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Exhibit 10.56
MASTER LEASE AGREEMENT
This Master Lease Agreement No. 6079 ("Agreement") is made this 15th day of
February. 1999 between Rainier Funding Services, Inc., a corporation having its
principal place of business at 0000 Xxxxxxxxxx Xxxxxxx, Xxxxxx, Xxx Xxxx
00000-0000, ("Lessor") and AppliedTheory Communications, Inc., a New York
corporation having its principal place of business at 000 Xxxxxx Xxxxx Xxxx,
Xxxxxxxx, Xxx Xxxx 00000-0000, ("Lessee").
1. LEASE.
This Agreement sets forth the terms and conditions pursuant to which the Lessor
shall lease to Lessee, and Lessee shall lease from Lessor, various items of
personal property (collectively the 'Equipment" or individually an (item")
described in the Equipment Schedule in the form attached to this Agreement as
Exhibit A. The terms Equipment" and item" include, as applicable, any associated
software systems and programming. Each Equipment Schedule incorporates the terms
and conditions of this Agreement and shall constitute a separate, distinct and
independent lease and contractual relationship between Lessor and Lessee. The
term Lease shall refer to an Equipment Schedule and this Agreement collectively.
By execution of this Agreement the parties hereto agree to the terms and
conditions pursuant to which Equipment may be leased from time to time by Lessor
to Lessee. If more than one Lessee is named in this Lease, the liability of each
shall be joint and several.
2. TERM.
(a) Upon delivery of an Item or the Equipment, it shall be installed under
Lessee's exclusive direction and supervision. Lessee shall be solely
responsible to inspect and test the Item during installation and, upon
completion of installation if it is found to be in good order, Lessee
shall execute and deliver to Lessor a Certificate of Acceptance
substantially in the form attached to this Agreement as Exhibit X. Xxxxxx
hereby appoints Lessee as its agent for inspecting, testing and accepting
the Equipment from the supplier(s). All Items listed on a Certificate of
Acceptance shall be deemed to conform to the Lease to which it is
subject, despite any defect whether latent or apparent.
(b) The Lease Term for an Item shall commence on the date of Lessee's
execution of the Certificate of Acceptance ("Acceptance Date"). The Lease
Term shall run for the number of months specified on the Equipment
Schedule measured from the first day of the month following the
Acceptance Date of the last Equipment Item, unless otherwise terminated
or extended pursuant to the provisions of the Lease. A Lease may be
terminated as of the last day of the last month of the Lease Term, or
thereafter, by written notice given by either party to the other not less
than six months prior to the date of termination designated in such
notice, which date shall be the last day of a calendar month. If the
Lease is not so terminated at the end of the Lease Term thereof and other
rental amounts are not specified therein or mutually agreed upon in
writing, the Lease Monthly Rental shall continue to be due and payable by
Lessee. Any notice of termination given hereunder may not be revoked
without the written consent of the other party. Lessee hereby grants
Lessor a right of first refusal for the financing of the Equipment which
Lessee is obtaining to replace the Equipment to be terminated hereunder.
3. RENT
(a) Lessee shall pay to Lessor as Basic Rent ("Basic Rent") for each Item the
following:
(i) Basic Rent shall be made up of Interim Rent plus an amount
equal to the Periodic Rent. Interim Rent is the amount of
days from the Acceptance Date to the Lease Term
Commencement Date multiplied by 1/30th of the Periodic
Rent amount
(ii) On the first day of the month next succeeding the Lease
Term Commencement and on the first day of each payment
period thereafter, an amount equal to the Periodic Rent.
(b) Lessee shall pay the following amounts (herein referred to as
"Supplemental Rent" and, together with Basic Rent, as "Rent"):
(i) On or before the applicable due date, all taxes, however
designated, which are levied or imposed by any governmental
authority upon the Equipment or its sale, purchase,
ownership, lease or use, or upon Basic Rent or the Lease,
including but not limited to sales or use taxes, personal
property taxes, privilege or excise taxes, franchise taxes,
ad valorem or value-added taxes, leasing taxes, and stamp
taxes, together with any penalties, fines or interest
thereon, excluding, however, income taxes measured solely
by the net income of Lessor. To the extent permitted by
applicable law, Lessee shall prepare (in such a manner as
will show Lessors Ownership of the Equipment) and timely
file all tax returns required in connection with taxes
payable by Lessee hereunder. With respect to any such tax
return required to be filed by Lessor, Lessee shall notify
Lessor of such requirement and furnish Lessor with all
forms and information necessary for proper and timely
filing of such return. Lessee shall inform Lessor as to any
governmental jurisdiction imposing personal property taxes
on the Equipment and the amount of such taxes.
(ii) On or before the date required by the terms of the Lease
(or upon Lessors demand if no date is specified) any other
amount which the Lessee is obligated to pay, including
indemnity payments or payments of Casualty Value.
(c) All payments to Lessor shall be made at the office of Lessor at 0000
Xxxxxxxxxx Xxxxxxx. Xxxxxx, Xxx Xxxx 00000-0000, or as otherwise directed
by Lessor in writing. If Lessee fails to pay on or before the date due
any Rent or other sum to be paid to Lessor, then Lessee shall pay a late
charge of five (5) percent of, and in addition to, the amount of such
payment but not exceeding the maximum amount, if any, permitted by
applicable law.
4. NET LEASE.
This Lease is a net lease. Lessee's obligation to pay all Rent and any other
amounts due hereunder shall be absolute and unconditional and, except as
expressly provided, shall not be subject to any abatement, deferment, reduction,
defense, counterclaim, set-off, or recoupment, including, for example. (i) any
existing or future claims of whatever kind or nature against Lessor or the
manufacturer(s) or supplier(s) of the Equipment or (ii) termination of Lessees
right of possession and/or the taking of possession of the Equipment or any
Items thereof by or through Lessor in accordance with this Lease. Except as
expressly provided herein, this Lease shall not terminate for any reason,
including any defect in the Equipment or Lessors title thereto or any
destruction or loss of use of any Item.
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5 MAINTENANCE.
Lessee shall enter into and maintain in force throughout the term of this Lease
a maintenance agreement with the equipment manufacturer(s), or such other
qualified maintenance organization as Lessee may select, covering maintenance of
the Equipment. Lessee will cause the Equipment to be kept in good working
order, repair and maintenance in accordance with the provisions of each
maintenance agreement and will make all necessary adjustments and repairs to the
Equipment, and each manufacturer or service organization is hereby authorized to
accept the directions of Lessee with respect thereto Lessee shall allow the
manufacturer(s) or service organization full and free access to the Equipment.
All maintenance and service charges. whether under a maintenance agreement or
otherwise and, in addition, the expenses. if any. of a manufacturer's or service
organization's customer engineers charged in connection with maintenance and
repair services, shall be borne by Lessee. Lessee covenants that the Equipment
will at all times by used and operated in accordance with each manufacturer's
instructions and in compliance with any restriction contained in each
manufacturer's warranties regarding the Equipment and shall be certified"
acceptable for the manufacturer's maintenance agreement at the time of
de-installation.
6. OWNERSHIP OF EQUIPMENT.
The Equipment shall at all times remain personal property and title thereto
shall remain solely with Lessor. The Equipment may be removed by Lessor any time
after termination of this Lease. Lessee shall affix tags. decals or plates to
the Equipment indicating Lessor's ownership, which tag, decal or plate and
location may be specified by Lessor, and Lessee shall not permit their removal
or concealment. Lessee shall cause each Item to be kept numbered with the serial
number specified in the Certificate of Acceptance. Lessee shall, at its own
expense, protect and defend Lessor's title in the Equipment against all claims
and liens of Lessee's creditors and keep the Equipment free and clear of all
claims, liens and encumbrances except those resulting from the agreements or
acts of Lessor, and not resulting from Lessee's failure to perform its
obligations under this Lease. Lessee agrees not to claim any income tax
deduction for depreciation with respect to the Equipment or to file returns or
reports with any taxing authority in which it claims or implies ownership of any
Item.
7. QUIET ENJOYMENT.
Lessor covenants that so long as Lessee is not in default under this Lease.
Lessor shall not interfere with Lessee's right to quiet possession of the
Equipment.
8. LOCATION AND USE OF EQUIPMENT.
(a) During the term of this Lease the Equipment shall be located at the
address specified in the Equipment Schedule and shall not be removed from
that address without the prior written consent of Lessor.
(b) Lessee covenants and warrants that during the period that any Equipment
is leased to Lessee, or its successors or assigns, the Equipment will at
all time. be used and operated in compliance with all acts, rules,
regulations, and orders of any commission, board or other legislative,
administrative, or judicial body or officer having power to regulate or
supervise the use or operation of the Equipment. Lessee shall not install
or use the Equipment in such manner or in such circumstances that any
part of the Equipment is deemed to be an accession to other personal
property or deemed to be real property or a fixture thereon.
9. RISK OF LOSS.
(a) Lessee assumes and shall bear the entire risk of loss with respect to any
damage, destruction, loss, theft, or governmental taking of any Item,
whether partial or complete, and whether or not through any fault or
neglect of Lessee. Further, Lessee assumes and shall bear the entire risk
of loss arising out of or in connection with delays, partial performance
or nonperformance by supplier(s), and Lessor shall not be liable for
specific performance of this Lease or for damages if. for any reason, any
supplier delays or fails to fill or improperly fills an order. Except as
provided in this section 9, no such event shall relieve Lessee of its
obligation to pay Rent.
If any Item is damaged, Lessee shall promptly notify Lessor and shall
determine within 15 days of the date of such notice whether such Item can
be repaired. If Lessee determines that the Item can be repaired, Lessee
shall promptly so notify Lessor and shall at its own expense cause to be
made such repairs or replacements (in like kind of the same or later
model) as are necessary to return the Item to its proper condition. To
the extent appropriate to reimburse Lessee for the cost of repair or
replacement. Lessee shall be entitled to receive from Lessor any
insurance or other recovery received by Lessor in connection with such
damage. All replacements made pursuant to this subsection 9(b) shall
become the property of Lessor and Lessee shall execute and provide Lessor
with any and all documents necessary to vest good and valid title thereto
in Lessor.
(c) In the event that any Item is destroyed, damaged beyond repair, lost,
stolen, or taken by governmental action for a stated period extending
beyond the term of this Lease or for an indefinite period (any such event
is referred to as an "Event of Loss"), Lessee shall promptly notify
Lessor and pay to Lessor on the next Rent payment date following such
Event of Loss, an amount equal to the Casualty Value of such Item (as
defined in the Equipment Schedule) After payment of the Casualty Value
and all rent due and owing on that Rent payment date, Lessee's obligation
to pay further Basic Rent for such item shall cease and Basic Rent shall
be adjusted pro rata based on the relationship between the Cost of that
Item subject to the Lease and the Cost of all items as stated on the
Equipment Schedule. After paying such Casualty Value to Lessor. Lessee
shall be entitled to receive from Lessor any insurance 0 other recovery
received by Lessor in connection with such Event of Loss up to the amount
actually paid by Lessee to Lessor,
(d) In the event of a governmental taking of an Item for a stated period
which does not extend beyond the term of this Lease, all obligations of
the Lessee with respect to such Item (including payment of Rent) shall
continue. So long as Lessee is not in default hereunder, Lessor shall pay
to Lessee all sums received by Lessor by reason of such governmental
taking, up to the amount of Basic Rent paid by Lessee for such Item
during the period of such governmental taking.
10. INSURANCE.
(a) During the period that any Equipment is leased to Lessee. Lessee will at
all times and at its sole expense carry and maintain in full force and
effect insurance for loss of or damage to the Equipment caused by fire,
lightning, sprinkler, breakage, tornado and windstorms, explosion. smoke
and smudge, aircraft and motor vehicle damage, strikes, riots and civil
commotion, burglary and theft, vandalism and malicious mischief, and
other casualty events customarily insured against with respect to similar
equipment, in an amount not less than the Casualty Value of the
Equipment. Lessee shall also carry and maintain at its expense public
liability insurance covering the Equipment, in such amounts and against
such risks as are customary with respect to similar equipment. All
insurance shall be in the broadest form available on usual commercial
terms and in amounts and with companies satisfactory to Lessor.
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The liability insurance policy shall contain minimum limits of $500,000.
for each person, $500,000. for each occurrence, and against claims for
property damages in an amount not less than S100.000. Lessee shall
furnish to Lessor an original certificate of insurance or policy as
evidence of such insurance.
(b) Lessee shall maintain a loss payable endorsement on all such policies in
favor of Lessor and its successors and assigns and shall afford to Lessor
and its successors and assigns such additional protection as they shall
reasonably require. All such insurance policies shall name Lessor. its
successors and assigns, as additional insureds and shall be payable to
each as their respective interests may appear. Each policy shall
expressly provide that any obligations imposed upon the insureds
(including, without limitation, the obligation to pay premiums) shall be
the obligations solely of Lessee and not the obligations of Lessor, its
successors and assigns Each policy shall expressly provide that (1) the
insurance as to Lessor and its successors and assigns shall not be
invalidated by any act, omission or neglect of Lessee. (2) the same may
not be cancelled or modified or lapse (for failure to renew or otherwise)
without at least thirty (30) days prior written notice to Lessor, its
successors and assigns. and (3) the insurance shall be primary without
right of contribution of any other insurance carried by or on behalf of
Lessor with respect to its interests.
(c) Lessee irrevocably appoints Lessor as Lessee's attorney-in-fact to make
claim for, receive payment of, execute and endorse all documents, checks
or drafts received in payment for loss or damage under any insurance
policies.
(d) In case of the failure of Lessee to procure or maintain the insurance or
to comply with any provision of this Lease, Lessor shall have the right,
but shall not be obligated, to effect such insurance or compliance on
behalf of Lessee. In that event, all monies spent by and expenses of
Lessor in effecting such insurance or compliance shall be deemed
Supplemental Rent, and shall be paid by Lessee to Lessor upon demand.
11. ENFORCEMENT OF WARRANTIES.
All warranties, express or implied, issued on or applicable to an Item shall be
enforced by Lessee in its discretion and in its own name. Lessee hereby agrees
to take all reasonable action to enforce any such warranty, provided, however,
that Lessee shall not be obligated to resort to litigation to enforce any such
warranty unless Lessor shall pay all expenses in connection therewith. Lessor
hereby assigns to Lessee any warranty rights which Lessor may have against a
manufacturer with respect to any Item, to the extent such warranty rights are
assignable. With respect to any warranty rights which are not assignable, Lessor
hereby appoints Lessee as its agent and attorney-in-fact for the purpose of
enforcing such warranty rights at Lessee's expense.
12. DISCLAIMER OF WARRANTIES.
(a) LESSOR. NOT BEING THE MANUFACTURER OR VENDOR OR MERCHANT OR SUPPLIER OF
THE EQUIPMENT NOR THEIR AGENT. MAKES NO WARRANTIES, AND LESSOR SHALL NOT
BY VIRUTE OF HAVING LEASED THE EQUIPMENT COVERED BY THIS LEASE BE DEEMED
TO HAVE MADE ANY REPRESENTATIONS OR WARRANTIES AS TO ANY MATTER
WHATSOEVER. INCLUDING, WITHOUT LIMITATION MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, DESIGN OR CONDITION OF, OR AS TO THE QUALITY OF THE
MATERLAL WORKMANSHIP IN OR CAPACITY OF THE EQUIPMENT, THE COMPLIANCE OF
THE EQUIPMENT WITH THE REQUIREMENTS OF ANY LAW RULE. SPECIFICATION OR
CONTRACT PERTAINING THERETO OR ANY GUARANTY OR WARRANTY AGAINST PATENT OR
COPYRIGHT INFRINGEMENT OR LATENT DEFECTS. NO DEFECT OR UNFITNESS OF THE
EQUIPMENT SHALL RELIEVE LESSEE OF THE OBLIGATION TO PAY RENT OR OF ANY
OTHER OBLIGATION UNDER THIS LEASE.
(b) LESSEE ACKNOWLEDGES, REPRESENTS AND WARRANTS THAT IT HAS SELECTED THE
EQUIPMENT BASED ON ITS OWN JUDGMENT AND EXPRESSLY DISCLAIMS ANY RELIANCE
UPON STATEMENTS MADE BY THE LESSOR AND FURTHER AGREES TO SETTLE ALL
CLAIMS DIRECTLY WITH THE MANUFACTURER OF VENDOR.
13. INDEMNIFICATION.
To the fullest extent permitted by law, Lessor, its officers, employees, agents,
successors and assigns, shall not be liable to Lessee for, and Lessee shall
indemnify and hold Lessor, its officers, employees, agents, successors and
assigns, harmless with respect to any third-party from any liability (including
liability for negligence), claim, loss, damage or expense (including litigation
expense) of any kind or nature arising out of this Lease, or the transactions
contemplated in the lease, including, but not limited to (a) the inadequacy of
any Item for any purpose, (b) any deficiency or defect in any Item, (c) the use
or performance or maintenance of any Item, (d) any interruption or loss of
service, use or performance of any Item, (e) any patent, trademark or copyright
infringement relating to any Item, or (f) any loss of business or other
consequential damage whether or not resulting from any of the foregoing. IN
PARTICULAR, LESSOR AND ITS SUCCESSORS AND ASSIGNS SHALL NOT BE LIABLE FOR
INJURIES TO PERSONS OR DAMAGE TO ANY ITEM OR OTHER PROPERTY UNDER ANY THEORY OF
STRICT LIABILITY, AND LESSEE SHALL INDEMNIFY AND SAVE LESSOR AND ITS SUCCESSORS
AND ASSIGNS HARMLESS FROM ANY SUCH LIABILITY AND ALL COSTS AND EXPENSES IN
DEFENDING THE SAME. All of Lessors and its successors' and assigns' rights under
this section 13 shall survive the termination of this Lease. However, Lessee
shall not be required to indemnify Lessor or its successors or assigns for
claims arising from events which occur after an Item has been redelivered to
Lessor, its successor or assign.
14. ALTERATIONS AND ATTACHMENTS.
Upon prior written notice to Lessor. Lessee may. at its own expense, make
alterations in or add attachments to an Item, provided any alteration or
attachment shall not interfere with the normal operation of the item. Lessee
hereby grants Lessor a right of first refusal for the providing and br financing
of such alterations or attachments. The manufacturer may incorporate engineering
changes or make temporary alterations to an Item upon request by Lessee. All
such alterations and attachments, unless Lessor shall otherwise agree in
writing, shall be removed by Lessee and the Item restored to its original
condition, reasonable wear and tear excepted, upon termination of this Lease. If
the alteration or attachment interferes with the normal and satisfactory
operation or maintenance of any Item in a manner as to increase the cost of
maintenance of the Item, or create a safety hazard, Lessee shall promptly remove
the alteration or attachment and restore the item to its normal condition.
15. DELIVERY AND RETURN OF THE EQUIPMENT-
Unless the one dollar buyout option is exercised,
Each Item will be delivered to Lessee at such place as Lessee specifies. Upon
expiration or termination of this Lease. Lessee, at its own risk, shall return
each item promptly to Lessor at the location specified by Lessor within the
continental United States in the same condition as when delivered, ordinary wear
and tear excepted, and in a condition eligible for a standard manufacturers
maintenance agreement without additional cost. All transportation, local
drayage, rigging and installation charges upon each Item both on delivery to the
Lessee and re-delivery to the Lessor are to be paid by Lessee. Lessor shall in
no way be liable to Lessee for delays in delivery beyond its reasonable control.
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16. INSPECTION AND REPORTS.
(a) Upon request, Lessee shall permit Lessor or persons designated by Lessor
to inspect any Item.
(b) Lessee shall immediately notify Lessor of any accident arising out of the
alleged or apparent improper manufacturing, functioning or operation of
any item, the time, place and nature of the accident and damage, the names
and addresses of parties involved, persons injured. witnesses and owners
of property damaged. and such other relevant information as may be known,
and shall promptly advise Lessor of all correspondence. papers, notices
and documents received by Lessee in connection with any claim or demand
related to improper manufacturing, operation or functioning of the Item or
charging Lessor with liability, and shall aid in the investigation and
defense of all such claims and shall aid in the recovery of damages from
third persons.
(C) Lessee shall annually, within ninety (901 days after the close of Lessees
fiscal year. furnish to Lessor its successors or assigns financial
statements of Lessee (including a balance sheet as of the close of such
year and statements of income, changes in financial condition and
shareholders' equity for such year) prepared in accordance with generally
accepted accounting principles and certified by Lessee's independent
public accountant(s) If requested by Lessor, its successors or assigns.
Lessee shall also provide quarterly financial statements of Lessee
similarly prepared for each of the first three quarters of each fiscal
year, which shall be certified (subject to normal year end audit
adjustments) by Lessee's chief financial officer and furnished to Lessor
within sixty (60) days following the end of the quarter
17. EVENTS OF DEFAULT AND LESSOR'S REMEDIES.
(a) Each of the following events shall constitute an event of default ("Event
of Default") hereunder: (i) Lessee fails to pay any Rent or other amount
due hereunder within ten (10) days after the same is due and payable or
(ii) Lessee fails to perform any other obligation or observe any condition
of this Lease required to be performed or observed by Lessee for a period
of twenty (20) days after Lessee's receipt of notice of such failure from
Lessor or (iii) any representation, warranty or statement made in writing
to lessor in connection with the transactions contemplated under this
Lease shall have been false in any material respect when made or (iv)
Lessee attempts to remove, sell. transfer, encumber, part with possession
of, assign or sublet (except as expressly permitted by the provisions
hereof) any Item or (v) Lessee ceases doing business as a going concern or
(vi) Lessee applies for or consents to the appointment of a receiver,
trustee, assignee, custodian or liquidator of its business or any
substantial part of its property or (vii) Lessee fails to pay its debts
generally as they become due or (viii) Lessee makes a general assignment
for the benefit of creditors or (ix) Lessee fails within sixty (60) days
to lift any execution, garnishment or attachment of such consequence as
will impair its ability to carry on its operations under this Lease or (x)
Lessee commences (as the debtor) a case in bankruptcy (including a
petition for reorganization or arrangement) under the United States
Bankruptcy Code or a proceeding under any state or federal insolvency law
or (xi) a case in bankruptcy or any other proceeding (including a petition
for reorganization or arrangement) under the United States Bankruptcy Code
or any case or proceeding under any other insolvency law shall be
commenced against Lessee (as the debtor) involuntarily or a decree or
order for relief against Lessee (as the debtor) shall be entered in any
court of competent jurisdiction, and such case, proceeding or decree or
order is not dismissed within thirty (30) days after such commencement or
entry. or Lessee shall consent to or admit the material allegations
against it in any such case or proceeding or (xii) a trustee, assignee,
receiver, custodian or agent (however named) is appointed or authorized to
take charge of any substantial part of Lessee's property or (xiii) Lessor
deems itself insecure.
(b) Upon the occurrence of any Event of Default, Lessor may declare the Lessee
in default, and such declaration shall apply to all Leases between Lessor
and Lessee except as specifically excepted therefrom by Lessor in such
declaration. In the case of an Event of Default, Lessor or its agents
shall have the right, at their option, to exercise any or all of the
rights and remedies available to a secured party under the Uniform
commercial Code and, in addition, do any or all of the following: (i)
declare immediately due and payable by Lessee, for loss of a bargain, an
amount equal to the sum of the Casualty Value of the Equipment as of the
Basic Rent payment date immediately preceding the date upon which the
Event of Default occurred plus the unpaid balance of any Rent or other
sums due and owing as of that date, (ii) terminate this Lease, or (iii)
take possession of any or all Items of Equipment during Lessees normal
working hours without demand or notice, wherever the Equipment may be
located, without court order or other process of law (Lessee hereby
waiving any right it may have to notice and hearing before repossession).
Lessee hereby waives any and all damages occasioned by such taking of
possession. Any taking of possession pursuant to this subsection (b) shall
not in itself constitute termination of this Lease and shall not, in any
event, relieve Lessee of its obligations hereunder. Lessee shall reimburse
Lessor for all reasonable expenses (including attorneys fees and
collection agency fees, court costs and repossession expenses) incurred by
Lessor in enforcing its rights under this section 17. To the extent
permitted under applicable law, any amount due and unpaid under this
section 17 shall bear interest at a rate equal to the sum of the prime
interest rate of The Wall Street Journal (as in effect during the period
any amount remains due and unpaid), plus 2% per annum from the due date
until paid in full. Upon taking possession of the Equipment. Lessor may,
at its option and upon notice to Lessee, lease the repossessed Equipment
to any third party on such terms and conditions as Lessor may determine,
or sell the Equipment at public auction or at private sale. In the event
that Lessor leases or sells repossessed Equipment, the Net Proceeds (as
defined below) shall first be credited to amounts due and owing by Lessee,
and shall then be used to reimburse Lessee for any payment made by Lessee
pursuant to clause (i) of this subsection (b). Any surplus shall be
retained by Lessor. Lessee shall remain liable for any deficiency
resulting from an excess of amounts due and owing by Lessee over Net
Proceeds.
(0) As used in subsection (b) Net Proceeds" shall mean the sale price of the
Equipment, or the aggregate rent payable pursuant to a re-lease of the
Equipment (discounted at a rate equal to the sum of the prime interest
rate in effect according to The Wall Street Journal on the date such
re-lease is entered into plus 2%) less all costs and expenses (including
reasonable attorneys fees and disbursements and collection agency fees,
court costs and repossession expenses) incurred by Lessor as a result of
Lessee's default and Lessors exercise of its remedies with respect thereto
18. SUBLEASES AND ASSIGNMENTS.
(a) Lessee may not sublet an Item unless Lessee notifies Lessor of the
proposed new location of the Item, receives Lessors prior written consent
and provides such documents (including UCC financing statements) as Lessor
may require. No sublease shall in any way discharge or diminish any of
Lessee's obligations under this Lease. Lessee hereby grants to Lessor the
right of first refusal on any sublease or grant of Lessee's rights to the
Equipment.
(b) This Lease shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and to the extent specified in any
assignment, assigns. Lessee shall not assign this Lease without the prior
written consent of Lessor. Lessor may assign any or all of its rights
under this Lease to another party as collateral security and Lessee agrees
to acknowledge in writing any such assignment within five days after
receipt of written notice thereof.
(c) So long as Lessors rights under a Lease are assigned to another party,
Lessee may not assert against the party any defense, counterclaim,
recoupment or set off Lessee may have against Lessor. Lessee agrees that
it will not seek to cancel or terminate this Lease (except as expressly
permitted in the Lease) or otherwise avoid its obligations as against such
assignee, without regard to any such defense, counterclaim, recoupment, or
set off, and will not seek to recover any part of the same from the
assignee. However, nothing herein shall be construed to prevent Lessee
from exercising against Lessor any claim for
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damages or injunctive relief which Lessee may have against Lessor or to
restrict any assignee's right to reassign this Lease.
19. LESSEE'S AND LESSOR'S WARRANTIES.
(a) Lessee hereby warrants and represents to Lessor, its successors and
assigns that: (i) Lessee's execution and performance of this Lease have
been duly authorized by all necessary corporate action and are not now and
will not be in conflict with lessee's charter or by-laws. or with any
indenture, contract or agreement by which it is bound, or with any
statute, judgment, decree, rule or regulation binding upon it, (ii) no
consent or approval of any trustee or holder of any indebtedness or
obligation of Lessee, and no consent or approval of any governmental
authority is necessary for Lessee's execution or performance of this Lease
and, (iii) this Lease is valid and binding and enforceable against Lessee
in accordance with its terms, subject to enforcement limitations imposed
by rules of equity or by bankruptcy or similar laws. Upon Lessor's
request. Lessee shall submit to Lessor an opinion of Lessee's counsel that
the above warranties and representations are true.
(b) Lessor hereby warrants and represents to Lessee, its successors arid
assigns that: (i) Lessor's execution and performance of this Lease has
been duly authorized by all necessary corporate action and are not now
and will not be in conflict with Lessor's charter and by-laws. or with
any indenture, contract or agreement by which it is bound, or with any
statue, judgment. decree, rule or regulation binding upon it, (ii) no
consent or approval of any trustee or holder of any indebtedness or
obligation of Lessor, and no consent or approval of any governmental
authority is necessary for Lessor's execution or performance of this
Lease and.(iii) this Lease is valid and binding and enforceable against
Lessor in accordance with its terms, subject to enforcement limitations
imposed by rules of equity or by bankruptcy or similar laws.
20. GOVERNING LAW.
This Lease shall be governed by and construed in accordance with the substantive
laws of the State of New York. This Lease shall be deemed to have been made in
Onondaga County, New York, regardless of the order in which it is executed.
21. LITIGATION.
In the event of any litigation in connection with this Lease or the transactions
contemplated herein. Lessor and Lessee mutually waive all rights to trial by
jury and each agrees not to assert any counterclaim of any nature in such
litigation. Lessor and Lessee agree that any action or suit in connection with
this Lease shall be brought only in a court of record in Onondaga County of the
State of New York. the parties hereby consenting to the jurisdiction of each
thereof, and service of process may be made on the other party by mailing a copy
of the summons to such party, by registered mail, to its address to be used for
the giving of notice under this Lease. Lessee hereby designates Lessor at its
address set forth above as agent for the purpose of accepting service of any
process within the State of New York and, as its agent, Lessor agrees to forward
by certified mail any process served upon it to Lessee at its address set forth
above.
22. NOTICE.
Any communication in connection with this Lease shall be made in writing to
Lessee or Lessor at its address shown in the first paragraph of this Lease or to
such other address as has been most recently designated in writing by one party
to the other. Unless otherwise specified herein, any notice or communication
shall become effective when deposited in the United States mail properly
addressed with proper postage for first-class mail prepaid.
23. AMENDMENT.
This Lease shall not be amended, modified or changed except by a written
amendment signed by the parties hereto.
24. COPIES OF LEASE.
With respect to each Lease, each Equipment Schedule shall be manually executed
and all counterparts serially numbered. To the extent that an Equipment Schedule
may constitute chattel paper (as defined in the Uniform Commercial Code), no
security interest may be created through transfer and possession of any
counterpart of the Equipment schedule other than the counterpart designated on
the Equipment Schedule.
25. SEVERABILITY.
If any provision or remedy set forth or provided in this Lease shall be invalid
under any applicable law, such provision or remedy shall be inapplicable and
deemed omitted, but the remaining provisions, including the remaining remedies,
shall be given effect in accordance with the manifest intent hereof.
26. OTHER DOCUMENTATION.
LESSOR AND LESSEE EACH AGREE TO FURNISH TO THE OTHER ANY NECESSARY DOCUMENTATION
TO EVIDENCE THE VALIDITY OF THIS LEASE, INCLUDING BUT NOT LIMITED TO INCUMBENCY
CERTIFICATES, CORPORATE RESOLUTIONS, AND OPINIONS OF COUNSEL, all in such form
as shall be reasonable satisfactory to the attorneys for the other party.
Further. Lessee shall provide to Lessor any document (including UCC financing
statements) which Lessor shall deem necessary or desirable for the purpose of
evidencing, protecting, or recording Lessors rights, title and interests in the
Equipment and this Lease.
27. WAIVER.
No supplier or agent is authorized to bind Lessor or to waive or modify any term
of this Lease. No waiver by Lessor of any provision shall constitute a waiver of
any other matter. Lessor's failure at any time to require strict performance by
Lessee of any of the provisions hereof shall not waive or diminish Lessors right
thereafter to demand strict compliance therewith or with any other provision.
Waiver of any default shall not waive any other default. Lessor's rights
hereunder are cumulative and not alternative.
NOTE: DISCLAIMER AND WARRANTY PROVISIONS CONTAINED IN SECTION 12 OF THIS
AGREEMENT.
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IN WITNESS WHEREOF the parties have executed this Master Lease Agreement.
LESSOR: Rainier Funding Services, Inc. LESSEE: Applied Theory Communications, Inc.
By: /s/ Illegible By: /s/ Xxxxx X. Xxxxxx
------------------------------------ ---------------------------------
Its: President Its: Chief Financial Officer
----------------------------------- -------------------------------
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ADDENDUM TO MASTER LEASE AGREEMENT NO. 6079 DATED FEBRUARY 15, 1998
BETWEEN RAINIER FUNDING SERVICES, INC. ("LESSOR") AND
APPLIEDTHEORY COMMUNICATIONS, INC. ("LESSEE")
1. The bold-type heading on page 1 of the Master Lease Agreement is changed
as follows:
The name and address of the Lessee is changed to: "AppliedTheory
Corporation, a Delaware Corporation having its principal place of
business at 000 Xxxxxxxx Xx., 0xx Xx., Xxxxxxxx, XX 00000"
IN WITNESS WHEREOF, the parties hereto have executed this addendum as of June
30, 2000.
LESSOR: Rainier Funding Services, Inc. LESSOR: AppliedTheory Corporation .
---------------------------------- -------------------------------------
BY: /s/ Illegible . BY: /s/ Xxxxxx X. Xxxxxxxxxx III .
-------------------------------------- -------------------------------------
TITLE: President . TITLE: Senior Vice President .
----------------------------------- --------------------------------------
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EXHIBIT A
EQUIPMENT SCHEDULE NO. 2 DATED JUNE 30, 2000
TO MASTER LEASE AGREEMENT NO. 6079 DATED FEBRUARY 15,1999
This is Counterpart No. ONE of ONE serially numbered, manually executed
counterparts. To the extent that this document constitutes chattel paper under
the Uniform Commercial Code, no security interest in this document may be
created through transfer and possession of any counterpart other than
Counterpart No. ONE.
This Equipment Schedule is made as of June 30, 2000 between Rainier Funding
Services, Inc. ("Lessor"), having its principal place of business at 0000
Xxxxxxxxxx Xxxxxxx, XxXxxx, XX 00000-0000 and AppliedTheory Corporation
("Lessee"), having his place of business at 000 Xxxxxxxx Xx., 0xx Xx., Xxxxxxxx,
XX 00000.
1. LEASE. Subject to the terms and conditions set forth in this
Equipment Schedule, Lessor hereby leases to Lessee and Lessee leases
from Lessor the items of personal property collectively the
"Equipment" or individually an "Item") described in Section 5.
Capitalized terms used herein shall have the meanings attributed to
them in this Equipment Schedule or in the Master Lease Agreement
incorporated herein.
2. TERMS. The terms and conditions of the Master Lease Agreement
referenced above, a copy of which is annexed hereto, are
incorporated in this Equipment Schedule and made a part of this
Lease. This Equipment Schedule constitutes a separate Lease,
evidenced by the executed copies hereof.
3. THE EQUIPMENT. Lessor, at the express request of Lessee, may have
ordered the Equipment set forth in this Equipment Schedule from
supplier(s) selected solely by Lessee. Lessor has made no
representations or recommendations regarding Lessee's choice of
supplier(s). Lessee negotiated the style, quality, price, delivery
date(s), and all other items relating to the Equipment directly with
the supplier(s) and without Lessors assistance or participation.
4. LOCATION OF ITEMS OF EQUIPMENT.
As specified on the Certificate of Acceptance
5. DESCRIPTION OF EQUIPMENT.
Qty. Mfg. Model Description Serial Number
(See Exhibit B - Certificate of Acceptance attached hereto)
1 of 2
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6. RENT.
(a) Interim Rent: $1,950.00 per day
(b) Lease Term: 36 months
(C) Amount of Periodic Rent: $58,500.00
(d) Payment Period: X monthly _____ quarterly
(e) Options: n/a
(f) Sales Tax - [XI Each Periodic Rent Payment is subject to sales
tax of % [X] Exempt from Sales Tax [ ] Sales tax paid to NYS
Department of Motor Vehicles
7. CASUALTY VALUE. The Casualty Value for any Item shall be the greater
of the cost to replace the Item with like Equipment in good repair,
condition, and working order, or the total of the remaining Periodic
Rental payments.
8. ADDITIONAL PROVISIONS. (a) On the Acceptance Date Lessee shall pledge
$540,000. to serve as a security deposit against Lessee's performance
under the terms and conditions of this Lease. This will be
accomplished by assigning monies currently on deposit at BSB Bank &
Trust in Account Number 0000000000. From time to time Lessors
assignee will review Lessee's financial condition and release none,
some, or all of the monies, as deemed appropriate by Lessors
assignee. In any event, Lessor will never allow Lessee's security
deposit to exceed the total of the outstanding rental payments due
under the Lease. (b) At the end of the Lease Term, provided no Event
of Default exists, title to the Equipment shall pass from the Lessor
to the Lessee for the amount of $1.00.
IN WITNESS WHEREOF, the parties have caused this Equipment Schedule to be duly
executed as of the date first above written
LESSOR: Rainier Funding Services, Inc. LESSOR: AppliedTheory Corporation .
BY: /s/ Illegible . BY: /s/ Xxxxxx X. Xxxxxxxxxx III .
-------------------------------------- ---------------------------------------------
Xxxx X.Will II Xxxxxx X. Xxxxxxxxxx III
TITLE: President . TITLE: Senior Vice President .
----------------------------------- --------------------------------------
2 of 2
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EXHIBIT B
CERTIFICATE OF ACCEPTANCE
Under Equipment Schedule No. 2 dated as of July 3, 2000 to Master Lease
Agreement No. 6079 dated as of February 15, 1998 (together, the "Lease") between
Rainier Funding Services, Inc. (the "Lessor') and AppliedTheory Corporation (the
"Lessee").
1. Items of Equipment: The Lessee hereby certifies and warrants to Lessor that
the following items of Equipment have been delivered to the location indicated
on the Equipment Schedule, tested and inspected by the Lessee, or Lessee has had
a reasonable opportunity to do so, found to be in good working order and
accepted as items of equipment under the Lease, all as of the date indicated
below. Lessee approves full payment thereof by Lessor to the supplier(s). To the
extent not available upon Lessee's execution of the Equipment Schedule, Lessee
hereby authorizes Lessor to insert serial numbers of the Equipment on this
Certificate of Acceptance, the Equipment Schedule, UCC-1 financing statements
covering such Equipment and all other related documents, when made available by
the supplier(s), provided Lessor provides Lessee with a copy of the corrected
documents within three (3) days after any such corrections are made; and
provided further that Lessee shall have the right to object to and contest such
corrections.
(a) Date of Acceptance: July 3, 2000
(b) Description of Equipment and Lessor's Cost:
Quantity Manufacturer and Model/Description Serial Number Cost
See Attachments A-1 to A-6 Hereto $1,680,000
Along with Vendors Invoices
Location of Equipment: See Attachments A-1 to X-0 Xxxxxx
Xxxxx with Vendors Invoices
2. Representations by the Lessee: The Lessee hereby represents and warrants to
lessor that (i) no Event of Default or event which, with the giving of notice or
the lapse of time or both, would become such an Event of Default under the Lease
has occurred and is continuing, and (ii) the Lessee has obtained and there are
in full force and effect, all insurance policies with respect to the Equipment
and public liability required to be obtained under the Lease.
3. SHOULD LESSEE HEREAFTER DISCOVER ANY DEFECT, UNFITNESS OR FAILURE OF
PERFORMANCE OF EQUIPMENT (INCLUDING, WITHOUT LIMITATION, SOFTWARE SYSTEMS AND
PROGRAMMING), LESSEE'S OBLIGATIONS TO LESSOR, INCLUDING THE OBLIGATION TO PAY
RENTS WHEN DUE, REMAIN IN EFFECT AS MORE FULLY STATED IN THE TERMS AND
CONDITIONS OF THE LEASE. IN SUCH EVENT, LESSEE'S EXCLUSIVE RECOURSE SHALL BE
AGAINST THE MANUFACTURER, SUPPLIER, PROGRAMMMER AND/OR SERVICING AGENT FOR THE
EQUIPMENT, AS IN LESSEE'S JUDGEMENT APPEARS APPROPRIATE.
Lessee: AppliedTheory Corporation .
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By: /s/ Xxxxxx X. Xxxxxxxxxx III .
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Title: Senior Vice President .
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