MASTER LEASE AGREEMENT
No. _______
This Master Lease Agreement (the "MLA") is entered into by and between Lucent
Technologies, Inc. Internetworking Division ("Lessor"), having its principal
place of business at 0000 Xxxxxx Xxx Xxxxxxx, Xxxxxxx, XX 00000 and Telecom
Wireless, Inc. ("Lessee"), having its principal place of business at 0000 XXX
Xxxx., Xxxxx 0000, Xxxxxxxxx, Xxxxxxxx 00000.
1. LEASE AGREEMENT. Lessor agrees to lease to Lessee, and Lessee agrees
to lease from Lessor, the equipment (the "Equipment") referenced in each of
the Schedules (the "Schedule" or "Schedules") which incorporate this MLA
therein (the "Lease") provided no Event of Default has occurred or is
continuing, subject to the following conditions, which Lessor in its sole
discretion may elect to waive with respect to any Schedule: (i) in no event
shall Lessor be obligated to lease Equipment to Lessee hereunder where the
aggregate purchase price of all Equipment under all Schedules would exceed
Twenty Million and no/100 Dollars ($20,000,000.00); (ii) Lessor shall agree
to lease Equipment with a value of up to Five Million and no/100 Dollars
($5,000,000.00) without satisfying the provisions of section 1(iii); (iii) if
the aggregate Equipment Value exceeds Five Million and no/100 Dollars
($5,000,000.00), then Lessee shall either (a) demonstrate that it has
obtained a ratio of Adjusted EBITDA to Adjusted Debt Service of 1.75 or
greater for the fiscal quarter ending just prior to the date of any new
Schedule, or (b) demonstrate that it has raised new cash equity of Twenty
Million Dollars ($20,000,000) or more from the date of this MLA to the date
of any new Schedule; (iv) Lessor's agreement to provide Equipment under the
terms hereof shall expire on December 31, 2000. "Adjusted EBITDA" is defined
as, for fiscal quarter most recently ended, earnings before interest, taxes,
depreciation, and amortization plus the portion of payments required under
this Agreement that may have been included in expenses for the period
measured. "Adjusted Debt Service" is defined as the sum of (a) the total
Equipment Value of all Equipment shipped to date, which Equipment shall be or
has been financed hereunder, plus the Equipment Value of the amount requested
to be shipped, each multiplied by 3.03810; plus (b) the principal portion of
required payments made during the measurement period on any other debt, note,
loan, or
Page 1 of 8
capital lease obligation excluding obligations undered under this Agreement;
plus (c) capital expenditures made during the quarter, net of the proceeds of
financing received during the quarter to fund such expenditures (with a
minimum value for (c) of -0-).
2. TERM. Each Lease shall be effective upon the execution of the MLA
and the related Schedule by the Lessor and the Lessee. The least term (the
"Lease Term") of the Equipment referenced in each of the Schedules shall
commence on the rent commencement date specified in each Schedule (the "Rent
Commencement Date"). The Rent Commencement Date shall be the date 30 days
from the date that the Equipment is shipped by the supplier (the "Ship Date")
as evidenced by a shipping document provided by the supplier related to the
Equipment (the "Shipping Document"). Lessor will provide Lessee with a copy
of the Shipping Document evidencing the Ship Date.
3. RENT. The rent (the "Rent") for the Equipment referenced in any
Schedule shall be as stated in such Schedule and shall be payable according
to the provisions of such Schedule. If any amount payable under a Schedule is
not received by Lessor within 10 days of the due date, Lessee agrees to pay
an Overdue Charge, as defined herein, with respect to such amount.
4. SELECTION AND ASSIGNMENT. Lessee will select the type, quantity and
Supplier of each item of Equipment designated in a Schedule, and Lessee
hereby assigns to Lessor all of its right, title and interest in and to the
related equipment purchase agreement, a copy of which has been provided to
Lessor by Lessee (the "Agreement"). The Agreement may be amended with the
consent of Lessor. Any such assignment with respect to Equipment shall become
binding upon Lessor when Lessor and Lessee have entered into a Lease with
respect to such Equipment and as of the Rent Commencement Date referenced in
such Lease. Upon such an assignment becoming effective, Lessor shall be
obligated to purchase the Equipment from the Supplier in accordance with the
provisions of the Agreement. It is expressly agreed that Lessee shall at all
times remain liable to Supplier under the Agreement to perform all duties and
obligations of Lessee thereunder, except for the obligation to purchase the
Equipment to the extent expressly assumed by the Lessor hereunder, and that
the Lessee shall be entitled to the same rights of the purchaser of the
Equipment under the Agreement, except such right, title and interest in the
Equipment retained exclusively by the Lessor as owner of the Equipment.
Lessor shall have no liability for a Supplier's failure to meet the terms and
conditions of the Agreement.
5. DELIVERY AND INSTALLATION. Lessee shall be responsible for payment
of all transportation, packing, installation, testing and other charges
associated with the delivery, installation or use of any Equipment which are
not included in the Agreement with respect to such Equipment.
6. WARRANTIES. LESSOR MAKES REPRESENTATION OR WARRANTY OF ANY KIND,
EXPRESS OR IMPLIED, WITH RESPECT TO ANY OF THE EQUIPMENT, ITS
MERCHANTABILITY, OR ITS FITNESS FOR A PARTICULAR PURPOSE. LESSOR SHALL NOT BE
LIABLE TO LESSEE OR ANY OTHER PERSON FOR
Page 2 of 8
DIRECT, INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING FROM
LESSEE'S USE OF THE EQUIPMENT, OR FOR DAMAGES BASED ON STRICT OR ABSOLUTE
TORT LIABILITY OR LESSOR'S PASSIVE NEGLIGENCE. LESSEE HEREBY ACKNOWLEDGES
THAT ANY MANUFACTURER'S OR SUPPLIER'S WARRANTIES WITH RESPECT TO THE
EQUIPMENT ARE FOR THE BENEFIT OF BOTH LESSOR AND LESSEE. NOTWITHSTANDING THE
FOREGOING, LESSEE'S OBLIGATIONS TO PAY EACH RENT PAYMENT DUE, OR OTHERWISE
PERFORM ITS OBLIGATIONS, UNDER THIS LEASE ARE ABSOLUTE AND UNCONDITIONAL.
7. TITLE TO AND LOCATION OF EQUIPMENT. Lessor shall retain title to
each item of Equipment. Lessee, at its expense, shall protect Lessor's title
and keep the Equipment free from all claims, liens, encumbrances and legal
processes. The Equipment is personal property and is not to be regarded as
part of the real estate on which it may be situated. If requested by Lessor,
Lessee will, at Lessee's expense, furnish a landlord or mortgagee waiver with
respect to the Equipment. The Equipment shall not be removed from the
location specified in the Schedule without the written consent of Lessor.
Lessee shall, upon Lessor's request, affix and maintain plates, tags or other
identifying labels, showing Lessor's ownership of the Equipment in a
prominent position on the Equipment. Equipment shall not be located outside
the continental United States of America.
8. USE OF EQUIPMENT, INSPECTION AND REPORTS. The use of the Equipment
by Lessee shall conform with all applicable laws, insurance policies, and
warranties of the manufacturer or Supplier of the Equipment. Lessor shall
have the right to inspect the Equipment at the premises where the Equipment
is located. Lessee shall notify Lessor promptly of any claims, liens,
encumbrances or legal processes with respect to the Equipment.
9. FURTHER ASSURANCES. Lessee shall execute and deliver to Lessor such
instruments as Lessor deems necessary for the confirmation of this Lease and
Lessor's rights hereunder. Lessor is authorized to file financing statements
signed only by the Lessor in accordance with the Uniform Commercial Code, or
financing statements signed by Lessor as Lessee's attorney-in-fact. Any such
filing with respect to the Equipment leased pursuant to a true lease shall
not be deemed evidence of any intent to create a security interest under the
Uniform Commercial Code.
10. MAINTENANCE AND REPAIRS. Lessee shall, at its expense, maintain
each item of Equipment in good condition, normal wear and tear excepted.
Lessee shall not make any addition, alteration, or attachment to the
Equipment without Lessor's prior written consent. Lessee shall make no
repair, addition, alteration or attachment to the Equipment which interferes
with the normal operation or maintenance thereof, creates a safety hazard, or
might result in the creation of a mechanic's or materialman's lien.
11. LESSOR'S PERFORMANCE OF LESSEE'S OBLIGATIONS. If Lessee fails to
perform any of its obligations under a Lease, Lessor may perform any act or
make any payment which Lessor deems necessary for the maintenance and
preservation of the Equipment subject thereto and Lessor's title thereto. All
sums so paid by Lessor (together with all related Overdue Charges), and
reasonable attorneys' fees incurred by Lessor in connection
Page 3 of 8
therewith, shall be additional rent payable to Lessor on demand. The
performance of any such act or the making of any such payment by Lessor shall
not be deemed a waiver or release of any obligation or default on the part of
Lessee.
12. INDEMNIFICATION. Lessee assumes liability for, and hereby agrees to
indemnify, protect and hold harmless, Lessor, and its agents, employees,
officers, directors, partners and successors and assigns, from and against,
all liabilities, obligations, losses, damages, injuries, claims, demands,
penalties, actions, costs and expenses, including, without limitation,
reasonable attorneys' fees, of whatever kind and nature, in contract or in
tort, arising out of the use, condition, operation, ownership, selection,
delivery, leasing or return of any item of Equipment, regardless of when, how
and by whom operated, or any failure on the part of Lessee to perform or
comply with any of its obligations under a Lease, excluding, however, any of
the foregoing which result from the gross negligence or willful misconduct of
Lessor. Such indemnities and assumptions of liabilities and obligations shall
continue in full force and effect, notwithstanding the expiration or other
termination of such Lease. Nothing contained in any Lease shall authorize
Lessee to operate the Equipment subject thereto so as to incur or impose any
liability on or obligation for or on
13. NO OFF-SET. All Rents shall be paid by Lessee irrespective of any
off-set, counterclaim, recoupment, defense or other right which Lessee may
have against Lessor, the manufacturer or Supplier of the Equipment or any
other party.
14. ASSIGNMENT BY LESSEE. Lessee shall not, without Lessor's prior
written consent, (a) sell, assign, transfer, pledge, hypothecate, or
otherwise dispose of, encumber or suffer to exist a lien upon or against, any
of the Equipment or any Lease or any interest therein, by operation of law or
otherwise, or (b) sublease or lend any of the Equipment or permit any of the
Equipment to be used by anyone other than Lessee.
15. ASSIGNMENT BY LESSOR. Lessor may assign, sell or encumber its
interest in any of the Equipment and any Lease. Upon Lessor's written
consent, Lessee shall pay directly to the assignee of any such interest all
Rent and other sums due under an assigned Lease. THE RIGHTS OF ANY SUCH
ASSIGNEE SHALL NOT BE SUBJECT TO ANY ABATEMENT, DEDUCTION, OFF-SET,
COUNTERCLAIM, RECOUPMENT, DEFENSE OR OTHER RIGHT WHICH LESSEE MAY HAVE
AGAINST LESSOR OR ANY OTHER PERSON OR ENTITY. Notwithstanding the foregoing,
any such assignment (a) shall be subject to Lessee's right to possess and use
the Equipment subject to a Lease so long as Lessee is not in default
thereunder, and (b) shall not release any of Lessor's obligations hereunder.
16. RETURN OF EQUIPMENT. Unless Lessee has exercised its option, if
any, to renew a lease or purchase the Equipment subject thereto, upon
expiration of the then current Lease Term of such Lease, Lessee shall, at its
expense, cause such Equipment to be removed, disassembled, and placed in the
same condition as when delivered to Lessee (reasonable wear and tear
excepted) and properly crate such Equipment for shipment and deliver it to a
common carrier designated by Lessor. Lessee will ship such Equipment, F.O.B.
destination, to any address specified
Page 4 of 8
in writing by Lessor within the continental United States. All additions,
attachments, alterations and repairs made or placed upon any of the Equipment
shall become part of such Equipment and shall be the property of Lessor.
17. EVENTS OF DEFAULT. The occurrence of any of the following shall be
deemed to constitute an Event of Default hereunder: (a) Lessee fails to pay
Rent, any other amount it is obligated to pay under a Lease or any other
amount it is obligated to pay to Lessor and does not cure such failure within
10 days of such amount becoming due; (b) Lessee fails to perform or observe
any obligation or covenant to be performed or observed by Lessee hereunder or
under any Schedule, including, without limitation, supplying all requested
documentation, and does not cure such failure within 10 days of receiving
written notice thereof from Lessor; (c) the occurrence and continuance of any
default under any other lease or agreement for borrowed money made between
Ascend Communications, Inc., Lucent Technologies, Inc. or its affiliates or
successors, and the Lessee; (d) any warranty, representation or statement
made or furnished to Lessor by or on behalf of Lessee is proven to have been
false in any material respect when made or furnished; (e) the attempted sale
or encumbrance by Lessee of the Equipment, or the making of any levy, seizure
or attachment thereof or thereon; or (f) the dissolution, termination of
existence, discontinuance of business, insolvency, or appointment of a
receiver of any part of the property of Lessee, assignment by lessee for the
benefit of creditors, the commencement of proceedings under any bankruptcy,
reorganization or arrangement laws by or against Lessee, or any other act of
bankruptcy on the part of Lessee.
18. REMEDIES OF LESSOR. At any time after the occurrence of any Event
of Default, Lessor may exercise one or more of the following remedies: (a)
Lessor may terminate any or all of the Leases with respect to any or all of
the Leases with respect to any or all items of Equipment subject thereto; (b)
Lessor may recover from Lessee all Rent and other amounts then due and to
become due under any or all of the Leases; (c) Lessor may take possession of
any or all items of Equipment, wherever the same may be located, without
demand or notice, without any court order or other process of law and without
liability to Lessee for any damages occasioned by such taking of possession,
and any such taking of possession shall not constitute a termination of any
Lease; (d) Lessor may demand that Lessee return any or all items of Equipment
to Lessor in accordance with Paragraph 16; and (e) Lessor may pursue any
other remedy available at law or in equity, including, without limitation,
seeking damages, specific performance or an injunction.
Upon repossession or return of any item of the Equipment, Lessor shall
sell, lease or otherwise dispose of such item in a commercially reasonable
manner, with or without notice and on public or private bid, and apply the
net proceeds thereof (after deducting the estimated fair market value of such
item at the expiration of the term of the applicable Lease, in the case of a
sale, or the rents due for any period beyond the scheduled expiration of such
Lease, in the case of any subsequent lease of such item, and all expenses,
including, without limitation, reasonable attorneys' fees, incurred in
connection therewith) towards the Rent and other amounts due under such
Lease, with any excess net proceeds to be retained by Lessor.
Page 5 of 8
Each of the remedies under this Lease shall be cumulative, and not
exclusive, and in addition to any other remedy referred to herein or
otherwise available to Lessor in law or in equity. Any repossession or
subsequent sale or lease by Lessor of any item of Equipment shall not bar an
action for a deficiency as herein provided, and the bringing of an action or
the entry of judgment against Lessee shall not bar Lessor's right to
repossess any or all items of Equipment.
19. CREDIT AND FINANCIAL INFORMATION. Upon the request of Lessor,
Lessee shall provide copies of its 10K and 10Q statements within 10 days of
the date such statements are required to be filed with the Securities and
Exchange Commission. At Lessor's request, if 10K or 10Q statements are not
required to be filed, Lessee shall deliver to Lessor a balance sheet,
statement of cash flows, and profit and loss statement for any of its fiscal
months or quarters, and any other additional information regarding historical
or projected operating performance reasonably requested by Lessor, all of
which shall be certified by an officer of Lessee.
20. INSURANCE. As of the date that risk of loss for the Equipment
passes from the Supplier to the Lessee under the terms of the Agreement,
Lessee shall obtain and maintain through the end of the Lease Term of each
Lease (and any renewal or extension thereof), at its own expense, property
damage and personal liability insurance and insurance against loss or damage
to the Equipment, including, without limitation, loss by fire (with extended
coverage), theft and such other risks of loss as are customarily insured
against with respect to the types of Equipment leased hereunder and by the
types of businesses in which such Equipment will be used by Lessee. Such
insurance shall be in such amounts, with such deductibles, in such form and
with such insurers as shall be satisfactory to Lessor; provided, however,
that the amount of the insurance against loss or damage to the Equipment
shall not be less than the greater of the replacement value of the Equipment,
from time to time, or the original purchase price of the Equipment. Each
insurance policy shall name Lessee as an insured and Lessor as an additional
insured or loss payee, and shall contain a clause requiring the insurer to
give Lessor at least 30 days prior written notice of any alteration in the
terms of such policy or of the cancellation thereof. Lessee shall furnish to
Lessor a certificate of insurance or other evidence satisfactory to Lessor
that such insurance coverage is in effect; provided, however, that Lessor
shall be under no duty either to ascertain the existence of or to examine
such insurance policy or to advise Lessee in the event such insurance
coverage shall not comply with the requirements hereof. Lessee shall give
Lessor prompt notice of any damage to, or loss of, any of the Equipment, or
any part thereof, or any personal injury or property damage occasioned by the
use of any of the Equipment.
21. TAXES. Lessee hereby assumes liability for, and shall pay when due,
and, on a net after-tax basis, shall indemnify, protect and hold harmless
Lessor against all fees, taxes and governmental charges (including, without
limitation, interest and penalties) of any nature imposed on or in any way
relating to Lessor, Lessee, any item of Equipment or any Lease, except state
and local taxes on or measured by Lessor's net income (other than any such
tax which is in substitution for or relieves Lessee from the payment of taxes
it would otherwise be obligated to pay or reimburse to Lessor as herein
provided) and federal taxes on Lessor's net income. Lessee shall, at its
expense, file
Page 6 of 8
when due with the appropriate authorities any and all tax and similar
returns, and reports required to be filed with respect thereto, for which it
has indemnified Lessor hereunder or, if required by Lessor, notify Lessor of
all such requirements and furnish Lessor with all information required for
Lessor to effect such filings. Any fees, taxes or other charges paid by
Lessor upon failure of Lessee to make such payments shall, at Lessor's
option, become immediately due from Lessee to Lessor and shall be subject to
the Overdue Charge from the date paid by Lessor until the date reimbursed by
Lessee.
22. SEVERABILITY. If any provision of any Lease is held to be invalid
by a court of competent jurisdiction, such invalidity shall not affect the
other provisions of such Lease or any provision of any other Lease.
23. NOTICES. All notices hereunder shall be in writing and shall be
deemed given when sent by certified mail, postage prepaid, return receipt
requested, addressed to the party to which it is being sent at its address
set forth herein or to such other address as such party may designate in
writing to the other party.
24. AMENDMENTS, WAIVERS AND EXTENSIONS. This MLA and each Schedule
constitute the entire agreement between Lessor and Lessee with respect to the
lease of the Equipment subject to such Schedule, and supersede all previous
communications, understandings, and agreements, whether oral or written,
between the parties with respect to such subject matter. No provision of any
Lease may be changed, waived, amended or terminated except by a written
agreement, specifying such change, wavier, amendment or termination, signed
by both Lessee and Lessor, except that Lessor may insert, on the appropriate
schedule, the serial number of Equipment, after delivery of such Equipment,
and the RENT Commencement Date for the Equipment. No waiver by Lessor of any
Event of Default shall be construed as a waiver of any future Event of
Default or any other Event of Default. At the expiration of the Lease Term
with respect to a Lease, upon notice given by Lessee at least ninety (90)
days prior thereto, (a) such Lease shall be renewed or the Equipment subject
thereto shall be purchased under the terms and conditions set forth herein
for a term and Rent amount of purchase price, as the case may be, to be
agreed upon, or (b) if no such agreement is reached prior to the expiration
of such Lease Term or such notice specifies that Lessee intends to return the
Equipment, then Lessee shall return the Equipment to Lessor in the manner
prescribed in Paragraph 16 of this MLA. In the absence of Lessor's timely
receipt of the notice contemplated by the preceding sentence, the Lease shall
be automatically extended, on a month-to-month basis, until terminated (upon
notice by either party given at least ninety (90) days prior to the end of
the month on which the termination is to be effective) or until renewed or
the Equipment subject thereto is purchased by agreement of the parties.
Unless otherwise agreed, Lessee shall continue to pay Rent for each month
following such Lease Term until the Equipment subject to such Lease is
returned pursuant to Paragraph 16 of this MLA.
25. CONSTRUCTION. This MLA shall be governed by and construed in
accordance with the internal laws, but not the choice of laws provisions, of
the State of California. The titles of the sections of this MLA are for
convenience
Page 7 of 8
only and shall not define or limit any of the terms or provisions hereof.
Time is of the essence in each of the provisions hereof.
26. PARTIES. This MLA shall be binding upon, and inure to the benefit
of, the permitted assigns, representatives and successors of the Lessor and
Lessee. If there is more than one Lessee named in this MLA, the liability of
each shall be joint and several.
27. COUNTERPARTS. Each Lease may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.
28. OVERDUE CHARGE. Overdue Charge shall mean an amount equal to 2% per
month of any payment under a Lease which is past due, including, without
limitation, any amounts not included in any payment of Rent hereunder, or the
highest charge permitted by law, whichever is lower. The person executing
this MLA on behalf of Lessee hereby certifies that he or she has read, and is
duly authorized to execute, this MLA.
Accepted by:
LESSOR: LESSEE:
LUCENT TECHNOLOGIES, INC. TELECOM WIRELESS, INC.
INTERNETWORKING SERVICES
BY: /s/ Xxxxxxx Xxxxxxxxx BY: /s/ Xxxxx X. Xxxxxxx
-------------------------- --------------------------
NAME: Xxxxxxx Xxxxxxxxx NAME: Xxxxx X. Xxxxxxx
------------------------ ------------------------
TITLE: Assistant Treasurer TITLE: CEO
------------------------ ------------------------
DATE: July 30, 1999 DATE: 7/29/99
------------------------ ------------------------
Page 8 of 8
