is to a solvent subsidiary of IBM, IBM will provide a
guaranty substantially in the form of Exhibit E attached hereto
(provided, however, such guaranty shall not include paragraph 3 of
Exhibit E therein), and (2) subparagraphs (ii), (iii), (iv) and
(vi) above shall be complied with.
5.3. Assignment by Lessor to a Secured Party. Lessor may not
grant a security interest in all or any part of a Schedule to a
Secured Party unless (a) Lessor delivers five (5) Business Days
prior written notice to Lessee setting forth the identity of any
proposed Secured Party and the Items on which such proposed
Secured Party is intended to have a Lien ("Notice") (b) any
proposed Secured Party qualifies as a Transferee (as such term is
hereinafter defined), and (c) Lessee confirms in writing the
qualification of such proposed Secured Party within a reasonable
time after such Notice. If such an event should occur, and upon
delivery by Lessor of written notice to Lessee confirming the
status of such party as a Secured Party and the Items on which it
has a Lien, the term Lessor will include the security interest of
such Secured Party with respect to such Schedule; provided,
however, any assignment, sale, or other transfer by Lessor will
not relieve Lessor of its obligations to Lessee and will not
change Lessee's duties or increase the burdens or risks imposed on
Lessee. Lessee consents to such assignments to a Transferee, and
will acknowledge them in a written notice given to Lessee. Any
successor to a Secured Party must also be a Transferee. Lessee
also agrees that at any time an Event of Default exists:
(a) The Secured Party will be entitled to exercise all of
Lessor's rights with respect to such Schedule subject to a
lien in favor of the Secured Party, but will not be obligated
to perform any of the obligations of Lessor with regard to
such Equipment; provided, however, the Secured Party will not
disturb Lessee's quiet and peaceful possession and
unrestricted use of the Equipment so long as no Event of
Default exists.
(b) To the extent applicable, Lessee will pay all Rent and
all other amounts payable to the Paying Agent for the benefit
of the Secured Party, despite any defense or claim which
Lessee has against Lessor. Notwithstanding anything to the
contrary contained herein, Lessee reserves its right to have
recourse directly against Lessor for any defense or claim.
(c) Subject to and without impairment of Lessee's leasehold
rights in the Equipment, Lessee will hold the Equipment for
the Secured Party to the extent of the Secured Party's rights
in such Equipment and to the extent such rights do not exceed
the rights of the Lessor (or conflict with Lessee's rights of
quiet enjoyment hereunder) and have been notified in writing
to Lessee.
5.4. Assignment by Lessor to Assignee and Participants.
(a) Lessor may not, without the consent of Lessee (which
consent shall not unreasonably be withheld, delayed or
conditioned; provided, however, any Assignee must qualify as
a Transferee), assign this Master Lease or any Schedule, in
whole but not in part, or the right to enter into any
Schedule to an Assignee. Lessor or the Paying Agent shall
act as the Paying Agent for any Assignee unless an Event of
Default exists hereunder, in which case such Assignee may act
directly in lieu of Lessor or Paying Agent, as the case may
be, hereunder. Lessee agrees to confirm in writing receipt
of a notice of an approved assignment with respect to a
Schedule (in whole, but not in part) as reasonably may be
requested by Assignee. Lessee hereby waives, and agrees not
to assert against any such Assignee, any defense, set-off,
recoupment, claim or counterclaim that Lessee has or may at
any time have against Lessor or any other person for any
reason whatsoever. Notwithstanding anything to the contrary
contained herein, Lessee reserves its right to have recourse
directly against Lessor for any defense or claim. Each
Assignee shall be required to assume, in a writing delivered
to Lessee, all obligations of Lessor, including the first
sentence of Section 4.2 and Section 5.6.
(b) Subject to the terms set forth in the last sentence of
this Section 5.4(b), Lessee acknowledges that it has been
advised that the interest of Lessor in this Master Lease, the
Schedules, related instruments and documents and/or the
Equipment may be conveyed to, in whole or in part, certain
third parties (each being herein referred to as a
"Participant" and, collectively, as the "Participants")
without the consent of Lessee (the "Syndication"). Lessee
agrees to cooperate reasonably with Lessor in connection with
the Syndication, including the execution and delivery of such
other documents, instruments, notices, opinions, certificates
and acknowledgments as reasonably may be required by Lessor
or such Participant; provided, however, in no event shall
Lessee be required to consent to any change that would
adversely affect any of the terms of the transactions
contemplated herein; and provided further, however, that
Lessor shall be responsible for its own costs and expenses
incurred in connection with the Syndication. Each
Participant shall be required to comply with the provisions
of the first sentence of Section 4.2 hereof and to qualify as
a Transferee.
5.5. Restrictions on Lessor, Assignee, Secured Party and the
Participants.
(a) Each of Lessor, any Assignee, Security Party and the
Participants agrees that it will not advertise or publish the
fact that it has furnished financing to, or otherwise entered
into the transactions contemplated hereby with, Lessee,
Guarantor or IBM without first obtaining the written consent
of such Person. Notwithstanding any other provision of this
Master Lease, a Schedule, the Guaranty or any documents
executed in connection with the Master Lease (collectively,
"Operative Documents"), Lessor, any Assignee, Security Party
and the Participants will not have any right to use any
trademark or trade name of, or otherwise refer to, Lessee,
Guarantor or IBM in any promotion or publication without
first obtaining the written consent of such Person.
(b) A Participant may at any time assign any or all of its
rights, obligations, title and interest as such Participant
to any Transferee with five (5) Business Days' notice to
Lessor, Lessee, Guarantor, IBM and IBM Credit Corporation.
As used herein, "Transferee" shall mean a corporation, bank,
insurance company, trust company or national banking
association, or any affiliate of any thereof, incorporated or
doing business under the laws of the United States or one of
the states thereof, having at the time of transfer a
consolidated net worth or combined capital and surplus of at
least $20,000,000.00, which is not a direct competitor of or
then in litigation adverse to Lessee, Guarantor or IBM or
which is then in litigation adverse to IBM Credit
Corporation.
(c) Subject always to the foregoing and to Sections 5.2, 5.3
and 5.4 hereof, this Master Lease inures to the benefit of,
and is binding upon, the successors and assigns of the
parties hereto.
5.6 No Lessor Liens. Lessor and Lessor's successors and
assigns (including, without limitation, any Assignee, Secured
Party or Participant) shall not directly or indirectly create,
incur or suffer to exist any lien on or disposition of title of
any Item or any portion thereof that either (i) results from
claims against Lessor not related to the transactions contemplated
by the Operative Documents or (ii) results from an affirmative
act of Lessor to create such a lien or disposition and that is
neither consented to by the Lessee nor taken in connection with
any Event of Default (all such liens referred to in clauses (i)
and (ii) being herein called "Lessor Liens"). Lessor agrees that
it will, at its own cost and expense, promptly take such action as
may be necessary duly to discharge any Lessor Lien attributable to
it and will make restitution and hold harmless Lessee from and
against any costs or expenses (including legal fees and expenses)
and any reduction in the amount payable under this Master Lease,
as a result of the imposition or enforcement of any such Lessor
Lien attributable to it.
0.XXX LEASE AND TAXES AND FEES.
6.1. Net Lease. Each Schedule constitutes a net lease.
Lessee's obligation to pay Rent and all other amounts is absolute
and unconditional and is not subject to any abatement, reduction,
set-off, defense, counterclaim, interruption, deferment or
recoupment for any reason whatsoever.
6.2. Taxes and Fees. Lessee will pay when due or reimburse
Lessor for all taxes, fees or any other charges by any
governmental authority (except only federal, state and local taxes
on or measured by the capital or the net income of Lessor),
together with any related interest or penalties not arising from
the negligence of Lessor, accrued for or arising from the
Equipment and/or this Master Lease during the term of each
Schedule. Lessor will file all personal property tax returns for
the Equipment and pay all property taxes due. Lessee will
reimburse Lessor for such property taxes within thirty (30) days
of receipt of an invoice therefor.
6.3. Reservation of Right. Notwithstanding anything to the
contrary contained herein, Lessee reserves the right to recover
damages resulting from any breach by Lessor, any Assignee, any
Secured Party or any Participant of Lessor's obligation under this
Master Lease to protect quiet and peaceful possession and
unrestricted use and enjoyment of each Item by Lessee.
0.XXXX, USE AND MAINTENANCE, ATTACHMENTS AND RECONFIGURATIONS AND
INSPECTION BY LESSOR.
7.1. Care, Use and Maintenance. (a)Lessee shall not use any
Item, or authorize any third party to use any Item, in breach of
any applicable laws (other than applicable laws as to which
noncompliance would not adversely affect the business, operations
or properties of Lessee and so long as such noncompliance shall
not involve any material danger of the sale, forfeiture or loss of
such Item or the imposition of any criminal liability on Lessor).
(b)Lessee at its own expense shall at all times during the Term
applicable to each Item maintain such Item in accordance with good
commercial maintenance standards and practices followed from time
to time by Lessee in the operation and maintenance of similar
kinds of properties owned or leased by them. Lessee shall keep
each such Item fit for its intended use, in good and efficient
working order (ordinary wear and tear excepted), and in as good
condition (ordinary wear and tear excepted) as it was in on the
Commencement Date for such Item of Equipment. (c)Lessee will
promptly report to Lessor in writing if any Item is lost or
damaged and the estimated replacement or repair costs would exceed
One Hundred Thousand Dollars ($100,000), or is otherwise involved
in an accident causing serious personal injury or significant
property damage.
7.2. Attachments and Reconfigurations. Notwithstanding
anything to the contrary contained herein or in a Schedule, no
consent of Lessor shall be required for any alterations,
modification, repairs, upgrades or enhancements (collectively,
"Alterations") to the Equipment during the Initial Term or any
extension thereof, provided, however, that if such Alterations
should impair or degrade the remarketability, fair market value or
use of the Equipment, then prior to return of Equipment, Lessee at
its expense will restore the Equipment as required in Section 9.
In the event Lessee elects either to purchase or renew at the end
of the Initial Term or extension thereof and Alterations have
impaired or degraded the Fair Market Value of the Equipment, then
both parties agree the determination of the Fair Market Value
shall be based on the Equipment in the same operating order,
repair and appearance as when installed (normal wear and tear
excluded). Alternatively, without limiting the foregoing, Lessee
may return the Equipment with the Alteration. If the Alteration
has been purchased by Lessee, upon return, Lessor will remarket
the altered equipment and remit 100% of the Fair Market Value of
Alteration to Lessee. The Lessor, at its sole discretion, may
lease Alterations to Lessee under mutually agreeable terms. 7.3.
Inspection by Lessor. Upon request, Lessee, during reasonable
business hours and subject to Lessee's security and operational
requirements, will make the Equipment and its related log and
maintenance records available to Lessor for inspection.
8. REPRESENTATIONS AND WARRANTIES OF LESSEE.
Lessee represents and warrants that for this Master Lease and
each Schedule: (a)The execution, delivery and performance of the
Lessee have been duly authorized by all necessary corporate or
partnership action; (b) The individual executing was duly
authorized to do so; (c)This Master Lease and each Schedule
constitute legal, valid and binding agreements of the Lessee
enforceable in accordance with their terms; and
9. DELIVERY AND RETURN OF EQUIPMENT.
Lessee assumes the full expense of transportation of the
Equipment to its initial location, installation, deinstallation,
and return to a location within the continental United States
(including without limitation the expense of in-transit insurance)
all pursuant to Lessee's operating requirements and manufacturer's
specifications (as applicable). Upon any expiration or
termination of this Master Lease or any Schedule, unless Lessee
has exercised its early termination option, extension option,
renewal option, or purchase option pursuant hereto, Lessee shall
promptly, at its own cost and expense: (i) perform any testing
and repairs required to place the affected Item in the same
condition and appearance as when received by Lessee (ordinary wear
and tear excepted) meeting all original equipment manufacturer's
specifications for continued manufacturer's maintenance, but only
to the extent such manufacturer's specifications and maintenance
are then commercially available, and, to the extent reasonably
available, accompanied by all associated documents, manuals,
maintenance records, spare parts and accessories for the duration
of the Initial Term, and in good working order for its originally
intended purpose; (ii) if deinstallation, disassembly or crating
is required, cause such Item to be deinstalled, disassembled and
crated by qualified personnel of Lessee or IBM, or by an
authorized manufacturer's representative or such other service
person as is satisfactory to Lessor; and (iii) within ten (10)
days after such expiration or termination, ship such Item, free
and clear of all liens and encumbrances (other than Lessor Liens),
to a location within the forty-eight (48) contiguous continental
United States as Lessor shall direct; and Lessee shall provide, at
its expense, transit insurance payable to Lessor for the Equipment
in the amount of the then Casualty Value of the Equipment. The
Lessee agrees that during the last six months of the Term with
respect to such Item, it will cooperate in all reasonable respects
with efforts of the Lessor to lease lessees or purchasers by
providing access to the Item as then being used and to the records
relating to maintenance and performance for inspection during
normal working hours upon prior written notice to Lessee,
including providing access to Lessor and a representative of the
manufacturer to audit such Item prior to any decommissioning of
such Item during such six month period; provided, however, that
such cooperation shall be subject to the Lessee's reasonable
operational and security requirements.
10. LABELING.
Upon request, Lessee will provide unique equipment numbering
for each Item that is tracked to the list of Items on a Schedule.
Lessee will keep all Equipment free from any other marking or
labeling which might be interpreted as a claim of ownership.
11. INDEMNITY.
Lessee will indemnify and hold Lessor, any Assignee and any
Secured Party harmless from and against any and all claims, costs,
expenses, damages and liabilities, including reasonable attorney's
fees, arising out of the ownership (for strict liability in tort
only), selection, possession, leasing, operation, control, use,
maintenance, delivery, return or other disposition of the
Equipment (including, without limitation, latent and other
defects, whether or not discoverable by Lessor or Lessee, and any
claim for patent, trademark or copyright infringement or
environmental damage). However, Lessee is not responsible to a
party indemnified hereunder, for any claims, costs, expenses,
damages and liabilities occasioned by the negligent acts or
willful misconduct of such indemnified party. Lessee agrees to
carry bodily injury and property damage liability insurance during
the term of the Master Lease in amounts and against risks
customarily insured against by Lessee on equipment owned by it.
Any amounts received by Lessor under that insurance will be
credited against Lessee's obligations under this Section.
12.RISK OF LOSS.
Effective upon delivery and until the Equipment is returned,
Lessee relieves Lessor of responsibility for all risks of physical
damage to or loss or destruction of the Equipment. With respect
to all losses in excess of One Hundred Thousand Dollars
($100,000), Lessee will carry casualty insurance for each Item in
an amount not less than the Casualty Value. All policies for such
insurance will name Lessor and any Secured Party as additional
insureds, and as loss payees, and will provide for at least thirty
(30) days' prior written notice to Lessor of cancellation or
expiration. Lessee will furnish appropriate evidence of such
insurance. Provided that no Event of Default exists, Lessor shall
apply proceeds of insurance with respect to losses in excess of
One Hundred Thousand Dollars ($100,000), in whole or in part, as
elected by Lessee pursuant to this Section 12, to (i) repair or
replace Equipment or any part thereof, or (ii) satisfy any
obligation of Lessee to Lessor hereunder. Lessee shall promptly
repair any damaged Item if such Item is damaged and the estimated
repair costs would exceed One Hundred Thousand Dollars ($100,000)
and unless such Item has suffered a Casualty Loss. Within fifteen
(15) days of a Casualty Loss, Lessee will provide written notice
of that loss to Lessor, and Lessee will, at Lessee's option,
either (a) replace the Item with Like Equipment, and marketable
title to the Like Equipment will automatically vest in Lessor, or
(b) pay the Casualty Value, and after that payment and the payment
of all other amounts due and owing hereunder, Lessee's obligation
to pay further Rent for the Item will cease, and (except in case
(i) of the loss, theft or complete destruction of such Item, or
(ii) where the insurer requires possession of the damaged Item)
Lessee shall be entitled to recover possession of and title to
such Item and Lessor shall transfer (without any representation,
recourse or warranty whatsoever except as to the absence of Lessor
Liens) such Item, including title to such Item to the Lessee and
the Lessor shall execute and deliver such documents evidencing
such transfer and take such further action as the Lessee shall
reasonably request.
13.DEFAULT, REMEDIES AND MITIGATION.
13.1.Default. Lessor of a defaulted Schedule may in writing
declare this Master Lease in default with respect to the Equipment
listed on such defaulted Schedule upon the occurrence of any one
or more of the following Events of Default: (a)Lessee's failure to
pay Rent with respect to such Schedule or other amounts payable by
Lessee with respect to such Equipment listed on such Schedule when
due if that failure continues for ten (10) days after written
notice; or (b)Lessee's failure to perform any other term or
condition of such Schedule or the material inaccuracy of any
representation or warranty made by Lessee in such Schedule or in
any document or certificate furnished to Lessor hereunder with
respect to the Equipment listed on such Schedule if that failure
or inaccuracy continues for thirty (30) days after written notice;
provided, however, that if (A) such breach is curable, (B) such
breach cannot be remedied within the thirty (30) day period, (C)
Lessee commences reasonable efforts to effect such remedy within
the thirty (30) day period and diligently pursues such efforts,
and (D) such breach does not involve any substantial danger of the
sale, forfeiture or loss of the applicable Equipment or of
Lessor's interest therein, then Lessee shall have an additional
period of sixty (60) days to effect such remedy; or (c)An
assignment by Lessee for the benefit of its creditors, the failure
by Lessee to pay its debts when due, the insolvency of Lessee, the
filing by Lessee of any petition under any bankruptcy or
insolvency law or for the appointment of a trustee or other
officer with similar powers, the filing of a petition against
Lessee under any bankruptcy or insolvency laws which is not
dismissed within sixty (60) days, the adjudication of Lessee as
insolvent, the liquidation of Lessee (unless Lessee has assigned
its rights and obligations under this Master Lease and each
Schedule pursuant to Section 5.2), or the taking of any action for
the purpose of the foregoing; or (d)Subject to the notice and cure
provisions set forth below, an assignment by Guarantor for the
benefit of its creditors, the failure by Guarantor to pay its
debts when due, the insolvency of Guarantor, the filing by
Guarantor of any petition under any bankruptcy or insolvency law
or for the appointment of a trustee or other officer with similar
powers, the filing of a petition against Guarantor under any
bankruptcy or insolvency laws which is not dismissed within sixty
(60) days, the adjudication of Guarantor as insolvent, the
liquidation of Guarantor, or the taking of any action for the
purpose of the foregoing. Lessor shall provide written notice to
IBM upon the occurrence of an event under clause (d) above and,
until thirty (30) days after the giving of such notice (the
"30-day Period"), so long as no other Event of Default exists,
Lessor shall not declare this Master Lease to be in default as a
result of such occurrence and shall not exercise any remedies
hereunder as a result of such occurrence, provided that all Rent
and other payments becoming due hereunder are paid as and when due
during such 30-day Period. Prior to the expiration of such 30-day
Period, IBM may (at its sole discretion): (1) cause to be
delivered to Lessor an irrevocable letter of credit (in form and
substance satisfactory to Lessor) issued by a national bank
acceptable to Lessor in an amount equal to the Rent becoming due
during the next succeeding ninety (90) day period (the "Subsequent
Rent"), or (2) deliver to Lessor a written guaranty of IBM, in
substantially the form of guaranty executed by Guarantor,
guaranteeing the payment as and when due of the Subsequent Rent.
If IBM timely provides the required letter of credit or guaranty,
for an additional ninety (90) days after the original 30-day
Period, and if no other Event of Default exists, Lessor shall not
declare this Master Lease to be in default as a result of such
occurrence and shall not exercise any remedies hereunder as a
result of such occurrence. Upon the expiration of such subsequent
ninety (90) day period, unless IBM has (i) delivered to Lessor a
written guaranty of IBM, in substantially the form of Exhibit E
hereto, (ii) purchased all the Equipment with respect to Lessor
for (A) with respect to up to, but not to exceed seventy percent
(70%) of the original Aggregate Funding Amount, an amount
calculated in accordance with the procedure used to calculate the
Prepayment Purchase Price, and (B) with respect to the remaining
Items, an amount equal to the Fair Market Value of such Items
(provided, however, that all Items that are designated by an
asterisk (*) on such Schedule A shall be included as part of the
aggregate purchase limit of seventy percent (70%)), and paid all
unpaid Rent and other amounts due hereunder, in which case Lessor
shall transfer (without any representation, recourse or warranty
whatsoever except as to the absence of Lessor Liens) such
Equipment, including title to such Equipment, to the Lessee and
the Lessor shall execute and deliver such documents evidencing
such transfer and take such further action as the Lessee shall
reasonably request, (iii) received an assignment of all rights,
title, interest and obligations of Lessee in, under and pursuant
to this Master Lease, and has accepted such assignment and assumed
such obligations, or (iv) taken such other action acceptable to
Lessor (in its sole discretion), then Lessor may exercise all
rights and remedies hereunder. 13.2.Remedies. Upon the occurrence
and continuation of any of the above Events of Default, Lessor, at
its option, may: (a)enforce Lessee's performance of the provisions
of the applicable Schedule by appropriate court action in law or
in equity; (b) recover from Lessee any related damages and/or
expenses, including Default Costs; (c)with notice and demand,
recover all sums due and accelerate and recover the present value
of the remaining payment stream of all Rent due under the
defaulted Schedule (discounted at the same rate of interest at
which such defaulted Schedule was discounted with a Secured Party
plus any prepayment fees charged to Lessor by the Secured Party,
or if there is no Secured Party, then discounted at 6%) together
with all Rent and other amounts currently due as liquidated
damages and not as a penalty; (d)with notice and process of law
and in compliance with Lessee's operational and security
requirements, enter on Lessee's premises to remove and repossess
the Equipment without being liable to Lessee for damages due to
the repossession, except those resulting from Lessor's, its
assignees' or agents' or representatives' negligence or willful
misconduct; and (e)pursue any other remedy permitted by law or
equity. The above remedies, in Lessor's discretion and to the
extent permitted by law, are cumulative and may be exercised
successively or concurrently.
14.Intentionally Omitted.
15. ADDITIONAL PROVISIONS.
15.1. Entire Agreement. (a)This Master Lease, each Schedule
and the other Operative Documents shall constitute the complete
and exclusive statement of the terms of the agreement of Lessor
and Lessee with respect to the Equipment leased thereby, and shall
automatically cancel and supersede any and all prior oral or
written agreements or understandings between the parties
concerning the Equipment. The headings of this Master Lease and
each Schedule shall be for convenience of reference only and shall
form no part of this Master Lease or such Schedule. (b) ANY
AMENDMENT OF THIS MASTER LEASE OR A SCHEDULE MAY ONLY BE
ACCOMPLISHED BY A WRITING SIGNED BY THE PARTY AGAINST WHOM THE
AMENDMENT IS SOUGHT TO BE ENFORCED.
15.2. No Waiver. No action taken by Lessor or Lessee shall
be deemed to constitute a waiver of compliance with any
representation, warranty or covenant contained in this Master
Lease or a Schedule. The waiver by Lessor or Lessee of a breach
of any provision of this Master Lease or a Schedule will not
operate or be construed as a waiver of any subsequent breach.
15.3. Binding Nature. Each Schedule is binding upon, and
inures to the benefit of, Lessor and its permitted assigns.
15.4. Survival of Obligations. All Lessee agreements,
obligations, including but not limited to those arising under
Section 6.2, representations and warranties contained in this
Master Lease, any Schedule or any document delivered in connection
with those agreements are for the benefit of Lessor and any
Assignee or Secured Party and shall survive the execution,
delivery, expiration or termination of this Master Lease.
15.5. Notices. Any notice, request or other communication
to either party by the other will be given in writing and deemed
received upon the earlier of actual receipt or three days after
mailing if mailed postage prepaid by first-class to Lessor (to the
attention of "Lease Administrator") or Lessee, at the address set
out in the applicable Schedule, or one day after it is sent by
courier or facsimile transmission if receipt is verified by the
receiving party.
15.6. Applicable Law. THIS MASTER LEASE AND EACH SCHEDULE
WILL BE GOVERNED AND CONSTRUED FOR ALL PURPOSES IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO
CONFLICT -OF- LAW PROVISIONS. THE PARTIES HERETO AGREE THAT THIS
MASTER LEASE ALONG WITH ANY SCHEDULE HERETO CONSTITUTES A "FINANCE
LEASE" AS DEFINED IN SECTION 103 OF ARTICLE 2A OF THE UNIFORM
COMMERCIAL CODE; PROVIDED, HOWEVER, NO RIGHTS OR REMEDIES REFERRED
TO IN ARTICLE 2A OF THE UNIFORM COMMERCIAL CODE WILL BE CONFERRED
ON LESSEE IF THEY CONTRADICT AN EXPRESS PROVISION OF THIS MASTER
LEASE.
15.7. Severability. If any one or more of the provisions of
this Master Lease or any Schedule are for any reason held invalid,
illegal or unenforceable, the remaining provisions of this Master
Lease and any such Schedule will be unimpaired, and any invalid,
illegal or unenforceable provision replaced by a mutually
acceptable valid, legal and enforceable provision that is closest
to the original intention of the parties.
15.8. Counterparts. This Master Lease and any Schedule may
be executed in any number of counterparts, each of which will be
deemed an original, but all such counterparts together will
constitute one and the same instrument. If Lessor grants a
security interest in all or any part of a Schedule, the Equipment
or sums payable thereunder or thereon, only that counterpart
Schedule marked "Secured Party's Original" can transfer Lessor's
rights, and all other counterparts will be marked "Duplicate."
15.9. Additional Documents. Lessee will, upon execution of
this Master Lease and as may be requested thereafter, provide
Lessor with a secretary's certificate of incumbency and authority
and any other documents reasonably requested by Lessor. Upon the
execution of each Schedule with an aggregate Rent in excess of
$2,000,000, Lessee will provide Lessor with an opinion from
Lessee's counsel regarding the representations and warranties in
Section 8. Lessee will furnish, upon request, audited financial
statements for the most recent period.
15.10. Electronic Communications. Each of the parties may
communicate with the other by electronic means under mutually
agreeable terms.
15.11. Scope of Liability. Notwithstanding any other
provision of this Master Lease or any other Operative Documents
executed in connection herewith (expressly excepting the
Guaranty), there shall be no recourse against Lessee or any of its
partners, officers or employees, for any liability to Lessor,
Assignee, Secured Party or any Participant arising in connection
with any breach or default under this Master Lease, except to the
extent the same is enforced against the Equipment and any proceeds
thereof (including, without limitation, insurance proceeds
thereof); and Lessor, Assignee, Secured Party and the Participants
shall look solely to the Equipment and any proceeds thereof
(including, without limitation, insurance proceeds thereof) in
enforcing rights and obligations under and in connection with this
Master Lease and the other Operative Documents (expressly
excepting the Guaranty); provided that the foregoing provisions of
this Section 15.11 shall not (i) constitute a waiver, release or
discharge of any of Lessee's obligations hereunder or of any of
the terms, covenants, conditions or provisions of this Master
Lease or the other Operative Documents, or (ii) limit or restrict
the right of Lessor to name Lessee as a defendant in any action or
suit for a judicial foreclosure or for the exercise of any other
remedy under or with respect to this Master Lease, so long as no
judgment in the nature of a deficiency judgment shall be enforced
against Lessee or any of its partners, officers or employees out
of any property, assets or funds other than the Equipment and any
proceeds thereof (including, without limitation, insurance
proceeds thereof).
15.12. Confidentiality. The Operative Documents are
confidential documents among the parties thereto and, for a period
of seven (7) years from the date hereof, each party thereto (the
"Relevant Party") agrees to use its best efforts (i.e., in
accordance with procedures adopted by such Relevant Party in good
faith to protect confidential information of third parties
delivered to such Relevant Party) to keep the same confidential
and not disclose the Operative Documents to any third party
without the prior written consent of Lessor, IBM and Guarantor;
provided that nothing herein shall be deemed to prevent any such
disclosure by the Relevant Party: (i)to its auditors or attorneys;
(ii)to any other persons requiring access to such information in
connection with the normal business operations of such Relevant
Party (including portfolio review and analysis), and such Relevant
Party shall be responsible for such persons acting in compliance
herewith; (iii)in connection with the enforcement or attempted
enforcement of any of the Operative Documents; (iv)to any person
expressing an interest in acquiring, directly or indirectly, the
Relevant Party's interest in the Operative Documents (and who
agrees to be bound by the provisions of this Section 15.13); or
(v)to (or as required by) any subpoena or civil investigative
demand or any applicable law or governmental or regulatory
authority.
15.13. Waiver of Jury Trial. THE LESSEE AND LESSOR EACH
WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS
MASTER LEASE, THE OTHER OPERATIVE DOCUMENTS, OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER
LITIGATION OF ANY TYPE BROUGHT BY ANY PARTY AGAINST ANOTHER PARTY,
OR ANY SECURED PARTY, PARTICIPANT OR ASSIGNEE, WHETHER WITH
RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE LESSEE
AND THE LESSOR EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION
SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY.
15.14. Appraisals. (a) If Lessee and Lessor are unable to
agree upon the Fair Market Value or Fair Market Rental Value (each
a "Value") of Equipment at any time, and the parties are unable to
resolve such dispute pursuant to reasonable negotiations among
themselves and if either Lessor or Lessee shall have given written
notice to the other requesting determination of such Value by
appraisal (provided, however, no such notice shall be given
earlier than 12 months prior to the end of the Initial Term for
such Item), Lessor and Lessee shall consult for the purpose of
appointing a mutually acceptable independent appraiser. If they
are unable to agree on an appraiser within 30 days of the giving
of such notice, then Lessor or Lessee may apply to the American
Arbitration Association (or its successor, the "Association") for
a list of independent appraisers qualified to determine such
Value. If either Lessor or Lessee does not find an acceptable
appraiser on such list, it may request a second list from the
Association. The Lessor and Lessee shall each select one
appraiser from the list. The Association will be asked to
commission the two appraisers so chosen to determine such Value,
with identical instructions being given to each and without
revealing (and Lessor and Lessee shall not reveal) which party
chose which appraiser. The appraiser or appraisers appointed
pursuant to the foregoing procedure shall be instructed to
determine such Value within 20 days after such appointment and
such determination shall be final and binding upon the parties.
If two appraisers shall be appointed, their determinations shall
be reported only to the Association, which shall be asked to
average them and report only the average (and not the individual
determinations) to the Lessee and Lessor and such average shall
constitute the determination of the appraisers. The fees and
expenses of the appraiser or appraisers shall be shared equally by
Lessor and Lessee unless either (i) the Value so determined shall
be greater than 110% of the Value proposed by Lessor, in which
event the Lessee shall pay such costs, or (ii) the Value so
determined shall be less than 90% of the Value proposed by Lessor,
in which event Lessor shall pay such costs.
15.15. Definitions.
30- Day Period - shall have the meaning set forth in Section
13.1. Affiliate - means any entity that directly or
indirectly, through one or more intermediaries, controls or
is controlled by, or is under common control with, Lessor.
Aggregate Funding Amount - is defined in the Schedule.
Assignee - means Transferee to whom Lessor has sold or
assigned its rights as owner and Lessor of Equipment.
Attachment - means any accessory, equipment or device and the
installation thereof that does not impair the original
function or use of the Equipment and is capable of being
removed without causing material damage to the Equipment and
is not an accession to the Equipment.
Business Day -means any day other than a Saturday, Sunday or
other day on which commercial banks in New York City or San
Francisco are authorized or required by law to close.
Casualty Loss - means an event whereby any Item shall be or
becomes lost, stolen, destroyed, irreparably damaged in the
determination of Lessee, or permanently rendered unfit for
use from any cause whatsoever.
Casualty Value -is defined in the Schedule.
Commencement Certificate - means the certificate provided by
Lessor which must be signed by Lessee within ten days after
the Commencement Date as requested by Lessor.
Commencement Date - is defined in the Schedule.
Default Costs - means reasonable attorney's fees resulting
from an Event of Default or Lessor's enforcement of its
remedies as a result of an Event of Default.
Equipment - shall have the meaning as set forth in Section 1.
Equipment Cost - is defined in the Schedule.
Equipment Vendor - is defined in the Purchase Agreement.
Event of Default - means the events described in Section
13.l.
Fair Market Value - means, with regards to any Item, at any
time, the aggregate amount that would be obtainable in an
arm's-length transaction between an informed and willing
buyer/user purchasing the Equipment in place for its
originally intended use and an informed and willing seller
under no compulsion to sell; provided, however, the Fair
Market Value shall not include the value of any Alterations
other than Alterations financed or purchased by Lessor.
Guarantor - means Cirrus Logic, Inc.
Guaranty - means the guaranty executed by Guarantor as of the
date hereof in the form of Exhibit D hereto.
IBM - means International Business Machines Corporation.
Initial Term - means the period of time beginning on the
first day of the first full Rent Interval following the
Commencement Date for all Items on a Schedule and continuing
for the number of Rent Intervals indicated on such Schedule.
Installation Date - means the day on which Equipment is
installed and qualified for a commercially available
manufacturer's standard maintenance contract or warranty
coverage, if available.
Interim Rent - means the pro rata portion of Rent due for the
period from the Commencement Date to but not including the
first day of the first full Rent Interval included in the
Initial Term.
Item - shall have the meaning set forth in Section 2.
Lease Rate Factor -is defined in the Schedule.
Lessor Liens - shall have the meaning set forth in Section
5.6.
Like Equipment - means a comparable item of Equipment, free
and clear of all liens other than Permitted Liens, that has
at least the value, utility and remaining useful life of and
is in as good operating condition as the substituted or
replaced Item, assuming that the substituted or replaced Item
was maintained in accordance with this Master Lease.
Like Part - means a substituted part that is lien free and of
the same manufacturer and part number as the removed part,
and that when installed on the Equipment will be eligible for
maintenance coverage with the manufacturer of the Equipment.
Master Lease - shall have the meaning set forth in the
recitals.
Notice Period - means the time period described in a Schedule
during which Lessee may give Lessor notice of the termination
of the term of that Schedule.
Operative Documents - shall have meaning set forth in Section
5.5(a).
Overdue Rate - means the lesser of 12% per year or the
maximum rate permitted by the law of the state where the
Equipment is located.
Participant or Participants - shall have the meaning set
forth in Section 5.4(b).
Paying Agent - is defined in the Schedule.
Permitted Liens - means
(i) liens that are created or permitted by this Master
Lease,
(ii) the rights of any sublessee or operator permitted
by the terms of this Master Lease,
(iii) those rights asserted by persons claiming by or
through Lessor,
(iv) liens for fees, taxes, levies, imposts, duties or
other governmental charges of any kind which are not yet
delinquent or are being contested in good faith by
appropriate proceedings that suspend the collection
thereof,
(v) liens of mechanics, materialmen, laborers,
employees or suppliers and similar liens arising by
operation of law, incurred by Lessee in the ordinary
course of business for sums that are not yet delinquent
or are being contested in good faith by negotiations or
by appropriate proceedings that suspend the collection
thereof, and
(vi) liens arising out of any judgments or awards
against Lessee which have been adequately bonded to
protect Lessor's interests or with respect to which a
stay of execution has been obtained pending an appeal or
proceeding for review.
Person - means any individual, partnership, corporation,
trust, unincorporated organization, government or department
or agency thereof and any other entity.
Prepayment Purchase Price - is defined in the Schedule.
Purchase Agreement - a purchase agreement in the form of
Exhibit B hereto.
Reconfiguration - means any change to Equipment that would
upgrade or downgrade the performance capabilities of the
Equipment in any way.
Relevant Party - shall have the meaning set forth in Section
15.13.
Rent - means the rent, including Interim Rent, that Lessee
will pay for each Item, expressed in a Schedule either as a
specific amount or as an amount equal to the Equipment cost
multiplied by the Lease Rate Factor, plus all other amounts
due to Lessor under this Master Lease or a Schedule.
Rent Interval - means a full calendar month or quarter as
indicated on a Schedule.
Replacement Equipment - is defined in the Schedule.
Schedule - shall have the meaning as set forth in Section 1.
Secured Party - means a Transferee to whom Lessor has granted
a security interest in a Schedule and related Equipment for
the purpose of securing a loan.
Subsequent Rent - shall have the meaning set forth in Section
13.1.
Syndication - shall have the meaning set forth in Section
5.4(b).
Term - shall have the meaning set forth in Section 2.
Total Equipment Cost - is defined in the Schedule.
Transferee - shall have the meaning set forth in Section
5.4(a).
IN WITNESS WHEREOF, the parties hereto have executed this Master
Lease on or as of the day and year first above written.
COMDISCO, INC., MICRUS,
as Lessee as Lessor
By: MICRUS HOLDINGS INC.,
as general partner
By: /s/ Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
Title: President Comdisco
Electronics Group
By: /s/ Xxxx X. Xxxxxxx
Xxxx X. Xxxxxxx
Title: Director, Business Office
CIREL INC.
as general partner
By: /s/ Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx
Title: Senior Vice President, Marke
CIRRUS GUARANTY
In consideration for Comdisco, Inc. ("Comdisco") entering
into the Master Lease Agreement dated as of June 28,1996, and all
of its related Equipment Schedules issued pursuant thereto (the
"Lease") with MiCRUS (as "Lessee"), a general partnership
organized and existing under the laws of the State of New York,
the undersigned hereby guarantees the prompt and complete
performance by the Lessee of all the terms and conditions of said
Lease to be performed by it, including but not limited to, the
prompt payment of all rentals and other sums payable thereunder.
The undersigned further agrees to indemnify and hold Comdisco, its
successors and assigns, harmless from and against any and all
liability, loss, damage or expense, including attorneys fees and
court costs, which Comdisco, its successors and assigns, may incur
or sustain by reason of the failure of the Lessee to fully perform
and comply with the terms and conditions of said Lease.
This is a continuing, absolute and unconditional guaranty of
performance and payment and not of collection. The undersigned
specifically waives any right to subrogation, setoff or
counterclaim, and any defense for changes in applicable law or any
other circumstances which might constitute a legal or equitable
defense or discharge of a guarantor or surety. The undersigned
waives any right to require a proceeding first against the Lessee
or to exhaust any security for the performance of the obligations
of the Lessee, and waives notice of acceptance hereof and of
defaults hereunder. The undersigned agrees that the liability of
the undersigned shall not be affected or decreased by any
amendment, termination, extension, renewal, waiver or modification
of said Lease or the rejection or disaffirmance thereof in
bankruptcy or like proceedings and that certain obligations under
the Lease may be accelerated upon any nonpayment thereof by the
Lessee. This Guaranty shall be specifically assignable to and
inure to the benefit of Lessor's Assignee and Secured Party to the
extent such assignment, transfer or grant of security interest is
permitted under the Lease and is irrevocable so long as there are
any obligations of Lessee remaining under the Lease. The
undersigned acknowledges that its obligations under this Guaranty
are in no way or manner limited by the provisions contained in
Section 15.11 of the Lease. This Guaranty shall be governed by
and construed in accordance with the laws of the State of New
York.
Dated: June 28, 1996.
CIRRUS LOGIC, INC.
(Guarantor)
By: /s/ Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx
Title: Senior Vice President, Marketing
