Exhibit 10.8
MASTER LEASE AGREEMENT
MMC/GATX PARTNERSHIP NO. I - LESSOR
MASTER LEASE AGREEMENT dated as of February 28, 1994 by and between
MMC/GATX Partnership No. I (hereinafter called "Lessor") having its principal
office and place of business at c/o GATX Capital Corporation, Four
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and FOCAL,
INC. (hereinafter called "Lessee") having its principal office and place of
business at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
1. PROPERTY LEASED. In consideration of the rent to be paid by Lessee and the
covenants and agreements of Lessee hereinafter set forth, Lessor agrees to
lease to Lessee and Lessee to lease from Lessor all of the tangible personal
property listed on each Equipment Schedule executed, from time to time,
pursuant to this Master Lease (with respect to any Equipment Schedule,
hereinafter called the "Equipment"). Each Equipment Schedule shall be
substantially in the form annexed hereto as Exhibit A and made a part hereof,
shall incorporate therein all of the terms and conditions of this Master
Lease and shall contain such additional terms and conditions as Lessor and
Lessee shall agree upon.
2. TERM AND COMMENCEMENT DATE. 2.1 Term. The term of this Master Lease shall
commence on the date set forth above and shall continue in effect thereafter
so long as any Equipment Schedule entered into pursuant to this Master Lease
remains in effect. Lessor and Lessee agree that all Equipment Schedules
entered into pursuant to this Master Lease Agreement shall be effective from
the date set forth on such Schedule and shall remain in force until
termination by either party upon not less than one hundred twenty (120) days
prior written note to the other party at it address as set forth in the
applicable Equipment Schedule, which notice shall be effective upon the first
day of the month following receipt (or upon receipt if such date is the first
day of the month); provided, however, that no such termination shall be
effective prior to the expiration of the Initial Term. Except with the prior
written consent of Lessor, (i) Lessor's Cost for the Equipment subject to any
Equipment Schedule shall be at least $75,000, (ii) there shall be no more
than one (1) Equipment Schedule entered into in any 30-day period, (iii)
there shall be no more than four (4) Equipment Schedules in the aggregate,
and (iv) Lessor's Cost of all Equipment under all Equipment Schedules shall
not exceed $1,000,000 in the aggregate.
2.2 Commencement Date. The commencement date (hereinafter called the
"Commencement Date") with respect to any item of Equipment leased pursuant to
the terms of each applicable Equipment Schedule shall be the Commencement
Date set forth in such Equipment Schedule. The lease term shall commence on
the Commencement Date and shall continue for the number of full calendar
months set forth in such Equipment Schedule (the "Initial Term"). The Initial
Term with respect to any such item of Equipment shall begin on the first day
of the calendar quarter next following the Commencement Date (or commencing
on the Commencement Date if such date is the first day of the calendar
quarter) for all items of Equipment to be leased under the applicable
Equipment Schedule.
3. RENT AND PAYMENT AND LESSOR'S COST. 3.1 Rent and Payment. Lessee shall pay
to Lessor, as rental for the Equipment during each month of the Initial Term
of any Equipment Schedule, an amount equal to the Lease Rate Factor set forth
on each applicable Equipment Schedule multiplied by the total of Lessor's
Cost (as hereinafter defined), which amount (hereinafter called "Monthly
Rent"), shall be due and payable in advance on the first day of each calendar
month during such Initial Term (each such date being hereinafter called a
"Monthly Rent Payment Date"). If the Commencement Date of any Equipment
Schedule shall be other than the first day of the calendar quarter, Lessee
shall make rental payments ("Interim Rent") equal to one-thirtieth of the
Monthly Rent set forth in the Equipment Schedule for each day from and
including the Commencement Date through and including the last day of the
calendar quarter prior to the beginning of the Initial Term. Rent shall be
paid to Lessor by check or wire transfer so as to constitute immediately
available funds at the address of Lessor set forth above or at such other
place as Lessor shall designate in writing, or, if to an Assignee of Lessor,
at such place as such Assignee shall designate in
writing, and shall be paid free and clear of all claims, demands or setoffs
against Lessor or such Assignee. Whenever any payment (of rent or otherwise)
is not made when due hereunder, Lessee shall pay interest on such amount at
the rate of two percent (2%) per month or the maximum allowable rate of
interest permitted by the law of the state where the Equipment is located,
whichever is less (the "Overdue Rate"), to the date of payment.
3.2 Monthly Rent in Advance. Upon Lessee's execution of each Equipment
Schedule, Lessee agrees to pay to Lessor the amount set forth on the
applicable Equipment Schedule (the "Advance"). So long as Lessee is not in
default of the applicable Equipment Schedule, Lessor shall apply the Advance
against Lessee's last Monthly Rent Payment. It is agreed that no interest
shall be payable by Lessor to Lessee on the Advance.
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3.3 Lessor's Cost. The "Lessor's Cost" as used herein or in such Equipment
Schedule shall be equal to the purchase pirce which Lessor actually pays for
such Equipment.
4. SECTION; WARRANTY AND DISCLAIER of Warranties. 4.1 Selection. Lessee
acknowledges, represents and wanants that it has made the selection of the
Equipment based on its own judgment, has reviewed and approved any purchase
documentation related thereto and expressly disclaims any reliance upon
statements made by the Lessor. Lessee authorizes Lessor to insert in each
Equipment Schedule the serial number and other identifying data of the
Equipment.
4.2 WARRANTY AND DISCLAIMER OF WARRANTIES. Lessor wanants to Lessee that, so
long as Lessee shall not be in default of any of the provisions of the
applicable Equipment Schedule, neither Lessor, nor any Assignee or Secured
Party (as defined in Section 5.3) of Lessor will disturb Lessee's quiet and
peaceful possession of the Equipment and Lessee's unrestricted use thereof
for its intended purpose. LESSOR MAKES NO OTHER WARRANTY, EXPRESS OR IMPLIED,
AS TO ANY MATTER WHATSOEVER, INCLUDING, WITHOUT LIMITATION, THE DESIGN OR
CONDITION OF THE EQUIPMENT, ITS MERCHANTABILITY OR ITS FITNESS OR CAPACITY OR
DURABILITY FOR ANY PARTICULAR PURPOSE, THE QUALITY OF THE MATERIAL OR
WORKMANSHIP OF THE EQUIPMENT OR CONFORMITY OF THE EQUIPMENT TO THE PROVISIONS
AND SPECIFICATIONS OF ANY PURCHASE ORDER OR ORDERS RELATING THERETO; AND, AS
TO LESSOR, LESSEE LEASES THE EQUIPMENT "AS IS". Lessor shall not be liable,
to any extent whatever, for the selection, quality, condition,
merchantability, suitability, fitness, operation or performance of the
Equipment. Without limiting the generality of the foregoing, Lessor shall not
be liable to Lessee for any liability, claim, loss, damage or expense of any
kind or nature (including strict liability in tort) caused, directly or
indirectly, by the Equipment or any inadequacy thereof for any purpose, or
any deficiency or defect therein, or the use or maintenance thereof, or any
repairs, servicing or adjustments thereto; or any delay in providing or
failure to provide any part thereof, or any interruption or loss of service
or use thereof, or any loss of business, or any damage whatsoever and
howsoever caused except for any such loss or damage caused by the wilful
misconduct of the Lessor or its agents or representatives. In addition, in no
event shall either Lessor or Lessee be liable to the other for special and
consequential damages arising from or as a result of a default or failure to
perform any term and covenant contained in this Master Lease Agreement.
Lessor hereby appoints Lessee as Lessor's agent to assert, during the term of
the applicable Equipment Schedule, any right Lessor may have to enforce the
manufacturer's warranties, if any; provided, however, that Lessee shall
indemnify and hold Lessor or its Assignee harmless from and against any and
all claims, costs, expenses, damages, losses and liabilities incurred or
suffered by Lessor as a result of or incident to any action by Lessee in
connection therewith. Lessee hereby agrees that Lessee shall not exercise any
rights or warranties which may adversely affect Lessor's title to the
Equipment without prior written consent of Lessor and its assigns.
5. TITLE AND ASSIGNMENT. 5.1 Title. Nothing contained in any Equipment
Schedule shall give or convey to Lessee any right, title or interest in or to
the Equipment, except as a Lessee as set forth therein, and Lessee represents
and agrees that Lessee shall hold the Equipment subject and subordinate to
the rights of the Lessor, any Assignee and any Secured Party (as defined in
Section 5.3) and Lessee shall furnish Lessor with such documentation as
Lessor shall reasonably require with respect thereto. Lessor is hereby
authorized by Lessee, at Lessee's expense, to cause this Master Lease, any
Equipment Schedule or any statement or other instrument in respect of any
Equipment Schedule as may be required by law showing the interest of Lessor,
any Assignee and any Secured Party in the Equipment to be filed, and Lessee
agrees to execute and deliver Uniform Commercial Code financing statements
requested by Lessor for such purpose. Lessee shall, at its expense, protect
and defend Lessor's title as well as the interest of any Assignee and any
Secured Party against all persons claiming against or through Lessee and
shall at all times keep the Equipment free and clear from any legal process,
liens or encumbrances whatsoever and shall give Lessor immediate written
notice thereof and shall indemnify and hold Lessor, any Assignee and any
Secured Party harmless from and against any loss caused thereby.
5.2 ASSIGNMENT, SUBLEASE OR RELOCATION BY LESSEE. UPON THE WRITTEN CONSENT OF
LESSOR,
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ANY ASSIGNEE AND ANY SECURED PARTY (AS DEFINED US SECTION 5.3) OBTAINED AT
LEAST SIXTY (60) DAYS IN ADVANCE (WHICH CONSENT WILL NOT BE UNREASONABLY
WITHHELD), LESSEE MAY ASSIGN OR SUBLEASE THE EQUIPMENT TO ANY PARTY, OR
RELOCATE THE EQUIPMENT TO ANY LOCATION WITHIN ANY STATE OF THE CONTINENTAL
UNITED STATES WHICH SHALL HAVE IN EFFECT THE UNIFORM COMMERCIAL CODE,
PROVIDED (I) THAT ALL COSTS Of ANY NATURE WHATSOEVER (INCLUDING ANY
ADDITIONAL PROPERTY TAXES OR OTHER TAXES AND ANY ADDITIONAL EXPENSES OF
INSURANCE COVERAGE) RESULTING FROM ANY RELOCATION, ASSIGNMENT OR SUBLEASE
SHALL BE PROMPTLY PAID BY LESSEE UPON PRESENTATION TO LESSEE OF EVIDENCE
SUPPORTING SUCH COST, AND II ANY ASSIGNMENT OR SUBLEASE SHALL BE MADE
EXPRESSLY SUBJECT AND SUBORDINATE TO THE TERMS OF THIS LEASE AND LESSEE SHALL
ASSIGN ITS RIGHTS UNDER SAID ASSIGNMENT OR SUBLEASE 'TO LESSOR, ANY ASSIGNEE
AND ANY SECURED PARTY AS ADDITIONAL COLLATERAL AND SECURITY FOR LESSEE'S
OBLIGATIONS HEREUNDER. If Lessee fails to so notify Lessor and, as a result
of such failure,
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Lessor has paid or is required by the jurisdiction where the Equipment was
originally located to continue to pay taxes of the sort for which Lessee is
responsible under Section 6.2 below, then Lessee shall reimburse Lessor for
such taxes, which payment (less Lessor's reasonable costs and expenses) will
be refunded to Lessee if and when Lessor receives a corresponding refund from
said jurisdiction. In the event of a relocation, assignment or sublease,
Lessee, its assignee, or its sublessee, if any, shall cooperate with Lessor
in taking all reasonable measures to protect the title of Lessor or any
Assignee and the interest of any Secured Party to and in the Equipment. No
relocation, assignment or sublease permitted hereunder shall relieve Lessee
from any of its obligations under this Lease. Lessee hereby grants to Lessor
the right and opportunity to submit or match the last proposal for the
sublease or assignment of the Equipment, and to submit a proposal for the
financing of any equipment which is replacing Equipment leased pursuant to
this Master Lease.
5.3 Assignment by Lessor. Lessee acknowledges and understands that the terms
and conditions of each Equipment Schedule have been fixed by Lessor in
anticipation of its ability to sell and assign its interest or grant a
security interest under each Equipment Schedule and the Equipment listed
therein in whole or in part to a security assignee (the "Secured Party") for
the purpose of securing a loan to the Lessor. The Lessor may also sell and
assign its rights as owner and lessor of the Equipment under any Equipment
Schedule to an assignee (the "Assignee"). After such assignments the term
Lessor shall mean, as the case may be, such Assignee and/or any Secured
Party. Notwithstanding the foregoing, any assignment by Lessor shall not
relieve Lessor of its obligations to Lessee. The Lessee hereby consents to
such assignment or assignments as shall be designated by written notice given
by Lessor to Lessee and further covenants and agrees that (a) any such
Secured Party shall have and be entitled to exercise any and all discretions,
right and powers of Lessor hereunder or under any Equipment Schedule, but
such Secured Party shall not be obligated to perform any of the obligations
of Lessor hereunder or under any Equipment Schedule, provided, however that
such Secured Party shall not disturb Lessee's quiet and peaceful possession
of the Equipment and unrestricted use thereof for its intended purpose during
the term hereof so long as Lessee is not in default of any of the provisions
hereof and such Secured Party continues to receive all amounts of Monthly
Rent payable under such Equipment Schedule; (b) Lessee will pay all Monthly
Rent and any and all other amounts payable by Lessee under any Equipment
Schedule to such Secured Party, notwithstanding any defense or claim of
whatever nature, whether by reason of breach of such Equipment Schedule or
otherwise which it may or might now or hereafter have as against Lessor
(Lessee reserving its right to have recourse directly against Lessor on
account of any such defense or claim); and (c) Subject to and without
impairment of Lessee's leasehold rights in and to the Equipment, Lessee holds
the Equipment for such Secured Party to the extent of such Secured Party's
rights therein.
6. NET LEASE, TAXES AND FEES. 6.1 Net Lease. Lessor and Lessee acknowledge
and agree that each Equipment Schedule constitutes a net lease and that
Lessee's obligation to pay all Monthly Rent and any and all amounts payable
by Lessee under any Equipment Schedule shall be absolute and unconditional
and shall not be subject to any abatement, reduction, set-off, defense,
counterclaim, interruption, deferment or recoupment for any reason
whatsoever, and that such payments shall be and continue to be payable in all
events. This Lease, and Lessee's obligation to pay all rent and other sums
hereunder, shall constitute a "finance lease" under the California Uniform
Commercial Code ("UCC"). Lessee 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 the leased property, (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 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 Equipment. The Equipment
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shall be leased for commercial purposes only, and not for consumer, personal,
home or family purposes.
6.2 Taxes and Fees. Lessee covenants and agrees to pay when due or reimburse
and indemnify and hold the Lessor harmless from and against all taxes, fees
or other charges of any nature whatsoever (together with any related interest
or penalties) now or hereafter imposed or assessed during the term of each
Equipment Schedule against Lessor, Lessee or the Equipment by any Federal,
state, county, or local governmental authority upon or with respect to the
Equipment or upon the ordering, purchase, sale, ownership, delivery, leasing,
possession, use, operation, return or other disposition thereof or upon the
rents, receipts or earnings arising therefrom or upon or with respect to any
Equipment Schedule (excepting only Federal, state and local taxes based on or
measured solely by the net income of Lessor). Notwithstanding the foregoing,
unless otherwise specified in the Equipment Schedule, Lessor shall be
responsible for the filing of all personal property tax returns in respect of
the Equipment and shall pay all taxes indicated thereon; provided that Lessee
shall reimburse Lessor for all such taxes within ten (10) days of receipt of
Lessor's invoice therefor.
7. CARE AND USE, MAINTENANCE AND REPAIR, AND INSPECTION BY LESSOR. 7.1 Care,
Use and Maintenance. Lessee shall, at its sole expense, at all times during
the term of each Equipment Schedule, maintain the Equipment in good operating
order, repair, condition and appearance and protect the Equipment from
deterioration, other than normal wear and tear. Lessee shall not use the
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Equipment for any purpose other than that for which it was designed. Lessee
shall comply with all laws, ordinances and regulations to which the use and
operation of the Equipment may be or become subject. Lessee shall, at its
sole expense, enter into and maintain in force, for the term of each
Equipment Schedule, an appropriate maintenance contract with the manufacturer
of the Equipment, or such other party as shall be acceptable to Lessor, and
shall provide Lessor with a copy of such contract and all supplements thereto
which are applicable to the Equipment. If Lessee has the Equipment maintained
by a party other than the manufacturer, Lessee shall assume any costs
necessary to have the manufacturer recertify the Equipment upon the
expiration of the Initial Term or any extension thereof, and further, said
Equipment will remain on lease pursuant to the applicable Equipment Schedule
until such Equipment shall be re-certified. For the purposes of this Section,
any reference to "Equipment" shall include any software included in any such
Equipment Schedule and any reference to "manufacturer" shall mean the
licensor thereof.
7.2 Alterations and Attachments. Lessee will not, without the prior written
consent of Lessor (which consent shall not be unreasonably withheld), affix
or install any accessory, equipment or device on the Equipment which cannot
be removed or would otherwise reduce the value of the Equipment below the
value the Equipment would have had if such accessory equipment or device had
not been attached. All such accessories, equipment and devices furnished,
attached or affixed to the Equipment shall thereupon become the property of
Lessor (except such as may be readily removed without causing material damage
to the Equipment). Lessee will not, without the prior written consent of
Lessor and subject to such conditions as Lessor may impose for its
protection, affix the Equipment to any real property if as a result thereof
the Equipment will become a fixture under applicable law.
7.3 Inspection by Lessor. Upon the request of Lessor, Lessee shall at
reasonable times during business hours make the Equipment available to Lessor
for inspection at the place where it is normally located and shall make
Lessee's log and maintenance records, if applicable, pertaining to the
Equipment available to Lessor for inspection.
8. REPRESENTATIONS AND WARRANTIES OF LESSEE. Lessee hereby represents,
warrants and covenants that, with respect to the Master Lease and each
Equipment Schedule executed hereunder:
(a) The Lessee is a corporation duty organized and validly existing in
good standing under the laws of the jurisdiction of its incorporation, is
duly qualified to do business in each jurisdiction (including the
jurisdiction where the Equipment is, or is to be, located) where its
ownership or lease of property or the conduct of its business requires such
qualification; and has full corporate power and authority to hold property
under the Master Lease and each Equipment Schedule and to enter into and
perform its obligations under such Lease.
(b) The execution and delivery by the Lessee of the Master Lease and each
Equipment Schedule and its performance thereunder have been duly authorized
by all necessary corporate action on the part of the Lessee, and the Master
Lease and each Equipment Schedule are not inconsistent with the Lessee's
Certificate of Incorporation or Bylaws, do not contravene any law or
governmental rule, regulation or order applicable to it, do not and will not
contravene any provision of, or constitute a default under, any indenture,
mortgage, contract or other instrument to which it is a party or by which it
is bound, and the Master Lease and each Equipment Schedule constitute legal,
valid and binding agreements of the Lessee, enforceable in accordance with
their terms.
(c) There are no actions, suits or proceedings pending or, to the
knowledge of the Lessee, threatened against or affecting the Lessee in any
court or before any governmental commission, board or authority which, if
adversely determined, will have a material adverse effect on the ability of
the Lessee to perform its obligations under the Master Lease and each
Equipment Schedule.
(d) The Equipment is personal property and when subjected to use by the
Lessee will not be or become fixtures under applicable law.
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(e) The Lessee has no material liabilities or obligations, absolute or
contingent (individually or in the aggregate), except the liabilities and
obligations of the Lessee as set forth in the Financial Statements and
liabilities and obligations which have occurred in the ordinary course of
business, and which have not been, in any case or in the aggregate,
materially adverse to Lessee's ongoing business.
(f) To the best of the Lessee's knowledge, the Lessee owns, possesses,
has access to, or can become licensed on reasonable terms under all patents,
patent applications, trademarks, trade names, inventions, franchises,
licenses, permits, computer software and copyrights necessary for the
operation of its business as now conducted, with no known infringement of, or
conflict with, the rights of others.
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(g) The Lessee has in full force and effect insurance policies, with
extended coverage, insuring the Lessee and its property and business against
such losses and risks, and in such amounts, as are customary for corporations
engaged in a similar business and similarly situated.
(h) All material contracts, agreements and instruments to which the
Lessee is a party are in full force and effect in all material respects, and
are valid, binding and enforceable by the Lessee in accordance with their
respective terms, subject to the effect of applicable bankruptcy and other
similar laws affecting the rights of creditors generally, and rules of law
concerning equitable remedies.
(i) No representation or warranty of or information provided by Lessee
contained in this Master Lease, any other documents (including Lessee's
business plan), certificate or exhibit furnished or to be furnished to Lessor
pursuant thereto or in connection herewith (when read together) contains any
untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements contained herein, in light of the
circumstances under which they are made, not misleading.
(j) The Lessee has not granted rights to manufacture or assemble in
products to any other entity.
(k) With the exception of minor indebtedness incurred in the ordinary
course of business, the Lessee is not indebted to any employee, shareholder,
officer or director of the Lessee, and no such employee, shareholder, officer
or director is indebted to the Lessee.
9. DELIVERY AND RETURN OF EQUIPMENT. Lessee hereby assumes the full expense
of transportation and in-transit insurance to Lessee's premises and
installation thereat of the Equipment. Upon termination (by expiration or
otherwise) of each Equipment Schedule, Lessee shall, pursuant to Lessor's
instructions and at Lessee's full expense (including, without limitation,
expenses of transportation and in-transit insurance), return the Equipment to
Lessor in the same operating order, repair, condition and appearance as when
received, less normal depreciation and wear and tear. Lessee shall return the
Equipment to Lessor at its address set forth herein or at such other address
within the continental United States as directed by Lessor, provided,
however, that Lessee's expense shall be limited to the cost of returning the
equipment to Lessor's address as set forth herein.
10. LABELING. Lessee covenants and agrees that, upon the request of Lessor,
it shall cause the Equipment to be plainly, permanently and conspicuously
marked, by stenciling or by metal tag or plate affixed thereto, indicating
Lessor's interest in the Equipment. Lessee shall replace any such stenciling,
tag or plate which may be removed or destroyed or become illegible. Lessee
shall keep all Equipment free from any marking or labeling which might be
interpreted as a claim of ownership thereof by Lessee or any party other than
Lessor or anyone so claiming through Lessor.
11. INDEMNITY. Lessee shall and does hereby indemnify and hold Lessor, any
Assignee and any Secured Party and their respective partners, agents and
employees harmless from and against any and all claims, costs, expenses,
damages and liabilities, including reasonable attorneys' fees, arising out of
bodily injury and property damage liability as it relates to the ownership,
selection, possession, leasing, renting, operation, control, use,
maintenance, delivery, return or other disposition of the Equipment. During
the continuance of the Master Lease as to any Equipment Schedule, Lessee
shall, at its own expense, carry commercial general liability insurance
reasonably satisfactory to Lessor. In addition, before Lessee commences
clinical trials for any product, Lessee shall, at its own expense, obtain and
thereafter carry and maintain products liability insurance reasonably
satisfactory to Lessor and in an amount of at least $2,000,000 per
occurrence. Any amounts received by Lessor with respect to such insurance
shall be credited against the Lessee's obligations hereunder.
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12. RISK OF LOSS. (a) Effective upon delivery of the Equipment to Lessee and
until the Equipment is returned to Lessor as provided in the Master Lease,
Lessee relieves Lessor of responsibility for all risks of physical damage to
or loss or destruction of the Equipment, howsoever caused. During the
continuance of the Master Lease as to any Equipment Schedule, Lessee shall,
at its own expense, cause to be carried and maintained "all-risk" casualty
insurance reasonably satisfactory to Lessor with respect to each item of
Equipment designated in the Equipment Schedule in an amount not less than the
Casualty Value (as hereinafter defined). All policies with respect to such
insurance and the insurance required by Section 11 hereof shall name the
Lessor as additional insured and (together with any Secured Party) as loss
payee, shall provide for at least thirty (30) days prior written notice to
the Lessor, Assignee and Secured Party by the underwriter or insurance
company in the event of cancellation or expiration and shall in all other
respects be reasonably satisfactory to Lessor. The Lessee shall, upon request
of the Lessor, furnish appropriate evidence of such insurance; (b) If any
item of Equipment is lost or rendered unusable as a result of any physical
damage to or destruction of such item of Equipment, Lessee shall give to
Lessor prompt notice thereof and the Master Lease and the Equipment Schedule
shall continue in effect without any abatement of rent. Lessee shall
determine, within fifteen (15) days after the date of occurrence of such
loss, damage or destruction, whether such item of Equipment can be repaired.
If Lessee determines that such item of Equipment can be repaired, Lessee, at
its expense, shall cause such item of Equipment to be promptly repaired.
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If Lessee determines that such item of Equipment is lost or cannot be
repaired, Lessee shall promptly notify the Lessor and such Equipment shall be
deemed to have suffered a "Casualty Loss" for purposes of this Section as of
the date of the occurrence of such loss. Within said fifteen (15) days Lessee
shall notify the Lessor of the Equipment which has suffered a Casualty Loss
and Lessee shall either (A) replace Equipment which has suffered a Casualty
Loss with equipment of the same model, type and feature configuration and in
the condition required by this Lease, in which case the replacement equipment
shall become the Equipment, this lease shall continue in full force and
effect, and title in such Equipment shall vest in Lessor free and clear of
all liens, claims and encumbrances or (B) pay the Casualty Value, as defined
below. If the Casualty Value is paid, any installment of rent with respect to
such Equipment due prior to the date of the Casualty Loss shall remain due
and payable. After the payment of such Casualty Value and all other amounts
due and owing with respect to such Equipment, Lessee's obligation to pay
further rent for such Equipment shall cease. Except in the case of loss or
total destruction, Lessor will be entitled to recover all Equipment for which
a Casualty Value has been paid; provided, however, that Lessee shall dispose
of such Equipment for the best price obtainable (on an "as-is, where-is"
basis without representation or warranty express or implied), and Lessee
shall be entitled to retain all amounts received for the Equipment up to the
Casualty Value and Lessee's reasonable costs of disposition attributable
thereto, and shall remit the excess, if any, to Lessor. As used herein,
"Casualty Value" shall mean the Casualty Value set forth in the Casualty
Value Table (attached to the applicable Equipment Schedule) applicable on the
Rent Payment Date next preceding the date of Casualty Loss.
13. DEFAULT AND REMEDIES. (a) Lessee shall be in default of any Equipment
Schedule upon (i) failure to pay any installment of Monthly Rent or other
charge payable by Lessee under such Equipment Schedule as and when the same
becomes due and payable and such default continues for a period of five (5)
days after written notice; (ii) failure to perform any other term, covenant
or condition of such Equipment Schedule or the inaccuracy in any material
respect of any representation or warranty made by the Lessee in such
Equipment Schedule or in any document or certificate furnished to the Lessor
in connection therewith, which default or inaccuracy shall continue for a
period of ten (10) days after written notice; (iii) failure to maintain
insurance as required by this Lease; (iv) the making of an assignment by
Lessee for the benefit a is creditors or the admission by Lessee in writing
of its inability to pay its debts as they become due, or the insolvency of
Lessee, or the filing by Lessee of a voluntary petition in bankruptcy, or the
adjudication of Lessee as a bankrupt, or the filing by Lessee of any petition
or answer seeking for itself any reorganization, arrangement, composition,
readjustment, liquidation, dissolution, or similar relief under any present
or future statute, law or regulation, or the filing of any answer by Lessee
admitting, or the failure by Lessee to deny, the material allegations of a
petition filed against it for any such relief, or the seeking or consenting
by Lessee to, or acquiescence by Lessee in, the appointment of any trustee,
receiver or liquidator of Lessee or of all or any substantial part of the
properties of Lessee, or the inability of Lessee to pay its debts when due,
or the commission by Lessee of any act of bankruptcy as defined in the
Federal Bankruptcy Act, as amended; (v) failure by Lessee, within sixty (60)
days after the commencement of any proceeding against Lessee seeking any
reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any present or future statute, law or
regulation, to obtain the dismissal of such proceeding or, within sixty (60)
days after the appointment, without the consent or acquiescence of Lessee, of
any trustee, receiver or liquidator of Lessee or of all or any substantial
part of the properties of Lessee, to vacate such appointment; or (vi) default
by Lessee under any other Equipment Schedule or other agreement between
Lessee and Lessor or its assignee or Secured Party hereunder.
(b) Upon default, Lessor, at its option, may (1) proceed by appropriate
court action or actions either at law or in equity to enforce performance by
Lessee of the applicable covenants and terms of the applicable Equipment
Schedule, or to recover from Lessee any and all damages or expenses,
including reasonable attorneys' fees, which Lessor shall have sustained by
reason of Lessee's default of any covenants of the applicable Equipment
Schedule or on account of Lessor's enforcement of its remedies thereunder, or
(2) upon notice, accelerate the balance of the Monthly Rent thereafter
11
accruing under the applicable Equipment Schedule, to the present value
thereof (discounted at a rate equal to nine (9%) per annum), which, together
with all rent and other amounts then due shall become immediately due and
payable, as liquidated damages and not as a penalty, and Lessor shall have
the right to the extent permitted by law: (i) to recover all sums so due
thereunder; (ii) to retake immediate possession of the Equipment without any
process of law and for such purpose Lessor may enter upon premises where the
Equipment may be located and may remove the same therefrom without notice,
and without being liable to Lessee therefor except for damage caused by the
gross negligence or willful misconduct of Lessor or its agents or
representatives; (iii) to sell, lease or otherwise dispose of all or any
portion of the Equipment, with the privilege of becoming the purchaser
thereof, at public or private sale, for cash or on credit and without notice
of its intention to do so or of its doing so, in which event Lessor shall
apply the cash proceeds from any sale or other disposition (less the
estimated Fair Market Value of the Equipment at the expiration of the Initial
Term or any extension thereof), or the present value (discounted at the
Overdue Rate) of the monthly rent under any other lease for a term not to
exceed the expiration of the Initial Term or any extension thereof (all such
amounts to be called "Proceeds" hereinafter), less all costs and expenses
incurred in connection with the recovery, repair or storage of the Equipment
or the transaction itself, against all sums due from Lessee and to the extent
and in the manner permitted by law; Lessee shall be liable to Lessor for, and
Lessor may recover from Lessee, the amount by which the Proceeds of any such
transaction, less the expenses of retaking, storing, repairing and the
transaction itself, including reasonable attorneys' fees incurred by Lessor,
are less than all sums due from Lessee under the
12
applicable Equipment Schedule; and (iv) to pursue any other remedy permitted
by law or equity. The above remedies, to the extent permitted by law, any one
of which Lessor need not, in its discretion, exercise, shall be deemed
cumulative and may be exercised successively or concurrently. Lessee shall
reimburse Lessor for all costs and expenses incurred in connection with the
enforcement of any right or remedy under such Equipment Schedule, including
reasonable attorneys' fees. Except as set forth in this Section and to the
extent permitted by applicable law, Lessee 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 damage or
which may otherwise limit or modify any of Lessor's rights or remedies,
provided, however, that Lessor shall use its best efforts to sell or re-lease
the Equipment in accordance with its usual business procedures and the
proceeds therefrom shall be applied against the amounts owed by Lessee in
accordance with the formula set forth above. Fair Market Value of the
Equipment shall be determined on the basis of and shall be the aggregate
amount which would be obtainable at the expiration of the Initial Term or any
extension thereof in an arms-length transaction between an informed and
willing buyer/user under no compulsion to buy and an informed and willing
seller under no compulsion to sell.
14. BOARD ATTENDANCE. Lessor or its duly appointed representative shall have
the right to attend Lessee's corporate Board of Directors meetings and Lessee
shall give Lessor reasonable notice in advance of any special Board of
Directors meeting, which notice shall provide an agenda of the subject matter
to be discussed at such board meeting. Lessee shall provide Lessor with a
certified copy of the minutes of each Board of Directors meeting within
thirty (30) days following the date of such meeting held during the term of
this Lease.
15. FINANCIAL STATEMENTS. (a) Notwithstanding anything to the contrary
contained herein, Lessee shall provide to Lessor the financial statements
specified in this Section 15, prepared in accordance with generally accepted
accounting principles, consistently applied (the "Financial Statements");
provided, however, 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 to only those statements
required by the Securities and Exchange Commission, to be provided no less
frequently than quarterly. For purposes of complying with this Section 15,
Lessee shall provide to Lessor (i) as soon as practicable (and in any event
within thirty (30) days) after the end of each month, a reasonably detailed
statement of revenues, costs, expenses, orders received, backlog, shipments,
commitments, contingencies, and changes in the financial position and capital
structure of the Lessee incurred during such month (including the
commencement of any material litigation by or against Lessee and a trial
balance of all accounts on both an adjusted and unadjusted basis), certified
by Lessee's Chief Executive or Financial Officer to be true and correct; and
(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 and changes in the financial position and
capital structure of Lessee for such year, setting forth in comparative form
the corresponding figures for the preceeding fiscal year, and accompanied by
an audit report and opinion of the independent certified public accountants
selected by Lessee.
(b) 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 ability to meet financial obligations (the
"Additional Information").
16. MERGER, SALE, ETC. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN
SECTION 5.2 HEREIN UPON ANY CONSOLIDATION OR MERGER OF THE LESSEE WITH OR
INTO ANY OTHER CORPORATION OR CORPORATIONS (WHETHER OR NOT AFFILIATED WITH
THE LESSEE), OR SUCCESSIVE CONSOLIDATIONS OR MERGERS IN WHICH THE LESSEE OR
ITS SUCCESSOR OR SUCCESSORS SHALL BE A PARTY OR PARTIES, OR UPON ANY SALE OR
CONVEYANCE OF ALL OR SUBSTANTIALLY ALL OF THE PROPERTY OF THE LESSEE TO ANY
OTHER PERSON OR ENTITY, THE LESSEE SHALL OBTAIN THE WRITTEN CONSENT OF LESSOR
PRIOR TO SUCH MERGER, SALE OR CONSOLIDATION ("MERGER"), WHICH CONSENT MAY BE
13
WITHHELD AT THE DISCRETION OF LESSOR, AND IN THE EVENT LESSOR WITHHOLDS
CONSENT, THEN ALL LEASES ENTERED INTO PURSUANT TO THIS MASTER LEASE AGREEMENT
PRIOR TO SUCH MERGER SHALL BE DEEMED TERMINATED EFFECTIVE THE DATE OF THE
CLOSING OF SUCH MERGER, AND LESSEE SHALL, ON THE DATE OF SUCH CLOSING, PAY
LESSOR, AS A TERMINATION FEE, ALL RENTS WHICH ARE DUE OR WOULD BECOME DUE
DURING THE INITIAL TERM, BUT FOR SUCH TERMINATION, DISCOUNTED AT SIX PERCENT
(6%). IF LESSOR CONSENTS TO SUCH MERGER, LESSEE WILL CAUSE ANY SUCH SUCCESSOR
TO CONTINUE TO MAKE THE DUE AND PUNCTUAL PAYMENT OF ALL MONTHLY RENT, AND THE
DUE AND PUNCTUAL PERFORMANCE AND OBSERVANCE OF ALL COVENANTS AND OBLIGATIONS
OF THE LESSEE HEREUNDER AND UNDER THE LEASE TO BE ASSUMED BY THE CORPORATION
(IF OTHER THAN THE LESSEE) FORMED BY SUCH CONSOLIDATION, OR THE CORPORATION
INTO WHICH THE LESSEE SHALL HAVE BEEN MERGED OR BY THE PERSON OR ENTITY WHICH
SHALL HAVE ACQUIRED SUCH PROPERTY.
14
7. MISCELLANEOUS. 17.1 Entire Agreement. Lessor and Lessee acknowledge that
there are no agreements or understandings, written or oral, between Lessor
and Lessee with respect to the Equipment, other than as set forth herein and
in each Equipment Schedule and that this Master Lease Agreement and each
Equipment Schedule contains the entire agreement between Lessor and Lessee
with respect thereto. Neither this Master Lease nor any Equipment Schedule
may be altered, modified, terminated or discharged except by a writing signed
by the party against whom such alteration, modification, termination or
discharge is sought.
17.2 No Waiver. No omission, or delay, by Lessor at any time to enforce any
right or remedy reserved to it, or to require performance of any of the
terms, covenants or provisions hereof by Lessee at any time designated, shall
be a waiver of any such right or remedy to which Lessor is entitled, nor
shall it in any way affect the right of Lessor to enforce such provisions
thereafter.
17.3 Binding Nature. Each Equipment Schedule shall be binding upon, and shall
inure to the benefit of Lessor, Lessee, and their respective successors,
legal representatives and assigns, except, in the case of any Secured Party,
to the extent set forth in Section 5.3.
17.4 Survival of Obligations. All agreements, representations and warranties
contained in this Master Lease, in any Equipment Schedule or in any document
delivered pursuant hereto or in connection herewith shall be for the benefit
of Lessor and any assignee or Secured Party and shall survive the execution
and delivery of this Master Lease and the expiration or other termination of
this Master Lease.
17.5 Notices. Any notice, request or other communication to either party by
the other as provided for herein shall be given in writing and only shall be
deemed received upon the earlier of receipt or three (3) days after mailing
if mailed postage prepaid by regular or airmail to Lessor (to the attention
of "Lease Administrator") or Lessee, as the case may be, at the address for
such party set forth in the Equipment Schedule or at such changed address as
may be subsequently submitted by written notice of either party.
17.6 Applicable Law. This Master Lease has been, and each Equipment Schedule
will have been made, executed and delivered in the State of California and
shall be governed and construed for all purposes under and in accordance with
the laws of the State of California without giving effect to principles of
conflicts of law or choice of law. LESSEE AGREES AND CONSENTS THAT THE
SUPERIOR COURT OF THE STATE OF CALIFORNIA FOR THE COUNTY OF SAN FRANCISCO OR
THE FEDERAL DISTRICT COURT FOR THE JURISDICTION IN THAT COUNTY SHALL HAVE
JURISDICTION AND SHALL BE THE VENUE FOR DETERMINATION OF ALL CONTROVERSIES,
DISPUTES AND ACTIONS ARISING UNDER THIS LEASE, NOTHING CONTAINED HEREIN IS
INTENDED TO PRECLUDE LESSOR FROM COMMENCING ANY ACTION UNDER THIS LEASE IN
ANY COURT HAVING JURISDICTION THEREOF.
17.7 Severability. In the event any one or more of the provisions of this
Master Lease and/or any Equipment Schedule shall for any reason be held
invalid, illegal or unenforceable, the remaining provisions of this Master
Lease and/or any such Equipment Schedule shall be unimpaired, and the
invalid, illegal or unenforceable provision shall be replaced by a mutually
acceptable valid, legal and enforceable provision which comes closest to the
intention of the parties underlying the invalid, illegal or unenforceable
provision.
17.8 Counterparts. This Master Lease and any Equipment Schedule may be
executed in any number of counterparts, each of which shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument. If Lessor grants a security interest in all or any part of
an Equipment Schedule, the Equipment covered thereby and/or sums payable
thereunder, only that counterpart Equipment Schedule marked "Secured Party's
Original" shall be effective to transfer Lessor's rights therein and all
other counterparts shall be marked "Duplicate" to indicate that they are not
the "Secured Party's Original".
15
17.9 Release of Lessor's obligations to lease Equipment. If there is (i) a
failure by Lessee to make lease payments on the first day of each month as
due; (ii) a default under this Master Lease or any Equipment Schedule
hereunder; (iii) any default by Lessee with respect to any indebtedness of
the Lessee for borrowed money, by virtue of which the holders of such
indebtedness shall have the right to demand immediate payment of such
indebtedness (regardless of whether such right shall have been exercised);
(iv) there is an adverse change in Lessee's credit standing; or (v) Lessor,
in the reasonable exercise of its judgment and in good faith, shall have
determined that the Lessee is unable to perform its obligations under this
Lease; then Lessor, at its option and upon prior written notice to Lessee,
shall be relieved of its obligation to lease any equipment hereunder with a
Commencement Date occurring after the date of such notice. In addition Lessee
agrees to reaffirm the representations, warranties and covenants contained
herein from time to time as requested by Lessor's written notice.
17.10 Landlord/Mortgagee Waiver Lessee agrees to provide Lessor with a
Landlord/Mortgagee Waiver with respect to the Equipment. Such waiver shall be
in a form satisfactory to Lessor.
16
7.11 Equipment Procurement Charges/Progress Payments. Lessee hereby agrees
that Lessor shall not, by virtue of its entering into this Lease, be required
to remit any payments to any manufacturer or other third party until Lessee
accepts the Equipment subject to this Lane and in accordance with Section 2.2
"Commencement Date" hereof.
17.12 Additional Matters. (a) Lessee, upon execution of this Master Lease and
thereafter upon execution of each Equipment Schedule, shall provide Lessor
with certification with respect to incumbency and authority and an opinion
from Lessee's counsel addressed to Lessor or any Secured Party with respect
to the representations and warranties set forth in subparagraphs (a) through
(e) of Section 8 above and shall also supply such other documents as Lessor
may reasonably request. If Lessee shall fail to timely and properly deliver
any of the aforesaid documents within fourteen (14) days of the execution of
this Master Lease and each Equipment Schedule, Lessor, in its discretion and
notwithstanding anything to the contrary contained in Section 2 hereof, may
postpone the commencement of the Initial Term to the first day of the
calendar quarter following receipt of all required documents. Lessor shall
give Lessee prompt written notice of any such postponement; (b) Section
headings are for convenience only and shall not be construed as part of this
Master Lease.
IN WITNESS WHEREOF, the parties hereto have executed this Master Lease on
or as of the day and year first above written.
LESSEE: FOCAL, INC., LESSOR: MMC/GATX PARTNERSHIP NO.I
By: GATX Capital Corporation, as Agent
By: /s/ W. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------- -------------------------
Title: Vice President, Finance Title:
17
EXHIBIT A
EQUIPMENT SCHEDULE NO.______ DATED AS OF _____________________
(the "Commencement Date")
TO MASTER LEASE AGREEMENT DATED AS OF February 28, 1994 ("MASTER LEASE")
LESSEE: FOCAL, INC. LESSOR: MMC/GATX PARTNERSHIP NO. I
Admin. Contact/Phone No.: Address for all Notices:
▇▇▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ MMC/GATX Partnership No. I
c/o GATX Capital Corporation
Address for Notices: Four Embarcadero Center, Suite 2200
One ▇▇▇▇▇▇▇ Square, Building 600 Attn: Contract Administration
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
with a copy of required financial
information to:
Attn:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Company
Central Billing Location: Four ▇▇▇▇▇▇. ▇▇▇, ▇▇▇▇▇ ▇▇▇-▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Same as above Attn: Mr, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
PAYING AGENT:
Lessee Reference No.:_____________________ Same as above
(24 digits maximum)
Location of Equipment: Initial Term: 36 months commencing
on ________________________, 199__ .
Same as above
Lease Rate Factor: 3.07%
EQUIPMENT (as defined below): Advance: $30,700.00
Machine Type/ Serial
No. Qty. Manufacturer Feature Description Number Rent
--- ---- ------------- ------- ----------- ------ ----
See Annex A hereto
Equipment specifically approved by Lessor, which shall be delivered to and
accepted by Lessee during the period February 28, 1994 through December 31,
1994, up to an aggregate Lessor's Cost of $1,000,000.00; not including
upgrades thereto and further excluding custom use equipment, leasehold
improvements, installation costs and delivery costs, rolling stock, special
tooling, custom
18
equipment, "stand-alone" software, application software bundled into computer
hardware, hand held items, molds and fungible items. In no event shall any
furniture exceed ten percent (10%) of Lessor's aggregate cost hereunder.
19
1. EQUIPMENT PURCHASE
This Equipment Schedule is contingent upon Lessor purchasing the
Equipment for an aggregate amount not to exceed $1,000,000.00 pursuant to
purchase documentation satisfactory to Lessor. Aggregate Equipment amount
shall include all Equipment purchased by Lessor, consisting of amounts
financed under Sections (i), (ii) and (iii) below. Lessee confirms that on
the Commencement Date hereof (i) all of the Equipment described in Annex A
attached hereto was duly accepted by Lessee and became subject to the Lease;
and (ii) Lessee became obligated to make rental payments to Lessor and
perform certain obligations with respect to such Equipment as provided in the
Lease and this Equipment Schedule.
(i) NEW EQUIPMENT. Lessor will purchase new Equipment which is
specifically approved by Lessor.
(ii) SALE-LEASEBACK EQUIPMENT. Any in-place Equipment installed at Lessee's
site and to which Lessee has clear title and ownership may be
considered by Lessor for inclusion under this Lease (the
"Sale-Leaseback Transaction"). Any request for a Sale-Leaseback
Transaction must be submitted to Lessor in writing (along with
accompanying evidence of Lessee's Equipment ownership satisfactory
to Lessor for all Equipment submitted) no later than April 30, 1994
Lessor will not perform a Sale-Leaseback Transaction for any request
or accompanying Equipment ownership documents which arrive after the
date marked above by an asterisk (*). Further, any sale-leaseback
Equipment will be place on lease subject to: (1) Lessor prior approval
of the Equipment; and (2) if approved, at Lessor's actual net
appraised Equipment value pursuant to the schedule below:
ORIGINAL EQUIPMENT
MANUFACTURER'S PERCENT OF ORIGINAL MANUFACTURER'S NET
SHIP DATE EQUIPMENT COST PAID BY LESSOR
Between 12/4/93 and 3/3/94 100%
Between 10/4/93 and 12/3/93 80%
Between 7/4/93 and 10/3/93 70%
Between 4/4/93 and 7/3/93 65%
Between 1/4/93 and 4/3/93 60%
(iii) USED EQUIPMENT. Lessor will purchase "used" Equipment which is
obtained from a third party by Lessee for its use subject
to: (1) Lessor's prior approval of the Equipment; and (2) at
Lessor's appraised value for such used Equipment.
2. OPTION TO EXTEND
So long as no Event of Default shall have occurred and be continuing,
Lessee shall have the right to extend the Initial Term of this Equipment
Schedule for a period of one-year by giving Lessor at least one hundred
twenty (120) days written notice prior to the expiration of the applicable
Initial Term. In such event, the rent to be paid during said extended period
shall be mutually agreed upon and if the parties cannot mutually agree, then
the Lease shall continue in full force and effect pursuant to the existing
terms and conditions until terminated in accordance with its terms. This
Equipment Schedule shall continue in effect following said extended period
until terminated by either party upon not less than one hundred twenty (120)
days prior written notice, which notice shall be effective as of the Monthly
Rent Payment Date next following receipt.
3. PURCHASE OPTION
20
So long as no Event of Default has occurred and is continuing hereunder,
and upon written notice no earlier than one hundred eighty (180) days and no
later than one hundred twenty (120) days prior to the expiration of the
Initial Term, Lessee shall have the option at the expiration of the Initial
Term of this Equipment Schedule to purchase all, but not less than all, of
the Equipment listed herein for a purchase price and upon terms and
conditions to be mutually agreed upon by the parties following Lessee's
written notice, plus any taxes applicable at time of purchase. Said purchase
price shall be paid to Lessor at least thirty (30) days before the expiration
date of the Initial Term. Title to the Equipment shall automatically pass to
Lessee upon payment in full of the purchase price but, in no event, earlier
than the expiration of the fixed Initial Term. The purchase of the Equipment
pursuant to its option herein shall be "AS IS, WHERE IS", without recourse to
or an, warranty by Lessor, other than a warranty that such Equipment is free
and clear of liens and encumbrances resulting from acts of Lessor. If the
parties are unable to agree
21
on the purchase price or the terms and conditions with respect to said
purchase, then the Lease with respect to this Equipment shall remain in full
force and effect. It is agreed and understood that Lessor is retaining a
purchase money security interest in the Equipment listed herein and this
Equipment Schedule shall constitute a Security Agreement under the Uniform
Commercial Code of the state in which the Equipment is located. Lessor and
Lessee agree that for purposes of this paragraph, any licensed software shall
not be considered part of the Equipment.
4. SPECIAL TERMS
The terms and conditions of the Master Lease Agreement as they pertain to
this Equipment Schedule are hereby modified and amended as follows:
A. Intentionally omitted.
B. Section 5.1, "Title" ",except for such claims arising from
the actions of the Lessor, any Assignee or any Secured Party."
C. 5.2, "Assignment, Sublease or Relocation by Lessee"
Delete the period at the end of this section and insert the
following:
"; provided, however, Lessee shall be under no obligation to
accept Lessor's proposal.".
D. Section 5.3, "Assignment by Lessor"
In line 12, before the word "default" insert the word
"material".
In line 13, after the letter "(b)" insert the words "upon
notification from the Lessor,".
E. Section 8, "Representations and Warranties of Lessee"
In subparagraph (a), line 3, after the word "qualification"
insert the words "except where the failure to so quality would
no have a material adverse effect on the Company's business".
In subparagraph (b), line 4, after the word "contravene" insert
the words "in any material way".
In subparagraph (b), before the word "default" insert the word
"material".
Delete the period at the end of subparagraph (b) and insert
the following:
22
", subject to the effect of applicable bankruptcy and other
similar laws affecting the rights of creditors generally and
rules of law concerning equitable remedies."
In subparagraph (k), line 2, before the words "no such
employee" insert the words "except for Lessee making loans
to employees in connection with the relocation of such
employees,".
F. Section 9, "Delivery and Return of Equipment"
23
To the end of this Section, add the following:
"Notwithstanding the foregoing, the cost of returning the
Equipment shall be limited to the cost of transportation
between the location of the Equipment's last use and Lessor's
warehouse in California."
24
G. Section 11, "Indemnity"
To the end of this Section, add the following:
"Notwithstanding the foregoing, Lessee shall not be responsible
under the terms of this Section 11 to a party indemnified hereunder
for any claims, costs, expenses, damages and liabilities occasioned
by the gross negligence or willful misconduct of Lessor or any
Assignee or Secured Party of Lessor."
H. Section 12, "Risk of Loss"
Add subsection (c) as follows:
"To the extent equipment insurance proceeds are paid directly to
Lessor, by virtue of being named a loss payee under Lessee's
equipment insurance policy, Lessee's obligation to pay Lessor,
pursuant to subsection 12(b) above, shall be decreased by the
amount of such insurance proceeds."
I. Section 15, "Financial Statements"
In line 7, after the words "each month," insert the following:
"monthly financial information, which shall include at a minimum, a
Balance Sheet as of the end of the month, an Income Statement for
the one month period and year-to-date and a Statement of Cash
Flow."
In lines 7-10, delete the words "a reasonably detailed statement of
revenues..." through "... and unadjusted basis),".
J. Section 16, "Merger, Sale, Etc.."
To the end of this section add the following:
"NOTWITHSTANDING THE FOREGOING, LESSOR HEREBY CONSENTS TO ANY
MERGER WHICH WELL RESULT IN THE FOLLOWING: (A) THE SURVIVING
ENTITY HAS A NET WORTH EQUAL TO OR GREATER THAN TEN (10) TIMES
THE PRESENT VALUE OF THE REMAINING MONTHLY RENTAL PAYMENTS TO
BECOME DUE UNDER THIS LEASE AND UNDER LESSEE'S LEASES WITH
COMDISCO, INC. AS THE ORIGINAL LESSOR, DISCOUNTED AT 8%, OR (B)
THE SURVIVING ENTITY HAS WORKING CAPITAL OF AT LEAST
$12,500,000.00."
MASTER LEASE: This Equipment Schedule is issued pursuant to the Master Lease
identified on page 1 hereof. All of the terms, conditions, representations
and warranties of the Master Lease are hereby incorporated herein and made a
part hereof as if they were expressly set forth in this Equipment Schedule
and this Equipment Schedule constitutes a separate lease with respect to the
Equipment described herein. By their execution and delivery of this Equipment
Schedule, the parties hereby reaffirm all of the terms, conditions,
representations and warranties of the Master Lease (including, without
limitation, the representations and warranties set forth in Section 8
thereof) except as modified herein.
Dated this____ day of ______________ , 19 __.
25
FOCAL, INC., MMC/GATX PARTNERSHIP NO. I
as Lessee as Lessor
By: GATX Capital Corporation, as Agent
By:_______________________ By: _________________________
Title:_____________________ _________________________
26
ANNEX A
DESCRIPTION OF EQUIPMENT
27
CASUALTY VALUE TABLE
28