EXHIBIT 10.14
EQUIPMENT LEASE
THIS AGREEMENT ("Agreement") is made and entered into as of January 1, 1997, by
and between SIMPLE TECHNOLOGY, INC., a California corporation ("STI"), and
MOSHAYEDI DEVELOPMENT CORPORATION, a California corporation ("MDC").
RECITALS
A. STI is in the business of manufacturing and selling computer memory
products, PCMCIA products, and computer peripheral equipment.
B. MDC owns various capital assets, including certain manufacturing equipment
used in the manufacture of computers and other products.
C. STI desires to lease certain manufacturing equipment from MDC and MDC
desires to lease such manufacturing equipment to STI, in accordance with the
terms and conditions of this Agreement.
NOW THEREFORE, in consideration of the mutual covenants and agreements
contained in this Agreement, and for other good and valuable consideration, STI
and MDC hereby agree as follows:
ARTICLE I
DESCRIPTION OF LEASED EQUIPMENT
1. PROPERTY DESCRIPTION. The property to be leased is described in the
attached Schedule A, which is included herein and made a part hereof.
ARTICLE II
TERM OF LEASE
1. INITIAL TERM. The initial term of the lease for the property leased
hereunder is set forth in Schedule A.
ARTICLE III
PAYMENTS BY STI
1. RENTAL PAYMENTS. The amount of monthly rental payments is set forth in
Schedule A. STI shall make monthly payments at MDC's address as set forth above
or at such other place as designated by MDC or its assignees. All rental
payments shall be due and payable in advance on the first day of each month
during the term of this Agreement. Any rental payments not made by STI within
five (5) days of the due date shall be subject to a late charge of five (5)
percent of the amount due.
2. SECURITY DEPOSIT. As security for the prompt and full payment of rent and
the faithful and timely performance of all provisions of this Agreement, STI
shall deposit
with MDC the amount set forth in Schedule A ("Security Deposit"). If any default
shall occur in the performance of any covenants in this Agreement by STI, MDC
shall have the right, but shall not be obligated, to apply the Security Deposit
to the curing of the default. On demand, STI shall restore the Security Deposit
to the full amount set forth in Schedule A. On the expiration or earlier
termination of this Agreement, providing STI has paid all of the required rent
and fully performed all of the other provisions of this Agreement, MDC shall
return to STI any remaining balance of the Security Deposit.
ARTICLE IV
OWNERSHIP
1. NO SALE OR SECURITY INTEREST INTENDED. This Agreement constitutes a lease
of the property described herein and not a sale or the creation of a security
interest. STI shall not have, or at any time acquire, any right, title, or
interest in the property except the right to possession and use as provided in
this Agreement. MDC shall at all times be the sole owner of the property.
2. SUBORDINATION. The rights of STI under this Agreement shall be subject and
subordinate to certain security interests in the property held by Lyon Credit
Corporation and its successors.
ARTICLE V
OPERATING EXPENSES
1. STI shall be responsible for all expenses and all other charges in
connection with the operation of the property.
ARTICLE VI
MAINTENANCE AND REPAIRS
1. STI'S RESPONSIBILITY. STI shall assume all obligation and liability with
respect to the possession of the property, and for its use, operation,
condition, and storage during the lease term. STI shall, at STI's own expense,
maintain the property in good mechanical condition and running order, allowing
for reasonable wear and tear. The rent on the property or on any element thereof
shall not be prorated or abated while the property is being serviced or
repaired.
2. ACCESSIONS. All installations, replacements, and substitutions of parts or
accessories with respect to any of the property shall constitute accessions and
shall become part of the property and shall be owned by MDC.
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ARTICLE VII
USE OF PROPERTY
1. RIGHTS OF STI. STI shall be entitled to the absolute right to the use,
operation, possession, and control of the property during the term of this
Agreement, providing STI is not in default of any provision of this Agreement.
STI shall employ and have absolute control, supervision, and responsibility over
any operators or users of the property.
2. DUTIES OF STI. STI shall use the property in a careful and proper manner
and shall not permit any of the property to be operated or used in violation of
any applicable federal, state, or local statute, ordinance, rule, or regulation
relating to the possession, use, or maintenance of the property. STI agrees to
reimburse MDC in full for all damage to the property arising from any misuse or
negligent act by STI, its employees, and its agents. STI shall indemnify and
hold MDC harmless from any and all liabilities, fines, forfeitures, or penalties
for violations of any applicable statute, ordinance, rule, or regulation.
3. COMMERCIAL USE LIMITATION. STI represents and warrants that the property
will be used for commercial or business purposes only.
ARTICLE VIII
MDC'S RIGHT OF INSPECTION AND REPAIR
1. INSPECTION AND REPAIR. MDC, at its discretion during STI's regular business
hours and with one (1) day's prior notice to STI, shall have the right to enter
the premises where the property is located or used for the purpose of
inspection. If any property covered by this Agreement is not being properly
maintained in the opinion of MDC, MDC shall have the right, but not the
obligation, to have it repaired or maintained by an appropriate service facility
at the expense of STI.
ARTICLE IX
ASSIGNMENT OF MDC'S WARRANTIES
1. WARRANTY ASSIGNMENT. MDC shall assign to STI all manufacturer, dealer, or
supplier warranties applicable to the property to enable STI to obtain any
warranty service available for the property. Any enforcement by STI of warranty
rights shall be at the expense of STI and shall in no way render MDC responsible
to STI for the performance of any of the warranties.
ARTICLE X
TAXES AND OTHER CHARGES
1. TAXES. STI shall be liable for and pay on or before the due dates, all
sales taxes, use taxes, personal property taxes, business personal property
taxes, and assessments, or other taxes or government charges imposed on the
property or levied against, or based on,
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the amount of rent to be paid under the Agreement or assessed in connection with
the Agreement.
2. OTHER CHARGES. STI shall be liable for any fees for licenses,
registrations, permits, and other certificates as may be required for the lawful
operation of the property. All certificates of title shall initially be applied
for in the State of California and shall be issued and maintained in the name of
MDC, as owner. Such certificates shall be delivered to MDC and STI shall pay all
expenses in relation thereto.
ARTICLE XI
STI INSPECTION
1. INSPECTION BY STI. STI shall inspect the property within fifteen (15) days
after receipt thereof. Unless STI within that time gives written notice to MDC,
specifying any defect in or other proper objection to the property, STI agrees
that it shall be conclusively presumed, as between MDC and STI, that STI has
fully inspected the property and acknowledged that the property is in good
condition and repair, and that STI is satisfied with and has accepted the
property in such good condition and repair.
ARTICLE XII
INSURANCE
1. STI DUTY TO INSURE. STI agrees to maintain in full force and effect, at its
own cost and expense, property damage insurance issued by a company satisfactory
to MDC, insuring the interest of MDC, STI, and their authorized agents and
employees. The policy shall be for primary coverage and shall have a limit of no
less than:
$1,000,000 per person;
$1,000,000 per accident;
$778,943.68 property damage; and
$1,000,000 excess liability umbrella coverage.
For all property covered by this Agreement, STI shall also provide, at its own
cost and expense, comprehensive, fire, theft, and additional combined insurance
coverage naming MDC as an additional insured. Coverage shall be in the form and
amounts as directed by MDC from time to time.
2. INSURANCE CERTIFICATE. STI shall cause the insured to furnish to MDC, not
less than ten (10) days prior to the date on which the property is delivered to
STI and not less than ten (10) days prior to the expiration date of any existing
insurance, a certificate evidencing the required insurance. The policy shall
provide that the insurer shall not cancel or materially modify the insurance
except on thirty (30) days' advanced written notice to MDC. If STI fails to
procure, maintain, or renew the insurance, MDC may, but is not obligated to,
obtain insurance for STI without prejudice to any other rights that MDC may
have.
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3. EXCESS LIABILITY INDEMNITY. STI shall indemnify and hold MDC, its agents,
and employees, harmless from and against all loss, liability, and expense,
including reasonable attorneys' fees, in excess of the provided limits of
liability insurance for bodily injury (including death) or property damage
caused by or arising out of the ownership, maintenance, use, or operation of the
leased property.
ARTICLE XIII
INDEMNIFICATION AND LIABILITY
1. ALL LIABILITY ASSUMED BY STI. STI assumes all risk and liability for the
loss of or damage to the equipment, for the death of or injury to any person or
property of another, and for all other risks and liabilities arising from the
use, operation, condition, possession, or storage of the leased property.
Nothing in this Agreement shall authorize STI or any other person to operate any
of the property so as to impose any liability or other obligation on MDC.
2. STI DUTY TO INDEMNIFY. STI shall indemnify, defend, and hold harmless MDC,
its agents, and employees from any and all claims, loss, or damage MDC may
sustain or suffer for any of the following reasons:
i) the loss of or damage to any of the property for any cause;
ii) the injury to or death of any person, including but not limited to
agents, or employees of STI; or,
iii) damage to any property arising from the use, possession, selection,
delivery, return, condition, or operation of any of the property.
3. OBLIGATIONS SURVIVE LEASE TERM. The indemnities and assumptions of risk,
liabilities, and obligations by STI arising under this Agreement during its term
shall continue in effect after the termination of this Agreement, regardless of
the reason for termination.
ARTICLE XIV
ACCIDENT, LOSS OF PROPERTY, OR DAMAGE TO PROPERTY
1. NOTIFICATION TO MDC. If any property covered by this Agreement is damaged,
lost, stolen, or destroyed, or if any person is injured or dies, or if any
property is damaged as a result of its operation, use, maintenance, or
possession, STI shall promptly notify MDC of the occurrence, and shall file all
necessary accident reports, including those required by law and those required
by insurers of the leased property.
2. STIPULATED LOSS VALUE. If any property becomes lost, stolen, destroyed, or
damaged beyond repair, STI shall pay MDC in cash the "Stipulated Loss Value" as
set forth in Schedule A, less any net proceeds of insurance for the property
received by MDC. Upon payment, this Agreement shall terminate with respect to
that item of property and STI shall become entitled to the property on an
"as-is, where-is" basis, without warranty, express or implied, for any matter
whatsoever.
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ARTICLE XV
ASSIGNMENT
1. ASSIGNMENT BY MDC. MDC may assign this Agreement or any rights under it at
any time without STI's consent. In the event of any assignment, MDC's assignee
shall have all the rights, powers, privileges, and remedies of MDC as set forth
in this Agreement.
2. ASSIGNMENT OR SUBLETTING BY STI. STI shall not assign this Agreement or any
property described in it, or assign any interest in this Agreement or property,
or sublet any of the leased property without the express written consent of MDC.
ARTICLE XVI
ACTIONS CONSTITUTING DEFAULT
1. STI IN DEFAULT. MDC, at its option, may by written notice to STI declare
STI in default on the occurrence of any of the following:
i) failure by STI to make payments or perform any of its obligations
under this Agreement;
ii) institution by or against STI of any proceeding in bankruptcy or
insolvency, or the reorganization of STI under any law, or the appointment of a
receiver or trustee for the goods and property of STI, or any assignment by STI
for the benefit of creditors;
iii) expiration or cancellation of any insurance policy to be paid by
STI as provided for under the terms of this Agreement; or
iv) involuntary transfer of STI's interest in this Agreement by
operation of law.
ARTICLE XVII
RIGHTS, REMEDIES, AND OBLIGATIONS ON DEFAULT
1. MDC RIGHTS AND REMEDIES. After default of STI, and on notice from MDC that
STI is in default, MDC shall have the following options:
i) terminate the Agreement and STI's rights under the Agreement;
ii) declare the balance of all unpaid rent and all other charges of any
kind required of STI under the Agreement to be due and payable immediately; and,
iii) repossess the property without legal process free of all rights of
STI in and to the property. STI authorizes MDC or MDC's agent to enter on any
premises where the property is located and repossess it and remove it.
2. STI OBLIGATION FOR MDC COSTS. After default, STI shall reimburse MDC for
all reasonable expenses of repossession and enforcement of MDC's rights and
remedies.
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3. EFFECT OF FORBEARANCE. No failure on the part of MDC to exercise any remedy
or right and no delay in the exercise of any remedy or right shall operate as a
waiver. Acceptance by MDC of rent or other payments made by STI after default
shall not be deemed a waiver of MDC's rights and remedies arising from STI's
default.
4. FORFEITURE OF STI INTEREST ON DEFAULT. Upon default, for any reason, STI
and STI's successor in interest shall have no right, title, or interest in the
leased property, its possession, or its use. MDC shall retain all rents and
other payments of any kind made by STI under this Agreement.
ARTICLE XVIII
RETURN OF PROPERTY ON EXPIRATION
1. STI RETURN OF PROPERTY. Upon the expiration of this Agreement with respect
to any and all of the property, STI shall return the property to MDC, together
with all accessions, free from all damage and in the same condition and
appearance as when received by STI, allowing for ordinary wear and tear. If STI
fails or refuses to return the equipment to MDC, MDC shall have the right to
take possession of the property and for that purpose to enter any premises where
the property is located without being liable in any suit, action, defense, or
other proceedings to STI.
ARTICLE XIX
LIENS
1. ENCUMBRANCES OR LIENS; NOTICE. STI shall not pledge, encumber, or create a
security interest in, or permit any lien to become effective on any leased
property. If any of these events takes place, STI shall be deemed to be in
default at the option of MDC. STI shall promptly notify MDC of any liens,
charges, or other encumbrances of which STI has knowledge. STI shall promptly
pay or satisfy any obligation from which any lien or encumbrance arises, and
shall otherwise keep the property and all right, title, and interest free and
clear of all liens, charges, and encumbrances. STI shall deliver to MDC
appropriate satisfactions, waivers, or evidence of payment.
ARTICLE XX
NOTICES
1. SERVICE OF NOTICE. Accept as otherwise provided by law, any and all notices
or other communications required or permitted by this Agreement or by law to be
served on or given to either party by the other party shall be in writing and
shall be deemed duly served and given when personally delivered to any member of
the party to whom they are directed, or in lieu of such personal service when
deposited in the United States mail, first class postage pre-paid, addressed to
STI at 0000 Xxxxxxx Xxxxxx, Xxxxx Xxx, Xxxxxxxxxx, 00000, or to MDC at 0000
Xxxxxxx Xxxxxx, Xxxxx Xxx, Xxxxxxxxxx, 00000. Either party may change its
address for the purpose of this paragraph by giving notice of the change to the
other party in the manner provided in this paragraph.
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ARTICLE XXI
AMENDMENT AND MODIFICATION
1. METHOD OF AMENDMENT OR MODIFICATION. Additional property may from time to
time be added as the subject matter of this Agreement as agreed on by the
parties. Any additional property shall be added to Schedule A in an amendment
describing the property, the monthly rental, the term of the leasing period,
security deposit, and stipulated loss value of additional property. This
Agreement shall be amended, modified or altered only in a writing signed by both
parties.
ARTICLE XXII
ENTIRE AGREEMENT
1. INCORPORATION BY REFERENCE. This Agreement and any attached schedule(s),
which are incorporated by reference and made an integral part of this Agreement,
constitute the entire agreement between the parties. No agreements,
representations, or warranties, other than those specifically set forth in this
Agreement or in the annexed schedule(s), shall be binding on any of the parties
unless set forth in writing and signed by both parties.
ARTICLE XXIII
GOVERNING LAW
1. CHOICE OF LAW. This Agreement shall be governed and construed in all
respects in accordance with the laws of the State of California, USA. Any legal
action or notice shall be entered into in a court of suitable jurisdiction in
the County of Orange, State of California, and STI and MDC each hereby submits
to the jurisdiction of said courts.
ARTICLE XXIV
SEVERABILITY CLAUSE
1. AGREEMENT SURVIVES PARTIAL INVALIDITY. If any provision of this Agreement
is held to be invalid by a court of competent jurisdiction, the remaining
provisions shall nevertheless remain in full force and effect.
ARTICLE XXV
RELATIONSHIP
1. INDEPENDENT CONTRACTOR RELATIONSHIP. It is understood and agreed that STI
and MDC are independent contractors and each is engaged in the operation of its
own business. Nothing in this Agreement shall be construed to constitute the
parties as partners, joint venturers, or co-owners.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date last written below.
Simple Technology, Inc.: MDC:
By: By:
-------------------------- --------------------------
Name: Name:
------------------------ ------------------------
Title: Title:
----------------------- -----------------------
Date: Date:
------------------------ ------------------------
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SCHEDULE A
DESCRIPTION OF PROPERTY
A. The property to which this Schedule and Agreement applies is as follows:
QTY. DESCRIPTION SERIAL #
---- ----------- --------
1 Hewlett Packard HP83000 Tester S0024*3654D
RENT
B. As rent for this property, STI shall pay MDC the total sum of
$960,000.00. Except as otherwise provided in this Agreement or in this Schedule,
rent shall be payable in 60 monthly installments of $16,000.00 each, commencing
on the first day of January, 1997, and continuing on the first day of each month
thereafter until the total sum has been paid in full.
LOCATION
C. The above described property shall be located at 3001 or 0000 Xxxxxxx
Xx., Xxxxx Xxx, XX 00000, and shall not be removed from that location without
the prior written consent of MDC.
RENEWAL OPTION
D. STI may renew this Agreement of which this Schedule is a part, on a
year-to-year basis, on the expiration of the original term at a total rental of
$16,000.00 per month, and otherwise on the same terms and conditions of this
Agreement. The option may be exercised by STI's written notice to such a fact to
MDC not less than thirty (30) days before the expiration of the term of the
Agreement.
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