MASTER LEASE AGREEMENT
Agreement No. 10571 Dated as of April 1, 1998
between
DOMINION VENTURES, INC.
00 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
as Lessor
and
FIRST MORTGAGE NETWORK, INC.
a Florida corporation
0000 Xxxxxxx Xxxxxxxxx, Xxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
as Lessee
Master Lease Line: $670,500
Rent Factor: 2.81% Initial Lease Term: 42 months
Advance Rental: $37,682.10 Security Deposit: $0
(PLUS APPLICABLE TAXES)
Minimum Funding Amount: $25,000 Maximum Funding Frequency: monthly
Funding Expiration Date: June 30, 1998
Eligible Equipment: Computer and office equipment, and Mitel telephone system.
All equipment to be purchased must be approved by Lessor.
Any equipment presently owned by Lessee and acquired by
Lessor will be purchased via a sale/leaseback at its current
fair market value. Should an appraisal of any sale/leaseback
equipment be required by the Lessor, the Lessee shall bear
the cost of any appraisal.
ORIGINAL COUNTERPART NO. ___
The terms and information set forth on the cover page are a part of the
Master Lease Agreement, dated as of the date first written above (this "Lease"),
entered into by and between DOMINION VENTURES, INC. ("Lessor") and the Lessee
set forth above, the terms and conditions of which are as follows:
LESSOR'S OBLIGATIONS UNDER THIS LEASE AND EACH SCHEDULE ARE SUBJECT TO THE
PRIOR SATISFACTION OF THE CONDITIONS SET FORTH ON ADDENDUM I HERETO.
1. DEFINITIONS: Unless otherwise defined in this Lease (which term shall
include the cover page, any Addendum, any Exhibit and any Schedule hereto),
capitalized terms shall have the following meanings:
(a) "Acceptance Certificate" means the Certificate of Inspection and
Acceptance in the form attached hereto as Exhibit D.
(b) "Acceptance Date" means, with respect to each Schedule, the date of
the Acceptance Certificate executed in connection with such Schedule.
(c) "Advance Rental" has the meaning set forth in Paragraph 5(a) and is in
the amount as set forth on the cover page.
(d) "Assignee" has the meaning set forth in Paragraph II(b).
(e) "Xxxx of Sale" means a xxxx of sale in the form attached hereto as
Exhibit C.
(f) "Commencement Date" has the meaning set forth in Paragraph 4.
(g) "Cost" means the cost to Lessor of purchasing one or more Units of
Equipment including any sales taxes and other charges paid by Lessor
and net of any discounts and rebates.
(h) "Discount Rate" means, as of any date of determination, the lesser of
(i) the then current per annum interest rate for one-year United
States treasury bills as set forth in the Wall Street Journal on such
date and (ii) six percent (6%).
(i) "Eligible Equipment" means Equipment of the types listed following
such term on the cover page of this Lease to the extent reasonably
acceptable to Lessor.
(j) "Environmental Law" means the Resource Conservation and Recovery Act
of 1987, the Comprehensive Environmental Response, Compensation and
Liability Act, and any other Federal, state or local statute, law,
ordinance, code, rule, regulation, order or decree (in each case
having the force of law) regulating or imposing liability or standards
of conduct concerning any Hazardous Materials or other hazardous,
toxic or dangerous waste, constituent, or other substance, whether
solid, liquid or gas, as now or at any time hereafter in effect.
(k) "Equipment" means all Units listed in any Schedule together with all
replacement parts, additions, accessions and accessories to such
Units.
(l) "Event of Default" shall have the meaning set forth in Paragraph 24
hereof.
(m) "Financial Statements" has the meaning set forth in Paragraph 19(a).
(n) "Funding Expiration Date" means the date set forth opposite such term
on the cover page of this Lease or such earlier date on which Lessor
terminates its commitment to fund Schedules pursuant to the terms of
this Lease.
(o) "Hazardous Material" means any hazardous or toxic substance, material,
pollutant or waste, whether solid, liquid or gaseous, which is
regulated by any Federal, state or local governmental authority.
(p) "Holdover Period" has the meaning set forth in Paragraph 18.
(q) "Initial Lease Term" means, with respect to each Schedule, the period
beginning on the first day of the calendar month following the
Acceptance Date for such Schedule and continuing for the time interval
specified opposite such term on the cover page of this Lease.
(r) "Interim Rent" shall have the meaning set forth in Paragraph 5(b) of
this Lease.
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(s) "Lease Term" means, with respect to each Schedule, the Noncancellable
Term and any Holdover Period.
(t) "Lessor Affiliate" has the meaning set forth in Paragraph 11(c)
hereof.
(u) "Master Lease Line" means the amount set forth following such term on
the cover page of this Lease.
(v) "Maximum Funding Frequency" means the time interval specified opposite
such term on the cover page hereof.
(w) "Minimum Funding Amount" means the amount set forth following such
term on the cover page of this lease.
(x) "Noncancellable Term" means, with respect to each Schedule, the period
from the Acceptance Date for such Schedule through the end of the
Initial Lease Term for such Schedule.
(y) "Purchase Order Assignment" means a purchase order assignment in the
form of Exhibit B hereto.
(z) "Rent Factor" means the Rent Factor applicable to each Schedule, which
is set forth on the cover page of this Lease.
(aa) "Rental Payment" means, for any Schedule, the monthly rent payment for
the Units identified in such Schedule.
(bb) "Residual Value" has the meaning set forth in Paragraph 22(b) of this
Lease.
(cc) "Schedule" means a schedule in the form of Exhibit F to this Lease
identifying this Lease and incorporating this Lease by reference,
which is executed by both parties hereto.
(dd) "UCC" means the Uniform Commercial Code as in effect in the State of
California from time to time.
(ee) "Unit" means an item of Equipment.
2. LEASE. Lessor leases to Lessee, and Lessee hires and takes from Lessor,
subject to the terms and conditions set forth in this Lease, the Units described
in the Schedules executed hereunder. Each Schedule shall constitute a separate
and independent lease and contractual obligation of Lessee incorporating the
terms of this Lease. Lessor's commitment to fund Schedules under this Lease
continues through the Funding Expiration Date and is limited to the amount of
the Master Lease Line; provided, however, that Lessor, acting in its sole
discretion, may terminate or modify its funding commitment at any time if: (a)
there is any material adverse change to the general affairs, management, results
of operations, condition (financial or otherwise) or prospects of Lessee,
whether or not arising from transactions in the ordinary course of business, (b)
there is any material adverse deviation by Lessee from the business plan (as it
may have been supplemented in writing) of Lessee presented to Lessor, since the
date first written on the cover page of this Lease, (c) any Event of Default or
event which with the passage of time or notice or both would constitute an Event
of Default exists, or (d) if any term or condition in any Schedule is not
satisfied prior to the Acceptance Date with respect to such Schedule. Each
Schedule shall be funded in an amount not less than the Minimum Funding Amount
and not more frequently than the Maximum Funding Frequency. No Unit of Equipment
shall have a unit cost of less than $1,000 or be subject to a single invoice of
less than $5,000.
3. EQUIPMENT SUBJECT TO LEASE. Lessee shall select the type and quantity of
Equipment (which Equipment shall in each case be Eligible Equipment) to be
subject to each Schedule. Subject to the terms and conditions of this Lease: (i)
if such Equipment is not previously owned by Lessee and is not subject to a
purchase order issued by Lessee, Lessor shall at Lessee's direction order each
Unit from the respective suppliers, and upon delivery and acceptance by Lessee
each such Unit shall be leased to Lessee hereunder; (ii) if Lessee has
previously issued its purchase order to a supplier, Lessee shall execute a
Purchase Order Assignment assigning such purchase order to Lessor and the Units
subject to such purchase order, upon delivery and acceptance by Lessee, shall be
leased to Lessee hereunder; or (iii) if Lessee owns the Equipment which it
intends to make subject to this Lease, Lessee shall execute a Xxxx of Sale
transferring title to such Equipment to Lessor at the purchase price agreed to
between Lessor and Lessee according to an appraisal undertaken at the expense of
Lessee (except in the case of Equipment placed in service by Lessee not more
than sixty (60) days prior to the date of any Schedule for which the purchase
price shall be the original cost to Lessee thereof (net of freight, taxes,
installation and similar costs). Lessee acknowledges that Lessor may have the
ability to
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obtain discounts or rebates not available to Lessee from suppliers from which
Lessor buys in volume. Any discounts or rebates remitted to Lessee shall be
turned over to Lessor and Cost of the Equipment set forth on any Schedule shall
be deemed to be the Cost net of such discount or rebate. Any request by Lessee
to Lessor to purchase Equipment directly or by assignment of a purchase order
shall be irrevocable.
4. TERM. This Lease is effective upon execution hereof by Lessor and shall
continue until full performance of every provision of this Lease; provided that
Lessor's obligations to fund any Schedule are subject to the prior satisfaction
by Lessee of the conditions set forth in Part I of Addendum I to this Lease. All
obligations under each Schedule shall commence upon Lessee's execution of an
Acceptance Certificate and Schedule for the Units to be subject to such Schedule
and Lessor's countersignature on such Schedule; provided that Lessor's
obligation to fund such Schedule is subject to the prior satisfaction by Lessee
of the conditions set forth in Part 2 of Addendum I to this Lease. The Initial
Lease Term with respect to each Schedule shall begin on the first day of the
calendar month following the Acceptance Date (the "Commencement Date").
5. RENTAL PAYMENTS. RENTAL PAYMENTS,
(a) Advance Rental. Upon execution of this Lease, Lessee shall pay to
Lessor an advance payment in an amount equal to the Rent Factor multiplied by
the Master Lease Line (plus applicable taxes) (the "Advance Rental"). A pro-rata
portion of the Advance Rental shall be deemed to prepay as of the date of this
Lease the last Rental Payment for each Schedule. If the Master Lease Line has
not been fully expended by the Funding Expiration Date, Lessor shall retain the
unutilized portion of the Advance Rental as compensation for expenses.
(b) Interim Rent. If the Acceptance Date with respect to any Schedule shall
be other than the first day of a calendar month, Lessee shall make interim
rental payments ("Interim Rent") for each day from and including the Acceptance
Date, through and including the last day of the calendar month prior to the
beginning of the Initial Lease Term in an amount equal to one-thirtieth of the
monthly Rental Payment set forth on the Schedule. Such Interim Rent shall be due
and payable on the first day of the calendar month following the month for which
such payment is assessed.
(c) Rental Payments. Lessee shall pay to Lessor, as rental for Equipment
during each month of the Initial Lease Term of any Schedule and during any
Holdover Period, an amount equal to the Rent Factor set forth on the cover page
of this Lease multiplied by the total Cost of the Equipment to Lessor, which
amount shall be due and payable in advance on the first day of each calendar
month during the Initial Lease Term and during any Holdover Period. In addition
to any other remedies that Lessor may have under this Lease, if Lessee fails to
pay any Rental Payment or Interim Rent or other amount herein provided within
five (5) business days after the same is due, Lessee shall pay to Lessor a late
charge calculated daily from the due date until the date of payment, at the rate
of two percent (2%) of such amount per month, or at the highest rate permitted
by applicable law, whichever is less, to compensate Lessor for additional
bookkeeping and collection expense. All Rental Payments, Advance Rental, Interim
Rent, late charges and other amounts for which Lessee is liable shall be paid to
Lessor at its address as set forth above or as otherwise directed by Lessor.
(d) Automatic Transfers. If Lessee so agrees, Lessor will initiate monthly
debit entries to Lessee's bank account for payment of Rental Payments on the
fifth business day of each month. If Lessee agrees to automatic transfers,
Lessee will provide depository and account information to Lessor and shall
execute or cause to be executed such supplemental agreements as Lessor deems
necessary in order to instate and maintain automatic transfer payments by Lessee
to Lessor. Other amounts due hereunder will be invoiced to Lessee by Lessor and
shall be due and payable within five (5) days of receipt of invoice.
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6. CHARACTERIZATION OF LEASE; WARRANTIES; WAIVERS; LIABILITY.
(a) Characterization of Lease. It is the intent of Lessor and Lessee that
this Lease be a true lease and not a lease intended as security or a conditional
sales agreement. Lessor and Lessee agree to treat this Lease as a true lease for
income tax purposes. Lessor and Lessee agree that this Lease is a "finance
lease" as that term is defined by Section 10103(a)(7) of the UCC. With respect
to the Equipment subject to each Schedule, Lessee acknowledges and warrants as
of the date of such Schedule that (i) Lessee has received a copy of the
contract(s) pursuant to which Lessor acquired the Equipment (the "Supply
Contract"), or (ii) Lessee has reviewed and approved the Supply Contract, or
(iii) Lessor has informed Lessee in writing that Lessee may have rights under
the Supply Contract and that Lessee should contact the supplier for a
description of any such rights. LESSOR AND LESSEE AGREE THAT THIS LEASE IS A
"NET" LEASE, AND LESSEE'S OBLIGATION TO MAKE RENTAL PAYMENTS AND PAY OTHER SUMS
WHEN DUE AND OTHERWISE PERFORM ITS OBLIGATIONS UNDER THIS LEASE SHALL BE
ABSOLUTE AND UNCONDITIONAL, AND SHALL NOT BE SUBJECT TO OR AFFECTED BY OR
REDUCED BY ANY ABATEMENT, REDUCTION, SET-OFF, DEFENSE, COUNTERCLAIM,
INTERRUPTION, DEFERMENT, RECOUPMENT OR OTHER RIGHT WHICH LESSEE MAY HAVE AGAINST
LESSOR, THE MANUFACTURER OR SUPPLIER OF THE EQUIPMENT OR ANY OTHER PERSON.
WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, NO DEFECT OR UNFITNESS OF ANY
ITEM OF EQUIPMENT NOR OTHER CLAIM REGARDING CONDITION OR USE OF THE EQUIPMENT
SHALL RELIEVE LESSEE OF THE OBLIGATION TO MAKE RENTAL PAYMENTS, PAY ANY OTHER
SUM WHEN DUE OR OTHERWISE PERFORM ANY OTHER OBLIGATION DUE TO LESSOR AND ITS
SUCCESSORS AND ASSIGNS UNDER THIS LEASE.
(b) Warranties. Lessor warrants that, so long as no Event of Default has
occurred and is continuing, neither Lessor nor its successors or Assignees or
anyone acting or claiming through Lessor will interfere with Lessee's quiet
enjoyment and use of the Equipment. EXCEPT FOR LESSOR'S WARRANTY OF QUIET
ENJOYMENT, LESSEE HAS NOT RELIED UPON LESSOR IN SELECTING THE EQUIPMENT AND
ACKNOWLEDGES THAT LESSOR HAS MADE NO REPRESENTATION OR WARRANTY OF ANY KIND,
EXPRESS OR IMPLIED, WITH RESPECT TO THE EQUIPMENT, INCLUDING WITHOUT LIMITATION
ITS CONDITION, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE. Until the
Lease is terminated, Lessor hereby assigns to Lessee and Lessee shall have the
benefit of, any and all manufacturer's warranties, service agreements and
intellectual property indemnities, if any, with respect to each Unit. Lessee's
sole remedy for the breach of any such warranty, indemnification or service
agreement shall be against the manufacturer or supplier of such Equipment and
not against Lessor, nor shall any such breach have any effect whatsoever on the
rights and obligations of Lessor or Lessee hereunder.
(c) Waivers. Lessee hereby specifically waives any and all rights and
remedies conferred upon Lessee by UCC Sections 10508 through 10522, including
(without limitation) Lessee's rights to (i) cancel or repudiate this Lease, (ii)
reject or revoke acceptance of any Unit, (iii) recover damages from Lessor for
breach of warranty or for any other reason, (iv) claim a security interest in
any rejected property in Lessee's possession or control, (v) deduct from Rental
Payments all or any part of any claimed damages resulting from Lessor's default
under this Lease, (vi) accept partial delivery of the Equipment, (vii) "cover"
by making any purchase or lease of other property in substitution for property
due from Lessor, (viii) recover from the Lessor any general, special, incidental
or consequential damages, for any reason whatsoever, and (ix) seek specific
performance, replevin or the like for any of the Units. To the extent permitted
by applicable law, Lessee also hereby waives any rights now or hereafter
conferred by statute or otherwise which may require Lessor to sell, lease or
otherwise use any Equipment in mitigation of Lessor's damages except as set
forth in Paragraph 26 of this Lease or which may otherwise limit or modify any
of Lessor's rights or remedies under Paragraph 25. Notwithstanding the
foregoing, nothing in this Lease shall be construed as a waiver of Lessee's
right to
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seek a separate recovery of any Rental Payment that is not due and payable under
this Lease, and Lessee retains the right to seek damages or other remedies on
account of Lessor's failure to perform its obligations under this Lease.
(d) Liability. LESSEE ACKNOWLEDGES THAT LESSOR IS NOT THE MANUFACTURER,
SUPPLIER OR DISTRIBUTOR OF THE EQUIPMENT, THAT SAID ENTITIES ARE NOT AGENTS OF
LESSOR, THAT LESSEE RENTS THE EQUIPMENT "AS IS", AND THAT LESSOR HAS ACCEPTED NO
RESPONSIBILITY FOR THE TRANSPORTATION, INSTALLATION OR REQUIRED LICENSING
NECESSARY FOR THE TRANSFER, INSTALLATION OR USE OF THE EQUIPMENT. LESSEE HEREBY
WAIVES ANY CLAIM (INCLUDING ANY CLAIM BASED ON STRICT OR ABSOLUTE LIABILITY IN
TORT) WHICH IT MIGHT HAVE AGAINST LESSOR FOR ANY LOSS, DAMAGE (INCLUDING
INCIDENTAL OR CONSEQUENTIAL DAMAGE) OR EXPENSE CAUSED DIRECTLY OR INDIRECTLY BY
THE EQUIPMENT, ITS USE OR MAINTENANCE, OR ANY DELAY OR FAILURE TO PROVIDE ANY
UNIT OF EQUIPMENT, OR ANY INTERRUPTION OF SERVICE OR LOSS OF USE OF THE
EQUIPMENT. If any Unit is unsatisfactory for any reason, Lessee shall make any
claim solely against the manufacturer or supplier of the Unit. Lessor shall not
be liable for specific performance of this Lease or for damages if for any
reason a supplier declines, delays or fails to fill any order.
7. ADJUSTMENTS FOR ACTUAL COST. Upon Lessee's request, Lessor may, but
shall have no obligation to, fund a Schedule which would cause the aggregate
Cost of Equipment on all Schedules funded under this Lease to exceed the Master
Lease Line. If at any time the actual aggregate Cost of all Equipment exceeds
the Master Lease Line, the Advance Rental shall be increased proportionately.
Lessee shall pay any additional sums for Advance Rental due under this Lease
within five (5) business days after receiving notice from Lessor. Lessee may not
request funding for a Schedule which would cause the aggregate Cost of Equipment
under all Schedules funded under this Lease to exceed the Master Lease Line by
more than ten percent (10%).
8. TITLE. All Equipment shall remain personal property, and the title
thereto shall remain exclusively in Lessor, notwithstanding the manner in which
any Unit may be attached to realty. Lessee agrees, upon the request of Lessor at
any time during the Lease Term, to affix or permit Lessor to affix, in a
permanent place on any Unit, labels supplied by Lessor identifying the Equipment
as property of Lessor, and shall not alter or remove any such label from any
Unit. Lessee shall keep the Equipment free from any and all liens and
encumbrances except those created by Lessor. Lessee shall give Lessor immediate
notice of any judicial process or encumbrance affecting the Equipment and shall
indemnify and save Lessor harmless from any loss or damage caused thereby,
including without limitation court costs, reasonable attorney few and expenses.
9. FILING. Lessee shall execute or cause to be executed, at Lessee's sole
expense, such supplemental instruments, financing statements and landlord's
waivers as Lessor deems necessary or advisable and shall cooperate to defend the
title of Lessor in the Equipment by filing or otherwise. Lessee authorizes
Lessor to record in any state, this Lease and any financing statements, security
agreements and landlord's waivers with respect to the Equipment or any
collateral provided by Lessee to Lessor. Lessee agrees to give Lessor thirty
(30) days written notice of any change in Lessee's name or place of business.
Lessee agrees to five written notice to Lessor as soon as Lessee has knowledge
of any change of ownership of the real property upon which or within which the
Equipment is located.
10. TAXES. Lessee shall pay in a timely fashion, and shall indemnify and
hold Lessor harmless against all federal, state and local taxes, assessments,
license and registration fees, and other governmental charges of any kind,
including, without limitation, those levied on motor vehicles or trailers, and
any interest or penalties thereon, which may be levied, directly or indirectly,
against the Equipment or with respect to its ordering, purchasing, delivery,
ownership, possession, use, leasing, documentation, and return or other
disposition thereof, regardless of whether such taxes and fees are levied
against Lessor or Lessee. Such taxes and fees to be paid by Lessee shall
include, without limitation,
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property, sales, rent, franchise, gross receipts, lease, and use taxes, and any
other tax measured by gross Rental Payments, but shall not include income or
franchise taxes based on Lessor's net income and payable by Lessor on its
receipt of Rental Payments hereunder. Personal property taxes shall be
reasonably estimated by Lessor and billed to Lessee as of the date of assessment
each year. Upon receipt by Lessor of the final personal property tax assessment
and invoice, Lessor shall invoice or credit Lessee, as applicable, for any
differences of such final assessment and Lessor's original estimate. Lessor
shall have the right, but not the obligation, to pay any such taxes or fees
regardless of whether levied against Lessor or Lessee. Any and all sales or use
taxes levied against Lessor's purchase of Equipment shall be added to the total
Cost of such Equipment as specified on the Schedule under which such Equipment
is added to this Lease. With the exception of taxes and fees which are added to
the total Cost of Equipment hereunder, Lessee shall reimburse Lessor within five
(5) days after receipt of invoice from Lessor specifying the amount of, and
reason for, any payment by Lessor of amounts for which Lessee is liable under
this Paragraph 10. Lessee shall timely prepare and file all reports and returns
which are required to be made with respect to such taxes and/or fees, and all
such reports shall show Lessor as owner of the Equipment.
11. ASSIGNMENTS AND SUBLEASES.
(a) WITHOUT THE PRIOR WRITTEN CONSENT OF LESSOR, LESSEE SHALL NOT ASSIGN,
PLEDGE, GRANT A SECURITY INTEREST IN, OTHERWISE ENCUMBER, SUBLEASE OR TRANSFER,
OR IN ANY WAY DISPOSE OF OR OTHERWISE RELINQUISH POSSESSION OR CONTROL OVER
(COLLECTIVELY, A "TRANSFER") ITS RIGHTS WITH RESPECT TO ANY UNIT OF EQUIPMENT OR
ALL OR ANY PART OF ITS RIGHTS AND OBLIGATIONS UNDER THIS LEASE. If
notwithstanding the foregoing, a Transfer by Lessee takes place, the rights of
the sublessee or other transferee will be subject and subordinate to all of the
terms of this Lease, including Lessor's right of repossession on the occurrence
of an Event of Default. Lessee will remain primarily liable for the performance
of all of the terms of this Lease to the same extent as if the sublease or
transfer of possession had not occurred. Lessor and Lessee agree that any
purchase of all or substantially all of Lessee's assets, any merger or
consolidation into or with Lessee regardless of whether Lessee is the surviving
entity or any entity acquiring more than fifty percent (50%) of Lessee's voting
securities shall be deemed to be a Transfer under this Lease. Notwithstanding
anything contained in this section 11(a), a Transfer shall not include a
merger or consolidation where (i) the Lessee is the surviving entity, (ii) such
merger or consolidation will not result in an Event of Default and (iii) the
Lessee will have a net worth after giving effect to the merger or consolidation
at least as great as the net worth of the Lessee prior to such merger or
consolidation.
(b) Lessor shall have the right, in its sole discretion, to assign, sell,
pledge, grant a security interest in or otherwise encumber its rights under this
Lease or one or more Schedules and/or with respect to the Equipment subject to
this Lease or such Schedule(s) to one or more persons or entities (each, an
"Assignee"). Lessee acknowledges that an assignment, sale or other encumbrance
by Lessor would not materially change Lessee's duties under the Lease or
materially increase its burdens or risks. Even if such an assignment, sale or
other encumbrance could be deemed to have that effect, Lessee agrees that the
assignment, sale or other encumbrance will nevertheless be permitted. Without
prejudice to any rights that Lessee may have against Lessor, Lessee agrees that
it will not assert against an Assignee any claim or defense that it may have
against Lessor.
(c) Lessee acknowledges that it is Lessor's intention to assign this Lease
and/or one or more Schedules and the related Equipment to one or more limited
partnerships with which Lessor is affiliated (each, a "Lessor Affiliate") and
agrees that upon any such assignment the sole liability for performance of
Lessor's obligations hereunder shall fall upon such Lessor Affiliate which shall
assume such obligations and Lessor shall be fully released from such liabilities
and that the limited partners of such Lessor Affiliate shall have no personal
liability for the performance or observance of this Lease. A Lessor Affiliate
which succeeds to the rights and interests of Lessor under this Paragraph 11(c)
shall be bound
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by the terms of this Lease without alteration and any claim or defense which
Lessee may have had against Lessor prior to such assignment may only be asserted
against the assignee Lessor Affiliate.
(d) Subject to the foregoing, this Lease inures to the benefit of, and is
binding upon, the heirs, legatees, representatives, successors and assigns of
Lessee and Lessor.
12. REPRESENTATIONS AND WARRANTIES.
(a) Lessee warrants and represents the following as of the date hereof. (i)
Lessee is a corporation duly organized, validly existing and in good standing
under the laws of the state of its incorporation and is duly qualified and
authorized to do business in the state(s) where the Equipment will be located;
(ii) Lessee has the full corporate power, authority and legal right and has
obtained all approvals and consents and has given all notices necessary to
execute and deliver this Lease and perform the terms hereof and of each
Schedule; (iii) there is no action, proceeding or claim pending or, insofar as
Lessee knows, threatened against Lessee or any of its subsidiaries before any
court or administrative agency which might have a material adverse effect on the
business, condition or operations of Lessee or any subsidiary; and (iv) this
Lease has been and each Schedule will be duly executed and delivered by Lessee
and constitute or will constitute the valid, binding and enforceable obligations
of Lessee.
(b) Lessee agrees that by its signature on each Schedule it shall be deemed
to have warranted and represented the following as of the Acceptance Date of
such Schedule: (i) all of the Units subject to such Schedule are accurately
described in Annex A attached to such Schedule, have been fully assembled and
conform to all applicable performance criteria; (ii) the requirements of this
Lease and of Lessor with respect to the identification of the Units have been
met; and (iii) each of the representations and warranties set forth in clause
(a) of this Section 12 remains true and correct.
13. USE AND INDEMNITY. Lessee shall use the Equipment only in Lessee's
business. Lessee agrees not to allow the Equipment to be used by other than its
employees, consultants, customers and agents. Lessee acknowledges that the
Equipment is leased for commercial purposes and not for personal, family or
household use. Lessee agrees to indemnify and hold Lessor, and Lessor's
officers, directors, shareholders, partners, affiliates, agents, servants,
successors and Assignees, harmless against any and all liabilities, losses,
damages, actions, claims and expenses of any kind and nature, including, without
limitation, court costs and reasonable attorneys' fees and expenses (each, a
"Claim"), directly or indirectly related to or arising in connection with the
breach of any representation or warranty of Lessee under this Lease or the
manufacture, purchase, licensing, lease or sublease, delivery, installation,
operation, use, ownership, maintenance, storage, relocation, return or condition
of any Unit of the Equipment (regardless of whether such Unit is at the time in
the possession or control of Lessee), except to the extent any such claims,
actions, liabilities and expenses result from the willful misconduct of Lessor.
The foregoing indemnity shall cover, without limitation, (i) any Claim in
connection with a design or other defect (latent or patent) in any Unit, (ii)
any Claim for infringement of any patent, copyright, trademark or other
intellectual property right, (iii) any Claim resulting from the presence on or
under or the escape, seepage, leakage, spillage, discharge, emission or release
from any Unit of any Hazardous Materials, including, without limitation, any
Claims asserted or arising under any Environmental Law, or (iv) any Claim for
negligence or strict or absolute liability in tort. Upon Lessor's written
demand, Lessee shall assume and diligently conduct, at its sole cost and
expense, the entire defense of Lessor and its agents, employees, successors and
assigns against any indemnified Claim described in this Paragraph 5. Lessee
shall not settle or compromise any Claim against or involving Lessor without
first obtaining Lessor's written consent thereto, which consent shall not be
unreasonably withheld. The foregoing indemnity shall continue in full force and
effect notwithstanding the termination or cancellation of this Lease, whether by
expiration of time, operation of law or otherwise.
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14. LOCATION. Lessee shall keep the Equipment at its place of business as
specified above or on the Schedules. Lessee shall not permit any Equipment to be
moved to a new location without the prior written consent of Lessor, which
consent will not be unreasonably withheld or delayed.
15. RIGHT OF INSPECTION. Lessor and its agents shall have the right, at any
time during normal business hours, to inspect and photograph the Equipment, to
review all maintenance records related to the Equipment and, during the last
ninety (90) days of the Noncancellable Term of each respective Schedule, to
demonstrate the Equipment specified thereon to prospective purchasers; provided,
however, Lessor shall give five (5) days' notice to Lessee of any such
demonstration.
16. MAINTENANCE. Lessee shall exercise due and proper care in the use,
repair and servicing of the Equipment. Lessee shall, at its own expense, make
all repairs and replacements required to maintain the Equipment in good working
condition in accordance with manufacturers' specifications and Lessor's
requirements, and shall pay all other operating expenses relating to the
Equipment. Lessee shall have the right, upon ten (10) days prior written notice
to Lessor, to make any alterations, additions or improvements to any Unit which
do not render the Unit in such a condition that it cannot, prior to the
expiration, cancellation or other termination of this Lease, be restored to its
original condition, reasonable wear and tear alone excepted; provided that no
such alteration, addition or improvement shall be made by Lessee if as a result
thereof any warranties made by the supplier of the Unit would be canceled or
terminated. If Lessee does not exercise its option to purchase the Equipment, as
specified in Paragraph 17, or if this Lease shall be earlier terminated or
canceled for any reason, Lessee shall restore each Unit to its original
condition, reasonable wear and tear alone excepted, prior to the expiration,
cancellation or other termination of each respective Schedule. All replacement
parts and additions incorporated into a Unit shall become the property of Lessor
immediately upon incorporation; provided, however, that Lessor shall transfer to
Lessee title to any alterations, additions and improvements which were made by
Lessee at its own expense to each item of Equipment purchased by Lessee pursuant
to the provisions of Paragraph 17. Lessee agrees to maintain and provide upon
request of Lessor all internal maintenance reports relating to the Equipment.
17. PURCHASE OPTION. Upon written notice to Lessor not less than ninety
(90) days nor more than one hundred eighty (180) days prior to the last day of
the Noncancellable Term of the first Schedule executed pursuant to this Lease,
if Lessee has fulfilled all of its obligations hereunder, Lessee shall have the
right to purchase all, but not less than all, of the Equipment under all
Schedules, for the aggregate Fair Market Value of such Equipment (plus
applicable taxes), provided that in the case of leasehold improvements and
software, the purchase price shall be 15% of the original cost of such leasehold
improvements and software. Should Lessor and Lessee fail to agree upon the Fair
Market Value of the Equipment, said price shall be determined by an independent
appraiser, and the cost of the appraisal shall be borne equally by both Lessor
and Lessee. Notwithstanding the date on which Lessee exercises this option,
Lessee shall acquire no rights of title to any Equipment, nor shall title to any
Unit be transferred to Lessee after the exercise of this purchase option until
the expiration of the Noncancellable Term for the Schedule on which such Unit is
specified. Lessee shall remain liable for all Rental Payments and other
obligations due under each Schedule until the expiration of the Noncancellable
Term of such Schedule. Any Equipment sold by Lessor shall be sold "AS IS",
"WHERE IS", and with no warranties, express or implied, including without
limitation implied warranties of merchantability and fitness for any particular
purpose. "Fair Market Value" is defined as the estimated amount at which the
property might be expected to exchange in an arm's length transaction between a
willing buyer (other than a used equipment dealer) and a willing seller, neither
being under compulsion, each having reasonable knowledge of all relevant facts,
and with equity to both, with the assumptions that the Units (i) are being sold
"in place and in use," (ii) are free and clear of all liens and encumbrances,
and (iii) are in the condition required by Paragraph 16 of this Lease.
18. RETURN OF EQUIPMENT. Upon ninety (90) days' written notice to Lessor,
in the event Lessee has not exercised its purchase option as specified in
Paragraph 17, after such notification and upon the expiration,
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cancellation or other termination of the Noncancellable Term of each Schedule,
Lessee shall, at Lessee's sole expense, properly pack and return the Equipment,
insured, unencumbered and in the same condition as when received by Lessee,
reasonable wear and tear alone excepted, by such carriers as Lessor shall
approve and to such place as designated by Lessor. Should Lessee fail to give
notice of its intent to return or fail to return the Equipment as directed
above, all obligations of Lessee under this Lease, including Rental Payments,
shall remain in full force and effect for the period from the end of the Initial
Lease Term until ninety (90) days after notice is given to Lessor of Lessee's
intent to return or purchase the Equipment (the "Holdover Period").
19. FINANCIAL STATEMENTS; OTHER INFORMATION.
(a) Lessee shall provide to Lessor the financial statements specified in
this Paragraph 19 (a), prepared in accordance with generally accepted accounting
principles, consistently applied (the "Financial Statements"); provided,
however, that after the effective date of the initial registration statement
covering a public offering of Lessee's securities, the term "Financial
Statements" shall be deemed to refer only to those statements required to be
filed by the Securities and Exchange Commission, to be provided no less
frequently than quarterly.
(i) As soon as practicable (and in any event within thirty (30) days
after the end of each month), a reasonably detailed balance sheet as of the end
of such month and the related statements of income or loss, cash flow and
capital structure of the Lessee during such month (including notification of the
commencement of any material litigation by or against Lessee), certified by
Lessee's Chief Executive Officer or Chief Financial Officer fairly to present
the data reflected therein.
(ii) As soon as practicable (and in any event within ninety (90) days
after the end of each fiscal year), audited balance sheets as of the end of such
year (consolidated if applicable), and related statements of income or loss,
retained earnings or deficit, cash flows and capital structure of Lessee for
such year, setting forth in comparative form the corresponding figures for the
preceding fiscal year, and accompanied by an audit report and opinion of the
independent certified public accountants of recognized national standing
selected by Lessee.
(b) Lessee shall promptly provide to Lessor copies of all notices, minutes,
consents and other material that it provides to its directors at the same time
they are delivered to the directors. Lessee shall promptly furnish to Lessor any
additional information (including but not limited to tax returns, income
statements, balance sheets, and names of principal creditors) as Lessor
reasonably believes necessary to evaluate Lessee's continuing financial
obligations (the "Additional Information").
(c) Lessor agrees to preserve the confidentiality of all information
provided to it hereunder by Lessee regarding the Lessee and its business which
Lessee designates in writing as confidential and which is otherwise not
generally known (except to the extent any disclosure of such information is
required by a court of competent jurisdiction or governmental authority).
20. TAX INDEMNIFICATION. Lessee acknowledges that this Lease has been
entered into on the basis that Lessor or Lessor's Assignee intends to claim such
depreciation, interest deductions and other tax benefits (the "Tax Benefits") as
are provided to an owner of Equipment under the Internal Revenue Code of 1986,
as amended (the "Code") and corresponding provisions of state law. If Lessor or
Lessor's Assignee shall not have the right to claim or there shall be
disallowed, deferred, recaptured or otherwise made unavailable with respect to
Lessor or Lessor's Assignee all or any portion of the Tax Benefits as a result
of an act or failure to act by Lessee in contravention of any of the terms and
conditions of the Lease, Lessee shall promptly pay to Lessor or Lessor's
Assignee, an amount which, on an after-tax basis, will compensate Lessor or
Lessor's Assignee for the value of the lost Tax Benefits. The Tax Benefits shall
be
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deemed to have been disallowed or recaptured upon the earliest of (i) the
adjustment by a taxing authority of the tax return of Lessor to reflect such
loss; or (ii) the payment by Lessor to the Internal Revenue Service or state
taxing authority of the tax increase resulting from such lost Tax Benefits.
Lessor or Lessor's Assignee shall be deemed not to have the right to claim the
Tax Benefits if, in the opinion of Lessor's independent tax counsel, reasonably
acceptable to Lessee, there is no reasonable basis for claiming the Tax
Benefits.
21. ADDITIONAL LESSOR RIGHTS.
(a) A representative of Lessor shall have the right to meet with Lessee's
Chief Executive Officer and Chief Financial Officer once each quarter throughout
the lease term to review and discuss the operating performance and financial
condition of the Company.
22. RISK OF LOSS. Lessee assumes the entire risk of loss, theft and damage
of the Equipment from any cause whatsoever, and no such event shall relieve
Lessee of any obligation under this Lease. Lessee shall notify Lessor in writing
within ten (10) days after any such event. Lessee agrees that Lessor shall have
the following remedies upon each occurrence of the following events:
(a) In the case of damage of any kind whatsoever to any Unit (unless such
Unit is damaged beyond repair), Lessee shall, at Lessee's sole expense and with
Lessor's reasonable consent, (i) restore such Equipment to its original
condition, reasonable wear and tear alone excepted, or (ii) replace it with like
equipment of the same or later model in good condition. Upon Lessee's
replacement of any Equipment as specified in clause (ii) of this Paragraph
22(a), Lessee shall transfer title to such replaced Equipment to Lessor.
(b) if any Unit is determined by Lessor to be damaged beyond repair, or if
Lessor has reasonable cause to believe that any Unit is stolen or lost and such
Unit is not returned to its proper location within thirty (30) days after notice
thereof to Lessee, Lessee shall, with Lessor's reasonable consent, immediately
pay to Lessor: (i) the amount required to replace such Unit with like equipment
of the same or later model in good condition, in which case such Unit shall be
substituted for the damaged Unit on the relevant Schedule, and Rental Payments
shall continue throughout the Lease Term of the Schedule to which the Unit
becomes subject without any interruption, or (ii) the sum of (A) the aggregate
unpaid rent due for the balance of the Noncancellable Term for the Unit
involved, discounted to present value at the Discount Rate; plus (B) the then
estimated Fair Market Value of the Unit involved, calculated as of the
expiration of the Noncancellable Term (the "Residual Value"), discounted to
present value at the Discount Rate; plus (C) any tax payments or indemnification
for which Lessee is liable under Paragraphs 10 and 20; plus any other amounts
with respect to such Unit for which Lessee is liable under this Lease; provided,
however, the option specified in clause (i) of this Paragraph 22(b) shall not be
available if an Event of Default has occurred and is continuing. Upon payment
under clause (ii) of Paragraph 22(b), this Lease shall terminate with respect to
the Unit(s) paid for, and Lessee shall become entitled to such Unit(s) "AS IS"
and "WHERE IS" WITHOUT ANY WARRANTY, EXPRESS OR IMPLIED, INCLUDING WITHOUT
LIMITATION ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
(c) Any proceeds paid to Lessor from the personal property insurance
specified in Paragraph 23(a)(i) shall be applied to Lessee's obligations under
this Paragraph 22.
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23. INSURANCE.
(a) Lessee shall, at its own expense, maintain the following types of
insurance, with companies with an A5 Best rating or better, acceptable to
Lessor, until such time as Lessee has returned the Equipment as specified in
Paragraph 18 or taken title to the Equipment pursuant to Paragraph 17:
(i) Personal property insurance on all property owned by Lessee
(including without limitation all of the Equipment) in an agreed amount based
upon the following:
(A) Standard "all risk" property insurance, including boiler and
machinery insurance, earthquake insurance, if applicable, and flood insurance if
any Equipment is located in an identified "flood hazard area," in which flood
insurance has been made available pursuant to the National Flood Insurance Act
of 1968;
(B) The amount of such insurance shall be not less than the greater
of the fair market value or the full undepreciated replacement value of the
Equipment. The amount of such insurance allocable to loss or damage or personal
property shall not have a deductible in excess of one thousand dollars
($1,000.00) per occurrence.
(C) Such insurance shall contain an endorsement issued by the
insurer (as opposed to a certificate issued by an agent of the insurer) in which
Lessor is named as loss payee with respect to the Equipment, and shall set aside
the amount stated in Paragraph 23(a)(i)(B) for the sole benefit of, and payable
directly to, Lessor.
(ii) Employee dishonesty insurance payable to Lessor with respect to
the theft of the Equipment.
(iii) Business interruption insurance in an amount at all times equal
to the total Rental Payments to become due during the six months following the
date of calculation. In the event of any interruption of Lessee's business, the
amount payable to Lessor shall be equal to the actual loss of Rental Payments
suffered by Lessor as the result of such interruption, and shall be payable to
Lessor within thirty (30) days from the date of loss, and on a month-to-month
basis thereafter, until Lessee's business is returned to a fully operational
state, plus ninety (90) days.
(iv) Commercial general liability insurance covering bodily injury
(including death) and property damage, naming Lessor, its directors, officers,
agents and employees as an Additional Insureds on all policies (evidenced by an
endorsement issued by the insurer (as opposed to a certificate issued by an
agent of the insurer)), and providing total limits in amounts as are at the time
carried by entities engaged in the same or similar business and which are
similarly situated, but in no event less than two million dollars
($2,000,000.00) for combined single limit occurrence. All such policies shall
cover any injury or damage occasioned by, or occurring upon, Lessee's premises,
products, operations and, at Lessor's option, explosion, collapse and
underground hazards. All such policies shall contain contractual liability
coverage including all liability assumed under this agreement, and a cross
liability clause providing that such insurance shall, except with respect to the
limits of liability, apply separately to each insured.
(v) Workers compensation insurance.
(b) All insurance specified in this Paragraph 23 shall be primary over, and
in no event shall, any insurance carried by Lessor be called upon to contribute
to any loss relating to or arising out of this Lease. All insurance shall be in
effect, and shall be evidenced by policies and/or endorsements delivered to
Lessor no later than twenty (20) days after the date upon which Lessee executes
this Lease. Notwithstanding anything to the contrary contained in this Lease,
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Lessor shall have no obligation to purchase any Equipment until all policies are
in place. All such policies shall provide for at least thirty (30) days' prior
written notice to Lessor in the event of any cancellation, non-renewal or
material change in coverage, and Lessor shall receive a copy of any and all
endorsements or other documentation relating to such policies.
(c) Should Lessee, at any time during the Lease Term, be without sufficient
insurance, as determined by Lessor in accordance with the provisions of this
Paragraph 23, Lessee appoints Lessor as its agent to obtain such coverage, and
promises to pay to Lessor the entire cost of such coverage.
24. DEFAULT. Each of the following events shall constitute an "Event of
Default" under this Lease:
(a) Nonpayment, by the due date specified herein, of any Rental Payment or
other payment required of Lessee under the terms of this Lease, and such
nonpayment shall continue for a period of five (5) business days;
(b) Noncompliance with any or all of the provisions of Paragraph 23, and
such noncompliance shall continue for a period of five (5) days after notice
thereof is given to Lessee;
(c) If Lessor shall determine that Lessee has made a misstatement or false
statement of, or omitted to state, a material fact in connection with the
execution, performance or nonperformance of this Lease or any Schedule, or if
any representation or warranty of Lessee in this Lease, any Schedule or any
Acceptance Certificate is inaccurate or false;
(d) If Lessee, without Lessor's prior written consent, shall have removed,
parted possession with, sold transferred, encumbered, assigned or sublet the
Equipment or Lessee's interest under this Lease or attempted to do any of the
foregoing; or if Lessee shall have converted any interest of Lessor arising
under this Lease or any purchase order, or resulting from the purchase of
Equipment or attempted to convert any of the foregoing;
(e) If Lessee, without Lessor's prior written consent, shall encumber or
grant a security interest in (other than for valid business purposes in the
ordinary course of business with respect to license agreements or similar
agreements), sell, transfer or assign Lessee's rights, title and interest in all
patents, patent applications, invention disclosures, copyrights, copyright
applications, trademarks (including service marks), trademark registrations,
trade names, computer software and hardware, microcode and source code, trade
secrets, know-how and processes owned by Lessee or other intellectual property
rights;
(f) If any of Lessee's credit or financial information submitted to Lessor
at any time (including but not limited to due diligence materials, Financial
Statements and Additional Information) contains any misstatement or false
statement of a material fact, or fails to state therein any material fact
necessary to make the statements made, in light of the circumstances under which
they were made, not misleading;
(g) If in the determination of Lessor the present fair salable value of
Lessee's assets is less than the amount that will be required to pay the
probable liability on Lessee's existing debts as they become absolute and
matured;
(h) If any single judgment for payment of money damages in excess of fifty
thousand dollars ($50,000.00), or aggregate judgments for payment of money
damages in excess of one hundred thousand dollars ($100,000.00), shall be
rendered against Lessee and shall remain undischarged for a period of sixty (60)
days (unless during such period execution shall not be effectively stayed in
which case there shall be no grace period under this Paragraph 24(h));
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(i) if any substantial part of Lessee's property shall be subjected to any
levy, seizure, involuntary assignment, attachment, application or sale for or by
any creditor or governmental agency;
(j) If any single indebtedness of Lessee exceeding the sum of fifty
thousand dollars ($50,000.00), or aggregate indebtedness exceeding the sum of
one hundred thousand dollars ($100,000.00), under any other lease or contract
for the borrowing of money or on account of the deferred purchase price of
property shall be accelerated, or subject to acceleration upon the giving of
notice, passage of time or both as a result of a default by Lessee, or the
obligee with respect to such indebtedness shall exercise any other remedy it may
have as a result of such default;
(k) If an order, judgement or decree shall be entered by any court having
jurisdiction for (i) relief in respect of Lessee in an involuntary case under
any applicable bankruptcy, insolvency or other similar law (as now or hereafter
in effect), (ii) appointing of receiver, liquidator, assignee, trustee,
custodian, sequestrator (or similar official) for Lessee or for any substantial
part of its property, or sequestering any substantial part of the property of
Lessee, or (iii) liquidating of Lessee's affairs, and any such order, judgement
or decree shall remain in force dismissed, unstayed or unvacated for a period of
sixty (60) days after the date of entry thereof; or if Lessee shall seek relief
of any kind under any such law or consent to any of the foregoing; or
(1) Nonperformance of any of Lessee's obligations under this Lease other
than those described elsewhere in this Paragraph 24, and such nonperformance
shall continue for a period of ten (10) days after notice thereof is given to
Lessee.
25. REMEDIES. Upon the occurrence and during the continuance of any Event
of Default, with or without canceling or terminating this Lease, Lessor or its
agent shall have the right, without demand or prior notice, in Lessor's sole
discretion, to exercise any one or more of the following remedies:
(a) To cancel this Lease and all Schedules;
(b) To declare the damages specified in Paragraph 26 to be immediately due
and payable;
(c) To take possession of any or all Units of Equipment with or without any
court order or other process of law, and for this purpose Lessor and/or its
agents may enter upon any premises of or under the control or jurisdiction of
Lessee or any agent of Lessee, without liability for suit, action or other
proceeding by Lessee and remove the Equipment therefrom; Lessee further agrees,
on demand, to assemble the Equipment and make it available to Lessor at a place
to be designated by Lessor which is reasonably convenient to Lessor and Lessee;
notwithstanding the foregoing, such taking of possession shall not relieve
Lessee of its obligations to pay damages as set forth in Paragraph 26. Lessee
further waives any and all damages occasioned by such taking of possession.
(d) To exercise any other right or remedy which may be available to Lessor
under the UCC or any other applicable law.
26. DAMAGES. Lessor's damages, in the event of default by Lessee, shall
include (in addition to all other damages available to Lessor under applicable
law): (i) the due and unpaid balance of Rental Payments and all other amounts
payable hereunder plus late charges and interest due under Paragraph 5(c) (but
not more than the maximum rate permitted by law) for the period after the date
such payments were due, (ii) the aggregate of all remaining Rental Payments
through the end of the Noncancellable Term of each Schedule, discounted to
present value at the Discount Rate, (iii) the Residual Value, discounted to
present value at the Discount Rate, (iv) any indemnification payments due
hereunder plus interest at a rate equal to the lesser of 1.5% per month or the
maximum rate permitted by
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law for the period after the date such payments were due, (v) costs of
repossession, recovery, storage and repairs and of lease or sale to a third
party, plus (vi) all other expenses including court costs and reasonable
attorneys' fees and expenses. Lessor's obligation to mitigate said damages and
any reduction of the amounts due to Lessor shall be limited as follows:
(a) Lessor shall make best efforts to mitigate its damages by releasing
the Equipment to a third party, and any rentals received in consideration for
such third party's use of said Equipment during any period of the Noncancellable
Term of any Schedule shall be applied only to that portion of Lessor's damages
resulting from loss of rentals that Lessor would have received from Lessee
during the same period had Lessee not become in default. Amounts received from
such third party shall be applied in mitigation of Lessor's damages only to the
extent such amounts are payable in connection with such third party's periodic
rental obligations as specified in the preceding sentence; in no event shall any
other amount received from such third party, including without limitation as a
security deposit or as an advance on periodic rental obligations, be applied in
mitigation of Lessor's damages hereunder.
(b) Lessor shall have no obligation to sell any of the Equipment; however,
any amounts received from a sale to a third party shall be applied to Lessor's
damages as specified in this Paragraph 26.
27. MISCELLANEOUS.
(a) If more than one Lessee is named in or added to this Lease, the
liability of each shall be joint and several.
(b) All notices related hereto shall be mailed to Lessor or Lessee at its
respective address as specified on the cover page of this Lease, or at such
other address as either party may designate upon ten days written notice to the
other party.
(c) Paragraph titles are solely for convenience and are not an aid in the
interpretation of this Lease.
(d) Time is of the essence of this Lease and each of its provisions.
(e) If notwithstanding the intent of the parties this Lease and any
Schedules hereto are determined to be a lease for security or a security
agreement, Lessee shall have been deemed to have granted to Lessor a security
interest in all of Lessee's right, title and interest in and to the Equipment
and the proceeds thereof to secure all of Lessee's obligations to Lessor arising
hereunder or otherwise.
(f) This Lease may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute one and the same instrument;
provided however that to the extent, if any, that this Lease constitutes chattel
paper (as such term is defined in the Uniform Commercial Code as in effect in
any applicable jurisdiction), no security interest in this Lease may be created
through the transfer or possession of any counterpart of this Lease or any
Schedule other than the original counterparts marked "Original Counterpart No.
1".
28. RIGHT OF FIRST OFFER. During the lease term, Lessee shall provide
Lessor with all requests for additional equipment lease financing prior to the
time that such requests are provided to other financing sources. Should Lessor
and Lessee fail to agree on the terms and conditions of such financing, then
Lessee may accept a funding source other than Lessor.
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29. LESSOR'S PERFORMANCE OF LESSEE'S OBLIGATIONS. If Lessee shall fail duly
and promptly to perform any of its obligations under this Lease, Lessor may, at
its option and at any time, perform the same without waiving any default on the
part of Lessee, or any of Lessor's rights. Lessee shall reimburse Lessor, within
five (5) days after notice thereof is given to Lessee. for all expenses and
liabilities incurred by Lessor in the performance of Lessee's obligations.
30. NONWAIVER; RIGHTS AND REMEDIES CUMULATIVE. Lessor's failure at any time
to require strict performance by Lessee shall not constitute waiver of, or
diminish, Lessor's right to demand strict compliance with any provision of this
Lease. Waiver by Lessor of any default shall not constitute waiver of any other
default. No rights or remedies referred to herein shall be exclusive, but shall
be cumulative and in addition to any other right or remedy set forth herein or
otherwise available to Lessee at law or in equity.
31. SURVIVAL OF OBLIGATIONS; LIMITATIONS ON ACTIONS. All agreements,
covenants, representations and warranties of Lessee contained in this Lease or
in the Schedules or other documents delivered pursuant hereto or in connection
herewith shall survive the execution and delivery, and the expiration.
cancellation or other termination of this Lease. Any action by Lessee against
Lessor for any default by Lessor under this Lease shall be commenced within one
(1) year after any such cause of action accrues.
32. SEVERABILITY If any provision or remedy herein provided is determined
invalid under applicable law, such provision shall be inapplicable and deemed
omitted; but the remaining provisions, including remaining default remedies,
shall be given effect in accordance with their terms.
33. UPGRADES; ADDITIONS AND ATTACHMENTS. Any added memory, upgrades,
additions and attachments to Equipment previously placed under this Lease shall,
upon approval by Lessor, be included on a Schedule, with a Noncancellable Term
that is coterminous with the Equipment to which such added memory, upgrade,
addition or attachment is being attached.
34. CHOICE OF LAW. THIS LEASE SHALL BE DEEMED TO HAVE BEEN MADE AND
ACCEPTED AND PERFORMED IN THE COUNTY OF SAN FRANCISCO, IN THE STATE OF
CALIFORNIA, WHERE THE LESSOR'S PRINCIPAL PLACE OF BUSINESS IS LOCATED. THIS
LEASE AND ALL TRANSACTIONS HEREUNDER, AND ALL RIGHTS AND LIABILITIES OF THE
PARTIES HERETO, SHALL BE DETERMINED AND GOVERNED AS TO THE VALIDITY,
INTERPRETATION, ENFORCEMENT AND EFFECT BY THE LAWS OF THE STATE OF CALIFORNIA.
THE LESSEE HEREBY CONSENTS, IN ALL ACTIONS AND PROCEEDINGS ARISING DIRECTLY OR
INDIRECTLY FROM THIS LEASE, TO THE EXCLUSIVE JURISDICTION OF THE FEDERAL
DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA OR ANY STATE COURT
LOCATED WITHIN SAN FRANCISCO COUNTY IN THE STATE OF CALIFORNIA. LESSEE HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS LEASE. IN ADDITION, ANY CLAIM OR DISPUTE
ARISING UNDER OR RELATING TO THIS LEASE MAY, AT LESSOR'S DISCRETION, BE
SUBMITTED TO BINDING ARBITRATION IN SAN FRANCISCO, CALIFORNIA PURSUANT TO THE
COMMERCIAL RULES OF THE AMERICAN ARBITRATION ASSOCIATION.
Lessee Initials: Lessor Initials
------ ------
35. ENTIRE AGREEMENT. This instrument constitutes the entire agreement
between the parties and
may not be modified except in writing executed by Lessor and Lessee. No supplier
or agent of Lessor is authorized to bind Lessor or to waive or modify any term
of this Lease.
Lessee Initials: _________ Lessor Initials _________
The undersigned representative of Lessee affirms that he or she has read
and understood this Lease and is duly authorized to execute this Lease on behalf
of Lessee and that, if Lessee is a corporation, this Lease is entered into with
consent of Lessee's Board of Directors and stockholders if so required.
IN WITNESS WHEREOF, the parties hereto execute this noncancellable Lease as
of the date on the cover page hereof.
LESSEE: LESSOR:
FIRST MORTGAGE NETWORK, INC. DOMINION VENTURES, INC.
By: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------- ---------------------------------
Name: Xxxxx X. Xxxxxx Name: Xxxxxxx X. Xxxxxx
-------------------------------- -------------------------------
Title: President Title: CFO
------------------------------ -----------------------------
This Lease incorporates the following Addenda as if fully set forth herein:
Addendum I.
This foregoing instrument was acknowledged before me this 7th day of April,
1998, by Xxxxx X. Xxxxxx, President of First Mortgage Network, Inc.
By:/s/ Xxxxxxxxx X. Xxx
--------------------------------------
Xxxxxxxxx X. Xxx, Notary Public
My Commission expires: 10-31-2001
ADDENDUM I
TO MASTER EQUIPMENT
LEASE AGREEMENT NO. 10571
April 1, 1998
Conditions to Lessor's Obligations
By their initials below and on the signature page of the Master Lease
Agreement referenced in the upper right corner of this page, Lessor and Lessee
agree that the Lease incorporates the following terms:
Part 1: On or prior to the date of execution of the Lease by Lessor, Lessor
shall have received in form and substance satisfactory to Lessor:
(a) Copies, certified, in substantially the manner set forth in
Exhibit E to the Lease, by the Secretary or Assistant Secretary
of: (A) the Articles of Incorporadon and By-Laws of Lessee (as
amended to the date of the Lease) and (B) the resolutions
adopted by Lessee's board of directors authorizing the
transaction and the documents being executed in connection
therewith.
(b) A Good Standing Certificate (including tax status if available)
with respect to Lessee from Lessee's state of incorporation,
dated a date reasonably close to the date of acceptance of the
Lease by Lessor.
(c) Evidence of the insurance coverage required by Paragraph 23 of
the Lease.
(d) All necessary consents of shareholders and other third parties
with respect to the subject matter of the Lease and the other
documents being executed in connection therewith.
(e) Landlord waiver(s) in the form of Exhibit A.
(f) The Advance Rental plus applicable taxes.
(g) All other documents as Lessor shall have reasonably requested.
Part 2: Prior to any funding of a Schedule, each of the conditions set
forth in Part I of this Addendum I shall have been satisfied and
Lessor shall have received in form and substance satisfactory to
Lessor:
(a) Such documentation as Lessor may request with respect to
invoices, purchase orders, canceled checks and the like
relating to the Equipment to be subject to the Schedule.
(b) A Purchase Order Assignment or Xxxx of Sale if applicable.
(c) A UCC-I financing statement duly executed by Lessee.
(d) An Acceptance Certificate with respect to the Equipment to be
subject to the Schedule.
Initials (Lessor)
INDEX OF EXHIBITS
TO
MASTER LEASE AGREEMENT
Exhibit A -- Landlord Waiver
Exhibit B -- Purchase Order Assignment
Exhibit C -- Xxxx of Sale
Exhibit D -- Certificate of Inspection and Acceptance
Exhibit E -- Secretary's or Assistant Secretary's Certificate
Exhibit F -- Form of Schedule
