Exhibit 10.7
EQUIPMENT LEASE AGREEMENT
THIS EQUIPMENT LEASE AGREEMENT ("this Agreement"), effective as of
October 1, 1993, is made between XXXXXXX LIMITED PARTNERSHIP I, a Maryland
limited partnership ("Lessor"), and THE XXXXXXX CO., a Maryland corporation
("Lessee").
In consideration of the mutual covenants, terms and conditions contained
herein, the parties hereto, intending to be legally bound, covenant and agree as
follows:
1. LEASE. Lessor hereby agrees to lease to Lessee, and Lessee hereby agrees
to lease and hire from Lessor, the equipment listed and described on Schedule A
attached hereto, together with all components, parts, additions, accessories,
and attachments incorporated therein (all such property hereinafter collectively
referred to as the "Equipment"), upon the terms and conditions set forth herein.
2. TERM. The term of this Lease (the "Term") shall begin on , 1993, and
shall expire on the first anniversary unless sooner terminated as set forth
herein. The Lessee may renew the Lease for successive one-year terms for the
rent set forth in Section 3.1 below. At the end of a term, the Lessee may
purchase the Equipment at its fair market value as determined by an appraiser
chosen by the Lessee and an appraiser chosen by the Lessor. If the two
appraisers determine values that are within 10% of one another, the fair market
value shall be deemed to be the average of the two values. If the two values
differ from one another by more than 10%, the appraisers shall appoint a third
appraiser and the fair market value shall be deemed the average of the three
values. The purchase price shall be payable in cash within 30 days after the
fair market value shall have been determined. The Lessee and Lessor shall bear
the expense of the appraiser chosen by each and shall share the expense of any
third appraiser equally.
3. RENT.
3.1 General. Lessee covenants and agrees to pay to Lessor, as rent for the
Equipment and subject to this Lease, without prior notice or demand, the amount
of $118,152 per annum, payable in equal monthly installments. Such rent shall be
payable on the last day of each calendar month, commencing on October 31, 1993.
If a monthly installment has not been paid by the fifteenth (15th) day of the
succeeding month, Lessor shall provide written notice to Lessee. If any monthly
rental payment that is due to Lessor is not made within fifteen (15) days after
its due date, Lessee shall pay a late payment penalty on such delinquent payment
equal to five percent (5%) of the amount then due for each month or portion of a
month until paid (the "Late Payment Penalty").
The annual rent in subsequent lease years, if the Lessee chooses to renew
the Lease, shall equal the higher of fair market value or the gross rent for the
applicable year noted is Exhibit C hereto. The Lessee shall obtain quotations
from two vendors of similar equipment for purposes of determining the fair
market value.
3.2 Net Lease. This Lease is a net lease, and Lessee's obligation to pay
rent shall be absolute and unconditional and shall not be affected by any
circumstance, including without limitation: (i) any setoff, counterclaim,
recoupment, deduction, defense, or other right that Lessee may have against
Lessor, against any seller, supplier, or manufacturer of any Equipment, or
against any other person for any reason whatsoever, (ii) any defect in the
title, condition, design, operation, merchantability or fitness for use or a
particular purpose of any Equipment, (iii) any loss or destruction of or damage
to any Equipment, or (iv) any interruption or cessation in the use or possession
thereof for any reason whatsoever and of whatever duration, and shall not be
prorated for any cause or reason except as herein specifically provided.
3.3 Taxes. Lessor shall pay and discharge, when due, all license fees,
fines, and assessments, and, in addition, all sales, use, property, and other
tax or taxes (exclusive of income taxes), now or hereafter imposed by any State,
Federal, or local government upon the Equipment or payments hereunder, whether
the same be payable by or billed or assessed to Lessor or to Lessee, together
with any penalties or interest payable in connection therewith.
4. DELIVERY OF EQUIPMENT. Lessee acknowledges that it is in possession of
the Equipment at the premises known as Suite 2800, 000 Xxxx Xxxxx Xxxxxx,
Xxxxxxxxx, XX 00000 (the "Premises").
5. USE AND OPERATION.
5.1 Use of Equipment. Lessee shall use the Equipment leased hereunder
solely in the conduct of its business and shall comply with and conform to all
applicable laws and regulations that relate in any way to the possession, use,
or maintenance of the Equipment. Lessee shall not (i) use, operate, maintain, or
store any Equipment leased hereunder improperly, imprudently, carelessly, or in
violation of this Agreement, or of any applicable laws or regulations, (ii) use
or operate any Equipment other than in a manner contemplated by the manufacturer
thereof, (iii) let or use the same for hire except to a bona fide tenant of the
Premises, (iv) assign this Agreement or any rights herein or assign or sublease
any Equipment or rights thereto except to a bona fide tenant of the Premises,
(v) permit anyone other than its authorized agents or employees to operate the
same, (vi) remove any Equipment from the Premises, and/or (vii) attach or
incorporate the Equipment, or suffer the same to be attached
2
or incorporated, to or in any other item of property in such a manner that
the Equipment becomes, or may be deemed to have become, an accessory to or
part of such property.
5.2 Maintenance and Repairs. Lessee shall, at its sole cost and expense,
at all times during the Term of this Agreement, maintain the Equipment in good
operating order, repair, condition, and appearance, ordinary wear and tear
excepted. Lessee will not, without the prior consent of Lessor, affix or install
any accessory, equipment, or device on any Equipment leased hereunder, if such
addition would impair the originally intended function or use of any such
Equipment. All repairs, parts, supplies, accessories, equipment, and devices
furnished or affixed to any Equipment shall thereupon become the property of
Lessor (except as such may in Lessor's opinion be removed without in any way
affecting or impairing the originally intended function or use of such
Equipment). Lessor shall have the right to inspect the Equipment and maintenance
records relating thereto at any reasonable time (with or without prior notice)
during normal business hours.
6. LOSS OR DAMAGE TO EQUIPMENT.
6.1 General. Lessor assumes all risks of loss, theft, or destruction of,
and damage to all Equipment during the Term of this Agreement. Any replacements,
repairs, or substitutes of parts or equipment in or on the Equipment, or any of
them, shall be at Lessor's expense and the same shall constitute an accession to
the Equipment, title to which shall vest and remain in the Lessor.
6.2 Damaged Equipment Capable of Repair. Should the Equipment be damaged
so as to preclude its use for the purposes intended and should the Equipment be
capable of repair, Lessor shall repair the Equipment at its sole cost and
expense, and the proceeds of any insurance recovery pertaining to such Equipment
shall be applied to the cost of the repair.
6.3 Damaged Equipment Incapable of Repair. Should any Equipment be damaged
beyond repair or be lost, stolen, or wholly destroyed, then this Agreement shall
cease and terminate as to such Equipment as of the date of such damage, loss, or
destruction.
6.4 Insurance Proceeds. The full proceeds of the insurance recovered with
respect to any Equipment damaged, lost, or destroyed, plus any salvage value (in
the case of Equipment not repairable), shall inure to the benefit of Lessor.
7. INSURANCE. Lessor is responsible for, at its sole cost and expense,
obtaining and maintaining (1) standard fire, theft, and extended coverage
3
insurance insuring the Equipment against loss or damage for no less than the
greater of full replacement value or the Stipulated Loss Value thereof, and
(2) public liability insurance, both personal injury and property damage,
covering the operation, condition, use, maintenance, and possession of the
Equipment.
8. REPORTS.
Without demand, Lessee will immediately notify Lessor of any damage or other
loss involving any Equipment leased hereunder. Such notice shall contain a brief
description of the nature and estimate of the damage or loss involved.
9. DEFAULT.
9.1 General. Should Lessee (i) fail to pay any rentals or any other sum
payable by Lessee to or for the account of Lessor hereunder within fifteen (15)
days after the due date, or (ii) fail to perform or observe any term or covenant
contained herein or under this Agreement at the time and in the manner herein
specified, or (iii) be the subject of any proceeding under any bankruptcy act
which is not dismissed within sixty (60) days after filing, or (iv) become
insolvent (i.e., unable to pay its debts as they become due), or (v) any
substantial part of Lessee's property be subject to any levy, seizure,
assignment, application, or sale for or by any creditor or governmental agency,
and within sixty (60) days thereof Lessee fails to secure a discharge thereof
(the foregoing items (i) through (v) constituting a "Default" hereunder), then
Lessor may, at its option, upon such notice of its election and demand as may be
required by applicable law, deem this Lease to be automatically in default, and
at any time thereafter, may do any one or more of the following, all of which
are hereby authorized by Lessee: (1) xxx for and recover all rent and other
payments hereunder, then accrued or thereafter accruing, with respect to any or
all of the Equipment; (2) take possession of any or all of the Equipment,
wherever it may be located; (3) require Lessee to return promptly, at Lessee's
expense, any or all of the Equipment in accordance with all of the terms hereof;
(4) sell, release, or otherwise dispose of any or all of the Equipment,
regardless of whether in Lessor's possession, in a commercially reasonable
manner at public or private sale or lease and with or without notice to Lessee,
and apply the net proceeds of such sale or lease, after deducting all costs of
such sale or lease (including, but not limited to, costs of transportation,
possession, storage, refurbishing, advertising, and brokers' fees), to the
obligations of Lessee hereunder, with Lessee remaining liable for any
deficiency; (5) retain any repossessed Equipment and credit the reasonable value
of the remaining leasehold interest therein to the obligations of Lessee
hereunder, with Lessee remaining liable for any deficiency, to the maximum
extent permitted by applicable law, and with Lessor having no obligation to
reimburse Lessee on account of any excess of such reasonable value over such
obligations; (6) terminate this Agreement as to any of the Equipment; (7)
declare this
4
Agreement to be in default and pursue any or all remedies in connection
therewith; or (8) exercise any other right or remedy available to Lessor at
law or in equity.
For purposes of the remedies set forth in clause (4) above, the net proceeds
of any re-lease by Lessor shall be determined by discounting to present value,
at the rate of four percent (4%) above the then Prime Rate (as established in
the Wall Street Journal) per annum, any rentals payable to Lessor pursuant to
such re-lease up to and including the expiration date of this Lease.
In addition, Lessee shall be liable, to the maximum extent permitted by
applicable law, for any and all legal fees and other costs and expenses incurred
by reason of any Default or the exercise of any of Lessor's remedies with
respect thereto, including all costs and expenses incurred in connection with
the return of any Equipment in accordance with the terms hereof or in placing
the Equipment in the condition required hereby. No right or remedy referred to
in this Section 9 is intended to be exclusive, but each shall be cumulative and
shall be in addition to any other remedy referred to herein or otherwise
available at law or in equity and may be exercised concurrently or separately
from time to time.
Unless otherwise expressly provided herein, a termination hereunder shall
occur only upon written notice by Lessor to Lessee and only with respect to
such items of Equipment as Lessor specifically elects to terminate in such
notice. Except as to such items of Equipment with respect to which there is a
termination, this Lease shall remain in full force and effect and Lessee
shall be and remain liable for the full performance of all its obligations
hereunder. The failure of Lessor to exercise the rights granted hereunder
upon any Default by Lessee shall not constitute a waiver of any such right
upon the continuation or reoccurrence of such Default.
9.2 Fees. In the event of any Default, Lessee shall pay to Lessor a
reasonable sum as and for attorneys' fees, and such other costs and expenses as
shall have been expended or incurred by Lessor in the enforcement of any right
or privilege hereunder.
10. QUIET POSSESSION. Lessor covenants that (i) it has the full right and
authority to enter into this Agreement on the terms herein stated, (ii) that it
is the lawful owner of the Equipment leased hereunder, and (iii) that
conditioned upon the Lessee performing all of the covenants and conditions
hereof, Lessee shall peaceably and quietly hold, possess and use the Equipment
during the term of this Agreement.
11. LIABILITY OF LESSOR. LESSOR SHALL NOT BE LIABLE TO LESSEE, ITS SERVANTS,
EMPLOYEES, AGENTS, OR TO
5
ANY PERSON, FIRM OR CORPORATION FOR BUSINESS LOSS OR ANY LOSS OR INTER-
RUPTION OR DAMAGE TO BUSINESS OR PROFITS, OR FOR OTHER DAMAGES OF ANY KIND OR
NATURE WHATSOEVER, CAUSED BY REASON OF THEFT, CONVERSION, DESTRUCTION, LOSS,
REPAIRS, ADJUSTMENTS, SERVICING, REPLACEMENT,OR ANY INTERRUPTION IN THE
SERVICE OR AVAILABILITY FOR ANY REASON OF ANY EQUIPMENT PROVIDED UNDER THIS
AGREEMENT, PROVIDED, THAT LESSEE MAY PURSUE ANY CLAIMS AGAINST THE
MANUFACTURER OR DISTRIBUTOR OF ANY EQUIPMENT, AND LESSOR SHALL AT LESSEE'S
EXPENSE, COOPERATE IN SUCH EFFORT.
12. DISCLAIMER OF WARRANTIES. LESSOR, NOT BEING THE MANUFACTURER OR SUPPLIER
OF THE EQUIPMENT, NOR THE MANUFAC- TURER'S OR SUPPLIER'S AGENT, HEREBY EXPRESSLY
DISCLAIMS AND MAKES TO LESSEE NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED,
OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OR OTHERWISE,
INCLUDING, BUT NOT LIMITED TO: THE FITNESS FOR USE OR DESIGN OF THE EQUIPMENT;
THE QUALITY OR CAPACITY OF THE EQUIPMENT; THE WORKMANSHIP IN THE EQUIPMENT; THAT
THE EQUIPMENT WILL SATISFY THE REQUIREMENTS OF ANY LAW, RULE, SPECIFICATION OR
CONTRACT PERTAINING THERETO; AND ANY GUARANTY OR WARRANTY AGAINST PATENT
INFRINGEMENT OR LATENT DEFECTS, it being agreed that all such risks, as between
Lessor and Lessee, are to be borne by Lessee. All assignable warranties made by
the manufacturer or supplier to Lessor are hereby assigned to Lessee for and
during the term of this Agreement and Lessee agrees to settle all such claims
directly with the manufacturer or supplier. Any such claim shall not affect in
any manner the unconditional obligation of Lessee to make rental and other
payments hereunder.
13. LESSOR'S RIGHT TO PERFORM FOR LESSEE. If Lessee fails to perform or
comply with any of its agreement contained herein, Lessor shall have the right,
but not the obligation, to effect such performance or compliance, and the amount
of any out-of-pocket expenses of Lessor incurred in connection with the
performance of or compliance with such agreement, together with the Late Payment
Penalty, shall be deemed additional rent, payable by Lessee upon demand.
14. MISCELLANEOUS.
14.1 Title. This Agreement is intended to constitute a lease only and
nothing herein contained shall give or convey to Lessee any right, title, or
interest in and to any Equipment leased hereunder except as a lessee.
6
Lessee shall not at any time during the Term of this Agreement be or become
the agent of the Lessor, and Lessor shall not be responsible for the acts or
omissions of Lessee, or its agents, representations or its employees.
14.2 Title to Equipment. All Equipment leased hereunder shall remain the
property of Lessor, and shall be titled and/or registered in the name of the
Lessor.
14.3 Remaining Obligations. Any cancellation or termination by Lessor
pursuant to the provisions hereof shall not release Lessee from any outstanding
obligations to Lessor hereunder.
14.4 Enforcement. Lessor's failure to enforce strictly any provision of
this Lease shall not be construed as a waiver thereof or as excusing Lessee from
future performance.
14.5 Severability. The invalidity of any portion of this Lease shall not
affect the force and effect of the remaining valid portion hereof.
14.6 Notices. All notices shall be binding upon the parties hereto if
delivered by hand or sent by certified mail, return receipt requested, at the
following address, or at such other address as such party shall from time to
time designate in writing to the other party, and shall be effective from the
date of such hand delivery or mailing:
If to Lessor:
Xxxxxxx Limited Partnership I
Suite 2800
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
7
If to Lessee:
The Xxxxxxx Co.
000 Xxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
14.7 Entire Agreement. This Agreement shall constitute the entire
agreement between the parties hereto. Any change or modification of this
Agreement must be in writing and signed by the parties hereto. If the parties
hereto mutually desire that additional equipment purchased by the Lessor after
the date hereof, become subject to the terms and conditions of this Agreement,
the parties agree to mutually cooperate to amend this Agreement to include such
equipment, and to take any and all such other action as may be necessary or
desirable to accomplish such amendment.
14.8 Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the respective parties, their successors, legal representatives and
assigns, provided, however, that neither this Agreement nor any interest herein
shall be assigned, alienated, pledged, or hypothecated voluntarily by Lessee or
by operation of law, nor shall any of the Equipment covered hereby be assigned
or sublet by Lessee, without the prior written consent of Lessor.
14.9 Counterparts. This Agreement may be executed in several counterparts,
each of which shall constitute an original.
14.10 Further Assurances. Lessee shall promptly and duly execute and
deliver to Lessor such further instruments and assurances and take such further
action as Lessor may from time to time reasonably request to carry out the
intent and purpose of this Agreement and to establish and protect the rights and
remedies created or intended to be created in favor of Lessor hereunder.
14.11 Governing Law. This Agreement shall be deemed to have been made in
and shall be construed in accordance with the laws of the State of Maryland.
8
IN WITNESS WHEREOF, the parties hereto have executed these presents, as a
document under seal, as of the date first above written.
LESSOR:
WITNESS: XXXXXXX LIMITED PARTNERSHIP I
/S/ XXXXXXXXX X.XXXXXX By: /S/ XXXXXX X. XXXXXXX, XX. (SEAL)
---------------------- ------------------------------------
Name: Xxxxxx X. Xxxxxxx, Xx.
-----------------------------
Title: President of Xxxxxxx General
----------------------------
Partner One, Inc.
----------------------------
Date: As of 10/1/93
-----------------------------
LESSEE:
/S/ XXXXXXXXX X.XXXXXX THE XXXXXXX CO.
----------------------
By: /S/ XXXXXX X. XXXXXXX, XX. (SEAL)
---------------------------------
Name: Xxxxxx X. Xxxxxxx, Xx.
---------------------------------
Title: President
---------------------------------
Date: As of 10/1/93
---------------------------------
9
EXHIBIT A
DESCRIPTION OF EQUIPMENT
10
SCHEDULE C
LEASE YEAR GROSS RENT
----------------- -----------
1 ............... $ 118,152
2 ............... 118,152
3 ............... 118,152
4 ............... 118,152
5 ............... 118,152
6 ............... 118,152
7 ............... 118,152
AMENDMENT TO EQUIPMENT LEASE
AGREEMENT DATED OCTOBER 1, 1993
This Amendment is made effective as of October 1, 1993 by and between
Xxxxxxx Limited Partnership I ("Lessor") and The Xxxxxxx Co. ("Lessee").
WHEREAS, the equipment to be leased by Lessor to Lessee pursuant to the
Equipment Lease Agreement dated October 1, 1993 ("Lease") was not all available
as of such date.
THEREFORE, in consideration of the mutual covenants herein contained the
parties hereto agree as follows
The Lessor and Lessee desire to amend the Lease to reflect a rental schedule
in line with the Equipment leased during the periods indicated as follows:
The rent shall be payable as follows:
RENTAL PERIOD AMOUNT
------------------------------------------- -------------
October 1, 1993--October 31, 1993........... $ 6,892.20
November 1, 1993--November 30, 1993......... $ 8,861.40
December 1, 1993--December 31, 1993......... $ 9,846.00
Annual rent commencing January 1, 1994 shall equal $118,152 in equal monthly
installments as provided in the Lease.
The Lease remains in full force and effecting all other respects.
XXXXXXX LIMITED PARTNERSHIP I THE XXXXXXX CO.
By: /S/ XXXXXX X. XXXXXXX, XX. By: /S/ XXXXXX X. XXXXXXX, XX.
------------------------------ ------------------------------
