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Exhibit 10.17
EQUIPMENT ACQUISITION AGREEMENT
This Equipment Acquisition Agreement ("Acquisition Agreement"), is made at
Boston, Massachusetts, dated June 1, 1998 by and between, BancBoston Leasing
Inc., a Massachusetts Corporation, with its principal place of business at 000
Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 (the "Lessor") and Integrated
Information Systems, Inc. an Arizona Corporation, with its principal place of
business at 0000 Xxxx Xxxxxxxxxxxx Xxxxxxx, Xxxxx 000, Xxxxx, Xxxxxxx 00000
(the "Lessee").
1. Premise. The Lessee desires to have the Lessor acquire title to
certain items of new tangible personal property ("Equipment") specified on
Exhibit A hereto, which is incorporated herein. The Equipment is to be acquired
from the various Suppliers (the "Suppliers") for various purchase prices which
are not to exceed Four Hundred Thousand and 00/100 US Dollars ($400,000.00)
(the "Maximum Contract Prices"). In connection with such acquisition, the
Lessee also desires to have Lessor advance certain sums to such Suppliers in
accordance with the provisions of this Acquisition Agreement. Upon acquisition
of such Equipment, Lessee shall lease such Equipment from Lessor pursuant to
Master Lease Finance Agreement (the "Lease Agreement"), by and between the
Lessor and the Lessee dated as of February 20, 1998.
2. Purchase Contract Assignment. The Lessee has entered into one or more
contracts (hereinafter "Contracts") with the Suppliers. Copies of the Contracts
are attached and identified as Exhibit A. Among other things, the Contracts
provide for the purchase by Lessee of Equipment described in Exhibit A. Lessee
desires to assign to the Lessor, under the terms and conditions of this
Acquisition Agreement, all of its rights, title, interest and claims in and to
the Contracts and the Equipment subject thereto. Accordingly, Lessee hereby
ASSIGNS, TRANSFERS, AND SETS OVER to Lessor all Lessee's rights, claims,
interests and benefits under the Contracts including, but not limited to: (i)
the right to purchase the Equipment for the applicable purchase prices not to
exceed the Maximum Contract Prices set forth, on Attachment A and (ii) the
benefits of any and all agreement, representations, warranties (to the full
extent permitted by the terms of such warranties and by applicable law) and
indemnities set forth in the Contracts with respect to the Equipment and the
purchase thereof.
Notwithstanding this assignment, Lessee does not delegate or assign to the
Lessor, and the Lessor does not hereby accept or assume, any of the duties,
liabilities or obligations of Lessee arising under or in connection with the
Contracts, and the Lessor shall not be liable or responsible in any way for the
performance by Lessee of any of the covenants, terms or provisions of such
Contracts.
3. Representations, Warranties and Agreements. Lessee hereby represents
and warrants to Lessor and covenants and agrees with Lessor as follows:
(a) The copies of the Contracts attached hereto are true and complete
copies of the Contracts, including any and all riders, schedules, certificates,
attachments, amendments and other supplements and modifications to Contracts;
(b) The Contracts (1) have been duly authorized, executed and delivered
by duly authorized officers or agents of each party thereto; (2) are in full
force and effect and constitute valid, lawful and binding obligations of each
of the parties thereto; (3) are enforceable in accordance with their terms
against each of the parties thereto except as enforceability may be limited by
applicable bankruptcy, reorganization, moratorium or other similar laws and,
with respect to the Contracts, neither party is in default, or will be in
default with the mere passage of time or the giving of notice;
(c) The terms and conditions of the Contracts, including price and
payment terms, were bargained for at arm's length between Lessee and Supplier;
(d) All interests, rights and claims purported to be assigned to, or
vested in, the Lessor by this Acquisition Agreement are hereby validly,
effectively and lawfully assigned to and vested in the Lessor, free and clear
of all liens, charges, claims and encumbrances whatsoever other than the
purchase money security interests of the Suppliers which shall be extinguished
automatically upon payment of the full purchase prices;
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(e) The Lessee has obtained, or has caused to be obtained, any and all
valid and legally binding consents or approvals from the Suppliers or any third
person necessary to effectuate the provisions of this Acquisition Agreement;
(f) Lessee agrees to give, if necessary, proper, prompt and timely notice
of the assignments effected hereby to the Suppliers or any third person to
which such notice may be required;
(g) Lessee shall maintain the Contracts or cause the Contracts to be
maintained in full force and effect and shall fully perform or cause to be
fully performed all of Lessee's obligations and duties under the Contracts
except for those expressly assigned to Lessor hereunder, and
(h) Lessee will cause the benefits of all warranties, indemnities and
similar rights and protections associated with the Equipment to be available
directly to Lessor, and will insure that the same may be assigned by the Lessor
at any time or from time to time, in whole or in part, to the Lessee to the
full extent permitted by the terms of such warranties and by applicable law.
4. Progress Payments. Subject to the conditions set forth in this
Acquisition Agreement, Lessor agrees to make progress payments ("Progress
Payments"), including deposits and other advance payments, but excluding final
payments, for Equipment, which payments are required to be made pursuant to the
contracts, in the amounts and at the times stated therein, provided that,
Lessor has been invoiced by the Supplier for such Progress Payments and the
Lessee has authorized Lessor to make such payments. The cumulative total of
Progress Payments made under this Acquisition Agreement with respect to any
Contract shall not exceed ninety-five percent (95%) of the Maximum Contract
Price. Notwithstanding the foregoing, the Lessor shall have no obligation to
make Progress Payments if the relevant Supplier has sought or has been placed
under the protection of the insolvency or bankruptcy laws of any state or of
the United States.
5. Final Payments. Lessor further agrees with Lessee that, after receiving
the written approval of Lessee to make final payments ("Final Payments") for
the Equipment, Lessor will make such Final Payments, provided that, prior to
the time of such payment, (i) Lessor has received from Lessee written approval,
(ii) the Lessee has accepted the Equipment pursuant to the terms and conditions
of the Lease Agreement and (iii) Lessor has received from the Supplier an
invoice for Final Payment which is marked as such. Notwithstanding the
foregoing, the Lessor shall have no obligation to make Final Payments if the
relevant Supplier has sought or has been placed under the protection of the
insolvency or bankruptcy laws of any state or of the United States.
6. Agreement to Lease. Lessee unconditionally agrees to lease from Lessor
all Equipment as to which Progress Payments and Final Payments are made by
Lessor under this Acquisition Agreement. Lessee shall evidence its acceptance
of such item of Equipment by signing and delivering to Lessor an Equipment
Schedule and Certificate of Acceptance pursuant to the terms and conditions of
the Lease Agreement.
7. Insurance. Lessee hereby agrees with Lessor that, commencing on the date
of execution of this Acquisition Agreement, Lessee will, at its own expense,
maintain insurance with respect to all Equipment in such amounts as may be
requested by Lessor and covering the Equipment with customary forms of fire and
extended coverage insurance and comprehensive general liability insurance
including public and product liabilities. Such insurance shall be subject to the
approval of the Lessor which approval shall not be unreasonably withheld.
Without limitation of the foregoing, Lessor may require that all such insurance
policies name Lessor as additional insured and as loss payee. All policies shall
provide for a twenty-day minimum notice to Lessor of changes to the terms of the
policy or the cancellation thereof. Upon written request of Lessor, Lessee shall
furnish evidence satisfactory to Lessor of compliance by Lessee with the
provisions of this Section. Lessor shall not be under any duty to examine any
evidence of insurance furnished hereunder, or to ascertain the existence of any
policy or coverage, or to advise Lessee of any failure of compliance with the
provisions of this Section.
8. Indemnification. Lessee hereby agrees with Lessor that, whether or not
the Equipment is leased pursuant to the Lease Agreement, the Lessee shall
indemnify and hold Lessor harmless against all liabilities, losses, damages and
expenses arising out of or in connection with the contracts or this Acquisition
Agreement, including, without limitation, the following:
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(a) all claims, costs, expenses, damages, losses and liabilities arising
or accruing in connection with the ordering, selection, manufacture, purchase,
delivery, acceptance, ownership, assembly, installation or return of all or any
part of the Equipment; and
(b) all claims or any Supplier of any Equipment arising out of or directly
or indirectly relating to any invoice or Contract.
The agreements and indemnities contained in this Section shall survive the
expiration or earlier termination of this Acquisition Agreement and shall be in
addition to, and not in lieu of the agreements and indemnities set forth in the
Lease Agreement; provided however that Lessor shall have no independent right of
action against Lessee other than hereunder or under or in connection with the
Lease Agreement with respect to any breach by Lessee or its representations and
warranties hereunder.
9. Interest Charges. Lessee hereby agrees to pay to Lessor interest
charges ("Interest Charges") equal to Base plus 2% ("Base Rate"), as announced
from time to time by BankBoston, N.A. as its Base Rate, multiplied by the
outstanding amounts paid by Lessor as Progress Payments. Interest charges (i)
shall accrue from the date any Progress Payment is made until the date the
Equipment is accepted by Lessee under the Lease Agreement, (ii) shall be
computed on the basis on a 365-day year for the actual number of days elapsed,
and (iii) shall be calculated with respect to the total amount of Progress
Payments then outstanding. The interest component of the Interest Charge shall
be determined monthly in accordance with Base Rate in effect at the close of
business on the last business day of each calendar month. The interest component
for the Interest Charge accruing during the month in which the Lease Agreement
commences with respect to the Equipment ("Commencement Date") shall be
determined in accordance with the Base Rate in effect on the Commencement Date.
Interest Charges shall be payable by Lessee monthly and on the Commencement
Date. Interest Charges will be invoiced by Lessor and will be due and payable by
Lessee within ten (10) business days of the date of such invoice.
10. Failure to Lease. If for any reason whatsoever, including, without
limitation, (i) the occurrence of an Event of Default under the Lease Agreement
or this Acquisition Agreement, (ii) the refusal of the Lessee to timely accept
the Equipment under the Lease Agreement, (iii) the failure of the Suppliers to
complete delivery, (iv) the failure of Lessee or of any third-party contractors
to complete installation, (v) the failure of Lessee to meet any one of the
conditions precedent specified in the Lease Agreement to the satisfaction of
Lessor, or (vi) the Equipment or any portion thereof is not leased by Lessee
under the Lease Agreement, then, in such event, Lessee hereby agrees to pay
Lessor immediately on demand an amount equal to (a) the total of all Progress
Payments paid by Lessor to the Suppliers for such Equipment, plus (b) the full
amount of Interim Interest accrued with respect thereto, less (c) any commitment
fee actually paid by Lessee to Lessor. After such amount has been received by
Lessor, Lessor will assign to Lessee all of Lessor's right, title and interest
in and to such Equipment and the Contracts (including without limitation, the
benefits of all warranties, indemnities and similar rights and protections
assigned to Lessor by Lessee hereunder) on a "AS IS/WHERE IS" basis without
representation or warranty of any kind whatsoever except that the equipment
shall be free and clear of any lien, claim or encumbrance arising by or through
Lessor. Lessee shall thereupon and, in writing, release Lessor of any and all
liability under this Acquisition Agreement, the Contracts and any invoices
issued by Suppliers with respect thereto and shall acknowledge its duty to
perform all of the obligations arising out of the Contracts and any invoices in
connection therewith.
11. Assignment. This Acquisition Agreement, and the obligations of
Lessee hereunder, may not be assigned by Lessee without the prior written
consent of Lessor, which consent shall not be unreasonably withheld. Any
attempted assignment without such consent shall be void.
12. Entire Agreement. This Acquisition Agreement, including amendments,
schedules, and any other addendum hereto, constitutes the entire understanding
and agreement of the parties hereto. It may not be altered, modified, terminated
or discharged except by a writing signed by the party against whom such
alteration, modification, termination, or discharge is sought.
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13. No Waiver. No omission or delay by Lessor in enforcing any of its
right or remedy shall be a waiver of any such right or remedy nor shall it in
any way affect the right of Lessor to enforce such provisions thereafter.
14. Applicable Law. This Acquisition Agreement shall be governed and
construed for all purposes in accordance with the laws of The Commonwealth of
Massachusetts.
15. Severability. No provision of this Acquisition Agreement which may be
deemed unenforceable shall in any way invalidate any other provision of this
Acquisition Agreement.
16. Headings. Section headings contained in this Acquisition Agreement are
inserted for ease of reference only and shall not limit or otherwise affect the
meaning of the terms of this Acquisition Agreement.
IN WITNESS WHEREOF, Lessor and Lessee have each caused this Acquisition
Agreement to be executed by their respective officers, hereunto duly authorized
as of the day and year first above written.
BancBoston Leasing Inc. Integrated Information Systems, Inc.
By: /s/ Illegible By: /s/ Xxxxx Xxxxxxxx
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Title: Title: CFO
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Equipment Acquisition Agreement 1
