[CISCO SYSTEMS LOGO]
Master Lease No. 2324
MASTER AGREEMENT TO LEASE EQUIPMENT
THIS MASTER AGREEMENT TO LEASE EQUIPMENT (this "AGREEMENT") is entered
into as of APRIL 5, 1999 by and between CISCO SYSTEMS CAPITAL CORPORATION
("LESSOR"), having its principal place of business at 000 Xxxx Xxxxxx Xxxxx,
Xxx Xxxx, Xxxxxxxxxx 00000 and RHYTHMS NETCONNECTIONS, INC., a Delaware
corporation ("LESSEE"), having a principal place of business at 0000 Xxxxx
Xxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxxxx, XX 00000.
I. THE LEASE
1.1 LEASE OF EQUIPMENT. In accordance with the terms and conditions of
this Agreement, Lessor shall lease to Lessee, and Lessee shall lease from
Lessor, the personal property, including all substitutions, replacements,
repairs, parts and attachments, improvements and accessions thereto and
therein (the "EQUIPMENT"), described in the lease schedule(s) (each, a
"LEASE") to be entered into from time to time into which this Agreement is
incorporated, a form of which Lease is attached hereto as Annex C. Each
Lease shall constitute a separate, distinct, and independent lease and
contractual obligation of Lessee. Lessor or its assignee shall at all times
retain the full legal title to the Equipment, it being expressly agreed by
both parties that each Lease is an agreement of lease only.
1.2 TERM OF LEASE. The original term (the "ORIGINAL TERM") of the
Lease shall commence on the Commencement Date and, subject to Sections 3.3
and 3.5 below, shall terminate on the date specified in the Lease.
Notwithstanding the foregoing, the Original Term for the Equipment shall
automatically extend for successive 1-month periods after its expiration
(each, an "EXTENDED TERM") unless either party gives the other party written
notice, at least thirty (30) days prior to the expiration of the Original
Term or any Extended Term, as the case may be, of its intent not to so extend
the applicable Lease. Except as specifically provided in this Section 1.2,
no Lease may be terminated by Lessor or Lessee, for any reason whatsoever,
prior to the end of the Original Term or any Extended Term (collectively, the
"LEASE TERM"). Notwithstanding any provision to the contrary contained in
this Agreement, Lessee shall be deemed to accept the Equipment on the
Commencement Date (as specified in each Lease).
1.3 RENTAL PAYMENTS. Lessee shall pay Lessor rent ("RENT") for the
Equipment in the amounts and at the times specified in the Lease. All Rent
and other amounts payable by Lessee to Lessor hereunder shall be paid to
Lessor at the address specified above, or at such other place as Lessor may
designate in writing to Lessee from time to time.
1.
1.4 RETURN OF EQUIPMENT. Upon expiration of the Lease Term of the
Equipment, Lessee shall immediately return the Equipment to Lessor as
provided in Section 3.3 below. If Lessee fails to return any of the
Equipment upon demand therefor by Lessor, Lessee shall pay Lessor, as the
measure of Lessor's damages, the Casualty Value (as defined in the applicable
Lease) of such Equipment.
II. DISCLAIMERS AND WARRANTIES; INTELLECTUAL PROPERTY
2.1 DISCLAIMERS; WARRANTIES. Lessee represents and acknowledges that
the Equipment is of a size, design, capacity and manufacture selected by it,
and that it is satisfied that the Equipment is suitable for its purposes.
LESSOR LEASES THE EQUIPMENT AS IS, AND, NOT BEING THE MANUFACTURER OF THE
EQUIPMENT, THE MANUFACTURER'S AGENT OR THE SELLER'S AGENT, MAKES NO WARRANTY
OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, AS TO THE MERCHANTABILITY,
FITNESS FOR ANY PARTICULAR PURPOSE, DESIGN OR CONDITION OF THE EQUIPMENT.
LESSOR SHALL NOT BE RESPONSIBLE FOR ANY LOSS OR DAMAGE RESULTING FROM THE
INSTALLATION, OPERATION OR OTHER USE, OR DEINSTALLATION OF THE EQUIPMENT,
INCLUDING, WITHOUT LIMITATION, ANY DIRECT, INDIRECT, INCIDENTAL OR
CONSEQUENTIAL DAMAGE OR LOSS. Lessee shall look solely to the manufacturer or
the supplier of the Equipment for correction of any problems that may arise
with respect thereto, and, provided no Event of Default (as defined in
Section 4.1) has occurred and is continuing, all warranties made by the
manufacturer or such supplier are, to the degree possible, hereby assigned to
Lessee for the Lease Term. To the extent any such warranty requires
performance of any kind by the beneficiary of the warranty, Lessee shall
perform in accordance therewith.
2.2 INTELLECTUAL PROPERTY. Except as otherwise expressly provided in
each Lease, LESSOR MAKES NO WARRANTIES OR REPRESENTATIONS WHATSOEVER WITH
RESPECT TO THE INTELLECTUAL PROPERTY RIGHTS, INCLUDING, WITHOUT LIMITATION,
ANY PATENT, COPYRIGHT AND TRADEMARK RIGHTS, OF ANY THIRD PARTY WITH RESPECT
TO THE EQUIPMENT, WHETHER RELATING TO INFRINGEMENT OR OTHERWISE. Lessor
shall, when requested in writing by Lessee and at Lessee's cost and expense,
exercise, rights of indemnification, if any, for patent, copyright or other
intellectual property infringement obtained from the manufacturer under any
agreement for purchase of the Equipment. If notified promptly in writing of
any action brought against Lessee based on a claim that the Equipment
infringes a United States patent, copyright or other intellectual property
right, Lessor shall promptly notify the manufacturer thereof for purposes of
exercising, for the benefit of Lessee, Lessor's rights with respect to such
claim under any such agreement.
III. COVENANTS OF LESSEE
3.1 PAYMENTS UNCONDITIONAL; TAX BENEFITS; ACCEPTANCE. EACH LEASE SHALL
BE A NET LEASE, AND LESSEE'S OBLIGATION TO PAY ALL RENT AND OTHER
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SUMS THEREUNDER, AND THE RIGHTS OF LESSOR IN AND TO SUCH PAYMENTS, SHALL BE
ABSOLUTE AND UNCONDITIONAL, AND SHALL NOT BE SUBJECT TO ANY ABATEMENT,
REDUCTION, SETOFF, DEFENSE, COUNTERCLAIM, INTERRUPTION, DEFERMENT OR
RECOUPMENT, FOR ANY REASON WHATSOEVER. It is the intent of Lessor, and an
inducement to Lessor, to enter into each Lease, to claim all available tax
benefits of ownership with respect to the Equipment subject thereto. Lease
acceptance of the Equipment subject to a Lease shall be conclusively and
irrevocably evidenced by Lessee executing an Acceptance Certificate with
respect to such Equipment, and upon acceptance, such Lease shall be
noncancellable for the Lease Term unless otherwise agreed to in writing by
Lessor. Any nonpayment of Rent or other amounts payable under any Lease
shall result in Lessee's obligation to promptly pay Lessor as additional Rent
on such overdue payment, for the period of time during which it is overdue
(without regard to any grace period), interest at a rate equal to the lesser
of (a) fourteen percent (14%) per annum, or (b) the maximum rate of interest
permitted by law.
3.2 USE OF EQUIPMENT. Lessee shall use the Equipment solely in the
conduct of its business, in a manner and for the use contemplated by the
manufacturer thereof, and in compliance with all laws, rules and regulations
of every governmental authority having jurisdiction over the Equipment or
Lessee and with the provisions of all policies of insurance carried by Lessee
pursuant to Section 3.6 below. Lessee shall pay all costs, expenses, fees
and charges incurred in connection with the use and operation of the
Equipment.
3.3 DELIVERY; INSTALLATION; RETURN; MAINTENANCE AND REPAIR; INSPECTION.
Lessee shall be solely responsible, at its own expense, for (a) the delivery
of the Equipment to Lessee, (b) the packing, rigging and delivery of the
Equipment back to Lessor, upon expiration or termination of the Lease Term,
in good repair, condition and working order, ordinary wear and tear excepted,
at the location(s) within the continental United States specified by Lessor,
and (c) the installation, de-installation, maintenance and repair of the
Equipment. During the Lease Term, Lessee shall ensure that the Equipment is
covered by a maintenance agreement, to the extent available, with the
manufacturer of the Equipment or such other party, reasonably acceptable to
Lessor. Lessee shall, at its expense, keep the Equipment in good repair,
condition and working order, ordinary wear and tear excepted, and, at the
expiration or termination of the Lease Term, or any renewal term, with
respect to any of the Equipment, have such Equipment inspected and certified
acceptable for maintenance service by the manufacturer. In the event any of
the Equipment, upon its return to Lessor, is not in good repair, condition
and working order, ordinary wear and tear excepted, Lessee shall be obligated
to pay Lessor for the out-of-pocket expenses Lessor incurs in bringing such
Equipment up to such status, but not in excess of the Casualty Value (as
defined in the applicable Lease) for such Equipment, promptly after its
receipt of an invoice for such expenses. Lessor shall be entitled to inspect
the Equipment at Lessee's location of reasonable times.
3.4 TAXES. Lessee shall be obligated to pay, and hereby indemnifies
Lessor and its successor and assigns against, and holds each of them harmless
from, all license fees, assessments, and sales, use, property, excise and
other taxes and charges, other than those
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measured by Lessor's net income, now and hereafter imposed by any
governmental body or agency upon or with respect to any of the Equipment, or
the possession, ownership, use or operation thereof, or any Lease or the
consummation of the transactions contemplated in any Lease or this Agreement.
Notwithstanding the foregoing, Lessor shall file all required personal
property tax returns, and shall pay all personal property taxes payable, with
respect to the Equipment, Lessee shall pay to Lessor, as additional Rent, the
amount of all such personal property taxes within fifteen (15) days of its
receipt of an invoice for such taxes.
3.5 LOSS OF EQUIPMENT. Lessee shall bear the entire risk of the
Equipment being lost, destroyed or otherwise permanently unfit or unavailable
for use from any cause whatsoever (an "EVENT OF LOSS") after it has been
delivered to common carrier for shipment to Lessee. If an Event of Loss
shall occur with respect to any item of Equipment, Lessee shall promptly
notify Lessor thereof in writing. On the rental payment date following
Lessor's receipt of such notice, Lessee shall pay to Lessor an amount equal
to the rental payment or payments due and payable with respect to such item
of Equipment on or prior to such date, plus a sum equal to the Casualty Value
of such item of Equipment as of the date of such payment as set forth in such
Lease. Upon the making of such payment by Lessee regarding any item of
Equipment, the Rent for such item of Equipment shall cease to accrue, the
term of this Lease as to such item of Equipment shall terminate and (except
in the case of loss, theft or complete destruction) Lessor shall be entitled
to recover possession of such item of Equipment in accordance with the
provisions of Section 3.3 above. Provided that Lessor has received the
Casualty Value of any item of Equipment, Lessee shall be entitled to the
proceeds of any recovery in respect of such item of Equipment from insurance
or otherwise.
3.6 INSURANCE. Lessee shall obtain and maintain for the Lease Term at
its own expense, property damage and liability insurance and insurance
against loss or damage to the Equipment (including so-called extended
coverage), as a result of theft and such other risks of loss as are normally
maintained on equipment of the type leased hereunder by company's carrying on
the business in which Lessee is engaged, in such amounts, in such form and
with such insurers as shall be satisfactory to Lessor. Each insurance policy
will name Lessee as insured and Lessor as an additional insured and loss
payee thereof as Lessor's interests may appear, and shall provide that it may
not be canceled or altered without at least thirty (30) days prior written
notice thereof being given to Lessor or its successor and assigns.
3.7 INDEMNITY. Except with respect to the negligence or willful
misconduct of Lessor, Lessee hereby indemnifies, protects, defends and holds
harmless Lessor and its successors and assigns, from and against any and all
claims, liabilities (including negligence, tort and strict liabilities),
demands, actions, suits, and proceedings, losses, costs, expenses and
damages, including without limitation, reasonable attorneys' fees and costs
(collectively, "CLAIMS"), arising out of, connected with, or resulting from
this Agreement, any Lease or any of the Equipment, including, without
limitation, the manufacture, selection, purchase, delivery, possession,
condition, use, operation, or return of the Equipment. Each of the parties
shall give the other prompt written notice of any Claim of which it becomes
aware. The provisions of this Section 3.7 shall survive the expiration or
termination of this Agreement or any Lease.
4.
3.8 PROHIBITIONS RELATED TO LEASE AND EQUIPMENT. Without the prior
written consent of Lessor, which consent as it pertains to subsections (a),
(b) and (d) below shall not be unreasonably withheld, Lessee shall not: (a)
assign, transfer, pledge, encumber, hypothecate or otherwise dispose of this
Lease or any rights or obligations thereunder; (b) sublease any of the
Equipment; (c) create or incur, or permit to exist, any lien or encumbrance
with respect to any of the Equipment, or any part thereof; (d) move any of
the Equipment from the location at which it is first installed; or (e) permit
any of the Equipment to be moved outside the continental limits of the United
States.
3.9 IDENTIFICATION. Lessee shall place and maintain permanent markings
provided by Lessor on the Equipment evidencing ownership, security and other
interests therein, as specified from time to time by Lessor.
3.10 ALTERATIONS AND MODIFICATIONS. Lessee shall not make any
additions, attachments, alterations or improvements to the Equipment without
the prior written consent of Lessor. Any addition, attachment, alteration
or improvement to any item of Equipment shall belong to and become the
property of Lessor unless, at the request of Lessor, it is removed prior to
the return of such item of Equipment by Lessee. Lessee shall be responsible
for all costs relating to such removal and shall restore such item of
Equipment to its operating condition that existed at the time it became
subject to the applicable Lease.
3.11 EQUIPMENT TO BE PERSONAL PROPERTY. Lessee acknowledges and
represents that the Equipment shall be and remain personal property,
notwithstanding the manner in which it may be attached or affixed to realty,
and Lessee shall do all reasonable acts and enter into all agreements
reasonably necessary to ensure that the Equipment remains personal property.
3.12 FINANCIAL STATEMENTS. Lessee shall promptly furnish to Lessor such
financial or other statements respecting the condition and operations of
Lessee, and information respecting the Equipment, as Lessor may from time to
time reasonably request.
3.13 LESSEE REPRESENTATIONS. Lessee hereby represents that, with
respect to this Agreement and each Lease: (a) the execution, delivery and
performance thereof by Lessee have been duly authorized by all necessary
corporate action; and (b) the individual executing such document is duly
authorized to do so; (c) such document constitutes a legal, valid and binding
obligations of Lessee, enforceable in accordance with its terms.
IV. DEFAULT AND REMEDIES
4.1 EVENTS OF DEFAULT. The occurrence of any of the following shall
constitute an "Event of Default" hereunder: (a) Lessee shall fail to pay any
Rent or other payment due hereunder and such failure shall continue for a
period of ten (10) days after Lessee's receipt of notice thereof; (b) any
representation or warranty of Lessee made in this Agreement, any Lease, or in
any document furnished pursuant to the provisions of this Agreement or
otherwise, shall
5.
prove to have been false or misleading in any material respect as of the date
when it was made; (c) Lessee shall fail to perform any covenant, condition or
agreement made by it under any Lease, and such failure shall continue for
twenty (20) days after its receipt of notice thereof; (d) bankruptcy,
receivership, insolvency, reorganization, dissolution, liquidation or other
similar proceedings shall be instituted by or against Lessee or all or any
part of its property under the Federal Bankruptcy Code or other law of the
United States or of any other competent jurisdiction, and, if such proceeding
is brought against Lessee, it shall consent thereto or shall fail to cause
the same to be discharged within thirty (30) days after it is filed; (e)
Lessee shall default under any agreement with respect to the purchase or
installation of any of the Equipment and such default shall continue for a
period of ten (10) days after Lessee's receipt of notice thereof (to the
extent that notice is required under any such agreement); or (f) Lessee or
any guarantor of Lessee's obligations under any Lease shall default under any
other agreement with Lessor or Cisco Systems, Inc. and such default shall
continue for a period of ten (10) days after Lessee's receipt of notice
thereof.
4.2 REMEDIES. If an Event of Default hereunder shall occur and be
continuing, Lessor may exercise any one or more of the following remedies:
(a) terminate any or all of the Leases and Lessee's rights thereunder; (b)
proceed, by appropriate court action or actions, to enforce performance by
Lessee of the applicable covenants of any or all of the Leases or to recover
damages for the breach thereof; (c) recover from Lessee an amount equal to
the sum of (i) all accrued and unpaid Rent and other amounts due under any or
all of the Leases (ii) as liquidated damages for loss of a bargain and not as
a penalty, the present value of (A) the balance of all Rent and other amounts
under any or all of the Leases discounted at a rate of five percent (5%) per
annum, and (B) Lessor's estimated fair market value of the Equipment at the
expiration of the Original Term (d) personally, or by its agents, take
immediate possession of any or all of the Equipment from Lessee and, for such
purpose, enter upon Lessee's premises where any of the Equipment is located
with or without notice or process of law and free from all claims by Lessee;
and (e) require the Lessee to assemble the Equipment and deliver the
Equipment to Lessor at a location which is reasonably convenient to Lessor
and Lessee. The exercise of any of the foregoing remedies by Lessor shall
not constitute a termination of any Lease or this Agreement unless Lessor so
notifies Lessee in writing.
4.3 DISPOSITION OF EQUIPMENT. In the event, upon the occurrence of an
Event of Default, Lessor repossesses any of the Equipment, Lessor shall use
its reasonable efforts (consistent with its customary business practices) to
sell or lease any or all of such Equipment, at one or more public or private
sales. The proceeds of (i) any rental of the Equipment for the balance of
the Original Term (discounted to present value at the rate of five percent
(5%) per annum) or (ii) any sale of the Equipment shall be applied to the
payment of (A) all costs and expenses (including, without limitation,
reasonable attorneys' fees) incurred by Lessor in retaking possession of, and
removing, storing, repairing, refurbishing and selling or leasing such
Equipment and (B) the obligations of Lessee to Lessor pursuant to this
Agreement. Lessee shall remain liable to Lessor for any deficiency.
6.
V. MISCELLANEOUS
5.1 PERFORMANCE OF LESSEE'S OBLIGATIONS. Upon Lessee's failure to pay
Rent (or any other sum due hereunder) or perform any obligation hereunder
when due, Lessor shall have the right, but shall not be obligated, to pay
such sum or perform such obligation, whereupon such sum or cost of such
performance shall immediately become due and payable hereunder as additional
Rent, with interest thereon at the highest legal rate from the date such
payment or performance was made.
5.2 QUIET ENJOYMENT. So long as no Event of Default shall have
occurred and be continuing, neither Lessor nor its assignee shall interfere
with Lessee's right of quiet enjoyment and use of the Equipment.
5.3 FURTHER ASSURANCES. Lessee shall, upon the request of Lessor, from
time to time, execute and deliver such further documents and do such further
acts as Lessor may reasonably request in order fully to effect the purpose of
any Lease and Lessor's rights thereunder. Lessor is authorized to file a
financing statement, signed only by Lessor in accordance with the Uniform
Commercial Code or signed by Lessor as Lessee's attorney in fact, with
respect to any of the Equipment.
5.4 RIGHT AND REMEDIES. Each and every right and remedy granted to
Lessor under any Lease shall be cumulative and in addition to any other right
or remedy therein specifically granted or now or hereafter existing in
equity, at law, by virtue of statute or otherwise, and may be exercised by
Lessor from time to time concurrently or independently and as often and in
such order as Lessor may deem expedient. Any failure or delay on the part of
Lessor in exercising any such right or remedy, or abandonment or
discontinuance of steps to enforce the same, shall not operate as a waiver
thereof or affect Lessor's right thereafter to exercising the same. Waiver
of any right or remedy on one occasion shall not be deemed to be a waiver of
any other right or remedy or of the same right or remedy on any other
occasion.
5.5 NOTICES. Any notice, request, demand, consent, approval or other
communication provided for or permitted hereunder shall be in writing and
shall be conclusively deemed to have been received by a party hereto on the
day it is delivered to such party at its address set forth above (or at such
other addresses such party shall specify to the other party in writing), or
if sent by registered or certified mail, return receipt requested, on the
fifth day after the day on which it is mailed, postage prepaid, addressed to
such party.
5.6 SECTION HEADINGS; COUNTERPARTS. Section headings are inserted for
convenience of reference only and shall not affect any construction or
interpretation of this Agreement. This Agreement and each Lease may be
executed in counterparts, and when so executed each counterpart shall be
deemed to be an original, and such counterparts together shall constitute one
and the same instrument.
5.7 ENTIRE LEASE. This Agreement and each Lease constitute the entire
agreement between Lessor and Lessee with respect to the lease of the
Equipment. No amendment of, or any
7.
consent with respect to, any provision of this Agreement or any Lease shall
bind either party unless set forth in a writing, specifying such waiver,
consent, or amendment, signed by both parties. TO THE EXTENT PERMITTED BY
APPLICABLE LAW AND NOT OTHERWISE SPECIFICALLY PROVIDED TO LESSEE IN THIS
AGREEMENT, LESSEE HEREBY WAIVES ANY AND ALL RIGHTS OR REMEDIES CONFERRED UPON
A LESSEE UNDER THE CALIFORNIA COMMERCIAL CODE, AND ANY OTHER APPLICABLE
SIMILAR CODE OR STATUTES OF ANOTHER JURISDICTION, WITH RESPECT TO A DEFAULT
BY LESSOR UNDER THIS AGREEMENT OR ANY LEASE.
5.8 SEVERABILITY. Should any provision of this Agreement or any Lease be
or become invalid, illegal, or unenforceable under applicable law, the other
provisions of this Agreement and such Lease shall not be affected and shall
remain in full force and effect.
5.9 ATTORNEYS' FEES. Should either party institute any action or
proceeding to enforce this Agreement or any Lease prevailing party shall be
entitled to receive from the other party all reasonable out-of-pocket costs and
expenses, including, without limitation, attorneys' fees.
8.
5.10 GOVERNING LAW AND JURISDICTION. THIS LEASE SHALL BE GOVERNED IN
ALL RESPECTS BY THE LAWS OF THE STATE OF CALIFORNIA WITH RESPECT TO
AGREEMENTS ENTERED INTO, AND TO BE PERFORMED, ENTIRELY IN CALIFORNIA. LESSOR
AND LESSEE WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY LITIGATION ARISING FROM
THIS AGREEMENT OR ANY LEASE. LESSEE CONSENTS TO THE NON-EXCLUSIVE
JURISDICTION OF THE STATE COURTS OF CALIFORNIA, AND THE FEDERAL COURTS
SITTING IN THE STATE OF CALIFORNIA, FOR THE RESOLUTION OF ANY DISPUTES
HEREUNDER.
5.11 SURVIVAL. All obligations of Lessee to make payments to Lessor
under any Lease or to indemnify Lessor, pursuant to Section 3.4 or 3.7 above,
with respect to a Lease, and all rights of Lessor hereunder with respect to a
Lease, shall survive the termination of such Lease.
LESSEE, BY THE SIGNATURE BELOW OF ITS AUTHORIZED REPRESENTATIVE, ACKNOWLEDGES
THAT IT HAS READ THIS LEASE, UNDERSTANDS IT, AND AGREES TO BE BOUND BY ITS
TERMS AND CONDITIONS.
LESSOR: LESSEE:
CISCO SYSTEMS CAPITAL CORPORATION RHYTHMS NETCONNECTIONS INC.
By: /s/ Xxxxx Xxxxxxxx By: /s/ Xxxxx X. Xxxxxxxx
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(Authorized Signature) (Authorized Signature)
Xxxxx X. Xxxxxxxx/Chief Financial
Xxxxx Xxxxxxxx Officer
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(Name/Title) (Name/Title)
April 5, 1999 April 5, 1999
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(Date) (Date)
9.
