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EXHIBIT 10.1
[MIDCOM LOGO]
MASTER LEASE AGREEMENT dated January 15, 1997 by and between COMDISCO, INC.
("Lessor") and MIDCOM Communications Inc. ("Lessee").
IN CONSIDERATION of the mutual agreements described below, the parties agree as
follows (all capitalized terms are defined in Section 14.13):
1. Property Leased.
Lessor leases to Lessee all of the Equipment described on each
Schedule. In the event of a conflict, the terms of a Schedule prevail over this
Master Lease.
2. Term.
On the Commencement Date Lessee will be deemed to accept the Equipment,
will be bound to its rental obligations for each item of Equipment and the term
of a Schedule will begin and continue through the Initial Term and thereafter
until terminated by either party upon prior written notice received during the
Notice Period. No termination may be effective prior to the expiration of the
initial Term.
3. Rent and Payment.
Rent is due and payable in advance, in immediately available funds, on
the first day of each Rent Interval to the payee and at the location specified
in Lessor's invoice. Interim Rent is due and payable when invoiced. If any
payment is not made when due, Lessee will pay interest at the Overdue Rate.
4. Selection: Warranty and Disclaimer of Warranties.
4.1 Selection. Lessee acknowledges that it has selected the Equipment
and disclaims any reliance upon statements made by the Lessor.
4.2 Warranty and Disclaimer of Warranties. Lessor warrants to Lessee
that, so long as Lessee is not in default, Lessor will not disturb Lessee's
quiet and peaceful possession, and unrestricted use of the Equipment. To the
extent permitted by the manufacturer, Lessor assigns to Lessee during the term
of the Schedule any manufacturer's warranties for the Equipment. Lessor MAKES
NO OTHER WARRANTY, EXPRESS OR IMPLIED AS TO ANY MATTER WHATSOEVER, INCLUDING,
WITHOUT LIMITATION, THE MERCHANTABILITY OF THE EQUIPMENT OR ITS FITNESS FOR A
PARTICULAR PURPOSE. Lessor is not responsible for any liability, claim, loss,
damage or expense of any kind (including strict liability in tort) caused by
the Equipment except for any loss or damage caused by the negligent acts of
Lessor. In no event is Lessor responsible for special, incidental or
consequential damages.
5. Title and Assignment.
5.1 Title. Lessee holds the Equipment subject and subordinate to the
rights of the Owner, Lessor, any Assignee and any Secured Party. Lessee
authorizes Lessor, as Lessee's agent, to prepare, execute and file in Lessee's
name precautionary Uniform Commercial Code financing statements showing the
interest of the Owner. Lessor, and any Assignee or Secured Party in the
Equipment and to insert serial numbers in Schedules as appropriate. Except as
provided in Sections 5.2 and 7.2, Lessee will, at its expense, keep the
Equipment free and clear from any liens or encumbrances of any kind (except any
caused by Lessor) and will indemnify and hold Lessor, Owner, any Assignee and
Secured Party harmless from and against any loss caused by Lessee's failure to
do so.
5.2 Relocation or Sublease. Upon prior written notice, Lessee may
relocate Equipment to any location within the continental United States provided
(i) the Equipment will not be used by an entity exempt from federal income tax,
(ii) all additional costs (including any administrative fees, additional taxes
and insurance coverage) are reconciled and promptly paid by Lessee.
Lessee may sublease the Equipment upon the reasonable consent of the
Lessor and the Secured Party. Such consent to sublease will be granted if (i)
Lessee meets the relocation requirements set out above, (ii) the sublease is
expressly subject and subordinate to the terms of the Schedule., (iii) Lessee
assigns its rights in the sublease to Lessor and the Secured Party as
additional collateral and security, (iv) Lessee's obligation to maintain and
insure the Equipment is not altered, (v) all financing statements required to
continue the Secured Party's prior perfected security interest are filed, and
(vi) the sublease is not to a leasing entity affiliated with the manufacturer
of the Equipment described on the Schedule. Lessor acknowledges Lessee's right
to sublease for a term which extends beyond the expiration of the Initial Term.
If Lessee subleases the Equipment for a term extending beyond the expiration of
such Initial Term of the applicable Schedule, Lessee shall remain obligated
upon the expiration of the Initial Term to return such Equipment, or, at
Lessor's option to (i) return Like Equipment or (ii) negotiate a mutually
acceptable lease extension or purchase. If the parties cannot mutually agree
upon the terms of an extension or purchase, the term of the Schedule will
extend upon the original terms and conditions until terminated pursuant to
Section 2.
No relocation or sublease will relieve Lessee from any of its obligations under
this Master Lease and the applicable Schedule.
5.3 Assignment by Lessor. The terms and conditions of each Schedule
have been fixed by Lessor in order to permit Lessor to sell and/or assign or
transfer its interest or grant a security interest in each Schedule and/or the
Equipment to a Secured Party or Assignee. In that event the term Lessor will
mean the Assignee and any Secured Party. However, any assignment, sale, or
other transfer by Lessor will not relieve Lessor of its obligations to Lessee
and will not materially change Lessee's duties or materially increase the
burdens or risks imposed on Lessee. The Lessee consents to and will acknowledge
such assignments in a written notice given to Lessee. Lessee also agrees that:
(a) The Secured Party will be entitled to exercise all of Lessor's
rights, but will not be obligated to perform any of the
obligations of Lessor. The Secured Party will not disturb
Lessee's quiet and peaceful possession and unrestricted use of
the Equipment so long as Lessee is not in default and the
Secured Party continues to receive all Rent payable under the
Schedule:
(b) Lessee will pay all Rent and all other amounts payable to the
Secured Party, despite any defense or claim which it has against
Lessor. Lessee reserves its right to have recourse directly
against Lessor for any defense or claim; and
(c) Subject to and without impairment of Lessee's leasehold rights
in the Equipment, Lessee holds the Equipment for the Secured
Party to the extent of the Secured Party's rights in that
Equipment.
6. Net Lease, Taxes and Forms.
6.1 Net Lease.
Each Schedule constitutes a net lease. Lessee's obligation to pay Rent
and all other amounts is absolute and unconditional and is not subject to any
abatement, reduction, set-off, defense, counterclaim, interruption, deferment
or recoupment for any reason whatsoever.
6.2 Taxes and Fees. Lessee will pay when due or reimburse Lessor for
all taxes, fees or any other charges (together with any retained interest or
penalties not arising from the negligence of Lessor) accrued for or arising
during the term of each Schedule against Lessor, Lessee or the Equipment by any
governmental authority (except only Federal, state and local taxes on the
capital or the net income of Lessor). Lessor will file all personal property
tax returns for the Equipment and pay all property taxes due. Lessee will
reimburse Lessor for property taxes within thirty (30) days of receipt of an
invoice.
7. Care, Use, Maintenance, Attachments, Reconfigurations and inspections
by Lessor.
7.1 Care, Use and Maintenance. Lessee will maintain the Equipment in
good operating order and appearance, protect the Equipment from deterioration,
other than normal wear and tear, and will not use the Equipment for any purpose
other than that for which it was designed. If commercially available, Lessee
will maintain in force a standard maintenance contract with the manufacturer of
the Equipment, or another party acceptable to Lessor, and upon request will
provide Lessor with a complete copy of that contract. If Lessee has the
Equipment maintained by a party other than the manufacturer, Lessee agrees to
pay any costs necessary for the manufacturer to bring the Equipment to then
current release, revision and engineering change levels, and to re-certify the
Equipment as eligible for manufacturer's maintenance at the expiration of the
lease term. The lease term will continue upon the same terms and conditions
until recertification has been obtained.
7.2 Attachments and Reconfigurations. Upon prior written notice to
Lessor, Lessee may reconfigure and install Attachments on the Equipment. In the
event of such a Reconfiguration or Attachment, Lessee shall, upon return of the
Equipment, at its expense, restore the Equipment to the original configuration
specified on the Schedule in accordance with the manufacturer's specifications
and in the same operating order, repair and appearance as when installed
(normal wear and tear excluded). If any parts are removed from the Equipment
during the Reconfiguration or Attachment, the restoration will include, at
Lessee's option, the installation of either the original removed parts or like
parts. Alternatively, with Lessors prior written consent which will not be
unreasonably withheld, Lessee may return the Equipment with any Attachment or
upgrade. If any parts of the Equipment are removed during a Reconfiguration or
Attachment, Lessor may require Lessee to provide additional security,
satisfactory to the Lessor, in order to ensure performance of Lessee's
obligations set forth in this subsection. Neither Attachments nor parts
installed on Equipment in the course of Reconfiguration shall be accessions to
the Equipment.
However, if the Reconfiguration or Attachment (i) adversely affects
Lessor's tax benefits relating to the Equipment: (ii) is not capable of being
removed without causing material damage to the Equipment; or (iii) if at the
time of the reconfiguration or attachment the manufacturer does not offer on a
commercial
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basis a means for the removal of the additional items: then such Reconfiguration
or Attachment is subject to the prior written consent of Lessor.
7.3 Inspection by Lessor. Upon request, Lessee, during reasonable
business hours and subject to Lessee's security requirements, will make the
Equipment and its related log and maintenance records available to Lessor for
inspection.
8. Representations and Warranties of Lessee.
Lessee represents and warrants that for the Master Lease and each
Schedule:
(a) The execution, delivery and performance of the Lessee have been
duly authorized by all necessary corporate action;
(b) The individual executing was duly authorized to do so;
(c) The Master Lease and each Schedule constitute legal, valid and
binding agreements of the Lessee enforceable in accordance with
their terms;
(d) The Equipment is personal property and when subjected to use by
the Lessee will not be or become fixtures under applicable law.
9. Delivery and Return of Equipment.
Lessee assumes the full expense of transportation and in-transit
insurance to Lessee's premises and for installation of the Equipment. Upon
expiration or termination of each Schedule, Lessee will, at Lessor's
instructions and at Lessee's expense (including transportation and in-transit
insurance), have the Equipment deinstalled, audited by the manufacturer, packed
and shipped in accordance with the manufacturer's specifications and returned
to Lessor in the same operating order, repair and appearance as when installed
(ordinary wear and tear excluded), to a location within the continental United
States as directed by Lessor. All items returned to Lessor in addition to the
Equipment become property of Lessor.
10. Labeling.
Upon request, Lessee will ▇▇▇▇ the Equipment indicating Lessor's
interest. Lessee will keep all Equipment free from any other marking or labeling
which might be interpreted as a claim of ownership.
11. Indemnity.
Lessee will indemnify and hold Lessor, any Assignee and any Secured
Party harmless from and against any and all claims, costs, expenses, damages
and liabilities, including reasonable attorney's fees, arising out of the
ownership (for strict liability in tort only), selection, possession, leasing,
operation, control, use, maintenance, delivery, return or other disposition of
the Equipment. However, Lessee is not responsible to a party indemnified
hereunder for any claims, costs, expenses, damages and liabilities occasioned
by the negligent acts of such indemnified party. Lessee agrees to carry bodily
injury and property damage liability insurance during the term of the Master
Lease in amounts and against risks customarily insured against by the Lessee on
equipment owned by it. Any amounts received by Lessor under that insurance will
be credited against Lessee's obligations under this Section.
12. Risk of Loss.
12.1 Lessee's Risk of Loss. If the Schedule indicates that the Lessee
has responsibility for the risk of loss of the Equipment, then the following
terms will apply:
Effective upon delivery and until the Equipment is returned, Lessee
relieves Lessor of responsibility for all risks of physical damage to or loss
or destruction of the Equipment. Lessee will carry casualty insurance for
each item of Equipment in an amount not less than the Casualty Value. All
policies for such insurance will name the Lessor and any Secured Party as
additional insured and as loss payee, and will provide for at least thirty (30)
days prior written notice to the Lessor of cancellation or expiration. The
Lessee will furnish appropriate evidence of such insurance.
Lessee shall promptly repair any damaged item of Equipment unless such
Equipment has suffered a Casualty Loss. Within fifteen (15) days of a Casualty
Loss, Lessee will provide written notice of that loss to Lessor and Lessee
will, at Lessor's option, either (a) replace the item of Equipment with Like
Equipment and marketable title to the Like Equipment will automatically vest in
Lessor or (b) pay the Casualty Value and after that payment and the payment of
all other amounts due and owing, Lessee's obligation to pay further rent for
the item of Equipment will cease.
12.2 Lessor's Risk of Loss. If the Schedule indicates that the Lessor
has responsibility for the risk of loss of the Equipment, then the following
terms will apply:
Effective upon delivery and throughout the Initial Term of a Schedule
and any extension, Lessor agrees to insure the Equipment against physical
damage to or loss or destruction due to external cause as specified by the
terms of the Lessor's then current insurance policy. Lessor relieves Lessee of
responsibility for physical damage to or loss or destruction of Equipment
reimbursed by that insurance. Lessee will give Lessor prompt notice of any
damage, loss or destruction to any item of Equipment and Lessor will determine
within fifteen (15) days of its receipt of that notice whether the item has
suffered a Casualty Loss.
If any item of Equipment suffers damage or a Casualty Loss which is
reimbursable under Lessor's insurance, upon payment by Lessee of Lessor's
deductible, Lessor will: (i) (for damaged equipment) arrange and pay for the
repair of any damaged item of Equipment or (ii) for any Casualty Loss) at
Lessor's option either replace the item of Equipment with Like Equipment, or
upon payment of all other amounts due by Lessee terminate the relevant Schedule
as it relates to that item of Equipment.
If any item of Equipment suffers damage or a Casualty Loss which is not
reimbursable under Lessor's insurance, then Lessee will comply with the
provisions of the last paragraph of Section 12.1 regarding repair, replacement
or payment of Casualty Value.
If Lessor fails to maintain insurance coverage as required by this
subsection 12.2, Lessee will assume such risk of loss and, at the request of
any Assignee or Secured Party, will promptly provide insurance coverage. This
paragraph does not relieve Lessor of its obligations to maintain coverage of
the Equipment.
13. Default, Remedies and Mitigation.
13.1 Default. The occurrence of any one or more of the following
Events of Default constitutes a default under a Schedule:
(a) Lessee's failure to pay Rent or other amounts payable by Lessee
when due if that failure continues for ten (10) days after written
notice; or
(b) Lessee's failure to perform any other term or condition of the
Schedule or the material inaccuracy of any representation or
warranty made by the Lessee in the Schedule or in any document or
certificate furnished to the Lessor hereunder if that failure or
inaccuracy continues for fifteen (15) days after written notice; or
(c) An assignment by Lessee for the benefit of its creditors, the
failure by Lessee to pay its debts when due, the insolvency of
Lessee, the filing by Lessee or the filing against Lessee of any
petition under any bankruptcy or insolvency law or for the
appointment of a trustee or other officer with similar powers, the
adjudication of Lessee as insolvent, the liquidation of Lessee, or
the making of any action for the purpose of the foregoing; or
(d) The occurrence of an Event of Default under any Schedule or other
agreement between Lessee and Lessor or its Assignee or Secured
Party.
13.2 Remedies. Upon the occurrence of any of the above Events of
Default, Lessor, at its option, may:
(a) enforce Lessee's performance of the provisions of the applicable
Schedule by appropriate court action in law or in equity;
(b) recover from Lessee any damages and or expenses, including Default
Costs;
(c) with notice and demand, recover all sums due and accelerate and
recover the present value of the remaining payment stream of all
Rent due under the defaulted Schedule (discounted at the same rate
of interest at which such defaulted Schedule was discounted with a
Secured Party plus any prepayment fees charged to Lessor by the
Secured Party of, if there is no Secured Party, then discounted at
6%) together with all Rent and other amounts currently due as
liquidated damages and not as a penalty;
(d) with notice and process of law and in compliance with Lessee's
security requirements, Lessor may enter Lessee's premises to remove
and repossess the Equipment without being liable to Lessee for
damages due to the repossession, except those resulting from
Lessor's, its assignees', agents' or representatives' negligence;
(e) Lessor may pursue any other remedy permitted by law or equity.
The above remedies, in Lessor's discretion and to the extent permitted
by law, are cumulative and may be exercised successively or concurrently.
13.3 Mitigation. Upon return of the Equipment pursuant to the terms
of Section 13.2, Lessor will use its best efforts in accordance with its normal
business procedures (and without obligation to give any priority to such
Equipment) to mitigate Lessor's damages as described below. EXCEPT AS SET
FORTH IN THIS SECTION, LESSEE HEREBY WAIVES ANY RIGHTS NOW OR HEREAFTER
CONFERRED BY STATUTE OR OTHERWISE WHICH MAY REQUIRE LESSOR TO MITIGATE ITS
DAMAGES OR MODIFY ANY OF LESSOR'S RIGHTS OR REMEDIES STATED HEREIN. Lessor may
sell, lease or otherwise dispose of all or any part of the Equipment at a
public or private sale for cash or credit with the privilege of purchasing the
Equipment. The proceeds from any sale, lease or other disposition of the
Equipment are defined as either:
(a) if sold or otherwise disposed of, the cash proceeds less the Fair
Market Value of the Equipment at the expiration of the Initial Term
less the Default Costs;
(b) if leased, the present value (discounted at three points over the
prime rate as referenced in the Wall Street Journal at the time
of the mitigation) of the rentals for a term not to exceed the
Initial Term, less the Default Costs.
Any proceeds will be applied against liquidated damages and any other
sums due to Lessor from Lessee. However, Lessee is liable to Lessor for, and
Lessor may recover, the amount by which the proceeds are less than the
liquidated damages and other sums due to Lessor from Lessee.
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14. Agreement provisions.
14.1 Entire Agreement. This Master Lease and associated Schedules
supersede all other oral or written agreements or understandings between the
parties concerning the Equipment including, for example, purchase orders. ANY
AMENDMENT OF THIS MASTER LEASE OR A SCHEDULE MAY ONLY BE ACCOMPLISHED BY A
WRITING SIGNED BY THE PARTY AGAINST WHOM THE AMENDMENT IS SOUGHT TO BE ENFORCED.
14.2 No Waiver. No action taken by Lessor or Lessee shall be deemed to
constitute a waiver of compliance with any representation, warranty or
covenant contained in this Master Lease or a Schedule. The waiver by Lessor or
Lessee of a breach of any provision of this Master Lease or a Schedule will not
operate or be construed as a waiver of any subsequent breach.
14.3 Binding Nature. Each Schedule is binding upon, and inures to the
benefit of Lessor and its assigns. LESSEE MAY NOT ASSIGN ITS RIGHTS OR
OBLIGATIONS.
14.4 Survival of Obligations. All agreements, obligations including,
but not limited to those arising under Section 6.2, representations and
warranties contained in this Master Lease, any Schedule or in any document
delivered in connection with those agreements are for the benefit of Lessor and
any Assignee or Secured Party and survive the execution, delivery, expiration
or termination of this Master Lease.
14.5 Notices. Any notice, request or other communication to either
party by the other will be given in writing and deemed received upon the
earlier of actual receipt or three days after mailing if mailed postage
prepaid by regular or airmail to Lessor (to the attention of "Lease
Administrator") or Lessee, at the address set out in the Schedule or, one day
after it is sent by courier or facsimile transmission if receipt is verified
by the receiving party.
14.6 Applicable Law. THIS MASTER LEASE HAS BEEN, AND EACH SCHEDULE WILL
HAVE BEEN MADE, EXECUTED AND DELIVERED IN THE STATE OF ILLINOIS AND WILL BE
GOVERNED AND CONSTRUED FOR ALL PURPOSES IN ACCORDANCE WITH THE LAWS OF THE STATE
OF ILLINOIS WITHOUT GIVING EFFECT TO CONFLICT OF LAW PROVISIONS. NO RIGHTS OR
REMEDIES REFERRED TO IN ARTICLE 2A OF THE UNIFORM COMMERCIAL CODE WILL BE
CONFERRED ON LESSEE UNLESS EXPRESSLY GRANTED IN THIS MASTER LEASE OR A SCHEDULE.
14.7 Severability. If any one or more of the provisions of this Master
Lease or and Schedule is for any reason held invalid, illegal or unenforceable,
the remaining provisions of this Master Lease and any such Schedule will be
unimpaired, and the invalid, illegal or unenforceable provision replaced by a
mutually acceptable valid, legal and enforceable provision that is closest to
the original intention of the parties.
14.8 Counterparts. This Master Lease and any Schedule may be executed
in any number of counterparts, each of which will be deemed an original, but all
such counterparts together constitute one and the same instrument. If Lessor
grants a security interest in all or any part of a Schedule, the Equipment or
sums payable thereunder, only that counterpart Schedule marked "Secured
Party's Original" can transfer Lessor's rights and all other counterparts will
be marked "Duplicate".
14.9 Nonspecified Features and Licensed Products. If the Equipment is
supplied from Lessor's inventory and contains any features not specified in the
Schedule, Lessee grants Lessor the right to remove any such features. Any
removal will be performed by the manufacturer or another party acceptable to
Lessee, upon the request of Lessor, at a time convenient to Lessee, provided
that Lessee will not unreasonably delay the removal of such features.
Lessee shall obtain no title to Licensed Products which will at all
times remain the property of the owner of the Licensed Products. A license from
the owner may be required and it is Lessee's responsibility to obtain any
required license before the use of the Licensed Products. Lessee agrees to treat
the Licensed Products as confidential information of the owner, to observe all
copyright restrictions, and not to reproduce or sell the Licensed Products.
14.10 Additional Documents. Lessee will, upon execution of this Master
Lease and as may be requested thereafter, provide Lessor with a secretary's
certificate of incumbency and authority and any other documents reasonably
requested by Lessor. Upon the execution of each Schedule with an aggregate Rent
in excess of $2,000,000, Lessee will provide Lessor with an opinion from
Lessee's counsel regarding the representations and warranties in Section 9.
Lessee will furnish, upon request, audited financial statements for the most
recent period.
14.11 Electronic Communications. Each of the parties may communicate
with the other by electronic means under mutually agreeable terms.
14.12 Lessor's Right to Match. Lessee's rights under Section 5.2 and
7.2 are subject to Lessor's right to match any sublease or upgrade proposed by
a third party. Lessee will provide Lessor with the terms of the third party
offer and Lessor will have three (3) business days to match the offer. Lessee
shall obtain such upgrade from or sublease the Equipment to Lessor if Lessor
has timely matched the third party offer.
14.13 Definitions.
ASSIGNEE - means an entity to whom Lessor has sold or assigned its rights as
owner and Lessor of Equipment.
ATTACHMENT - means any accessory, equipment or device and the installation
thereof that does not impair the original function or use of the Equipment and
is capable of being removed without causing material damage to the Equipment
and is not an accession to the Equipment.
CASUALTY LOSS - means the irreparable loss or destruction of Equipment.
CASUALTY VALUE - means the greater of the aggregate Rent remaining to be paid
for the balance of the lease term or the Fair Market Value of the Equipment
immediately prior to the Casualty Loss. However, if a Casualty Value Table is
attached to the relevant Schedule its terms will control.
COMMENCEMENT CERTIFICATE - means the Lessor provided certificate which must be
signed by Lessee within ten days of the Commencement Date as requested by
Lessor.
COMMENCEMENT DATE - is defined in each Schedule.
DEFAULT COSTS - means reasonable attorney's fees and remarketing costs
resulting from a Lessee default or Lessor's enforcement of its remedies.
EQUIPMENT - means the property described on a Schedule and any replacement for
that property required or permitted by this Master Lease or a Schedule but not
including any Attachment.
EVENT OF DEFAULT - means the events described in Subsection 13.1.
FAIR MARKET VALUE - means the aggregate amount which would be obtainable in an
arm's-length transaction between an informed and willing buyer/user and an
informed and willing seller under no compulsion to sell.
INITIAL TERM - means the period of time beginning on the first day of the first
full Rent Interval following the Commencement Date for all items of Equipment
and continuing for the number of Rent intervals indicated on a Schedule.
INSTALLATION DATE - means the day on which Equipment is installed and
qualified for a commercially available manufacturer's standard maintenance
contract or warranty coverage, if available.
INTERIM RENT - means the pro-rata portion of Rent due for the period from the
Commencement Date through but not including the first day of the first full
Rent Interval included in the initial Term.
LICENSED PRODUCTS - means any software or other licensed products attached to
the Equipment.
LIKE EQUIPMENT - means replacement Equipment which is lien free and of the same
model, type, configuration and manufacture as Equipment.
LIKE PART - means a substituted part which is lien free and of the same
manufacturer and part number as the removed part, and which when installed on
the Equipment will be eligible for maintenance coverage with the manufacturer of
the Equipment
NOTICE PERIOD - means the time period described in a Schedule during which
Lessee may give Lessor notice of the termination of the term of that Schedule.
OVERDUE RATE - means the lessor of 18% per year of the maximum rate permitted
by the law of the state where the Equipment is located.
OWNER - means the owner of Equipment.
RECONFIGURATION - means any change to Equipment that would upgrade or downgrade
the performance capabilities of the Equipment in any way.
RENT - means the ret, including interim Rent. Lessee will pay for each item of
Equipment expressed in a Schedule either as a specific amount or an amount
equal to the amount which Lessor pays for an item of Equipment multiplied by a
lease rate factor plus all other amounts due to Lessor under this Master Lease
or a Schedule.
RENT INTERVAL - means a full calendar month or quarter as indicated on a
Schedule.
SCHEDULE - means an Equipment Schedule which incorporates all of the terms and
conditions of this Master Lease and, for purposes of Section 14.8, its
associated Commencement Certificate(s).
SECURED PARTY - means an entity to whom Lessor has granted a security
interest in a Schedule and related Equipment for the purpose of securing a loan.
IN WITNESS WHEREOF, the parties hereto have executed this Master Lease on or as
of the day and year first above written.
MIDCOM COMMUNICATIONS INC. COMDISCO INC.
as Lessee as Lessor
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. SKUDDLER
Title: Executive V.P. and CFO Title: Director
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EQUIPMENT SCHEDULE NO. 1 01-SL78387-00
DATED JANUARY 15, 1997
TO MASTER LEASE AGREEMENT DATED JANUARY 15, 1997 ("Master Lease")
LESSEE: MIDCOM COMMUNICATIONS INC. LESSOR: COMDISCO, INC.
Address for Legal Notices: Address for All Notices:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇. ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Corporate Secretary Attn: Communication Products Group
Address for Administrative Correspondence: Central Billing Location:
Same As Above Same As Administrative Correspondence
Attn: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Attn: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇ Phone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Lessee Reference No.:
Location of Equipment:
(24 digits maximum)
Same As Above
Initial Term/
Rent Interval: 36 months
Attn: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇ Rent: $10,663.28
EQUIPMENT (as defined below):
Item Machine Model/ Serial
No. Qty. Mfg. Type Feature Description Number
---- ---- ---- ------- ------- ----------- ------
1 1 Cisco 7513
2 2 Cisco WS C5001
3 10 Cisco 2524
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RISK OF LOSS: Pursuant to the Master Lease, Lessor and Lessee agree that the
net of loss is the responsibility of the Lessee.
NOTICE OF PERIOD: not less than ninety (90) days nor more than twelve (12)
months prior to the expiration of the lease term. If Lessee gives proper
written notice of termination but fails to return the Equipment on the
expiration date of the Initial Term, the Lease will be reinstated and an
additional sixty (60) days written notice of termination will be required,
which termination will be effective at the end of the month following the 60
day notice requirement. The periodic Rent will continue at the current rate
until the effective date of the written notice of termination and the Equipment
is returned.
SPECIAL TERMS: The following additional terms are a part of this Equipment
Schedule. The terms and conditions of the Master Lease Agreement as they
pertain to this Equipment Schedule are modified and amended as follows:
I. COMMENCEMENT DATE
-----------------
The Commencement Date for each item of Equipment will be the day on
which that item is installed and qualified for a commercially available
manufacturer's standard maintenance contract or warranty coverage, if
applicable, or the seventh (7th) day after delivery if Lessee delays the
installation. The initial Term will begin on the first day of the
calendar quarter following the Commencement Date.
II. INTEREST RATE CHANGE
--------------------
The Lease Rate Factors or the periodic Rent described in this Equipment
Schedule have been calculated using an interest rate based on the 3-year
U.S. Treasury Constant Maturity of 6.07% as described in the Federal
Reserve Statistical Release H.15 ("Treasury Rate"). If on the
Commencement Date for the last item of Equipment prior to the beginning
of the Initial Term, the Treasury Rate is greater or there is an adverse
change in Lessee's credit standing, Lessor may adjust the Lease Rate
Factors or the periodic Rent accordingly.
III. LETTER OF CREDIT CONTINGENCY
----------------------------
This Schedule is contingent upon Lessee providing to Lessor an approved
Irrevocable Standby Letter of Credit ("Letter of Credit"), in the form
attached hereto as Exhibit A, from a United States bank acceptable to
Lessor for the amount of $120,000.00 for Year 1 of the Initial Term,
$85,000.00 for Year 2 of the Initial Term and $70,000.00 for Year 3 of
the Initial Term prior to the Commencement Date of this Schedule.
Lessee further understands that if Lessor does not receive the approved
Letter of Credit and the signed Master Lease Agreement prior to the
Commencement Date, or if the Letter of Credit is unacceptable to Lessor,
Lessor may at its discretion cancel this Schedule with no further
obligation to either party.
MASTER LEASE: This Equipment Schedule is issued pursuant to the Master Lease
identified on page 1 of this Equipment Schedule. All of the terms and
conditions of the Master Lease are incorporated in and made a part of this
Equipment Schedule as if expressly described in this Equipment Schedule, and
this Equipment Schedule constitutes a separate lease for the Equipment. The
parties reaffirm all of the terms and conditions of the Master, Lease
(including without limitation, the representations and warranties set forth in
the Master Lease) except as modified by this Equipment Schedule. This
Equipment Schedule may not be amended or rescinded except by a writing signed
by both parties.
MIDCOM COMMUNICATIONS INC. COMDISCO, INC.
as Lessee as Lessor
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------ ---------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Executive VP-CFO Title: Vice President
--------------------------- ------------------------
Date: 2/17/97 Date: 2/18/97
---------------------------- -------------------------
6
01-SL78683-00
EQUIPMENT SCHEDULE NO. 2
DATED FEBRUARY 17, 1997
TO MASTER LEASE AGREEMENT DATED JANUARY 15, 1997 ("MASTER LEASE")
LESSEE: MIDCOM COMMUNICATIONS INC. LESSOR: COMDISCO, INC.
ADDRESS FOR LEGAL NOTICES: ADDRESS FOR ALL NOTICES:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Communications Product Group
ATTN: General Counsel
PHONE: (▇▇▇) ▇▇▇-▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
ADDRESS FOR ADMINISTRATIVE CORRESPONDENCE: ADDRESS FOR INVOICES:
Same as Above Same as Administrative Correspondence
ATTN: Chief Financial Officer ATTN: Chief Financial Officer
PHONE: (▇▇▇) ▇▇▇-▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇ LESSEE REFERENCE NO:
NY Office
(24 digits maximum)
INITIAL TERM/
1
7
RENT INTERVAL: 60
Months
LOCATION OF EQUIPMENT:
LEASE RATE FACTOR:
▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ Hardware: .0198213
Softcosts: .021976
ATTN: ▇▇. ▇▇▇▇ ▇▇▇▇▇
PHONE: (▇▇▇) ▇▇▇-▇▇▇▇
EQUIPMENT (AS DEFINED BELOW):
ITEM MACHINE MODEL/ SERIAL
NO. QTY. MFG. TYPE FEATURE DESCRIPTION NUMBER
--- ---- ---- ---- ------- ----------- ------
1. 1 NTEL DMS 500 PBX System
2
8
RISK OF LOSS: Pursuant to the Master Lease, Lessor and Lessee agree that the
risk of loss is the responsibility of the Lessee.
NOTICE PERIOD: Not less than ninety (90) days nor more than twelve (12) months
prior to the expiration of the lease term. If Lessee gives written notice of
termination, in accordance with the terms of the preceding sentence, but fails
to return the Equipment on the expiration date of the Initial Term, the Lease
will be reinstated and an additional sixty (60) days written notice of
termination will be required, which termination will be effective at the end of
the month following the 60 day notice requirement. The periodic Rent will
continue at the current rate until the effective date of the written notice of
termination and the Equipment is returned.
SPECIAL TERMS: The following additional terms are a part of this Equipment
Schedule. The terms and conditions of the Master Lease Agreement as they pertain
to this Equipment Schedule are modified and amended as follows:
1. SOFTWARE
In addition to leasing the Equipment described herein, Lessor agrees to
finance software license fees ("License Fees") of approximately
$746,291.00, for the Software described in this Equipment Schedule (the
"Software").The Software is licensed by Northern Telecom Inc., the
vendor of the Software (the "Vendor") directly to the Lessee pursuant to
the terms and conditions of the license agreement between Vendor and
Lessee (the "LicenseAgreement"). Lessor is not a party to nor has any
obligations under the License Agreement and has no interest in the
Software except as described in this Equipment Schedule.
2 ADDITIONAL SOFT COSTS
Lessee and Lessor acknowledge that the Equipment Schedule contains
approximate softcosts of $444,591.00 for labor, freight and handling
costs, and OEM charges charged by Vendor.
3. COMMENCEMENT DATE
The Commencement Date for each item of Equipment and/or Software (as
applicable) will be the day on which that item of Equipment and/or
Software (as applicable) is installed and qualified for a commercially
available manufacturer's standard maintenance contract or warranty
coverage, if available. Lessee agrees to confirm theCommencement Date by
providing Lessor with either a Commencement Certificate in the form
provided by Lessor or the Vendor's invoice
3
9
containing the Equipment and/or Software location (as applicable),
description, serial number (if applicable), cost, the Commencement Date
and Lessee's signature, within ten (10) days of the Commencement Date.
For purposes of this Equipment Schedule, the Initial Term will begin on
July 1, 1997 for all items of Equipment and Software.
Lessee's obligations under this Equipment Schedule and the periodic Rent
described in this Equipment Schedule are contingent upon Lessor
purchasing the Equipment, including the softcosts for an aggregate
amount of $1,798,025.00 in addition to financing the Software License
Fees of approximately $746,291.00 pursuant to satisfactory purchase
documentation. Lessee acknowledges that it has either received or
approved Lessor's purchase documentation for the Equipment and/or
Software. If the Commencement Date occurs later than June 30, 1997
("Outside Date"), if the Commencement Certificate or Vendor invoices are
not provided within ten (10) days of the Commencement Date, or if the
cost or configuration of the Equipment and/or Software or actual
softcosts changes, Lessor may adjust the Lease Rate Factors or the
periodic Rent to reflect any additional costs or expenses resulting from
those changes.
4
10
4. RENT AND PAYMENT
Lessee acknowledges that in addition to its obligations under Section
6.1 of the Master Lease, Lessee's obligation to pay the periodic Rent
described in this Equipment Schedule will not be affected by any
representations made by the Vendor, or by any discontinuance, return,
destruction or failure of the Software. If the Software is
unsatisfactory for any reason, Lessee will make any claims solely
against the Vendor and will continue to pay Lessor all amounts payable
under this Equipment Schedule.
5. DEFAULT
Any violation by Lessee of any of its covenants or representations in
the License Agreement or any failure by Lessee to perform any provision
of the License Agreement will also be an Event of Default under this
Equipment Schedule.
6. MISCELLANEOUS
Upon an Event of Default, expiration or termination of this Equipment
Schedule, Lessee will assign to Lessor all of Lessee's rights and
interests in the Software subject to the prior consent of the Vendor if
required by the License Agreement.
7. EQUIPMENT PROCUREMENT CHARGES (PROGRESS PAYMENTS-LEASE RATE FACTOR)
Because items of Equipment and/or Software will be delivered to Lessee
prior to the Commencement Date, progress payments will be required to be
paid to the Vendor prior to the Commencement Date ("Progress Payments").
With respect to any items of Equipment and/or Software delivered prior
to the Commencement Date, all terms and conditions of this Equipment
Schedule will be applicable except the Lessee's rental obligations
However, Lessee agrees to pay Lessor "Equipment Procurement Charges"
equal to a daily lease rate factor of .0208298 multiplied by the
aggregate of the Progress Payments paid by Lessor for each day from the
date Progress Payments are made until the Commencement Date. Accrued
Equipment Procurement Charges are payable when invoiced.
If the Commencement Date occurs after the Outside Date, the daily lease
rate factor applicable from the Outside Date until the Commencement Date
will be equal to .0208298. If Lessee rejects the Equipment and/or
Software prior to the Commencement Date pursuant to the purchase
agreement with the Equipment vendor or if Lessee is in default of this
Equipment Schedule, then this Equipment Schedule will terminate and
Lessee will (i) reimburse Lessor for all amounts paid
5
11
by Lessor for the purchase of the Equipment and/or Software and (ii) pay
all Equipment Procurement Charges due through the date of termination.
Upon payment of all amounts due and owing by Lessee, Lessor will
transfer to Lessee all of Lessor's interest in the Equipment and/or
Software and under any purchase agreement including any remedies that
Lessor may have against Vendor with respect to said Equipment and/or
Software.
8. INTEREST RATE CHANGE
The Lease Rate Factors or the periodic Rent described in this Equipment
Schedule have been calculated using an interest rate based on the 5-year
U.S. Treasury Constant Maturity of 6.37% as described in the Federal
Reserve Statistical Release H.15 ("Treasury Rate"). If on the
Commencement Date for the last item of Equipment and/or Software prior
to the beginning of the Initial Term, the Treasury Rate is greater or
there is an adverse change in Lessee's credit standing, Lessor may
adjust the Lease Rate Factors or the periodic Rent accordingly.
6
12
9. GENERAL UPGRADE PROVISION
If Lessee is not in default, there has been no material adverse change
in Lessee's credit standing at the time and assuming all required third
party consents are obtained, Lessor will, on Lessee's request enter into
negotiation of a contract in which Lessor would on mutually agreeable
terms and conditions lease to Lessee standard feature and/or equipment
model upgrades to the Equipment and/or Software (as applicable) offered
either by the Equipment manufacturer or by another manufacturer (the
"Upgrade"), provided, however, that (a) the Initial Term for the Upgrade
will be coterminous with the Initial Term of this Equipment Schedule;
and (b) the periodic Rent for the Upgrade will be equal to 100% of the
present value of the acquisition cost of the Upgrade amortized over the
remaining Initial Term of this Equipment Schedule using then prevailing
interest rates for similar transactions and with Lessees of similar
credit rating. If the parties cannot mutually agree upon terms and
conditions with respect to the Upgrade, this Equipment Schedule will
continue in full force and effect.
10. EARLY TERMINATION
As long as Lessee is not in default and upon not less than ninety (90)
days prior written notice to Lessor, Lessee may terminate this Equipment
Schedule with respect to all, but not less than all, of the Equipment
and/or Software (as applicable) effective upon the expiration of the
12th month of the Initial Term or upon the expiration of any month of
the Initial Term thereafter as specified in the termination notice (the
"Termination Date"), provided that on or before the Termination Date
Lessee pays to Lessor an amount equal to (i) (a) the remaining Rent for
the balance of the Initial Term, (determined as of the Termination
Date), and (b) $966,840.08 which equals thirty-eight percent (38%) of
the original acquisition cost, each discounted to present value in
accordance with the formula set below, plus an amount which would be
obtainable in an arm's-length transaction between an informed and
willing lessee/user and an informed and willing lessor/dealer under no
compulsion to lease as determined by Lessor (as of the Termination Date)
in its reasonable discretion, exercised in good faith, for any upgrades
or additions with respect to such Equipment and/or Software (as
applicable), and (ii) all other outstanding amounts due and owing on the
Termination Date (collectively, the "Termination Amount").
For purposes of calculating the Termination Amount, any amounts
discounted shall be discounted at the lesser of:
7
13
(a) the Secured Party's interest rate, if any, (b) the then current U.S.
Treasury Rate for a term which most closely approximates the Initial
Term, or (c) six percent (6%).
11. END OF TERM OPTIONS
If Lessee is not in default and gives Lessor at least ninety (90) days
prior written notice, Lessee will have the option at the expiration of
the Initial Term to (a) purchase all, but not less than all, Equipment
and/or Software (as applicable) for an amount equal to thirty-eight
percent (38%) of the original acquisition cost, plus an amount which
would be obtainable at the end of the Initial Term in an arm's-length
transaction between an informed and willing buyer/user and an informed
and willing seller under no compulsion to sell as determined by Lessor
in its reasonable discretion, exercised in good faith, for any upgrades
or additions with respect to such Equipment and/or Software (as
applicable), plus taxes or (b) extend the Initial Term for all, but not
less than all, Equipment and/or Software (as applicable) for a mutually
agreed upon renewal period at a periodic Rent equal to an amount which
would be obtainable at the commencement of the extended Initial Term in
an arm's-length transaction between an informed and willing lessee/user
and an informed and willing lessor/dealer under no compulsion to lease,
plus taxes amortized over the renewal period , or (c) return the
Equipment and/or Software (as applicable) in accordance with the terms
and conditions of the Master Lease. If Lessee fails to provide written
notice then the Equipment Schedule will continue in full force and
effect until terminated in accordance with its terms.
12. STOCK WARRANT CONTINGENCY
This Equipment Schedule is contingent upon receipt by Lessor of a
Warrant Agreement in form and substance satisfactory to Lessor for
117,000 shares of Common Stock of the Lessee at an exercise price of
$10.00 per share, exercisable for ten (10) years from the date of
issuance by (i) cash or check, or (ii) net issuance and containing
anti-dilution and registration rights in parity with those provided to
other investors.
MASTER LEASE: This Equipment Schedule is issued pursuant to the Master Lease
identified on page 1 of this Equipment Schedule. All of the terms and conditions
of the Master Lease are incorporated in and made a part of this Equipment
Schedule as if expressly described in this Equipment Schedule, and this
Equipment Schedule constitutes a separate lease for the Equipment. The parties
reaffirm all of the terms and conditions of the Master Lease (including, without
limitation, the representations and warranties set forth in the Master Lease)
except as modified by this Equipment Schedule. This
8
14
Equipment Schedule may not be amended or rescinded except by a writing signed by
both parties.
MIDCOM COMMUNICATIONS INC. COMDISCO, INC.
as Lessee as Lessor
By: By:
---------------------------- -------------------------------
Title: Title:
---------------------------- -------------------------------
Date: Date:
---------------------------- -------------------------------
9
15
01-SL78684-00
EQUIPMENT SCHEDULE NO. 3
DATED FEBRUARY 17, 1997
TO MASTER LEASE AGREEMENT DATED JANUARY 15, 1997 ("MASTER LEASE")
LESSEE: MIDCOM COMMUNICATIONS INC. LESSOR: COMDISCO, INC.
ADDRESS FOR LEGAL NOTICES: ADDRESS FOR ALL NOTICES:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Communications Product Group
ATTN: General Counsel
PHONE: (▇▇▇) ▇▇▇-▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
ADDRESS FOR ADMINISTRATIVE CORRESPONDENCE: ADDRESS FOR INVOICES:
Same as Above Same as Administrative Correspondence
ATTN: Chief Financial Officer ATTN: Chief Financial Officer
PHONE: (▇▇▇) ▇▇▇-▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇ LESSEE REFERENCE NO:
Chicago Office
(24 digits maximum)
INITIAL TERM/
1
16
Months RENT INTERVAL: 60
LOCATION OF EQUIPMENT:
LEASE RATE FACTOR:
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Hardware: .0198213
Softcosts: .021976
ATTN: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇
PHONE: (▇▇▇) ▇▇▇-▇▇▇▇
EQUIPMENT (AS DEFINED BELOW):
ITEM MACHINE MODEL/ SERIAL
NO. QTY. MFG. TYPE FEATURE DESCRIPTION NUMBER
--- ---- ---- ---- ------- ----------- ------
1. 1 NTEL DMS 500 PBX System
2
17
RISK OF LOSS: Pursuant to the Master Lease, Lessor and Lessee agree that the
risk of loss is the responsibility of the Lessee.
NOTICE PERIOD: Not less than ninety (90) days nor more than twelve (12) months
prior to the expiration of the lease term. If Lessee gives written notice of
termination, in accordance with the terms of the preceding sentence, but fails
to return the Equipment on the expiration date of the Initial Term, the Lease
will be reinstated and an additional sixty (60) days written notice of
termination will be required, which termination will be effective at the end of
the month following the 60 day notice requirement. The periodic Rent will
continue at the current rate until the effective date of the written notice of
termination and the Equipment is returned.
SPECIAL TERMS: The following additional terms are a part of this Equipment
Schedule. The terms and conditions of the Master Lease Agreement as they pertain
to this Equipment Schedule are modified and amended as follows:
1. SOFTWARE
In addition to leasing the Equipment described herein, Lessor agrees to
finance software license fees ("License Fees") of approximately
$740,330.00, for the Software described in this Equipment Schedule (the
"Software").The Software is licensed by Northern Telecom Inc., the
vendor of the Software (the "Vendor") directly to the Lessee pursuant to
the terms and conditions of the license agreement between Vendor and
Lessee (the "LicenseAgreement"). Lessor is not a party to nor has any
obligations under the License Agreement and has no interest in the
Software except as described in this Equipment Schedule.
2 ADDITIONAL SOFT COSTS
Lessee and Lessor acknowledge that the Equipment Schedule contains
approximate softcosts of $437,746.00 for labor, freight and handling
costs, and OEM charges charged by Vendor.
3. COMMENCEMENT DATE
The Commencement Date for each item of Equipment and/or Software (as
applicable) will be the day on which that item of Equipment and/or
Software (as applicable) is installed and qualified for a commercially
available manufacturer's standard maintenance contract or warranty
coverage, if available. Lessee agrees to confirm the Commencement Date
by providing Lessor with either a Commencement Certificate in the form
provided by Lessor or the Vendor's invoice
3
18
containing the Equipment and/or Software location (as applicable),
description, serial number (if applicable), cost, the Commencement Date
and Lessee's signature, within ten (10) days of the Commencement Date.
For purposes of this Equipment Schedule, the Initial Term will begin on
July 1, 1997 for all items of Equipment and Software.
Lessee's obligations under this Equipment Schedule and the periodic Rent
described in this Equipment Schedule are contingent upon Lessor
purchasing the Equipment, including the softcosts for an aggregate
amount of $1,755,026.00 in addition to financing the Software License
Fees of approximately $740,330.00 pursuant to satisfactory purchase
documentation. Lessee acknowledges that it has either received or
approved Lessor's purchase documentation for the Equipment and/or
Software. If the Commencement Date occurs later than June 30, 1997
("Outside Date"), if the Commencement Certificate or Vendor invoices are
not provided within ten (10) days of the Commencement Date, or if the
cost or configuration of the Equipment and/or Software or actual
softcosts changes, Lessor may adjust the Lease Rate Factors or the
periodic Rent to reflect any additional costs or expenses resulting from
those changes.
4
19
4. RENT AND PAYMENT
Lessee acknowledges that in addition to its obligations under Section
6.1 of the Master Lease, Lessee's obligation to pay the periodic Rent
described in this Equipment Schedule will not be affected by any
representations made by the Vendor, or by any discontinuance, return,
destruction or failure of the Software. If the Software is
unsatisfactory for any reason, Lessee will make any claims solely
against the Vendor and will continue to pay Lessor all amounts payable
under this Equipment Schedule.
5. DEFAULT
Any violation by Lessee of any of its covenants or representations in
the License Agreement or any failure by Lessee to perform any provision
of the License Agreement will also be an Event of Default under this
Equipment Schedule.
6. MISCELLANEOUS
Upon an Event of Default, expiration or termination of this Equipment
Schedule, Lessee will assign to Lessor all of Lessee's rights and
interests in the Software subject to the prior consent of the Vendor if
required by the License Agreement.
7. EQUIPMENT PROCUREMENT CHARGES (PROGRESS PAYMENTS-LEASE RATE FACTOR)
Because items of Equipment and/or Software will be delivered to Lessee
prior to the Commencement Date, progress payments will be required to be
paid to the Vendor prior to the Commencement Date ("Progress Payments").
With respect to any items of Equipment and/or Software delivered prior
to the Commencement Date, all terms and conditions of this Equipment
Schedule will be applicable except the Lessee's rental obligations
However, Lessee agrees to pay Lessor "Equipment Procurement Charges"
equal to a daily lease rate factor of .0208298 multiplied by the
aggregate of the Progress Payments paid by Lessor for each day from the
date Progress Payments are made until the Commencement Date. Accrued
Equipment Procurement Charges are payable when invoiced.
If the Commencement Date occurs after the Outside Date, the daily lease
rate factor applicable from the Outside Date until the Commencement Date
will be equal to .0208298. If Lessee rejects the Equipment and/or
Software prior to the Commencement Date pursuant to the purchase
agreement with the Equipment vendor or if Lessee is in default of this
Equipment Schedule, then this Equipment Schedule will terminate and
Lessee will (i) reimburse Lessor for all amounts paid
5
20
by Lessor for the purchase of the Equipment and/or Software and (ii) pay
all Equipment Procurement Charges due through the date of termination.
Upon payment of all amounts due and owing by Lessee, Lessor will
transfer to Lessee all of Lessor's interest in the Equipment and/or
Software and under any purchase agreement including any remedies that
Lessor may have against Vendor with respect to said Equipment and/or
Software.
8. INTEREST RATE CHANGE
The Lease Rate Factors or the periodic Rent described in this Equipment
Schedule have been calculated using an interest rate based on the 5-year
U.S. Treasury Constant Maturity of 6.37% as described in the Federal
Reserve Statistical Release H.15 ("Treasury Rate"). If on the
Commencement Date for the last item of Equipment and/or Software prior
to the beginning of the Initial Term, the Treasury Rate is greater or
there is an adverse change in Lessee's credit standing, Lessor may
adjust the Lease Rate Factors or the periodic Rent accordingly.
6
21
9. GENERAL UPGRADE PROVISION
If Lessee is not in default, there has been no material adverse change
in Lessee's credit standing at the time and assuming all required third
party consents are obtained, Lessor will, on Lessee's request enter into
negotiation of a contract in which Lessor would on mutually agreeable
terms and conditions lease to Lessee standard feature and/or equipment
model upgrades to the Equipment and/or Software (as applicable) offered
either by the Equipment manufacturer or by another manufacturer (the
"Upgrade"), provided, however, that (a) the Initial Term for the Upgrade
will be coterminous with the Initial Term of this Equipment Schedule;
and (b) the periodic Rent for the Upgrade will be equal to 100% of the
present value of the acquisition cost of the Upgrade amortized over the
remaining Initial Term of this Equipment Schedule using then prevailing
interest rates for similar transactions and with Lessees of similar
credit rating. If the parties cannot mutually agree upon terms and
conditions with respect to the Upgrade, this Equipment Schedule will
continue in full force and effect.
10. EARLY TERMINATION
As long as Lessee is not in default and upon not less than ninety (90)
days prior written notice to Lessor, Lessee may terminate this Equipment
Schedule with respect to all, but not less than all, of the Equipment
and/or Software (as applicable) effective upon the expiration of the
12th month of the Initial Term or upon the expiration of any month of
the Initial Term thereafter as specified in the termination notice (the
"Termination Date"), provided that on or before the Termination Date
Lessee pays to Lessor an amount equal to (i) (a) the remaining Rent for
the balance of the Initial Term, (determined as of the Termination
Date), and (b) $948,235.28 which equals thirty-eight percent (38%) of
the original acquisition cost, each discounted to present value in
accordance with the formula set below, plus an amount which would be
obtainable in an arm's-length transaction between an informed and
willing lessee/user and an informed and willing lessor/dealer under no
compulsion to lease as determined by Lessor (as of the Termination Date)
in its reasonable discretion, exercised in good faith, for any upgrades
or additions with respect to such Equipment and/or Software (as
applicable), and (ii) all other outstanding amounts due and owing on the
Termination Date (collectively, the "Termination Amount").
For purposes of calculating the Termination Amount, any amounts
discounted shall be discounted at the lesser of:
7
22
(a) the Secured Party's interest rate, if any, (b) the then current U.S.
Treasury Rate for a term which most closely approximates the Initial
Term, or (c) six percent (6%).
11. END OF TERM OPTIONS
If Lessee is not in default and gives Lessor at least ninety (90) days
prior written notice, Lessee will have the option at the expiration of
the Initial Term to (a) purchase all, but not less than all, Equipment
and/or Software (as applicable) for an amount equal to thirty-eight
percent (38%) of the original acquisition cost, plus an amount which
would be obtainable at the end of the Initial Term in an arm's-length
transaction between an informed and willing buyer/user and an informed
and willing seller under no compulsion to sell as determined by Lessor
in its reasonable discretion, exercised in good faith, for any upgrades
or additions with respect to such Equipment and/or Software (as
applicable), plus taxes or (b) extend the Initial Term for all, but not
less than all, Equipment and/or Software (as applicable) for a mutually
agreed upon renewal period at a periodic Rent equal to an amount which
would be obtainable at the commencement of the extended Initial Term in
an arm's-length transaction between an informed and willing lessee/user
and an informed and willing lessor/dealer under no compulsion to lease,
plus taxes amortized over the renewal period , or (c) return the
Equipment and/or Software (as applicable) in accordance with the terms
and conditions of the Master Lease. If Lessee fails to provide written
notice then the Equipment Schedule will continue in full force and
effect until terminated in accordance with its terms.
8
23
MASTER LEASE: This Equipment Schedule is issued pursuant to the Master Lease
identified on page 1 of this Equipment Schedule. All of the terms and conditions
of the Master Lease are incorporated in and made a part of this Equipment
Schedule as if expressly described in this Equipment Schedule, and this
Equipment Schedule constitutes a separate lease for the Equipment. The parties
reaffirm all of the terms and conditions of the Master Lease (including, without
limitation, the representations and warranties set forth in the Master Lease)
except as modified by this Equipment Schedule. This Equipment Schedule may not
be amended or rescinded except by a writing signed by both parties.
MIDCOM COMMUNICATIONS INC. COMDISCO, INC.
as Lessee as Lessor
By: By:
------------------------------- ------------------------------
Title: Title:
------------------------------- ------------------------------
Date: Date:
------------------------------- ------------------------------
9
24
01-SL78685-00
EQUIPMENT SCHEDULE NO. 4
DATED FEBRUARY 17, 1997
TO MASTER LEASE AGREEMENT DATED JANUARY 15, 1997 ("MASTER LEASE")
LESSEE: MIDCOM COMMUNICATIONS INC. LESSOR: COMDISCO, INC.
ADDRESS FOR LEGAL NOTICES: ADDRESS FOR ALL NOTICES:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Communications Product Group
ATTN: General Counsel
PHONE: (▇▇▇) ▇▇▇-▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
ADDRESS FOR ADMINISTRATIVE CORRESPONDENCE: ADDRESS FOR INVOICES:
Same as Above Same as Administrative Correspondence
ATTN: Chief Financial Officer ATTN: Chief Financial Officer
PHONE: (▇▇▇) ▇▇▇-▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇ LESSEE REFERENCE NO:
CA Office
(24 digits maximum)
INITIAL TERM/
1
25
RENT INTERVAL: 60
Months
LOCATION OF EQUIPMENT:
LEASE RATE FACTOR:
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇ - ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Hardware: .0198213
Softcosts: .021976
ATTN: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇
PHONE: (▇▇▇) ▇▇▇-▇▇▇▇
EQUIPMENT (AS DEFINED BELOW):
ITEM MACHINE MODEL/ SERIAL
NO. QTY. MFG. TYPE FEATURE DESCRIPTION NUMBER
--- ---- ---- ---- ------- ----------- ------
1. 1 NTEL DMS 500 PBX System
2
26
RISK OF LOSS: Pursuant to the Master Lease, Lessor and Lessee agree that the
risk of loss is the responsibility of the Lessee.
NOTICE PERIOD: Not less than ninety (90) days nor more than twelve (12) months
prior to the expiration of the lease term. If Lessee gives written notice of
termination, in accordance with the terms of the preceding sentence, but fails
to return the Equipment on the expiration date of the Initial Term, the Lease
will be reinstated and an additional sixty (60) days written notice of
termination will be required, which termination will be effective at the end of
the month following the 60 day notice requirement. The periodic Rent will
continue at the current rate until the effective date of the written notice of
termination and the Equipment is returned.
SPECIAL TERMS: The following additional terms are a part of this Equipment
Schedule. The terms and conditions of the Master Lease Agreement as they pertain
to this Equipment Schedule are modified and amended as follows:
1. SOFTWARE
In addition to leasing the Equipment described herein, Lessor agrees to
finance software license fees ("License Fees") of approximately
$760,539.00, for the Software described in this Equipment Schedule (the
"Software"). The Software is licensed by Northern Telecom Inc., the
vendor of the Software (the "Vendor") directly to the Lessee pursuant to
the terms and conditions of the license agreement between Vendor and
Lessee (the "LicenseAgreement"). Lessor is not a party to nor has any
obligations under the License Agreement and has no interest in the
Software except as described in this Equipment Schedule.
2 ADDITIONAL SOFT COSTS
Lessee and Lessor acknowledge that the Equipment Schedule contains
approximate softcosts of $448,936.00 for labor, freight and handling
costs, and OEM charges charged by Vendor.
3. COMMENCEMENT DATE
The Commencement Date for each item of Equipment and/or Software (as
applicable) will be the day on which that item of Equipment and/or
Software (as applicable) is installed and qualified for a commercially
available manufacturer's standard maintenance contract or warranty
coverage, if available. Lessee agrees to confirm the Commencement Date
by providing Lessor with either a Commencement Certificate in the form
provided by Lessor or the Vendor's invoice
3
27
containing the Equipment and/or Software location (as applicable),
description, serial number (if applicable), cost, the Commencement Date
and Lessee's signature, within ten (10) days of the Commencement Date.
For purposes of this Equipment Schedule, the Initial Term will begin on
July 1, 1997 for all items of Equipment and Software.
Lessee's obligations under this Equipment Schedule and the periodic Rent
described in this Equipment Schedule are contingent upon Lessor
purchasing the Equipment, including the softcosts for an aggregate
amount of $1,889,175.30 in addition to financing the Software License
Fees of approximately $760,539.00 pursuant to satisfactory purchase
documentation. Lessee acknowledges that it has either received or
approved Lessor's purchase documentation for the Equipment and/or
Software. If the Commencement Date occurs later than June 30, 1997
("Outside Date"), if the Commencement Certificate or Vendor invoices are
not provided within ten (10) days of the Commencement Date, or if the
cost or configuration of the Equipment and/or Software or actual
softcosts changes, Lessor may adjust the Lease Rate Factors or the
periodic Rent to reflect any additional costs or expenses resulting from
those changes.
4
28
4. RENT AND PAYMENT
Lessee acknowledges that in addition to its obligations under Section
6.1 of the Master Lease, Lessee's obligation to pay the periodic Rent
described in this Equipment Schedule will not be affected by any
representations made by the Vendor, or by any discontinuance, return,
destruction or failure of the Software. If the Software is
unsatisfactory for any reason, Lessee will make any claims solely
against the Vendor and will continue to pay Lessor all amounts payable
under this Equipment Schedule.
5. DEFAULT
Any violation by Lessee of any of its covenants or representations in
the License Agreement or any failure by Lessee to perform any provision
of the License Agreement will also be an Event of Default under this
Equipment Schedule.
6. MISCELLANEOUS
Upon an Event of Default, expiration or termination of this Equipment
Schedule, Lessee will assign to Lessor all of Lessee's rights and
interests in the Software subject to the prior consent of the Vendor if
required by the License Agreement.
7. EQUIPMENT PROCUREMENT CHARGES (PROGRESS PAYMENTS-LEASE RATE FACTOR)
Because items of Equipment and/or Software will be delivered to Lessee
prior to the Commencement Date, progress payments will be required to be
paid to the Vendor prior to the Commencement Date ("Progress Payments").
With respect to any items of Equipment and/or Software delivered prior
to the Commencement Date, all terms and conditions of this Equipment
Schedule will be applicable except the Lessee's rental obligations
However, Lessee agrees to pay Lessor "Equipment Procurement Charges"
equal to a daily lease rate factor of .0208298 multiplied by the
aggregate of the Progress Payments paid by Lessor for each day from the
date Progress Payments are made until the Commencement Date. Accrued
Equipment Procurement Charges are payable when invoiced.
If the Commencement Date occurs after the Outside Date, the daily lease
rate factor applicable from the Outside Date until the Commencement Date
will be equal to .0208298. If Lessee rejects the Equipment and/or
Software prior to the Commencement Date pursuant to the purchase
agreement with the Equipment vendor or if Lessee is in default of this
Equipment Schedule, then this Equipment Schedule will terminate and
Lessee will (i) reimburse Lessor for all amounts paid
5
29
by Lessor for the purchase of the Equipment and/or Software and (ii) pay
all Equipment Procurement Charges due through the date of termination.
Upon payment of all amounts due and owing by Lessee, Lessor will
transfer to Lessee all of Lessor's interest in the Equipment and/or
Software and under any purchase agreement including any remedies that
Lessor may have against Vendor with respect to said Equipment and/or
Software.
8. INTEREST RATE CHANGE
The Lease Rate Factors or the periodic Rent described in this Equipment
Schedule have been calculated using an interest rate based on the 5-year
U.S. Treasury Constant Maturity of 6.37% as described in the Federal
Reserve Statistical Release H.15 ("Treasury Rate"). If on the
Commencement Date for the last item of Equipment and/or Software prior
to the beginning of the Initial Term, the Treasury Rate is greater or
there is an adverse change in Lessee's credit standing, Lessor may
adjust the Lease Rate Factors or the periodic Rent accordingly.
6
30
9. GENERAL UPGRADE PROVISION
If Lessee is not in default, there has been no material adverse change
in Lessee's credit standing at the time and assuming all required third
party consents are obtained, Lessor will, on Lessee's request enter into
negotiation of a contract in which Lessor would on mutually agreeable
terms and conditions lease to Lessee standard feature and/or equipment
model upgrades to the Equipment and/or Software (as applicable) offered
either by the Equipment manufacturer or by another manufacturer (the
"Upgrade"), provided, however, that (a) the Initial Term for the Upgrade
will be coterminous with the Initial Term of this Equipment Schedule;
and (b) the periodic Rent for the Upgrade will be equal to 100% of the
present value of the acquisition cost of the Upgrade amortized over the
remaining Initial Term of this Equipment Schedule using then prevailing
interest rates for similar transactions and with Lessees of similar
credit rating. If the parties cannot mutually agree upon terms and
conditions with respect to the Upgrade, this Equipment Schedule will
continue in full force and effect.
10. EARLY TERMINATION
As long as Lessee is not in default and upon not less than ninety (90)
days prior written notice to Lessor, Lessee may terminate this Equipment
Schedule with respect to all, but not less than all, of the Equipment
and/or Software (as applicable) effective upon the expiration of the
12th month of the Initial Term or upon the expiration of any month of
the Initial Term thereafter as specified in the termination notice (the
"Termination Date"), provided that on or before the Termination Date
Lessee pays to Lessor an amount equal to (i) (a) the remaining Rent for
the balance of the Initial Term, (determined as of the Termination
Date), and (b) $1,006,891.40 which equals thirty-eight percent (38%) of
the original acquisition cost, each discounted to present value in
accordance with the formula set below, plus an amount which would be
obtainable in an arm's-length transaction between an informed and
willing lessee/user and an informed and willing lessor/dealer under no
compulsion to lease as determined by Lessor (as of the Termination Date)
in its reasonable discretion, exercised in good faith, for any upgrades
or additions with respect to such Equipment and/or Software (as
applicable), and (ii) all other outstanding amounts due and owing on the
Termination Date (collectively, the "Termination Amount").
For purposes of calculating the Termination Amount, any amounts
discounted shall be discounted at the lesser of:
7
31
(a) the Secured Party's interest rate, if any, (b) the then current U.S.
Treasury Rate for a term which most closely approximates the Initial
Term, or (c) six percent (6%).
11. END OF TERM OPTIONS
If Lessee is not in default and gives Lessor at least ninety (90) days
prior written notice, Lessee will have the option at the expiration of
the Initial Term to (a) purchase all, but not less than all, Equipment
and/or Software (as applicable) for an amount equal to thirty-eight
percent (38%) of the original acquisition cost, plus an amount which
would be obtainable at the end of the Initial Term in an arm's-length
transaction between an informed and willing buyer/user and an informed
and willing seller under no compulsion to sell as determined by Lessor
in its reasonable discretion, exercised in good faith, for any upgrades
or additions with respect to such Equipment and/or Software (as
applicable), plus taxes or (b) extend the Initial Term for all, but not
less than all, Equipment and/or Software (as applicable) for a mutually
agreed upon renewal period at a periodic Rent equal to an amount which
would be obtainable at the commencement of the extended Initial Term in
an arm's-length transaction between an informed and willing lessee/user
and an informed and willing lessor/dealer under no compulsion to lease,
plus taxes amortized over the renewal period , or (c) return the
Equipment and/or Software (as applicable) in accordance with the terms
and conditions of the Master Lease. If Lessee fails to provide written
notice then the Equipment Schedule will continue in full force and
effect until terminated in accordance with its terms.
8
32
MASTER LEASE: This Equipment Schedule is issued pursuant to the Master Lease
identified on page 1 of this Equipment Schedule. All of the terms and conditions
of the Master Lease are incorporated in and made a part of this Equipment
Schedule as if expressly described in this Equipment Schedule, and this
Equipment Schedule constitutes a separate lease for the Equipment. The parties
reaffirm all of the terms and conditions of the Master Lease (including, without
limitation, the representations and warranties set forth in the Master Lease)
except as modified by this Equipment Schedule. This Equipment Schedule may not
be amended or rescinded except by a writing signed by both parties.
MIDCOM COMMUNICATIONS INC. COMDISCO, INC.
as Lessee as Lessor
By: By:
------------------------------- ------------------------------
Title: Title:
------------------------------- ------------------------------
Date: Date:
------------------------------- ------------------------------
9
33
01-SL78686-00
EQUIPMENT SCHEDULE NO. 5
DATED FEBRUARY 17, 1997
TO MASTER LEASE AGREEMENT DATED JANUARY 15, 1997 ("MASTER LEASE")
LESSEE: MIDCOM COMMUNICATIONS INC. LESSOR: COMDISCO, INC.
ADDRESS FOR LEGAL NOTICES: ADDRESS FOR ALL NOTICES:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Communications Product Group
ATTN: General Counsel
PHONE: (▇▇▇) ▇▇▇-▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
ADDRESS FOR ADMINISTRATIVE CORRESPONDENCE: ADDRESS FOR INVOICES:
Same as Above Same as Administrative Correspondence
ATTN: Chief Financial Officer ATTN: Chief Financial Officer
PHONE: (▇▇▇) ▇▇▇-▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇ LESSEE REFERENCE NO:
Atlanta Office
(24 digits maximum)
INITIAL TERM/
1
34
Months
RENT INTERVAL: 60 Months
LOCATION OF EQUIPMENT:
LEASE RATE FACTOR:
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇ - ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Hardware: .0198213
Softcosts: .021976
ATTN: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇
PHONE: (▇▇▇) ▇▇▇-▇▇▇▇
EQUIPMENT (AS DEFINED BELOW):
ITEM MACHINE MODEL/ SERIAL
NO. QTY. MFG. TYPE FEATURE DESCRIPTION NUMBER
--- ---- ---- ---- ------- ----------- ------
1. 1 NTEL DMS 250 PBX System
2
35
RISK OF LOSS: Pursuant to the Master Lease, Lessor and Lessee agree that the
risk of loss is the responsibility of the Lessee.
NOTICE PERIOD: Not less than ninety (90) days nor more than twelve (12) months
prior to the expiration of the lease term. If Lessee gives written notice of
termination, in accordance with the terms of the preceding sentence, but fails
to return the Equipment on the expiration date of the Initial Term, the Lease
will be reinstated and an additional sixty (60) days written notice of
termination will be required, which termination will be effective at the end of
the month following the 60 day notice requirement. The periodic Rent will
continue at the current rate until the effective date of the written notice of
termination and the Equipment is returned.
SPECIAL TERMS: The following additional terms are a part of this Equipment
Schedule. The terms and conditions of the Master Lease Agreement as they pertain
to this Equipment Schedule are modified and amended as follows:
1. SOFTWARE
In addition to leasing the Equipment described herein, Lessor agrees to
finance software license fees ("License Fees") of approximately
$225,204.00, for the Software described in this Equipment Schedule (the
"Software"). The Software is licensed by Northern Telecom Inc., the
vendor of the Software (the "Vendor") directly to the Lessee pursuant to
the terms and conditions of the license agreement between Vendor and
Lessee (the "LicenseAgreement"). Lessor is not a party to nor has any
obligations under the License Agreement and has no interest in the
Software except as described in this Equipment Schedule.
2 ADDITIONAL SOFT COSTS
Lessee and Lessor acknowledge that the Equipment Schedule contains
approximate softcosts of $347,112.00 for labor, freight and handling
costs, and OEM charges charged by Vendor.
3. COMMENCEMENT DATE
The Commencement Date for each item of Equipment and/or Software (as
applicable) will be the day on which that item of Equipment and/or
Software (as applicable) is installed and qualified for a commercially
available manufacturer's standard maintenance contract or warranty
coverage, if available. Lessee agrees to confirm the Commencement Date
by providing Lessor with either a Commencement Certificate in the form
provided by Lessor or the Vendor's invoice
3
36
containing the Equipment and/or Software location (as applicable),
description, serial number (if applicable), cost, the Commencement Date
and Lessee's signature, within ten (10) days of the Commencement Date.
For purposes of this Equipment Schedule, the Initial Term will begin on
July 1, 1997 for all items of Equipment and Software.
Lessee's obligations under this Equipment Schedule and the periodic Rent
described in this Equipment Schedule are contingent upon Lessor
purchasing the Equipment, including the softcosts for an aggregate
amount of $1,356,490.50 in addition to financing the Software License
Fees of approximately $225,204.00 pursuant to satisfactory purchase
documentation. Lessee acknowledges that it has either received or
approved Lessor's purchase documentation for the Equipment and/or
Software. If the Commencement Date occurs later than June 30, 1997
("Outside Date"), if the Commencement Certificate or Vendor invoices are
not provided within ten (10) days of the Commencement Date, or if the
cost or configuration of the Equipment and/or Software or actual
softcosts changes, Lessor may adjust the Lease Rate Factors or the
periodic Rent to reflect any additional costs or expenses resulting from
those changes.
4
37
4. RENT AND PAYMENT
Lessee acknowledges that in addition to its obligations under Section
6.1 of the Master Lease, Lessee's obligation to pay the periodic Rent
described in this Equipment Schedule will not be affected by any
representations made by the Vendor, or by any discontinuance, return,
destruction or failure of the Software. If the Software is
unsatisfactory for any reason, Lessee will make any claims solely
against the Vendor and will continue to pay Lessor all amounts payable
under this Equipment Schedule.
5. DEFAULT
Any violation by Lessee of any of its covenants or representations in
the License Agreement or any failure by Lessee to perform any provision
of the License Agreement will also be an Event of Default under this
Equipment Schedule.
6. MISCELLANEOUS
Upon an Event of Default, expiration or termination of this Equipment
Schedule, Lessee will assign to Lessor all of Lessee's rights and
interests in the Software subject to the prior consent of the Vendor if
required by the License Agreement.
7. EQUIPMENT PROCUREMENT CHARGES (PROGRESS PAYMENTS-LEASE RATE FACTOR)
Because items of Equipment and/or Software will be delivered to Lessee
prior to the Commencement Date, progress payments will be required to be
paid to the Vendor prior to the Commencement Date ("Progress Payments").
With respect to any items of Equipment and/or Software delivered prior
to the Commencement Date, all terms and conditions of this Equipment
Schedule will be applicable except the Lessee's rental obligations
However, Lessee agrees to pay Lessor "Equipment Procurement Charges"
equal to a daily lease rate factor of .0208298 multiplied by the
aggregate of the Progress Payments paid by Lessor for each day from the
date Progress Payments are made until the Commencement Date. Accrued
Equipment Procurement Charges are payable when invoiced.
If the Commencement Date occurs after the Outside Date, the daily lease
rate factor applicable from the Outside Date until the Commencement Date
will be equal to .0208298. If Lessee rejects the Equipment and/or
Software prior to the Commencement Date pursuant to the purchase
agreement with the Equipment vendor or if Lessee is in default of this
Equipment Schedule, then this Equipment Schedule will terminate and
Lessee will (i) reimburse Lessor for all amounts paid
5
38
by Lessor for the purchase of the Equipment and/or Software and (ii) pay
all Equipment Procurement Charges due through the date of termination.
Upon payment of all amounts due and owing by Lessee, Lessor will
transfer to Lessee all of Lessor's interest in the Equipment and/or
Software and under any purchase agreement including any remedies that
Lessor may have against Vendor with respect to said Equipment and/or
Software.
8. INTEREST RATE CHANGE
The Lease Rate Factors or the periodic Rent described in this Equipment
Schedule have been calculated using an interest rate based on the 5-year
U.S. Treasury Constant Maturity of 6.37% as described in the Federal
Reserve Statistical Release H.15 ("Treasury Rate"). If on the
Commencement Date for the last item of Equipment and/or Software prior
to the beginning of the Initial Term, the Treasury Rate is greater or
there is an adverse change in Lessee's credit standing, Lessor may
adjust the Lease Rate Factors or the periodic Rent accordingly.
6
39
9. GENERAL UPGRADE PROVISION
If Lessee is not in default, there has been no material adverse change
in Lessee's credit standing at the time and assuming all required third
party consents are obtained, Lessor will, on Lessee's request enter into
negotiation of a contract in which Lessor would on mutually agreeable
terms and conditions lease to Lessee standard feature and/or equipment
model upgrades to the Equipment and/or Software (as applicable) offered
either by the Equipment manufacturer or by another manufacturer (the
"Upgrade"), provided, however, that (a) the Initial Term for the Upgrade
will be coterminous with the Initial Term of this Equipment Schedule;
and (b) the periodic Rent for the Upgrade will be equal to 100% of the
present value of the acquisition cost of the Upgrade amortized over the
remaining Initial Term of this Equipment Schedule using then prevailing
interest rates for similar transactions and with Lessees of similar
credit rating. If the parties cannot mutually agree upon terms and
conditions with respect to the Upgrade, this Equipment Schedule will
continue in full force and effect.
10. EARLY TERMINATION
As long as Lessee is not in default and upon not less than ninety (90)
days prior written notice to Lessor, Lessee may terminate this Equipment
Schedule with respect to all, but not less than all, of the Equipment
and/or Software (as applicable) effective upon the expiration of the
12th month of the Initial Term or upon the expiration of any month of
the Initial Term thereafter as specified in the termination notice (the
"Termination Date"), provided that on or before the Termination Date
Lessee pays to Lessor an amount equal to (i) (a) the remaining Rent for
the balance of the Initial Term, (determined as of the Termination
Date), and (b) $601,043.91 which equals thirty-eight percent (38%) of
the original acquisition cost, each discounted to present value in
accordance with the formula set below, plus an amount which would be
obtainable in an arm's-length transaction between an informed and
willing lessee/user and an informed and willing lessor/dealer under no
compulsion to lease as determined by Lessor (as of the Termination Date)
in its reasonable discretion, exercised in good faith, for any upgrades
or additions with respect to such Equipment and/or Software (as
applicable), and (ii) all other outstanding amounts due and owing on the
Termination Date (collectively, the "Termination Amount").
For purposes of calculating the Termination Amount, any amounts
discounted shall be discounted at the lesser of:
7
40
(a) the Secured Party's interest rate, if any, (b) the then current U.S.
Treasury Rate for a term which most closely approximates the Initial
Term, or (c) six percent (6%).
11. END OF TERM OPTIONS
If Lessee is not in default and gives Lessor at least ninety (90) days
prior written notice, Lessee will have the option at the expiration of
the Initial Term to (a) purchase all, but not less than all, Equipment
and/or Software (as applicable) for an amount equal to thirty-eight
percent (38%) of the original acquisition cost, plus an amount which
would be obtainable at the end of the Initial Term in an arm's-length
transaction between an informed and willing buyer/user and an informed
and willing seller under no compulsion to sell as determined by Lessor
in its reasonable discretion, exercised in good faith, for any upgrades
or additions with respect to such Equipment and/or Software (as
applicable), plus taxes or (b) extend the Initial Term for all, but not
less than all, Equipment and/or Software (as applicable) for a mutually
agreed upon renewal period at a periodic Rent equal to an amount which
would be obtainable at the commencement of the extended Initial Term in
an arm's-length transaction between an informed and willing lessee/user
and an informed and willing lessor/dealer under no compulsion to lease,
plus taxes amortized over the renewal period, or (c) return the
Equipment and/or Software (as applicable) in accordance with the terms
and conditions of the Master Lease. If Lessee fails to provide written
notice then the Equipment Schedule will continue in full force and
effect until terminated in accordance with its terms.
8
41
MASTER LEASE: This Equipment Schedule is issued pursuant to the Master Lease
identified on page 1 of this Equipment Schedule. All of the terms and conditions
of the Master Lease are incorporated in and made a part of this Equipment
Schedule as if expressly described in this Equipment Schedule, and this
Equipment Schedule constitutes a separate lease for the Equipment. The parties
reaffirm all of the terms and conditions of the Master Lease (including, without
limitation, the representations and warranties set forth in the Master Lease)
except as modified by this Equipment Schedule. This Equipment Schedule may not
be amended or rescinded except by a writing signed by both parties.
MIDCOM COMMUNICATIONS INC. COMDISCO, INC.
as Lessee as Lessor
By: By:
------------------------------- ------------------------------
Title: Title:
------------------------------- ------------------------------
Date: Date:
------------------------------- ------------------------------
9
42
01-SL78687-00
EQUIPMENT SCHEDULE NO. 6
DATED FEBRUARY 17, 1997
TO MASTER LEASE AGREEMENT DATED JANUARY 15, 1997 ("MASTER LEASE")
LESSEE: MIDCOM COMMUNICATIONS INC. LESSOR: COMDISCO, INC.
ADDRESS FOR LEGAL NOTICES: ADDRESS FOR ALL NOTICES:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Communications
Product Group
ATTN: General Counsel
PHONE: (▇▇▇) ▇▇▇-▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
ADDRESS FOR ADMINISTRATIVE CORRESPONDENCE: ADDRESS FOR INVOICES:
Same as Above Same as Administrative
Correspondence
ATTN: Chief Financial Officer ATTN: Chief Financial Officer
PHONE: (▇▇▇) ▇▇▇-▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇ LESSEE REFERENCE NO:
Dallas Office
(24 digits maximum)
INITIAL TERM/
1
43
RENT INTERVAL: 60 Months
LOCATION OF EQUIPMENT:
LEASE RATE FACTOR:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Hardware: .0198213
Softcosts: .021976
ATTN: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
PHONE: (▇▇▇) ▇▇▇-▇▇▇▇
EQUIPMENT (AS DEFINED BELOW):
ITEM MACHINE MODEL/ SERIAL
NO. QTY. MFG. TYPE FEATURE DESCRIPTION NUMBER
--- ---- ---- ---- ------- ----------- ------
1. 1 NTEL DMS 250 PBX System
2
44
RISK OF LOSS: Pursuant to the Master Lease, Lessor and Lessee agree that the
risk of loss is the responsibility of the Lessee.
NOTICE PERIOD: Not less than ninety (90) days nor more than twelve (12) months
prior to the expiration of the lease term. If Lessee gives written notice of
termination, in accordance with the terms of the preceding sentence, but fails
to return the Equipment on the expiration date of the Initial Term, the Lease
will be reinstated and an additional sixty (60) days written notice of
termination will be required, which termination will be effective at the end of
the month following the 60 day notice requirement. The periodic Rent will
continue at the current rate until the effective date of the written notice of
termination and the Equipment is returned.
SPECIAL TERMS: The following additional terms are a part of this Equipment
Schedule. The terms and conditions of the Master Lease Agreement as they pertain
to this Equipment Schedule are modified and amended as follows:
1. SOFTWARE
In addition to leasing the Equipment described herein, Lessor agrees to
finance software license fees ("License Fees") of approximately
$203,232.00, for the Software described in this Equipment Schedule (the
"Software"). The Software is licensed by Northern Telecom Inc., the
vendor of the Software (the "Vendor") directly to the Lessee pursuant to
the terms and conditions of the license agreement between Vendor and
Lessee (the "LicenseAgreement"). Lessor is not a party to nor has any
obligations under the License Agreement and has no interest in the
Software except as described in this Equipment Schedule.
2 ADDITIONAL SOFT COSTS
Lessee and Lessor acknowledge that the Equipment Schedule contains
approximate softcosts of $334,881.00 for labor, freight and handling
costs, and OEM charges charged by Vendor.
3. COMMENCEMENT DATE
The Commencement Date for each item of Equipment and/or Software (as
applicable) will be the day on which that item of Equipment and/or
Software (as applicable) is installed and qualified for a commercially
available manufacturer's standard maintenance contract or warranty
coverage, if available. Lessee agrees to confirm the Commencement Date
by providing Lessor with either a Commencement Certificate in the form
provided by Lessor or the Vendor's invoice
3
45
containing the Equipment and/or Software location (as applicable),
description, serial number (if applicable), cost, the Commencement Date
and Lessee's signature, within ten (10) days of the Commencement Date.
For purposes of this Equipment Schedule, the Initial Term will begin on
July 1, 1997 for all items of Equipment and Software.
Lessee's obligations under this Equipment Schedule and the periodic Rent
described in this Equipment Schedule are contingent upon Lessor
purchasing the Equipment, including the softcosts for an aggregate
amount of $1,111,227.60 in addition to financing the Software License
Fees of approximately $203,232.00 pursuant to satisfactory purchase
documentation. Lessee acknowledges that it has either received or
approved Lessor's purchase documentation for the Equipment and/or
Software. If the Commencement Date occurs later than June 30, 1997
("Outside Date"), if the Commencement Certificate or Vendor invoices are
not provided within ten (10) days of the Commencement Date, or if the
cost or configuration of the Equipment and/or Software or actual
softcosts changes, Lessor may adjust the Lease Rate Factors or the
periodic Rent to reflect any additional costs or expenses resulting from
those changes.
4
46
4. RENT AND PAYMENT
Lessee acknowledges that in addition to its obligations under Section
6.1 of the Master Lease, Lessee's obligation to pay the periodic Rent
described in this Equipment Schedule will not be affected by any
representations made by the Vendor, or by any discontinuance, return,
destruction or failure of the Software. If the Software is
unsatisfactory for any reason, Lessee will make any claims solely
against the Vendor and will continue to pay Lessor all amounts payable
under this Equipment Schedule.
5. DEFAULT
Any violation by Lessee of any of its covenants or representations in
the License Agreement or any failure by Lessee to perform any provision
of the License Agreement will also be an Event of Default under this
Equipment Schedule.
6. MISCELLANEOUS
Upon an Event of Default, expiration or termination of this Equipment
Schedule, Lessee will assign to Lessor all of Lessee's rights and
interests in the Software subject to the prior consent of the Vendor if
required by the License Agreement.
7. EQUIPMENT PROCUREMENT CHARGES (PROGRESS PAYMENTS-LEASE RATE FACTOR)
Because items of Equipment and/or Software will be delivered to Lessee
prior to the Commencement Date, progress payments will be required to be
paid to the Vendor prior to the Commencement Date ("Progress Payments").
With respect to any items of Equipment and/or Software delivered prior
to the Commencement Date, all terms and conditions of this Equipment
Schedule will be applicable except the Lessee's rental obligations.
However, Lessee agrees to pay Lessor "Equipment Procurement Charges"
equal to a daily lease rate factor of .0208298 multiplied by the
aggregate of the Progress Payments paid by Lessor for each day from the
date Progress Payments are made until the Commencement Date. Accrued
Equipment Procurement Charges are payable when invoiced.
If the Commencement Date occurs after the Outside Date, the daily lease
rate factor applicable from the Outside Date until the Commencement Date
will be equal to .0208298. If Lessee rejects the Equipment and/or
Software prior to the Commencement Date pursuant to the purchase
agreement with the Equipment vendor or if Lessee is in default of this
Equipment Schedule, then this Equipment Schedule will terminate and
Lessee will (i) reimburse Lessor for all amounts paid
5
47
by Lessor for the purchase of the Equipment and/or Software and (ii) pay
all Equipment Procurement Charges due through the date of termination.
Upon payment of all amounts due and owing by Lessee, Lessor will
transfer to Lessee all of Lessor's interest in the Equipment and/or
Software and under any purchase agreement including any remedies that
Lessor may have against Vendor with respect to said Equipment and/or
Software.
8. INTEREST RATE CHANGE
The Lease Rate Factors or the periodic Rent described in this Equipment
Schedule have been calculated using an interest rate based on the 5-year
U.S. Treasury Constant Maturity of 6.37% as described in the Federal
Reserve Statistical Release H.15 ("Treasury Rate"). If on the
Commencement Date for the last item of Equipment and/or Software prior
to the beginning of the Initial Term, the Treasury Rate is greater or
there is an adverse change in Lessee's credit standing, Lessor may
adjust the Lease Rate Factors or the periodic Rent accordingly.
6
48
9. GENERAL UPGRADE PROVISION
If Lessee is not in default, there has been no material adverse change
in Lessee's credit standing at the time and assuming all required third
party consents are obtained, Lessor will, on Lessee's request enter into
negotiation of a contract in which Lessor would on mutually agreeable
terms and conditions lease to Lessee standard feature and/or equipment
model upgrades to the Equipment and/or Software (as applicable) offered
either by the Equipment manufacturer or by another manufacturer (the
"Upgrade"), provided, however, that (a) the Initial Term for the Upgrade
will be coterminous with the Initial Term of this Equipment Schedule;
and (b) the periodic Rent for the Upgrade will be equal to 100% of the
present value of the acquisition cost of the Upgrade amortized over the
remaining Initial Term of this Equipment Schedule using then prevailing
interest rates for similar transactions and with Lessees of similar
credit rating. If the parties cannot mutually agree upon terms and
conditions with respect to the Upgrade, this Equipment Schedule will
continue in full force and effect.
10. EARLY TERMINATION
As long as Lessee is not in default and upon not less than ninety (90)
days prior written notice to Lessor, Lessee may terminate this Equipment
Schedule with respect to all, but not less than all, of the Equipment
and/or Software (as applicable) effective upon the expiration of the
12th month of the Initial Term or upon the expiration of any month of
the Initial Term thereafter as specified in the termination notice (the
"Termination Date"), provided that on or before the Termination Date
Lessee pays to Lessor an amount equal to (i) (a) the remaining Rent for
the balance of the Initial Term, (determined as of the Termination
Date), and (b) $499,494.64 which equals thirty-eight percent (38%) of
the original acquisition cost, each discounted to present value in
accordance with the formula set below, plus an amount which would be
obtainable in an arm's-length transaction between an informed and
willing lessee/user and an informed and willing lessor/dealer under no
compulsion to lease as determined by Lessor (as of the Termination Date)
in its reasonable discretion, exercised in good faith, for any upgrades
or additions with respect to such Equipment and/or Software (as
applicable), and (ii) all other outstanding amounts due and owing on the
Termination Date (collectively, the "Termination Amount").
For purposes of calculating the Termination Amount, any amounts
discounted shall be discounted at the lesser of:
7
49
(a) the Secured Party's interest rate, if any, (b) the then current U.S.
Treasury Rate for a term which most closely approximates the Initial
Term, or (c) six percent (6%).
11. END OF TERM OPTIONS
If Lessee is not in default and gives Lessor at least ninety (90) days
prior written notice, Lessee will have the option at the expiration of
the Initial Term to (a) purchase all, but not less than all, Equipment
and/or Software (as applicable) for an amount equal to thirty-eight
percent (38%) of the original acquisition cost, plus an amount which
would be obtainable at the end of the Initial Term in an arm's-length
transaction between an informed and willing buyer/user and an informed
and willing seller under no compulsion to sell as determined by Lessor
in its reasonable discretion, exercised in good faith, for any upgrades
or additions with respect to such Equipment and/or Software (as
applicable), plus taxes or (b) extend the Initial Term for all, but not
less than all, Equipment and/or Software (as applicable) for a mutually
agreed upon renewal period at a periodic Rent equal to an amount which
would be obtainable at the commencement of the extended Initial Term in
an arm's-length transaction between an informed and willing lessee/user
and an informed and willing lessor/dealer under no compulsion to lease,
plus taxes amortized over the renewal period , or (c) return the
Equipment and/or Software (as applicable) in accordance with the terms
and conditions of the Master Lease. If Lessee fails to provide written
notice then the Equipment Schedule will continue in full force and
effect until terminated in accordance with its terms.
8
50
MASTER LEASE: This Equipment Schedule is issued pursuant to the Master Lease
identified on page 1 of this Equipment Schedule. All of the terms and conditions
of the Master Lease are incorporated in and made a part of this Equipment
Schedule as if expressly described in this Equipment Schedule, and this
Equipment Schedule constitutes a separate lease for the Equipment. The parties
reaffirm all of the terms and conditions of the Master Lease (including, without
limitation, the representations and warranties set forth in the Master Lease)
except as modified by this Equipment Schedule. This Equipment Schedule may not
be amended or rescinded except by a writing signed by both parties.
MIDCOM COMMUNICATIONS INC. COMDISCO, INC.
as Lessee as Lessor
By: By:
------------------------------- ------------------------------
Title: Title:
------------------------------- ------------------------------
Date: Date:
------------------------------- ------------------------------
9
51
01-SL78688-00
EQUIPMENT SCHEDULE NO. 7
DATED FEBRUARY 17, 1997
TO MASTER LEASE AGREEMENT DATED JANUARY 15, 1997 ("MASTER LEASE")
LESSEE: MIDCOM COMMUNICATIONS INC. LESSOR: COMDISCO, INC.
ADDRESS FOR LEGAL NOTICES: ADDRESS FOR ALL NOTICES:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Communications
Product Group
ATTN: General Counsel
PHONE: (▇▇▇) ▇▇▇-▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
ADDRESS FOR ADMINISTRATIVE CORRESPONDENCE: ADDRESS FOR INVOICES:
Same as Above Same as Administrative
Correspondence
ATTN: Chief Financial Officer ATTN: Chief Financial Officer
PHONE: (▇▇▇) ▇▇▇-▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇ LESSEE REFERENCE NO:
Seattle Office
(24 digits maximum)
INITIAL TERM/
1
52
RENT INTERVAL: 60 Months
LOCATION OF EQUIPMENT:
LEASE RATE FACTOR:
▇▇▇▇ ▇▇▇ ▇▇▇. - ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Hardware: .0198213
Softcosts: .021976
ATTN: ▇▇. ▇▇ ▇▇▇▇▇
PHONE: (▇▇▇) ▇▇▇-▇▇▇▇
EQUIPMENT (AS DEFINED BELOW):
ITEM MACHINE MODEL/ SERIAL
NO. QTY. MFG. TYPE FEATURE DESCRIPTION NUMBER
--- ---- ---- ---- ------- ----------- ------
1. 1 NTEL DMS 250 PBX System
2
53
RISK OF LOSS: Pursuant to the Master Lease, Lessor and Lessee agree that the
risk of loss is the responsibility of the Lessee.
NOTICE PERIOD: Not less than ninety (90) days nor more than twelve (12) months
prior to the expiration of the lease term. If Lessee gives written notice of
termination, in accordance with the terms of the preceding sentence, but fails
to return the Equipment on the expiration date of the Initial Term, the Lease
will be reinstated and an additional sixty (60) days written notice of
termination will be required, which termination will be effective at the end of
the month following the 60 day notice requirement. The periodic Rent will
continue at the current rate until the effective date of the written notice of
termination and the Equipment is returned.
SPECIAL TERMS: The following additional terms are a part of this Equipment
Schedule. The terms and conditions of the Master Lease Agreement as they pertain
to this Equipment Schedule are modified and amended as follows:
1. SOFTWARE
In addition to leasing the Equipment described herein, Lessor agrees to
finance software license fees ("License Fees") of approximately
$203,232.00, for the Software described in this Equipment Schedule (the
"Software"). The Software is licensed by Northern Telecom Inc., the
vendor of the Software (the "Vendor") directly to the Lessee pursuant to
the terms and conditions of the license agreement between Vendor and
Lessee (the "LicenseAgreement"). Lessor is not a party to nor has any
obligations under the License Agreement and has no interest in the
Software except as described in this Equipment Schedule.
2 ADDITIONAL SOFT COSTS
Lessee and Lessor acknowledge that the Equipment Schedule contains
approximate softcosts of $334,881.00 for labor, freight and handling
costs, and OEM charges charged by Vendor.
3. COMMENCEMENT DATE
The Commencement Date for each item of Equipment and/or Software (as
applicable) will be the day on which that item of Equipment and/or
Software (as applicable) is installed and qualified for a commercially
available manufacturer's standard maintenance contract or warranty
coverage, if available. Lessee agrees to confirm the Commencement Date
by providing Lessor with either a Commencement Certificate in the form
provided by Lessor or the Vendor's invoice
3
54
containing the Equipment and/or Software location (as applicable),
description, serial number (if applicable), cost, the Commencement Date
and Lessee's signature, within ten (10) days of the Commencement Date.
For purposes of this Equipment Schedule, the Initial Term will begin on
July 1, 1997 for all items of Equipment and Software.
Lessee's obligations under this Equipment Schedule and the periodic Rent
described in this Equipment Schedule are contingent upon Lessor
purchasing the Equipment, including the softcosts for an aggregate
amount of $1,111,227.60 in addition to financing the Software License
Fees of approximately $203,232.00 pursuant to satisfactory purchase
documentation. Lessee acknowledges that it has either received or
approved Lessor's purchase documentation for the Equipment and/or
Software. If the Commencement Date occurs later than June 30, 1997
("Outside Date"), if the Commencement Certificate or Vendor invoices are
not provided within ten (10) days of the Commencement Date, or if the
cost or configuration of the Equipment and/or Software or actual
softcosts changes, Lessor may adjust the Lease Rate Factors or the
periodic Rent to reflect any additional costs or expenses resulting from
those changes.
4
55
4. RENT AND PAYMENT
Lessee acknowledges that in addition to its obligations under Section
6.1 of the Master Lease, Lessee's obligation to pay the periodic Rent
described in this Equipment Schedule will not be affected by any
representations made by the Vendor, or by any discontinuance, return,
destruction or failure of the Software. If the Software is
unsatisfactory for any reason, Lessee will make any claims solely
against the Vendor and will continue to pay Lessor all amounts payable
under this Equipment Schedule.
5. DEFAULT
Any violation by Lessee of any of its covenants or representations in
the License Agreement or any failure by Lessee to perform any provision
of the License Agreement will also be an Event of Default under this
Equipment Schedule.
6. MISCELLANEOUS
Upon an Event of Default, expiration or termination of this Equipment
Schedule, Lessee will assign to Lessor all of Lessee's rights and
interests in the Software subject to the prior consent of the Vendor if
required by the License Agreement.
7. EQUIPMENT PROCUREMENT CHARGES (PROGRESS PAYMENTS-LEASE RATE FACTOR)
Because items of Equipment and/or Software will be delivered to Lessee
prior to the Commencement Date, progress payments will be required to be
paid to the Vendor prior to the Commencement Date ("Progress Payments").
With respect to any items of Equipment and/or Software delivered prior
to the Commencement Date, all terms and conditions of this Equipment
Schedule will be applicable except the Lessee's rental obligations.
However, Lessee agrees to pay Lessor "Equipment Procurement Charges"
equal to a daily lease rate factor of .0208298 multiplied by the
aggregate of the Progress Payments paid by Lessor for each day from the
date Progress Payments are made until the Commencement Date. Accrued
Equipment Procurement Charges are payable when invoiced.
If the Commencement Date occurs after the Outside Date, the daily lease
rate factor applicable from the Outside Date until the Commencement Date
will be equal to .0208298. If Lessee rejects the Equipment and/or
Software prior to the Commencement Date pursuant to the purchase
agreement with the Equipment vendor or if Lessee is in default of this
Equipment Schedule, then this Equipment Schedule will terminate and
Lessee will (i) reimburse Lessor for all amounts paid
5
56
by Lessor for the purchase of the Equipment and/or Software and (ii) pay
all Equipment Procurement Charges due through the date of termination.
Upon payment of all amounts due and owing by Lessee, Lessor will
transfer to Lessee all of Lessor's interest in the Equipment and/or
Software and under any purchase agreement including any remedies that
Lessor may have against Vendor with respect to said Equipment and/or
Software.
8. INTEREST RATE CHANGE
The Lease Rate Factors or the periodic Rent described in this Equipment
Schedule have been calculated using an interest rate based on the 5-year
U.S. Treasury Constant Maturity of 6.37% as described in the Federal
Reserve Statistical Release H.15 ("Treasury Rate"). If on the
Commencement Date for the last item of Equipment and/or Software prior
to the beginning of the Initial Term, the Treasury Rate is greater or
there is an adverse change in Lessee's credit standing, Lessor may
adjust the Lease Rate Factors or the periodic Rent accordingly.
6
57
9. GENERAL UPGRADE PROVISION
If Lessee is not in default, there has been no material adverse change
in Lessee's credit standing at the time and assuming all required third
party consents are obtained, Lessor will, on Lessee's request enter into
negotiation of a contract in which Lessor would on mutually agreeable
terms and conditions lease to Lessee standard feature and/or equipment
model upgrades to the Equipment and/or Software (as applicable) offered
either by the Equipment manufacturer or by another manufacturer (the
"Upgrade"), provided, however, that (a) the Initial Term for the Upgrade
will be coterminous with the Initial Term of this Equipment Schedule;
and (b) the periodic Rent for the Upgrade will be equal to 100% of the
present value of the acquisition cost of the Upgrade amortized over the
remaining Initial Term of this Equipment Schedule using then prevailing
interest rates for similar transactions and with Lessees of similar
credit rating. If the parties cannot mutually agree upon terms and
conditions with respect to the Upgrade, this Equipment Schedule will
continue in full force and effect.
10. EARLY TERMINATION
As long as Lessee is not in default and upon not less than ninety (90)
days prior written notice to Lessor, Lessee may terminate this Equipment
Schedule with respect to all, but not less than all, of the Equipment
and/or Software (as applicable) effective upon the expiration of the
12th month of the Initial Term or upon the expiration of any month of
the Initial Term thereafter as specified in the termination notice (the
"Termination Date"), provided that on or before the Termination Date
Lessee pays to Lessor an amount equal to (i) (a) the remaining Rent for
the balance of the Initial Term, (determined as of the Termination
Date), and (b) $499,494.64 which equals thirty-eight percent (38%) of
the original acquisition cost, each discounted to present value in
accordance with the formula set below, plus an amount which would be
obtainable in an arm's-length transaction between an informed and
willing lessee/user and an informed and willing lessor/dealer under no
compulsion to lease as determined by Lessor (as of the Termination Date)
in its reasonable discretion, exercised in good faith, for any upgrades
or additions with respect to such Equipment and/or Software (as
applicable), and (ii) all other outstanding amounts due and owing on the
Termination Date (collectively, the "Termination Amount").
For purposes of calculating the Termination Amount, any amounts
discounted shall be discounted at the lesser of:
7
58
(a) the Secured Party's interest rate, if any, (b) the then current U.S.
Treasury Rate for a term which most closely approximates the Initial
Term, or (c) six percent (6%).
11. END OF TERM OPTIONS
If Lessee is not in default and gives Lessor at least ninety (90) days
prior written notice, Lessee will have the option at the expiration of
the Initial Term to (a) purchase all, but not less than all, Equipment
and/or Software (as applicable) for an amount equal to thirty-eight
percent (38%) of the original acquisition cost, plus an amount which
would be obtainable at the end of the Initial Term in an arm's-length
transaction between an informed and willing buyer/user and an informed
and willing seller under no compulsion to sell as determined by Lessor
in its reasonable discretion, exercised in good faith, for any upgrades
or additions with respect to such Equipment and/or Software (as
applicable), plus taxes or (b) extend the Initial Term for all, but not
less than all, Equipment and/or Software (as applicable) for a mutually
agreed upon renewal period at a periodic Rent equal to an amount which
would be obtainable at the commencement of the extended Initial Term in
an arm's-length transaction between an informed and willing lessee/user
and an informed and willing lessor/dealer under no compulsion to lease,
plus taxes amortized over the renewal period , or (c) return the
Equipment and/or Software (as applicable) in accordance with the terms
and conditions of the Master Lease. If Lessee fails to provide written
notice then the Equipment Schedule will continue in full force and
effect until terminated in accordance with its terms.
8
59
MASTER LEASE: This Equipment Schedule is issued pursuant to the Master Lease
identified on page 1 of this Equipment Schedule. All of the terms and conditions
of the Master Lease are incorporated in and made a part of this Equipment
Schedule as if expressly described in this Equipment Schedule, and this
Equipment Schedule constitutes a separate lease for the Equipment. The parties
reaffirm all of the terms and conditions of the Master Lease (including, without
limitation, the representations and warranties set forth in the Master Lease)
except as modified by this Equipment Schedule. This Equipment Schedule may not
be amended or rescinded except by a writing signed by both parties.
MIDCOM COMMUNICATIONS INC. COMDISCO, INC.
as Lessee as Lessor
By: By:
------------------------------- ------------------------------
Title: Title:
------------------------------- ------------------------------
Date: Date:
------------------------------- ------------------------------
9