EXHIBIT 10.17
PACIFIC ATLANTIC SYSTEMS LEASING
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LEASE AGREEMENT
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This Lease Agreement dated April 24, 1996, is made between PACIFIC ATLANTIC
SYSTEMS LEASING, INC. with its home office at 00000 Xxxxx Xxxxx Xxxxxxxxx, Xxxxx
0000, Xxxxxxx, Xxxxxxx 00000-0000 ("Lessor") and Proximus Corporation with an
office at 000 X. Xxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxx, XX 00000 ("Lessee").
The parties agree as follows:
1. LEASE
Lessor agrees to lease to Lessee, and Lessee agrees to lease from Lessor,
the equipment and/or features ("Equipment") described in Equipment Schedule(s)
referencing this Lease Agreement. Each Equipment Schedule shall constitute a
separate lease. In the event of a conflict between the terms and conditions of
this Lease Agreement and the terms and conditions of any Equipment Schedule or
any amendment, addendum, or rider thereto, the terms and conditions of such
Equipment Schedule, amendment, addendum, or rider shall prevail. Any reference
to "Lease" shall mean this Lease Agreement, the applicable Equipment Schedule,
and any amendments, addenda, or riders thereto.
2. DEFINITIONS.
(a) "Installation Date" means the date determined in accordance with the
applicable Equipment Schedule.
(b) "Commencement Date" means, as to all Equipment designated on any Equipment
Schedule, where the Installation Date for the Item of Equipment (an Item of
Equipment shall mean (i) a machine and its features, or (ii) a feature last
to be installed falls on the first day of the month, that date, or in any
other case, the first day of the month following the month in which the
Item of Equipment last to be installed was installed.
(c) "Daily Rental" means 1/30th of the amount set forth as the Monthly Rental
for each Item of Equipment on the applicable Equipment Schedule.
3. TERM OF LEASE.
The term of this Lease as to each Item of Equipment designated on any
Equipment Schedule shall commence on the Installation Date for such Item of
Equipment and shall continue for an initial period ending that number of months
from the Commencement Date as is specified on the applicable Equipment Schedule
("Initial Term"). The term of this Lease for all such Equipment shall be
automatically extended for successive three-month periods until terminated by
either party giving to the other not less than six months' prior irrevocable
written notice of termination. Any such termination shall be effective only on
the later of (a) the last day of the Initial Term or the last day of any such
successive period, or (b) the date the Equipment has been recertified for
maintenance.
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4. RENTAL.
The monthly rental ("Monthly Rental") for each Item of Equipment payable
hereunder is as set forth in the applicable Equipment Schedule. Rental for each
Item of Equipment shall begin to accrue on the Installation Date of such Item of
Equipment and shall be due and payable by Lessee in advance on the first day of
each month whether or not Lessee has received any notice that such payment is
due. If the Installation Date does not fall on the first day of the month, the
rental for that period of time from the Installation Date until the first day of
the succeeding month shall be an amount equal to the Daily Rental multiplied by
the number of days from (and including) the Installation Date to (but, not
including) the first day of the succeeding month and shall be due and payable on
the Installation Date. The Monthly Rental set forth on the applicable Equipment
Schedule is conditioned upon the federal corporate income tax rate in effect on
the Installation Date. Should the federal corporate income tax rate be
increased during the term of the applicable Equipment Schedule all Monthly
Rental payments, commencing with the first payment due after the effective date
of such tax rate increase, shall be increased so as to maintain the net economic
after-tax yield, cash flow, and rate of return Lessor originally anticipated
based on the foregoing tax rate assumption.
In addition to the Monthly Rental set forth in the Equipment Schedule(s),
Lessee shall pay to Lessor an amount equal to all taxes paid, payable, or
required to be collected by Lessor, however designated, which are levied or
based on the rental, on the Lease, or on the Equipment or its purchase, sale,
ownership, delivery, possession, use, lease, operation, control, or value
(including, without limitation, state and local privilege or excise taxes based
on gross revenue), any penalties or interest in connection therewith not arising
from negligence on the part of Lessor or taxes or amounts in lieu thereof paid
or payable by Lessor in respect of the foregoing, but excluding taxes on
Lessor's net income.
Lessor shall be responsible for the timely filing of all necessary personal
property tax returns or declarations and shall pay all personal property taxes
levied or assessed against the Equipment during the Initial Term of the
applicable Equipment Schedule, and all renewals and extensions thereof, before
the taxes become delinquent. Promptly upon presentation of evidence of
liability for personal property taxes by Lessor to Lessee, Lessee shall
reimburse Lessor for all amounts of personal property taxes due, without
proration.
Interest on any past due payments shall accrue at the rate of 1 1/2
percent per month, or if such rate shall exceed the maximum rate allowed by law,
then at such maximum rate, and shall be payable on demand. Charges for taxes,
penalties, and interest shall be promptly paid by Lessee when invoiced by
Lessor.
5. INSTALLATION, USE, DISCONTINUANCE, AND MODIFICATION OF EQUIPMENT.
(a) Lessor shall have the sole right and option to make all the
arrangements for (i) the transportation of each Item of Equipment to, and the
installation of each Item of Equipment at, the Equipment Location stated in the
applicable Equipment Schedule, and (ii) the discontinuance, disassembly,
packing, and transportation of each Item of Equipment from the Equipment
Location to a location of Lessor's choice within the continental United States
upon
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the termination of the applicable Equipment Schedule (by expiration or
otherwise) as to such Item of Equipment.
(b) Lessee shall (i) make all arrangements for rigging and drayage, if
applicable, with respect to the Equipment, and (ii) furnish suitable electric
current required to operate the Equipment and a specific area in the Equipment
Location which is suitable for the operation of the Equipment and complies with
the applicable directives issued by the manufacturer thereof and by Lessor. All
transportation (including insurance), rigging, and drayage costs with respect to
the Equipment, both on delivery to the Equipment Location and redelivery to a
location of Lessor's choice within the continental United States, and all
installation, discontinuance, disassembly, and packing costs shall be paid by
Lessee.
(c) Lessee shall have the uninterrupted right to enjoy the quiet possession
and exclusive use of the Equipment while the applicable Equipment Schedule is in
force, without limitation as to time, provided Lessee shall not be in default
hereunder.
(d) Any equipment, cards, disks, tapes, or other items not specified in the
Equipment Schedule which are used on or in connection with the Equipment must
meet the specifications of the manufacturer of the Equipment ("Manufacturer")
and shall be acquired by Lessee at its own expense.
(e) Lessee will at all times keep the Equipment in its sole possession and
control. The Equipment shall not be moved from the Equipment Location without
Lessor's prior written consent. Lessee's rights under Sections 5(f) and 6(b)
are subject to Lessor's right to match any Modification or sublease proposed by
a third party. Lessee will provide Lessor in writing with the terms of the
third party offer and Lessor shall have ten days to match the offer. Lessee
shall obtain such Modification from, or sublease the Equipment to, Lessor if
Lessor has timely matched the third party offer.
(f) Lessee may not, without Lessor's prior written consent, make
alterations in, or add features, attachments, or conversions to, or upgrade
(model or memory) the Equipment. Any such alteration, feature, attachment,
conversion, or upgrade (collectively, "Modification") not owned by Lessor and
leased to Lessee must (i) be installed by Manufacturer at Lessee's sole expense,
(ii) not interfere with the normal and satisfactory operation or maintenance of
the Equipment or with Lessee's ability to obtain and maintain the maintenance
contract required by Section 5(g) hereof, (iii) be removable at any time without
material damage to the Equipment, and (iv) by removed by Manufacturer and the
Equipment restored, at Lessee's expense, to its normal, unmodified condition,
reasonable wear and tear only excepted, no later than the termination of this
Lease as to the applicable Item of Equipment. No lien, encumbrance, or interest
may be granted by Lessee in such Modification which would impair Lessor's right,
title, and interest in the applicable Item of Equipment. Any and all parts
removed as a result of any Modification remain the property of Lessor, and may
not be assigned, transferred, or otherwise disposed of by Lessee. Lessee is
responsible for storing and safekeeping the removed parts and for their
reinstallation prior to return of the Equipment upon cancellation or termination
of the Lease. All Modifications not leased by Lessor to Lessee which are not
removed upon cancellation or termination of the Lease shall become the property
of Owner, as defined in Section 9 hereof. Manufacturer or other organization
selected by Lessee and approved in writing
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by Lessor to maintain the Equipment ("Maintenance Organization") may incorporate
engineering changes or make temporary alterations to the Equipment upon request
of Lessee. Lessee shall promptly accept and cause the installation of all
engineering and safety changes furnished without charge by Manufacturer, which
safety and engineering changes shall be and become the property of Lessor.
(g) Lessee shall, during the term of this Lease, at it own expense, enter
into and maintain in force a contract with Manufacturer or the Maintenance
Organization covering at least prime shift maintenance of each Item of
Equipment. If at any time the Equipment is not being maintained to Lessor's
satisfaction, Lessor shall have the right to require Lessee to have another
company of Lessor's choice maintain the Equipment. Such maintenance contract
shall commence upon expiration of Manufacturer's warranty period, if any,
relating to such Item of Equipment. At Lessor's request Lessee shall furnish
Lessor with an executed copy of such contract and all renewals and extensions
thereof and amendments thereto.
(h) At the termination of this Lease as to the applicable Equipment
Schedule (by expiration or otherwise), Lessee shall, at it own expense, return
the Equipment to Lessor in the same operating order, repair, condition, and
appearance as on the Installation Date, subject only to reasonable wear and tear
and to the provisions of Section 5(f) hereof, complete with all cables,
diagnostics, and logic manuals. Lessee shall be responsible to have the
Equipment including software certified as acceptable for Manufacturer's standard
maintenance contract prior to redelivery to Lessor without any reconditioning or
initial set up or license charges. In the event Lessee is unable to comply with
the foregoing, Lessee shall indemnify and hold Lessor harmless from any such
charges incurred upon a subsequent installation of the Equipment.
6. OWNERSHIP AND INSPECTION.
(a) This is a contract of lease only and Lessee shall have no equity or
property interest in the Equipment other than the rights acquired as a lessee
hereunder and the Equipment shall remain personal property regardless of the
manner in which it may be installed or attached. Lessee shall not, without
Lessor's prior written consent, install or use the Equipment in such a manner or
in such circumstances that any part of the Equipment is deemed to be an
accession to other personal property. Lessee shall, at Lessor's request, affix
to the Equipment tags, decals, or plates furnished by Lessor indicating Owner's
ownership and Lessee shall not permit their removal or concealment.
(b) Lessee shall keep the Equipment free and clear of all liens and
encumbrances except liens or encumbrances arising through the actions or
omissions of Lessor. Lessee shall not assign or otherwise encumber this Lease
or any of its rights hereunder or sublease the Equipment or any parts of the
Equipment without Lessor's prior written consent, except that Lessee, subject to
the provisions of Section 5(e) hereof, at its expense and upon prior written
notice to Lessor, may assign this Lease or sublease the Equipment to its parent
or any subsidiary corporation or to a corporation which shall have acquired all
or substantially all of the property of Lessee by merger, consolidation, or
purchase. Upon any permitted assignment or sublease, Lessee shall execute and
deliver to Lessor, or any assignee of Lessor, at Lessee's expense, such
documentation as Lessor or such assignee may require, including but not limited
to documentation to evidence and put third parties on notice of Lessor's or its
assignee's interest in
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the Equipment. No permitted assignment or sublease shall relieve Lessee of any
of its obligations hereunder.
(c) Lessor or its agents shall have free access to the Equipment at all
reasonable times for the purpose of inspection and for any other purpose
contemplated in this Lease. Lease shall make Lessee's log and maintenance
records pertaining to the Equipment available during any such inspection.
(d) Lessee shall immediately notify Lessor of all details concerning any
damage to, or loss of, the Equipment arising out of any event or occurrence
whatsoever, including, but not limited to, the alleged or apparent improper
manufacture, functioning, or operation of the Equipment.
7. WARRANTIES AND DISCLAIMER OF WARRANTIES.
(a) Lessee represents that, as of the Installation Date set forth in the
applicable Equipment Schedule, it shall have (i) thoroughly inspected the
Equipment, (ii) determined for itself that all Items of Equipment are of a size,
design, capacity, and manufacture selected by it, and (iii) satisfied itself
that the Equipment is suitable for Lessee's purposes. Lessee authorizes Lessor
to insert in each Equipment Schedule the serial numbers and other identifying
data of the Equipment.
(b) Lessee hereby covenants, represents, and warrants with respect to this
Lease and each Equipment Schedule executed hereunder as of the Installation Date
of any Item of Equipment that: (i) the execution, delivery, and performance
thereof by Lessee have been duly authorized by all necessary corporate action;
(ii) the individual executing such was duly authorized to do so; (iii) the Lease
and each Equipment Schedule constitute legal, valid, and binding agreements of
Lessee enforceable in accordance with their respective terms; and (iv) the
Equipment is personal property and when subjected to use by Lessee will not be
or become fixtures under applicable law.
(c) LESSOR SUPPLIES THE EQUIPMENT AS IS AND NOT BEING THE MANUFACTURER OF
THE EQUIPMENT, THE MANUFACTURER'S AGENT, OR THE SUPPLIER'S AGENT, MAKES NO
WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, AS TO THE EQUIPMENT'S
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, DESIGN, CONDITION, QUALITY,
CAPACITY, MATERIAL, WORKMANSHIP, CONFORMITY TO THE PROVISIONS AND SPECIFICATIONS
OF ANY PURCHASE ORDER(S) RELATING THERETO, OR AS TO PATENT INFRINGEMENT OR THE
LIKE OR ANY SOFTWARE USED IN THE EQUIPMENT, it being agreed that all such risks,
as between Lessor and Lessee, are to be borne by Lessee. Lessee agrees to look
solely to Manufacturer or to the supplier of the Equipment for any and all
warranty claims and any and all warranties made by Manufacturer or the supplier
to Lessor are hereby assigned to Lessee, to the extent permitted by Manufacturer
or the supplier, for the term of the applicable Equipment Schedule. Lessee
agrees that Lessor shall not be responsible for the delivery, installation,
maintenance, operation, or service of the Equipment or for delay or inadequacy
of any or all of the foregoing. Lessor shall not be responsible for any
general, incidental, special, or consequential loss or damage resulting from the
installation,
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operation, or use of the Equipment or otherwise (including strict liability in
tort). Lessee will defend, indemnify, and hold Lessor harmless on an after-tax
basis against any and all claims, demands, and liabilities arising out of or in
connection with the design, manufacture, possession, or operation of the
Equipment, including strict liability in tort.
8. RISK OF LOSS.
(a) Until the Equipment is returned to Lessor as provided in this Lease,
Lessee relieves Lessor of responsibility for all risks of physical damage to or
loss or destruction of the Equipment, whether or not insured against, howsoever
caused. During the term of this Lease as to any Equipment Schedule, Lessee
shall, at its expense, keep in effect all risk and public liability insurance
policies covering the Equipment designated in each Equipment Schedule. The all
risk insurance policy shall be for an amount not less than the replacement cost
of the Equipment. The public liability insurance policy shall be in such amount
as is reasonably acceptable to Lessor. Lessor, its successors and assigns,
shall be named as additional insureds and/or loss payees on such policies, which
shall be written by one or more insurance companies of recognized responsibility
reasonably acceptable to Lessor. Evidence of such insurance coverage shall be
furnished to Lessor not later than the Installation Date set forth in the
applicable Equipment Schedule and from time to time thereafter as Lessor may
demand. Such policies shall provide that no less than ten days' written notice
shall be given Lessor prior to cancellation of such policies for any reason.
Lessee hereby irrevocably appoints Lessor as Lessee's attorney-in-fact coupled
with an interest to make claim for, receive payment of, and execute any and all
documents that may be required to be provided to the insurance carrier in
substantiation of any such claim for loss or damage under said insurance
policies, and to endorse Lessee's name to any and all drafts or checks in
payment of the loss proceeds.
(b) If any Item of Equipment is rendered unusable as a result of any
physical damage to, or loss or destruction of, the Equipment, or title thereto
shall be taken by any governmental authority under power of eminent domain or
otherwise, Lessee shall give to Lessor immediate notice thereof and this Lease
shall continue in full force and effect without any abatement of rental. Lessee
shall determine, within fifteen days after the date of occurrence of any such
damage or destruction, whether such Item of Equipment can be repaired. In the
event Lessee determines that the Item of Equipment cannot be repaired or such
Item of Equipment was lost, destroyed, or title thereto taken, Lessee shall
promptly replace such Item of Equipment with identical equipment and transfer
title to such replacement equipment to Lessor free and clear of all liens,
claims, equities, and encumbrances of every kind or nature whatsoever, and this
Lease shall continue in full force and effect as though, subject to the
provisions of Section 9 hereof, such damage, loss, destruction, or taking of
title had not occurred, except that the replacement equipment shall become
Equipment for purposes of this Lease in lieu of the replaced Equipment. In the
event Lessee determines that such Item of Equipment can be repaired, Lessee
shall cause such Item of Equipment to be promptly repaired. All proceeds of
insurance received by Lessor or Lessee under the all risk insurance policy
referred to in the preceding paragraph of this Section shall be applied toward
the cost of such repair or replacement.
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9. TAX BENEFITS.
This Lease has been entered into on the basis that Lessor (and/or any
persons, firms, corporations, or other entities to which Lessor has transferred
or may transfer title to all or any portion of the Equipment) (collectively,
"Owner") shall be entitled to such deductions, credits, and other benefits as
are provided by the Internal Revenue Code of 1986, as amended or superseded from
time to time and the rules and regulations promulgated thereunder (the "Code"),
to an owner of property ("Tax Benefits"). As used herein the term "Owner" shall
mean and include Lessor in the event Lessor has not transferred title to all of
the Equipment, and the term "Lessor" shall mean and include each member of the
affiliated group of corporations with which Lessor files a consolidated return
for federal income tax purposes.
If to any extent as a result of (a) any act or failure to act by Lessee or
any person claiming by, through, or under Lessee, (b) any misrepresentation or
breach of any covenant, warranty, or agreement contained in this Lease or the
applicable Equipment Schedule, (c) any requisition of use or title to the
Equipment by any governmental entity or authority, whether by claim of right,
eminent domain, or otherwise, (d) any physical damage to, or loss or destruction
of the Equipment, (e) the substitution of all or any part of the Equipment
pursuant to Section 8(b) hereof or otherwise, (f) any assignment or sublease, or
(g) Lessee permitting the Equipment to become "tax-exempt use property" within
the meaning of the Code, Owner, in determining its income tax liability for any
year, shall (i) lose the benefit of, or shall not have, or shall not claim as a
result of a written opinion of independent tax counsel that there is not a
reasonable possibility that Owner's claiming of such Tax Benefits would be
upheld by a court if the matter were litigated, or shall lose the right to
claim, or shall be delayed in claiming, or shall suffer a deferral, diminution,
or disallowance of, or shall be required to recapture, all or any part of the
Tax Benefits, or (ii) be required to include any amount in income other than
rental payments in the times and amounts set forth in the applicable Equipment
Schedule, or (iii) have any portion of the Tax Benefits attributed to foreign
sources (any of (i)-(iii) being hereinafter referred to as a "Loss"), then
Lessee shall pay to Owner, upon demand, a sum which, after deduction therefrom
for all federal, state, and local income taxes payable by Owner with respect to
the receipt of such sum, shall be sufficient to restore Owner's net economic
after-tax yield, cash flow, and rate of return that Owner would have had if such
Loss had not occurred, plus any fines, interest, penalties, or additions to tax
fairly attributable to such Loss. For purposes of this Section a Loss shall
occur upon the earliest of (i) the happening of any event (such as any
disposition, damage, loss, destruction, or change in the use of any Item of
Equipment) which may cause such Loss, (ii) the payment by Owner to the Internal
Revenue Service of the tax increase resulting from such Loss, (iii) the
adjustment by audit or otherwise of the tax return of Owner to reflect such
Loss, or (iv) the filing of any return reflecting such Loss.
10. EVENTS OF DEFAULT AND REMEDIES.
The occurrence of any one of the following shall constitute an Event of
Default hereunder:
(a) Lessee fails to pay any installment of rent on or before the fifth day
following the date when the same becomes due and payable;
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(b) Lessee attempts to remove, sell, transfer, encumber, sublet, or part
with possession of any Item of Equipment, except as expressly permitted herein;
(c) Lessee fails to observe or perform any of the other obligations
required to be observed or performed by Lessee hereunder and such failure shall
continue uncured for ten days after written notice thereof to Lessee by Lessor;
(d) Any warranty, representation, or statement made or furnished to Lessor
by or on behalf of Lessee proves to have been false in any material respect when
made or furnished;
(e) Lessee ceases doing business as a going concern, makes an assignment
for the benefit of creditors, admits in writing its inability to pay its debts
as they become due, is generally not paying its debts as they mature, files a
voluntary petition in bankruptcy, files a petition seeking for itself any
reorganization, arrangement, composition, readjustment, liquidation,
dissolution, or similar arrangement under any present or future statute, law, or
regulation or files an answer admitting the material allegations of a petition
filed against it in any such proceeding, consents to or acquiesces in the
appointment of a custodian, trustee, receiver, or liquidator of it or all or any
substantial part of its assets or properties, or if it or its shareholders shall
take any action looking to its dissolution or liquidation, or if any order for
relief is entered against Lessee under the federal bankruptcy laws;
(f) Within thirty days after the commencement of any proceedings against
Lessee seeking reorganization, arrangement, readjustment, liquidation,
dissolution, or similar relief under any present or future statute, law, or
regulation, such proceedings shall not have been dismissed, or if within thirty
days after the appointment without Lessee's consent or acquiescence of any
custodian, trustee, receiver, or liquidator of it or of all or any substantial
part of its assets and properties, such appointment shall not be vacated; or
(g) The default by Lessee under any other Equipment Schedule or other
agreement between Lessee and Lessor or any assignee of Lessor.
Upon the occurrence of an Event of Default, Lessor may at its option do any
or all of the following: (a) by notice to Lessee cancel or terminate this Lease
as to any or all Equipment Schedules; (b) whether or not this Lease is canceled
or terminated as to any or all Equipment Schedules, take possession of any or
all of the Equipment listed on any or all Equipment Schedules, wherever
situated, and for such purpose, enter upon any premises without liability for so
doing (except that Lessor shall be liable for damages resulting from the fault
or negligence of Lessor) or Lessor may cause Lessee, and Lessee hereby agrees,
to return the Equipment to Lessor as provided in the Lease; (c) recover from
Lessee, as liquidated damages for loss of a bargain and not as a penalty, an
amount equal to the present value of all monies to be paid by Lessee during the
remaining Initial Term or any successive period then in effect, discounted at
the rate of three percent per annum, which payment, together with applicable
sales or use tax, shall become immediately due and payable; or (d) sell, dispose
of, hold, use, or lease any Equipment as Lessor in its sole discretion may
determine (and Lessor shall not be obligated to give preferences to the sale,
lease, or other disposition of the Equipment, which may be either wholesale or
retail, over the sale, lease, or other disposition of similar equipment owned,
leased, or managed by Lessor). Any disposition may be at private or public
sale, in bulk or in parcels,
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with or without notice, and without having the Equipment present at the place of
sale or lease. The subsequent acceptance of payments hereunder by Lessor shall
not be deemed a waiver of any prior existing breach by Lessor shall not be
deemed a waiver of any prior existing breach by Lessee regardless of Lessor's
knowledge of such prior existing breach at the time of acceptance of such
payments. In any event, Lessee shall, without further demand, pay to Lessor an
amount equal to all sums due and payable for all periods up to and including the
date on which Lessor has declared this Least to be in default.
In the event that Lessee shall have paid to Lessor the liquidated damages
and other amounts referred to in the preceding paragraph of this Section.
Lessor hereby agrees to pay to Lessee, promptly after receipt thereof, either
(a) if Lessor re-leases the Equipment, all rentals or proceeds received from the
reletting of the Equipment during the balance of the Initial Term or an
successive period then in effect (after deduction of all expenses incurred by
Lessor), or (b) if Lessor sells the Equipment, all proceeds received from the
sale (after deduction of the estimated residual value of the Equipment as of the
end of the Initial Term or any successive period then in effect and of all
expenses incurred by Lessor), said amount never to exceed the amount of the
liquidated damages paid by Lessee. Lessee agrees that Lessor shall have no
obligation to sell the Equipment. Lessee shall in any event remain fully liable
for reasonable damages as provided by law and for all costs and expenses
incurred by Lessor on account of such default including, but not limited to, all
collection agency fees and all court costs and reasonable attorneys' fees,
whether or not suit is brought, including in-house attorneys' fees. Lessee
hereby agrees that, in any event, it will be liable for any deficiency after any
sale, lease, or other disposition by Lessor. The rights afforded Lessor
hereunder shall not be deemed to be exclusive, but shall be in addition to any
rights or remedies provided by law.
If, upon the cancellation or termination of the applicable Equipment
Schedule as to any Item of Equipment, Lessee fails or refuses to return and
deliver possession of such Item of Equipment to Lessor on the prescribed date,
in addition to all other rights and remedies available to Lessor, Lessee shall
promptly pay Lessor rent equal to the greater of the then fair market month to
month rental value or 150 percent of the current Monthly Rental for all
Equipment as shown on the applicable Equipment Schedule on a month to month
basis until all Equipment is returned to Lessor, provided Lessee shall be liable
for rent through the last day of any monthly extension. Lessee shall remain
liable for any direct damages Lessor may suffer by reason of being unable to
deliver such Item of Equipment to another party.
11. NET LEASE.
Except as otherwise specifically provided in this Lease, it is understood
and agreed that each Equipment Schedule constitutes a net lease, and that, as
between Lessor and Lessee, Lessee shall be responsible for all costs and
expenses of every nature whatsoever (including, but not limited to,
transportation, installation, deinstallation, taxes, maintenance, and insurance)
arising out of or in connection with or related to this Lease or the Equipment.
Lessee hereby agrees that in the event that Lessee fails to pay or perform any
obligation under this Lease, Lessor may, at its option, pay or perform said
obligation and any payment made or expense incurred by Lessor in connection
therewith shall become additional rent which shall be due and payable by Lessee
upon demand. All amounts payable by Lessee under any Equipment Schedule shall
be absolute and unconditional and shall not be subject to any abatement,
reduction, offset, defense,
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counterclaim, interruption, deferment, or recoupment for any reason whatsoever,
and such amounts shall be and continue to be payable in all events.
12. ASSIGNMENT.
Lessee agrees that Lessor may transfer all or part of Lessor's right,
title, and interest in, under, or to the Equipment and this Lease or any
Equipment Schedule, and any or all sums due or to become due pursuant to any of
the above, to any third party ("Assignee") for any reason. Lessee agrees that
upon receipt of written notice from Lessor of such assignment, Lessee shall
perform all of its obligations hereunder for the benefit of Assignee and, if so
directed, shall pay all sums due or to become due hereunder directly to Assignee
or to any other party designated by Assignee. Lessee hereby covenants,
represents, and warrants as follows and agrees that Assignee shall be entitled
to rely on and shall be considered a third party beneficiary of the following
covenants, representations, and warranties: (a) Lessee's obligations to Assignee
hereunder are absolute and unconditional and are not subject to any abatement,
reduction, offset, defense, counterclaim, interruption, deferment, or recoupment
available to Lessee for any reason whatsoever including, but not limited to,
operation of law, defect in the Equipment, failure of Lessor to perform any of
its obligations hereunder, any insolvency or bankruptcy of Lessor, or for any
other cause or reason whatsoever, whether similar or dissimilar to the
foregoing; (b) Lessee shall not look to Assignee to perform any of Lessor's
obligations hereunder unless Assignee specifically assumes such obligations; (c)
Lessee will not amend or modify this Lease without the prior written consent of
Assignee; and (d) Lessee will send a copy to Assignee of each notice which
Lessee sends to Lessor.
Upon receipt of notice of such transfer or assignment, Lessee agrees to
promptly execute and deliver to Lessor such documentation as Assignee may
require to secure and/or complete such transfer or assignment, including, but
not limited to, the following: (a) an acknowledgement of, or consent to, the
assignment which may require Lessee to make certain representations or
reaffirmations as to some of the basic terms and covenants contained in this
Lease; (b) a Certificate of Incumbency; (c) an opinion of counsel for Lessee
with respect to the representations and warranties set forth in Section 7(b)
above; and (d) a Certificate of Delivery and Acceptance. Such assignment shall
relieve Lessor of its obligations hereunder upon the assumption thereof in
writing by Assignee unless Lessor, Lessee, and Assignee agree otherwise, and the
rights of Lessee hereunder shall not be impaired.
13. MISCELLANEOUS.
(a) Neither this Lease, any Equipment Schedule, nor any consent or approval
provided for herein shall be binding upon Lessor unless signed on its behalf by
a duly authorized office, at its home office. This Lease shall be deemed to
have been made in the State of Arizona and shall be governed in all respects by
the laws, but not the rules relating to choice of laws, of such State. No
rights or remedies referred to in Article 2A of the Uniform Commercial Code will
be conferred on Lessee unless expressly granted in this Lease or an Equipment
Schedule.
(b) This Lease and each Equipment Schedule constitute the entire agreement
and understanding of the parties with respect to the lease of the Equipment
listed on each Equipment Schedule (notwithstanding any contrary provision
contained in any instrument submitted by
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Lessee), supersede any or all prior agreements and understandings related to the
subject matter hereof, and may not be changed orally but only by an agreement in
writing signed by both parties. Lessee's purchase order, if any, shall be used
for accounting purposes only and the provisions thereof shall be inapplicable
notwithstanding Lessor's acknowledgement thereof.
(c) Any notice, request, or other communication to either party by the
other shall be given in writing and deemed received upon the earlier of actual
receipt or three days after mailing if mailed postage prepaid to the address of
the other party as set forth herein or to such other address as such party shall
have designated by proper notice or one day after it is sent by courier or
facsimile transmission if receipt is verified by the receiving party. Notices
to Lessor shall be sent to the attention of the Manager, Contract Documents.
(d) Subject to Sections 6(b) and 12 hereof, this Lease shall be binding
upon and inure to the benefit of Lessor and Lessee and their respective
successors and assigns (including any subsequent assignee of an Assignee).
(e) No representation or statement made by any representative of either
party not contained herein shall be binding upon such party. No provision of
this Lease or any Equipment Schedule which may be deemed unenforceable shall in
any way invalidate any other provision or provisions hereof, all of which shall
remain in full force and effect. Neither any failure nor any delay on the part
of either party in exercising any of its rights hereunder shall operate as a
waiver thereof, nor shall a single or partial exercise thereof preclude any
other or further exercise or the exercise of any other right hereunder.
(f) No waiver of any of the terms and condition hereof shall be effective
unless in writing and signed by the party against whom such waiver is sought to
be enforced. Any waiver of the terms hereof shall be effective only in the
specific instance and for the specific purpose given.
(g) Lessor is hereby authorized by Lessee to cause this Lease or other
instruments, including Uniform Commercial Code financing statements, to be filed
or recorded for the purposes of evidencing and putting third parties on notice
of Lessor's or Assignee's interest in the Equipment and Lessee agrees that
Lessor or Assignee may execute such instruments for and on behalf of Lessee. In
the event for any reason whatsoever Lessee is determined to have an interest in
the Equipment other than a purely leasehold interest for the term of this Lease,
Lessee agrees to and does hereby expressly subordinate such interest to the
interests of Owner in the Equipment and to the security interest in the
Equipment of any Assignee whether such security interest is presently in
existence or hereafter acquired. Lessee shall execute all documents requested
by Owner or any Assignee to evidence such subordination.
(h) During the term of this Lease, Lessee agrees to deliver to Lessor a
copy of Lessee's annual audited financial statements within a reasonable time
after the statements are available.
(i) Lessee's covenants, representations, and warranties shall survive the
expiration, termination, or cancellation of this Lease.
(j) If Equipment delivered pursuant to any Equipment Schedule contains any
features not specified therein, Lessor reserves the right to remove or
deactivate any such features at any
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reasonable time without liability for any down time of any Item of Equipment
occasioned thereby.
(k) Lessee and Lessor acknowledge that an Equipment Schedule may include
certain software ("Software") in which Lessor and Lessee have no ownership or
other proprietary rights. Where required by the Software owner or manufacturer,
Lessee shall enter into a license or other agreement for the use of the
Software. Any Software agreement shall be separate and distinct from this Lease
and any Equipment Schedule, and Lessor and Assignee shall not have any rights or
obligations thereunder.
(l) This Lease and any Equipment Schedule may be executed in any number of
counterparts, each of which shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument. To the
extent that this Lease constitutes chattel paper, no security interest in this
Lease may be created through the transfer of possession of any counterpart other
than an executed counterpart or a photostatic copy of an executed counterpart of
this Lease together with an executed Equipment Schedule marked "Counterpart No.
1 of ____."
(m) It is the intention of the parties hereto to comply with applicable
usury laws. Accordingly, it is agreed that in no event shall this Lease require
the payment or permit the collection of interest in excess of the maximum amount
permitted by law.
LESSOR: PACIFIC ATLANTIC SYSTEMS LEASING, INC. LESSEE:______________________
By:_______________________________ By:__________________________
Name:_____________________________ Name:________________________
Title:____________________________ Title:_______________________
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CERTIFICATE OF PARTIAL DELIVERY AND ACCEPTANCE
The undersigned hereby certifies to PACIFIC ATLANTIC SYSTEMS, INC.
("Lessor") that certain Item(s) of Equipment leased by the undersigned from
Lessor pursuant to Equipment Schedule No. 1A to that certain Lease Agreement
between the undersigned and Lessor dated April 24, 1996, are acceptable and
conform in all respects to the undersigned's purchase agreement with the vendor
or supplier of the Equipment.
The undersigned further certifies that Item(s) of Equipment as listed on
Attachment "A" were installed and ready for use as of 5/22/96, that billing
pursuant to Equipment Schedule No. 1 as detailed on the Pro-Rata Letter
Agreement dated April 25, 1996 is appropriate, and hereby authorizes Lessor to
pay for the respective Item(s) of Equipment.
Dated:___________________
PROXIMUS CORPORATION
By:______________________
Name:____________________
Title:_____________________
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