EXHIBIT 10.40
MASTER LEASE AGREEMENT
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THIS MASTER LEASE AGREEMENT (this "Lease") is between XXXXXX FINANCIAL LEASING,
INC., a Delaware corporation ("Lessor"), with an office address at 000 Xxxx
Xxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000, and ACT Manufacturing, Inc. ("Lessee"),
a Massachusetts corporation, with its address and principal place of business at
0 Xxxxx Xxxx, Xxxxxx, XX 00000, which parties hereby agree as follows:
1. LEASING OF EQUIPMENT: Subject to the terms and conditions set forth
below, Lessor agrees to lease to Lessee and Lessee agrees to hire from Lessor
the equipment (the "Equipment;" a unit or part thereof being sometimes
hereinafter referred to as an "Item") described in any Master Lease Schedule
hereto, now or hereafter executed by the parties (each, a "Schedule"). Nothing
contained herein shall obligate either party to execute any Schedule subsequent
to the date hereof. The Equipment shall be delivered and installed at the
location specified or referred to in the applicable Schedule. The Equipment
shall be deemed to have been accepted by Lessee for all purposes under this
Lease as of the Acceptance Date (defined below) shown on the executed Delivery
and Acceptance Certificate (an "Acceptance Certificate") with respect to such
Equipment. Any modifications to this Lease contained in any Schedule shall be
controlling, but only with respect to the Equipment described in such Schedule.
Until and unless a Schedule is sold, assigned or otherwise transferred by
Lessor, or Lessor and Lessee expressly agree otherwise in writing, this Lease,
all Riders hereto or to any Schedule, now or hereafter executed by the parties
(each, a "Rider"), and all Schedules shall constitute one lease, and references
to this Lease shall include all such Riders and Schedules. In the event that a
Schedule is sold, assigned or otherwise transferred by Lessor, such Schedule and
all Riders thereto shall be deemed to be a separate lease, which shall include
and incorporate each term and condition in this Lease and all Riders hereto. As
used herein, "Equipment Cost" shall have the same meaning and value as set forth
in each applicable Schedule.
2. TERM, RENT AND PAYMENT: (a) The term of this Lease for each respective
Item (the "Term") shall commence on the date set forth in the Acceptance
Certificate therefor (the "Acceptance Date") and, unless sooner terminated
pursuant to Section 9 or 17, shall continue for the period specified as the
"Term" in the applicable Schedule. If any Term shall be extended or this Lease
is renewed pursuant to an extension or renewal option, the work "Term" shall
include all such extensions and renewals, and all provisions of this Lease shall
apply during all extension and renewal periods, except as may be specifically
provided otherwise in any Rider, Schedule or other written agreement applicable
thereto.
(b) Lessee agrees to pay to Lessor's order basic rent for each Item
in the amount therefor set forth in the applicable Schedule ("Basic Rent"), plus
a per diem, pro-rata portion of the periodic Basic Rent for any interim period
("Interim Rent") from the Acceptance Date through the day immediately preceding
the "Commencement Date" set forth in the applicable Schedule. (Unless otherwise
stated in the applicable Schedule, the "Commencement Date" shall be the first
day on the first calendar month immediately following the Acceptance Date.)
Interim Rent for Items covered by a particular Schedule shall be due on the
Commencement Date. The first Basic Rent payment for Items covered by a
particular Schedule
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shall be due on the day of the period specified in such Schedule. Subsequent
Basic Rent payments for the Items described in the applicable Schedule shall be
due on the same day of each applicable period thereafter. Any payment due on a
day which is not a business day shall be made on the following business day.
(c) Basic Rent, Interim Rent and all other amounts payable to Lessor
under any provision of this Lease (collectively, "Rent") shall, unless Lessor
otherwise directs, be paid to Lessor at its office address set forth above and
shall be deemed received when good funds are received by Lessor. Lessee agrees
to pay Lessor on demand an administrative and late charge on all Rent not paid
within 10 days of the date due hereunder equal to the lesser of: (i) 5% of the
amount not timely paid or (ii) the maximum rate permitted by applicable law.
3. DISCLAIMER: LESSOR IS NEITHER THE MANUFACTURER NOR SELLER OF THE
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EQUIPMENT, AND MAKES NO REPRESENTATION OR WARRANTY OF ANY KIND, EXPRESS OR
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IMPLIED, WITH RESPECT TO THE EQUIPMENT, ALL OF WHICH ARE HEREBY EXPRESSLY
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DISCLAIMED. LESSEE UNDERSTANDS AND AGREES THAT NO WARRANTY IS TO BE IMPLIED
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WITH RESPECT TO THE CONDITION OF THE EQUIPMENT, ITS MERCHANTABILITY, THE FITNESS
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OF THE EQUIPMENT FOR A PARTICULAR PURPOSE, THE ACCURACY OF THE DESCRIPTION OF
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THE EQUIPMENT, OR WITH RESPECT TO INFRINGEMENT, INTERFERENCE OR THE LIKE, LESSOR
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SHALL NOT BE LIABLE IF, FOR WHATEVER REASON, THE EQUIPMENT IS DELAYED OR NOT
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DELIVERED TO LESSEE.
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4. QUIET ENJOYMENT: So long as no Event of Default (as defined below)
exists, Lessor will not interfere with Lessee's quiet enjoyment and use of the
Equipment during the Term therefor.
5. NET LEASE; NO SET-OFF: This Lease is a net lease and Lessee shall not
be entitled to any abatement or reduction of, or set-off against, any Rent by
reason of any (i) past, present or future claim against Lessor or any successor
or assignee of Lessor or any supplier of any Item or any other person, (ii)
defect in or damage to, or loss, prohibition, restriction on use, damage or
destruction of, any Item (except as expressly provided otherwise in Section 9)
from whatever cause, or (iii) other cause whatsoever, whether similar or
dissimilar to the foregoing, it being the intention of the parties that all Rent
shall continue to be payable in all events in the manner and at the times
specified in this Lease and that Lessee's obligation to pay Rent shall be
absolute and unconditional unless the obligation to pay the same shall be
terminated pursuant to the express provisions of this Lease.
6. USE, LOCATION AND POSSESSION; LIENS: (a) Lessee shall use each Item
in a careful and proper manner and for the use contemplated by the manufacturer
thereof and in compliance with all applicable laws, rules, and regulations and
the provisions of the insurance required to be maintained hereunder and the
terms of any manufacturer's warranty. Each Item shall at all times be kept at
the location specified in the applicable Schedule unless Lessor has given prior
written consent to a change in location. Lessee shall at all times keep each
Item in its possession and control.
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(b) Lessee shall keep each Item free and clear of all claims, liens,
pledges, rights of others or other encumbrances, and shall not create, incur,
assume or suffer to exist any thereof in, on , of or to any Item (collectively
"Liens"), other than those arising by, through or under Lessor ("Lessor Liens").
(c) Lessor shall have the right as owner, but not the obligation, at
all reasonable times to enter upon the premises where the Equipment is located
or used to inspect the Equipment. Such inspections shall be for, among other
things, determining whether Lessee is properly complying with its obligations
hereunder. Neither Lessee nor any third party may rely upon any such inspections
by Lessor and Lessor shall not be obligated to inform Lessee or any third party
of the result of any such inspection. Any inspection that is not followed by a
notice of an Event of Default shall not constitute a waiver of any Event of
Default then existing and Lessor's failure to inspect the Equipment or to
discover any information regarding the Equipment shall not constitute a waiver
of any of Lessor's rights hereunder.
7. MAINTENANCE AND SERVICE; IMPROVEMENTS: (a) Lessee shall, at its
expense, at all times maintain, service and repair each Item as would a prudent
owner of such Item, and in any event so as to keep each Item in good operating
condition, ordinary wear and tear excepted, in compliance with all applicable
laws, rules, regulations, and manufacturer's recommended basic warranty,
extended warranty and/or maintenance program requirements, and as otherwise may
be required to enforce warranty claims against each vendor and manufacturer of
each Item. To the extent that Lessee's maintenance, repair or servicing
standards exceed the foregoing, then Lessee shall keep each Item in at least as
good condition as other comparable equipment owned or used by Lessee. In
addition, Lessee shall, at its expense, comply with all maintenance requirements
set forth by Lessor in any applicable Rider now or hereafter executed by the
parties. Lessee shall, if at any time requested to do so by Lessor, affix in a
prominent position on each Item plates, tags or other identifying labels showing
ownership thereof by Lessor.
(b) Any alterations or modifications with respect to any Item that
may be required at any time during the Term therefor to comply with any
applicable law or any governmental or other rule or regulation shall be made by
Lessee, at its expense, and shall thereupon become the property of Lessor.
(c) Unless required pursuant to Subsection (b), Lessee shall not,
without Lessor's prior consent, affix or install any accessory, equipment or
device on, or modify, any Item if such addition or modification will impair the
original function or use thereof or cannot be readily removed without causing
damage to such Item. Further, Lessee shall not, without Lessor's prior written
consent, affix or install any Item to or in any other personal property, or to
or in any real property so that such Item shall constitute a fixture. Upon
Lessor's request, Lessee shall obtain and deliver to Lessor disclaimers or
waivers from all owners and/or mortgagees of real estate in which any Item is
located in form and content acceptable to Lessor.
8. NO AGENCY: Lessee acknowledges that it alone has selected the
Equipment and the supplier(s) thereof; that it has reviewed and approved each
written supply contract and purchase order covering the Equipment, or has been
advised by Lessor in writing of the identity of
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each supplier; that is may have rights under each such supply contract and
purchase order; and that it may contact each supplier for a description of any
such rights and/or supplier's warranty. Nothing herein contained shall be
construed to deprive Lessee of whatever rights Lessee may have against parties
other than Lessor or Lessor's assignee, such as the supplier or manufacturer of
any Item, and Lessee agrees to look solely to such third parties with respect to
any and all claims concerning the Equipment. So long as no Event of Default
exists, Lessee may pursue such claims for the mutual benefit of Lessor and
Lessee in accordance with their interests in the Equipment. Without in any way
limiting any other provision in this Lease, Lessor shall not in any event be
liable for any consequential damages hereunder or with respect to any Item. No
supplier is the agent of Lessor and no employee of any supplier is authorized to
waive, supplement or otherwise alter any provision of this Lease. Lessee and
Lessor hereby agree that they intend this Lease to be a "Finance Lease" as
defined by Article 2A of the Uniform Commercial Code (the "UCC"). Lessee
acknowledges that Lessee has reviewed and approved any written "Supply Contract"
covering the Equipment from any "Supplier (as those terms are defined in Article
2A of the UCC).
9. RISK OF DAMAGE AND LOSS: Lessee assumes and shall be solely
responsible for the entire risk of any Item being lost, destroyed, damaged,
stolen, confiscated or condemned, from whatever source, until the date such Item
is returned and accepted by Lessor (the "Return Date") in accordance with
Section 12. In the event of damage to any Item, Lessee, at its expense, shall
promptly repair the same, restoring it to the condition required to be
maintained hereunder. If any Item is lost, destroyed, stolen, damaged in such a
way that it is not commercially reasonable to repair it (or such repairs are not
completed within 60 days of the damage or by the end of the Term with respect
thereto, whichever is shorter), confiscated or condemned (each, an "Event of
Loss"), then Lessee shall pay to Lessor the Stipulated Loss Value (as defined
below) of such Item and all other Rent owing with respect to such Item, which
such payment shall be due on the first to occur of (i) the end of the Term with
respect thereto or (ii) the sooner of (A) 60 days after such Event of Loss or
(B) the second Basic Rent payment date with respect to such Item following such
Event of Loss. Lessor and Lessee shall execute a Stipulated Loss Value Rider
applicable to each Item and the Stipulated Loss Value for each Item shall be as
set forth therein (the "Stipulated Loss Value").
Upon due payment by Lessee of all such amounts, this Lease shall
terminate with respect to such Item and Lessor shall transfer title thereto to
Lessee, without representation or warranty other than as to Lessor Liens. So
long as no Event of Default exists, any proceeds of insurance required hereunder
received by Lessor with respect to any damage or Event of Loss respecting any
Equipment shall be paid to Lessee to the extent necessary to reimburse Lessee
for costs incurred and paid by Lessee in repairing the same or shall be credited
against amounts payable by Lessee with respect to the Equipment involved.
10. INSURANCE: Lessee shall, at its expense at all times through the
Return Date (i) keep the Equipment insured against all risks of loss or damage
from every cause whatsoever in an amount not less than the greater of fair
market value or Stipulated Loss Value thereof, and (ii) obtain liability
insurance, including automobile coverage if the Equipment includes motor
vehicles, respecting the Equipment covering liability for bodily injury,
including death, and property damage, in an amount of at least $3 million per
occurrence or such greater amount as may comply
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with general industry standards, or such greater amount as Lessee may maintain,
or in such other amounts as Lessor may from time to time require.
Lessor shall be the sole named loss-payee with respect to damage or
loss to the Equipment with no provision for co-insurance and shall be named as
an additional insured on the liability insurance. All insurance shall be with
insurers and in form satisfactory to Lessor, have a deductible not to exceed
$50,000 per occurrence, or such other amount as Lessor may from time to time
require; shall provide for at least 30 days' prior written notice to Lessor
before any cancellation or material modification thereof; shall waive any claim
for premium against Lessor; and shall provide that Lessor will be insured
regardless of any breach by Lessee of any representation, warranty or covenant
in any such policy or any application therefor. Lessee shall deliver to Lessor
certificates of insurance and other evidence satisfactory to Lessor evidencing
the insurance required hereby, and at Lessor's request Lessee will furnish
copies of such policies to Lessor. In the case of renewals, evidence of renewal
shall be delivered to Lessor at least 5 days prior to expiration of the current
policy.
In the event Lessee fails to provide Lessor with evidence of the
insurance coverage required by this Lease, Lessor may purchase insurance at
Lessee's expense to protect Lessor's interests in the Equipment. This insurance
may, but need not, protect Lessee's interests. The coverage purchased by Lessor
may not pay any claim made by Lessee or any claim that is made against Lessee in
connection with the Equipment. Lessee may later cancel any insurance purchased
by Lessor, but only after providing Lessor with evidence that Lessee has
obtained insurance as required by this Lease. If Lessor purchases insurance for
the Equipment, Lessee will be responsible for the costs of that insurance,
including interest and other charges imposed by Lessor in connection with the
placement of the insurance, until the effective date of the cancellation or
expiration of the insurance. The costs of the insurance may be added to the
Rent. The costs of the insurance may be more than the cost of insurance Lessee
is able to obtain on its own.
11. ACCEPTANCE: By its execution of any Acceptance Certificate, Lessee
warrants and agrees that the Equipment covered thereby conforms to the
specifications and requirements of Lessee and that, as between Lessee and
Lessor, it was delivered in good repair and that Lessee has unconditionally
accepted it hereunder "AS IS" and "WITH ALL FAULTS" as of the Acceptance Date.
12. RETURN OF EQUIPMENT: Upon the expiration or earlier termination or
cancellation of this Lease with respect to any Item, except in the case of
retention by Lessee upon purchase of the Equipment in accordance with any
applicable Rider now or hereafter executed by the parties, Lessee shall, at its
own cost and expense, promptly return such Item to Lessor to such location as
Lessor may specify, for acceptance by Lessor in the condition required to be
maintained hereunder or in the condition specified in any applicable Rider now
or hereafter executed by the parties. Lessee shall pay for any repairs required
to place the Equipment in such condition. In the event Lessee shall not
surrender up and redeliver any Item to Lessor as herein required or shall not
timely pay the purchase price for any Item under any applicable Rider now or
hereafter executed by the parties, then Lessee shall pay to Lessor Basic Rent
for such Item (at the highest rate payable during the Term) until the Item is
duly returned, restored to the proper
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condition and accepted by Lessor or the purchase price is paid in accordance
with the applicable Rider.
13. GENERAL TAX INDEMNITY: Lessee agrees to pay and indemnify, on an
after-tax basis, Lessor against all income, sales, use, personal property, ad
valorem, value added, leasing, stamp or other taxes, levies, imposts, fees,
duties, charges or withholdings of any nature, including all license and
registration fees, together with any penalties, fines or interest thereon
(collectively, "Impositions") arising out of the transactions contemplated by
this Lease (including the acquisition of any Item prior to the Acceptance Date)
and imposed against Lessor, Lessee, this Lease (including any Rent) or the
Equipment or any Item by the United States or any state or political subdivision
thereof or any foreign government or taxing authority, excluding, however, any
Impositions based on or measured by the net income of Lessor imposed by the
United States or any state or political subdivision thereof. Lessee will notify
Lessor of the need to file any reports and returns relating to any Imposition at
least 60 days before the due date thereof and will remit any amounts payable in
connection therewith to Lessor 10 days before payment is due. Lessor shall
prepare and file all returns, and pay all Impositions, unless Lessor directs
Lessee otherwise. In the event that Lessor pays any such Impositions, Lessee
will on demand reimburse Lessor for the full amount paid by Lessor therefor.
Lessor shall have no obligation to contest or refuse to pay any Imposition.
Lessee acknowledges that in some jurisdictions Impositions may not be billed,
audited, assessed or due until after this Lease has terminated and agrees that
in such event Lessee will remain liable for such Impositions notwithstanding
such termination. Lessor makes no warranty, express or implied, regarding
Lessee's tax or accounting treatment of this Lease.
14. INCOME TAX INDEMNIFICATION: (a) Lessee acknowledges that Lessor is
the owner of the Equipment for state law and Federal income tax purposes and
that the most accelerated depreciation or cost recovery deductions on the full
amount of the Equipment cost will be available to Lessor. Lessee acknowledges
that Lessor intends to claim and take the depreciation deductions ("Depreciation
Deductions") with respect to the Equipment in accordance with Section 168 of the
Internal Revenue Code of 1986, as amended (the "Code").
(b) Lessee represents, warrants and covenants as follows:
(i) Lessor will not be required to include any amount in its income in
connection with any Item for any taxable year or part thereof during the Term
respecting such Item other than (A) Interim Rent and Basic Rent, as such Rent
accrues in accordance with the terms hereof, (B) any amount constituting gain
recognized with respect to or by reason of the sale or other disposition of such
Item upon the termination of this Lease with respect thereto, (C) any amount
payable to Lessor to the extent such amount is required to be determined by
reference to the income tax effect to Lessor of the receipt thereof, (D) any
amount specifically identified as interest, and (E) any other amount with
respect to which Lessor shall be entitled to a contemporaneous and equal
offsetting deduction (any amount so includable in Lessor's income other than as
contemplated in clauses (A) through (E) above being referred to herein as an
"Inclusion"); and
(ii) Each Item will constitute the Classification of Property specified in
the applicable Schedule within the meaning of Section 168(e) of the Code and
Lessor will be entitled to
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Depreciation Deductions with respect to its basis in the Equipment (which basis
shall equal 100% of the Equipment Cost for each Item) in accordance with such
Classification of Property.
(c) If, as the result of any act or omission of Lessee or the
inaccuracy of any representation or warranty of Lessee herein or in connection
with the transactions contemplated hereby:
(i) Lessor shall lose or lose the right the claim, or be advised or
determines that it would be imprudent, improper or inadvisable to claim, or
there shall be disallowed or recaptured, all or any portion of the anticipated
Depreciation Deductions,
(ii) Lessor shall suffer an Inclusion, or
(iii) Any foreign tax credit of Lessor shall be reduced, disallowed or
recaptured (any such loss, disallowance, reduction, recapture or Inclusion being
hereinafter called a "Tax Loss"), then 30 days after written notice to Lessee by
Lessor that any Tax Loss has occurred, Lessee shall pay Lessor, as an indemnity
payment, a lump sum amount which, after deduction of all Federal, state and
local taxes required to be paid by Lessor in respect of the receipt of such
payment, shall provide Lessor with not less than the same net after-tax return
that Lessor would have realized if such Tax Loss had not occurred, including any
interest and penalties payable by Lessor attributable to such Tax Loss. In
computing Lessee's liability under this Section, the Federal, state and local
taxes payable by Lessor shall be based upon the highest marginal corporate tax
rate in effect for the taxable year in which the Tax Loss occurred.
(d) Lessee shall not be liable for indemnification respecting a Tax
Loss occurring solely as a result of: (i) Lessor being subject to the
application of the mid-quarter convention of Section 168(d)(3) of the Code, (ii)
Lessor making any election to claim the Depreciation Deductions in a manner less
rapid than contemplated by the definition thereof, (iii) Lessor failing to have
a sufficient taxable income to utilize the Depreciation Deductions, (iv) Lessor
being subject to the "alternative minimum tax" of Section 55 of the Code, or (v)
A voluntary transfer of other voluntary disposition by the Lessor of any
interest in any Equipment or this Lease when no Event of Default exists.
(e) For the purpose of this Section the term "Lessor" shall include
any affiliated group within the meaning of Section 1504 of the Code of which
Lessor is a member, if consolidated returns are filed for such affiliated group
for Federal tax purposes, and a Tax Loss shall be deemed to have occurred upon
the earliest of:
(i) The happening of any event which may cause such Tax Loss,
(ii) The payment by Lessor to the taxing authority of the tax increase
resulting from such Tax Loss, or
(iii) The adjustment of the tax return of Lessor to reflect such Tax Loss.
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15. GENERAL INDEMNIFICATION: Lessee hereby agrees to indemnify, save,
protect, defend and keep harmless Lessor, and its agents, directors, employees,
successors and assigns from and against any and all losses, damages (including
indirect, special or consequential damage), harm, expenses, including legal fees
(and a reasonable allocation of the compensation, costs and expenses of internal
counsel, based upon time spent), penalties, injuries, claims, actions and suits,
of whatsoever kind and nature, in contract, tort or otherwise, whether caused by
the active or passive negligence of Lessor (excluding, however, Lessor's gross
negligence or willful misconduct) or otherwise and including Lessor's strict
liability in tort, in any way arising out of, related to or in connection with
the selection, modification, purchase, acceptance, rejection, ownership,
delivery, lease, possession, maintenance, use, condition (including latent or
other defects, whether or not discoverable by Lessor or Lessee, and any claim
for patent, trademark or copyright infringement), return of, or operation of any
Item prior to its Return Date or relating to any default by Lessee or Event of
Default.
16. DEFAULT: Each of the following shall constitute an event of default
(an "Event of Default") hereunder:
(a) Lessee shall fail to make any payment of Rent within ten (10)
calendar days after the same shall become due and payable;
(b) Lessee shall fail to perform, as and when due, any of its
obligations under Sections 6,7,9, and 10 hereof;
(c) Lessee or any guarantor of all or any part of Lessee's
obligations under this Lease (a "Guarantor") shall fail to pay or perform, as
and when due, any obligations to Lessor or any of its affiliates arising under
or in connection with this Lease and not covered by any other subsection of this
Section 16, and the failure is not cured to the satisfaction of Lessor within
thirty (30) days following Lessor's notice thereof to Lessee;
(d) Lessee or any Guarantor shall fail to pay or perform, as and when
due (including any applicable grace or cure period) any obligations to Lessor or
any of its affiliates arising under any other document or instrument including,
but not limited to, any document or instrument executed in connection with any
other presently existing or future loans, leases or other credit arrangements
from Lessor or any of its affiliates in favor of Lessee, or otherwise;
(e) Lessee or any Guarantor shall make any representation or
warranty, respectively, in this Lease or in any certificate or statement
furnished at any time hereunder or in connection with this Lease which proves to
have been untrue or misleading in any material respect when made or furnished;
(f) Lessee or any Guarantor shall file a voluntary petition in
bankruptcy or a voluntary petition or answer seeking liquidation,
administration, reorganization, arrangement, readjustment of its debts, or for
any other relief under the Bankruptcy Code, or under any other act or law
pertaining to insolvency or debtor relief, whether state, federal, or foreign,
now or hereafter existing; or Lessee or any Guarantor shall enter into any
agreement indicating its consent to, approval of, or acquiescence in, any such
petition or proceeding, or Lessee or any Guarantor
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shall apply for or permit the appointment by consent or acquiescence of a
receiver, custodian administrator, or trustee for all or a substantial part of
its property; or Lessee or any Guarantor shall make an assignment for the
benefit of creditors; or Lessee or any Guarantor shall be unable or shall fail
to pay its debts generally as such debts become due; or Lessee or any Guarantor
shall admit, in writing its inability or failure to pay its debts generally as
such debts become due;
(g) There shall have been filed against Lessee or any Guarantor an
involuntary petition in bankruptcy or seeking liquidation, administration,
reorganization, arrangement, readjustment of its debts or for any other relief
under the Bankruptcy Code, or under any other act or law pertaining to
insolvency or debtor relief, whether state, federal or foreign, now or hereafter
existing or Lessee or any Guarantor shall suffer or permit the involuntary
appointment of a receiver, custodian, administrator, or trustee for all or a
substantial part of its property; or Lessee or any Guarantor shall suffer or
permit the issuance of a warrant of attachment, diligence, execution or similar
process against all or any substantial part of its property; unless, in each
other case, such petition, appointment or process is fully bonded against,
vacated or dismissed within forty-five (45) days from its effective date, but
not later than ten (10) days prior to any proposed disposition of any assets
pursuant to any such proceeding;
(h) The occurrence of any default in the payment or performance, and
the subsequent acceleration, of any debt or other obligations (including, but
not limited to, capital lease obligations or any corporate guaranty) owed by
Lessee to any other persons or entity unaffiliated with Lessor with an
outstanding principal balance in excess of $1,000,000.00, whether now or
hereafter existing;
(i) There shall be a change in the beneficial ownership and control,
directly or indirectly, of the majority of the outstanding voting securities or
other interests entitled (without regard to the occurrence of any contingency)
to elect or appoint members of the board of directors or other managing body of
Lessee or Guarantor (a "change of control"), or there is any merger,
consolidation, dissolution, liquidation, winding up or sale or other transfer of
all or substantially all of the assets of Lessee or Guarantor pursuant to which
there is a change of control or cessation of Lessee or Guarantor or their
businesses.
(j) The occurrence of any event described as a Default or an Event of
Default in any applicable Rider now or hereafter executed by the parties;
(k) There is a material adverse change in Lessee's or any Guarantor's
financial condition since the first Acceptance Date.
17. REMEDIES: (a) Upon the occurrence of any Event of Default, then, to
the extent permitted by applicable law, Lessor shall have the right to exercise
any one or more of the following remedies:
(i) To proceed by appropriate court action to enforce performance by
Lessee of its obligations hereunder or to recover damages for breach thereof;
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(ii) To take possession of any Item, wherever located, without notice,
legal process, prior judicial hearing, or liability for trespass or other damage
(WHICH RIGHTS LESSEE HEREBY VOLUNTARILY, INTELLIGENTLY AND KNOWINGLY WAIVES) and
thereafter hold, sell, operate or lease such Item free of claims of Lessee,
except as set forth below;
(iii) By notice to Lessee, to terminate or cancel this Lease and declare
all Rent then owning to Lessor hereunder immediately due and payable (whereupon
Lessee shall promptly pay the same);
(iv) To demand immediate payment of the Stipulated Loss Value of the
Equipment as liquidated damages for the remaining term (whereupon Lessee shall
promptly pay the same); and
(v) To pursue any other remedy available to Lessor at law or in equity.
(b) Lessor and Lessee agree that an amount equal to the Stipulated
Loss Value of the Equipment represents a reasonable return for the use of the
Equipment and for the depreciation thereof, and shall be the basis for
liquidated damages for the remaining term for which Lessee shall be liable to
Lessor upon the occurrence of an Event of Default. Any amounts realized by
Lessor on account of the Equipment subsequent to Lessor's taking possession
thereof pursuant to Section 17(a)(ii) shall, after reimbursement to Lessor of
all its expenses incurred in connection therewith, including legal fees (and a
reasonable allocation of the compensation, costs and expenses of internal
counsel, based upon time spent), be credited to amounts of Stipulated Loss Value
and all other Rent owing by Lessee hereunder or, if such Stipulated Loss Value
and all other Rent has been paid, paid to Lessee.
(c) If Lessor elects not to sell, re-lease, or otherwise dispose of
all or any part of the Equipment, and holds such Equipment for Lessee for the
remaining Term Lessor may recover, in addition to all Rent accrued and unpaid as
of the date of Lessor's recovery of possession of the Equipment, the present
value, as of such date, of the Rent for the remainder of the Term respecting
such Equipment (which Term shall include, for this purpose, to the extent
applicable, any agreed upon extensions and renewals which would, in the absence
of an Event of Default, automatically extend the Term upon Lessee's failure to
exercise any option to purchase contained in any addenda or Rider hereto).
Present value shall be computed using a discount rate equal to the Prime Rate in
effect on the Acceptance Date.
(d) If Lessor sells, leases, or otherwise disposes of all or any part
of the Equipment, Lessor may recover from Lessee, in addition to any Rent
accrued and unpaid as of the date of Lessor's recovery of possession of the
Equipment, the present value computed by using a discount rate equal to the
Prime Rate in effect on the Acceptance Date, of the difference between (i) the
Rent for the remainder of the Term respecting such Equipment (which Term shall
include, for this purpose, to the extent applicable, any agreed upon extensions
and renewals which would, in the absence of an Event of Default, automatically
extend the Term upon Lessee's failure to exercise any option to purchase
contained in any addenda or Rider hereto) and (ii) except in the case of a
substantially similar lease, the market rent for such period of time determined
by Lessor in is sole discretion, or (iii) in the case of a lease of Equipment
which is substantially similar to this Lease, the total rent for the lease term
of such substantially similar lease.
-11-
(e) Time of performance of Lessee's obligations hereunder is of the
essence. All remedies of Lessor hereunder are cumulative, and may, to the extent
permitted by law, be exercised concurrently or separately, and the exercise of
any one remedy shall not be deemed to be an election of such remedy to the
exclusion of any other remedy or to preclude the exercise of any other remedy at
any other time. However, Lessor is entitled to only one satisfaction. Failure on
the part of Lessor to exercise, or delay in exercising, any right or remedy
hereunder or Lessor's failure at any time to require performance by Lessee of
any of the provisions hereof shall not operate as a waiver thereof; nor shall
any single or partial exercise by Lessor of any right or remedy hereunder
preclude any other further exercise thereof or the exercise of any other right
or remedy. Lessee shall be liable for all charges, costs, expenses and
attorneys' fees incurred by Lessor (including a reasonable allocation of the
compensation, costs and expenses of internal counsel, based upon time spent):
(i) in defending or protecting its interests in the Equipment, or any Item or
part thereof; (ii) in the negotiation, execution, delivery, administration,
amendment or enforcement of this Lease or the collection of any Rent hereunder;
(iii) in any lawsuit or other legal proceeding in any way connected with this
Lease, including, but not limited to, any contract or tort or other actions, any
arbitration or other alternative dispute resolution proceeding, all appeals and
judgment enforcement actions an any bankruptcy proceeding (including, but not
limited to, any relief from stay and/or adequate protection motions, cash
collateral disputes, assumption/rejection motions and disputes or objections to
any proposed disclosure statement or reorganization plan). Lessee acknowledges
and agrees that the preceding sentence shall survive and not be merged with any
judgment in connection with any exercise of any remedy by Lessor provided
hereunder. Lessee shall pay to Lessor interest on any overdue payments under
Section 13, 14 or 15 or amounts due under this Section 17 after demand therefor
and until paid at a rate per annum equal to the lesser of five percent (5%)
above the Prime Rate then in effect or the maximum amount permitted to be
charged by Lessor by applicable law.
18. ASSIGNMENT: (a) Lessor may, upon written notice thereof to Lessee,
sell, assign or otherwise transfer all or any part of its right, title and
interest in and to the Equipment and/or this Lease or in any Schedule executed
in connection herewith, to a third-party assignee, subject to the terms and
conditions of this Lease including, but not limited to, the right to the quiet
enjoyment by Lessee as set forth in Section 4 above. Any such assignee may
assume all of the rights and obligations of Lessor in connection with the
Equipment or any Schedules sold, assigned or otherwise transferred, in which
case Lessor shall be relieved therefrom. To the extent of any such assumption of
obligations, all references to Lessor herein shall thereafter mean such
assignee.
(b) Lessor may also pledge, mortgage or grant a security interest in
the Equipment and assign this Lease as collateral. Each such pledgee, mortgagee,
lien holder or assignee shall have any and all rights as may be assigned by
Lessor but none of the obligations of Lessor hereunder. Any pledge, mortgage or
grant of security interest in the Equipment or collateral assignment of this
Lease shall be subject to the terms and conditions hereof including, but not
limited to, the right to the quiet enjoyment of the Equipment by Lessee as set
forth in Section 4 above. If Lessor grants a security interest in all or any
part of any Schedule, any Equipment covered thereby and/or any sums payable
thereunder, only the original of the Schedule held by Lessor shall be effective
to transfer Lessor's rights therein.
-12-
(c) Lessee shall not be relieved of any of its obligations hereunder
by reason of any such sale, assignment, or other transfer referred to in
Subsection (a) above, or any pledge, mortgage, grant of security interest or
collateral assignment referred to in Subsection (b) above, all of which such
obligations shall remain absolute and unconditional, including, but not limited
to, Lessee's obligations to pay Rent as set forth in Section 5 above. Lessee
agrees that it will not assert against any purchaser, pledgee, mortgagee,
lienholder or assignee (collectively, an "Assignee") any defense, counterclaim
or offset that Lessee may have against Lessor and Lessee acknowledges that any
such assignment or other transfer by Lessor, or any such pledge, mortgage, grant
of security interest or collateral assignment by Lessor, shall not materially
change Lessee's duties or obligations under this Lease nor materially increase
the burdens or risks imposed on Lessee. Upon the written request of Lessor,
Lessee shall acknowledge all such obligations to the Assignee, which such
acknowledgment shall be in such form and substance as Lessor or any such
Assignee may require, consistent with their normal business practices.
(d) LESSEE SHALL NOT SELL, TRANSFER, ASSIGN, SUBLEASE, CONVEY OR
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PLEDGE ANY OF ITS INTEREST IN THIS LEASE OR ANY OF THE EQUIPMENT, WITHOUT THE
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PRIOR WRITTEN CONSENT OF LESSOR. ANY SUCH SALE, TRANSFER, ASSIGNMENT, SUBLEASE,
--------------------------------------------------------------------------------
CONVEYANCE, OR PLEDGE, WHETHER BY OPERATION OF LAW OR OTHERWISE, WITHOUT THE
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PRIOR WRITTEN CONSENT OF LESSOR, SHALL BE VOID.
-----------------------------------------------
19. REPORTS: (a) Lessee will immediately notify Lessor of:
(i) Each Event of Loss or accident involving or allegedly involving any
Item;
(ii) Any Lien (other than a Lessor Lien) which shall have attached to any
Item; or
(iii) The occurrence of any Event of Default of event which, with the lapse
of time or giving of notice or both could become an Event of Default.
(b) Lessee and each Guarantor shall, as soon as practicable, and in
any event within sixty (60) days after the end of each fiscal quarter, furnish
to Lessor its unaudited financial statements including in each instance, balance
sheets, income statements, and statements of cash flow, on a consolidated and
consolidating basis, as appropriate, and separate profit and loss statements as
of and for the quarterly period then ended and for its fiscal year to date,
prepared in accordance with generally accepted accounting principles,
consistently applied, and Lessee and any Guarantor hereunder shall, as soon as
practicable, and in any event within ninety (90) days after the end of each
fiscal year, furnish to Lessor its annual audited financial statements,
including balance sheets, income statements and statements of cash flow for the
fiscal year then ended, on a consolidated and consolidating basis, as
appropriate, which have been prepared by its independent accountants. Such
audited financial statements shall be accompanied by the independent
accountant's opinion, which opinion shall be in form generally recognized as
"unqualified".
(c) Lessee will permit Lessor to inspect and examine the Equipment
and any Item and Lessee's records relating thereto at such times and from time
to time as Lessor may wish upon reasonable notice.
-13-
20. REPRESENTATIONS AND WARRANTIES OF LESSEE: Lessee hereby represents
and warrants to Lessor that on the date hereof and on the date of execution of
each Schedule:
(a) Lessee has full power, authority and legal right to enter into
and to perform its obligations under this Lease and all related documents
(collectively the "Documents"), is in good standing under the law of its
jurisdiction of incorporation and is duly qualified to do business and in good
standing wherever necessary to carry on its present business and operations,
including the jurisdiction(s) where the Equipment is or is to be located.
(b) The Documents have been duly authorized, executed and delivered
by Lessee and constitute valid, legal and binding agreements of Lessee,
enforceable against it in accordance with their terms.
(c) No approval, consent or withholding of objections is required
from any governmental authority or instrumentality, or any person, with respect
to the entry into or performance by Lessee of the Documents except such as have
already been obtained.
(d) The entry into and performance by Lessee of its obligations under
the Documents will not (i) violate any judgment, order, law or regulation
applicable to Lessee or any provision of Lessee's Certificate of Incorporation
or By-Laws; or (ii) result in any breach of, constitute a default under or
result in the creation of any Lien, pursuant to any indenture, mortgage, deed of
trust, bank loan or credit agreement or other instrument to which Lessee is a
party.
(e) There is no existing Event of Default under this Lease or any
existing default in connection with any indenture, mortgage, deed of trust, bank
loan or credit agreement or other instrument to which Lessee is a party.
(f) There are no suits or proceedings pending or overtly threatened
in any court or by any governmental agency against or affecting Lessee, which,
if adversely determined, would have a material adverse effect on the ability of
Lessee to fulfill its obligations under this Lease or its financial condition or
prospects.
(g) Each balance sheet, income statement, and statement of cash flow
delivered to Lessor has been prepared in accordance with generally accepted
accounting principles, and since the date of the most recent such balance sheet,
income statement, and statement of cash flow, there has been no material adverse
change in the financial condition or prospects of Lessee.
(h) The Equipment will at all times be used for commercial or
business purposes.
(i) Lessee has made an assessment of the microchip and computer-based
systems and the software used in its business and based upon such assessment
believes that it will be "Year 2000 Compliant" by January 1, 2000. For purposes
of this paragraph, "Year 2000 Compliant" means that all software, embedded
microchips and other processing capabilities utilized by, and material to the
business operations or financial condition of, Lessee are able to
-14-
interpret, store, transmit, receive and manipulate data on and involving all
calendar dates correctly and without causing any abnormal ending scenarios in
relation to dates in and after the Year 2000. From time to time, at the request
of Lessor, Lessee shall provide to Lessor such updated information as is
requested regarding the status of its efforts to become Year 2000 Compliant.
21. MISCELLANEOUS, JURY WAIVER, GOVERNING LAW, JURISDICTION VENUE: (a)
Nothing therein contained shall give or convey to Lessee any right, title or
interest in and to any Equipment leased hereunder except as a lessee. Should
Lessor permit the use of any Equipment beyond the specified Term thereof, the
obligations of Lessee hereunder shall continue (including the obligation to pay
the Basic Rent at the highest rate applicable during the Term with respect
thereto) and such permissive use shall not be construed as renewal of the Term
thereof nor as a waiver of any right or continuation of any obligation of Lessor
hereunder. Lessee's obligations pursuant to Sections 11, 12, 13, 14 and 15 shall
survive the expiration or earlier termination of this Lease and Lessee shall
remain liable therefor. Equipment shall at all times remain personal property of
Lessor notwithstanding any affixation to the real estate.
(b) The Equipment subject hereto is and at all times shall be and
remain the sole and exclusive property of Lessor, and Lessee shall have no
right, title or interest therein or thereto, except as expressly set forth in
this Lease. As a precaution, Lessee hereby also grants hereto, Lessor a first
priority continuing lien and security interest in the Equipment subject thereto
and the proceeds thereof to secure any obligation of Lessee under this Lease,
each Schedule hereunder, any other agreement between Lessor and Lessee. Lessee
further agrees that Lessee's obligations hereunder are additionally secured by
all security interests, liens and encumbrances hereto, now or hereafter granted
by Lessee to Lessor under any instrument, whether or not related to this Lease.
Lessee agrees to execute any instrument or instruments necessary or expedient
for filing, recording, perfecting, or notifying of the interest of Lessor in the
Equipment upon request of, and as determined by, Lessor. Lessee hereby
specifically authorizes Lessor to file financing statements not signed by Lessee
or to execute same for and on behalf of Lessee as Lessee's attorney-in-fact,
irrevocably and coupled with an interest, for such purposes.
(c) To the extent permitted by applicable law, Lessee hereby waives
any and all rights and remedies conferred upon a lessee by such applicable law
(including but not limited to Article 2A of the UCC) to: (i) cancel this Lease;
(ii) repudiate this Lease; (iii) reject the Equipment; (iv) revoke acceptance of
the Equipment; (v) recover damages from Lessor for any breaches of warranty or
for any other reason; (vi) a security interest in the Equipment in Lessee's
possession or control for any reason; (vii) deduct all or any part of any
claimed damages resulting from Lessor's default, if any, under this Lease;
(viii) accept partial delivery of the Equipment; (ix) "Cover" by making any
purchase or lease of, or contract to purchase or lease, Equipment in
substitution for that due from Lessor; (x) recover any general, special,
incidental or consequential damages, for any reason whatsoever; and (xi) obtain
specific performance, replevin, detinue, sequestration, claim and delivery or
the like for any Equipment identified to this Lease. To the extent permitted by
applicable law, Lessee also hereby waives any rights now or hereafter conferred
by statute or otherwise which may require Lessor to sell, lease or otherwise use
any Equipment in mitigation of Lessor's damages as set forth in Section 17 of
this Lease or which may otherwise limit or modify any of Lessor's rights or
remedies under Section 17.
-15-
Any action by Lessee against Lessor for any default by Lessor under
this Lease, including breach of warranty or indemnity, shall be commenced within
one (1) year after any such cause of action accrues. LESSOR AND LESSEE EACH
----------------------
WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY LITIGATION ARISING HEREFROM OR IN
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RELATION HERETO.
---------------
(d) All notices hereunder shall be in writing and shall be delivered
by hand, by overnight courier or by certified or registered mail, return receipt
requested, to each party at its address set forth below, as such address may be
changed by such notice. All notices shall be deemed given when received, when
delivery is refused or when the same are returned for failure to be called for.
(e) If Lessee fails to perform any of its obligations hereunder
Lessor may, but shall not be obligated to, perform the same (without such
performance constituting a cure or waiver of Lessee's failure to so perform) and
Lessee will on demand reimburse Lessor for all its costs and expenses incurred
in connection therewith.
(f) THIS LEASE AND THE RIGHTS AND OBLIGATION OF THE PARTIES HEREUNDER
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SHALL IN ALL RESPECTS BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
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INTERNAL LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO PRINCIPLES OF
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CONFLICTS OF LAW, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
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PERFORMANCE, REGARDLESS OF THE LOCATION OF THE EQUIPMENT OR THE STATE OF
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INCORPORATION OR PRINCIPAL PLACE OF BUSINESS OF THE LESSEE, LESSEE (I) CONSENTS
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AT LESSOR'S ELECTION AND WITHOUT LIMITING LESSOR'S RIGHT TO COMMENCE AN ACTION
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IN ANY OTHER JURISDICTION, TO THE EXCLUSIVE JURISDICTION AND VENUE OF ANY COURTS
--------------------------------------------------------------------------------
(FEDERAL, STATE OR LOCAL) SITUATED IN XXXX COUNTY, ILLINOIS; (II) WAIVES ANY
----------------------------------------------------------------------------
OBJECTION TO IMPROPER VENUE AND FORUM NON CONVENIENS; AND (III) CONSENTS TO
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SERVICE OF PROCESS BY CERTIFIED MAIL, POSTAGE PREPAID, TO LESSEE AT ITS ADDRESS
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AS SET FORTH HEREIN, WHICH SERVICE SHALL BE DEEMED COMPLETE WITHIN TEN (10) DAYS
--------------------------------------------------------------------------------
AFTER THE DATE OF MAILING THEREOF. If any provision of this Lease shall
---------------------------------
contravene or be invalid under applicable law or regulation, such contravention
or invalidity shall not affect the entire Lease, the provisions held to be
invalid to be deemed deleted or modified and the Lease interpreted and construed
as though such invalid provision or provisions were not part hereof or conformed
thereto.
(g) This Lease, together with each Schedule and Rider, constitutes
the entire agreement of the parties with respect to the subject matter hereof,
and supersedes and replaces any prior or contradictory representations,
warranties or agreements by Lessor and Lessee. Unless set forth in a Schedule or
Rider, signed by an authorized manager of Lessor, Lessee shall have no right to
purchase or otherwise acquire title to or ownership of any Item of Equipment. No
agent or employee of any supplier or manufacturer is authorized to bind Lessor
to this Lease or any Schedule, or to waive, alter or add to the terms and
conditions printed herein and in any Schedule.
-16-
This is a non-cancelable Lease and Lessee's obligations hereunder are absolute
and unconditional. This Lease, any amendments to, variations or modifications of
this Lease, any waiver of its provisions or conditions, any consent hereunder
and all Schedules shall not be valid unless in writing and signed by an
authorized officer or manager of Lessor.
/s/ JBL
____________________________________
[LESSEE'S INITIALS]
IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the
22nd day of February, 1999.
XXXXXX FINANCIAL LEASING, INC. ACT MANUFACTURING, INC.
(Lessee)
/s/ Xxxxxxx X. Xxxxxx /s/ Xxxxxxx X. Xxxxx
By:___________________________ By:______________________________
Xxxxxxx X. Xxxxxx Xxxxxxx X. Xxxxx
Name:_________________________ Name:____________________________
Vice President Chief Financial Officer
Title:________________________ Title:___________________________
500 West Monroe Xxxxxx 0 Xxxxx Xxxx
Address:______________________ Address:_________________________
Xxxxxxx, XX 00000 Xxxxxx, XX 00000
______________________ _________________________
______________________ _________________________
(000) 000-0000 (000) 000-0000
Facsimile No.:________________ Facsimile No.:___________________
