Exhibit 10.23
Pacific [LOGO] Atlantic LEASE AGREEMENT
SYSTEMS LEASING
This Lease Agreement dated January 22, 1999, is made between PACIFIC ATLANTIC
SYSTEMS LEASING with an office at 0000 Xxxxx Xxxxxx Xxxx, Xxxxx X000,
Xxxxxxxxxx, Xxxxxxx 00000 ("Lessor") and Xxxx.xxx, Inc. with an office at 00
Xxxxxxxx, 0xx Xxxxx, Xxx Xxxx, XX 00000 ("Lessee"). The parties agree as
follows:
1. LEASE
Lessor agrees to lease to Lessee, and Lessee agrees to lease from Lessor, the
equipment and/or features ("Equipment") described in Equipment Schedule(s)
referencing this Lease Agreement. Each Equipment Schedule shall constitute a
separate lease. In the event of a conflict between the terms and conditions of
this Lease Agreement and the terms and conditions of any Equipment Schedule or
any amendment, addendum, or rider thereto, the terms and conditions of such
Equipment Schedule, amendment, addendum, or rider shall prevail. Any reference
to "Lease" shall mean this Lease Agreement, the applicable Equipment Schedule,
and any amendments, addenda, or riders thereto.
2. DEFINITIONS
(a) "Installation Date" means the date determined in accordance with the
applicable Equipment Schedule.
(b) "Commencement Date" means, as to all Equipment designated on any Equipment
Schedule, where the Installation Date for the Item of Equipment (an Item
of Equipment shall mean (i) a machine and its features, or (ii) a feature)
last to be installed falls on the first day of the month, that date, or in
any other case, the first day of the month following the month in which
the Item of Equipment last to be installed was installed.
(c) "Daily Rental" means 1/30th of the amount set forth as the Monthly Rental
for each Item of Equipment on the applicable Equipment Schedule.
3. TERM OF LEASE
The term of this Lease as to each Item of Equipment designated on any Equipment
Schedule shall commence on the Installation Date for such Item of Equipment and
shall continue for an initial period ending that number of months from the
Commencement Date as is specified on the applicable Equipment Schedule ("Initial
Term"). The term of this Lease for all such Equipment shall be automatically
extended for successive three-month periods until terminated by either party
giving to the other not less than six months' prior irrevocable written notice
of termination. Any such termination shall be effective only on the later of (a)
the last day of the Initial Term or the last day of any such successive period,
or (b) the date the Equipment has been recertified for maintenance.
4. RENTAL
The monthly rental ("Monthly Rental") for each Item of Equipment payable
hereunder is as set forth in the applicable Equipment Schedule. Rental for each
Item of Equipment shall begin to accrue on the Installation Date of such Item of
Equipment and shall be due and payable by Lessee in advance on the first day of
each month whether or not Lessee has received any notice that such payment is
due. If the Installation Date does not fall on the first day of the month, the
rental for that period of time from the Installation Date until the first day of
the succeeding month shall be an amount equal to the Daily Rental multiplied by
the number of days from (and including) the Installation Date to (but not
including) the first day of the succeeding month and shall be due and payable
on the Installation Date. The Monthly Rental set forth on the applicable
Equipment Schedule is conditioned upon the federal corporate income tax rate in
effect on the Installation Date.
In addition to the Monthly Rental set forth in the Equipment Schedule(s), Lessee
shall pay to Lessor an amount equal to all taxes paid, payable, or required to
be collected by Lessor, however designated, which are levied or based on the
rental, on the Lease, or on the Equipment or its purchase, sale, ownership,
delivery, possession, use, lease, operation, control, or value (including,
without limitation, state and local privilege or excise taxes based on gross
revenue), any penalties or interest in connection therewith not arising from
negligence on the part of Lessor or taxes or amounts in lieu thereof paid or
payable by Lessor in respect of the foregoing, but excluding taxes on Lessor's
net income.
Lessor shall be responsible for the timely filing of all necessary personal
property tax returns or declarations and shall pay all personal property taxes
levied or assessed against the Equipment during the Initial Term of the
applicable Equipment Schedule, and all renewals and extensions thereof, before
the taxes become delinquent. Promptly upon presentation of evidence of liability
for personal property taxes by Lessor to Lessee, Lessee shall reimburse Lessor
for all amounts of personal property taxes due, without proration.
Interest on any past due payments shall accrue at the rate of 1 1/2 percent per
month, or if such rate shall exceed the maximum rate allowed by law, then at
such maximum rate, and shall be payable on demand. Charges for taxes, penalties,
and interest shall be promptly paid by Lessee when invoiced by Lessor.
5. INSTALLATION, USE DISCONTINUANCE, AND MODIFICATION OF EQUIPMENT
(a) Lessor shall have the sole right and option to make all the arrangements
for (i) the transportation of each Item of Equipment to, and the
installation of each Item of Equipment at, the Equipment Location stated
in the applicable Equipment Schedule, and (ii) the discontinuance,
disassembly, packing, and transportation of each Item of Equipment from
the Equipment Location to a location of Lessor's choice within the
continental United States upon the termination of the applicable Equipment
Schedule (by expiration or otherwise) as to such Item of Equipment.
(b) Lessee shall (i) make all arrangements for rigging and drayage, if
applicable, with respect to the Equipment, and (ii) furnish suitable
electric current required to operate the Equipment and a specific area in
the Equipment Location which is suitable for the operation of the
Equipment and complies with applicable directives issued by the
manufacturer thereof and by Lessor. All transportation (including
insurance), rigging, and drayage costs with respect to the Equipment, both
on delivery to the Equipment Location and redelivery to a location of
Lessor's choice within the continental United States, and all
installation, discontinuance, disassembly, and packing costs shall be paid
by Lessee.
(c) Lessee shall have the uninterrupted right to enjoy the quiet possession
and exclusive use of the Equipment while the applicable Equipment Schedule
is in force, without limitation as to time, provided Lessee shall not be
in default hereunder.
(d) Any equipment, cards, disks, tapes, or other items not specified in the
Equipment Schedule which are used on or in connection with the Equipment
must meet the specifications of the manufacturer of the Equipment
("Manufacturer") and shall be acquired by Lessee at its own expense.
(e) Lessee will at all times keep the Equipment in its sole possession and
control. The Equipment shall not be moved from the Equipment Location
without Lessor's prior written consent. Lessee's rights under Sections
5(f) and 6(b) are subject to Lessor's right to match any Modification or
sublease proposed by a third party. Lessee will provide Lessor in writing
with the terms of the third party offer and Lessor shall have ten days to
match the offer. Lessee shall obtain such Modification from, or sublease
the Equipment to, Lessor if Lessor has timely matched the third party
offer.
(f) Lessee may not, without Lessors prior written consent, make alterations
in, or add features, attachments, or conversions to, or upgrade (model or
memory) the Equipment. Any such alteration, feature, attachment,
conversion, or upgrade (collectively, "Modification") not owned by Lessor
and leased to Lessee must (i) be installed by Manufacturer at Lessee's
sole expense, (ii) not interfere with the normal and satisfactory
operation or maintenance of the Equipment or with Lessee's ability to
obtain and maintain the maintenance contract required by Section 5(g)
hereof, (iii) be removable at any time without material damage to the
Equipment, and (iv) be removed by Manufacturer and the Equipment restored,
at Lessee's expense, to its normal, unmodified condition, reasonable wear
and tear only excepted, no later than the termination of the Lease as to
the applicable Item of Equipment. No lien, encumbrance, or interest may be
granted by Lessee in such Modification which would impair Lessor's right,
title, and interest in the applicable Item of Equipment. Any and all parts
removed as a result of any Modification remain the property of Lessor, and
may not be assigned, transferred, or otherwise disposed of by Lessee.
Lessee is responsible for storing and safekeeping the removed parts and
for their reinstallation prior to return of the Equipment upon
1.
cancellation or termination of the Lease. All Modifications not leased by
Lessor to Lessee which are not removed upon cancellation or termination of
the Lease shall become the property of Owner, as defined in Section 9
hereof. Manufacturer or other organization selected by Lessee and approved
in writing by Lessor to maintain the Equipment ("Maintenance
Organization") may incorporate engineering changes or make temporary
alterations to the Equipment upon request of Lessee. Lessee shall promptly
accept and cause the installation of all engineering and safety changes
furnished without charge by Manufacturer, which safety and engineering
changes shall be and become the property of Lessor.
(g) Lessee shall, during the term of this Lease, at its own expense, enter
into and maintain in force a contract with Manufacturer or Maintenance
Organization covering at least prime shift maintenance of each Item of
Equipment. If at any time the Equipment is not being maintained to
Lessor's satisfaction, Lessor shall have the right to require Lessee to
have another company of Lessor's choice maintain the Equipment. Such
maintenance contract shall commence upon expiration of Manufacturer's
warranty period, if any, relating to such Item of Equipment. At Lessor's
request Lessee shall furnish Lessor with an executed copy of such contract
and all renewals and extensions thereof and amendments thereto.
(h) At the termination of this Lease as to the applicable Equipment Schedule
(by expiration or otherwise), Lessee shall, at its own expense, return the
Equipment to Lessor in the same operating order, repair, condition, and
appearance as on the Installation Date, subject only to reasonable wear
and tear and to the provisions of Section 5(f) hereof, complete with all
cables, diagnostics, and logic manuals. Lessee shall be responsible to
have the Equipment including software certified as acceptable for
Manufacturer's standard maintenance contract prior to redelivery to Lessor
without any reconditioning or initial set up or license charges. In the
event Lessee is unable to comply with the foregoing, Lessee shall
indemnify and hold Lessor harmless from any such charges incurred upon a
subsequent installation of the Equipment.
6. OWNERSHIP AND INSPECTION
(a) This is a contract of lease only and Lessee shall have no equity or
property interest in the Equipment other than the rights acquired as a
lessee hereunder and the Equipment shall remain personal property
regardless of the manner in which it may be installed or attached. Lessee
shall not, without Lessor's prior written consent, install or use the
Equipment in such a manner or in such circumstances that any part of the
Equipment is deemed to be an accession to other personal property. Lessee,
shall, at Lessor's request, affix to the Equipment tags, decals, or plates
furnished by Lessor indicating Owner's ownership and Lessee shall not
permit their removal or concealment.
(b) Lessee shall keep the Equipment free and clear of all liens and
encumbrances except liens or encumbrances arising through the actions or
omissions of Lessor. Lessee shall not assign or otherwise encumber this
Lease or any of its rights hereunder or sublease the Equipment or any
parts of the Equipment without Lessor's prior written consent, except that
Lessee, subject to the provisions of Section 5(e) hereof, at its expense
and upon prior written notice to Lessor, may assign this Lease or sublease
the Equipment to its parent or any subsidiary corporation or to a
corporation which shall have acquired all or substantially all of the
property of Lessee by merger, consolidation, or purchase. Upon any
permitted assignment or sublease, Lessee shall execute and deliver to
Lessor, or any assignee of Lessor, at Lessee's expense, such documentation
as Lessor or such assignee may require, including but not limited to
documentation to evidence and put third parties on notice of Lessor's or
its assignee's interest in the Equipment. No permitted assignment or
sublease shall relieve Lessee of any of its obligations hereunder.
(c) Lessor or its agents shall have free access to the Equipment at all
reasonable times for the purpose of inspection and for any other purpose
contemplated in this Lease. Lessee shall make Lessee's log and maintenance
records pertaining to the Equipment available during any such inspection.
(d) Lessee shall immediately notify Lessor of all details concerning any
damage to, or loss of, the Equipment arising out of any event or
occurrence whatsoever, including, but not limited to, the alleged or
apparent improper manufacture, functioning, or operation of the Equipment.
7. WARRANTIES AND DISCLAIMER OF WARRANTIES
(a) Lessee represents that, as of the Installation Date set forth in the
applicable Equipment Schedule, it shall have (i) thoroughly inspected the
Equipment, (ii) determined for itself that all Items of Equipment are of a
size, design, capacity, and manufacture selected by it, and (iii)
satisfied itself that the Equipment is suitable for Lessee's purposes.
Lessee authorizes Lessor to insert in each Equipment Schedule the serial
numbers and other identifying data of the Equipment.
(b) Lessee hereby covenants, represents, and warrants with respect to this
Lease and each Equipment Schedule executed hereunder as of the
Installation Date of any Item of Equipment that (i) the execution,
delivery. and performance thereof by Lessee have been duly authorized by
all necessary corporate action; (ii) the individual executing such was
duly authorized to do so; (iii) the Lease and each Equipment Schedule
constitute legal, valid, and binding agreements of Lessee enforceable in
accordance with their respective terms; and (iv) the Equipment is personal
property and when subjected to use by Lessee will not be or become
fixtures under applicable law.
(c) LESSOR SUPPLIES THE EQUIPMENT AS IS AND NOT BEING THE MANUFACTURER OF THE
EQUIPMENT, THE MANUFACTURER'S AGENT, OR THE SUPPLIER'S AGENT, MAKES NO
WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, AS TO THE
EQUIPMENT'S MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, DESIGN,
CONDITION, QUALITY, CAPACITY, MATERIAL, WORKMANSHIP, CONFORMITY TO THE
PROVISIONS AND SPECIFICATIONS OF ANY PURCHASE ORDER(S) RELATING THERETO,
OR AS TO PATENT INFRINGEMENT OR THE LIKE OR ANY SOFTWARE USED IN THE
EQUIPMENT, it being agreed that all such risks, as between Lessor and
Lessee, are to be borne by Lessee. Lessee agrees to look solely to
Manufacturer or to the supplier of the Equipment for any and all warranty
claims and any and all warranties made by Manufacturer or the supplier to
Lessor are hereby assigned to Lessee, to the extent permitted by
Manufacturer or the supplier, for the term of the applicable Equipment
Schedule. Lessee agrees that Lessor shall not be responsible for the
delivery, installation, maintenance, operation, or service of the
Equipment or for delay or inadequacy of any or all of the foregoing.
Lessor shall not be responsible for any general, incidental, special, or
consequential loss or damage resulting from the installation, operation,
or use of the Equipment or otherwise (including strict liability in tort).
Lessee will defend, indemnify, and hold Lessor harmless on an after-tax
basis against any and all claims, demands, and liabilities arising out of
or in connection with the design, manufacture, possession, or operation of
the Equipment, including strict liability in tort.
8. RISK OF LOSS
(a) Until the Equipment is returned to Lessor as provided in this Lease,
Lessee relieves Lessor of responsibility for all risks of physical damage
to or loss or destruction of the Equipment, whether or not insured
against, howsoever caused. During the term of this Lease as to any
Equipment Schedule, Lessee shall, at its expense, keep in effect all risk
and public liability insurance policies covering the Equipment designated
in each Equipment Schedule. The all risk insurance policy shall be for an
amount not less than the replacement cost of the Equipment. The public
liability insurance policy shall be in such amount as is reasonably
acceptable to Lessor. Lessor, its successors and assigns, shall be named
as additional insureds and/or loss payees on such policies, which shall be
written by one or more insurance companies of recognized responsibility
reasonably acceptable to Lessor. Evidence of such insurance coverage shall
be furnished to Lessor not later than the Installation Date set forth in
the applicable Equipment Schedule and from time to time thereafter as
Lessor may demand. Such policies shall provide that no less than ten days'
written notice shall be given to Lessor prior to cancellation of such
policies for any reason. Lessee hereby irrevocably appoints Lessor as
Lessee's attorney-in-fact coupled with an interest to make claim for,
receive payment of, and execute any and all documents that may be required
to be provided to the insurance carrier in substantiation of any such
claim for loss or damage under said insurance policies, and to endorse
Lessee's name to any and all drafts or checks in payment of the loss
proceeds.
(b) If any Item of Equipment is rendered unusable as a result of any physical
damage to, or loss or destruction of, the Equipment, or title thereto
shall be taken by any governmental authority under power of eminent domain
or otherwise, Lessee shall give to Lessor immediate notice thereof and
this Lease shall continue in full force and effect without any abatement
of rental. Lessee shall determine, within fifteen days after the date of
occurrence of any such damage or destruction, whether such Item of
Equipment can be repaired. In the event Lessee determines that the Item of
Equipment cannot be repaired or such Item of Equipment was lost,
destroyed, or title thereto taken, Lessee shall promptly replace such Item
of Equipment with identical equipment and transfer title to such
replacement equipment to Lessor free and clear of all liens, claims,
equities, and encumbrances of every kind or nature whatsoever, and this
Lease shall continue in full force and effect as though, subject to the
provisions of Section 9 hereof, such damage, loss, destruction, or taking
of title had not occurred, except that the replacement equipment shall
become Equipment for purposes of the Lease in lieu of the replaced
Equipment. In the event Lessee determines that such Item of Equipment can
be repaired,
2.
Lessee shall cause such Item of Equipment to be promptly repaired. All
proceeds of insurance received by Lessor or Lessee under the all risk
insurance policy referred to in the preceding paragraph of this Section
shall be applied toward the cost of such repair or replacement.
9. TAX BENEFITS
This Lease has been entered into on the basis that Lessor (and/or any persons,
firms, corporations, or other entities to which Lessor has transferred or may
transfer title to all or any portion of the Equipment) (collectively, "Owner")
shall be entitled to such deductions, credits, and other benefits as are
provided by the Internal Revenue Code of 1986, as amended or superseded from
time to time and the rules and regulations promulgated thereunder (the Code"),
to an owner of property ("Tax Benefits"). As used herein the term "Owner" shall
mean and include Lessor in the event Lessor has not transferred title to all of
the Equipment, and the term "Lessor" shall mean and include each member of the
affiliated group of corporations with which Lessor files a consolidated return
for federal income tax purposes.
If to any extent as a result of (a) any act or failure to act by Lessee or any
person claiming by, through, or under Lessee, (b) any misrepresentation or
breach of any covenant, warranty, or agreement contained in this Lease or the
applicable Equipment Schedule, (c) any requisition of use or title to the
Equipment by any governmental entity or authority, whether by claim of right,
eminent domain, or otherwise, (d) any physical damage to, or loss or destruction
of, the Equipment, (e) the substitution of all or any part of the Equipment
pursuant to Section 8(b) hereof or otherwise, (f) any assignment or sublease, or
(g) Lessee permitting the Equipment to become "tax-exempt use property" within
the meaning of the Code, Owner, in determining its income tax liability for any
year, shall (i) lose the benefit of, or shall not have, or shall not claim as a
result of a written opinion of independent tax counsel that there is not a
reasonable possibility that Owner's claiming of such Tax Benefits would be
upheld by a court if the matter were litigated, or shall lose the right to
claim, or shall be delayed in claiming, or shall suffer a deferral, diminution,
or disallowance of, or shall be required to recapture, all or any part of the
Tax Benefits, or (ii) be required to include any amount in income other than
rental payments in the times and amounts set forth in the applicable Equipment
Schedule, or (iii) have any portion of the Tax Benefits attributed to foreign
sources (any of (i)-(iii) being hereinafter referred to as a "Loss"), then
Lessee shall pay to Owner, upon demand, a sum which, after deduction therefrom
for all federal, state, and local income taxes payable by Owner with respect to
the receipt of such sum, shall be sufficient to restore Owner's net economic
after-tax yield, cash flow, and rate of return that Owner would have had if such
Loss had not occurred, plus any fines, interest, penalties, or additions to tax
fairly attributable to such Loss. For purposes of this Section a Loss shall
occur upon the earliest of (i) the happening of any event (such as any
disposition, damage, loss, destruction, or change in the use of any Item of
Equipment) which may cause such Loss, (ii) the payment by Owner to the Internal
Revenue Service of the tax increase resulting from such Loss, (iii) the
adjustment by audit or otherwise of the tax return of Owner to reflect such
Loss, or (iv) the filing of any return reflecting such Loss.
10. EVENTS OF DEFAULT AND REMEDIES
The occurrence of any one of the following shall constitute an Event of Default
hereunder:
(a) Lessee fails to pay any installment of rent on or before the fifth day
following the date when the same becomes due and payable;
(b) Lessee attempts to remove, sell, transfer, encumber, sublet, or part with
possession of any Item of Equipment, except as expressly permitted herein;
(c) Lessee fails to observe or perform any of the other obligations required
to be observed or performed by Lessee hereunder and such failure shall
continue uncured for ten days after written notice thereof to Lessee by
Lessor;
(d) Any warranty, representation, or statement made or furnished to Lessor by
or on behalf of Lessee proves to have been false in any material respect
when made or furnished;
(e) Lessee ceases doing business as a going concern, makes an assignment for
the benefit of creditors, admits in writing its inability to pay its debts
as they become due, is generally not paying its debts as they mature,
files a voluntary petition in bankruptcy, files a petition seeking for
itself any reorganization, arrangement, composition, readjustment,
liquidation, dissolution, or similar arrangement under any present or
future statute, law, or regulation or files an answer admitting the
material allegations of a petition filed against it in any such
proceeding, consents to or acquiesces in the appointment of a custodian,
trustee, receiver, or liquidator of it or all or any substantial part of
its assets or properties, or if it or its shareholders shall take any
action looking to its dissolution or liquidation, or if any order for
relief is entered against Lessee under the federal bankruptcy laws;
(f) Within thirty days after the commencement of any proceedings against
Lessee seeking reorganization, arrangement, readjustment, liquidation,
dissolution, or similar relief under any present or future statue, law, or
regulation, such proceedings shall not have been dismissed, or if within
thirty days after the appointment without Lessee's consent or acquiescence
of any custodian, trustee, receiver, or liquidator of it or of all or any
substantial part of its assets and properties, such appointment shall not
be vacated; or
(g) The default by Lessee under any other Equipment Schedule or other
agreement between Lessee and Lessor or any assignee of Lessor.
Upon the occurrence of an Event of Default, Lessor may at its option do any or
all of the following: (a) by notice to Lessee cancel or terminate this Lease as
to any or all Equipment Schedules; (b) whether or not this Lease is canceled or
terminated as to any or all Equipment Schedules, take possession of any or all
of the Equipment listed on any or all Equipment Schedules, wherever situated,
and for such purpose, enter upon any premises without liability for so doing
(except that Lessor shall be liable for damages resulting from the fault or
negligence of Lessor) or Lessor may cause Lessee, and Lessee hereby agrees, to
return the Equipment to lessor as provided in this Lease; (c) recover from
Lessee, as liquidated damages for loss of a bargain and not as a penalty, an
amount equal to the present value of all monies to be paid by Lessee during the
remaining Initial Term or any successive period then in effect, discounted at
the rate of three percent per annum, which payment, together with applicable
sales or use tax, shall become immediately due and payable; or (d) sell, dispose
of, hold, use, or lease any Equipment as Lessor in its sole discretion may
determine (and Lessor shall not be obligated to give preference to the sale,
lease, or other disposition of the Equipment, which may be either wholesale or
retail, over the sale, lease, or other disposition of similar equipment owned,
leased, or managed by Lessor). Any disposition may be at private or public sale,
in bulk or in parcels, with or without notice, and without having the Equipment
present at the place of sale or lease. The subsequent acceptance of payments
hereunder by Lessor shall not be deemed a waiver of any prior existing breach by
Lessee regardless of Lessor's knowledge of such prior existing breach at the
time of acceptance of such payments. In any event, Lessee shall, without further
demand, pay to Lessor an amount equal to all sums due and payable for all
periods up to and including the date on which Lessor has declared this Lease to
be in default.
In the event that Lessee shall have paid to Lessor the liquidated damages and
other amounts referred to in the preceding paragraph of this Section, Lessor
hereby agrees to pay to Lessee, promptly after receipt thereof, either (a) if
Lessor re-leases the Equipment, all rentals or proceeds received from the
reletting of the Equipment during the balance of the Initial Term or any
successive period then in effect (after deduction of all expenses incurred by
Lessor), or (b) if Lessor sells the Equipment, all proceeds received from the
sale (after deduction of the estimated residual value of the Equipment as of the
end of the Initial Term or any successive period then in effect and of all
expenses incurred by Lessor), said amount never to exceed the amount of the
liquidated damages paid by Lessee. Lessee agrees that Lessor shall have no
obligation to sell the Equipment. Lessee shall in any event remain fully liable
for reasonable damages as provided by law and for all costs and expenses
incurred by Lessor on account of such default including, but not limited to, all
collection agency fees and all court costs and reasonable attorneys' fees,
whether or not suit is brought, including in-house attorneys' fees. Lessee
hereby agrees that, in any event, it will be liable for any deficiency after any
sale, lease, or other disposition by Lessor. The rights afforded Lessor
hereunder shall not be deemed to be exclusive, but shall be in addition to any
rights or remedies provided by law.
If, upon the cancellation or termination of the applicable Equipment Schedule as
to any Item of Equipment, Lessee fails or refuses to return and deliver
possession of such Item of Equipment to Lessor on the prescribed date, in
addition to all other rights and remedies available to Lessor, Lessee shall
promptly pay Lessor rent equal to the greater of the then fair market month to
month rental value or 150 percent of the current Monthly Rental for all
Equipment as shown on the applicable Equipment Schedule on a month to month
basis until all Equipment is returned to Lessor, provided Lessee shall be liable
for rent through the last day of any monthly extension. Lessee shall remain
liable for any direct damages Lessor may suffer by reason of being unable to
deliver such Item of Equipment to another party.
11. NET LEASE
Except as otherwise specifically provided in this Lease, it is understood and
agreed that each Equipment Schedule constitutes a net lease, and that, as
between Lessor and Lessee, Lessee shall be responsible for all costs and
expenses of every nature whatsoever (including, but not limited to,
transportation, installation, deinstallation, taxes, maintenance, and insurance)
arising out of or in connection with or related to this Lease or the Equipment.
Lessee hereby agrees that in the event that Lessee fails to pay or perform any
obligation under this Lease, Lessor may, at its option. pay or perform said
obligation and any payment made or expense incurred by Lessor in connection
therewith shall become additional rent which shall be due and payable by
3.
Lessee upon demand. All amounts payable by Lessee under any Equipment Schedule
shall be absolute and unconditional and shall not be subject to any abatement,
reduction, offset, defense, counterclaim, interruption, deferment, or recoupment
for any reason whatsoever, and such amounts shall be and continue to be payable
in all events.
12. ASSIGNMENT
Lessee agrees that Lessor may transfer or assign all or any part of Lessor's
right, title, and interest in, under, or to the Equipment and this Lease or any
Equipment Schedule, and any or all sums due or to become due pursuant to any of
the above, to any third party ("Assignee") for any reason. Lessee agrees that
upon receipt of written notice from Lessor of such assignment, Lessee shall
perform all of its obligations hereunder for the benefit of Assignee and, if so
directed, shall pay all sums due or to become due hereunder directly to Assignee
or to any other party designated by Assignee. Lessee hereby covenants,
represents, and warrants as follows and agrees that Assignee shall be entitled
to rely on and shall be considered a third party beneficiary of the following
covenants, representations, and warranties: (a) Lessee's obligations to Assignee
hereunder are absolute and unconditional and are not subject to any abatement,
reduction, offset, defense, counterclaim, interruption, deferment, or recoupment
available to Lessee for any reason whatsoever including, but not limited to,
operation of law, defect in the Equipment, failure of Lessor to perform any of
its obligations hereunder, any insolvency or bankruptcy of Lessor, or for any
other cause or reason whatsoever, whether similar or dissimilar to the
foregoing; (b) Lessee shall not look to Assignee to perform any of Lessor's
obligations hereunder unless Assignee specifically assumes such obligations; (c)
Lessee will not amend or modify this Lease without the prior written consent of
Assignee; and (d) Lessee will send a copy to Assignee of each notice which
Lessee sends to Lessor.
Upon receipt of notice of such transfer or assignment, Lessee agrees to promptly
execute and deliver to Lessor such documentation as Assignee may require to
secure and/or complete such transfer or assignment, including, but not limited
to, the following: (a) an acknowledgment of, or consent to, the assignment which
may require Lessee to make certain representations or reaffirmations as to some
of the basic terms and covenants contained in this Lease; (b) a Certificate of
Incumbency; (c) an opinion of counsel for Lessee with respect to the
representations and warranties set forth in Section 7(b) above; and (d) a
Certificate of Delivery and Acceptance. Such assignment shall relieve Lessor of
its obligations hereunder upon the assumption thereof in writing by Assignee
unless Lessor, Lessee, and Assignee agree otherwise, and the rights of Lessee
hereunder shall not be impaired.
13. MISCELLANEOUS
(a) Neither this Lease, any Equipment Schedule, nor any consent or approval
provided for herein shall be binding upon Lessor unless signed on its
behalf by a duly authorized officer at its home office. This Lease shall
be deemed to have been made in the State of California and shall be
governed in all respects by the laws, but not the rules relating to choice
of laws, of such State. No rights or remedies referred to in Article 2A of
the Uniform Commercial Code will be conferred on Lessee unless expressly
granted in this Lease or an Equipment Schedule.
(b) This Lease and each Equipment Schedule constitute the entire agreement and
understanding of the parties with respect to the lease of the Equipment
listed on each Equipment Schedule (notwithstanding any contrary provision
contained in any instrument submitted by Lessee), supersede any or all
prior agreements and understandings related to the subject matter hereof,
and may not be changed orally but only by an agreement in writing signed
by both parties. Lessee's purchase order, if any, shall be used for
accounting purposes only and the provisions thereof shall be inapplicable
notwithstanding Lessor's acknowledgment thereof.
-------
Lessee
Initials
(c) Any notice, request, or other communication to either party by the other
shall be given in writing and deemed received upon the earlier of actual
receipt or three days after mailing if mailed postage prepaid to the
address of the other party as set forth herein or to such other address as
such party shall have designated by proper notice or one day after it is
sent by courier or facsimile transmission if receipt is verified by the
receiving party.
Notices to Lessor shall be sent to the attention of the Manager, Contract
Documents.
(d) Subject to Sections 6(b) and 12 hereof, this Lease shall be binding upon
and inure to the benefit of Lessor and Lessee and their respective
successors and assigns (including any subsequent assignee of an Assignee).
(e) No representation or statement made by any representative of either party
not contained herein shall be binding upon such party. No provision of
this Lease or any Equipment Schedule which may be deemed unenforceable
shall in any way invalidate any other provision or provisions hereof, all
of which shall remain in full force and effect. Neither any failure nor
any delay on the part of either party in exercising any of its rights
hereunder shall operate as a waiver thereof, nor shall a single or partial
exercise thereof preclude any other or further exercise or the exercise of
any other right hereunder.
(f) No waiver of any of the terms and conditions hereof shall be effective
unless in writing and signed by the party against whom such waiver is
sought to be enforced. Any waiver of the terms hereof shall be effective
only in the specific instance and for the specific purpose given.
(g) Lessor is hereby authorized by Lessee to cause this Lease or other
instruments, including Uniform Commercial Code financing statements, to be
filed or recorded for the purposes of evidencing and putting third parties
on notice of Lessor's or Assignee's interest in the Equipment and Lessee
agrees that Lessor or Assignee may execute such instruments for and on
behalf of Lessee. In the event for any reason whatsoever Lessee is `
determined to have an interest in the Equipment other than a purely
leasehold interest for the term of this Lease, Lessee agrees to and does
hereby expressly subordinate such interest to the interests of Owner in
the Equipment and to the security interest in the Equipment of any
Assignee whether such security interest is presently in existence or
hereafter acquired. Lessee shall execute all documents requested by Owner
or any Assignee to evidence such subordination.
(h) During the term of this Lease, Lessee agrees to deliver to Lessor a copy
of Lessee's annual audited financial statements within a reasonable time
after the statements are available.
(i) Lessee's covenants, representations, and warranties shall survive the
expiration, termination, or cancellation of this Lease.
(j) If Equipment delivered pursuant to any Equipment Schedule contains any
features not specified therein, Lessor reserves the right to remove or
deactivate any such features at any reasonable time without liability for
any down time of any Item of Equipment occasioned thereby.
(k) Lessee and Lessor acknowledge that an Equipment Schedule may include
certain software ("Software") in which Lessor and Lessee have no ownership
or other proprietary rights. Where required by the Software owner or
manufacturer, Lessee shall enter into a license or other agreement for the
use of the Software. Any Software agreement shall be separate and distinct
from this Lease and any Equipment Schedule, and Lessor and Assignee shall
not have any rights or obligations thereunder.
(l) This Lease and any Equipment Schedule may be executed in any number of
counterparts, each of which shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument. To
the extent that this Lease constitutes chattel paper, no security interest
in this Lease may be created through the transfer of possession of any
counterpart other than an executed counterpart or a photostatic copy of an
executed counterpart of this Lease together with an executed Equipment
Schedule marked "Original."
(m) It is the intention of the parties hereto to comply with applicable usury
laws. Accordingly, it is agreed that in no event shall this Lease require
the payment or permit the collection of interest in excess of the maximum
amount permitted by law.
LESSOR: PACIFIC ATLANTIC SYSTEMS LEASING LESSEE: XXXX.XXX, INC.
By: By: /s/ Xxx Xxxxxxx 2/3/99
------------------------------------ -----------------------------
Name: Name: Xxx Xxxxxxx
---------------------------------- ---------------------------
Title: Title: SVP
--------------------------------- --------------------------
Rev.4 8/98
4.
CERTIFICATE OF INCUMBENCY
Re: Lease Agreement dated January 22, 1999, and all Equipment
Schedule(s) thereto between Pacific Atlantic Systems Leasing and
Xxxx.xxx, Inc.
I, Xxxxxxx XxXxxxxxx hereby certify that I am the duly elected, qualified and
presently serving CFO of Xxxx.xxx, Inc. ("Company"). I further certify that each
of the persons listed below was duly elected or appointed to and on the date
hereof holds the office or position set forth opposite his/her name and that the
signature appearing opposite the name of such person is the genuine signature of
such person. Each such person has the power and authority to execute any and all
documents on behalf of the Company relating to the above referenced transaction
and to bind the Company to perform in accordance with the terms thereof.
Name Office/Position Signature
Xxx Xxxxxxx SVP /s/ Xxx Xxxxxxx
------------------- ------------------------ -------------------
------------------- ------------------------ -------------------
------------------- ------------------------ -------------------
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of the
Company this 3 day of Feb, 1999.
_________________________
(Corporate Seal)
Xxxx.xxx[LOGO]
The Internet Messaging Company
February 2, 0000
Xxxxxxx Xxxxxxxx Systems Leasing
0000 Xxxxx Xxxxxx Xx, Xxx X-x00
Xxxxxxxxxx, XX 00000
RE: Equipment schedule No. 1 to Lease Agreement dated January 22,1999 between
Xxxx.xxx, Inc. and Pacific Atlantic Systems Leasing (the "Lease")
To Whom It May Concern:
Please accept this letter as our 180-day notice of intent to terminate the Lease
effective June 30, 2002. We would like to know what the fair market value is
several months before the lease termination date so we can make our decision to
return it to you or purchase it. Thank you.
Sincerely,
/s/ Xxx Xxxxxxx
Xxx Xxxxxxx
Senior Vice President
Xxxx.Xxx, Inc.
00 xxxxxxxx x xxxxx 000, x xxx xxxx x xx o p212.425.3477 o f212.425.3487
[LOGO] GlobeComm(TM) Purchase Order
11 Broadway DATE X.X. XX.
Xxxxx 000
Xxx Xxxx, XX 00000 12/9/98 1327
---------------------------------- ----------------------------------
Vendor SHIP TO
---------------------------------- ----------------------------------
MTI iName, Inc.
Xxx Xxx 00 Xxxxxxxx
0000 Xxxxxxx Xxxxxx/Xxx 00 0xx xxxxx
Xxxxxx, XX 00000 Xxx Xxxx, XX 00000
fax 000-000-0000
---------------------------------- ----------------------------------
----------------------------------------------------------------------------------------------
REQUISITION No. TERMS Expected SHIP VIA APPROVED BY:
----------------------------------------------------------------------------------------------
see note below 12/2/98 /s/ Xxx Xxxxxxx
---------------------------------------------------------------------------------------------------------------------
ITEM DESCRIPTION QTY RATE AMOUNT
---------------------------------------------------------------------------------------------------------------------
GL3600IOP per 12/7 letter -frame plus 2 - I0 processors 4 22,000.00 88,000.00
SW2500-CHA StorageWare 2500 shelf with chassis (holds 12 drives) 19 5,680.00 107,920.00
SW25D3-182 18.2GB 10,000 RPM in MTI hot swap RAID canister 120 2,610.00 313,200.00
SW25D3-364 10,000 RPM 36 GB HD 108 4,176.00 451,008.00
support 3 years of 24x7 hardware/software support/warranty 1 0.00 0.00
which includes 7x24 monitoring by MTI.
Discount 1 -193,128.00 -193,128.00
Memo * Terms are 3 year lease beginning 7/1/99 - rate to be 0.00 0.00
approved by iName.
* System supports remote management and configuration.
* System supports Remote Mirroring and MTI will work
with iName to see that is implemented when needed by
iName.
* iName may change the delivery schedule with 30 days
notice to MTI.
---------------------------------------------------------------------------------------------------------------------
Total $767,000.00
---------------------------------------------------------------------------------------------------------------------
EL CAMINO [LOGO] RESOURCES LTD.
ASSIGNMENT OF PURCHASE ORDER
PURCHASE AGREEMENT OR PURCHASE RIGHTS
Introduction
XXXX.XXX, INC.. ("Customer") has entered into Purchase Order No. 1327 dated
12/9/98 attached hereto and incorporated herein by reference (the "Purchase
Agreement") with MTI Technology (the "Supplier") for the purchase of certain
equipment described therein (the "Equipment"). In order to facilitate the
Customer's leasing of the Equipment, the Customer wishes to assign its rights to
purchase the Equipment to Pacific Atlantic Systems Leasing, a division of El
Camino Resources, Ltd. ("Assignee"). In the event of any conflict between the
aforesaid documents and this assignment (the "Assignment"), the language of this
Assignment shall control.
Agreement
In consideration of the mutual undertakings herein contained and for other good
and valuable consideration, the receipt of which is hereby acknowledged,
Supplier, Customer and Assignee agree as follows:
1. Customer hereby assigns to Assignee all of Customer's right to purchase
the Equipment, and, subject to the terms and conditions herein contained
and of execution of the lease for the Equipment between the Customer and
Assignee assumes and agrees to perform Customer's obligations to pay the
purchase price for the Equipment including freight, maintenance, set-up,
installation and software. The parties agree that progress payments made
or to be made by the Customer have been made or will be made on behalf of
the Assignee and shall be reimbursed by the Assignee to the Customer, and
the Assignee will only be liable to the Supplier for the actual net amount
still owing.
2. Customer shall remain liable to Supplier for the full performance of
Customer's obligations under the Purchase Agreement (except to the event
provided in Paragraph 1 above), and Customer agrees to hold Assignee
harmless from all loss, cost, damage and expense incurred as a result of
Customer's failure to perform the obligations it retains hereunder with
respect to the Purchase Agreement, or failure to obtain from Supplier a
refund of any funds due from Supplier.
3. Upon delivery of each item of Equipment, title to such item of Equipment
shall be conveyed to Assignee free and clear of all claims, liens and
encumbrances arising under or through the Supplier or Customer. Until
payment in full of the purchase price, the Supplier reserves a purchase
money security interest in the Equipment.
4. All Equipment shall, on the date of acquisition by the Assignee, be newly
manufactured depreciable personal property not used by any party prior to
Assignee's acquisition thereof, except for use by Customer for a period
not exceeding ninety (90) days prior to Assignee's acquisition. Title to
each item of the Equipment shall pass directly from Supplier to Assignee
on the later of the date of delivery of such item to Customer or the date
of this Assignment, and Supplier will invoice Assignee directly for such
purchase. In the event the Equipment is manufactured by Digital Equipment
Corporation, Customer and Supplier agreed that Supplier shall provide
Assignee with a fully executed copy of all media documentation, Software
license agreements, PAK agreements, and upon Assignee's request, any other
documents relating to the Equipment.
5. Any warranties (express or implied) made by the Supplier shall vest in
Assignee, and shall be enforceable by Assignee or by Customer on behalf of
Assignee.
6. The Assignee is purchasing the Equipment for lease to the Customer and,
where permitted by applicable law, such purchase shall be considered a
purchase for resale.
7. Assignee's purchase payment obligations to Supplier shall be "net 10
days" from the later of: (i) the date of installation of the last unit of
Equipment as evidenced by Assignee's receipt of Assignee's executed
installation acceptance certificate ("Acceptance Certificate") executed
by Customer, as lessee pursuant to a lease with Asignee, as lessor; (ii)
receipt of Supplier's invoice listing all serial numbers and any related
purchase documents; or (iii) on more favorable terms if made available by
Supplier. The Supplier shall, upon request, provide to Assignee any
documents reasonably necessary to confirm that upon its payment of the
purchase price the Equipment will be free and clear of all claims, liens
and encumbrances.
8. In the event that Customer fails to accept the Equipment under the lease
promptly upon its delivery, then Assignee shall have the right upon notice
to Customer and Supplier to terminate this Assignment with respect to such
Equipment, and the Customer shall thereafter directly assume its
obligations to the Supplier under the Purchase Agreement.
9. The parties acknowledge that the Equipment listed herein may include
software ("Software") in which Assignee shall have no ownership or other
proprietary rights and no such title shall be transferred to Assignee
hereunder. Customer agrees to enter into a license or other agreement for
the use of the Software, and Customer agrees that, as between Assignee
and Customer, Assignee shall be third party beneficiary under such
license or other agreement. Any Software agreement shall be separate and
distinct from this Assignment, and Assignee shall not have any right or
obligations thereunder or with respect to such Software.
19. The Purchase Agreement and this Assignment represent the entire
understanding of the parties with respect to the purchase of the
Equipment. No modifications or additions to any of those documents which
affect the purchase shall be made unless consented to in writing by
Customer, Supplier and Assignee. This Assignment is valid only upon
signature of all parties hereto.
IN WITNESS WHEREOF, the parties have duly executed this Assignment as of
_______________ , l9__.
XXXX.XXX, INC. PACIFIC ATLANTIC SYSTEMS LEASING,
(Customer) a division of El Camino Resources, Ltd.
(Assignee)
By: /s/ Xxx Xxxxxxx By:
---------------------------- ------------------------------
Title: SVP Title:
------------------------- ---------------------------
Acknowledged and agreed to:
MTI TECHNOLOGY
(Supplier)
By:
----------------------------
Title:
-------------------------
ECR NO. 4298-001
ADDENDUM A
TO EQUIPMENT SCHEDULE NO. 1 ("SCHEDULE")
TO LEASE AGREEMENT DATED JANUARY 22, 0000
XXXXXXX
XXXXXXX XXXXXXXX SYSTEMS LEASING ("LESSOR") AND
XXXX.XXX, INC. ("LESSEE")
Notwithstanding the terms and conditions contained in the Lease Agreement and to
the limited extent hereof, Lessor and Lessee hereby agree that this Addendum A
modifies the terms and conditions of the above referenced Schedule. In the event
of conflict or inconsistency between the terms and conditions hereof and those
of the Lease Agreement, the former shall govern. Unless otherwise herein
defined, the terms used herein shall have the same meanings as ascribed to them
in the Lease Agreement.
Section 3. Term of Lease. For the purpose of this Schedule No. 1 only, shall be
amended as follows: Delete the last two (2) sentences of this section in their
entirety.
Section 13. Miscellaneous. For the purpose of this Schedule No. 1 only, shall be
amended as follows: The following shall be added to this section in its
entirety:
"(n) At the conclusion of the thirty-sixth (36th) Initial Term rental payment
due under the Schedule, or upon any expiration of any renewal or extension
thereof as provided for in option (2) herein or otherwise, Lessee shall,
provided at least one hundred eighty (180) days prior written notice is received
by Lessor via certified mail, do one of the following: 1) purchase all (but not
less than all) of the Items of Equipment for the fair market value, 2) continue
the Schedule for twelve (12) additional months at the rate delineated on the
Schedule, or 3) return the Items of Equipment to Lessor at Lessee's expense to a
destination within the continental United States, and terminate the Schedule,
provided all accrued but unpaid late charges, interest, taxes, penalties, and
any and all other sums due and owing under the Schedule have been paid and
provided the provisions of Section 5 (f) have been specifically adhered to. With
respect to options (1) and (3) each party shall have absolute and sole
discretion regarding their agreement or lack of agreement to either such
arrangement. If Lessor and Lessee have not agreed to either option (1) or (3)
prior to the conclusion of the thirty-sixth (36th) Initial Term rental payment
or if the notice requirement provided for herein is not received by Lessor, via
certified mail, at least one hundred eighty (180) days prior to the conclusion
of the thirty-sixth (36th) Initial Term rental payment, then option (2) shall
prevail at the conclusion of the Initial Term or any renewal or extension
thereof."
In all other respects, the terms and conditions of the Lease Agreement, as
originally set forth, shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto, by there authorized signatories, have
executed this Addendum A at the date set forth below their respective
signatures.
Lessor: Lessee:
PACIFIC ATLANTIC SYSTEMS LEASING XXXX.XXX, INC.
By: By: /s/ Xxx Xxxxxxx
---------------------------- ----------------------------
Name: Name: Xxx Xxxxxxx
-------------------------- --------------------------
Title: Title: SVP
------------------------- -------------------------
Date: Date: 2/3/99
-------------------------- --------------------------
ECR No. 4298-001
EQUIPMENT SCHEDULE NO. 1
TO LEASE AGREEMENT DATED JANUARY 22, 1999 ("LEASE") BETWEEN
PACIFIC ATLANTIC SYSTEMS LEASING ("LESSOR")
AND XXXX.XXX, INC. ("LESSEE")
0.Xxxxxxxxx:
ITEM QTY MFG DESCRIPTION
---- --- --- -----------
01 04 MTI FRAME PLUS 2-10 PROCESSORS
02 19 STORAGE XXXX 2500 SHELF WITH CHASSIS (HOLDS 12 DRIVES)
03 120 18.2GB 10,000 RPM in MTI HOT SWAP RAID CANISTERS
04 108 10,000 RPM 36GB HD
05 01 3 YEARS OF 24X7 HARDWARE/SOFTWARE SUPPORT/WARRANTY, AND 7X24
MONITORING BY MTI
TOTAL EQUIPMENT COST $767,000.00
Note 1: To the extent there is software bundled with the Equipment,
Lessor is not leasing software to Lessee nor providing Lessee
with a license to use any software. Lessor has no ownership or
proprietary right to any software associated with the
Equipment, but is merely financing Lessee's acquisition of the
right to use the software. Any license must be between Lessee
and the respective software vendor.
Note 2. Lessee agrees that the above described configuration may be
amended by Lessor to reflect the configuration appearing on
Manufacturer's or supplier's invoice for the Equipment and that
Lessor may insert the serial numbers and other identifying data
of the Equipment.
2. Equipment Location: Xxxx.xxx, Inc.
00 Xxxxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
3. Projected Installation Date: On or by June 15, 1999.
4. Installation Date: _________, 199__. If this space is not completed, the
Installation Date of each Item of Equipment shall be:
(a) in the case of an Item of Equipment which is the subject of a sale and
leaseback between Lessor and Lessee, the date upon which Lessor purchases such
Item of Equipment from Lesser; or
(b) in the case of and item of Equipment which is currently installed at the
Equipment Location, but where Lessor is obtaining title directly from
Manufacturer or supplier, the date upon which Lessor purchases such Item of
Equipment from Manufacturer or supplier; or
(c) in the case of an Item of Equipment requiring installation, the earlier to
occur of the following: (i) the date determined by Manufacturer or Maintenance
Organization to be the date of installation; or (ii) unless Lessor and Lessee
agree otherwise, the seventh day following delivery of such Item of Equipment to
the Equipment Location.
5. Commencement Date: July 1, 1999.
6. Initial Term: 36 months, beginning July 1, 1999, and the rent free period
from the Installation Date to the Commencement Date.
7. Monthly Rental: $26,284.00. A one month deposit in the amount of $26,284.00
is required and shall be applied to the last billing period of the Initial Term.
8. Additional Consideration: In addition to the rent payable under this
Equipment Schedule, Lessee shall grant to Lessor warrants to purchase a number
of shares of common stock determined based on the valuation of Xxxx.xxx, Inc. in
the current venture round plus twenty percent (20%) on mutually agreeable terms
set forth in a separate agreement executed contemporaneously herewith.
9. Lease Agreement. The lease and this Equipment Schedule may not be changed
orally but only by an agreement in writing signed by both parties. All of the
other terms, covenants, and conditions set forth in the Lease are set forth
herein by reference as if the same had been set forth in full. By their
execution and delivery of this Equipment Schedule, the parties hereby reaffirm
all of the terms and conditions of the Lease (including, without limitation, the
representations and warranties of Lessee set forth in Section 7 thereof) except
as modified herein.
LESSOR: PACIFIC ATLANTIC SYSTEMS LEASING Lessee: XXXX.XXX, INC.
By: By: /s/ Xxx Xxxxxxx
--------------------------------- ----------------------------
Name: Name: XXX XXXXXXX
------------------------------- --------------------------
Title: Title: SVP
------------------------------ -------------------------
Date: , 199 Date: 2/3/, 1999
----------------- --- -------------------
