EXHIBIT 10.9
MASTER EQUIPMENT LEASE AGREEMENT
DATED AS OF
FEBRUARY 11, 1997
BETWEEN
FINOVA TECHNOLOGY FINANCE, INC.
(LESSOR)
AND
POWER INTEGRATIONS, INC.
(LESSEE)
TABLE OF CONTENTS
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SECTION PAGE
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1. Agreement for Lease of Equipment........................................ 1
2. Delivery and Acceptance of Equipment.................................... 1
3. Disclaimer of Warranties................................................ 2
4. Primary Term............................................................ 2
5. Rent.................................................................... 2
6. Lessee's Representations and Warranties................................. 3
7. Identification Marks.................................................... 4
8. Fees and Taxes.......................................................... 5
9. General Indemnity...................................................... 5
10. Use of Equipment; Location; Liens....................................... 6
11. Maintenance and Repairs; Additions to Equipment......................... 6
12. Loss, Damage or Destruction of Equipment................................ 7
13. Reports; Inspections.................................................... 8
14. Confidentiality......................................................... 8
15. Insurance............................................................... 8
16. Return of Equipment..................................................... 9
17. Lessor's Ownership; Equipment To Be and Remain Personal Property........ 10
18. Other Covenants......................................................... 11
19. Events of Default....................................................... 12
20. Assignment and Transfer by Lessor....................................... 14
21. Recording and Filing; Expenses.......................................... 15
22. Option to Renew......................................................... 15
23. Quiet Enjoyment......................................................... 16
24. Failure or Indulgence Not Waiver;
Additional Rights of Lessor............................................. 16
25. Sublease................................................................ 16
26. Commitment Fee.......................................................... 16
27. Lessee Purchase Option During Lease Term................................ 16
28. Purchase and Sale Options of Lessor and Lessee.......................... 17
29. Notices................................................................. 17
30. Entire Agreement; Severability; Amendment or
Cancellation of Lease................................................... 17
31. Waiver of Jury.......................................................... 17
32. Restriction of Limitation Periods and Damages........................... 17
33. Governing Law; Consent to Jurisdictio and Service....................... 17
34. Lessor's Right to Perform for Lessee................................... 19
35. Agreement for Lease Only................................................ 19
36. Binding Effect.......................................................... 19
37. General................................................................. 19
38. Definitions............................................................. 19
MASTER EQUIPMENT LEASE AGREEMENT
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MASTER EQUIPMENT LEASE AGREEMENT dated as of February 11, 1997, between
POWER INTEGRATIONS, INC. (hereinafter called "Lessee"), a California corporation
that has its executive office and principal place of business at ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and FINOVA TECHNOLOGY FINANCE, INC.
(hereinafter called "Lessor"), a Delaware corporation with its principal place
of business at ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇.
In consideration of the mutual covenants hereinafter contained, Lessee and
Lessor agree as follows:
1. Agreement for Lease of Equipment. Lessor shall lease to Lessee and
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Lessee shall lease from Lessor, upon the terms and conditions specified in this
Master Lease and the applicable Rental Schedule, the Equipment as described in
the applicable Rental Schedule including Schedule A of such Rental Schedule and
this Master Lease. Each Rental Schedule shall incorporate the terms of this
Master Lease and shall constitute a separate lease (the term "this Lease" shall
refer collectively to the applicable Rental Schedule and this Master Lease).
Only the signed copy of each Rental Schedule and not this Master Lease shall
constitute chattel paper the possession of which can perfect a security
interest. In the event of a conflict between the provisions of this Master
Lease and the provisions of any Rental Schedule, the provisions of the Rental
Schedule shall prevail.
2. Delivery and Acceptance of Equipment. (a) Lessor and Lessee agree that
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the vendor of the Equipment to Lessor or, as to any Equipment to be sold by
Lessee to Lessor and leased back, the vendor of the Equipment to Lessee (in
either case, the "Vendor") will be responsible to deliver the Equipment to
Lessee at the location specified in the applicable Rental Schedule. Such
delivery shall be delivery of the Equipment by Lessor to Lessee under this Lease
unless such Equipment is to be sold by Lessee to Lessor and leased back.
Provided that no Event of Default has occurred, no event which with the passage
of time or giving of notice would be an Event of Default has occurred, and is
continuing, and the conditions set forth in the next following paragraph have
been met and the Equipment is not to be sold by Lessee to Lessor and leased
back, Lessor hereby authorizes Lessee, acting as Lessor's agent, to accept for
Lessor, and in Lessor's name, the Equipment from the Vendor upon delivery
pursuant to the purchase contract for the Equipment. Such acceptance shall be
acceptance of the Equipment by Lessee under this Lease. Nevertheless, if within
20 days after Lessee has received delivery of an item of the Equipment, Lessee
has not given Lessor written notice of a defect therein and Lessor has not
notified Lessee not to accept the Equipment, Lessee shall be deemed to have (a)
acknowledged receipt of such item of the Equipment in good condition and repair
and (b) accepted such item of the Equipment under this Lease. Lessee agrees to
confirm any acceptance of the Equipment by Lessee by executing a Certificate of
Inspection and Acceptance and providing the same to Lessor in accordance with
the notice provision hereof on or about the Lease Commencement Date, but no
later than the date for payment to the Vendor.
(b) Conditions precedent to every progress payment and Lease Term
Commencement are that (i) no payment shall be past due to Lessor or any assign
of Lessor from Lessee or any Guarantor (as hereinafter defined), whether as a
lessee, a guarantor or in some other capacity; (ii) Lessee shall be in
compliance with the provisions of this Lease; (iii) all documentation then
required by Lessor's counsel shall have been received by Lessor; (iv) a default
shall not then exist under any agreement for borrowed monies or any finance
lease to which Lessee is a party or by which Lessee or the property of Lessee is
bound which would permit the lender or lessor, as applicable, to accelerate
payment of the obligations thereunder; and (v) there shall not have been any
material adverse change or threatened material adverse change in the financial
or other condition, business, operations, properties or assets of Lessee, since
December 31, 1996, or from the written information that has been supplied to
Lessor as of January 29, 1997 by Lessee.
3. Disclaimer of Warranties. LESSEE ACKNOWLEDGES THAT IT HAS SELECTED
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BOTH THE EQUIPMENT AND EVERY MANUFACTURER AND OTHER VENDOR OF THE EQUIPMENT,
THAT LESSEE HAS NOT RELIED UPON LESSOR FOR SUCH SELECTION AND THAT LESSEE HAS A
COPY OF THE PURCHASE CONTRACT(S) FOR LESSOR'S PURCHASE OF THE EQUIPMENT. LESSOR
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HAS NOT MADE AND SHALL NOT BE DEEMED TO HAVE MADE ANY REPRESENTATION OR
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WARRANTY, EXPRESS OR IMPLIED, AS TO THE MERCHANTABILITY, FITNESS FOR USE,
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FITNESS FOR A PARTICULAR PURPOSE OR TITLE OF THE EQUIPMENT (OR ANY PART THEREOF)
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OR AS TO COMPLIANCE WITH SPECIFICATIONS, COMPLIANCE WITH GOVERNMENTAL
REGULATIONS, QUALITY, SELECTION, INSTALLATION, SUITABILITY, PERFORMANCE,
CONDITION, DESIGN, ABSENCE OF DEFECTS, OPERATION, OR NON-INFRINGEMENT OF PATENT,
COPYRIGHT, TRADEMARK OR OTHER INTELLECTUAL PROPERTY RIGHTS OF THE EQUIPMENT (OR
ANY PART THEREOF). LESSEE SHALL LEASE THE EQUIPMENT "AS IS, WHERE IS". LESSOR
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HEREBY DISCLAIMS ANY AND ALL SUCH WARRANTIES OR REPRESENTATIONS, EXPRESS OR
IMPLIED. LESSEE AND LESSOR AGREE THAT ALL RISKS INCIDENT TO THE MATTERS
REFERRED TO IN THIS SECTION ARE TO BE BORNE BY LESSEE. Lessor has and shall
have no responsibility for the installation, adjustment or servicing of the
Equipment. The provisions of this Section have been negotiated and are intended
to be a complete exclusion and negation of any representations or warranties by
Lessor, express or implied, with respect to the Equipment that may arise
pursuant to any law now or hereafter in effect, or otherwise. In no event shall
defect in, or unfitness of, any or all of the Equipment, or any breach of
warranty or representation by any or every Manufacturer or other Vendor relieve
Lessee of the obligation to pay rent or to make any other payments required
hereunder or to perform any other obligation hereunder. Without limiting the
generality of the foregoing, Lessor shall not be responsible or liable for any
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(i) defect, either latent or patent, in any of the Equipment or for any direct
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or consequential damages therefrom, (ii) loss of use of any of the Equipment or
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for any loss of profits or any interruption in Lessee's business occasioned by
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Lessee's inability to use any or all of the Equipment for any reason whatsoever,
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or (iii) in the event that any Vendor delays or fails to make delivery of any or
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all of the Equipment or fails to fulfill or comply with any purchase contract or
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order. For as long as this Lease is not declared in default by Lessor following
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an Event of Default, Lessor hereby transfers and assigns to Lessee during the
Lease Term (as hereinafter defined) all right and interest of Lessor in any
Manufacturer's and other Vendor's warranties with respect to any and all of the
Equipment, and agrees to execute all documents reasonably necessary to effect
such transfer and assignment, except that to the extent any rights of Lessor
with respect to the Equipment may not be assigned or otherwise be available to
Lessee, Lessor shall instead use reasonable efforts to enforce such rights
against such Manufacturers or other Vendors but only upon the request and at the
expense of Lessee.
4. Primary Term. The Primary Term for each item of the Equipment shall
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commence on the Lease Commencement Date provided for by the Rental Schedule for
such Equipment, and unless sooner terminated pursuant to the provisions of this
Lease, shall be for the number of calendar months set forth in such Rental
Schedule, plus the number of days remaining in any partial calendar month if the
Lease Commencement Date occurs on other than the first day of a month.
Notwithstanding the foregoing, the provisions of this Master Lease on
indemnification of Lessor by Lessee shall apply between Lessor and Lessee with
respect to any Equipment from the time that any order for the Equipment is
placed by Lessor.
5. Rent. (a) Lessee shall pay to Lessor in cash or by check as rent for
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the Equipment during the Lease Term, the amounts provided for in the Rental
Schedule ("Basic Rent") for such Equipment on the dates designated therein
("Payment Dates"), at the location of Lessor set forth therein, or at such other
address or to such other person or entity as Lessor, from time to time, may
designate.
(b) Lessee shall also pay to Lessor, upon notice by Lessor to Lessee that
payment is due, any sums other than for Basic Rent that Lessee at any time shall
be required to pay Lessor pursuant to the provisions of this Lease, together
with every additional charge, interest and cost which may be added for non-
payment or late payment of any such sums or of Basic Rent. All such sums shall
be additional rent ("Additional Rent") and Lessor shall provide Lessee with
notification as to the amount of any Additional
Rent. If Lessee shall fail to pay any Additional Rent, Lessor shall have all
rights, powers and remedies with respect thereto as are provided herein or by
law in the case of non-payment of Basic Rent.
(c) With respect to any amount of Basic Rent or Additional Rent not
received by Lessor when due and continuing to be unpaid five days after written
notice to Lessee that such amount is past due, Lessee shall pay to Lessor
interest within five days of notice of the amount of interest accrued as of the
date specified in the notice. If payable such interest shall accrue from the due
date of such Basic Rent or Additional Rent until payment of such Basic Rent or
Additional Rent is received by Lessor at one and one-half percent per month or
the highest rate of interest on amounts past due that is not unlawful, whichever
is lower (the "Default Interest Rate"). Additionally, with respect to each such
instance of late payment for one or more rental schedules, Lessee shall pay to
Lessor, within five days of written notice to Lessee that such payment has been
five or more days past due and continued to be unpaid five days after written
notice that such payment was past due, a collection fee of $500, which fee
approximates Lessor's administrative costs, at minimum, to collect such unpaid
Basic Rent or Additional Rent.
(d) SUBJECT TO GRACE PERIODS GRANTED TO LESSEE HEREUNDER, LESSEE AGREES
THAT TIME IS OF THE ESSENCE TO LESSOR IN LESSEE'S MAKING PAYMENTS OF BASIC RENT
AND ADDITIONAL RENT WHEN SUCH PAYMENTS BECOME DUE.
(e) This Lease is a net-net-net lease and, notwithstanding any other
provisions of this Lease, it is intended that Basic Rent and Additional Rent
shall be paid without notice, demand, counterclaim, setoff, deduction or defense
and without abatement, suspension, deferment, diminution or reduction. Lessee
shall perform all its obligations under this Lease at its sole cost and expense.
Except to the extent otherwise expressly specified herein, the obligations and
liabilities of Lessee hereunder shall in no way be released, discharged or
otherwise affected for any reason, including, without limitation: (i) any
defect in the condition, quality or fitness for use of the Equipment or any part
thereof; (ii) any damage to, removal, abandonment, salvage, loss, scrapping or
destruction of or any requisition or taking of the Equipment or any part
thereof; (iii) any restriction, prevention or curtailment of or interference
with any use of the Equipment or any part thereof; (iv) any defect in title or
rights to the Equipment or any lien on such title or rights or on the Equipment;
(v) any change, waiver, extension, indulgence or other action or omission in
respect of any obligation or liability of Lessor; (vi) any bankruptcy,
insolvency, reorganization, composition, adjustment, dissolution, liquidation or
other like proceedings relating to Lessee or any action taken with respect to
this Lease by any trustee or receiver of Lessee or by any court, in any such
proceeding; (vii) any claim that Lessee has or might have against any Person (as
hereinafter defined), including without limitation Lessor; (viii) any failure on
the part of Lessor to perform or comply with any of the terms hereof or of any
other agreement; (ix) any invalidity, unenforceability or disaffirmance of this
Lease or any provision hereof against or by Lessee; or (x) any other occurrence
whatsoever, whether similar or dissimilar to the foregoing, whether or not
Lessee or Lessor shall have notice or knowledge of any of the foregoing. To the
extent permitted by law, Lessee waives all rights now or hereafter conferred by
statute or otherwise to quit, terminate, cancel, rescind or surrender this
Lease, or to any diminution or reduction of Basic Rent or Additional Rent
payable by Lessee hereunder.
6. Lessee's Representations and Warranties. Lessee represents and
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warrants (and if requested by Lessor, promptly will provide supporting documents
to the effect and an opinion of counsel substantially in the form requested by
Lessor) that as of the date that Lessee signs this Master Lease, as of any date
that Lessor makes a payment to a Vendor prior to the date all Equipment has been
accepted for lease hereunder, as of each date that any Equipment is accepted for
lease hereunder and as of each Lease Commencement Date pursuant to a Rental
Schedule hereunder: (i) all items of the Equipment are new and unused as of the
Lease Commencement Date, unless otherwise specified in the applicable Rental
Schedule in which event the specified items of the Equipment shall have been
delivered new to Lessee by their suppliers not more than 90 days prior to their
Lease Term Commencement; (ii) Lessee is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization, and is
qualified and in good standing to do business wherever necessary to carry on its
present business and operations, including the jurisdictions where the Equipment
is or will be located except where the failure
to qualify would not have a material adverse effect on Lessee, its business
operations or financial condition; (iii) Lessee has the power to enter into this
Lease and the other instruments and documents executed by Lessee in connection
herewith (together with this Lease, the "Transactional Documents") and to pay
and perform its obligations under this Lease and the other Transactional
Documents; (iv) this Lease and the other Transactional Documents have been duly
authorized, executed and delivered by Lessee, and constitute the valid, legal
and binding obligations of Lessee enforceable in accordance with their terms;
(v) no vote or consent of, or notice to, the holders of any class of stock of
Lessee is required, or if required, such vote or consent has been obtained or
given, to authorize the execution, delivery and performance of this Lease and
the other Transactional Documents by Lessee; (vi) subject to Lessee's obtaining
certain waivers and consents prior to the first Lease Commencement Date for any
of the Equipment from the holders of the subordinated notes of Lessee and the
primary line of credit of Lessee, neither the execution and delivery by Lessee
of this Lease or the other Transactional Documents, nor the consummation by
Lessee of the transactions contemplated hereby or thereby, nor compliance by
Lessee with the provisions hereof or thereof, conflicts with or results in a
breach of any of the provisions of any Certificate of Incorporation or By-laws
or partnership or trust agreement or certificate of Lessee, or of any applicable
law, judgment, order, writ, injunction, decree, award, rule or regulation of any
court, administrative agency or other governmental authority, or of any
indenture, mortgage, deed of trust, other agreement or instrument of any nature
to which Lessee is a party or by which it or its property is bound or affected
or pursuant to which it is constituted, or constitutes a default under any
thereof or will result in the creation of any lien, charge, security interest or
other encumbrance upon any of the Equipment, other than the interests therein of
Lessor or any Assignee (as hereinafter defined), or upon any other right or
property of Lessee or will in any manner adversely affect Lessor's or any
Assignee's right, title and interest in any of the Equipment; (vii) no consent,
approval, withholding of objection or other authorization of or by any court,
administrative agency, other governmental authority or any other Person is
required, except such consents, approvals or other authorizations which have
been duly obtained and are in full force and effect and copies of which have
been furnished Lessor, in connection with the execution, delivery or performance
by Lessee, or the consummation by Lessee, of the transactions contemplated by
this Lease and the other Transactional Documents; (viii) there are no actions,
suits or proceedings pending, or, to the knowledge of Lessee, threatened, in any
court or before any administrative agency or other governmental authority
against or affecting Lessee, which, if adversely decided would or could,
individually or in the aggregate, materially and adversely affect the financial
or other condition, business, operations, properties, assets or prospects of
Lessee or the ability of Lessee to perform any of its obligations under this
Lease or under the other Transactional Documents, except for any such actions,
suits or proceedings that Lessee has described in writing to Lessor; (ix) no
Event of Default or event or condition which upon the passage of time, the
giving of notice, or both, would constitute an Event of Default, exists or is
continuing; (x) there has been no material adverse change or threatened change
in Lessee's, financial or other condition, business, operations, properties,
assets or prospects since the date of Lessee's most recent financial statements
reported on by an independent public accounting firm prior to the date of this
Master Lease, since the dates of each such Person's interim and annual financial
statements, if any, subsequent to such prior statements, or from the written
information that has been supplied to Lessor by Lessee; (xi) Lessee possesses
any and all authorizations, certifications and licenses which are or may be
required to use and operate the Equipment; (xii) the actual Acquisition Cost
pursuant to the applicable Rental Schedule of each item of the Equipment
reflects all discounts, rebates and allowances for the Equipment given to Lessee
or any affiliate of Lessee by any Vendor or other Person including, without
limitation, discounts for advertising, prompt payment, testing or other
services; (xiii) all information supplied to Lessor by Lessee is correct and
does not omit any statement necessary to make the information supplied not
materially misleading; and (xiv) the financial statements of Lessee have been
prepared in accordance with generally accepted accounting principles
consistently applied and accurately and completely present the financial
condition and the results of operations of Lessee at the dates of and for the
periods covered by such statements.
7. Identification Marks. To the extent requested by Lessor or if
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required by applicable law, Lessee shall affix to the Equipment at Lessee's
expense signs, labels, or other forms of notice to disclose Lessor's ownership
of, and the interest of any Assignee in, the Equipment. Lessee shall keep and
main-
tain such signs, labels or other forms of notice affixed to the Equipment
throughout the Lease Term. Lessor may furnish such signs, labels or other forms
of notice to Lessee. Except as otherwise directed by Lessor, Lessee shall not
allow the name of any person other than Lessor to be placed on any part of the
Equipment as a designation that might reasonably be interpreted as a claim of
ownership.
8. Fees and Taxes. Lessee agrees to pay promptly when due, and to
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indemnify and hold Lessor harmless from, all license, title, registration and
recording fees whatsoever, all taxes including, without limitation, sales, use,
franchise, personal property, excise, import, export and stamp taxes and customs
duties, and all charges together with any penalties, fines or interest thereon
which are assessed, levied or imposed by any governmental or taxing authority
against Lessor with respect to any or all of the Equipment or the purchase,
acquisition, ownership, construction, installation, shipment, delivery, lease,
possession, use, maintenance, condition, operation, control, return or other
disposition thereof or the rents, receipts or earnings arising therefrom which
accrue or are payable with respect to the Equipment or this Lease or which are
assessed, are based on a valuation date, or are due during or with respect to
the Lease Term or any subsequent period until the Equipment has been returned to
Lessor pursuant to the provisions of this Lease or until the Equipment has been
purchased by Lessee pursuant to any purchase option provisions of this Lease,
excluding, however, any taxes solely measured by Lessor's net income from the
general operation of Lessor's business and any penalties, fines and interest
resulting from the actual negligence or willful misconduct of Lessor. In the
event any fees, taxes or charges payable by Lessee pursuant to the next
preceding sentence are paid by Lessor, or if Lessor is required to collect or
pay any thereof, Lessee shall reimburse Lessor therefor (plus any penalties,
fines or interest thereon) promptly upon demand. Unless and until Lessor
notifies Lessee in writing to the contrary, Lessee shall file and pay any
personal property taxes levied or assessed on the Equipment directly to the
levying authority. Upon Lessor's written request, Lessee shall submit to Lessor
satisfactory evidence of payment by Lessee of any or all amounts for which
Lessee is required to make payment or to indemnify Lessor hereunder that are
paid by Lessee, and of the filing of any and all reports, returns and other
documentation required in connection with any such payment. In the event Lessor
elects to pay the personal property taxes directly to a levying authority,
Lessor shall submit to Lessee a copy of its personal property tax return and its
receipt for the full amount of such personal property taxes so paid by Lessor.
All of the obligations of Lessee under this Section shall continue in full force
and effect notwithstanding any expiration, termination, rescission or
cancellation of this Lease. Lessee acknowledges that Lessor may not be exempt
from the payment of any of the amounts referred to herein, even though Lessee
might have been exempt therefrom if it were the owner or purchaser of the
Equipment, and Lessee agrees that this Section shall apply, and the amounts due
from it hereunder shall be due, whether or not Lessee might itself have
otherwise been exempt from any such payments. Subject to the foregoing, Lessee
shall have the right to contest in good faith any such taxes levied or imposed
by any governmental or taxing authority, provided that Lessee shall have given
Lessor not less than ten days prior notice of its intention to contest and full
particulars of the proposed contest, in the opinion of Lessor the proposed
contest will not adversely affect the interests of Lessor or any Assignee, and
Lessee either shall have paid the taxes or provided for a bond or other security
so that none of the Equipment will be subject to seizure, confiscation or
forfeiture. For purposes of this Section, the term "Lessor" shall include each
member of Lessor's affiliated group, if any.
9. General Indemnity. (a) Lessee shall indemnify Lessor and any Assignee
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(as hereinafter defined), and their respective agents and servants, against, and
agrees to defend, protect, save and keep them harmless from, any and all
liabilities, obligations, losses, damages, penalties, claims, actions, suits,
costs, expenses and disbursements, including attorneys' fees and expenses and
costs for customs, completion, performance and appeal bonds, of whatsoever kind
and nature (including, without limitation, for negligence, tort liability,
damages by reason of strict or absolute liability, punitive damages, and
indirect and consequential damages, but excluding any such amounts imposed or
incurred as a result of Lessor's gross negligence or willful misconduct),
imposed on or incurred by or assessed against Lessor and/or any Assignee, in any
way relating to or arising out of (i) the failure of Lessee to provide or obtain
any certificates, documents, consents, authorizations, clearances, licenses,
permits or instruments required hereunder or under any of the other
Transactional Documents, or (ii) the ordering, construction, installation,
delivery, testing, ownership, lease, possession, use, maintenance, operation,
control, movement, import,
export, shipment, condition, or return of the Equipment (including but not
limited to latent and other defects, whether or not discoverable by Lessor or
Lessee, and any claim for patent, trademark, copyright, software or other
intellectual property infringement) until such time as the Equipment shall have
been returned to Lessor pursuant to the provisions of this Lease or until the
Equipment shall have been purchased by Lessee pursuant to any purchase option
provisions of this Lease.
(b) The obligations of Lessee under this Section shall survive the payment
of all known obligations under and any expiration, termination, rescission or
cancellation of this Lease, and are expressly made for the benefit of and shall
be enforceable by Lessor, its successors and any Assignee.
10. Use of Equipment; Location; Liens. (a) During the Lease Term, Lessee
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warrants and agrees that the Equipment shall be used and operated and otherwise
be in compliance with any established operating procedures therefor of any
Manufacturer and all statutes, regulations and orders of any governmental body
having power to regulate the Equipment or its use. Lessee shall bear and pay
all costs of such compliance. Lessee shall not permit the Equipment to be used
or maintained in any manner or condition that would violate, or could result in
the termination of, the insurance policies carried by Lessee pursuant to the
provisions of this Lease on insurance, or in any manner or condition or for any
purpose for which, in the opinion of any Manufacturer, the Equipment is not
designed or suited.
(b) Lessee agrees that without Lessor's prior written consent, it will not
remove any of the Equipment from the location or locations specified in the
Rental Schedule for such Equipment or permit any of the Equipment to be used by
anyone other than Lessee, Lessee's employees or a responsible independent
contractor engaged by Lessee. The locations specified in Rental Schedules for
personal computers may be the base locations for the employees of Lessee using
the computers and if so indicated on the applicable Rental Schedules,
wheresoever from time to time accompanying such employees.
(c) During the Lease Term and until the Equipment has been returned to
Lessor pursuant to the provisions of this Lease or until the Equipment is
purchased by Lessee pursuant to any purchase option provisions of this Lease,
Lessee will not directly or indirectly create, incur, assume or suffer to exist
any mortgage, security interest, lien or encumbrance on the Equipment or
Lessor's or any Assignee's title thereto or interest therein, except in the name
of Lessor and its successor(s) and any Assignee or for any Permitted Liens.
Lessee, at its own expense, will promptly take such action as may be necessary
to keep the Equipment free and clear of, and to duly discharge, any such
mortgage, security interest, lien or encumbrance not excepted above.
(d) Lessee agrees to procure and maintain in effect all licenses,
certificates, permits and other approvals and consents required by federal,
state and local laws and regulations in connection with Lessee's possession,
use, operation and maintenance of the Equipment. During the Lease Term, Lessee
agrees that 100 percent of the use of the Equipment shall be "qualified business
use" as that term is and shall be from time to time defined by the Internal
Revenue Code of 1986, as amended.
(e) Lessee shall cooperate fully with Lessor or any Assignee to perfect
and record their respective interests in connection with the Transactional
Documents including, without limitation, the filing of financing statements and
will pay such Persons their reasonable costs related thereto. Lessee authorizes
Lessor to file financing statements that are signed only by Lessor or that are
signed for Lessee by Lessor in any jurisdiction when permitted by law or local
authority. Lessee hereby grants to Lessor power-of-attorney to act as Lessee's
attorney-in-fact to sign Lessee's name on financing statements as "Debtor".
11. Maintenance and Repairs; Additions to Equipment. (a) Lessee shall,
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for the entire Lease Term, at its sole expense, maintain all of the Equipment in
good, safe and efficient operating repair, appearance and condition, will keep
all components of the Equipment properly calibrated and aligned, and will make
all required adjustments, replacements and repairs (collectively, "maintenance
and repairs"). Such maintenance and repairs shall include, but not be limited
to, all recommended or advised by a Manufacturer, all required or advised by
cognizant governmental agencies or regulatory bodies and all
commonly performed by prudent business and/or professional practice. All
maintenance and repairs to any item of the Equipment shall be made by the
Manufacturer or, those of substantially equal skill or knowledge in maintaining
and repairing the Equipment.
(b) Lessee shall not modify the Equipment without the prior written
consent of Lessor except for any modifications which do not impair the
usefulness and the Fair Market Value of the Equipment and do not change the
description of the Equipment set forth in the applicable Rental Schedule and
financing statements. Any replacements, substitutions, additions, parts,
fittings, accessories, modifications, enhancements, maintenance and repairs and
other upgrades to the Equipment whenever made shall be considered accessions to
the Equipment and shall automatically become the property of Lessor.
(c) All instruction manuals, published statements of capabilities and
technical specifications, service, maintenance and repair records, installation,
qualification, certification and calibration reports, usage logs, and printed
material relating to the Equipment shall be deemed part of the Equipment.
12. Loss, Damage or Destruction of Equipment. (a) Lessee shall bear all
----------------------------------------
risks of damage to, taking of, or theft, loss or destruction of, any or all of
the Equipment commencing as of the date of this Master Lease and continuing
throughout the Lease Term and until such Equipment has been returned to Lessor
or purchased by Lessee pursuant to any purchase option provisions of this Lease.
Except as otherwise herein expressly provided, no damage to, taking of or theft,
loss or destruction of any Equipment shall impair any obligation of Lessee to
Lessor under this Lease, including, without limitation, the obligation to pay
Basic Rent.
(b) In the event that any item of Equipment shall become damaged from any
cause whatsoever, Lessee agrees to promptly notify Lessor in writing of such
fact, fully informing Lessor of the details thereof. If any item of Equipment
is damaged (unless the same, in the reasonable opinion of Lessor is irreparably
damaged, in which case the provisions of this Lease with respect to a Casualty
Occurrence shall apply), Lessee shall, at its sole cost and expense, place the
same in good repair, condition and working order or replace the same with "like
property" having the same value and operating capabilities and useful life at
least equal to the damaged Equipment prior to the date of such damage, which
property shall thereupon become subject to this Lease with title thereto in
Lessor. In the event that an item of Equipment has been damaged, but not
irreparably, if no Event of Default has occurred and is continuing hereunder,
upon receipt by Lessor of evidence, satisfactory to Lessor, that such repair,
restoration or replacement has been completed, and an invoice therefor, Lessor
shall release to Lessee or its supplier the proceeds of any insurance received
by Lessor as a result of such damage for the purpose of reimbursing Lessee for
the costs of repairing, restoring or replacing such item.
(c) In the event that any item of Equipment shall become lost, stolen,
destroyed or irreparably damaged from any cause whatsoever, or if any item of
Equipment or Lessor's title thereto shall be requisitioned or seized by any
governmental authority (each such occurrence being herein called a "Casualty
Occurrence") during the Lease Term and until it has been returned to Lessor
pursuant to the provisions of this Lease or until the Equipment is purchased by
Lessee pursuant to any purchase option provisions of this Lease, Lessee shall
promptly notify Lessor in writing of such fact, fully informing Lessor of all
details of the Casualty Occurrence in question, and shall pay Lessor in cash the
the "Stipulated Loss Value" as set forth in the Table of Stipulated Loss Values
attached to the Rental Schedule pursuant to which such item of Equipment is
leased hereunder, calculated as of the date of the Casualty Occurrence. This
payment shall be made within 30 days following the Casualty Occurrence, together
with the Basic Rent accrued and unpaid with respect to such Equipment as of the
date of the Casualty Occurrence, plus all Additional Rent or amounts owing with
respect to such Equipment on such date of payment.
(d) Upon the payment of the Stipulated Loss Value of the Equipment in
question in accordance with the terms of this Section, and the payment of all
Basic Rent, Additional Rent and any other sums then due hereunder, this Lease
shall terminate with respect to the Equipment or part thereof suffering the
Casualty Occurrence and all Lessor's rights and title to such Equipment shall
pass to Lessee, "as is" and
-----
"where is", without any representation or warranty by, or recourse to, Lessor,
--------------------------------------------------
as provided by the provisions of this Master Lease on disclaimer of warranties
and as evidenced by a duly executed ▇▇▇▇ of sale naming Lessor as the seller and
Lessee as the buyer.
(e) Provided that no Event of Default has occurred and no event that with
the passage of time or giving of notice, or both, would be an Event of Default
has occurred and is continuing, any insurance proceeds received as the result of
a Casualty Occurrence with respect to any or all items of the Equipment shall be
applied first in reduction of any other then unpaid obligation of Lessee to
Lessor hereunder and second in reduction of Lessee's obligation to pay the
Stipulated Loss Value for such item if not already paid by Lessee to Lessor, or,
if already paid by Lessee, to the reimbursement of Lessee therefor, and the
balance of the insurance proceeds, if any, shall be paid to Lessee.
13. Reports; Inspections. Lessee will cause to be furnished to Lessor, if
--------------------
requested, from time-to-time a statement showing the condition and such other
information regarding the Equipment as Lessor may reasonably request. Lessor
and any Assignee shall have the right, upon reasonable notice to Lessee and
during normal business hours, to inspect the Equipment including Lessee's
records with respect to the Equipment, to copy such records, and to inspect and
copy Lessee's records with respect to the financial statements Lessee is
required to furnish Lessor or has warranted to Lessor pursuant to this Lease.
Any inspection by Lessor or any Assignee shall not be deemed to be approval or
acknowledgment by Lessor or such Assignee of the safety, freedom from defects,
performance or compliance with specifications or governmental requirements of
the Equipment or of the conformity of the Equipment or such financial statements
to the requirements or warranties of this Lease, and the disclaimers set forth
in the provisions of this Master Lease on disclaimer of warranties shall apply
to any such inspection. Lessee shall pay or reimburse Lessor for Lessor's
costs, travel expenses and salaries and the charges and such expenses of
Lessor's advisers for the inspection following an inspection which encountered a
breach of the requirements of this Lease or the warranties of Lessee pursuant to
this Lease.
14. Confidentiality. Lessor agrees to hold in confidence any confidential
---------------
information it receives from Lessee pursuant hereto, except for disclosure: (a)
to legal counsel and accountants for Lessor or any assignee; (b) to other
professional advisors to Lessor or any assignee; (c ) to regulatory officials
having jurisdiction over Lessor or any assignee; (d) as required by law or legal
process or in connection with any legal proceeding to which Lessor (or any
assignee) and Lessee are adverse parties, or in which confidential information
is subject to subpoena duces tucem served upon Lessor provided Lessor shall
notify Lessee of such impending disclosure to enable Lessee to move for a
protective order or to quash the process or subpoena.
15. Insurance. During the Lease Term and until all Equipment has been
---------
returned to Lessor pursuant to the provisions of this Lease or until the
Equipment is purchased by Lessee pursuant to any purchase option provisions of
this Lease, Lessee shall procure and maintain at its expense with reputable
insurers acceptable to Lessor (i) insurance on all of the Equipment in an amount
not less than the the Equipment's Stipulated Loss Value insuring against all
risks of loss or damage to the Equipment and against such other risks as Lessee
would, in the prudent management of its properties, maintain with respect to
similar equipment owned by it, and (ii) comprehensive public liability and
property damage insurance, in such amounts as shall be satisfactory to Lessor
but for not less than $3,000,000, insuring Lessor and any Assignees, as their
interests may appear, against liability for death, bodily injury, and property
damage arising out of or resulting from the design, construction, manufacture,
ownership, use, operation, lease or maintenance of, or otherwise in connection
with, the Equipment. On the policies referred to in clause (i), such insurance
shall name Lessor (and any Assignees) as the loss payee so that (and Lessor and
Lessee hereby agree that) the insurance proceeds payable under such policies
will be payable and paid to Lessor (and to any Assignees). On the policies
referred to in clause (ii), such insurance will name Lessor (and any Assignees)
as an additional insured as its interests may appear. All such policies shall
provide that they may not be invalidated against Lessor (or any Assignees)
because of
any violation of a condition or a breach of warranty of the policies or
application therefor by Lessee, that they may not be altered or canceled except
after 30 days' prior written notice to Lessor, and that Lessor and any Assignee
have the right but not the obligation to pay the premiums with respect to
coverage required by this Lease in order to continue such insurance in effect or
to obtain like coverage. Under the policies of insurance required to be
maintained by Lessee pursuant to this Master Lease, Lessee agrees to waive any
right of subrogation in each instance as such right may exist against Lessor or
any Assignee and for any and all loss or damage to the Equipment. Lessor is
hereby appointed Lessee's attorney-in-fact to endorse any check or draft which
may be payable to Lessee in order to collect the proceeds of such insurance.
Lessee shall deliver to Lessor, prior to the beginning of the Lease Term with
respect to any of the Equipment and at such other time or times as Lessor may
request, a certificate or other evidence satisfactory to Lessor of the
maintenance of such insurance. Every policy described in (i) or (ii) above in
regard to personal computers and the certificates or evidences of such insurance
delivered to Lessor shall provide worldwide coverage without geographical
limitations.Lessor shall be under no duty to examine such policies, certificates
or other evidence of insurance or to advise Lessee in the event that its
insurance is not in compliance with this Lease. In the event of failure on the
part of Lessee to provide such insurance, Lessor may, at its option, but without
obligation, provide such insurance and add the amount of the premiums to the
rents due hereunder, and Lessee shall, upon Lessor's demand, pay the same as
Additional Rent.
16. Return of Equipment. (a) At the termination, cancellation or end of
-------------------
the Lease Term for any Equipment, if Lessee does not perform any purchase
obligation under Section 28 of this Master Lease and does not purchase the
Equipment under Section 27 of this Master Lease, in addition to damages payable
by Lessee, at its sole expense Lessee shall forthwith return possession of such
Equipment without omissions to Lessor by:
(i) properly preparing, crating and/or assembling such Equipment (in
accordance with the Manufacturer's instructions if such instructions exist) for
shipment by common carrier with all containers and pieces labeled with model,
part and unit numbers and descriptions; and
(ii) shipping such Equipment by common carrier, with insurance and freight
prepaid, to a place designated by Lessor within a 1,000 mile radius of the
specified location under this Lease for such Equipment. Lessor shall pay
additional shipping charges incurred because of distances in excess of such
1,000 miles.
The insurance required by clause (ii) above shall provide that in the event
of loss such insurance shall pay Lessor in cash directly the "Stipulated Loss
Value" as set forth in the Exhibit to the Rental Schedule calculated as of the
Payment Date next preceding the date of loss.
(b) When the Equipment is returned to Lessor it shall be complete. The
condition of the Equipment including Software upon receipt by Lessor shall be
not less than (i) in fully operational condition, (ii) capable of being
installed and operated in the normal course by another user, (iii) for each item
of the Equipment for which the vendor, manufacturer or supplier (collectively,
"Vendor") has a program of maintenance and service including certification for
reinstallation and for qualification under the maintenance and service program
certified in writing by the Vendor that the items of the Equipment are in
compliance with the conditions specified in this paragraph, are accepted by the
Vendor for reinstallation and are qualified for the usual and customary service
and maintenance program of the Vendor, (iv) legally qualified for future use or
operation of the Equipment by another lessee or purchaser of the Equipment, (v)
free of defects, visible or concealed, including, but not limited to, damage or
malfunction of any kind, dents, fractures, chips, scratches, stains,
defacements, discolorations, rust, corrosion, electrical shorts, fluid
restrictions or blockages, disconnections, breakage or the like, other than
normal wear and tear, (vi) safe for routine and usual operation, (vii) in
compliance with any and all pertinent governmental or regulatory rules, laws or
guidelines for its operation or use, (viii) free of Lessee's markings or
labelings, and (ix) free of any advertising or insignia not requested by Lessor
that was placed on the Equipment by Lessee.
(c) Lessor reserves the right to inspect the Equipment within 30 days of
its return to verify compliance with the provisions of this Master Lease on
Equipment maintenance and repairs and additions and on return of Equipment.
Should there be less than full compliance, Lessor at its option may (i) perform
or cause to be performed through service organizations of its own choosing such
maintenance and repairs, including upgrades, replacements, the obtaining of
paid-up Software licenses and other services, as it deems necessary to effect
such compliance, (ii) require Lessee to perform or cause to be performed such
maintenance and repairs, including upgrades, replacements, the obtaining of
paid-up Software licenses and other services, as Lessor deems necessary to
effect such compliance and/or (iii) reasonably estimate the costs to effect such
compliance. Lessee shall pay to Lessor the costs for performance of (i) or (ii)
above, or the estimated costs under (iii) above, in any such case including the
costs of the inspection(s). If maintenance and repairs, including upgrades,
replacements, and the obtaining of paid-up Software licenses and other services,
are necessary to place any of the Equipment under any Rental Schedule in the
condition required by this Lease, Lessee shall continue to pay to Lessor monthly
Additional Rent at the last prevailing rate during the Lease Term for Basic Rent
on the Equipment under such Rental Schedule for the period of delay until all
such required maintenance and repairs can be performed, or for the period of
time reasonably necessary to accomplish such maintenance and repairs. For any
such period that applies, Lessee shall continue to provide the insurance
required during the Lease Term. However, Lessor's acceptance of such rent and
provision of insurance during such period shall not constitute a renewal of the
Lease Term, a waiver of Lessor's right to prompt return of such Equipment in the
condition required by this Section, or a waiver of Lessor's right to possession
of such Equipment.
(d) Should the inspection reveal any item(s) of the Equipment to be
missing, Lessee shall be responsible for paying to Lessor promptly the
Stipulated Loss Value of such item(s) of the Equipment computed as of the last
Payment Date prior to the end of the Lease Term, plus the amount of any
impairment of the Fair Market Value of the remaining item(s) of the Equipment
due to the absence of such missing item(s) of the Equipment provided that Lessee
shall not receive payment under this paragraph (d) of more than the Stipulated
Loss Value for all of the Equipment (both missing and returned).
(e) In the event that Lessee fails to return any of the Equipment when
required, at the election of Lessor effected by notice to Lessee, the Lease Term
for such Equipment shall be extended on a month-to-month basis on the same terms
as previously in effect, and Lessee shall pay to Lessor monthly in advance Basic
Rent for such Equipment at the last prevailing rate during the unextended Lease
Term, until such Equipment has been returned to Lessor pursuant to the
provisions of this Lease. Notwithstanding any month-to-month continuance of
this Lease, Lessor may resort to any remedies available to it under this Lease,
at law or in equity, to recover such Equipment at any time following the end of
such extended Lease Term.
17. Lessor's Ownership; Equipment To Be and Remain Personal Property.
----------------------------------------------------------------
(a) Lessee acknowledges and agrees that it does not have, and by execution
of this Lease and/or payments and performance hereunder it shall not have or
obtain, any title to the Equipment, nor any property right or interest, legal or
equitable, therein, except its rights as Lessee hereunder and subject to the
terms hereof. Lessee shall not have or claim a security interest and shall not
seek or obtain replevin, detinue, specific performance, sequestration, claim and
delivery, or like remedies in or for this Lease, any rents under this Lease, any
or all of the Equipment, any items of personal property identified to become
items of the Equipment, or any proceeds of any or all of the foregoing.
(b) All of the Equipment shall be and remain personal property
notwithstanding the manner in which the Equipment may be attached or affixed to
realty. Upon the expiration, cancellation or termination of the Lease Term of
any or all of the Equipment, Lessee shall have the obligation, and Lessor shall
have the right, to remove, or cause the removal of, such Equipment from the
premises where the same is then located, for return to Lessor pursuant to the
provisions of this Master Lease on return of Equipment and, if applicable, on
Events of Default, whether or not any of the Equipment is affixed or attached to
realty or to any building. In the exercise of its rights, Lessor shall not be
liable for any damage
to the realty or any such building or other real or personal property occasioned
by any removal of the Equipment by Lessee or Lessor or the agents of Lessee or
Lessor. Lessee further covenants and agrees that Lessee will, at the request of
Lessor, obtain and deliver to Lessor prior to the execution and delivery of the
first Rental Schedule for Equipment that will be at a specified location or
locations, a waiver, in recordable form, from the owner and any landlord, tenant
or holder of any lien or encumbrance on the realty or building(s) on or in which
any of the Equipment described in such Rental Schedule shall be located, under
which such owner, landlord, tenant and holder (i) agree and consent that such
Equipment is and shall be personal property, owned by and removable by Lessor
upon the expiration, cancellation or termination of the Lease Term thereof, and
(ii) waive any rights of distraint or similar rights with respect to such
Equipment.
(c) If Lessee is unable to return, or is prevented from returning, any of
the Equipment to Lessor upon the expiration, cancellation or termination of the
Lease Term as required under the provisions of this Master Lease on return of
Equipment, for any reason whatsoever, including, but not limited to, the
assertion by any third party of any claim against such Equipment, or of any
right with respect thereto, whether or not resulting from the manner in which
such Equipment is affixed or attached to, or installed in, the realty or any
building(s) thereon or any other personal or real property, or from the failure
of any owner, landlord or tenant of said realty (or the building(s) thereon) or
the holder of any lien or encumbrance to execute the waiver in writing of such
fact, for all purposes of this Lease such Equipment shall be deemed to have been
the subject of a Casualty Occurrence. Thereupon, Lessee shall pay to Lessor the
amounts provided for by the provisions of this Master Lease on loss, damage or
destruction of Equipment, with respect to such Equipment, at the time, in the
manner, and with the consequences provided by such provisions.
(d) Notwithstanding the foregoing provisions of this Section, without
----------------------------------------------------------------------
Lessor's prior written consent, Lessee shall not permit any of the Equipment to
-------------------------------------------------------------------------------
be attached or affixed to, imbedded in or incorporated into any building,
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structure, real estate or other personal or real property.
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18. Other Covenants. (a) Lessee agrees to furnish, upon Lessor's
---------------
request, such financial, business and operational information concerning Lessee
and any or all Guarantors, including copies of its and their tax returns, as
Lessor or its assigns may reasonably request during the Lease Term.
Additionally, Lessee shall furnish to Lessor and its assigns without notice or
demand therefor two complete copies of its and of every Guarantor's (i)
quarterly interim financial statements within 45 days of the close of each of
the first three fiscal quarters of every year, certified by the chief financial
officer of, respectively, Lessee or such Guarantor and (ii) annual financial
statements within 90 days of the close of each fiscal year reported on by
independent accountants without material adverse qualification. All such
financial statements shall be prepared in accordance with generally accepted
accounting principles consistently applied, and shall accurately and completely
present Lessee's and every Guarantor's financial condition and results of
operations at the dates of and for the periods covered by such statements.
(b) Lessee shall promptly furnish to Lessor copies of (i) filings that
Lessee or any Guarantor makes with the SEC or other government agencies under
the securities laws including but not limited to definitive proxy statements,
registration statements, prospectuses and tender offer filings, and reports on
holdings or acquisitions of securities, relating to proxy solicitations, and on
Form 10-K, 10-Q, 8-K or similar forms, and any amendments to such filings and
(ii) press releases of Lessee or any Guarantor.
(c) If Lessee shall become a public company, Lessee shall give Lessor
notice of all meetings of its stockholders and copies of all materials that are
furnished to the stockholders for the meetings at the same time that the notice
or materials are sent to the stockholders and Lessor shall have the right to
have its representative attend such meetings.
(d) There shall be no actual or threatened conflict with, or violation of,
any statute, regulation, standard or rule relating to Lessee, its present or
future operations, or the Equipment.
(e) All financial information supplied to Lessor or its assigns by Lessee
shall be correct and shall not omit any statement necessary to make the
information supplied not be materially misleading. There shall be no material
breach of the representations and warranties made by Lessee in connection with
this Lease.
(f) Lessee shall give Lessor notice of any change in the address of the
executive office or principal place of business of Lessee not less than 15 days
prior to the change.
(g) The senior management of Lessee shall not be changed as a result of a
change in control of Lessee without the consent of Lessor which shall not be
unreasonably withheld.
(h) Lessee shall not make any payment or distribution of money, checks,
securities or property to any Person in contravention of the provisions of any
Guaranty or subordination that such Person has made in favor of Lessor or its
assigns of which Lessee shall have notice or knowledge.
19. Events of Default. If one or more of the following events
-----------------
(hereinafter called "Events of Default" or an "Event of Default") shall occur:
(i) default shall be made in the payment of any Basic Rent or Additional
Rent due under this Master Lease or under any Rental Schedule hereto, and any
such default shall continue for more than 10 days after the due date thereof;
(ii) any representation or warranty by Lessee made in this Master Lease or
in any Guaranty or other Transactional Document or certificate furnished to
Lessor in connection with this Lease or pursuant hereto shall at any time prove
to be incorrect in any material respect as of the date made;
(iii) Lessee shall make or permit any unauthorized assignment or transfer
of this Master Lease or any Rental Schedule to this Master Lease or of any of
Lessee's rights and obligations hereunder or thereunder, or Lessee shall make or
permit any unauthorized sublease or transfer of any Equipment or the possession
of any Equipment;
(iv) Lessee shall default in the observance and/or performance of any
other covenant, condition or agreement on the part of Lessee to be observed
and/or performed under this Master Lease, under any Rental Schedule hereto, or
under any other Transactional Document, which default is not governed by
paragraphs (i), (ii) or (iii) above, and such default shall continue for 30 days
after written notice from Lessor to Lessee specifying the default and demanding
the same to be remedied;
(v) Lessee or any Guarantor shall make an assignment for the benefit of
creditors or generally fail to pay its debts as they become due, or become
insolvent or commence a voluntary case under the federal Bankruptcy Code as now
or hereafter constituted or any other applicable federal or state bankruptcy,
insolvency or similar law, or admit in writing its inability to pay its debts as
they mature, or consent to the appointment of a trustee or receiver, or a
trustee or a receiver shall be appointed for Lessee or any Guarantor or for a
substantial part of Lessee's or any Guarantor's property without such party's
consent and such appointment shall be not dismissed for a period of 60 days;
there shall have been entered a decree or order for relief by a court having
jurisdiction in respect of Lessee or any Guarantor, or approving as properly
filed a petition seeking a reorganization, arrangement, adjustment or
composition of or in respect of Lessee or any Guarantor in an involuntary
proceeding or case under any applicable federal or state bankruptcy, insolvency
or other similar law, or appointing a receiver, liquidator, assignee, custodian,
trustee or similar official of Lessee or any Guarantor or of any substantial
part of its property, or ordering the winding-up or liquidation of its affairs,
and the continuance of any such decree or order unstayed and in effect for a
period of 60 days, or there shall have been filed a petition by or against
Lessee or any Guarantor under any bankruptcy law or other insolvency law and, if
petition is filed against Lessee or such Guarantor, the petition is not
withdrawn or dismissed within 60 days after the date of filing; or Lessee or any
Guarantor shall cease doing business as a going concern or shall liquidate or be
dissolved;
(vi) Lessee or any Guarantor shall, without the prior written consent of
Lessor, enter into a merger, consolidation or division, effect a share exchange
of its outstanding stock for the stock of another corporation, or sell or
otherwise dispose of all or a major part of its assets or of assets that produce
all or a major part of its revenues or profits; provided, however, that Lessee
or any Guarantor, without violating the provisions of this clause, may
consolidate with or merge with a corporation or other entity organized under the
laws of one of the states of the United States (the surviving entity, a
"successor"), or sell (except by means of a sale and leaseback arrangement) all
or substantially all of its business and assets to such a successor, on the
condition that any successor expressly assume in writing all of the obligations
of Lessee pursuant to this Lease or of such Guarantor pursuant to its Guaranty,
and that the net tangible assets and the net worth (determined in accordance
with generally accepted accounting principles) of the successor after the
consolidation, merger or sale shall be at least equal to the net tangible assets
and the net worth of Lessee or such Guarantor, as the case may be, immediately
prior to the consolidation, merger or sale;
(vii) there shall occur under any other lease, contract or agreement
between Lessee and Lessor, an Event of Default, as defined in such lease,
contract or agreement;
(viii) any of the Equipment shall be attached, levied upon, encumbered,
pledged, seized or taken under any judicial process (except for any attachment,
levy, encumbrance or pledge caused to be placed on the Equipment by Lessor) and
such proceedings shall not be vacated, or fully stayed, within 30 days thereof;
(ix) at any time there shall occur under (A) any lease between Lessee and
a party other than Lessor as lessor or (B) under any lease wholly or partially
guaranteed by Lessee, the exercise by the lessor of its possessory remedies or
commencement of legal proceedings by the lessor for default under the lease;
provided that the aggregate future payments remaining to be made or guaranteed
by Lessee exceed $10,000, and that under a lease described in (B) above within
ten days of notice to Lessee of such exercise of remedies and demand for payment
by Lessee any such amount guaranteed by Lessee remains unpaid; or
(x) any obligation of Lessee or any Guarantor for the payment of borrowed
money or the acquisition of assets by purchase, conditional sale or other
arrangement is not paid or refinanced at maturity, whether by acceleration or
otherwise, or is declared due and payable prior to the stated maturity thereof
by reason of default or other violation of the terms of any promissory note or
agreement evidencing or governing such obligation, and Lessor has given Lessee
an opportunity to either cure the purported Event of Default or supply
information satisfactory to Lessor that it does not, in fact, exist;
this Lease shall be declared in default, immediately and without notice upon the
occurrence of an Event of Default specified in clause (v) above, and in the case
of any other Event of Default, upon Lessor at any time at its option subsequent
to such Event of Default giving notice to Lessee that this Lease is declared in
default. At any time after this Lease has been declared in default, Lessor may
exercise one or more of the following remedies, to the extent not then
prohibited by law, as Lessor in its sole discretion may elect:
(I) to proceed by appropriate court action or actions at law or in equity
or in bankruptcy to enforce performance by Lessee of the covenants and terms of
this Lease and/or to recover damages for the breach thereof;
(II) to terminate or cancel this Lease upon written notice to Lessee
whereupon all rights of Lessee to use the Equipment shall immediately terminate,
but Lessee shall not be relieved of any obligations under this Lease;
(III) whether or not this Lease be so terminated or canceled, and without
notice to Lessee, to repossess and/or to render inoperable the Equipment
wherever found, with or without legal process, and for this purpose Lessor
and/or its agents may enter upon any premises of or under the control or
jurisdiction of Lessee or any agent of Lessee without liability for suit, action
or other proceeding by Lessee and remove the Equipment therefrom; Lessee hereby
expressly waives any claims for damages occasioned by
such repossession; LESSEE HEREBY EXPRESSLY WAIVES ANY AND ALL RIGHTS, INCLUDING
RIGHTS TO NOTICE OR A JUDICIAL HEARING, WITH RESPECT TO REPOSSESSION OF THE
EQUIPMENT AFTER AN EVENT OF DEFAULT;
(IV) to hold or to use any Equipment returned to Lessor or repossessed by
Lessor for any purpose whatsoever, to sell any Equipment at a private or public,
cash or credit sale, to re-lease any Equipment, in all the foregoing events free
and clear of any rights of Lessee and without any duty to account to Lessee with
respect to such action or inaction, provided that prior to sale or lease of the
Equipment, or actual use of the Equipment, by Lessor after its return or
repossession, Lessor shall provide to Lessee the opportunity to remove from the
Equipment confidential information, data and software attached thereto or loaded
or present thereon or therein that are not a part of the Equipment.
(V) whether or not Lessor shall have exercised, or shall hereafter at any
time exercise, any of its other rights with respect to an item of the Equipment,
upon written notice to Lessee, to demand that Lessee pay to Lessor, and Lessee
shall pay to Lessor on the date specified in such notice, as liquidated damages
for loss of a bargain and not as a penalty (in lieu of the Basic Rent for such
Equipment that prior to the Event of Default was to have been paid on Payment
Dates subsequent to the date specified in such notice), the sum equal to the
---
excess, if any, of 125% of the Stipulated Loss Value for such item of Equipment
computed as of the latest Payment Date when all Basic Rent and Additional Rent
------------
then due and payable has been fully paid over whichever of the following three
amounts Lessor, in its reasonable discretion, shall designate in such notice:
(A) the present value of the fair market rental value (determined as
hereafter provided in this Section) of such item of the Equipment for
the remainder of the Lease Term as of the date specified in such notice
plus its projected residual value at the end of the Lease Term as of
such date, the present value to be computed on the basis of a seven
percent per annum rate of discount from the respective dates upon which
such rent would be paid,
(B) the fair market sales value (determined as hereafter provided in this
Section) of such item of Equipment as of the date specified in such
notice,or
(C) if Lessor shall have sold or re-leased any item of Equipment pursuant
to clause (IV) above, the net proceeds of such sale or re-lease,
plus interest at the Default Interest Rate (a) on such sum from the such Payment
--- -------
Date until paid and (b) on whichever of such three amounts is so designated by
----
Lessor from such Payment Date until whichever one of the following shall be
------------
applicable to the designated amount: the time when the fair market rental or
sales value shall have been so determined or the time when the Equipment shall
have been sold or re-leased; and
(VI) to forthwith recover from Lessee, and Lessee shall be fully liable
for, all Basic Rent that shall accrue until the date that the Equipment is
returned to or repossessed by Lessor and any Additional Rent including
collection fees, whenever accrued, and interest at the Default Interest Rate.
In addition to the foregoing, Lessor may also recover from Lessee all costs
and expenses arising out of Lessee's default, including, without limitation,
expenses of repossession of the Equipment and the storage, inspection, repair,
reconditioning, sale and re-leasing thereof, and reasonable attorneys' fees
incurred by Lessor in exercising any of its rights or remedies hereunder. For
the purposes of this Section only, "fair market rental value", "fair market
sales value" and "residual value" shall be determined by an appraisal of an
independent appraiser chosen by Lessor, and the cost of any such appraisal shall
be borne by Lessee. No remedy referred to in this Section is intended to be
exclusive, but each shall be cumulative and in addition to any other remedy
referred to above or otherwise available to Lessor at law or in equity or in
bankruptcy. The exercise by Lessor of any one or more remedies shall not be
deemed to preclude the simultaneous or later exercise by Lessor of any or all
such previously exercised remedies and any and all
other remedies; provided, however, that Lessor's total recovery upon exercise of
its rights and remedies with respect to any Equipment shall not exceed the
Stipulated Loss Value thereof and any such excess, after payment of all other
obligations of Lessee hereunder, shall be delivered to Lessee.
20. Assignment and Transfer by Lessor. (a) Lessor may at any time and
---------------------------------
from time to time assign to one or more security assignees (all herein called
the "Secured Party" and also called an "Assignee") for the purpose of securing a
loan to Lessor or for any other purpose, and at its sole discretion, may also
sell or transfer to one or more Persons (herein called the "Transferee" and also
called an "Assignee"), in any case subject to the rights of Lessee under this
Lease but without notice to or consent of Lessee, this Lease, any other
Transactional Documents, any or all of the Equipment, and all sums at any time
due and to become due or at any time owing or payable by Lessee to Lessor under
this Lease or pursuant to any or all of the Transaction Documents. The Secured
Party shall not be obligated to perform any duty, covenant or condition required
to be performed by Lessor under this Lease or any other Transactional Documents.
(b) Lessee agrees that notwithstanding any assignment to a Secured Party,
each and every covenant, agreement, representation and warranty of Lessor under
this Lease shall be and remain the sole liability of Lessor and of every
successor in interest of Lessor (excluding any Secured Party) or, in the case of
assignment to a Transferee, shall become and remain the sole liability of the
Transferee if so agreed to by the Transferee and if not so agreed to shall be
and remain the sole liability of Lessor. Lessee further agrees and acknowledges
that any assignment, sale or transfer by Lessor could not and shall not
materially change any duty or obligation of Lessee or materially increase any
burden or risk of Lessee.
(c) Lessee further acknowledges and agrees that from and after the receipt
by Lessee of written notice of an assignment from Lessor, Lessee shall comply
with the directions or demands given in writing by the Secured Party or (to the
extent not inconsistent with the directions or demands of the Secured Party) by
the Transferee, and the Secured Party or Transferee shall have the right to
exercise (either in its own name or in the name of Lessor) all rights,
privileges, and remedies of Lessor provided for herein. Lessee agrees that any
obligation to a Secured Party as a result of the assignment of this Lease to a
Secured Party as aforesaid shall not be reduced or minimized by reason of any
claim, defense, counterclaim, set-off, abatement, reduction or recoupment or
other right that Lessee might otherwise have been able to assert against Lessor,
any prior Assignee or any Transferee. After any assignment to a Secured Party
and unless and until Lessee is otherwise notified by the Secured Party, this
Lease may not be amended or modified, and no consent or waiver hereunder shall
be effective, without the prior written consent of the Secured Party. Lessee
agrees to execute and Lessor or any Transferee or Secured Party may record any
instruments and documents relating to such assignment, mortgage or security
interest desired by Lessor or any Transferee or Secured Party. Lessee shall
promptly provide any such instruments and documents that are requested by Lessor
or any Assignee including certificates indicating any claim, defense,
counterclaim, set-off, abatement, reduction, recoupment or other right that
Lessee may have against Lessor or any Assignee, the date to which Basic Rent has
been paid under each Rental Schedule hereunder and that this Lease is in effect
without default or amendment, or the extent of such default or amendment, as the
case may be.
21. Recording and Filing; Expenses. Lessee will, upon demand of Lessor,
------------------------------
at Lessee's cost and expense, do and perform any other act and will execute,
acknowledge, deliver, file, register, record and deposit (and will re-file, re-
register, re-record or re-deposit whenever required) any and all instruments
required by law or requested by Lessor (or any Assignee) including, without
limitation, financing statements under the Uniform Commercial Code (which,
notwithstanding the intent of Lessor and Lessee that this is a true lease,
Lessor shall have the right to file wherever and whenever Lessor requires), for
the purpose of providing proper protection to the satisfaction of Lessor (and/or
any Assignee) of Lessor's title to any Equipment (and/or of any Assignee's
security interest in the Equipment) or for the purpose of carrying out the
intention of this Lease. Lessee will also pay, or will upon demand reimburse
Lessor for, all reasonable costs and expenses incurred by Lessor in connection
with this Lease, any other Transactional Documents, and any related
transactions, closings, assignments, sales and transfers to any Secured
Party or Transferee, enforcement of Lessor's rights under this Lease and the
other Transactional Documents, proceedings involving Lessee or any Guarantor as
a debtor under any chapter of the Bankruptcy Code, filings, the documentation of
this and any related transactions, and fees and costs of attorneys for Lessor in
connection therewith.
22. Option to Renew. (a) Upon the expiration of the Primary Term
---------------
provided for under any Rental Schedule, and provided that the financial
condition of Lessee then meets the criteria of Lessor and that no Event of
Default or event which with the giving of notice or lapse of time, or both,
would constitute an Event of Default, has occurred and then remains unremedied
to Lessor's satisfaction, Lessee shall have the option, exercisable on at least
120 days' prior written notice to Lessor, to renew this Lease with respect to
all, but not less than all (except for items that have been destroyed and for
which Lessor has received payment of the greater of the Stipulated Loss Value or
the Fair Market Value with respect thereto) of the Equipment then subject to
such Rental Schedule, for up to two successive additional renewal terms (each a
"Renewal Term") of one year at a rate of Basic Rent for each Renewal Term that
would be obtained in an arm's-length transaction at the end of the Primary Term
between an informed and willing prospective lessee and an informed and willing
lessor, each under no compulsion to lease (said rate being herein called the
"Fair Rental Rate").
(b) If, on or before a date 60 days prior to the expiration of the Primary
Term or any Renewal Term with respect to such Rental Schedule, Lessor and Lessee
are unable to agree upon a determination of the Fair Rental Rate of the
Equipment, Lessee shall have no obligation to renew this Lease and shall either
give the notice required by the provisions of this Master Lease of intention to
return such Equipment and on the condition of such Equipment or a written notice
that Lessee wishes to proceed with its option. If Lessee gives such notice that
it will proceed with its option, such Equipment shall be leased during the
Renewal Term at the Fair Rental Rate determined in accordance with the procedure
for Appraisal (as hereinafter defined).
23. Quiet Enjoyment. So long as no Event of Default has occurred and is
---------------
continuing hereunder, Lessee shall have peaceful and quiet use and enjoyment of
the Equipment during the Lease Term as against acts of Lessor or anyone claiming
solely by, through or under Lessor including any Secured Party or Transferee.
24. Failure or Indulgence not Waiver; Additional Rights of Lessor. (a)
-------------------------------------------------------------
No failure to exercise, and no delay in exercising, any right, power or remedy
hereunder on the part of Lessor shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, power or remedy preclude any other or
further exercise thereof or the exercise of any other right, power or remedy.
Any waiver, to be effective, must be in writing. A waiver of any covenant, term
or condition contained herein shall not be construed as a waiver of any
subsequent breach of the same covenant, term or condition. Receipt by Lessor of
any Basic Rent or Additional Rent with knowledge of the breach of any provision
hereof shall not constitute a waiver of such breach.
(b) Lessor shall be entitled to injunctive relief in case of the violation
or attempted or threatened violation of any of the provisions hereof, to a
decree compelling performance of any of the provisions hereof, and to any other
remedy allowed in law or in equity.
25. Sublease. Lessee shall not sublease the Equipment, relinquish
--------------------------------------------------------------
possession of the Equipment, or assign, pledge or hypothecate this Lease or any
-------------------------------------------------------------------------------
of Lessee's rights or obligations hereunder, in whole or in part, without the
-------------------------------------------
prior written consent of Lessor. Nevertheless, any such sublease and the rents,
profits and proceeds therefrom shall be the property of Lessor and, unless
Lessor has consented to such sublease, Lessor within 30 days after receiving
notice thereof in accordance with the provisions of this Master Lease on notices
shall have the right to declare the sublease void from its purported
commencement, to terminate the sublease or to accept the sublease. Any such
attempted relinquishment of possession, assignment, pledge or hypothecation by
Lessee without such consent shall be null and void.
26. Commitment Fee. Lessee has paid Lessor a commitment fee of $13,500.00
--------------
(the "Commitment Fee"). The Commitment Fee shall be applied by Lessor until
exhausted proportionally to the last month's Basic Rent due for each Rental
Schedule hereunder upon the Lease Commencement Date of the Rental Schedule in
the proportion the Acquisition Cost of the Equipment leased pursuant to the
Rental Schedule bears to $1,750,000.00. The portion of the Commitment Fee which
is not so applied shall be non-refundable.
27. Lessee Purchase Option During Lease Term. If (i) no Event of Default,
----------------------------------------
and no event which with the giving of notice or lapse of time, or both, would
constitute an Event of Default, has occurred and then remains unremedied to
Lessor's satisfaction, and (ii) this Lease shall not have been earlier
terminated, Lessee shall be entitled, at its option, upon written notice to
Lessor, as hereinafter provided, to purchase, after 24 full calendar months
shall have passed from the last Lease Commencement Date to have occurred under
any Rental Schedule then outstanding, all but not less than all the Equipment
under all Rental Schedules of this Master Lease for the Stipulated Loss Value of
the Equipment on the date of purchase, as determined by the provisions of each
Rental Schedule for the Equipment subject thereto, plus any applicable sales,
excise or other taxes imposed as a result of such sale (other than net income
taxes attributable to such sale). Lessor's sale of any item of the Equipment
shall be on an "as-is", "where-is" basis, without any representation or warranty
by or recourse to Lessor, as provided by the provisions of this Master Lease on
disclaimer of warranties. If Lessee intends to exercise said purchase option in
regard to the Equipment, Lessee shall give written notice to Lessor to such
effect specifying the date of purchase at least 30 days prior to the date of
purchase. If Lessee gives such written notice, Lessee shall be obligated to
buy, and Lessor shall be obligated to sell, all of the Equipment on the terms
herein provided. The purchase price shall be payable in immediately available
funds on the date of purchase.
28. Purchase and Sale Options of Lessor and Lessee. (a) If (i) no Event of
----------------------------------------------
Default, and no event which with the giving of notice or lapse of time, or both,
would constitute an Event of Default, has occurred and then remains unremedied
to Lessor's satisfaction, and (ii) this Lease shall not have been earlier
terminated, Lessee shall be entitled, at its option, upon written notice to
Lessor, as hereinafter provided, to purchase all, but not less than all, items
of the Equipment then subject to a Rental Schedule, at the expiration of the
Primary Term for such items of the Equipment or, as the case may be, at the
expiration of any Renewal Term for such items of the Equipment, for an amount,
with respect to each such item of the Equipment, payable in immediately
available funds, equal to five percent (5%) of its Acquisition Cost, plus any
applicable sales, excise or other taxes imposed as a result of such sale (other
than net income taxes attributable to such sale). Lessor's sale of any item of
the Equipment shall be on an "as-is", "where-is" basis, without any
representation or warranty by or recourse to Lessor, as provided by the
provisions of this Master Lease on disclaimer of warranties, and shall be
subject to such additional terms and conditions as may be specified in the
Rental Schedule. If Lessee intends to exercise said purchase option, Lessee
shall give written notice to Lessor to such effect at least 30 days prior to the
earliest expiration of the Primary Term of the item(s) of the Equipment subject
to the particular Rental Schedule with respect to which Lessee intends to
exercise its purchase option, or, if a Renewal Term is then in effect, at least
30 days prior to the earliest expiration of the then current Renewal Term of the
item(s) of the Equipment subject to the particular Rental Schedule with respect
to which Lessee intends to exercise its purchase option. If Lessee fails to
give such written notice to Lessor as aforesaid, it shall be conclusively
presumed that Lessee has elected not to exercise such purchase option. If
Lessee gives such written notice, Lessee shall be obligated to buy, and Lessor
shall be obligated to sell, such Equipment on the terms herein provided.
(b) Lessor shall be entitled, at its option, upon written notice to Lessee,
as hereinafter provided, to sell all, but not less than all, items of the
Equipment then subject to a Rental Schedule, at the expiration of the Primary
Term for such items of the Equipment or, as the case may be, at the expiration
of any Renewal Term for such items of the Equipment, for an amount, with respect
to each such item of the Equipment, payable in immediately available funds,
equal to five percent (5%) of its Acquisition Cost, plus any
applicable sales, excise or other taxes imposed as a result of such sale (other
than net income taxes attributable to such sale). Lessor's sale of any item of
-------------
the Equipment shall be on an "as-is", "where-is" basis, without any
-----------------------------------------------------
representation or warranty by or recourse to Lessor, as provided by the
--------------------------
provisions of this Master Lease on disclaimer of warranties, and shall be
subject to such additional terms and conditions as may be specified in the
Rental Schedule. If Lessor intends to exercise said sale option, Lessor shall
give written notice to Lessee to such effect at least 30 days prior to the
earliest expiration of the Primary Term of the item(s) of the Equipment subject
to the particular Rental Schedule with respect to which Lessor intends to
exercise its sale option, or, if a Renewal Term is then in effect, at least 30
days prior to the earliest expiration of the then current Renewal Term of the
item(s) of the Equipment subject to the particular Rental Schedule with respect
to which Lessor intends to exercise its sale option. If Lessor fails to give
such written notice to Lessee as aforesaid, it shall be conclusively presumed
that Lessor has elected not to exercise such sale option. If Lessor gives such
written notice, Lessee shall be obligated to buy, and Lessor shall be obligated
to sell, such Equipment on the terms herein provided.
(c) Notwithstanding any election by Lessee to purchase or Lessor to sell,
the provisions of this Lease shall continue in full force and effect until the
transfer of ownership of such equipment upon the date of purchase and sale by
the delivery of a ▇▇▇▇ of Sale by Lessor.
29. Notices. Any notice or other communication required or permitted to
-------
be given by either party hereto to the other party shall be deemed to have been
given upon its receipt, in writing, by the receiving party at its address set
forth below, or at such other address as the receiving party shall have
furnished to the other party by notice pursuant to this Section.
If to Lessee: Power Integrations, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to Lessor: FINOVA Technology Finance, Inc.
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
30. Entire Agreement; Severability; Amendment or Cancellation of Lease.
------------------------------------------------------------------
This Lease constitutes the complete and exclusive statement of the terms of the
agreement between the parties with respect to the leasing of the Equipment and
any sale of the Equipment by Lessor to Lessee, except that the commitment letter
of Lessor to Lessee dated January 29, 1997, accepted by Lessee February 5, 1997,
covers the commitment of Lessor to enter into Rental Schedules under this Master
Lease. Any provision of this Lease which is prohibited or unenforceable in any
jurisdiction shall be, as to such jurisdiction, ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. LESSEE ACKNOWLEDGES RECEIPT OF A COPY OF THIS MASTER LEASE.
Lessor and Lessee agree that neither this Lease nor Lessee's acceptance or
--------------------------------------------------------------------------
deemed acceptance of any or all of the Equipment may be canceled, waived,
------------------------------------------------------------------------
altered, amended, repudiated, terminated, rescinded, revoked or modified, except
--------------------------------------------------------------------------------
by a writing signed by Lessee and a duly authorized representative of Lessor
----------------------------------------------------------------------------
POWER INTEGRATIONS,INC.
--------------------------------
Signature of Lessee
31. Waiver of Jury. Lessor and Lessee waive any right and all right to
-------------------------------------------------------------------
trial by jury in any action or proceeding relating in any way to this Lease.
---------------------------------------------------------------------------
32. Restriction of Limitation Periods and Damages. Any action for breach
---------------------------------------------------------------------
of warranty or in respect of or relating to the Equipment or this Lease that may
--------------------------------------------------------------------------------
be brought by Lessee against Lessor or any Assignee must be commenced within one
--------------------------------------------------------------------------------
year after the cause of action accrues. Lessee shall not make any claim in
---------------------------------------------------------------------------
respect of or relating to the Equipment or this Lease against Lessor or any
---------------------------------------------------------------------------
Assignee for special consequential or punitive damages.
------------------------------------------------------
33. Governing Law; Consent to Jurisdiction and Service. This Lease shall
---------------------------------------------------------------------
be governed by and construed in accordance with the laws of the State of
------------------------------------------------------------------------
Connecticut (other than the conflicts of laws provisions). Lessee agrees that
------------------------------------------------------------------------------
any legal action or proceeding against Lessee in respect of or relating to this
-------------------------------------------------------------------------------
Lease or the Equipment may be brought in any state or federal court sitting in
------------------------------------------------------------------------------
the city of Hartford in the State of Connecticut. Lessee hereby irrevocably
----------------------------------------------------------------------------
consents and submits to the nonexclusive personal jurisdiction of said courts
-----------------------------------------------------------------------------
and irrevocably agrees that all claims in any such action or proceeding may be
------------------------------------------------------------------------------
heard and determined in and enforced by any such court. Lessee irrevocably
---------------------------------------------------------------------------
consents to the service of summons, notice, or other process relating to any
----------------------------------------------------------------------------
such action or proceeding by delivery thereof to it by hand or by mail in the
-----------------------------------------------------------------------------
manner set forth in the provisions of this Master Lease on notices.
------------------------------------------------------------------
34. Lessor's Right to Perform for Lessee. If Lessee fails to duly and
------------------------------------
promptly perform any of its obligations under this Lease or fails to comply with
any of the covenants or agreements contained herein, Lessor may itself perform
such obligations or comply with such covenants or agreements, for the account of
Lessee, without thereby waiving any default, and any amount paid or expense
(including, without limitation, attorney's fees) reasonably incurred by Lessor
in connection with such performance or compliance shall, together with interest
thereon at the Default Interest Rate, be payable by Lessee to Lessor on demand.
35. Agreement for Lease Only. Lessor and Lessee agree that this Lease is
------------------------
and is intended to be a true lease (and not a lease in the nature of a security
interest) and further agree to treat this Lease as a true lease for all
purposes, including, without limitation, tax purposes.
36. Binding Effect. This Lease shall inure to the benefit of and be
--------------
binding upon the parties hereto and their respective permitted successors and
assigns.
37. General. The captions in this Master Lease and each Rental Schedule
-------
are for convenience of reference only. There shall be only one original
executed copy of this Master Lease and of each Rental Schedule. This Master
Lease is and each Rental Schedule shall be executed in the State of Connecticut
by Lessor's having countersigned the same in the State of Connecticut, and are
to be and shall be performed in the State of Connecticut by reason of the
requirements therein for payment by Lessee to Lessor to be made in the State of
Connecticut.
38. Definitions. The following terms, not elsewhere defined, shall have
-----------
the following meanings for all purposes hereof:
"Acquisition Cost" of any item of the Equipment shall mean an amount equal
to the sum of (i) the purchase price of such item of the Equipment paid by
Lessor pursuant to the purchase order for such item of the Equipment assigned to
or given by Lessor, plus (ii) any excise, sales or use tax, freight,
installation, set-up and other costs that are paid by Lessor on or with respect
to such item of the Equipment on or about the time of Lessor's purchase of the
Equipment or the Lease Commencement Date and that Lessor does not request Lessee
to directly reimburse to Lessor.
"Appraisal" shall mean the following procedure whereby recognized
independent qualified equipment appraisers shall mutually agree upon the amount
in question. The party seeking Appraisal shall deliver a written notice to that
effect to the other party appointing its appraiser, and within 15 days after
receipt of such notice, the other party shall, by written notice, appoint its
appraiser. If within 15 days after appointment of the two appraisers as
described above, the two appraisers are unable to agree upon the amount in
question, a third appraiser shall be chosen within five days thereafter by
mutual agreement
of the first two appraisers, or if the first two appraisers fail to agree upon
the appointment of a third appraiser, such appointment shall be made by an
authorized representative of the American Arbitration Association. The appraisal
of the third appraiser shall be given within a period of ten days after the
selection of the third appraiser. The average of the three appraisals arrived at
by the three appraisers shall be binding and conclusive on Lessor and Lessee.
Lessor and Lessee each shall pay the fees of the appraiser appointed by it and
shall share equally the fees and expenses of the third appraiser, if any, and
those of the American Arbitration Association, if applicable.
"Certificate of Inspection and Acceptance" shall mean a certificate in the
form designated by Lessor whereby Lessee evidences its acceptance of one or more
items of the Equipment for lease hereunder.
"Fair Market Value" shall mean, with respect to the Equipment in question,
the amount which would be paid for that Equipment in an arm's-length sale
transaction between an informed and willing buyer (not a used equipment or scrap
dealer) who wants the Equipment to be as described in the next following
sentence and is under no compulsion to buy, and an informed and willing seller
under no compulsion to sell. In determining the Fair Market Value, it shall be
assumed (whether or not the same be true) that the Equipment is fully
operational, installed and in economically productive service and that all
maintenance and repairs including upgrades, replacements and other services
required by this Lease have been performed and that the Equipment is in such
condition to comply fully with the requirements of this Lease, including
provisions of this Master Lease governing the return of Equipment. The costs of
removal from the location of current use and installation at another location
for use shall not be a deduction in determining the Fair Market Value.
"Guarantor" shall mean a guarantor of any or all of the obligations of
Lessee pursuant to this Lease.
"Guaranty" shall mean a writing containing a guaranty of any or all of the
obligations of Lessee pursuant to this Lease.
"Lease Commencement Date" with respect to an item of Equipment shall mean
the date of commencement of the Lease Term of the item as provided by the
applicable Rental Schedule.
"Lease Term" with respect to an item of the Equipment shall mean the
Primary Term plus any and all Renewal Terms plus any period during which Lessee
retains the Equipment on a month-to-month basis pursuant to provisions of this
Master Lease governing the return of the Equipment. The Lease Term shall
include the Lease Commencement Date and the date on which the Lease Term ends.
"Manufacturer" shall mean the Person that manufactures the item of the
Equipment in question.
"Master Lease" shall mean this Master Equipment Lease Agreement.
"Permitted Liens" shall mean:
(a) liens for taxes, fees, assessments or other governmental charges or
levies, either not delinquent or being contested in good faith by
appropriate proceedings, provided the same have no priority over the
--------
interests of Lessor;
(b) liens securing claims or demands of materialmen, mechanics, carriers,
warehousemen, landlords and other like persons or entities imposed
without action of such parties, provided that the payment thereof is
--------
not yet required and such claims or demands do not arise from acts or
requests of Lessee prohibited by this Lease; and
(c) liens arising from judgments, decrees or attachments in circumstances
not constituting immediately or with either or both the passage of
time or the giving of notice an Event of Default hereunder.
"Person" shall mean an individual, a corporation, a partnership, an
association, a joint-stock company, a trust, an estate, any incorporated
organization or similar association, a government or political subdivision, or
any other entity.
"Rental Schedule" shall mean each schedule, executed by Lessor and Lessee
pursuant to this Master Lease, providing for a description of some or all of the
Equipment to be leased hereunder, the place or places where such Equipment shall
be located, its Acquisition Cost, the Basic Rent payable by Lessee with respect
thereto, the Primary Term thereof, the Lease Commencement Date with respect
thereto, and such other matters as Lessor and Lessee may agree upon.
"Stipulated Loss Value" shall mean the amounts specified in the Table of
Stipulated Loss Values applicable to the items of the Equipment subject to a
Rental Schedule, as provided by the Schedule B attached to the Rental Schedule.
Except as otherwise provided in a writing signed by Lessor and Lessee, the
Stipulated Loss Value immediately prior to the end of the Primary Term for any
items of the Equipment shall be the Stipulated Loss Value throughout any Renewal
Term(s) for such items, and thereafter until such items are returned to Lessor
pursuant to the provisions of this Lease or purchased by Lessee pursuant to any
then applicable purchase option provisions of this Lease.
IN WITNESS WHEREOF, the duly authorized representatives of Lessor and
Lessee have executed this Master Lease as of the date first above written.
LESSOR: LESSEE:
FINOVA TECHNOLOGY POWER INTEGRATIONS, INC.
FINANCE, INC.
By: By:
------------------------------- ----------------------------
Title: Title:
---------------------------- -------------------------
ATTEST:
By:
----------------------------
Title:
-------------------------