1
Exhibit 10.6
MASTER LEASE AGREEMENT
GE CAPITAL
Providing financial solutions for LUCENT
LESSOR GENERAL ELECTRIC CAPITAL
CORPORATION
SUPPLIER
LUCENT TECHNOLOGIES INC.
LESSEE GLOBALNET INTERNATIONAL, INC.
Contact XX. XXXXXX X. XXXXXXXXXX
Title COO
--------------------------------------------------------------------------------
Address Telephone Number Facsimile Number
1919 WEST XXXXX 630/000-0000 000/532-5008
--------------------------------------------------------------------------------
Master Lease Agreement No. City County/Province State/Country
6886230 VILLA PARK DuPAGE IL
--------------------------------------------------------------------------------
Zip Code Corporation Proprietorship Partnership Other
60181 X
--------------------------------------------------------------------------------
TERMS AND CONDITIONS (THE REVERSE SIDE CONTAINS TERMS AND
CONDITIONS WHICH ARE ALSO A PART OF THIS AGREEMENT)
1. LEASE: Lessor shall purchase and lease to Lessee the equipment and associated
items ("Equipment") described in any Equipment Schedule ("Schedule") executed
from time to time by Lessor and Lessee that makes reference to this Master Lease
Agreement ("Agreement"). This Agreement shall be incorporated into each
Schedule. When computer programs and related documentation are furnished with
the Equipment, and a non-exclusive license and/or sublicense (collectively,
"Software") is granted to Lessee in an agreement ("Supplier Agreement") with the
suppliers (collectively, "Supplier") identified on the Schedule, Lessor, to the
extent permitted, grants Lessee a similar non-exclusive sublicense to use the
Software only in conjunction with the Equipment for so long as the Equipment is
leased hereunder. The Equipment and Software include, but are not limited to,
all additions, attachments and accessions thereto and replacements therefor
(collectively, "System"). Any reference to "Lease" shall mean with respect to
each System, this Agreement, a Schedule, a Consent of Supplier, an Acceptance
Certificate, any riders, amendments and addenda thereto, and any other documents
as may from time to time be made a part thereof.
As conditions precedent to Lessor's obligation to purchase any Equipment and
obtain any Software, not later than the Commitment Date set forth on the
applicable Schedule (a) Lessee and Lessor shall execute this Agreement, a
Schedule, an Acceptance Certificate and other documentation contemplated herein,
and (b) there shall have been no material adverse change in Lessee's financial
condition. Upon Lessee's execution of a Schedule, Lessee assigns to Lessor its
rights to receive title to the Equipment and any non-exclusive sublicense to use
the Software described in the Supplier Agreement as of the day the System is
delivered to the Installation Site set forth in the applicable Schedule but no
other right or any warranty thereunder. In consideration of such an assignment
and subject to the terms and conditions herein, Lessor agrees to pay to the
Supplier the Price (as defined in Section 3 below) for the System pursuant to
the Supplier Agreement, but not to perform any other obligation thereunder.
Unless Lessee exercises its Purchase Option as set forth in the applicable
Schedule, Lessee hereby assigns to Lessor all of Lessee's then-remaining rights
pursuant to the applicable Supplier Agreement effective upon the termination or
expiration of the Term (as set forth in the applicable Schedule) for any reason.
2. TERM, RENEWAL AND EXTENSIONS: If all other conditions precedent to a Lease
have been met, the Lease Term for the System described on each Schedule shall
commence on the date of Lessee's execution of an Acceptance Certificate
("Commencement Date"), and continue for the number of whole months or other
periods set forth in such Schedule ("Initial Term"), the first such full month
commencing on the first day of the month following the Commencement Date (or
commencing on the Commencement Date if such date is the first day of the month).
If Lessee selects Purchase Option B or C in the applicable Schedule, on the
expiration date of the Initial Term, the Lease shall be automatically renewed
for a six-month period ("Renewal Term") unless, by giving written notice to
Lessor six (6) months prior to the expiration date, the Lessee elects to
terminate the Lease. After the Renewal Term, the Lease shall be automatically
extended on a month-to-month basis until either party gives the other not less
than thirty (30) days prior written notice of its intention to terminate the
Lease. Any renewals and extensions shall be on the same terms and conditions as
during the Initial Term. "Term" shall mean the applicable Initial Term, the
Renewal Term, if any, and any extension thereof as provided herein.
3. RENT AND PAYMENT: Lessee shall pay to Lessor all the rental payments as shown
in the applicable Schedule ("Rent") during the Term of the Lease, except as such
Rent may be adjusted pursuant to this Section and Sections 2 and 8 of a
Schedule, plus such additional amounts as are due Lessor under the Lease. Rent
shall be paid as designated in the applicable Schedule in advance on the first
day of each Payment Period ("Rent Payment Date"). If the Commencement Date is
not the first day of a calendar month (or other Payment Period), Lessee shall
pay to Lessor, on demand, interim Rent prorated daily based on a 360-day year
for each day from and including the Commencement Date to and including the last
day of such month or other Payment Period.
The Rent is based upon the Price of the System and the acceptance of the System
by Lessee on or before the Commitment Date set forth in the applicable Schedule.
The "Price" of the System shall be as set forth in the Schedule, and shall
exclude all other costs, including sales or other taxes included in the Supplier
Agreement as part of the purchase price. If the Price is increased or decreased
as a result of a job change order ("JCO"), the Lessee authorizes Lessor to
adjust the Rent. If the Commencement Date occurs after the Commitment Date, and
Lessor waives the condition precedent that the Commencement Date occur on or
before the Commitment Date, Lessor's then-current Lease Rate Factor for similar
transactions shall apply and the Lessee authorizes Lessor to adjust the Rent
accordingly.
Whenever any payment of Rent or other amount is not made within ten (10) days
after the date when due, Lessee agrees to pay on demand (as a fee to offset
Lessor's collection and administrative expenses), the greater of twenty-five
dollars ($25.00) or ten percent (10%) of each such overdue amount, but not
exceeding the lawful maximum, if any. All payments shall be payable to Lessor in
U.S. dollars at Lessor's address set forth in Section 18 or such other place as
Lessor directs in writing. If Lessee requests changes or amendments to any
Lease, Lessor may charge Lessee Lessor's reasonable costs and expenses of
negotiation and documentation, including fees of legal staff or outside counsel.
4. DELIVERY: All transportation, delivery and installation costs (unless
included in the Price) are the sole responsibility of Lessee. Lessee assumes all
risk of loss and damage if the Supplier fails to deliver or delays in the
delivery of any System, or if any System is unsatisfactory for any reason.
5. NET LEASE: Lessee's obligations under each Lease are absolute, unconditional
and non-cancelable and shall not be subject to any delay, reduction, setoff,
defense, counterclaim or recoupment for any reason including any failure of any
System, or any misrepresentations of any supplier, manufacturer, installer,
vendor or distributor. Lessor is not responsible for the delivery, installation,
maintenance or operation of any System.
6. WARRANTIES: Lessor agrees that third-party warranties, if any, inure to the
benefit of Lessee during the Term and on exercise of the Purchase Option. Lessee
agrees to pursue any warranty claim directly against such third party and shall
not pursue any such claim against Lessor. Lessee shall continue to pay Lessor
all amounts payable under any Lease under any and all circumstances.
7. QUIET ENJOYMENT: Lessor shall not interfere with Lessee's quiet enjoyment and
use of the System during the Term if no Event of Default has occurred and is
continuing.
8. TAXES AND FEES: Lessee shall promptly reimburse Lessor, upon demand, as
additional Rent, or shall pay directly, if so requested by Lessor, all license
and registration fees, sales, use, personal property taxes and all other taxes
and charges imposed by any federal, state, or local governmental or taxing
authority, relating to the purchase, ownership, leasing, or use of the System or
the Rent excluding, however, all taxes computed upon the net income of Lessor.
9. DISCLAIMER OF WARRANTIES AND DAMAGES: LESSEE ACKNOWLEDGES THAT (A) THE SIZE,
DESIGN AND CAPACITY OF EACH SYSTEM AND THE MANUFACTURER AND SUPPLIER THEREOF
HAVE BEEN SELECTED BY LESSEE; (B) LESSOR IS NOT A MANUFACTURER, SUPPLIER,
DEALER, DISTRIBUTOR OR INSTALLER OF ANY SYSTEM; (C) NO MANUFACTURER OR SUPPLIER
OR ANY OF THEIR REPRESENTATIVES IS AN AGENT OF LESSOR OR AUTHORIZED TO WAIVE OR
ALTER ANY TERM OR CONDITION OF ANY LEASE; AND (D) EXCEPT FOR LESSOR'S WARRANTY
OF QUIET ENJOYMENT SET FORTH IN SECTION 7, LESSOR HAS NOT MADE, AND DOES NOT
HEREBY MAKE, ANY REPRESENTATION, WARRANTY OR COVENANT, WRITTEN OR ORAL,
STATUTORY, EXPRESS OR IMPLIED, AS TO ANY MATTER WHATSOEVER INCLUDING, WITHOUT
LIMITATION, THE DESIGN, QUALITY, CAPACITY, MATERIAL, WORKMANSHIP, OPERATION,
CONDITION, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, HIDDEN OR LATENT
DEFECTS, OR AS TO ANY PATENT, COPYRIGHT OR TRADEMARK INFRINGEMENT. LESSEE LEASES
EACH SYSTEM "AS IS, WHERE IS." LESSOR SHALL HAVE NO LIABILITY TO LESSEE OR ANY
THIRD PARTY FOR ANY SPECIAL, DIRECT, INDIRECT, INCIDENTAL OR CONSEQUENTIAL
DAMAGES OF ANY SORT INCLUDING, WITHOUT LIMITATION, DAMAGES FOR PERSONAL INJURY,
LOSS OF PROFITS OR SAVINGS, LOSS OF USE, OR ANY OTHER DAMAGES, WHETHER BASED ON
STRICT LIABILITY OR NEGLIGENCE, WHETHER RESULTING FROM USE OF A SYSTEM OR BREACH
OF A LEASE OR OTHERWISE, EXCEPT FOR DIRECT, SPECIFIC DAMAGES FOR PERSONAL INJURY
OR PROPERTY DAMAGE TO THE EXTENT CAUSED BY LESSOR'S ACTIVE
EXCEPT AS OTHERWISE PROVIDED IN SECTION 3 OF THIS AGREEMENT AND SECTIONS 2, 3,
AND 8 OF A SCHEDULE, ANY MODIFICATIONS, AMENDMENTS OR WAIVERS TO A LEASE SHALL
BE EFFECTIVE ONLY IF MUTUALLY AGREED UPON IN A WRITING, DULY EXECUTED BY
AUTHORIZED REPRESENTATIVES OF THE PARTIES.
GENERAL ELECTRIC CAPITAL CORPORATION
BY
----------------------------------
Authorized Representative
PRINT NAME Xxx Xxxxxxx Xxxxxxxx
----------------------------------
TITLE Operations Manager DATE 6/6/00
--------------------------- --------------
GLOBALNET INTERNATIONAL, INC.
BY
----------------------------------
Authorized Representative
PRINT NAME
TITLE DATE
------------------------ ---------------
2
-20-
Xxxxxxx X. Xxxx
Senior Vice President
0 Xxxxxxxxxxxx Xxx
0xx Xxxxx
Xxxxxxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
Email: Xxxxxxx.Xxxx@xxxxxxxxx.xxx
Wednesday, April 19, 2000
Xxxxxx Xxxxxxxxxx
Chief Operating Officer
Globalnet, International, Inc.
000 Xxxx Xxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Dear Xx. Xxxxxxxxxx:
General Electric Capital Corporation ("GE Capital") is pleased to provide the
following proposal (the "Proposal") to provide lease financing for IFX Globalnet
International, Inc. ("Globalnet" or "Lessee") to purchase equipment and services
(collectively the "Equipment", and each instance of payment for purchase of
Equipment a "Purchase") from Lucent Technologies Inc. ("Supplier").
Facility Description: Up to $10 million 3-Year Dollar
Buyout Lease Financing Facility (the
"Facility" or "Commitment").
Closing: On or before May 31, 2000.
Availability: Available for Purchases of Equipment
for up to 6 months from Closing,
subject to the following usage
limits and conditions:
i) All equipment shall be installed
or in service at physical locations
within the United States or Canada.
Lessor: GE Capital and/or its assignee
Lessee: Globalnet
Equipment: Telecommunications network and data
transmission equipment and related
products and services manufactured
by the Supplier, including its
subsidiaries and affiliates. The
freight, installation, maintenance,
or other services
3
component in such Equipment shall
not exceed 20% of the aggregate
value.
Location: Within the U.S. or Canada (to be
scheduled).
Master Lease Agreement: The Master Lease Agreement shall be
the agreement detailing the terms
and conditions of Lease Schedules.
Lease Schedule: The Lessor and Lessee shall enter
into a separate Lease Schedule for
each shipment of Equipment. The
Master Lease and each Lease Schedule
shall constitute a separate Lease
("Lease").
Net Lease: The Lease will be a "net
lease" with Lessee responsible for
all expenses, maintenance,
insurance, taxes and all other costs
relating to the purchase, lease
possession and use of the Equipment
excluding, however, taxes based
solely on the net income of Lessor.
Lease Commencement: Each Lease shall commence on the
date that all Conditions Precedent
to the Lease have been met including
acceptance of the Equipment by the
Lessee.
Conditions Precedent: Customary for financings of this
type including the Lessee's
forthcoming merger with Rich Earth
Inc.
Lease Term: Each Lease shall have a term equal
to 36 months from Lease
Commencement.
Monthly Payment: The monthly payment is determined by
multiplying the Lease Rate Factor
times the Purchase Price of the
Equipment. Monthly Payments are
payable in advance.
Lease Rate Factor: For months 1-3: 0.011000
For months 4-36:0.036283
Lease Rate Factor Index: The above-quoted Lease Rate Factors
are based on the 3 Year Treasury
Yield as of April 19, 2000 (6.34%).
At each Lease Commencement Date,
such Lease Rate Factors will be
indexed to like term Treasury
Constant Maturities as reported by
the Federal Statistical Release
(H.15 Report).
End of Lease Term Options: Provided no Event of Default is
outstanding, on 180 days written
notice from Lessee to Lessor prior
to end of the Lease Term, Lessee at
the end of Lease Term may
2
4
(i) purchase all the Equipment under
such Lease for $1.00
(ii) return all the Equipment under
such Lease at its risk and sole
expense.
Maintenance and Insurance: All maintenance and insurance are
the responsibility of the Lessee.
Lessee shall bear all risk of loss
or damage to the Equipment. The
Lessee shall be responsible to keep
the Equipment insured for (i) the
installed replacement cost of such
Equipment naming Lessor as loss
payee, and (ii) comprehensive
general liability insurance naming
Lessor as additional insured. All
policies must be with companies
acceptable to Lessor and provide for
not less than thirty-(30) days
written notice to Lessor of material
changes in or cancellation of the
policy. Evidence of such insurance
must be satisfactory to Lessor.
Reporting Requirements: The Lessee shall provide Lessor
with audited financials within 90
days of the close of each fiscal
year and monthly unaudited
financials along with covenant
compliance certificates within 30
days of the close of each month,
each prepared in accordance with
U.S. Generally Accepted Accounting
Principles ("GAAP"). Covenants:
Customary for financings of this
type.
Financial Covenants: Customary, to be determined,
including among others, and without
limitation, maintenance of a maximum
ratio of Total Debt to Total Equity
of no greater than 2:1.
Events of Default: Customary for financings of this
type, including, cross default to
other Lessee indebtedness.
Caveat: Lessor's willingness to consider
this financing is specifically
contingent upon and subject to the
approval of Lessor's management and
Lessor's credit committees of this
transaction, the approval of
Lessee's credit standing, the
negotiation, execution and delivery
of definitive agreements in form and
substance satisfactory to Lessor,
Lessee and their respective counsel,
which will supersede the terms and
understandings herein and all other
understandings and agreements
between the parties relating to the
transactions described herein.
Certain Defined Terms: "Capital Lease" shall mean any lease
of any property (whether real,
personal or mixed) by the Lessee
that, in
3
5
accordance with GAAP, would
be required to be classified and
accounted for as a capital lease on
a balance sheet of the Lessee.
"Capital Lease Obligation" shall
mean with respect to any Capital
Lease of the Lessee, the amount of
the obligation of the Lessee
thereunder that, in accordance with
GAAP, would appear on a balance
sheet of such Lessee in respect of
such Capital Lease.
"Ratio of Total Debt to Total
Equity" shall mean (i) Total Debt
divided by (ii) Total Equity.
"Total Debt" shall mean all (i)
secured or unsecured indebtedness
and guaranties plus (ii) liabilities
secured by liens on property of the
Lessee and its subsidiaries,
including Capital Lease Obligations.
"Total Equity" shall be defined as
aggregate proceeds, whether received
in cash or in exchange for property
contributed to the Lessee, of
issuances of preferred and common
equity instruments, less
redemptions.
Unless otherwise described, all
financial terms defined shall be in
accordance with U.S. GAAP on a
consolidated basis with respect to
the Lessee.
In order for GE Capital to commence its credit approval process, please
acknowledge and accept the terms and conditions outlined above by signing and
returning this proposal letter with a proposal deposit equal to 0.25% of the
Facility. If the proposal is approved and accepted by GE Capital, this deposit
will be applied against initial rental payments due under each Lease. If this
proposal is not approved and accepted by GE Capital for any reasons, the
proposal deposit will be returned promptly. Please send a check in this amount
made payable to General Electric Capital Corporation to: General Electric
Capital Corporation, 000 Xxxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxx, XX 00000,
attention: Xxxxxx Xxxx/Xxxxx Bible.
Nothing herein is intended to indicate approval by Lessor of documents or
information previously furnished by Lessee. The terms hereof may be modified in
any respect and the transaction may be subject to additional terms not set forth
in this letter as a result of changes in market conditions, the financial
condition of the Lessee, and Lessor's continuing due diligence or preparation of
documentation satisfactory to Lessor and its counsel as outlined above.
The Lessee and Lessor agree that the contents of this letter are confidential
and are provided solely for the purpose described herein. This proposal letter
may not be relied
4
6
on by any third party without Lessor's prior written consent,
and the Lessee shall not deliver, display or otherwise disclose the contents of
this letter to any third party without Lessor's prior written consent.
This proposal letter supersedes all previous negotiations, proposals,
commitments and understandings of any nature whatsoever.
This proposal letter shall expire on May 1, 2000 unless accepted in writing by
Lessee or extended in writing by Lessor.
We look forward to the opportunity to be of service to you. If you should have
any questions, please call me at (000) 000-0000.
Yours truly,
Xxxxxxx Xxxx
Senior Vice President
GE Capital Corporation
Telecom Financial Services
PROPOSAL ACKNOWLEDGED AND ACCEPTED:
Globalnet International, Inc.
By:
---------------------
Title:
---------------------
Date:
---------------------
5
