EXHIBIT 10.16
ADDENDUM NO. 1 TO
MASTER LEASE AGREEMENT NO. 7265
DATED AS OF July 20, 1998
BETWEEN
LINC CAPITAL INC., AS LESSOR
AND iOwn, Inc., formerly known as Home Shark, Inc. AS LESSEE
This Addendum is attached to and forms part of that certain Master Lease
Agreement No. 7265 dated as of July 20, 1998 (the "Lease") between LINC Capital
Inc., ("Lessor" or "LINC"), and iOwn, Inc. formerly known as Home Shark, Inc.
("Lessee") agreeing as follows:
A. Terms defined in the Lease shall have the same meanings herein unless
otherwise expressly set forth herein or otherwise required by context
hereof.
B. The following terms and conditions shall be added to the terms of the Lease
and are hereby incorporated therein by reference.
22. Leasing of Equipment
a. Lease Line. Subject to the terms and conditions herein set forth and
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in the applicable Equipment Schedule, and provided no event of default under the
Lease shall have occurred and be then continuing, Lessor agrees to purchase and
lease to Lessee, from time to time, the "Equipment" (as defined below). Subject
to the condition set forth in Section 29 below, the aggregate "Cost" (as defined
below) of Equipment purchased by Lessor pursuant to this Section 22.a shall in
no event exceed [*] (the "Lease Line Amount").
The first [*] of Cost of Equipment purchased by Lessor for lease to
Lessee is referred to herein as the "Existing Lease Line Amount". The next
[*] of Cost of Equipment purchased by Lessor for lease to Lessee is
referred to herein as the "First Supplemental Lease Line Amount". The final
[*] of Cost of Equipment purchased by Lessor for lease to Lessee is
referred to herein as the "Second Supplemental Lease Line Amount". Lessor shall
have no obligation to purchase Equipment having a Cost in excess of the First
Supplemental Lease Line Amount unless and until LINC has received independent
confirmation that the Lessee has received additional equity investments
aggregating at least [*].
All "Takedowns" (as defined below) shall be completed on or before October
31, 1999 (the "Last Takedown Date"). If all Takedowns which occur on or before
October 31, 1999 do not aggregate Equipment having a Cost equal to the Lease
Line Amount then LINC shall have the right to assess and Lessee agrees to pay
LINC a non-utilization fee equal to [*] of the difference between the Lease Line
Amount and the aggregate Cost of all Equipment purchased by LINC on the Last
Takedown Date. The non-utilization fee described above shall be due and payable
to LINC on the next business day after the Last Takedown Date.
b. Equipment. (1) Lessor will purchase certain computer equipment,
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peripherals computer equipment, workstations, software, office furniture and
office equipment, and ancillary equipment related thereto (the "Equipment") from
Lessee or from vendors designated by Lessee. The purchase price for the
Equipment will be equal to the lesser of either (i) 100% of the manufacturers'
net invoice price (excluding applicable sales or use taxes, freight,
installation, and similar charges) for the Equipment or (ii) the Net Book Value
of the Equipment (as defined below); and (iii) the then fair market value for
each item or commercial unit of the Equipment as determined by Lessor ("Cost").
(2) All Equipment shall be tangible personal property eligible for
MACRS depreciation under the Internal Revenue Code of 1986, as amended. The
depreciation benefits arising from the Equipment will be for the account of
Lessor.
(3) Each item of or commercial unit of the Equipment, its vendor
and all purchase orders, invoices and related documents will be subject to
review and approval by Lessor prior to funding any Takedown. Freight and
installation charges shall not exceed 15% of the Equipment Cost unless otherwise
agreed by Lessor.
(4) Notwithstanding the provisions of subsection (1) above, the
"Cost" of for any Equipment placed in service by Lessee more than ninety (90)
days prior to purchase by LINC ("Used Equipment") shall be the Sale Leaseback
Amount ("SLB Amount"). The SLB Amount
[*] Confidential Treatment Requested
to be paid by LINC for Used Equipment shall be equal to the lesser of either (a)
75% of the Net Book Value of the Equipment or (b) 75% of the then fair market
value for each item or commercial unit of the type of Used Equipment acceptable
to LINC but in either event not to exceed [*] in the aggregate. Title to all
Used Equipment described in any Equipment Schedule shall pass to Lessor upon
payment of the SLB Amount.
(5) The "Net Book Value" shall mean the depreciated value of the
Equipment (determined in accordance with generally accepted accounting
principles according to the books and records of Lessee) and shall be supported
by the original manufacturer's net invoice amount actually paid by Lessee
(excluding applicable sales or use taxes, freight, installation and other
similar charges) as evidenced by canceled checks, copies of which are to be
delivered to Lessor prior to any purchase of Equipment by LINC.
c. Initial Lease Term and Monthly Lease Rate. For all Equipment purchased
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by Lessor up to the Existing Lease Line Amount, the Initial Lease Term shall be
36 months and the applicable Monthly Lease Rate factor during the initial 36
months shall be [*] of Cost per month. For all Equipment purchased by Lessor
in excess of the Existing Lease Line Amount, the Initial Lease Term shall be 36
months. The applicable Monthly Lease Rate factor during the initial 36 months
shall be [*] per month.
d. Rate Adjustment. For Equipment purchased by Lessor under the Existing
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Lease Line Amount, the Monthly Lease Rate Factor will be indexed to the yield
for U.S. Treasury Notes maturing closest to the date 36 months from the
Commencement Date of the first Equipment Schedule under this Lease (the "Index
Instrument") which is [*]. For Equipment purchased by Lessor after the Existing
Lease Line Amount has been fully utilized, the Monthly Lease Rate Factor will be
[*].
e. Takedowns. "Takedowns" means the date of the final payment of the Cost
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of the Equipment for the applicable Equipment Schedules by LINC. All Takedowns
shall commence on the first day of the calendar month following Lessee's
acceptance of all Equipment on each Equipment Schedule. Any Equipment purchased
after the Initial Takedown shall be funded on subsequent Takedowns through
additional Equipment Schedules having Equipment with an aggregate Cost of at
least $100,000.00 each. Each Equipment Schedule will include all purchases of
Equipment made for Equipment on a progress payment basis in the previous
calendar quarter not previously included in an Equipment Schedule. All Equipment
Schedules shall takedown prior to the Last Takedown Date.
f. End of Term Options. Provided that the Lease has not been terminated
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by Lessor and that no Event of Default or event which, with notice or lapse of
time or both, would become an Event of Default shall have occurred and be
continuing, and not withstanding any other conflicting terms set forth in any
Equipment Schedule, Lessee shall elect at the end of the Initial Lease Term of
each Equipment Schedule now or hereafter covered by this Lease, one of the
following options below:
(i) Lessee's Option to Renew: At the expiration of the Initial Lease
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Term of each Equipment Schedule now or hereafter made under this Lease, Lessee
may elect to extend the Lease with respect to all, and not less than all, of the
Equipment covered under each such Equipment Schedule at their respective Initial
Lease Term expiration dates for 12 months (the "Extended Lease Term") for a
Monthly Lease Rate Factor equal to the greater of the then fair market monthly
rental value of the Equipment or 1.5% per month. Rent during any extended term
shall be paid monthly in advance plus any applicable taxes.
(ii) First Option to Purchase: At the expiration of the Initial Lease
------------------------
Term of each Equipment Schedule now or hereafter covered under this Lease, if
Lessee has paid all rental payments due during the Initial Lease Term (without
electing any extension thereof) of each Equipment Schedule covered under this
Lease, then Lessee shall have the Option to Purchase not less than all of the
Equipment on all Equipment Schedules made under this Lease at the end of the
Initial Lease Term at a Purchase Option Price equal to the Fair Market Value of
[*] Confidential Treatment Requested
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the Equipment but not less than 15% of the original Cost of the Equipment to
Lessor.
(iii) Second option to Purchase: If Lessee has elected to renew the
-------------------------
Lease, then at the expiration of the First Extended Lease Term, if Lessee has
paid all rental payments due during the Initial Lease Term and during the First
Extended Lease Term, Lessee shall have the option to purchase not less than all
of the Equipment on all Equipment Schedules made under this Lease at the end of
the Initial Lease Term at a Purchase Option Price equal to the Fair Market Value
of the Equipment.
(iv) Restocking Charge: If Lessee elects to return (or is required by
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Lessor to return) the Equipment covered on any Equipment Schedule made under the
Lease, Lessee agrees to pay Lessor as a Restocking charge an amount equal to 15%
of the Cost of such Equipment. Any applicable Restocking charge shall be due and
payable either (I) ninety (90) days the date Lessee notifies Lessor of its
intention to return the Equipment or (II) thirty (30) days after Lessor notifies
Lessee to return the Equipment.
28. Name Change Amendment.
The Lessee acknowledges that it has changed its legal name from Home Shark, Inc.
to iOwn, Inc. Lessee agrees that all references in the Lease to the name "Home
Shark, Inc." shall refer to "iOwn, Inc." and Lessor shall be authorized to
change each reference in the Lease from "Home Shark, Inc." to "iOwn, Inc".
IN WITNESS WHEREOF, this Addendum has been executed by a duly authorized officer
of Lessee as of the _____ day of ______________,1999.
iOwn, Inc. formerly known as Home Shark, Inc.
(Lessee)
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
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Title: CFO
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LINC CAPITAL INC.
(Lessor)
By:
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Name:
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Title:
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LINC CAPITAL, INC. LINC Capital, Inc.
MASTER LEASE AGREEMENT ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, #▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
Lessee: Home Shark, Inc. Master Lease Agreement No. 7305 - 7265
Address: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Date: July 20, ▇▇▇▇
▇▇▇▇▇ ▇▇▇,
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
LINC Capital, Inc. ("Lessor") hereby leases to Lessee and Lessee leases from
Lessor, in accordance with the terms and conditions hereinafter set forth, the
equipment and property purchased by Lessor for lease to the Lessee hereunder
together with all replacement parts, additions, accessories, alterations and
repairs incorporated therein or now or hereafter affixed thereto Add-on Items
(as defined herein) (herein collectively referred to as the "Equipment")
described in each Schedule which may be executed by Lessor and Lessee from time
to time (individually a "Schedule" and collectively, the "Schedules"), each of
which is made a part hereof. For all purposes of this Master Lease Agreement
("Lease"), each Schedule relating to one or more items of Equipment shall be
deemed a separate lease incorporating all of the terms and provisions of this
Lease. In the event of a conflict between the terms of this Lease and the terms
and conditions of an Schedule, the terms and conditions of the Schedule shall
govern and control that Schedule.
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1. Term and Rental. The term of this Lease (the "Initial Lease Term") for
any item of Equipment shall be set forth in the Schedule relating to such item
of Equipment and shall commence (the "Commencement Date") on the Acceptance
Date. The "Acceptance Date" with respect to each Schedule shall be the
applicable of either: (1) the date of delivery to Lessee of all of the Equipment
to be leased thereunder; (2) in the case of Equipment which is the subject of a
sale and leaseback between Lessor and Lessee, the date upon which Lessor
purchases such Equipment from Lessee; or (3) in the case of Equipment requiring
installation, the date of installation of Equipment. If the Acceptance Date is
other than the first day of a calendar month, then the Commencement Date of the
Initial Lease Term set forth in any Schedule shall be the first day of the
calendar month following Lessee's acceptance of all Equipment listed on such
Schedule and Lessee shall pay to Lessor, in addition to all other sums due
hereunder, an amount equal to one-thirtieth of the amount of the average monthly
rental payment due or to become due hereunder multiplied by the number of days
from and including the Acceptance Date to the Commencement Date of the Initial
Lease Term set forth in the Schedule. During the entire Initial Lease Term and
any extension or renewal of the term of this Lease, Lessee agrees to pay the
total rental due hereunder which shall be the total amount of all rental
payments set forth in the Schedule plus such additional amounts as may become
due hereunder or pursuant to any written modification hereof or additional
written agreement hereto. Except as otherwise specified in the Schedule, rental
payments payable hereunder shall be due monthly and shall be payable in advance
on the first day of each month during the term of this Lease beginning with the
Commencement Date of the Initial Lease Term. All rental payments due hereunder
shall be sent to the address of the Lessor specified in this Lease or in the
Schedule or as otherwise directed by the Lessor in writing. Rental payments or
any other payments due hereunder not made by their scheduled due date shall be
overdue and shall be subject to a service charge in an amount equal to two
percent (2%) per month or the maximum rate permitted by law whichever is less
(the "Service Charge Rate") applied to amount of the overdue payments from the
date due until paid. If Lessor shall at any time accept a rental payment after
it shall become due, such acceptance shall not constitute or be construed as a
waiver of any or all of Lessor's rights hereunder, including without limitation
those rights of Lessor set forth in Sections 12 and 13 hereof.
2. Title. This is an agreement of lease only. Except as otherwise provided
in any applicable Schedule, Lessee shall have no right, title or interest in or
to the Equipment leased hereunder, except as to the lawful use thereof subject
to the terms and conditions of this Lease. All of the Equipment shall remain
personal property (whether or not the Equipment may at any time become attached
or affixed to real property). The Equipment is and shall remain the sole and
exclusive property of Lessor or its assignees. All replacement parts,
modifications, repairs, alterations, additions and accessories now or hereafter
incorporated in or affixed to the Equipment whether before or after the
Commencement Date (herein collectively call "Add-on Items") are hereby included
in the definition of "Equipment". All Add-on Items shall become the property of
Lessor upon being so incorporated or affixed to the Equipment and shall be
returned to Lessor as provided in Section 3 (other than alterations, additions
and accessions that are attached or affixed by Lessee with notice to Lessor
after the Commencement Date for which the Lessor has not given value or
purchased and which are readily removable by Lessee form the Equipment without
any diminution of value or functionality to the Equipment). Upon the request of
Lessor, Lessee will affix to the Equipment labels or other markings supplied by
Lessor indicating its ownership of the Equipment and shall keep the same affixed
for the entire term of this Lease. Lessee agrees to promptly execute and deliver
or cause to be executed and delivered to Lessor and Lessor is hereby authorized
to record or file, any statement and/or instrument reasonably requested by
Lessor for the purpose of showing Lessor's interest in the Equipment, including
without limitation, financing statements, security agreements, and waivers with
respect to rights in the Equipment from any owners or mortgagees of any real
estate where the Equipment may be located. In the event that Lessee fails or
refuses to execute and/or file Uniform Commercial Code financing statements or
other instruments or recordings which Lessor or its assignee reasonably deems
necessary to perfect or maintain perfection of Lessor's or its assignee's
interests hereunder, Lessee hereby appoints Lessor as Lessee's limited attorney-
in-fact to execute and record all documents necessary to perfect or maintain the
perfection of Lessor's interests hereunder. Lessee shall pay Lessor for any
costs or fees relating to any filings hereunder including, but not limited to
actual out of pocket costs, fees, searches, documentation preparation,
documentary stamps, privilege taxes and reasonable attorneys' fees. If any item
of Equipment includes computer software purchased by Lessor or for which Lessor
has given Lessee value, Lessee shall upon request made by Lessor, execute and
deliver and shall cause Seller (as hereinafter defined) to deliver all such
documents as are necessary to effectuate assignment of all software licenses to
Lessor.
3. Acceptance and Return of Equipment. Lessor shall, at any time prior to
unconditional acceptance of all Equipment by Lessee, have the right to cancel
this lease with respect to such Equipment (and if the Equipment or any portion
thereof has not previously been delivered, Lessor may refuse to pay for the
Equipment or any portion thereof or refuse to cause the same to be delivered)
if: (a) the Acceptance Date with respect to any item of Equipment to be leased
pursuant to any Schedule has not occurred within ninety (90) days of the
estimated Acceptance Date set forth in such Schedule or (b) there shall be, in
the reasonable judgement of Lessor, a material adverse change in the financial
condition or credit standing of Lessee or any guarantor of Lessee's performance
under this Lease since the date of the most recent financial statements of
Lessee or of such guarantor submitted to Lessor. Upon any cancellation by Lessor
pursuant to this Section or the provisions of any Schedule, Lessee shall
forthwith reimburse to Lessor all sums paid by Lessor with respect to such
Equipment plus all costs and expenses of Lessor incurred in connection with such
Equipment and any interest or rentals due
1
hereunder in connection with such Equipment and shall pay to Lessor all other
sums then due hereunder, whereupon if Lessee is not then in default and has
fully performed all its obligations hereunder, Lessor will, upon request of
Lessee, transfer to Lessee without warranty or recourse any rights that Lessor
may then have with respect to such Equipment
Lessee agrees to promptly execute and deliver to Lessor (in no event later than
15 days after the Acceptance Date) a confirmation by Lessee of unconditional
acceptance of the Equipment in the form supplied by Lessor (the "Equipment
Acceptance"). Lessee agrees, before execution of the aforesaid Equipment
Acceptance to inform Lessor in writing of any defects in the Equipment, or in
the installation thereof, which have come to the attention of Lessee or its
agents and which might give rise to a claim by Lessee against the Seller or any
other person. If Lessee fails to give notice to Lessor of any such defects or
fails to deliver to Lessor the Equipment Acceptance as provided herein, it shall
be deemed an acknowledgment by Lessee (for purposes of this Lease only) that no
such defects in the Equipment or its installation exist and it shall be
conclusively presumed, solely as between Lessor and its assignees and Lessee,
that such Equipment has been unconditionally accepted by Lessee for lease
hereunder.
Except as otherwise provided in an Schedule, upon expiration or the cancellation
or termination of the Lease with respect to any Equipment, Lessee shall return
the Equipment to Lessor as provided herein. Lessee shall provide Lessor with not
less than ninety (90) days prior written notice of its intention to return the
Equipment upon expiration of the Initial Lease Term. Upon expiration or the
cancellation or termination of the Lease with respect to any Equipment. Lessee
shall, at its own expense, assemble, crate, insure and deliver all of the
Equipment and all of the service records and all software and software
documentation subject to this Lease and any Schedules hereto to Lessor in the
same good condition and repair as when received, reasonable wear and tear
resulting only from proper use thereof excepted, to such reasonable destination
within the continental United States as Lessor shall designate with all packing,
drayage and freight charges to the return destination designated by Lessor pre-
paid by Lessee with evidence of transit insurance on all items of Equipment at
no less than their estimated fair market value as specified by Lessor. Lessee
shall, immediately prior to such return of each item of Equipment or commercial
unit of Equipment, provide to Lessor a letter from the manufacturer of the
equipment or another service organization reasonably acceptable to Lessor
certifying that said item is in good working order, with reasonable wear and
tear resulting only from proper use thereof excepted, whether such item is
eligible for a maintenance agreement by such manufacturer, and all software and
related attachments are included thereon If any computer software requires
relicensing when removed from Lessee's premises, Lessee shall bear all costs of
such relicensing. Except as otherwise expressly provided in the Schedule, if
Lessee fails for any reason to provide the notice set forth above or Lessee
fails to redeliver the Equipment back to Lessor in accordance with the terms set
forth above, Lessee shall pay to Lessor, at Lessor's election, an amount equal
to the highest monthly payment set forth in the Schedule for a period of not
less than three (3) months and at the end of such period of time ("Holdover
Period"). Except as otherwise expressly provided in the Schedule, if Lessee
fails or refuses to return the Equipment as provided herein at the end of any
Holdover Period, Lessee shall pay to Lessor, at Lessor's option, an amount equal
to the highest monthly rental payment set forth in the Schedule for each month
or portion thereof, until Lessee so returns the Equipment to Lessor. Should
Lessor permit use by Lessee of any Equipment beyond the Initial Lease Term, or,
if applicable, any exercised extension or renewal term, the lease obligations of
Lessee shall continue and such permissive use shall no be construed as a renewal
of the term thereof, or as a waiver of any right or continuation of any
obligation of Lessor hereunder, and Lessor may take possession of any such
Equipment at any time upon demand.
4. Disclaimer of Warranties. LESSEE HAS EXCLUSIVELY SELECTED AND CHOSEN THE
TYPE, DESIGN, CONFIGURATION, SPECIFICATION AND QUALITY OF THE EQUIPMENT HEREIN
LEASED AND THE VENDOR, DEALER, SELLER, MANUFACTURER OR SUPPLIER THEREOF (HEREIN
COLLECTIVELY CALLED "SELLER"), AS SET FORTH IN THE SCHEDULES. LESSOR MAKES NO
REPRESENTATION OR WARRANTY, EITHER EXPRESS OR IMPLIED, AS TO ANY MATTER
WHATSOEVER, INCLUDING WITHOUT LIMITATION THE CONDITION OF THE EQUIPMENT, ITS
MERCHANTABILITY OR ITS FITNESS, ADAPTABILITY, ANY IMPLIED WARRANTY OF QUIET
ENJOYMENT OR NON-INTERFERENCE OR SUITABILITY FOR ANY PARTICULAR PURPOSE, AND,
LESSEE LEASES HIRES AND RENTS THE EQUIPMENT AS IS, WHERE IS." Lessee understands
and agrees that neither Seller, nor any agent of Seller, is an agent of Lessor
or is in any manner authorized to waive or alter any term or condition of this
Lease. Lessor shall not be liable for any loss or damage suffered by Lessee or
by any other person or entity, direct or indirect or consequential, including,
but not limited to, business interruption and injury to persons or property,
resulting from non-delivery or late delivery, installation, failure or faulty
operation condition, suitability or use of the Equipment leased by Lessee
hereunder, or for any failure of any representations, warranties or covenants
made by the Seller. Any claims of Lessee, with respect to claims discussed in
the preceding sentences, shall not be made against Lessor but shall be made, if
at all, solely and exclusively against Seller, or any persons other than the
Lessor. Lessor hereby authorizes Lessee to enforce during the term of this
Lease, in its name, but at Lessee's sole effort and expense, all warranties,
agreements or representations, if any, which may have been made by Seller to
Lessor or to Lessee, and Lessor hereby assigns to Lessee solely for the limited
purpose of making and prosecuting any such claim, all rights which Lessor may
have against Seller for breach of warranty or other representation respecting
the Equipment.
5. Care, Transfer and Use of Equipment. Lessee, at its own expense, shall
maintain the Equipment in good operating condition, repair and appearance in
accordance with Seller's specifications and in compliance with all laws and
regulations applicable to the Equipment, Lessee and its business and shall
protect the Equipment from deterioration except for reasonable wear and tear
resulting only from proper use thereof. When generally offered with respect to
the Equipment, Lessee shall, at its expense, keep a maintenance contract in full
force and effect, throughout the term of this Lease and any Schedule hereto
unless otherwise agreed on the Schedule. The disrepair or inoperability of the
Equipment regardless of the cause thereof shall no relieve Lessee of the
obligation to pay rental hereunder. Lessee shall not make any modification,
alteration or addition to the Equipment (other than normal operation accessories
or controls). Lessee will not, and will not permit anyone other than the
authorized field engineering representatives of Seller or other maintenance
organization reasonably acceptable to Lessor to effect any inspection,
adjustment, preventative or remedial maintenance or repair to the Equipment.
Lessee may not (a) relocate or operate the Equipment at locations other than the
premises of Lessee specified in the applicable Schedule (the "Premises"), except
with Lessor's prior written consent, which shall not be unreasonably withheld if
such other location within the continental United States, or (b) SELL, CONVEY,
TRANSFER ENCUMBER, PART WITH POSSESSION OF, OR ASSIGN ANY ITEM OF EQUIPMENT OR
ANY OF ITS RIGHTS HEREUNDER, AND ANY SUCH PURPORTED TRANSACTION SHALL BE NULL
AND VOID AND OF NO FORCE OR EFFECT. In the event of a relocation of the
Equipment or any item
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thereof to which Lessor consents, all costs (including any additional property
taxes or other taxes and any additional expense of insurance coverage) resulting
from any such relocation, shall be promptly paid by Lessee upon presentation to
Lessee of evidence supporting such cost. Lessor shall have the right during
normal hours upon reasonable notice to Lessee, subject to applicable laws and
regulations, to enter Lessee's Premises in order to inspect, observe, affix
labels or other markings, or to exhibit the Equipment to prospective purchasers
or future lessees thereof, or to otherwise protect Lessor's interest therein.
6. Net Lease. THIS LEASE AND ANY SCHEDULE HERETO IS A NET LEASE, AND ALL
PAYMENTS HEREUNDER ARE NET TO LESSOR. All taxes, assessments, licenses, and
other charges (including, without limitation personal property taxes and sales
taxes, use taxes, leasing taxes and all other taxes based on gross receipts) and
penalties and interest on such taxes imposed, levied or assessed on the
ownership, possession, rental or use of the Equipment during the term of this
Lease and any Schedule hereto (except for Lessor's federal or state net income
taxes) shall be paid by Lessee when due and before the same shall become
delinquent, whether such taxes are assessed or would ordinarily be assessed
against Lessor or Lessee. To the extent possible under applicable law, for
personal property or ad valorem tax return purposes only, Lessee shall include
the Equipment on such reports and returns as may be required by local law, which
returns shall be timely filed by it. Lessee shall provide Lessor with evidence
that Lessee has complied with the foregoing provisions. In any event, Lessees
shall file all tax returns required for itself or Lessor with respect to the
Equipment and this Lease and Lessor hereby appoints Lessee as its attorney-in-
fact for such purpose. In case of failure by Lessee to so pay said taxes,
assessments, licenses or other charges, Lessor may pay all or any part of such
items, in which event the amount so paid by Lessor including any interest or
penalties thereon and reasonable attorney's fees incurred by Lessor in pursuing
its rights against Lessee or defending against any claims or defenses asserted
by or through Lessee shall be immediately paid by Lessee to Lessor as additional
rental hereunder. Lessee shall promptly pay all costs, expenses and obligations
of every kind and nature incurred in connection with the use or operation of the
Equipment which may arise or become due during the term of this Lease and any
Schedule hereto, whether or not specifically mentioned herein. In case of
failure by Lessee to comply with any provision of this Lease and any Schedule
hereto, Lessor shall have the right, but not the obligation, to effect such
compliance on behalf of Lessee. In such event, all costs and expenses incurred
by Lessor in effecting such compliance shall be immediately payable by Lessee to
Lessor as additional rental hereunder.
7. Indemnity. Lessee shall at its expense: (i) indemnify, protect and
defend Lessor's title to the Equipment from and against all persons claiming
against or through Lessee: (ii) at all times keep the Equipment then subject to
this Lease free from any and all liens, encumbrances attachments, levies,
executions, burdens, charges or legal process of any and every type whatsoever;
(iii) give Lessor immediate written notice of any breach of the Lease described
in clause (ii); and (iv) indemnify, protect and save Lessor harmless from any
loss, cost or expense (including reasonable attorney's fees) caused by the
Lessee's breach of any of the provisions of the Lease, whether incurred by
Lessor in pursuing its rights against Lessee or defending against any claims or
defenses asserted by or through Lessee. Lessee shall and does hereby agree to
indemnify, defend and hold Lessor and its assigns harmless from and against any
and all liability, loss, costs, injury, damage, penalties, suits, judgements,
demands, claims, expenses and disbursements (including without limitation,
reasonable attorneys' fees incurred by Lessor in pursuing its rights against
Lessee or defending against any claims or defenses asserted by or through
Lessee) of any kind whatsoever arising out of, on account of, or in connection
with this Lease and the Equipment leased hereunder, including, without
limitation its manufacture, selection, purchase, delivery, rejection,
installation, ownership, possession, leasing, renting, operation, control, use,
maintenance and the return thereof except for any such claims or damages from
Lessor's gross negligence or willful misconduct. This indemnity shall survive
the Initial Lease Term or earlier cancellation or termination of this Lease and
any Schedule hereto.
8. Insurance. Commencing on the date that risk of loss or damage passes to
Lessor from the Seller of any Equipment covered under this Lease and continuing
until Lessee has re-delivered possession of the Equipment to Lessor, Lessee
shall, at its own expense, keep the Equipment (including all Add-on Items
thereto) insured against all risks of loss or damage from every and any cause
whatsoever in such amounts (but in no event less than the greater of the
replacement value thereof or the amount set forth in any applicable Casualty
Schedule, whichever is higher) with such deductibles and exclusions as approved
by Lessor and in such form as is reasonably satisfactory to Lessor. All such
insurance policies shall protect Lessor and Lessor's assignee(s) as loss payees
as their interest may appear. Lessee shall also at its own expense, carry public
liability insurance, with Lessor and Lessor's assignee(s) as an additional
insured, in such amounts with such companies and in such form as is reasonably
satisfactory to Lessor, with respect to injury to person or property resulting
from or based in any way upon or in any way connected with or relating to the
installation, use or alleged use, or operation of any or all of the Equipment,
or its location or condition.
Not less than ten days prior to the Acceptance Date, Lessee shall deliver to
Lessor satisfactory evidence of such insurance and shall further deliver
evidence of renewal of each such policy not less than thirty (30) days prior to
expiration thereof. Each such policy shall contain an endorsement providing that
the insurer will give Lessor not less than thirty (30) days prior written notice
of the effective date of any alteration, change, cancellation, or modification
of such policy or the failure by Lessee to timely pay all required premiums,
costs, or charges with respect thereto. Upon Lessor's request, Lessee shall
cause its Insurance agent(s) to execute and deliver to Lessor Loss Payable
Clause Endorsement and Additional Insured Endorsement (bodily injury and
property damage liability insurance) forms provide to Lessees by Lessor. In case
of the failure to procure or maintain such insurance, Lessor shall have the
right, but not the obligation, to obtain such insurance and any premium paid by
Lessor shall be immediately due and payable by Lessee to Lessor as additional
rent hereunder. The maintenance of any policy or policies of insurance pursuant
to this Section shall not limit any obligation or liability of Lessee pursuant
to Sections 7 or 9 or any other provision of this Lease and any Schedule hereto.
9. Risk of Loss. Until such time as the Equipment is returned and delivered
to and accepted by Lessor at the expiration of this Lease, pursuant to the terms
of this Lease and any Schedule hereto, Lessee hereby assumes and shall bear the
entire risk of loss, damage, theft and destruction of the Equipment, or any
portion thereof, from any cause whatsoever ("Equipment Loss"). Without
limitation of the foregoing, no Equipment Loss shall relieve Lessee in any way
from its obligations hereunder. Lessee shall promptly notify Lessor in writing
of any Equipment Loss. In the event of any such Equipment Loss, Lessee shall:
(a) in the event Lessor determines such Equipment to be repairable, promptly
place at Lessee's expense, the Equipment in good repair, condition and working
order in accordance with Seller's specifications and to the satisfaction of
Lessor; or (b) in the event of an actual or constructive total loss of any item
of Equipment, at Lessor's option (i) promptly replaced at Lessee's expense, the
Equipment with like equipment of the same or a later model with the same Add-on
Items as the Equipment, and in good repair, condition and working order in
accordance with the Seller's specifications and to the satisfaction of Lessor;
or (ii) immediately pay to Lessor the amount obtained by multiplying the actual
Equipment Cost as specified in the applicable
3
Schedule by the percentage contained in any applicable Casualty Schedule for the
date of such Equipment Loss plus, any unpaid rentals or any amounts due
hereunder.
If no Casualty Schedule has been made a part of any applicable Schedule, an
amount equal to the present value of the total amount of unpaid rentals and all
other amounts due and to become due under any applicable Schedule during the
term thereof as of the date of any payment, discounted at a rate equal to
discount rate of the Federal Reserve Bank of Chicago as of the Commencement Date
of the Lease with respect to each applicable Schedule shall be paid to Lessor by
Lessee, plus an additional amount equal to the estimated fair market value of
the Equipment at the end of the Initial Lease Term applicable to such Equipment
(the "End of Term Value"). In no event shall the amount of such End of Term
Value for the Equipment be less than twenty percent (20%) of the actual cost of
the Equipment unless a purchase option is granted (or other end of term payment
is required) under this Lease for other than the fair market value of the
Equipment then the actual amount of such Purchase Option Price (or other end of
term payment) specified in the applicable Equipment Schedule shall be due and
payable to Lessor as the End of Term Value under this section or such lesser or
greater amount specified in the applicable Schedule.
In the event Lessee is required to repair or replace any such item of Equipment
pursuant to Subsections (a) or (b)(i) of the preceding sentence, the insurance
proceeds received by Lessor, if any, pursuant to Section 8, after the use of
such funds to pay any unpaid amounts then due hereunder, shall be paid to Lessee
or, if applicable, to a third party repairing or replacing the Equipment upon
Lessee's furnishing proof reasonably satisfactory to Lessor that such repair or
replacement has been completed in a reasonably satisfactory manner. In the event
Lessor elects option (b)(ii), Lessee shall be entitled to a credit against the
payment required by said Subsection in an amount equal to such insurance
proceeds actually received by Lessor pursuant to Section 8 on account of such
Equipment, and, upon payment by Lessee to Lessor of all of the sums required
pursuant to Subsection (b)(ii), the applicable Schedule shall terminate with
respect to such item of Equipment and Lessee shall be entitled to whatever
interest Lessor may have in such item AS IS, WHERE IS and WITH ALL FAULTS in its
then condition and location without warranties of any type whatsoever, express
or implied.
10. Covenants of Lessee. Lessee agrees that its obligations under this Lease
and any Schedule hereto, including without limitation, the obligation to pay
rental, are irrevocable and absolute, shall not ▇▇▇▇▇ for any reason whatsoever
(including any claims against Lessor), and shall continue in full force and
effect regardless of any inability of Lessee to use the Equipment or any part
thereof for any reason whatsoever including, without limitation, war, act of
God, storms, governmental regulations, strike or other labor troubles, loss,
damage, destruction, disrepair, obsolescence, failure of or delay in delivery of
the Equipment, or failure of the Equipment to properly operate for any cause. In
the event of any alleged claim (including a claim which would otherwise be in
the nature of a set-off) against Lessor, Lessee shall fully perform and pay its
obligations hereunder (including the payment of all rents, without set-off or
defense of any kind) and its only exclusive recourse against Lessor shall be by
a separate action. Lessee agrees to furnish promptly to Lessor the annual
financial statements of Lessee (and of any guarantors of Lessee's performance
under this Lease and any Schedule hereto), prepared in accordance with generally
accepted accounting principles and such interim financial statements of Lessee
as Lessor may reasonably require during the entire term of this Lease and any
Schedule hereto. Either independent certified public accountants or the Lessee's
chief financial officer as requested by Lessor shall certify all such annual
financial statements. Lessee, if requested by Lessor prior to the initial
purchase by Lessor of Equipment for lease hereunder, shall provide at Lessee's
expense an opinion of its counsel acceptable to Lessor affirming the covenants,
representations and warranties of Lessee under this Lease and any Schedule
hereto. So long as there are amounts due Lessor under this Lease, Lessor shall
supply Lessor with such other financial and operating performance data as is
provided to its outside investors or commercial lenders and, if applicable,
required to be provided to shareholders by the Security and Exchange Commission,
and Lessor shall immediately notify Lessor of any material adverse change in its
financial condition or business prospects.
11. Representations and warranties. In order to induce Lessor to enter into
this Lease and any Schedule hereto and to lease the Equipment to Lessee
hereunder, Lessee represents and warrants that: (a) Financial Statements. (i)
applications, financial statements, and reports which have been submitted by
Lessee and any Obligors (as hereinafter defined) to Lessor are, and all
information hereafter furnished by Lessee and Obligors to Lessor will be, true
and correct in all material respects as of the date submitted; (ii) as of the
date hereof, the date of any Schedule and any Acceptance Date, there has been no
material adverse change in any matter stated in such applications, financial
statements and reports; and, (iii) none of the foregoing omit or omitted to
state any material fact which would make any of the foregoing false or
misleading. (b) Organization. Lessee is an organizational entity described on
the signature page hereof and is duly organized, validly existing and is duly
qualified to do business and is in good standing or subsisting or in other
similar active status in each State in which the Equipment will be located. (c)
Authority. Lessee has full power, authority and right to execute, deliver and
perform this Lease and any Schedule hereto, and the execution, delivery and
performance hereof has been authorized by all necessary action of Lessee. (d)
Enforceability. This Lease and any Schedule or other document executed in
connection therewith has been duly executed and delivered by Lessee and any
Obligor and constitutes a legal, valid and binding obligation of Lessee and any
Obligor enforceable in accordance with its terms. (e) Consents. The execution,
delivery and performance of this Lease and any Schedule hereto does not require
any approval or consent of any stockholders, partners or proprietors or of any
trustee or holders of any indebtedness or obligations of Lessee, and will not
contravene any law, regulation, judgment or decree applicable to Lessee, or the
certificate or articles of incorporation, partnership agreement, by-laws or
other governing documents of Lessee, or contravene the provisions of, or
constitute a default under, or result in the creation of any lien upon any
property of Lessee under any mortgage, instrument or other agreement to which
Lessee is a party or by which Lessee or its assets may be bound or affected.
Except as disclosed, no authorization, approval, license, filing or registration
with any court or governmental agency or instrumentality is necessary in
connection with the execution, delivery, performance, validity and
enforceability of this Lease and any Schedule hereto. (f) Title. On each
Commencement Date, Lessor shall have good and marketable title to the items of
Equipment which is subject to this Lease and any Schedule hereto on such date,
free and clear of all liens, except the lien of Seller which will be released
upon receipt of payment. Lessee warrants that no party has a security interest
in the Equipment which will not be released on or before payment by Lessor to
Seller of the Equipment and that the Equipment is and shall at all times remain
personal property regardless of how it may be affixed to any real property. (g)
Litigation. There is no action, suit, investigation or proceeding by or before
any court, arbitrator, agency or governmental authority pending or to Lessee's
knowledge threatened against or affecting Lessee: (i) which involves the
Equipment or the transactions contemplated by this Lease and any Schedule
hereto; or (ii) which, if adversely determined, could have a material adverse
effect on the financial condition, business or operation of Lessee.
12. Events of Default. An event of default ("Event of Default") shall
4
occur hereunder if Lessee or any Obligor ("Obligor" shall include any guarantor
or surety of any obligations of Lessee to Lessor under this Lease and any
Schedule hereto): (i) fails to pay any installment of rent or other payment
required hereunder within five (5) days after its due date; or (ii) attempts to
or does remove from the Premises (except a relocation with Lessor's consent as
provided in Section 5), sell, transfer, encumber, part with possession of, or
sublet any item of the Equipment; or (iii) shall suffer or have suffered, in the
reasonable judgment of Lessor, a material adverse change in its financial
condition since the date of the last financial statements submitted to Lessor,
and as a result thereof Lessor in good ▇▇▇▇▇ ▇▇▇▇▇ itself to be insecure; or
(iv) breaches or shall have breached any representation or warranty made or
given by Lessee or Obligor in this Lease or in any other document furnished to
Lessor in connection herewith, or any such representation or warranty shall be
untrue or, by reason of failure to state amaterial fact or otherwise, shall
be misleading or any of the statements or other documents or information
submitted at any time heretofore or hereafter by Lessee or Obligor to Lessor
shall be untrue or, by reason of failure to state a material fact or otherwise,
shall be misleading or (v) fails to perform or observe any other covenant,
condition or agreement to be performed or observed by it hereunder, and such
failure or breach shall continue unremedied for a period of ten days after the
date on which notice thereof shall be given by Lessor to Lessee (unless such
remedial action cannot be completed within such ten day period but Lessee has in
good faith commenced to remedy such breach or failure and such remedy is in fact
achieved within a time period agreed to by Lessor); or (vi) shall become
insolvent or bankrupt or make an assignment for the benefit of creditors or
consent to the appointment of a trustee or receiver, or a trustee or receiver
shall be appointed for a substantial part of its property without its consent,
or bankruptcy or reorganization or insolvency proceeding shall be instituted by
or against Lessee or Obligor and Lessee fails to continue to pay all rentals
becoming due hereunder during the pendency of such proceedings and fails to
assume this Lease within sixty (60) days after the commencement of such
proceedings; or (vii) conveys, sells, transfers or assigns substantially all of
Lessee's or Obligor's assets or ceases doing business as a going concern, or, if
a corporation, ceases to be in good standing or files a statement of intent to
dissolve, or abandons any or all of the Equipment; or (viii) shall be in breach
of or default under any lease or other agreement at any time executed with
Lessor or any other lessor or with any lender to Lessee or Obligor such that
Lessee's obligations thereunder have been or are being accelerated.
13. Remedies. Upon the occurrence and during any continuance of an Event of
Default (the "Default Date") set forth in Section 12. Lessor may, in its sole
and absolute discretion, do any one or more of the following: (a) upon notice to
Lessee cancel all or any portion of this Lease or any Schedules executed
pursuant thereto; (b) enter Lessee's Premises and without removal of the
Equipment, render the Equipment unusable or, require Lessee to assemble the
Equipment and make unusable or, require Lessee to Assemble the Equipment and
make it available to Lessor at a place designated by Lessor, and/or dispose of
the Equipment by sale or otherwise (all of which determinations may be made by
Lessor in its sole and absolute discretion); (c) declare immediately due and
payable all sums due and to become due hereunder for the full term of the Lease
(including any renewal or purchase obligations which Lessee has contracted to
pay); (d) with or without canceling this Lease, recover from Lessee damages, in
an amount equal to the sum of: (i) all unpaid rent and other amounts that
became due and payable on, or prior to, the Default Date, (ii) the present value
of all future rentals and other amounts described in the Lease and not included
in (i) above discounted to the Default Date at a rate equal to the discount rate
of the Federal Reserve Bank of Chicago as of the Commencement Date of the Lease
with respect to each Schedule (which discount rate Lessee agrees is a
commercially reasonable rate which takes into account the facts and
circumstances at the time such Schedule commenced), (iii) all commercially
reasonable costs and expenses incurred by Lessor in enforcing Lessor's rights
under this Lease, or defending against any claims or defenses asserted by or
through Lessee, including but not limited to, costs of repossession, recovery,
storage, repair, sale, re-lease and reasonable attorneys' fees, (iv) the
estimated residual value of the Equipment as of the expiration of the Lease, (v)
any indemnity amount payable to Lessor hereunder; and (vi) interest on all of
the foregoing from the Default Date until the date payment is received by Lessor
at 2% per month or the highest rate permitted by law, whichever is less; (e)
exercise any other right or remedy which may be available to it under the
Uniform Commercial Code or any other applicable law.
If Lessor elects to dispose of any Equipment recovered from the possession of
Lessee after an Event of Default, Lessor shall dispose of such Equipment in a
commercially reasonable manner. Lessor reserves the right, in its sole and
absolute discretion, to control the timing and negotiate the terms of any re-
leasing or re-sale of any or all of the Equipment at a public auction or in a
private sale, at such time, on such term sand with such notice as Lessor shall
in its sole and absolute discretion deem commercially reasonable. In such event,
without any duty on Lessor's part to effect any such re-lease or sale of the
Equipment, Lessor will credit the present value of any proceeds from such sale
or re-lease actually received and retainable by it (net of any and all costs or
expenses) discounted from the date of Lessor's receipt thereof to the Default
Date at 2 1/2% in excess of the Prime Rate (or its equivalent) per annum in
effect at the First National Bank of Chicago on the date of such payment to the
amounts due to Lessor from Lessee under the provisions of (c), (d), and/or (e)
above. A cancellation of this Lease shall occur only upon notice by Lessor and
only as to such items of Equipment as Lessor specifically elects to cancel and
this Lease shall continue in full force and effect as to the remaining items of
Equipment, if any. If this Lease and/or any Schedule is deemed at any time to be
one intended as security, Lessee agrees that the Equipment shall secure, in
addition to the indebtedness set forth herein, any other indebtedness at any
time owing by Lessee to Lessor. No remedy referred to in this Section is
intended to be exclusive, but shall be cumulative and in addition to any other
remedy referred to above or otherwise available to Lessor at law or in equity.
No express or implied waiver by Lessor of any default shall constitute a waiver
of any other default by Lessee or a waiver of any of Lessor's rights.
14. Assignment by Lessor. LESSOR MAY (WITH OR WITHOUT NOTICE TO LESSEE) SELL,
TRANSFER, ASSIGN OR GRANT A SECURITY INTEREST IN ALL OR ANY PART OF ITS INTEREST
IN THIS LEASE, ANY SCHEDULE, ANY ITEMS OF EQUIPMENT OR ANY AMOUNT PAYABLE
HEREUNDER. In such an event, Lessee shall, upon receipt of written notice,
acknowledge any such sale, transfer, assignment or grant of a security interest
and shall pay its obligations hereunder or amounts equal thereto to the
respective transferee, assignee or secured party in the manner specified in any
instructions received from Lessor. Notwithstanding any such sale, transfer,
assignment or grant of a security interest by Lessor and so long as no Event of
Default shall have occurred hereunder, neither Lessor nor any transferee,
assignee or secured party shall interfere with Lessee's right of use or quiet
enjoyment of the Equipment. In the event of such sale, transfer, assignment or
grant of a security interest in all or any part of this Lease and any Schedule
hereto, or in the Equipment or in sums payable hereunder, as aforesaid, Lessee
agrees to execute such documents as may be reasonably necessary to evidence,
secure and complete such sale, transfer, assignment or grant of a security
interest and to perfect the transferee's, assignee's or secured party's interest
therein (with any filing fees at Lessor's expense) and Lessee further agrees
that the rights of any transferee, assignee or secured party shall not be
subject to any defense, set-off or counterclaim that Lessee may have against
Lessor or any other party, including the Seller, which defenses, set-offs and
counterclaims shall be asserted only against such party, and that any such
transferee, assignee or secured party shall have
5
all of Lessor's rights hereunder, but shall assume none of Lessor's obligations
hereunder. Lessee acknowledges that any assignment or transfer by Lessor shall
not materially change Lessee's duties or obligations under this Lease and shall
not materially increase the burdens and risks imposed on Lessee.
15. Miscellaneous. All notices and demands relating hereto shall be in
writing and sent by either any nationally recognized overnight air courier or by
certified mail, return receipt requested, to Lessor or Lessee at their
respective addresses above or shown in the Schedule, or at any other address
designated by notice served in accordance herewith. Notice by overnight air
courier shall be effective one (1) business day after delivery. Notice by
certified mail shall become effective five (5) business days after deposit in
the United States mail, with proper postage prepaid, addressed to the party
intended to be served at the address designated herein. All obligations of
Lessee shall survive the termination or expiration of this Lease and any
Schedule hereto. If more than one Lessee is named in this Lease, the liability
of each hereunder to Lessor shall be joint and several. Lessee shall, upon
request of Lessor from time to time, perform all acts and execute and deliver to
Lessor all documents which Lessor deems reasonably necessary to implement this
Lease and any Schedule hereto, including, without limitation, certificates
addressed to such persons as Lessor may direct stating that this Lease and the
Schedule hereto is in full force and effect, that there are no amendments or
modifications thereto, that Lessor is not in default hereof or breach hereunder,
setting forth the date to which rentals due hereunder have been paid, and
stating such other matters as Lessor may reasonably request. This Lease and any
Schedule hereto shall be binding upon the parties and their successors, legal
representatives and assigns. Lessee's successors and assigns shall include,
without limitation, a receiver, debtor-in-possession, or trustee of or for
Lessee. If any person, firm, corporation or other entity shall guarantee this
Lease and the performance by Lessee of its obligations hereunder, all of the
terms and provisions hereof shall be duly applicable to such Obligor.
16. Conditions Precedent to Leasing. (i) Lessor shall have no obligation to
purchase any Equipment for lease to Lessee under any Schedule hereunder unless
or until acceptable documentation, the form of which will be provided by Lessor
has been executed by Lessee and delivered to Lessor; (ii) Lessor has confirmed
with Lessee that no material adverse change in Lessee's financial condition and
business prospects has occurred prior to each purchase of Equipment.
17. Invalidity. In the event that any provision of this Lease and any
Schedule hereto shall be unenforceable in whole or in part, such provision shall
be limited to the extent necessary to render the same valid, or shall be excised
from this Lease or any Schedule hereto, as circumstances may require, and this
Lease and the applicable Schedule shall be construed as if said provision had
been incorporated herein as so limited, or as if said provision had not been
included herein, as the case may be without invalidating any of the remaining
provision hereof.
18. End of Term Options. Provided that the Lease has not been terminated and
that no Event of Default or event which, with notice or lapse of time or both,
would become an Event of Default shall have occurred and shall be continuing,
Lessee shall at the end of the Initial Lease Term of the first Schedule be
entitled to elect and to exercise one of the options, if any, indicated in the
applicable Schedule which election shall be binding on Lessee with respect to
all Schedules entered into between Lessor and Lessee under this Lease. The
foregoing options granted hereunder shall be exercised by written notice
delivered to Lessor by Lessee not more than 180 days and not less than ninety
(90) days prior to the expiration of the Initial Lease Term of the Equipment,
subject to Schedule No 001.
19. Progress Payments. If requested by Lessee, progress payments will be made
for any amount over the Minimum Invoice Amount specified on each Progress
Payment Authorization per invoice to vendors in accordance with Lessor's
standard procedures. Unless otherwise agreed by Lessor the minimum progress
payment amount shall not be less than the Minimum Progress Payment Amount
specified on the Progress Payment Authorization. Interim rent, on progress
payments, shall be payable from the date progress payments are made by Lessor to
the Commencement Date of the corresponding Schedule. Interim rent shall be
calculated at the daily equivalent of the Monthly Lease Rate Factor. Lessee
shall deliver to Lessor a Progress Payment Authorization, not less than 30 days
prior to the due date thereof and in a form acceptable to Lessor, to make a
progress payment and, provided on such date no Events of Default have occurred
and be continuing hereunder or under the Lease. Lessor shall make the progress
payment set forth to the manufacturer(s) or supplier(s) as set forth in such
authorization.
20. Law. This Lease and any Schedule hereto shall be binding only when
accepted by Lessor at its corporate headquarters in Illinois and shall in all
respects be governed and construed, and the rights and the liabilities of the
parties hereto determined, except for local filing requirements, in accordance
with the laws of the State of Illinois. LESSEE WAIVES TRIAL BY JURY AND SUBMITS
TO THE JURISDICTION OF THE FEDERAL DISTRICT COURT OR ANY STATE COURT LOCATED
WITHIN ▇▇▇▇ COUNTY IN THE STATE OF ILLINOIS AND WAIVES ANY RIGHT TO ASSERT THAT
ANY ACTION INSTITUTED BY LESSOR IN ANY SUCH COURT IS IN THE IMPROPER VENUE OR
SHOULD BE TRANSFERRED TO A MORE CONVENIENT FORUM.
Lessee's Initials _________
21. Amendments. This Lease and any Schedule hereto contain the entire
agreement between the parties with respect to the Equipment, this Lease and any
Schedule hereto and there is no agreement or understanding oral or written,
which is not set forth herein. This Lease and any Schedule hereto may not be
altered, modified, terminated or discharged except by a writing signed by the
party against whom such alteration, modification, termination or discharge is
sought.
Lessee's Initials _________
22. Lessee's Waivers. To the extent permitted by applicable law, Lessee
hereby waives any and all rights and remedies conferred upon a Lessee by Article
2A of the Uniform Commercial Code as adopted in any jurisdiction, including but
not limited to Lessee's rights to: (i) cancel this Lease; (ii) repudiate this
Lease; (iii) reject the Equipment; (iv) revoke acceptance of the Equipment; (v)
recover damages from Lessor for any breaches of warranty or for any other reason
related to the Equipment; (vi) claim a security interest in the Equipment in
Lessee's possession or control for any reason (vii) deduct all or any part of
any claimed damages resulting from Lessor's default, if any, under this Lease;
(viii) accept partial delivery of the Equipment (ix) "cover" by making any
purchase or lease of or contract to purchase or lease Equipment in substitution
for those due from Lessor; (x) recover any general, special, incidental, or
consequential damages for any reason whatsoever; and (xi) specific performance,
replevin, detinue, claim,
6
identified to this Lease. To the extent permitted by applicable law (unless
expressly otherwise agreed hereunder), 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 as set
forth in Paragraph 13 or which may otherwise limit or modify any of Lessor's
rights or remedies under Paragraph 13. Any action by Lessee against Lessor for
any default by Lessor under this Lease, including breach of warranty or
indemnity, shall be commenced within one (1) year after any such cause of action
accrues.
Lessee's Initials _________
23. Counterparts. This Lease may be executed in any number of counterparts,
each of which shall be deemed an original. Each Schedule shall be executed in
three (3) serially numbered counterparts each of which shall be deemed an
original but only counterpart number 1 shall constitute "chattel paper" or
"collateral" within the meaning of the Uniform Commercial Code in any
jurisdiction.
24. Addendum. ("X" if applicable) [__] See Addendum(s) attached hereto and
made a part hereof.
The person executing this Lease for and on behalf of Lessee warrants and
represents, which warranty and representation shall survive the expiration or
termination of this Lease, that this Lease and the execution hereof has been
duly and validly authorized by Lessee, constitutes a valid and binding
obligation of Lessee and that he has authority to make such execution for and on
behalf of Lessee.
IN WITNESS WHEREOF, this Lease has been executed by Lessee this 22 day
------
of July 19 98.
------------ ----
ACCEPTED AT SAN FRANCISCO, CA ACCEPTED AT CHICAGO, ILLINOIS
HOME SHARK, INC LINC CAPITAL, INC.
Lessee Lessor
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------- ------------------------------
Title: Chief Financial Officer Title: Senior V.P.
------------------------- ---------------------------
Date: 7/22/98 Date: 10/7/98
-------------------------- ----------------------------
7
CERTIFIED COPY OF RESOLUTION
----------------------------
Lease Contract No. 7265
I do hereby certify that I am the duly elected, qualified and acting Secretary
of iOWN, INC., a California corporation and as such, have custody of the records
of the Corporation including the minutes of the meetings of the Board of
Directors of the Corporation, and I do further certify that at a meeting of the
Board of Directors of said Corporation duly called and held on ________________
___________,19___, at which a quorum was present and acting throughout, the
following resolutions were duly adopted and that said resolutions are in full
force and effect as of the date hereof and have not been modified or rescinded
in any manner whatsoever.
RESOLVED: that the President, any Vice President, any Assistant Vice President,
the Treasurer, any Assistant Treasurer or ______________________________ or
______________________________, be and each of them is, authorized to execute
and deliver in the name and on behalf of the Corporation, agreements with LINC
Capital, Inc. (the "Company") providing for various financing arrangements with
the Company, including but not limited to the leasing of equipment by, and
financing the acquisition of equipment for, the Corporation, the borrowing of
monies and the pledging, mortgaging, or otherwise encumbering any or all of the
Corporation's assets as security therefore and the sale or assignment of certain
of the Corporation's assets pursuant to any sale and leaseback or other
financing arrangement, with or without recourse to the Corporation (all of the
foregoing are hereafter sometimes referred to collectively as "financing
arrangements"), all upon such terms and conditions and containing such
provisions as such officer(s), employee(s) or agent(s) may in his or their sole
discretion deem advisable, necessary or expedient; and
FURTHER RESOLVED: that the President, any Vice President, any Assistant Vice
President, the Treasurer, any Assistant Treasurer, or ______________________ or
_____________________________, be and each of them hereby is, authorized in the
name and on behalf of the Corporation to execute and deliver to the Company such
rental schedules, leases, security agreements, real estate mortgages, chattel
mortgages, installment purchase agreements, promissory notes, bills of sale,
certifications, documents, and instruments, and to do all other acts and things
and execute and deliver such other agreements as such officer(s), employee(s) or
agent(s} in his or their sole discretion determine to be necessary or required
in order to consummate and implement said financing arrangements; and
FURTHER RESOLVED: that the President, any Vice President, any Assistant Vice
President, the Treasurer, any Assistant Treasurer or ______________________ or
______________________________, be and each of them hereby is authorized to
execute and deliver in the name and on behalf of this Corporation, from time to
time, amendments, renewals or extensions of any or all documents previously
delivered to the Company, in such form and content as shall be approved by the
officer(s), employee(s) or agent(s) who execute the same with such execution to
be conclusive evidence of such approval; and
FURTHER RESOLVED: that the acts and doings of said officer(s), employee(s) or
agent(s) or any of them in respect to the subject matter hereof, and all of the
prior acts and doings of such officer(s), employee(s) or agent(s) of the
Corporation with the Company, and all agreements, written or oral, and any and
all instruments of any and every kind, nature, or description whatsoever
heretofore executed and delivered by the Corporation to the Company,
are hereby fully ratified, approved, adopted and confirmed, and declared to be
and represent binding obligations of the Corporation in accordance with the
respective terms and provisions thereof; and
FURTHER RESOLVED: that the authorizations herein set forth shall remain in full
force and effect until written notice of their modification or discontinuance
shall be given to and actually received by the Company at is offices in Chicago,
Illinois, but no such modification or discontinuance shall affect the validity
of the acts of any person, authorized to so act by these resolutions, performed
prior to the receipt of such notice by the Company.
I further certify that there is no provision in the charter or by-laws of the
Corporation limiting the power of the Board of Directors to pass the foregoing
resolutions, that the same are in conformity with the provision of said charter
and by-laws and that no shareholder consent is required to permit the action
provided for thereby.
I further certify that the persons whose names, titles and signatures appear
below are duly elected (or appointed), qualified and acting officer(s),
employee(s) or agent(s) of the Corporation and hold on the date of this
certificate, the office or position set forth opposite their respective names,
and the signatures appearing opposite their respective names are the genuine
signatures of such officer(s), employee(s), or agent(s).
NAME TITLE OR POSITION SIGNATURE
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ CFO & Secretary /s/ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇ CEO and President /s/ ▇▇▇▇▇▇ ▇▇▇▇
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---------------------- --------------------- ----------------------------
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of said
Corporation this 4 day of May , 19 99.
----- ------------ ----
iOWN, INC.
/s/ ▇▇▇▇▇▇ ▇▇▇▇
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President
/s/ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
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(Corporate Seal) Secretary
OFFICER'S CERTIFICATE
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(WARRANTS)
The undersigned hereby certifies to LINC Capital, Inc. ("LINC"), its successors
and assigns that s/he is the Secretary of iOwn, Inc., a California corporation
(the "Company") and that as such s/he is authorized to execute this certificate
on behalf of the Company. With respect to Master Lease Agreement No. 7265 dated
as of July 20, 1998 (together with all Exhibits, Schedules, or Addenda being
referred to herein as the "Lease Documents") between LINC, as Lessor and the
Company as Lessee, the undersigned further certifies, represents and warrants as
follows each capitalized term used herein having the same meaning given to it in
the Lease Documents unless otherwise specified herein):
1. RESTATEMENT OF REPRESENTATIONS. The representations and warranties of the
------------------------------
Company contained in the Lease Documents were true and correct when made, are
repeated and are true and correct at and as of the time of delivery hereof.
2. CORPORATE STATUS. The Company is a corporation duly organized and validly
----------------
existing under the laws of the State of its incorporation identified above. The
Company is in good standing under the laws of such Jurisdiction and each
jurisdiction where the Equipment is, or is to be located, and, where the
Company's ownership or lease of property or the conduct of its business requires
such qualification.
3. CORPORATE POWER AND AUTHORITY. The Company has full power and authority to
-----------------------------
own and hold Property under lease; to conduct its business as presently
conducted; and to enter into, carry out and perform its obligations under the
terms of the Lease Documents. The execution and delivery by the Company of the
Lease Documents have been duly authorized by all necessary action on the part of
the Company. The Lease Documents constitute the legal, valid and binding
obligation of the Company, enforceable in accordance with their respective
terms, except to the extent that the enforceability may be modified or limited
by bankruptcy, insolvency, and other similar laws affecting the enforcement of
LINC's or creditor's rights in general and except as may be limited by the
application of general principles of equity.
4. NO CONFLICTS. The execution, delivery and performance by the Company of the
------------
Lease Documents will not violate or contravene the Company's Articles of
Incorporation or By-Laws. Such transactions do not: (a.) contravene any law,
governmental rule, regulation or administrative order applicable to the Company;
(b.) do not and will not, in any material respect (separately or in the
aggregate), violate or contravene any provision of, or constitute a default
under, any indenture, mortgage, contract, agreement or other instrument to which
the Company is a party or to which the Company or its property is subject; or
(c.) violate or contravene any judgment, decree or order binding upon the
Company or to which its property is subject.
5. GOVERNMENTAL APPROVALS. No consent or approval of, giving of notice to,
----------------------
registration with, or taking of any other action in respect of, any Federal,
State, or other governmental authority or agency is required with respect to the
execution, delivery and performance by the Company of the Lease Documents; or,
if any such approval, notice, registration or action is required, it has been
obtained.
6. LITIGATION. There are no actions, suits or proceedings pending or threatened
----------
against or affecting the Company in any court or before any governmental
commission, board or authority which, if adversely determined, will have a
material adverse effect (separately or in the aggregate) on the ability of the
Company to perform its obligations under the any of Lease Documents.
7. DEFAULT. No event has occurred and is continuing which constitutes a default
-------
under any of the Lease Documents.
8. CONDITION OF THE EQUIPMENT. The Equipment is personal property and when
--------------------------
subject to use by the Company under the Lease Documents, will not be or become a
fixture under the laws of the State where it is, or will be, located.
9. CAPITAL STRUCTURE. As of the date hereof, and prior to the issuance of the
-----------------
Warrant, the capital structure of the Company or the affiliate of the Company
who is issuing the Warrant to LINC (the "Issuer") consists of the number and
classes of shares of the Issuer's capital stock, as set forth in the following
table, which are: (a.) authorized; (b.) issued and outstanding; (c.) reserved
for issuance upon the exercise of options, warrants and other rights agreements;
end (d.) reserved for issuance upon the conversion of convertible securities
(including convertible securities issuable upon the exercise of options,
warrants and other rights agreements). All such issued and outstanding shares
are duly authorized, validly issued, fully paid and non-assessable. Except with
respect to the shares set forth in the table, there are no outstanding options,
warrants, other rights agreements, conversion rights or other agreements for the
purchase or acquisition from Issuer of any shares of its capital stock.
Number of Shares Reserved
for Issuance Upon
-----------------------------------------
Exercise of
Number of Number of Options, Warrants Conversion of
Classes of Capital Stock Shares Shares Issued Other Rights Convertible
of Issuer Authorized And Outstanding Agreements Securities
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Common Stock
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Series Preferred Stock
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Series Preferred Stock
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Series Preferred Stock
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Series Preferred Stock
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Total Preferred Stock
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10. ISSUANCE AND STATUS OF WARRANT. The Warrant has been duly authorized and
------------------------------
validly issued. The issuance of the Warrant is not subject to any preemptive
rights or rights of first refusal granted by Issuer, other than rights that have
been waived. The shares of the Class of Stock issuable upon exercise of the
Warrant (the "Warrant Shares"), and the shares of the Class of Stock issuable
upon conversion of the Warrant Shares (the "Conversion
2
Shares"), have bean duly and validly reserved and are not subject to any
preemptive rights or rights of first refusal granted by Issuer or any other
person, other than rights that have been waived. Upon exercise of the Warrant in
accordance with the terms thereof, and upon conversion of the Warrant Shares to
Conversion Shares in accordance with Issuer's Articles/Certificate of
Incorporation, the Warrant Shares and the Conversion Shares, respectively, will
be duly authorized, validly issued, fully paid and non-assessable.
11. SECURITIES LAW COMPLIANCE. The issuance of the Warrant is in compliance with
-------------------------
or exempt from the registration requirements of the Securities Act of 1933, as
amended, and the registration or qualification requirements of applicable state
"Blue Sky" laws, and the regulations issued pursuant to such laws.
IN WITNESS WHEREOF, the undersigned has executed this certificate this
__________ day of ____________, 19 _____.
LESSEE: IOWN, inc.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
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Title: CFO
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3