EXHIBIT 10.6
[Fleet Capital Corporation Logo]
MASTER EQUIPMENT LEASE AGREEMENT No. 35018
LESSOR: FLEET CAPITAL CORPORATION LESSEE: ACT MANUFACTURING, INC.
a Rhode Island corporation a MASSACHUSETTS CORPORATION
ADDRESS: 00 XXXXXXX XXXXX ADDRESS: 0 XXXXX XXXX
XXXXXXXXXX, XXXXX XXXXXX 00000-0000 XXXXXX, XX 00000
1. LEASE OF EQUIPMENT
Subject to the terms and conditions set forth herein (the "MASTER LEASE")
and in any Lease Schedule incorporating the terms of this Master Lease (each, a
"LEASE SCHEDULE"), Lessor agrees to lease to Lessee, and Lessee agrees to lease
from Lessor, the items and units of personal property described in each such
Lease Schedule, together with all replacements, parts, additions, accessories
and substitutions therefor (collectively, the "EQUIPMENT"). As used in this
Lease, the term "ITEM OF EQUIPMENT" shall mean each functionally integrated and
separately marketable group or unit of Equipment subject to this Lease. Each
Lease Schedule shall constitute a separate, distinct and independent lease of
Equipment and contractual obligation of Lessee. References to "THE LEASE," "THIS
LEASE" or "ANY LEASE" shall mean and refer to any Lease Schedule which
incorporates the terms of this Master Lease, together with all exhibits,
addenda, schedules, certificates, riders and other documents and instruments
executed and delivered in connection with such Lease Schedule or this Master
Lease, all as the same may be amended or modified from time to time. The
Equipment is to be delivered and installed at the location specified or referred
to in the applicable Lease Schedule. The Equipment shall be deemed to have been
accepted by Lessee for all purposes under this Lease upon Lessor's receipt of an
Acceptance Certificate with respect to such Equipment, executed by Lessee after
receipt of all other documentation required by Lessor with respect to such
Equipment. Lessor shall not be liable or responsible for any failure or delay in
the delivery of the Equipment to Lessee for whatever reason. As used in this
Lease, "ACQUISITION COST" shall mean (a) with respect to all Equipment subject
to a Lease Schedule, the amount set forth as the Acquisition Cost in the Lease
Schedule and the Acceptance Certificate applicable to such Equipment; and (b)
with respect to any item of Equipment, the total amount of all vendor or seller
invoices (including Lessee invoices, if any) for such item of Equipment,
together with all acquisition fees and costs of delivery, installation, testing
and related services, accessories, supplies or attachments procured or financed
by Lessor from vendors or suppliers thereof (including items provided by Lessee)
relating or allocable to such item of Equipment ("RELATED EXPENSES"). As used in
this Lease with respect to any Equipment, the terms "ACCEPTANCE DATE," "RENTAL
PAYMENT(S)," "RENTAL PAYMENT DATE(S)," "RENTAL PAYMENT NUMBERS," "RENTAL PAYMENT
COMMENCEMENT DATE," "LEASE TERM" and "LEASE TERM COMMENCEMENT DATE" shall have
the meanings and values assigned to them in the Lease Schedule and the
Acceptance Certificate applicable to such Equipment.
2. TERM AND RENT
The Lease Term for any Equipment shall be as specified in the applicable
Lease Schedule. Rental Payments shall be in the amounts and shall be due and
payable as set forth in the applicable Lease Schedule. Lessee shall, in
addition, pay interim rent to Lessor on a pro-rata, per-diem basis from the
Acceptance Date to the Lease Term Commencement Date set forth in the applicable
Acceptance Certificate, payable on such Lease Term Commencement Date. If any
rent or other amount payable hereunder shall not be paid within 10 days of the
date when due, Lessee shall pay as an administrative and late charge an amount
equal to 5% of the amount of any such overdue payment. In addition, Lessee shall
pay overdue interest on any delinquent payment or other amounts due under the
Lease (by reason of acceleration or otherwise) from 30 days after the due date
until paid at the rate of 1 1/2% per month or the maximum amount permitted by
applicable law, whichever is lower. All payments to be made to Lessor shall be
made to Lessor in immediately available funds at the address shown above, or at
such other place as Lessor shall specify in writing. THIS IS A NON-CANCELABLE,
NON-TERMINABLE LEASE OF EQUIPMENT FOR THE ENTIRE LEASE TERM PROVIDED IN EACH
LEASE SCHEDULE HERETO.
3. POSSESSION; PERSONAL PROPERTY
No right, title or interest in the Equipment shall pass to Lessee other
than the right, which Lessor hereby covenants to Lessee, to maintain possession
and use of the Equipment for the Lease Term (provided no Event of Default has
occurred and is continuing under the Lease) free from interference by any person
claiming by, through, or under Lessor. The Equipment shall always remain
personal property even though the Equipment may hereafter become attached or
affixed to real property. Lessee agrees to give and record such notices and to
take such other action at its own expense as may be necessary to prevent any
third party (other than an assignee of Lessor) from acquiring or having the
right under any circumstances to acquire any interest in the Equipment or this
Lease.
4. DISCLAIMER OF WARRANTIES
LESSOR IS NOT THE MANUFACTURER OR SUPPLIER OF THE EQUIPMENT, NOR THE AGENT
THEREOF, AND MAKES NO EXPRESS OR IMPLIED REPRESENTATIONS OR WARRANTIES AS TO ANY
MATTER WHATSOEVER, INCLUDING WITHOUT LIMITATION, THE MERCHANTABILITY OF THE
EQUIPMENT, ITS FITNESS FOR A PARTICULAR PURPOSE, ITS DESIGN OR CONDITION, ITS
CAPACITY OR DURABILITY, THE QUALITY OF THE MATERIAL OR WORKMANSHIP IN THE
MANUFACTURE OR ASSEMBLY OF THE EQUIPMENT, OR THE CONFORMITY OF THE EQUIPMENT TO
THE PROVISIONS AND SPECIFICATIONS OF ANY PURCHASE ORDER RELATING THERETO, OR
PATENT INFRINGEMENTS, AND LESSOR HEREBY DISCLAIMS ANY SUCH WARRANTY. LESSOR IS
NOT RESPONSIBLE FOR ANY REPAIRS OR SERVICE TO THE EQUIPMENT, DEFECTS THEREIN OR
FAILURES IN THE OPERATION THEREOF. Lessee has made the selection of each item of
Equipment and the manufacturer and/or supplier thereof based on its own judgment
and expressly disclaims any reliance upon any statements or representations made
by Lessor. For so long as no Event of Default (or event or condition which, with
the passage of time or giving of notice, or both, would become such an Event of
Default) has occurred and is continuing, Lessee shall be the beneficiary of, and
shall be entitled to, all rights under any applicable manufacturer's or vendor's
warranties with respect to the Equipment, to the extent permitted by law.
If the Equipment is not delivered, is not properly installed, does not
operate as warranted, becomes obsolete, or is unsatisfactory for any reason
whatsoever, Lessee shall make all claims on account thereof solely against the
manufacturer or supplier and not against Lessor, and Lessee shall nevertheless
pay all rentals and other sums payable hereunder. Lessee acknowledges that
neither the manufacturer or supplier of the Equipment, nor any sales
representative or agent thereof, is an agent of Lessor, and no agreement or
representation as to the Equipment or any other matter by any such sales
representative or agent of the manufacturer or supplier shall in any way affect
Lessee's obligations hereunder.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS
Lessee represents and warrants to and covenants with Lessor that:
(a) Lessee has the form of business organization indicated above and is
duly organized and existing in good standing under the laws of the state listed
in the caption of this Master Lease and is duly qualified to do business
wherever necessary to carry on its present business and operations and to own
its property; (b) this Lease has been duly authorized by all necessary action on
the part of Lessee consistent with its form of organization, does not require
any further shareholder or partner approval, does not require the approval of,
or the giving notice to, any federal, state, local or foreign governmental
authority and does not contravene any law binding on Lessee or contravene any
certificate or articles of incorporation or by-laws or partnership certificate
or agreement, or any agreement, indenture, or other instrument to which Lessee
is a party or by which it may be bound; (c) this Lease has been duly executed
and delivered by authorized officers or partners of Lessee and constitutes a
legal, valid and binding obligation of Lessee enforceable in accordance with its
terms; (d) Lessee has not and will not, directly or indirectly, create, incur or
permit to exist any lien, encumbrance, mortgage, pledge, attachment or security
interest on or with respect to the Equipment or this Lease (except those of
persons claiming by, through or under Lessor); (e) the Equipment will be used
solely in the conduct of Lessee's business and will remain in the location shown
on the applicable Lease Schedule unless Lessor otherwise agrees in writing and
Lessee has completed all notifications, filings, recordings and other actions in
such new location as Lessor may reasonably request to protect Lessor's interest
in the Equipment; (f) there are no pending or threatened actions or proceedings
before any court or administrative agency which materially adversely affect
Lessee's financial condition or operations, and all credit, financial and other
information provided by Lessee or at Lessee's direction is, and all such
information hereafter furnished will be, true, correct and complete in all
material respects; and (g) Lessor has not selected, manufactured or supplied the
Equipment to Lessee and has acquired any Equipment subject hereto solely in
connection with this Lease and Lessee has received and approved the terms of any
purchase order or agreement with respect to the Equipment.
6. INDEMNITY
Lessee assumes the risk of liability for, and hereby agrees to indemnify
and hold safe and harmless, and covenants to defend, Lessor, its employees,
servants and agents from and against: (a) any and all liabilities, losses,
damages, claims and expenses (including legal expenses of every kind and nature)
arising out of the manufacture, purchase, shipment and delivery of the Equipment
to Lessee, acceptance or rejection, ownership, titling, registration, leasing,
possession, operation, use, return or other disposition of the Equipment,
including, without limitation, any liabilities that may arise from patent or
latent defects in the Equipment (whether or not discoverable by Lessee), any
claims based on absolute tort liability or warranty and any claims based on
patent, trademark or copyright infringement; (b) any and all loss or damage of
or to the Equipment; and (c) any obligation or liability to the manufacturer or
any supplier of the Equipment arising under any purchase orders issued by or
assigned to Lessor, in each case other than resulting proximately from the gross
negligence or willful misconduct of Lessor.
7. TAXES AND OTHER CHARGES
Lessee agrees to comply with all laws, regulations and governmental orders
related to this Lease and to the Equipment and its use or possession, and to pay
when due, and to defend and indemnify Lessor against liability for all license
fees, assessments, and sales, use, property, excise, privilege and other taxes
(including any related interest or penalties) or other charges or fees now or
hereafter imposed by any governmental body or agency upon any Equipment, or with
respect to the manufacturing, ordering, shipment, purchase, ownership, delivery,
installation, leasing, operation, possession, use, return, or other disposition
thereof or the rentals hereunder (other than taxes on or measured solely by the
net income of Lessor). Any fees, taxes or other lawful charges paid by Lessor
upon failure of Lessee to make such payments shall at Lessor's option become
immediately due from Lessee to Lessor.
If any Lease Schedule is denominated as a "TRUE LEASE SCHEDULE," then, with
respect to the Equipment set forth on such True Lease Schedule, Lessee and
Lessor anticipate that Lessor shall be entitled to the following tax benefits
(the "TAX BENEFITS"): Lessor will be entitled to cost recovery deductions under
Section 168 of the Internal Revenue Code of 1986, as amended (the "CODE"), using
a 200% declining balance method of depreciation switching to the straight line
method for the first taxable year for which such method will yield larger
depreciation deductions, and assuming a half-year convention and zero salvage
value, for the applicable recovery period for such Equipment as set forth in the
True Lease Schedule with respect to such Equipment. With respect to Equipment
set forth on any such True Lease Schedule, Lessee agrees that: Lessee will not
claim that Lessee is the owner of the Equipment subject thereto or that Lessee
is otherwise entitled to all or any of the Tax Benefits; Lessee will not take
any action inconsistent with Lessor's anticipated Tax Benefits; and the
Equipment will not constitute "public utility property" or "tax-exempt use
property" within the meaning of Sections 168(i)(10) or 168(h) of the Code. If,
as the proximate result of any act, omission and/or misrepresentation of Lessee,
there shall be a loss, disallowance, recapture or delay in claiming all or any
portion of the Tax Benefits with respect to the Equipment, or there shall be
included in Lessor's gross income for Federal, state or local income tax
purposes any amount on account of any addition, modification or improvement to
or in respect of any of the Equipment made or paid for by Lessee (any loss,
disallowance, recapture, delay or inclusion being herein called a "TAX LOSS"),
Lessee shall reimburse Lessor for such Tax Loss in the manner provided for in
this Section 7. Lessee's indemnification obligation hereunder is limited to as
set forth in the previous sentence. Without limiting the generality of the
foregoing, Lessee shall not have any liability to Lessor for indemnification
hereunder for any Tax Loss with respect to any of the Equipment resulting
proximately from one or more of the following: (i) any voluntary transfer or
other disposition by Lessor of any of its interests in the Lease or the
Equipment; (ii) Lessor's failure to claim or follow the proper procedure in
claiming any Tax Benefit in a proper and timely manner; (iii) Lessor's failure
to have sufficient income to utilize any Tax Benefit; or (iv) any act, omission
or misrepresentation of Lessor. A Tax Loss shall be deemed to have occurred if
either (a) a deficiency shall have been proposed or a claim has been made that a
Tax Loss has so occurred by the Internal Revenue Service or other taxing
authority having jurisdiction, or (b) independent tax counsel ("TAX COUNSEL")
selected by Lessor and acceptable to Lessee (which acceptance shall not be
unreasonably withheld or delayed by Lessee) has rendered an opinion to Lessor
that such Tax Loss has so occurred. Lessor shall use its best efforts to
promptly provide written notice to Lessee that a Tax Loss has occurred. The
foregoing indemnities and covenants set forth in this Section 7 shall continue
in full force and effect and shall survive the expiration or earlier termination
of the Lease with respect to matters arising during the applicable Lease Term.
8. DEFAULT
Lessee shall be in default of this Lease upon the occurrence of any one or
more of the following events (each an "EVENT OF DEFAULT"):
(a) Lessee shall fail to make any payment, of rent or otherwise, under any
Lease within 10 days of the date when due; or (b) Lessee shall fail to obtain or
maintain any of the insurance required under any Lease; or (c) Lessee shall fail
to perform or observe any covenant, condition or agreement under any Lease, and
such failure continues for 10 days after notice thereof to Lessee; or (d) Lessee
shall default in the payment or performance of any indebtedness or obligation to
Lessor or any affiliated person, firm or entity controlling, controlled by or
under common control with Lessor, under any loan, note, security agreement,
lease, guaranty, title retention or conditional sales agreement or any other
instrument or agreement evidencing such indebtedness with Lessor or such other
affiliated person, firm or entity affiliated with Lessor; or (e) any
representation or warranty made by Lessee herein or in any certificate,
agreement, statement or document hereto or hereafter furnished to Lessor in
connection herewith, including without limitation, any financial information
disclosed to Lessor, shall prove to be false or incorrect in any material
respect when made; or (f) death or judicial declaration of incompetence of
Lessee, if an individual; the commencement of any bankruptcy, insolvency,
arrangement, reorganization, receivership, liquidation or other similar
proceeding by or against Lessee (except, in the case of an involuntary petition
against Lessee, after a 60-day cure period, provided Lessee is taking reasonable
steps to discharge such petition) or any of its properties or businesses, or the
appointment of a trustee, receiver, liquidator or custodian for Lessee or any of
its properties of business, or if Lessee suffers the entry of an order for
relief under Title 11 of the United States Code; or the making by Lessee of a
general assignment or deed of trust for the benefit of creditors, or (g) Lessee
shall default in any one or more payments or other obligations singly or
collectively in the amount of not less than $250,000 to any one or more third
parties and any applicable grace or cure period with respect thereto has
expired; or (h) Lessee shall terminate its existence by merger, consolidation,
sale of substantially all of its assets or otherwise; or (i) if Lessee is a
privately held entity, and more than 50% of Lessee's voting capital stock or
other equivalent ownership interest, or effective control of such stock or
interest in Lessee, issued and outstanding from time to time, is not retained by
the holders of such stock or interest on the date of this Lease; or (j) if
Lessee is a publicly held corporation, there shall be a change in the ownership
of Lessee's stock such that Lessee is no longer subject to the reporting
requirements of the Securities Exchange Act of 1934, or no longer has a class of
equity securities registered under Section 12 of the Securities Act of 1933; or
(k) Lessor shall determine, in its sole discretion and in good faith, that there
has been a material adverse change in the financial condition of the Lessee
since the date of this Lease, or that Lessee's ability to make any payment
hereunder promptly when due or otherwise comply with the terms of this Lease or
any other agreement between Lessor and Lessee is impaired; or (l) any event or
condition set forth in subsections (b) through (k) of this Section 8 shall occur
with respect to any guarantor or other person responsible, in whole or in part,
for payment or performance of this Lease; or (m) any event or condition set
forth in subsections (d) through (j) shall occur with respect to any affiliated
person, firm or entity controlling, controlled by or under common control with
Lessee. Lessee shall promptly notify Lessor of the occurrence of any Event of
Default or the occurrence or existence of any event or condition which, upon the
giving of notice of lapse of time, or both, may become an Event of Default.
9. REMEDIES; MANDATORY PREPAYMENT.
Upon the occurrence of any Event of Default, Lessor may, at its sole option
and discretion, exercise in accordance with the terms hereof and with applicable
law one or more of the following remedies with respect to any or all of the
Equipment: (a) cause Lessee to promptly return, at Lessee's expense, any or all
Equipment to such location as Lessor may designate in accordance with the terms
of Section 18 of this Master Lease, or Lessor, at its option, may peacably enter
upon the premises where the Equipment is located and take immediate possession
of and remove the same by summary proceedings or otherwise, all without
liability to Lessor for or by reason of damage to property or such entry or
taking possession except for Lessor's gross negligence or willful misconduct;
(b) sell any or all Equipment at public or private sale or otherwise dispose of,
hold, use, operate, lease to others or keep idle the Equipment, all as Lessor in
its sole discretion may determine and all free and clear of any rights of
Lessee; (c) remedy such default, including making repairs or modifications to
the Equipment, for the account and expense of Lessee, and Lessee agrees to
reimburse Lessor for all of Lessor's costs and expenses; (d) by written notice
to Lessee, terminate the Lease with respect to any or all Lease Schedules and
the Equipment subject thereto, as such notice shall specify, and, with respect
to such terminated Lease Schedules and Equipment, declare immediately due and
payable and recover from Lessee, as liquidated damages for loss of Lessor's
bargain and not as a penalty, an amount equal to the Stipulated Loss Value,
calculated as of the next following Rental Payment Date; (e) apply any deposit
or other cash collateral or sale or remarketing proceeds of the Equipment at any
time to reduce any amounts due to Lessor, and (f) exercise any other right or
remedy which may be available to Lessor under applicable law, or proceed by
appropriate court action to enforce the terms hereof or to recover damages for
the breach hereof, including reasonable attorneys' fees and court costs. To the
extent permitted by law, notice of Lessor's intention to accelerate, notice of
acceleration, notice of nonpayment, presentment, protest, notice of dishonor, or
any other notice whatsoever are hereby waived by Lessee and any endorser,
guarantor, surety or other party liable in any capacity for any of the Lessee's
obligations under or in respect of the Lease. No remedy referred to in this
Section 9 shall be exclusive, but each shall be cumulative and in addition to
any other remedy referred to above or otherwise available to Lessor at law or in
equity.
The exercise or pursuit by Lessor of any one or more of such remedies shall
not preclude the simultaneous or later exercise or pursuit by Lessor of any or
all such other remedies, and all remedies hereunder shall survive termination of
this Lease. At any sale of the Equipment pursuant to this Section 9, Lessor may
bid for the Equipment. Notice required, if any, of any sale or other
disposition hereunder by Lessor shall be satisfied by the mailing of such notice
to Lessee atten (10) days prior to such sale or other disposition. In the event
Lessor takes possession and disposes of the Equipment, the proceeds of any such
disposition shall be applied in the following order: (1) to all of Lessor's
costs, charges and expenses incurred in taking, removing, holding, repairing and
selling or leasing the Equipment; (2) to the extent not previously paid by
Lessee, to pay Lessor for any damages then remaining unpaid hereunder; (3) to
reimburse Lessee for any sums previously paid by Lessee as damages hereunder;
and (4) the balance, if any, shall be retained by Lessor. A termination shall
occur only upon written notice by Lessor and only with respect to such Equipment
as Lessor shall specify in such notice. Termination under this Section 9 shall
not affect Lessee's duty to perform Lessee's obligations hereunder to Lessor in
full. Lessee agrees to reimburse Lessor on demand for any and all costs and
expenses incurred by Lessor in enforcing its rights and remedies hereunder
following the occurrence of an Event of Default, including, without limitation,
reasonable attorney's fees, and the costs of repossession, storage, insuring,
reletting, selling and disposing of any and all Equipment.
The term "STIPULATED LOSS VALUE" with respect to any item of Equipment
shall mean the Stipulated Loss Value as set forth in any Schedule of Stipulated
Loss Values attached to and made a part of the applicable Lease Schedule. If
there is no such Schedule of Stipulated Loss Values, then the Stipulated Loss
Value with respect to any item of Equipment on any Rental Payment Date during
the Lease Term shall be an amount equal to the sum of: (a) all Rental Payments
and other amounts then due and owing to Lessor under the Lease, together with
all accrued interest and late charges thereon calculated through and including
the date of payment; plus (b) the net present value of: (i) all Rental Payments
then remaining unpaid for the Lease Term, plus (ii) the amount of any purchase
obligation with respect to such item of Equipment or, if there is no such
obligation, then the fair market value of such item of Equipment at the end of
the Lease Term, as estimated by Lessor in its sole discretion (accounting for
the amount of any unpaid Related Expenses for such item of Equipment and, with
respect to any such item of Equipment that has been attached to or installed on
or in any other property leased or owned by Lessee, such value shall be
determined on an installed basis, in place and in use), all discounted to net
present value at a discount rate equal to the 1-year Treasury Constant Maturity
rate as published in the Selected Interest Rates table of the Federal Reserve
statistical release H.15(519) for the week ending immediately prior to the
original Acceptance Date for such Equipment.
Lessee is or may become indebted under or in respect of one or more leases,
loans, notes, credit agreements, reimbursement agreements, security agreements,
title retention or conditional sales agreements, or other documents, instruments
or agreements, whether now existing or hereafter arising, evidencing Lessee's
obligations for the payment of borrowed money or other financial accommodations
("OBLIGATIONS") owing to FCC, or to one or more affiliated persons, firms or
entities controlling, controlled by or under common control with Lessor
("AFFILIATES"). If Lessee pays or prepays all or substantially all of its
Obligations owing to any Affiliate, and such payment or prepayment is
involuntarily made by Lessee before or after any default or acceleration of such
Obligations, then Lessee shall pay, at Lessor's option and immediately upon
notice from Lessor, all or any part of Lessee's Obligations owing to Lessor,
including but not limited to Lessee's payment of Stipulated Loss Value for all
or any Lease Schedules as set forth in such notice from Lessor.
10. ADDITIONAL SECURITY
For so long as any obligations of Lessee shall remain outstanding under any
Lease, Lessee hereby grants to Lessor a security interest in all of Lessee's
rights in and to Equipment subject to such Lease from time to time, to secure
the prompt payment and performance when due (by reason of acceleration or
otherwise) of each and every indebtedness, obligation or liability of Lessee, or
any affiliated person, firm, or entity controlling, controlled by, or under
common control with Lessee, owing to Lessor, whether now existing or hereafter
arising, including but not limited to all of such obligations under or in
respect of any Lease. The extent to which Lessor shall have a purchase money
security interest in any item of Equipment under a Lease which is deemed to
create a security interest under Section 1-201(37) of the Uniform Commercial
Code shall be determined by reference to the Acquisition Cost of such item
financed by Lessor. In order to more fully secure its rental payments and all
other obligations to Lessor hereunder, Lessee hereby grants to Lessor a security
interest in any deposit of Lessee to Lessor under Section 3(d) of any Lease
Schedule hereto. Such security deposit shall not bear interest, may be
commingled with other funds of Lessor and shall be immediately restored by
Lessee if applied under Section 9. Upon expiration of the Lease Term of this
Lease and satisfaction of all of Lessee's obligations, the security deposit
shall be returned to Lessee. The term "LESSOR" as used in this Section 10 shall
include any affiliated person, firm or entity controlling, controlled by or
under common control with Lessor.
11. NOTICES
Any notices or demands required or permitted to be given under this Lease
shall be given in writing and by regular mail or overnight delivery service and
shall become effective when deposited in the United States mail with postage
prepaid or, in the case of overnight delivery service, when received, to Lessor
to the attention of Customer Accounts, and to Lessee at the address set forth
above, or to such other address as the party to receive notice hereafter
designates by such written notice.
12. USE; MAINTENANCE; INSPECTION; LOSS AND DAMAGE
During the Lease Term for each item of Equipment, Lessee shall, unless
Lessor shall otherwise consent in writing: (a) permit each item of Equipment to
be used only within the continental United States by qualified personnel solely
for business purposes and the purpose for which it was designed and shall, at
its sole expense, service, repair, overhaul and maintain each item of Equipment
in the same condition as when received, ordinary wear and tear excepted, in good
operating order, consistent with prudent industry practice (but, in no event
less than the same extent to which Lessee maintains other similar equipment in
the prudent management of its assets and properties) and in compliance with all
applicable laws, ordinances, regulations, and conditions of all insurance
policies required to be maintained by Lessee under the Lease and all manuals,
orders, recommendations, instructions and other written requirements as to the
repair and maintenance of such item of Equipment issued at any time by the
vendor and/or manufacturer thereof; (b) maintain conspicuously on any Equipment
such labels, plates, decals or other markings as Lessor may reasonably require,
stating that Lessor is owner of such Equipment; (c) furnish to Lessor such
information concerning the condition, location, use and operation of the
Equipment as Lessor may request; (d) permit any person designated by Lessor to
visit and inspect during regular business hours upon reasonable prior notice (or
if an event of default has occurred and is continuing, at any time) any
Equipment and any records maintained in connection therewith, provided, however,
that the failure of Lessor to inspect the Equipment or to inform Lessee of any
noncompliance shall not relieve Lessee of any of its obligations hereunder; (e)
if any Equipment does not comply with the requirements of this Lease, Lessee
shall, within 30 days of written notice from Lessor, bring such Equipment into
compliance; (f) not use any Equipment, nor allow the same to be used, for any
unlawful purpose, nor in
connection with any property or material that would subject the Lessor to any
liability under any state or federal statute or regulation pertaining to the
production, transport, storage, disposal or discharge of hazardous or toxic
waste or materials; and (g) make no additions, alterations, modifications or
improvements (collectively, "IMPROVEMENTS") to any item of Equipment that are
not readily removable without causing material damage to such item of Equipment
or which will cause the value, utility or useful life of such item of Equipment
to materially decline. If any such Improvement is made and cannot be removed
without causing material damage or decline in value, utility or useful life (a
"NON-SEVERABLE IMPROVEMENT"), then Lessee warrants that such Non-Severable
Improvement shall immediately become Lessor's property upon being installed and
shall be free and clear of all liens and encumbrances and shall become Equipment
subject to all of the terms and conditions of the Lease. All such Improvements
that are not Non-Severable Improvements shall be removed by Lessee prior to the
return of the item of Equipment hereunder or such Improvements shall also become
the sole and absolute property of Lessor without any further payment by Lessor
to Lessee and shall be free and clear of all liens and encumbrances whatsoever.
Lessee shall repair all damage to any item of Equipment caused by the removal of
any Improvement so as to restore such item of Equipment to the same condition
which existed prior to its installation and as required by this Lease.
Lessee hereby assumes all risk of loss, damage or destruction for whatever
reason to the Equipment from and after the earlier of the date (i) on which the
Equipment is ordered or (ii) Lessor pays the purchase price of the Equipment,
and continuing until the Equipment has been returned to, and accepted by, Lessor
in the condition required by Section 18 hereof upon the expiration of the Lease
Term. If during the Lease Term all or any portion of an item of Equipment shall
become lost, stolen, destroyed, damaged beyond repair or rendered permanently
unfit for use for any reason, or in the event of any condemnation, confiscation,
theft or seizure or requisition of title to or use of such item, Lessee shall
immediately pay to Lessor an amount equal to the Stipulated Loss Value of such
item of Equipment, as of the next following Rental Payment Date.
13. INSURANCE
Lessee shall procure and maintain insurance in such amounts and upon such
terms and with such companies as Lessor may approve, during the entire Lease
Term and until the Equipment has been returned to, and accepted by, Lessor in
the condition required by Section 18 hereof, at Lessee's expense, provided that
in no event shall such insurance be less than the following coverages and
amounts: (a) Worker's Compensation and Employer's Liability Insurance, in the
full statutory amounts provided by law; (b) Comprehensive General Liability
Insurance including product/completed operations and contractual liability
coverage, with minimum limits of $1,000,000 each occurrence, and Combined Single
Limit Body Injury and Property Damage, $1,000,000 aggregate, where applicable;
and (c) All Risk Physical Damage Insurance, including earthquake and flood, on
each item of Equipment, in an amount not less than the greater of the Stipulated
Loss Value of the Equipment or (if available) its full replacement value. Lessor
will be included as an additional insured and loss payee as its interest may
appear. Such policies shall be endorsed to provide that the coverage afforded to
Lessor shall not be rescinded, impaired or invalidated by any act or neglect of
Lessee. Lessee agrees to waive Lessee's right and its insurance carrier's rights
of subrogation against Lessor for any and all loss or damage.
In addition to the foregoing minimum insurance coverage, Lessee shall
procure and maintain such other insurance coverage as Lessor may require from
time to time during the Lease Term. All policies shall be endorsed or contain a
clause requiring the insurer to furnish Lessor with at least 10 days' prior
written notice of any material change, cancellation or non-renewal of coverage.
Upon execution of this Lease, Lessee shall furnish Lessor with 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 coverage or to advise
Lessee in the event such insurance coverage should not comply with the
requirements hereof. In case of failure of Lessee to procure or maintain
insurance, Lessor may at its option obtain such insurance, the cost of which
will be paid by the Lessee as additional rentals. Effective upon the occurrence
and during the continuation of an Event of Default hereunder, Lessee hereby
irrevocably appoints Lessor as Lessee's attorney-in-fact to file, settle or
adjust, and receive payment of claims under any such insurance policy and to
endorse Lessee's name on any checks, drafts or other instruments on payment of
such claims. Lessee further agrees to give Lessor prompt notice of any damage to
or loss of, the Equipment, or any part thereof.
14. LIMITATION OF LIABILITY
Lessor shall have no liability in connection with or arising out of the
ownership, leasing, furnishing, performance or use of the Equipment or any
special, indirect, incidental or consequential damages of any character,
including, without limitation, loss of use of production facilities or
equipment, loss of profits, property damage or lost production, whether suffered
by Lessee or any third party.
15. FURTHER ASSURANCES
Lessee shall promptly execute and deliver to Lessor such further documents
and take such further action as Lessor may require in order to more effectively
carry out the intent and purpose of this Lease. Lessee shall provide to Lessor,
within 120 days after the close of each of Lessee's fiscal years, and, upon
Lessor's request, within 45 days of the end of each quarter of Lessee's fiscal
year, a copy of its financial statements prepared in accordance with generally
accepted accounting principles and, in the case of annual financial statements,
audited by independent certified public accountants, and in the case of
quarterly financial statements certified by Lessee's chief financial officer.
Lessee shall execute and deliver to Lessor upon Lessor's request any and all
schedules, forms and other reports and information as Lessor may deem necessary
or appropriate to respond to requirements or regulations imposed by any
governmental authorities. Lessee shall execute and deliver to Lessor upon
Lessor's request such further and additional documents, instruments and
assurances as Lessor deems necessary (a) to acknowledge and confirm, for the
benefit of Lessor or any assignee or transferee of any of Lessor's rights, title
and interests hereunder (an "ASSIGNEE"), all of the terms and conditions of all
or any part of this Lease and Lessor's or Assignee's rights with respect
thereto, and Lessee's compliance with all of the terms and provisions hereof and
(b) to preserve, protect and perfect Lessor's or Assignee's right, title or
interest hereunder and in any Equipment, including, without limitation, such UCC
financing statements or amendments, corporate resolutions, certificates of
compliance, notices of assignment or transfers of interests, and restatements
and reaffirmations of Lessee's obligations and its representations and
warranties with respect thereto as of the dates requested by Lessor from time to
time. In furtherance thereof, Lessor may file or record this Lease or a
memorandum or a photocopy hereof (which for the purposes hereof shall be
effective as a financing statement) so as to give notice to third parties, and,
effective upon the occurrence and during the continuation of an Event of Default
hereunder, Lessee hereby appoints Lessor as its attorney-in-fact to execute,
sign, file and record UCC financing statements and other lien recordation
documents with respect to the Equipment where Lessee fails or refuses to do so
after Lessor's written request, and Lessee agrees to pay or reimburse Lessor for
any filing, recording or stamp fees or taxes arising from any such filings.
16. ASSIGNMENT
This Lease and all rights of Lessor hereunder shall be assignable by Lessor
absolutely or as security, without notice to Lessee (except Lessor shall notify
Lessee of any assignment as a result of which Lessee would be expected to
perform any of all of its obligations under the Lease directly for the benefit
of the Assignee), subject to the rights of Lessee hereunder for the use and
possession of the Equipment for so long as no Event of Default has occurred and
is continuing hereunder. Any such assignment shall not relieve Lessor of its
obligations hereunder unless specifically assumed by the assignee in writing,
and LESSEE AGREES IT SHALL NOT ASSERT ANY DEFENSE, RIGHTS OF SET-OFF OR
COUNTERCLAIM AGAINST ANY ASSIGNEE TO WHICH LESSOR SHALL HAVE ASSIGNED ITS RIGHTS
AND INTERESTS HEREUNDER, NOR, UNLESS SUCH ASSIGNEE HAS ASSUMED THE OBLIGATIONS
OF LESSOR HEREUNDER, HOLD OR ATTEMPT TO HOLD SUCH ASSIGNEE LIABLE FOR ANY OF
LESSOR'S OBLIGATIONS HEREUNDER TO THE EXTENT ARISING ON OR AFTER THE DATE OF
SUCH ASSIGNMENT. No such assignment shall materially increase Lessee's
obligations hereunder. LESSEE SHALL NOT ASSIGN OR DISPOSE OF ANY OF ITS RIGHTS
OR OBLIGATIONS UNDER THIS LEASE OR ENTER INTO ANY SUBLEASE WITH RESPECT TO ANY
OF THE EQUIPMENT WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT OF LESSOR.
17. LESSEE'S OBLIGATION UNCONDITIONAL
This Lease is a net lease and Lessee hereby agrees that it shall not be
entitled to any abatement of rents or of any other amounts payable hereunder by
Lessee, and that its obligation to pay all rent and any other amounts owing
hereunder shall be absolute and unconditional under all circumstances,
including, without limitation, the following circumstances: (i) any claim by
Lessee to any right of set-off, counterclaim, recoupment, defense or other right
which Lessee may have against Lessor, any seller or manufacturer of any
Equipment or anyone else for any reason whatsoever; (ii) the existence of any
liens, encumbrances or rights of others whatsoever with respect to any
Equipment, whether or not resulting from claims against Lessor not related to
the ownership of such Equipment; or (iii) any other event or circumstances
whatsoever; provided, however, that Lessee may institute an independent action
against Lessor or any assignee of Lessor assuming the obligations of Lessor
hereunder for claims arising from any breach of Lessor's covenant of quiet
enjoyment set forth in Section 3 hereof. Each Rental
Payment or other amount paid by Lessee hereunder shall be final and Lessee will
not seek to recover all or any part of such payment from Lessor for any reason
whatsoever.
18. RETURN OF EQUIPMENT
Upon the expiration or earlier termination of the Lease Term with respect
to any Equipment, and provided that Lessee has not validly exercised any
purchase option with respect thereto, Lessee shall: (a) return the Equipment to
a location and in the manner designated by the Lessor within the continental
United States, including, as reasonably required by Lessor, securing
arrangements for the disassembly and packing for shipment by an authorized
representative of the manufacturer of the Equipment, shipment with all parts and
pieces on a carrier designated or approved by Lessor, and then reassembly
(including, if necessary, repair and overhaul) by such representative at the
return location in the condition the Equipment is required to be maintained by
the Lease and in such condition as will make the Equipment immediately able to
perform all functions for which the Equipment was originally designed (or as
upgraded during the Lease Term), and immediately qualified for the
manufacturer's (or other authorized servicing representative's) then-available
service contract or warranty; (b) cause the Equipment to qualify for all
applicable licenses or permits necessary for its operation for its intended
purpose and to comply with all specifications and requirements of applicable
federal, state and local laws, regulations and ordinances; (c) upon Lessor's
request, provide suitable storage, acceptable to Lessor, for the Equipment for a
period not to exceed 180 days from the date of return; (d) cooperate with Lessor
in attempting to remarket the Equipment, including display and demonstration of
the Equipment to prospective purchasers or lessees, and allowing Lessor to
conduct any private or public sale or auction of the Equipment on Lessee's
premises. All costs incurred in connection with any of the foregoing shall be
the sole responsibility of the Lessee. During any period of time from the
expiration or earlier termination of the Lease until the Equipment is returned
in accordance with the provisions hereof or until Lessor has been paid the
applicable purchase option price if any applicable purchase option is exercised,
Lessee agrees to pay to Lessor additional per diem rent ("HOLDOVER RENT"),
payable promptly on demand in an amount equal to 120% of the highest monthly
Rental Payment payable during the Lease Term divided by 30, provided, however,
that nothing contained herein and no payment of Holdover Rent hereunder shall
relieve Lessee of its obligation to return the Equipment upon the expiration or
earlier termination of the Lease.
19. RELATED LEASE SCHEDULES
"RELATED LEASE SCHEDULES" means and refers to: (i) Leases covering
Equipment intended to be or which otherwise becomes attached to, affixed to, or
used in connection with other Equipment subject to any other Lease hereunder, or
(ii) Leases entered into pursuant to or in respect of a single credit offering
memorandum or credit approval of Lessor. Lessee agrees that if: (a) if Lessee
elects to exercise any purchase option, early termination option, renewal
option, purchase obligation or early purchase option under any Related Lease
Schedule; or (b) Lessee elects to return the Equipment under any Related Lease
Schedule in accordance therewith, then, in either case, Lessor shall have the
right, in its sole discretion, to require Lessee to elect the same or similar
disposition for all Equipment subject and pursuant to the terms and provisions
of one or more other Related Lease Schedules.
20. MISCELLANEOUS; ENFORCEABILITY AND GOVERNING LAW
The term "LESSEE" as used in the Lease shall mean and include any and all
Lessees who sign below, each of whom shall be jointly and severally liable under
the Lease. This Master Lease will not be binding on Lessor until accepted and
executed by Lessor, notice of which is hereby waived by Lessee. Any waiver of
the terms hereof shall be effective only in the specific instance and for the
specific purpose given. Time is of the essence in the payment and performance of
all of Lessee's obligations under the Lease. The captions in this Lease are for
convenience only and shall not define or limit any of the terms hereof.
Any provisions of this Lease which are unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such
unenforceability without invalidating the remaining provisions hereof, and any
such unenforceability in any jurisdiction shall not render unenforceable such
provisions in any other jurisdiction. To the extent permitted by applicable
law, Lessee hereby waives; (a) any provisions of law which render any provision
hereof unenforceable in any respect; (b) all rights and remedies under Rhode
Island General Laws Sections 6A-2.1-508 through 522 or corresponding provisions
of the Uniform Commercial Code article or division pertaining to personal
property leasing in any jurisdiction in which enforcement of this Lease is
sought.
THIS LEASE AND THE LEGAL RELATIONS OF THE PARTIES HERETO SHALL IN ALL
RESPECTS BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF RHODE ISLAND, WITHOUT REGARD TO PRINCIPLES REGARDING THE CHOICE OF LAW.
LESSEE HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF THE COURTS OF THE
STATE OF RHODE ISLAND AND THE FEDERAL DISTRICT COURT FOR THE DISTRICT OF RHODE
ISLAND FOR THE PURPOSES OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF
ITS OBLIGATIONS HEREUNDER, AND EXPRESSLY WAIVES ANY OBJECTIONS THAT IT MAY HAVE
TO THE VENUE OF SUCH COURTS. LESSEE HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL
BY JURY IN ANY ACTION BROUGHT ON OR WITH RESPECT TO THIS LEASE. Any action by
Lessee against Lessor for any cause of action relating to this Lease shall be
brought within one year after any such cause of action first arises.
THIS LEASE REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES CONCERNING
THE LEASE OF THE EQUIPMENT AND CONSTITUTES THE ENTIRE AGREEMENT BETWEEN THE
PARTIES SUPERSEDING ANY AND ALL CONFLICTING TERMS OR PROVISIONS OF ANY PRIOR
PROPOSALS, COMMITMENT LETTERS, TERM SHEETS OR OTHER AGREEMENTS OR UNDERSTANDINGS
BETWEEN THE PARTIES. THIS LEASE MAY NOT BE CONTRADICTED BY EVIDENCE OF (i) ANY
PRIOR WRITTEN OR ORAL AGREEMENTS OR UNDERSTANDINGS, OR (ii) ANY CONTEMPORANEOUS
OR SUBSEQUENT ORAL AGREEMENTS OR UNDERSTANDINGS BETWEEN THE PARTIES, AND LESSEE
ACKNOWLEDGES AND CERTIFIES THAT NO SUCH ORAL OR WRITTEN AGREEMENTS OR
UNDERSTANDINGS EXIST AS OF THE DATE OF THIS LEASE. THIS LEASE MAY NOT BE
AMENDED, NOR MAY ANY RIGHTS UNDER THE LEASE BE WAIVED, EXCEPT BY AN INSTRUMENT
IN WRITING SIGNED BY THE PARTY CHARGED WITH SUCH AMENDMENT OR WAIVER.
Executed and delivered by duly authorized representatives of the parties hereto
as of the date set forth below.
DATED AS OF: June 6, 2000
FLEET CAPITAL CORPORATION ACT MANUFACTURING, INC.
By: /s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxxxxx X. Xxxxx
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Name: Xxxxxx X. Xxxxxxxx Name: Xxxxxxx X. Xxxxx
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Title: Vice President Title: Chief Financial Officer
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