Master Equipment Lease Agreement
This
Master Equipment Lease Agreement (this “Master Lease”) dated as of March
6,
2007
is made
by and between THE
FIFTH
THIRD LEASING COMPANY,
having
an office at ▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇,
and
Advanced
Photonix, Inc.,
a
corporation
organized under the laws of the State of Delaware
and
having a principal place of business at ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(“Lessee”).
TERMS
AND CONDITIONS OF LEASE
1. Lease.
Subject
to the terms and conditions set forth herein, Lessor and Lessee shall execute
and deliver Equipment Schedules (in form and substance as identified on
Attachment 1 herein) pursuant to this Master Lease (each, an “Equipment
Schedule”) and pursuant to each Equipment Schedule Lessor shall lease to Lessee
the equipment and other property described on such Equipment Schedule (together
with all parts, additions and accessories incorporated therein, and software
incorporated therein, the “Equipment”). Each Equipment Schedule will incorporate
by reference this Master Lease and will specify certain terms relating to the
leasing of the Equipment (this Master Lease as incorporated into each Equipment
Schedule, a “Lease”). Each Equipment Schedule, together with this Master Lease,
shall constitute a separate and enforceable Lease. In the event that any term
of
any Equipment Schedule conflicts with or is inconsistent with any term of this
Master Lease, the terms of the Equipment Schedule shall govern. As used herein,
the term “Item of Equipment”, as it relates to any Equipment, shall have the
meaning specified in the Equipment Schedule relating to such Equipment and
if no
such meaning is specified therein, “Item of Equipment” shall mean the Equipment
as a whole.
2. Term.
With
respect to any Item of Equipment, unless otherwise specified on an Equipment
Schedule, the initial term of lease shall commence on the earlier of (a) the
date an Acceptance Certificate (as defined in Section 5)
is
executed with respect to such Item of Equipment, and (b) unless the Lessee
rejects such Item of Equipment in a written notice to Lessor, ten (10) days
after delivery of such Item of Equipment (the “Delivery and Acceptance Date”)
and, unless earlier terminated as provided herein, shall expire on the
Expiration Date (as defined in the Equipment Schedule relating to such Item
of
Equipment); provided,
however, that
the
Base Lease Term or the then applicable Renewal Term shall be automatically
extended for successive one month periods until either (a) the end of the Notice
Period (as defined below) or (b) Lessor demanding return of the Equipment.
As
used herein, “Notice Period” shall mean the period ending on the latest of (i)
the Expiration Date, (ii) one hundred eighty (180) days after the delivery
by
Lessee of its final written notice of its election to purchase or return the
Equipment or to determine the Fair Market Value or Fair Market Rental Value,
as
applicable, in accordance with the options set forth in the Equipment Schedule
and (iii) one hundred eighty (180) days after the delivery by Lessee of its
election to return the Equipment. Lessee shall pay Basic Rent at the then
current rate for each month during the automatic renewal term. As used herein,
“Term” shall mean, collectively, the period from the Delivery and Acceptance
Date to the Expiration Date and all Renewal Terms (as defined in the Equipment
Schedule relating to such Equipment); provided,
however,
that
this Master Lease shall be effective from and after the date of execution
hereof. All tax and general indemnification obligations of Lessee hereunder
shall survive the expiration, cancellation or other termination of the Term,
and
all payment obligations shall survive until indefeasible receipt by Lessor
of
such payment obligations. Provided that no Default or Event of Default (each
as
defined in Section 16)
has
occurred and is continuing, Lessor shall not interfere with Lessee’s quiet use
and possession of the Equipment.
3. Rent.
Lessee
shall pay Lessor for the leasing of the Equipment hereunder the periodic rental
payments (“Basic Rent”) on the dates (each a “Rent Payment Date”) and in the
amounts set forth in the Equipment Schedule. Basic Rent together with all other
additional amounts as may from time to time be payable under this Lease and
the
other Lease Documents (as defined in Section 4)
is
referred to herein as “Rent”). Rent shall be due whether or not Lessee has
received any notice that such payments are due. All Rent shall be paid to Lessor
at its address set forth in the Equipment Schedule, or as otherwise directed
by
Lessor in writing. If any Rent is not paid when due (or within 10 days
thereafter) Lessee shall pay to Lessor a late payment fee equal to five percent
(5%) of the amount of such Rent.
4. Net
Lease.
Each
Lease shall constitute a non-cancelable net lease, it being the intention of
the
parties that all costs, expenses and liability associated with the Equipment
or
its lease shall be borne by Lessee. Lessee’s obligation to pay Rent and
otherwise to perform its obligations under this Lease and each other document
and agreement executed in connection with this Lease (together with the Lease,
collectively, the “Lease Documents”) shall be irrevocable, absolute and
unconditional and shall not be subject to defense, counterclaim, set-off,
diminution, abatement or recoupment for any reason whatsoever, and Lessee waives
all rights to terminate or surrender this Lease for any reason except as
expressly set forth in this Lease, including, without limitation, defect in
the
Equipment or non-performance by Lessor. All Rent shall be paid without reduction
or deduction whatsoever, including any reduction or deduction for any Tax (as
defined in Section 18).
5. Acceptance.
Upon
delivery of the Equipment, Lessee shall promptly inspect and test such Equipment
and, if acceptable to Lessee, accept such Equipment and deliver to Lessor a
certificate of acceptance, in form and substance reasonably satisfactory to
Lessor (“Acceptance Certificate”). Lessee represents that it has selected both
(a) the Equipment, and (b) the manufacturer, vendor or other supplier of the
Equipment (the “Supplier”) without assistance from Lessor and either is a party
to, or has received a copy of, each agreement and document by which Lessor
acquired the Equipment or the right to possession and use of the Equipment
(including any documents or agreements with the Supplier (collectively, the
“Supply Contract”)) prior to the Delivery and Acceptance Date. Lessee hereby
assumes the risks, burdens, and obligations to any manufacturer or vendor of
any
Item of Equipment on account of nondelivery, nonacceptance or nonperformance
of
the Equipment.
6. Disclaimer
of Warranties.
THE
EQUIPMENT IS BEING LEASED TO THE LESSEE BY THE LESSOR “AS IS, WHERE IS”. LESSOR
DOES NOT MAKE, HAS NOT MADE, SHALL NOT BE DEEMED TO MAKE OR HAVE MADE, AND
EXPRESSLY DISCLAIMS TO LESSEE ANY WARRANTY OR REPRESENTATION, EITHER EXPRESS
OR
IMPLIED, WRITTEN OR ORAL, WITH RESPECT TO THE EQUIPMENT LEASED HEREUNDER OR
ANY
COMPONENT THEREOF, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY AS TO DESIGN,
COMPLIANCE WITH ANY LAW, RULE, SPECIFICATION, OR CONTRACT PERTAINING THERETO,
QUALITY OF MATERIALS OR WORKMANSHIP, MERCHANTABILITY,
FITNESS FOR ANY PURPOSE,
USE OR
OPERATION, SAFETY, PATENT, TRADEMARK OR COPYRIGHT INFRINGEMENT, OR TITLE, IT
BEING AGREED THAT ALL SUCH RISKS, AS BETWEEN LESSOR AND LESSEE, ARE TO BE BORNE
BY LESSEE. Lessee’s execution and delivery of an Acceptance Certificate shall be
conclusive evidence as between Lessor and Lessee that the Items of Equipment
referred to therein are acceptable for all purposes hereof.
7. Conditions
Precedent.
The
obligation of Lessor to purchase the Equipment and to lease the same to Lessee
shall be subject to satisfaction (or waiver by Lessor) of each of the following
conditions, prior to the Delivery and Acceptance Date with respect to such
Equipment: (a) Lessor shall have received each of the following documents,
in
form and substance satisfactory to Lessor: (i) the Equipment Schedule relating
to such Equipment duly executed by Lessee; (ii) an Acceptance Certificate for
each Item of Equipment duly executed by Lessee; (iii) if requested by Lessor,
an
assignment of Lessee’s rights under the Supply Contract in form and substance
acceptable to Lessor and consent executed by Lessee and the Supplier; (iv)
the
original bills of sale evidencing chain of title from the manufacturer or
supplier to the Lessor relating to the Equipment to be leased hereunder;
(v)
a
certificate of the secretary or assistant secretary of Lessee dated the date
of
such Equipment Schedule certifying (A) the incumbency of each of the officers
executing the applicable Lease Documents, (B) a copy of the articles or
certificate of incorporation, by-laws or code of regulations, and other
applicable organizational documents of Lessee and (C) copies of any other
documents evidencing the authorization of the corporate officers on behalf
of
the Lessee to execute, deliver and perform this Lease and each other Lease
Document; (vi)
a
certificate dated the date of such Equipment Schedule of the president or chief
financial officer of Lessee certifying that, to the best of Lessee’s knowledge,
no Default or Event of Default has occurred and is continuing and no Event
of
Loss (as defined in Section 11)
has
occurred with respect to any Equipment identified in such Equipment Schedule;
and (vii) such other documents or agreements as may be required by the terms
of
the Equipment Schedule or as Lessor may reasonably request; (b) Lessor shall
have the right (by assignment or otherwise) to purchase the Equipment identified
in the applicable Equipment Schedule for a price not to exceed the Lessor’s
Capitalized Cost (as identified in such Equipment Schedule) and on terms and
conditions otherwise reasonably satisfactory to the Lessor; (c) Lessorby its
execution of the Acceptance Certificate shall be deemed to have authorized
Lessor to file Uniform Commercial Code financing statements or other records
relating to such Equipment in the jurisdiction in which Lessee is a registered
organization and such other jurisdiction as Lessor may reasonably require;
(d)
Lessor shall have received evidence of insurance policies covering the Equipment
which comply with the requirements of Section 10,
hereof;
(e) the representations and warranties of the Lessee contained herein and in
each of the Lease Documents shall be true and correct on and as of the Delivery
and Acceptance Date both with and without giving effect to the transactions
contemplated by the applicable Lease; (f) no Default or Event of Default shall
have occurred and be continuing or result from the transactions contemplated
by
the Lease; (g) Lessee shall have paid the fees and reasonable out-of-pocket
expenses of Lessor (including the fees and expenses of counsel to the Lessor
and
any filing or recordation fees) incurred in connection with the negotiation,
execution and delivery of the Equipment Schedule and other Lease Documents
relating thereto; and (h) no material adverse change in the existing or
prospective financial condition or results of operations of Lessee or any
guarantor of Lessee’s obligations hereunder (a “Guarantor”) which may affect the
ability of Lessee to perform its obligations under the Lease Documents, or
the
ability of any Guarantor to perform its obligations under any Guaranty, shall
have occurred since the date of the most recent audited financial statements
of
Lessee delivered to Lessor.
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8. Use
and Maintenance; Alterations.
(a) Lessee
covenants and agrees that it: (i) shall use the Equipment solely in the conduct
of its business, for the purpose, and in the manner, for which the Equipment
was
designed, (and shall not permanently discontinue use of the Equipment without
Lessor’s prior express written consent); (ii) shall operate, maintain, service
and repair the Equipment, and maintain all records and other materials relating
thereto, (A) in accordance and consistent with (1) the Supplier’s
recommendations all maintenance and operating manuals or service agreements,
whenever furnished or entered into, including any subsequent amendments or
replacements thereof, issued by the Supplier or other service provider
(including requiring all components, fuels and fluids installed in or used
on
the Equipment to meet the standards specified by the Supplier from time to
time), (2) the requirements of all applicable insurance policies, (3) the Supply
Contract, so as to preserve all of Lessee’s and Lessor’s rights thereunder,
including all rights to any warranties, indemnities or other rights or remedies,
(4) all applicable laws, and (5) the prudent practice of other similar companies
in the same business as Lessee, but in any event, to no lesser standard than
that employed by Lessee for comparable equipment owned or leased by it; and
(B)
without limiting the foregoing, so as to cause the Equipment to be in good
repair and operating condition, except for ordinary wear and tear resulting
despite Lessee’s full compliance with the terms hereof; (iii) shall not
discriminate against the Equipment with respect to scheduling of maintenance,
parts or service; (iv) shall not change the location of any Equipment as
specified in the Equipment Schedule without the prior written consent of Lessor;
and (v) to the extent requested by Lessor, shall cause each Item of the
Equipment to be continually marked, in a plain and distinct manner, with the
name of Lessor followed by the words “Owner and Lessor,” or other appropriate
words designated by Lessor on labels furnished by Lessor. If the location for
any Equipment specified in the Equipment Schedule is a facility leased by Lessee
or owned by Lessee subject to one or more mortgage liens, upon the request
of
Lessor, Lessee will obtain an Access and Waiver Agreement in form and substance
satisfactory to Lessor (as identified as Attachment 2 herein) from the landlord
or lessors or mortgagees of such facility.
(b) Lessee,
at its own cost and expense, will promptly replace all parts, appliances,
systems, components, instruments and other equipment (“Parts”) incorporated in,
or installed on, the Equipment which may from time to time become worn out,
lost, stolen, destroyed, seized, confiscated, damaged beyond repair or
permanently rendered unfit for use for any reason whatsoever. In addition,
in
the ordinary course of maintenance, service repair, overhaul or testing, Lessee
may remove any Parts, whether or not worn out, lost, stolen, destroyed, seized,
confiscated, damaged beyond repair or permanently rendered unfit for use,
provided
that
Lessee shall replace such Parts as promptly as practicable. All replacement
Parts shall be free and clear of all Liens (as defined in Section 8(c))
and
shall be in as good an operating condition as, and shall have a value and
utility at least equal to, the Parts replaced, assuming such replaced Parts
were
in the condition and repair required to be maintained by the terms hereof.
Any
replacement Part installed, or incorporated on, the Equipment shall be
considered an accession to such Equipment and title to such replacement Part
shall immediately vest in Lessor without cost or expense to Lessor.
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(c) Lessee
will keep the Equipment and its interest therein free and clear of all liens,
claims, mortgages, charges and encumbrances of any type regardless of how
arising (“Liens”) other than any Lien arising out of claims against Lessor not
relating to the lease of the Equipment to Lessee (“Permitted Liens”). Lessee
will defend, at its own expense, Lessor’s title to the Equipment from all such
Liens. If any Lien shall attach to any item of Equipment, Lessee will provide
written notification to Lessor within five (5) business days after Lessee
receives notice of any such attachment stating the full particulars thereof
and
the location of such Equipment on the date of such notification.
(d) At
its
sole option, Lessee may make any alteration, modification or attachment to
the
Equipment deemed appropriate by Lessee, provided
that
such alteration, modification, attachment is of a type which is readily
removable without damage to the Equipment does not decrease the value,
condition, utility or useful life of the Equipment or cause such Equipment
to
become “limited use property” (as defined in Revenue Procedure 2001-28, 2001-19
I.R.B. 1156 or any successor publication or Treasury Regulation issued pursuant
to the Internal Revenue Code of 1986 (as amended, supplemented or modified
from
time to time, the “Code”)), a fixture (as defined in the Uniform Commercial Code
as in effect in any applicable jurisdiction), or real property or affect the
insurability or impair any manufacturer’s warranty with respect to the
Equipment. All alterations, modifications and attachments of whatsoever kind
or
nature made to any item of Equipment that cannot be removed without damaging
or
reducing the functional capability, economic value or insurability of the item
of Equipment or impairing any manufacturer’s warranty shall only be made with
the prior written consent of the Lessor and shall be deemed to be part of the
Equipment. Under no circumstance shall any alteration, modification or
attachment be subjected by Lessee to any encumbrance other than this
Lease.
9. Assignment
and Sublease.
Lessee
shall not sublease or otherwise relinquish possession of any Item of Equipment,
or assign, transfer or encumber its rights, interests or obligations hereunder
or under any Equipment Schedule executed pursuant hereto unless expressly
permitted pursuant to the terms of the Equipment Schedule relating to such
Equipment. No assignment, transfer or sublease, in any event, shall relieve
Lessee of, and Lessee shall remain primarily liable for, its obligations under
each Lease Document.
10. Insurance.
(a) Lessee
shall provide, maintain and pay for insurance coverage with respect to the
Equipment, insuring against, among other things, the
loss,
theft, damage, or destruction of the Equipment, in an amount not less than
the
Stipulated Loss Value (as defined in the applicable Equipment Schedule) of
such
Equipment at any time; and public liability and property damage with respect
to
the use or operation of the Equipment, in the amounts set forth in the
applicable Equipment Schedule. All insurance against loss shall name Lessor
as
the sole loss payee and all liability insurance shall name Lessor and its
Assignees (as defined in Section 20)
and
their subsidiaries and affiliated companies, and their successors and assigns
as
additional insureds. All of such insurance shall be in form (including all
endorsements required by Lessor), and with companies, reasonably satisfactory
to
Lessor.
(b) All
policies of insurance required hereunder shall (i) provide that any
cancellation, expiration, lapse, or material modification shall not be effective
as to the Lessor for a period of thirty (30) days after receipt by Lessor of
written notice thereof; (ii) provide that premiums may be paid by the Lessor,
but without liability on the part of the Lessor for such premiums; (iii) be
primary without any right of set-off or right of contribution from any other
insurance carried by the Lessor; (iv) contain breach of warranty provisions
providing that, in respect of the interests of the Lessor, the insurance shall
not be invalidated by any action, inaction or breach of warranty, declaration,
or condition by the Lessee or any other person or by any fact or information
known to Lessor; and (v) waive any right of subrogation against Lessor. Prior
to
the Delivery and Acceptance Date for any Item of Equipment, and thereafter,
not
less than 15 days prior to each renewal or replacement of such insurance, Lessee
will deliver to Lessor certificates issued by the insurance carriers thereunder
evidencing the insurance required to be maintained pursuant to this
Lease.
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(c) The
proceeds (if any) of the insurance maintained by Lessee that are received with
respect to the loss or damage of any Equipment, shall be applied and paid
first,
to
Lessor for any amount then due and payable by Lessee under this Lease,
second,
if an
Event of Loss (as defined in Section 11)
has
occurred, to Lessor for the payment of Stipulated Loss Value or otherwise,
to
Lessee for its reasonable, documented, out-of-pocket costs to repair or replace
such item of Equipment pursuant to Section 11(b)(i),
to
the extent that such repairs or replacements were necessitated by the occurrence
of the loss for which such proceeds were paid, third,
to
Lessee to reimburse Lessee for any Stipulated Loss Value actually paid to,
and
retained by Lessor and fourth,
any
excess to Lessor. Proceeds of any liability insurance shall promptly be paid
to
the party entitled thereto.
11. Risk
of Loss; Damage to Equipment.
(a) Lessee
shall bear the entire risk of loss and damage to any and all Items of Equipment
from any cause whatsoever, whether or not insured against, during the Term
until
the Equipment is returned to Lessor in accordance with Section 14
hereof.
No loss or damage shall relieve Lessee of the obligation to pay Rent or of
any
other obligation under this Lease. An “Event of Loss” shall be deemed to have
occurred with respect to any Item of Equipment if such Item of Equipment or
any
material part thereof has been lost, stolen, requisitioned or condemned by
any
governmental authority, damaged beyond repair or damaged in such a manner that
results in an insurance settlement on the basis of an actual or arranged total
loss.
(b) Upon
any
loss or damage to any Item of Equipment not constituting an Event of Loss,
Lessee will promptly, and in any event within thirty (30) days of such loss
or
damage (or such longer period as Lessor shall determine in its sole discretion),
place such Item of Equipment in good condition and repair as required by the
terms of this Lease. If an Event of Loss to any Item of Equipment has occurred,
Lessee shall immediately notify Lessor of same, and at the option of Lessor,
Lessee shall: (i) not more than thirty (30) days following such Event of Loss
(or such longer period as Lessor shall determine in its sole discretion) replace
such Item of Equipment with replacement equipment (acceptable to Lessor) in
as
good condition and repair, and with the same value remaining useful economic
life and utility, as such replaced Item of Equipment immediately preceding
the
Event of Loss (assuming that such replaced Item of Equipment was in the
condition required by this Lease), which replacement equipment shall
immediately, and without further act, be deemed to constitute Items of Equipment
and be fully subject to this Lease as if originally leased hereunder and shall
be free and clear of all Liens; or (ii) pay to Lessor on the next succeeding
Rent Payment Date the sum of (A) all Rent due and owing hereunder with respect
to such Item of Equipment (at the time of such payment) including all Basic
Rent
payable on such Rent Payment Date plus (B) the Stipulated Loss Value as of
such
Rent Payment Date with respect to such Item of Equipment. Upon Lessor’s receipt
of the payment required under subsection (ii) above, Lessee shall be entitled
to
Lessor’s interest in such Item of Equipment, in its then condition and location,
“as is” and “where is”, without any representations or warranties, express or
implied.
12. Financial,
Other Information and Notices.
(a) Lessee
shall maintain a standard and modern system for accounting and shall furnish
to
Lessor:
5
(i) Within
forty-five (45) days after the end of each quarter, a copy of Lessee’s
internally prepared consolidated financial statements for that quarter and
for
the year to date in a form reasonably acceptable to Lessor, prepared and
certified as complete and correct, subject to changes resulting from year-end
adjustments, by the chief financial officer of Lessee.
(ii) Within
one
hundred twenty (120)
days
after the end of each fiscal year, a copy of Lessee’s consolidated year end
financial statements audited by a firm of independent certified public
accountants acceptable to Lessor (which acceptance shall not be unreasonably
withheld) and accompanied by an audit opinion of such accountants without
qualification.
All
such
financial statements shall be prepared in accordance with generally accepted
accounting principles, consistently applied. In the event Lessee is a publicly
held stock company domiciled in the United States, and Lessee files its
financial statements on public record in accordance with the requirements set
forth by the Securities and Exchange Commission, then Lessor shall deem Lessee
to be in compliance with the financial reporting timing requirements set forth
above.
(b) Lessee
shall provide prompt written notice to Lessor (i) of any Event of Default (ii)
of any loss or damage to any Item of Equipment or any Event of Loss with respect
to any Item of Equipment, and (iii) any existing or threatened investigation,
claim or action by any governmental authority which could adversely affect
the
Equipment or this Lease.
(c) Lessee
shall furnish such other information as Lessor may reasonably request from
time
to time relating to the Equipment, this Lease or the operation or condition
of
Lessee including, without limitation, such additional financial statements
of
the Lessee for such periods as Lessor may request.
13. Inspections.
Lessor
may from time to time during Lessee’s normal business hours, inspect the
Equipment and Lessee’s records with respect thereto in a reasonable manner.
Lessee shall cooperate with Lessor in scheduling such inspection and in making
the Equipment available for inspection by Lessor or its designee at a single
location as reasonably specified by Lessee. Lessee will, upon reasonable
request, provide a report on the condition of the Equipment, a record of its
maintenance and repair, a summary of all items suffering an Event of Loss,
a
certificate of no Event of Default, or such other information or evidence of
compliance with Lessee’s obligations under the Lease as Lessor may reasonably
request.
14. Condition
Upon Return.
At the
expiration of the Term, unless Lessee has elected to purchase the Equipment
in
accordance with the terms of the Equipment Schedule, Lessee shall promptly,
at
its own cost and expense: (a) perform any testing and repairs required to place
each Item of Equipment in the same condition and appearance as when received
by
Lessee (reasonable wear and tear excepted) and in good working order for its
originally intended purpose and eligible for manufacturer’s maintenance (if
available), free of all Lessee’s markings and free of all Liens other than
Permitted Liens; (b) if de-installation, disassembly or crating is required,
cause such Items of Equipment to be de-installed, disassembled and crated by
an
authorized manufacturer’s representative or such other service person as is
reasonably satisfactory to Lessor; and (c) return such Items of Equipment in
the
condition and in the manner specified in the Equipment Schedule (collectively,
the “Return Condition”). The Equipment, as returned, will include related
maintenance logs, operating manuals, and other related materials. All operating
manuals for the Equipment must be returned to Lessor undamaged and containing
all pages. If lost or destroyed, Lessee shall, at its own expense, provide
replacement operating manuals. Lessor may, but is not required to, inspect
the
Equipment prior to its return. If Lessor determines that the Equipment does
not
conform to the Return Condition, Lessor will promptly notify Lessee of such
determination specifying the repairs or refurbishments needed to place the
Equipment in the Return Condition. Lessor may, at its option, either require
Lessee to effect such repairs or itself effect such repairs. In either case,
all
costs associated with any repairs and inspections will be paid by Lessee. Until
Lessee has returned the Equipment in compliance with the requirements of this
Lease, the Lease shall continue in full force and effect and Lessee shall
continue to pay Rent notwithstanding any expiration or termination of the Term
through and including the date on which the Equipment is accepted for return
by
Lessor as conforming with the Return Condition.
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15. Lessee’s
Representations and Warranties.
Lessee
represents and warrants as of the date of execution and delivery of this Master
Lease and each Equipment Schedule as follows: (a) Lessee is a corporation
organized under the laws of the State of Delaware,
having
a principal place of business at ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
duly
organized, validly existing under the laws of the jurisdiction of its
organization with full power to enter into and to pay and perform its
obligations under the Equipment Schedule and this Lease as incorporated therein
by reference, and is duly qualified or licensed in all other jurisdictions
where
its failure to so qualify would adversely affect the conduct of its business
or
its ability to perform any of its obligations under or the enforceability of
this Lease; (b) each Equipment Schedule, this Master Lease and all other Lease
Documents have been duly authorized, executed and delivered by Lessee, are
valid, legal and binding obligations of Lessee, are enforceable against Lessee
in accordance with their terms and do not and will not contravene any provisions
of or constitute a default under Lessee’s organization documents, any agreement
to which it is a party or by which it or any of its property is bound, or any
applicable law, regulation or order of any governmental authority; (c) Lessor’s
right, title and interest in and to the Equipment and the Rent therefrom will
vest in Lessor upon Lessee’s acceptance of the Equipment for lease hereunder and
will not be affected or impaired by the terms of any agreement or instrument
by
which Lessee or any of its property is bound; (d) no approval of, or filing
with, any governmental authority or other person is required in connection
with
Lessee’s entering into, or the payment or performance of its obligations under,
this Lease and the other Lease Documents; (e) there are no suits or proceedings
pending or, to the knowledge of Lessee, threatened, before any court or
governmental agency against or affecting Lessee which, if decided adversely
to
Lessee, would adversely affect the conduct of its business or its ability to
perform any of its obligations under or the enforceability of this Lease; (f)
the financial statements of Lessee which have been delivered to Lessor have
been
prepared in accordance with generally accepted accounting principles
consistently applied, and fairly present Lessee’s financial condition and the
results of its operations as of the date of and for the period covered by such
statements (subject to customary year-end adjustments), and since the date
of
such statements there has been no adverse change in such financial condition
or
operations; (g) Lessee’s full and correct legal name is set forth on the
signature page hereof and Lessee will not change its legal name or the location
of its jurisdiction of organization without giving to Lessor at least thirty
(30) days prior written notice thereof; (h) the Equipment will always be used
for business or commercial, and not personal, purposes; (i) Lessee is not in
default under any obligation for borrowed money, for the deferred purchase
price
of property or any lease agreement which, either individually or in the
aggregate, would have an adverse effect on the condition of its business or
its
ability to perform any of its obligations under or the enforceability of this
Lease; (j) under the laws of the jurisdiction(s) in which the Equipment is
to be
located, the Equipment consists solely of personal property and not fixtures;
and (k) Lessee is, and will remain, in full compliance with all laws and
regulations applicable to it including without limitation, (i) ensuring that
no
person who owns a controlling interest in or otherwise controls Lessee is or
shall be (A) listed on the Specially Designated National and Blocked Person
List
maintained by the Office of Foreign Assets Control (“OFAC”), Department of the
Treasury and/or any other similar lists maintained by OFAC pursuant to any
authorizing statute, executive order or regulations or (C) a person designated
under Section 1(b), (c) or (d) of Executive Order No. 13224 (September 23,
2001), any related enabling legislation or any other similar executive order
and
(ii) compliance with all applicable Bank Secrecy Act (“BSA”) laws, regulations
and government guidance on BSA compliance and on the prevention and detection
of
money laundering violations.
Lessee’s
representations and warranties shall survive termination or expiration of the
Lease.
7
16. Events
of Default and Remedies.
(a)
Each
of the following events constitutes an “Event of Default” hereunder and any
event that, with the passage of time or the giving of notice, or both, would
constitute an Event of Default shall constitute a “Default” hereunder: (i)
Lessee fails to pay any Rent when due under this Lease and such failure
continues for a period of ten (10) days; (ii) any representation or warranty
made by Lessee in the Lease or in any other Lease Document shall at any time
prove to have been incorrect in any material respect as and when made; (iii)
Lessee fails (A) to obtain and maintain the insurance coverage required
herein; or (B) fails to observe or perform any other covenant, condition or
agreement under this Lease and, in the case of clause (B), such failure
continues unremedied for a period of fifteen (15) days unless Lessor waives
such
failure in Lesor’s sole discretion; (iv) Lessee or any Guarantor shall have
consolidated with, merged with or into, or conveyed, sold or otherwise
transferred all or substantially all of its assets or shall have failed to
maintain its corporate existence; (v) Lessee or any Guarantor (A) ceases doing
business as a going concern; (B) makes an assignment for the benefit of
creditors or admits in writing its inability to pay its debts as they mature
or
generally fails to pay its debts as they become due; (C) initiates any voluntary
bankruptcy, reorganization, insolvency or similar proceeding; (D) fails to
obtain the discharge of any bankruptcy, reorganization, insolvency or similar
proceeding initiated against it by others within sixty (60) days of the date
such proceedings were initiated; (E) requests or consents to the appointment
of
a trustee, custodian or receiver or other officer with similar powers for itself
or a substantial part of its property; or (F) a trustee, custodian or receiver
or other officer with similar powers is appointed for itself or for a
substantial part of its property; (vi) Lessee fails to return the Equipment
or
fails to return the Equipment in the required condition at the expiration of
the
Term; (vii) a default shall have occurred and be continuing under any contract,
agreement or document between Lessee and any of its other creditors, (viii)
a
default shall have occurred and be continuing under any contract, agreement
or
document between Lessee or any Guarantor and Lessor or any affiliate of Lessor;
(ix) if Lessee’s obligations are guaranteed by any other party, an “Event of
Default” (under and as defined in the Guaranty executed by such Guarantor) shall
occur; (x) a material adverse change in Lessee’s existing or prospective
financial condition or results of operations since the date hereof which may
affect the ability of Lessee to perform its obligations under the Lease
Documents shall occur and be continuing; or (xi) the
individuals who as of the date of this Agreement are members of the Board of
Directors of the Lessee (the “Incumbent Board”) cease for any reason to
constitute at least a majority of the Board of Directors; provided, however,
that if the election, or nomination for election by the Lessee’s shareholders,
of any new director was approved by a vote of at least a majority of the
Incumbent Board, such new director shall, for purposes of this Agreement, be
considered as a member of the Incumbent Board.
(b) Upon
the
occurrence of an Event of Default, Lessor may exercise any one or more of the
following remedies and any additional rights and remedies permitted by law
(none
of which shall be exclusive) and shall be entitled to recover all its reasonable
costs and expenses including incidental and consequential damages (as described
in Section 2A-530 of the Uniform Commercial Code) and attorneys’ fees in
enforcing its rights and remedies:
(i) Lessee
shall upon demand assemble or cause to be assembled any or all of the Equipment
at a location designated by Lessor; and/or to return promptly, at Lessee’s
expense, any or all of the Equipment to Lessor at such location, in the
condition and otherwise in accordance with all of the terms of Section 14
hereof; and/or
(ii) Lessor
may itself or by its agents without breach of the peace or with court order
or
other process of law, enter upon the premises of Lessee or any other location
where the Equipment is located and take possession of and render unusable by
Lessee any or all of the Equipment, wherever it may be located, without any
court order or other process of law and without liability for any damages
occasioned by such taking of possession; and/or
(iii) Sell,
re-lease or otherwise dispose of any or all of the Equipment, whether or not
in
Lessor’s possession, at public or private sale with or without notice to Lessee,
with the right of Lessor to purchase and apply the net proceeds of such
disposition, after deducting all costs of such disposition (including but not
limited to costs of transportation, possession, storage, refurbishing,
advertising and brokers’ fees), to the obligations of Lessee under this Lease,
with Lessee remaining liable for any deficiency and with any excess being
retained by Lessor, or retain any and all of the Equipment; and/or
8
(iv) Cancel
such Equipment Schedule as to any or all of the Equipment; and/or
(v) Proceed
by appropriate court action, either at law or in equity (including an action
for
specific performance), to enforce performance by Lessee or to recover damages
associated with such Event of Default; or exercise any other right or remedy
available to Lessor at law or in equity; and/or
(vi) By
offset, recoupment or other manner of application, apply any security deposit,
monies held in deposit or other sums then held by Lessor or any affiliate of
Lessor, and with respect to which Lessee has an interest, against any
obligations of Lessee arising under this Lease or any other Lease Document,
whether or not Lessee has pledged, assigned or granted a security interest
to
Lessor in any or all such sums as collateral for said obligations.
(c) In
addition to the foregoing, Lessee shall pay to Lessor on demand the sum of
(i)
any and all Rent which is then due or which has accrued to the date of demand
and (ii) at Lessor’s option (A) an amount equal to the Stipulated Loss Value (as
set forth in the related Equipment Schedule) as of the Rent Payment Date on
or
immediately preceding the date of demand for the Items of Equipment as Lessor
shall specify or (B) all Basic Rent and all other sums, including any tax
indemnities becoming due as a result of such Event of Default, for the Term
(including any mandatory Renewal Term) and all amounts due upon the expiration
of the Term including any return fees and/or any amounts due with respect to
the
mandatory purchase of the Equipment becoming due under this Lease from the
date
of demand to the Expiration Date for such Items of Equipment plus the assumed
residual value of such Equipment (as determined by Lessor). The Lessor and
Lessee agree that Lessor shall be entitled to such amount as damages for loss
of
bargain and not as a penalty and that such amount is reasonable in light of
the
anticipated harm to Lessor caused by an Event of Default.
(d) If
Lessee
pays the full amount referred to in Section 16(c) to Lessor prior to the
termination of this Lease as it relates to such Items of Equipment, title to
the
relevant Equipment shall immediately vest in Lessee without representation
or
warranty by Lessor. If Lessee fails to pay such amount and Lessor subsequently
sells, releases or otherwise disposes of such Items of Equipment, the amount
due
from Lessee under Section 16(c) shall be reduced by an amount equal to (i)
the
actual cash proceeds received and retained by Lessor upon any sale or
disposition or (ii) if Lessor leases such Equipment by a lease agreement
substantially similar to this Lease, the present value of the rents (discounted
at the Prime Rate as announced by Fifth Third Bank and in effect at the time
of
demand plus 2.00%) payable under such subsequent Lease for the remaining Term
of
this Lease (without regard to any Renewal Terms other than the then current
Renewal Term (if applicable)), in each case, net of all costs and expenses
incurred in connection with such sale, disposition or lease including any
incidental damages.
(e) A
cancellation or termination hereunder shall occur only upon written notice
by
Lessor to Lessee, and only with respect to such Items of Equipment as Lessor
specifically elects to cancel or terminate by such notice. Except as to any
such
Items of Equipment with respect to which there is a cancellation or termination,
this Lease shall remain in full force and effect and Lessee shall be and remain
liable for the full performance of all its obligations under this
Lease.
(f) Lessee
shall indemnify, defend and hold Lessor harmless for any loss, personal injury
(including death), or damage to property, suffered by Lessor, its employees
or
any of its agents in connection with its entry onto the premises of Lessee
or
any third party hereunder. Each of the rights and remedies of Lessor hereunder
and under the other Lease Documents is in addition to all of its other rights
and remedies hereunder, under the other Lease Documents and under applicable
law
and nothing in this Lease or any other Lease Document shall be construed as
limiting any such right or remedy. Lessor’s failure to exercise or delay in
exercising any right, power or remedy available to Lessor shall not constitute
a
waiver or otherwise affect or impair its rights to the future exercise of any
such right, power or remedy. Waiver by Lessor of any Event of Default shall
not
be a waiver by Lessor of any other or subsequent Events of Default.
9
17. General
Indemnification.
Lessee
shall pay, and shall indemnify and hold Lessor, its directors, officers, agents,
employees, successors and assigns (each an “Indemnitee”) harmless on an
after-tax basis from and against, any and all liabilities, causes of action,
claims, suits, penalties, damages, losses, costs or expenses (including
attorneys’ fees), obligations, liabilities, demands and judgments, and Liens, of
any nature whatsoever (collectively, a “Liability”) arising out of or in any way
related to: (a) the Lease Documents, (b) the manufacture, purchase,
ownership, title, selection, acceptance, rejection, possession, lease, sublease,
operation, use, maintenance, documenting, inspection, control, loss, damage,
destruction, removal, storage, surrender, sale, use, condition, delivery,
nondelivery, return or other disposition of or any other matter relating to
any
Item of Equipment or any part or portion thereof (including, in each case and
without limitation, latent or other defects, whether or not discoverable, any
claim for patent, trademark or copyright infringement) and any and all
Liabilities in any way relating to or arising out of injury to persons,
properties or the environment or any and all Liabilities based on strict
liability in tort, negligence, breach of warranties or violations of any
regulatory law or requirement, (c) a failure to comply fully with applicable
law
and (d) Lessee’s failure to perform any covenant, or Lessee’s breach of any
representation or warranty, hereunder; provided,
that the
foregoing indemnity shall not extend to the Liabilities to the extent resulting
solely from the gross negligence or willful misconduct of an
Indemnitee.
18. General
Tax Indemnification.
Lessee
shall pay when due and shall indemnify and hold each Indemnitee harmless from
and against (on an after-tax basis) any and all taxes, fees, withholdings,
levies, imposts, duties, assessments and charges of any kind and nature
(“Taxes”) arising out of or related to this Lease or any other Lease Document
(together with interest and penalties thereon and including, without limitation,
sales, use, gross receipts, personal property, real property, real estate
excise, ad
valorem,
business and occupational, value added, leasing, leasing use, documentary,
stamp
or other taxes imposed upon or against any Indemnitee, Lessee or any Equipment
by any governmental authority with respect to any Equipment or the
manufacturing, ordering, sale, purchase, shipment, delivery, acceptance or
rejection, ownership, titling, registration, leasing, subleasing, possession,
use, operation, removal, return or other dispossession thereof or upon the
rents, receipts or earnings arising therefrom or upon or with respect to this
Lease, whether payable at the inception of a Lease, during the Term thereof
or
at the expiration thereof, excepting only all United States federal, state
and
local taxes based on or measured by Lessor’s net income. Whenever this Lease or
any other Lease Document terminates as to any Item of Equipment, Lessee shall,
upon written request by Lessor, advance to Lessor the amount estimated by Lessor
to be the personal property or other taxes on such Item of Equipment which
are
not yet payable, but for which Lessee is responsible. Lessor shall, at Lessee’s
request, provide Lessee with Lessor’s method of computation of any estimated
taxes.
Except
as otherwise provided in the Equipment Schedule relating to any Equipment,
upon
receipt of any tax ▇▇▇▇ relating to such Equipment from a relevant taxing
authority, Lessor will pay the Tax identified on such tax ▇▇▇▇. Lessee will,
on
demand, (a) reimburse Lessor for the amount of such Tax paid to such taxing
authority and (b) pay to Lessor a fee (as identified by Lessor from time to
time) relating to the administration of such payment.
10
19. Ownership.
Title
to the Equipment shall at all times remain in Lessor, and Lessee shall acquire
no ownership, title, property, right, equity or interest in the Equipment other
than its leasehold interest solely as Lessee subject to all the terms and
conditions hereof. This Lease, is intended to be a “finance lease” solely for
the purposes of Article 2A of the Uniform Commercial Code as that term is
defined in Article 2A of the Uniform Commercial Code. To the extent permitted
by
applicable law, Lessee (a) waives any and all rights and remedies of Lessee
under Sections 2A-508 through 2A-522 of the Uniform Commercial Code and (b)
any
rights now or hereafter conferred by statute or otherwise to recover incidental
or consequential damages from Lessor for any breach or any other reason
whatsoever. If, notwithstanding the express intent of the parties, a court
of
competent jurisdiction determines that any Equipment Schedule is not a “finance
lease”, the parties agree that in such event (i) (A) in order to secure the
prompt payment of Rent under and with respect to this Lease, and the performance
and observance by Lessee of all the agreements, covenants and provisions hereof
(collectively, the “Obligations”), Lessee hereby grants to Lessor a first
priority security interest in all of Lessee’s right, title and interest in the
following (whether now existing or hereafter created and whether now owned
or
hereafter acquired): (1) the Equipment (including, without limitation, all
inventory, equipment, fixtures or other property comprising the same), and
general intangibles relating thereto, (2) additions, attachments, accessories
and accessions thereto whether or not furnished by the Supplier of such
Equipment, (3) all subleases (including the right to receive any payment
thereunder and the right to make any election or determination or give any
consent or waiver thereunder), chattel paper, accounts, security deposits and
bills of sale relating thereto, (4) any and all substitutions, replacements
or
exchanges for any such Equipment or other collateral, and (5) any and all
products and proceeds of any collateral hereunder (including all insurance
and
requisition proceeds and all other payments of any kind with respect to the
Equipment and other collateral in and against which a security interest is
granted hereunder and (B) Lessee agrees that with respect to the Equipment,
in
addition to all of the other rights and remedies available to Lessor hereunder
upon the occurrence of an Event of Default, Lessor shall have all of the rights
and remedies of a secured party under the Uniform Commercial Code; and (ii)
the
original principal amount of the obligations hereunder shall be an amount equal
to the Lessor’s Capitalized Cost, and that such principal amount shall accrue
interest at the lesser of (x) the maximum lawful rate permitted by applicable
law or (y) the implicit interest rate reflecting Lessor’s financial assumptions
at the time of the execution of the Lease (including any assumed residual value
at the end of the Term as determined by Lessor. Lessee hereby authorizes Lessor
to file, solely at the expense of Lessee, any Uniform Commercial Code financing
statements or other similar documents that Lessor reasonably deems necessary
or
advisable to protect its interest. Lessee agrees promptly to execute and deliver
to Lessor such further documents or other assurances, and to take such further
action, including obtaining landlord and mortgagee waivers, as Lessor may from
time to time reasonably request.
20. Assignment
by Lessor.
Lessor
may at any time assign, grant a security interest in, or otherwise dispose
of
(individually or collectively, a “transfer”), all or any portion of its rights,
title or interests in, to and under this Lease, any Equipment Schedule or any
Item of Equipment, together or separately, to one or more persons or entities
(each, an “Assignee”). Upon any such transfer, this Lease shall remain in full
force and effect. If Lessee is given notice of any such transfer, it shall
acknowledge receipt thereof in writing and execute, or otherwise authenticate,
such further instruments as may be reasonably requested by Assignee with respect
to such transfer, including without limitation, a consent certifying certain
material facts and circumstances related to this Lease and the Equipment. Unless
otherwise expressly agreed by Assignee, Assignee shall not assume any of the
obligations of Lessor under this Lease. Upon written notice to Lessee of an
assignment, Lessee agrees to pay the Rent with respect to the Items of Equipment
covered by such assignment to such Assignee in accordance with the instructions
specified in such notice and Lessee shall not assert against Assignee any
defense, counterclaim or offset that Lessee may have against Lessor. All
obligations and liabilities of Lessee to Lessor under this Lease (including,
without limitation, any schedules, exhibits, riders or other attachments
attached hereto or otherwise incorporated herein) are also hereby made for
the
express benefit of Assignee.
21. Miscellaneous.
(a) Lessee
shall pay all reasonable costs and expenses of Lessor, including, without
limitation, reasonable attorneys’ and other professional fees, the fees of any
collection agencies and appraisers and all other costs and expenses related
to
any sale or re-lease of the Equipment (including storage costs), incurred by
Lessor in the preparation, negotiation and execution of this Lease or any
amendment or supplement hereto, enforcing any of the terms, conditions or
provisions hereof and in protecting Lessor’s rights hereunder.
(b) This
Lease shall be governed by and construed in accordance with the laws of the
State of Michigan. Any judicial proceeding arising out of or relating to this
Lease may be brought in any court of competent jurisdiction in Michigan and
each
of the parties hereto (i) accepts the nonexclusive jurisdiction of such courts
and any related appellate court and agrees to be bound by any judgment rendered
by any such court in connection with any such proceeding and (ii) waives any
objection it may now or hereafter have as to the venue of any such proceeding
brought in such court or that such court is an inconvenient forum. EACH OF
THE
LESSEE AND LESSOR HEREBY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY LAWSUIT OR
PROCEEDING ARISING OUT OF OR IN ANY WAY RELATING TO THIS LEASE, ANY EQUIPMENT
SCHEDULE, OR ANY OTHER LEASE DOCUMENT AND ANY ASSIGNMENT, SUBLEASE OR OTHER
DOCUMENT EXECUTED IN CONNECTION THEREWITH.
11
(c) All
notices delivered hereunder shall be in writing (including facsimile) and shall
be delivered to the following addresses:
if
to
Lessee:
Advanced
Photonix, Inc..
▇▇▇▇
▇▇▇▇▇▇▇▇▇
▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn:
▇▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇
Facsimile:
(▇▇▇)
▇▇▇-▇▇▇▇
if
to
Lessor:
Fifth
Third Commercial Leasing Company
▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
(d) Lessee
acknowledges and agrees that time is of the essence with respect to its
performance under the Lease Documents. Any failure of Lessor to require strict
performance by Lessee or any waiver by Lessor of any provision herein shall
not
be construed as a consent or waiver of any provision of this Lease. This Lease
shall be binding upon, and inure to the benefit of, the parties hereto, their
permitted successors and assigns.
(e) This
Lease, together with all other Lease Documents, constitutes the entire
understanding or agreement between Lessor and Lessee with respect to the leasing
of the Equipment, and supercedes all prior agreements, representations and
understandings relating to the subject matter hereof. Neither this Lease nor
any
other Lease Document may be amended except by a written instrument signed by
Lessor and Lessee.
(f) This
Lease may be executed in any number of counterparts, each of which shall be
an
original and all of which shall constitute but one and the same
instrument.
(g) Any
provision of this Lease which is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability shall not invalidate or render
unenforceable such provision in any other jurisdiction. Captions are intended
for convenience or reference only, and shall not be construed to define, limit
or describe the scope or intent of any provisions hereof.
12
IN
WITNESS WHEREOF, Lessor and Lessee have executed this Master Lease as of the
day
and year first above written.
LESSOR:
THE
FIFTH
THIRD LEASING COMPANY
By:
/s/
▇▇▇▇▇ ▇▇▇▇▇
Name:
▇▇▇▇▇
▇▇▇▇▇
Title:
Vice
President
LESSEE:
ADVANCED
PHOTONIX, INC.
By:
/s/
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name:
▇▇▇▇▇ ▇.
▇▇▇▇▇▇
Title:
CFO
13
ATTACHMENT
1 TO MASTER LEASE
Equipment
Schedule - No. 001
Dated
March
6,
2007
Dated
as
of ▇▇▇▇▇
▇,
▇▇▇▇
▇▇▇▇▇▇: THE
FIFTH THIRD LEASING COMPANY,
an
Ohio corporation
Lessee: Advanced
Photonix, Inc.
All
of
the terms of the Master Equipment Lease Agreement dated as of March
6,
2007
(as
amended, supplemented or modified from time to time, the “Master Lease”) between
Lessee and Lessor are incorporated by reference herein. Capitalized terms used,
and not otherwise defined, herein shall have the meanings ascribed thereto
in
the Master Lease. This Equipment Schedule as it incorporates the terms of the
Master Lease and each schedule, exhibit and rider attached hereto is referred
to
as this “Lease”. This Equipment Schedule, and the Master Lease, as incorporated
herein shall constitute a separate and enforceable lease. If any term of any
schedule, exhibit or rider hereto conflicts with or is inconsistent with any
term of this Equipment Schedule or the Master Lease, the terms of such schedule,
exhibit or rider shall govern.
Equipment.
This
Equipment Schedule relates to the Equipment described on Schedule 1 hereto
(collectively, the “Equipment”).
Financial
Terms.
Base
Lease Term Commencement Date: ____________
__, 2007
Base
Lease Term: 60
months
Rent
Payment Dates: _____________
__, 2007
and on
the same day of each month thereafter during the Term.
Expiration
Date: ____________
__, _____
Lessor’s
Capitalized Cost: $___________________
Rent:
The
Base Term Rental Factor is 0.________________
(or
$_______________
per
month as of the Base Lease Term Commencement Date). The Base Term Rental Factor
has been determined based on an interest rate swap rate for a term corresponding
to the maturity of this Lease as quoted in the Federal Reserve Statistical
H15
Release and such Base Term Rental Factor may be adjusted up or down (as
appropriate) by Lessor (based upon Lessee’s choice of either (x) a corresponding
interest rate swap rate quoted in such Release plus 300 basis points, or (y)
a
floating rate of Prime Rate plus 1/8%) as in effect on the Delivery and
Acceptance Date. Lessor will provide Lessee with notice of any such adjustment.
Equipment
Location(s): As specified on Schedule 1.
Pursuant
to Section 18 of the Master Lease, on or prior to the Delivery and Acceptance
Date, Lessee will execute and deliver a Tax Payment Certification in the form
of
Exhibit A hereto.
14
Lessee’s
federal taxpayer identification number is and
Lessee’s state charter or organizational identification number is.
Rent
and Tax Payments.
On
each
Rent Payment Date during the Base Lease Term, Lessee shall pay (i) as Basic
Rent
for the Equipment, the product of the Base Term Rental Factor and Lessor’s
Capitalized Cost for the Equipment and (ii) in respect of Taxes scheduled to
become due, such amounts monthly (or at such other interval as Lessor may deem
appropriate) as Lessor determines will be due and payable. In addition to the
foregoing, on the Base Lease Term Commencement Date, Lessee shall pay to Lessor
as interim rent for each day from the Delivery and Acceptance Date to the Base
Lease Term Commencement Date, the sum of (A) $500.00,
as
daily rent and (B) such amounts daily in respect of Taxes as Lessor determines
will be due and payable.
Rental
payments shall be initiated by Lessor in accordance with the terms of this
Lease
from Lessee’s account through BillPayer 2000®.
Lessee
hereby authorizes Lessor to initiate such payments from Lessee’s account located
at Fifth
Third Bank,
ABA
routing number ***ABA
Routing Number***,
account
number ***Bank
Account Number***.
Lessee
acknowledges and agrees that use of BillPayer 2000®
shall be
governed by the BillPayer 2000®
Terms
and Conditions, and Lessee hereby acknowledges receipt of a copy of such Terms
and Conditions. Lessee further acknowledges and agrees to maintain payments
hereunder through BillPayer 2000®
throughout the term of this Lease.
Tax,
Interest and Security.
For
federal and state income tax purposes, Lessor and Lessee agree that Lessee
will
be considered the owner of the Equipment. Accordingly, Lessor agrees (i) not
to
take actions or positions inconsistent with Lessee as owner of the Equipment
on
or with respect to its federal income tax return, and (ii) not to claim any
tax
benefits available to an owner of the Equipment on or with respect to its
federal or state income tax return. The foregoing undertakings by Lessor shall
not be violated by Lessor’s taking a tax position inconsistent with the
foregoing to the extent such position is required by law or to the extent such
position is taken without gross negligence on the part of Lessor. Lessor shall
in no event be liable to Lessee if Lessee fails to secure any of the tax
benefits available to the owner of the Equipment.
Nothing
contained in the Lease Documents shall require Lessee at any time to pay
interest at a rate exceeding the maximum permissible rate under applicable
law.
To the extent that any Rent is characterized as interest and if such interest
payable by Lessee on any date would exceed the maximum amount permitted by
applicable law, such interest payment shall automatically be reduced to such
maximum amount permitted. Any interest actually received for any period in
excess of such maximum amount permitted for such period shall be held by Lessor
as security for the obligations of Lessee under this Lease.
To
the
extent permitted by applicable law, Lessee waives any rights now or hereafter
conferred by statute or otherwise to recover incidental or consequential damages
from Lessor for any breach or any other reason whatsoever. In order to secure
the prompt payment of Rent under and with respect to this Lease, and the
performance and observance by Lessee of all the agreements, covenants and
provisions hereof (collectively, the “Obligations”), Lessee hereby grants to
Lessor a first priority security interest in all of Lessee’s right, title and
interest in the following (whether now existing or hereafter created and whether
now owned or hereafter acquired): (i) the Equipment (including, without
limitation, all inventory, equipment, fixtures or other property comprising
the
same), and general intangibles relating thereto, (ii) additions, attachments,
accessories and accessions thereto whether or not furnished by the Supplier
of
such Equipment, (iii) all subleases (including the right to receive any payment
thereunder and the right to make any election or determination or give any
consent or waiver thereunder), chattel paper, accounts, security deposits and
bills of sale relating thereto, (iv) any and all substitutions, replacements
or
exchanges for any such Equipment or other collateral, and (v) any and all
products and proceeds of any collateral hereunder (including all insurance
and
requisition proceeds and all other payments of any kind with respect to the
Equipment and other collateral in and against which a security interest is
granted hereunder). Lessee agrees that with respect to the Equipment, in
addition to all of the other rights and remedies available to Lessor hereunder
upon the occurrence of an Event of Default, Lessor shall have all of the rights
and remedies of a secured party under the Uniform Commercial Code. Lessee
further agrees that the original principal amount of the obligations hereunder
shall be an amount equal to Lessor’s Capitalized Cost, and that such principal
amount shall accrue interest at the implicit interest rate reflecting Lessor’s
financial assumptions at the time of the execution of the Lease (including
any
outstanding balance at the end of the Base Lease Term as reflected by the
purchase price for the Equipment at the end of the Base Lease Term set forth
in
Section 0).
Lessee
hereby authorizes Lessor to file, solely at the expense of Lessee, any Uniform
Commercial Code financing statements or other similar documents that Lessor
reasonably deems necessary or advisable to protect its interest. Lessee agrees
promptly to execute and deliver to Lessor such further documents or other
assurances, and to take such further action, including obtaining landlord and
mortgagee waivers, as Lessor may from time to time reasonably
request.
15
Insurance.
The
amount of public liability insurance including personal injury and property
damage required to be maintained by Lessee pursuant to Section 10(a) of the
Master Lease is $1,000,000.00
per
occurrence.
End
of Term.
(h) Upon
the
expiration of the Base Lease Term, so long as (i) no Default or Event of Default
has occurred and is continuing and (ii) this Lease shall not have been earlier
terminated, Lessee shall, upon the terms and conditions set forth below,
purchase all but not less than all of the Equipment for a price equal to One
Dollar ($1.00) plus all Rent then due and payable pursuant to this Lease and
Taxes (including all sales and use Taxes) payable in connection with such
purchase. Upon the purchase of the Equipment in accordance with the terms
hereof, and payment of all other amounts then due and payable under this Lease,
Lessor will deliver to Lessee a ▇▇▇▇ of sale transferring title to the Equipment
to Lessee on an “as-is”, “where-is” basis without representation or warranty of
any kind except that Lessor shall warrant that the Equipment is free, clear
and
unencumbered of all Liens arising by, through or under Lessor except for such
Liens that Lessee is required to remove pursuant to the terms of the
Lease.
(i) Except
to
the extent otherwise expressly set forth herein in case of a permitted
prepayment in full of all Basic Rent and other obligations due under this Lease,
the amount of Basic Rent or any other obligation required to be paid under
this
Lease shall not be discounted by virtue of the fact that such amount may be
paid
by the Lessee prior to the due date thereof.
Amendments
to Master Lease and Additional Lease Provisions.
(j) Section
10(a) of the Master Lease is hereby amended by deleting the words “Stipulated
Loss Value (as defined in the applicable Equipment Schedule) of such Equipment
at any time” appearing therein and inserting in lieu thereof, the words,
“Lessor’s Capitalized Cost or such lesser amount to which Lessor shall
reasonably consent.”
(k) Section
10(c) of the Master Lease is hereby amended by replacing the two references
to
“Stipulated Loss Value” with the words “amounts due to Lessor pursuant to
Section 11(b)(ii) following an Event of Loss.”
(l) Section
11(b)(ii) of the Master Lease is hereby deleted in its entirety and the
following is hereby inserted in lieu thereof: “(ii) pay to Lessor on the next
succeeding Rent Payment Date (the “Loss Payment Date”) the sum of (A) all Rent
due and owing hereunder with respect to such Item of Equipment (at the time
of
such payment) including all Basic Rent payable on such Rent Payment Date plus
(B) an amount equal to each installment of Basic Rent payable under the Lease
on
each Rent Payment Date during the Term after the Loss Payment Date, in each
case, discounted from the Rent Payment Date on which such payment would have
been due to the Loss Payment Date at a rate per annum equal to the then current
yield, as reasonably determined by Lessor, on United States Treasury securities
with a remaining life to maturity equal to, or approximately equal to, the
period from the Loss Payment Date to the final Rent Payment Date during the
Term."
16
(m) Section
15 of the Master Lease is hereby amended by inserting the following immediately
following clause (j) thereof: “(k) Upon the filing with the Secretary of State
of Delaware
of a
Uniform Commercial Code financing statement describing Lessor, as secured party,
Lessee, as debtor, and the Equipment as the collateral, Lessor shall have a
first priority perfected security interest in the Equipment leased under this
Lease.”
(n) Section
16(c) of the Master Lease is hereby deleted in its entirety and the following
is
hereby inserted in lieu thereof: “In addition to the foregoing, Lessee shall pay
to Lessor on demand the sum of (i) any and all Rent which is then due or which
has accrued to the date of demand and (ii) an amount equal to each installment
of Basic Rent payable under the Lease on each Rent Payment Date during the
Term
after the date of demand, in each case, discounted from the Rent Payment Date
on
which such payment would have been due to the date of demand at a rate per
annum
equal to the then current yield, as reasonably determined by Lessor, on United
States Treasury securities with a remaining life to maturity equal to, or
approximately equal to, the period from the date of demand to the final Rent
Payment Date during the Term. Lessor and Lessee agree that Lessor shall be
entitled to such amount as damages for loss of bargain and not as a penalty
and
that such amount is reasonable in light of the anticipated harm to Lessor caused
by an Event of Default.”
(o) Section
19 of the Master Lease is hereby deleted in its entirety and the following
is
inserted, in lieu thereof: “19. [INTENTIONALLY OMITTED].”
(p) For
purposes of this Equipment Schedule and to the extent required by law, Lessee
for purposes of tangible personal property taxes will prepare and file
applicable tax returns. Lessee hereby agrees to remit any tax due and owing
(unless properly contested) directly to the taxing authority in which the
Equipment is located. In the event the Lessee relocates the Equipment, Lessee
shall notify Lessor. Upon request from Lessor, Lessee shall provide copies
of
any requested tax return and proof of payment. Both Lessor and Lessee agree
to
cooperate with each other to resolve any disputed assessment or governmental
audit. Lessee shall have the right to contest any assessment provided such
contest: (i) is properly initiated and challenged in accordance with such taxing
jurisdiction’s procedures or is premised upon the advice of tax counsel; (ii)
does not jeopardize the Equipment to confiscation or forfeiture; and (iii)
does
not subject Lessor to penalty or criminal sanction. Should any contest fail,
or
upon the advise of Lessor’s tax counsel be deemed to lack merit or be unlikely
to succeed, Lessee shall upon demand from Lessor withdraw its challenge and
promptly remit payment to the taxing authority.
Except
as
expressly modified hereby, all terms and provisions of the Master Lease shall
remain in full force and effect. This Equipment Schedule is not binding or
effective with respect to the Master Lease or Equipment until executed on behalf
of Lessor and Lessee by authorized representatives of Lessor and Lessee,
respectively.
Remainder
of page intentionally left blank. Signature page follows.
17
IN
WITNESS WHEREOF, Lessee and Lessor have caused this Equipment Schedule to be
executed by their duly authorized representatives as of the date first above
written.
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LESSOR:
|
|
LESSEE:
|
|
THE
FIFTH THIRD LEASING COMPANY
|
|
ADVANCED
PHOTONIX, INC.
|
|
|
|
|
|
|
|
|
|
By:
|
|
By:
|
|
Name:
|
|
Name:
|
|
Title:
|
|
Title:
|
THIS
LEASE MAY BE EXECUTED IN SEVERAL COUNTERPARTS AND TO THE EXTENT, IF ANY, THAT
THIS LEASE CONSTITUTES CHATTEL PAPER (AS SUCH TERM IS DEFINED IN THE UNIFORM
COMMERCIAL CODE AS IN EFFECT IN ANY APPLICABLE JURISDICTION), NO SECURITY
INTEREST IN THIS LEASE MAY BE PERFECTED THROUGH THE TRANSFER OF POSSESSION
OF
ANY COUNTERPART OTHER THAT THE ORIGINAL COUNTERPART, WHICH SHALL BE IDENTIFIED
AS THE CHATTEL PAPER ORIGINAL ON THE SIGNATURE PAGE THEREOF. THIS IS
THE
CHATTEL PAPER ORIGINAL.
CHATTEL
PAPER ORIGINAL
18
IN
WITNESS WHEREOF, Lessee and Lessor have caused this Equipment Schedule to be
executed by their duly authorized representatives as of the date first above
written.
|
LESSOR:
|
|
LESSEE:
|
|
THE
FIFTH THIRD LEASING COMPANY
|
|
ADVANCED
PHOTONIX, INC.
|
|
|
|
|
|
|
|
|
|
By:
|
|
By:
|
|
Name:
|
|
Name:
|
|
Title:
|
|
Title:
|
THIS
LEASE MAY BE EXECUTED IN SEVERAL COUNTERPARTS AND TO THE EXTENT, IF ANY, THAT
THIS LEASE CONSTITUTES CHATTEL PAPER (AS SUCH TERM IS DEFINED IN THE UNIFORM
COMMERCIAL CODE AS IN EFFECT IN ANY APPLICABLE JURISDICTION), NO SECURITY
INTEREST IN THIS LEASE MAY BE PERFECTED THROUGH THE TRANSFER OF POSSESSION
OF
ANY COUNTERPART OTHER THAT THE ORIGINAL COUNTERPART, WHICH SHALL BE IDENTIFIED
AS THE CHATTEL PAPER ORIGINAL ON THE SIGNATURE PAGE THEREOF. THIS IS
NOT
THE
CHATTEL PAPER ORIGINAL.
19