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EXHIBIT 10.5
MASTER LEASE AGREEMENT
Agreement No. 10450 Dated as of August 9, 1995
between
DOMINION VENTURES, INC.
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
as Lessor
and
CORAL SYSTEMS, INC.
a Delaware corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
as Lessee
Master Lease Line: $750,000
Rent Factor: 3.3 % Initial Lease Term: 36 months
-------- --
Advance Rental: $ 24,750 Security Deposit: $ 0
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(PLUS APPLICABLE
TAXES)
Minimum Funding Amount: $ 25,000 Maximum Funding Frequency: monthly
-------- ---------
Funding Expiration Date: December 15, 1996
Eligible Equipment: New and/or used computer, furniture, software, and office
equipment.
ORIGINAL COUNTERPART NO. 2
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The terms and information set forth on this cover page are a part of
the MASTER LEASE AGREEMENT, dated as of the date first written above (this
"Lease"), entered into by and between DOMINION VENTURES, INC. ("Lessor") and
the Lessee set forth above, the terms and conditions of which are as follows:
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LESSOR'S OBLIGATIONS UNDER THIS LEASE AND EACH SCHEDULE ARE SUBJECT TO
THE PRIOR SATISFACTION OF THE CONDITIONS SET FORTH ON ADDENDUM I HERETO.
1. DEFINITIONS: Unless otherwise defined in this Lease (which
term shall include the cover page, any Addendum, any Exhibit and any Schedule
hereto), capitalized terms shall have the following meanings:
(a) "Acceptance Certificate" means the Certificate of Inspection
and Acceptance in the form attached hereto as Exhibit D.
(b) "Acceptance Date" means, with respect to each Schedule, the
date of the Acceptance Certificate executed in connection with
such Schedule.
(c) "Advance Rental" has the meaning set forth in Paragraph 5(a)
and is in the amount as set forth on the cover page.
(d) "Assignee" has the meaning set forth in Paragraph 11(b).
(e) "▇▇▇▇ of Sale" means a ▇▇▇▇ of sale in the form attached
hereto as Exhibit C.
(f) "Cost" means the cost to Lessor of purchasing one or more
Units of Equipment including any sales taxes and other charges
paid by Lessor and net of any discounts and rebates.
(g) "Discount Rate" means, as of any date of determination, the
lesser of (i) the then current per annum interest rate for
one-year United States treasury bills as set forth in the
Wall Street Journal on such date and (ii) six percent (6%).
(h) "Eligible Equipment" means Equipment of the types listed
following such term on the cover page of this Lease to the
extent acceptable to Lessor, provided, however, that the
aggregate value of all software funded pursuant to this Master
Lease Agreement shall be no more than fifteen percent (15%)
of the Master Lease Line.
(i) "Environmental Law" means the Resource Conservation and
Recovery Act of 1987, the Comprehensive Environmental
Response, Compensation and Liability Act, and any other
Federal, state or local statute, law, ordinance, code, rule,
regulation, order or decree (in each case having the force of
law) regulating or imposing liability or standards of conduct
concerning any Hazardous Materials or other hazardous, toxic
or dangerous waste, constituent, or other substance, whether
solid, liquid or gas, as now or at any time hereafter in
effect.
(j) "Equipment" means all Units listed in any Schedule together
with all replacement parts, additions, accessions and
accessories to such Units.
(k) "Event of Default" shall have the meaning set forth in
Paragraph 24 hereof.
(l) "Financial Statements" has the meaning set forth in Paragraph
19(a).
(m) "Funding Expiration Date" means the date set forth opposite
such term on the cover page of this Lease or such earlier date
on which Lessor terminates its commitment to fund Schedules
pursuant to the terms of this Lease.
(n) "Hazardous Material" means any hazardous or toxic substance,
material, pollutant or waste, whether solid, liquid or
gaseous, which is regulated by any Federal, state or local
governmental authority.
(o) "Holdover Period" has the meaning set forth in Paragraph 18.
(p) "Initial Lease Term" means, with respect to each Schedule,
the period beginning on the first day of the month following
the Acceptance Date for such Schedule and continuing for the
number of months set forth following such term on the cover
page of this Lease.
(q) "Interim Rent" shall have the meaning set forth in
Paragraph 5(b) of this Lease.
(r) "Lease Term" means, with respect to each Schedule the
Noncancellable Term and any Holdover Period.
(s) "Lessor Affiliate" has the meaning set forth in Paragraph
11(c) hereof.
(t) "Master Lease Line" means the amount set forth following such
term on the cover page of this Lease.
(u) "Maximum Funding Frequency" means the time interval specified
opposite such term on the cover page hereof.
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(v) "Minimum Funding Amount" means the amount set forth following
such term on the cover page of this lease.
(w) "Noncancellable Term" means, with respect to each Schedule,
the period from the Acceptance Date for such Schedule through
the end of the Initial Lease Term for such Schedule.
(x) "Purchase Order Assignment" means a purchase order assignment
in the form of Exhibit B hereto.
(y) "Rent Factor" means the Rent Factor applicable to each
Schedule which is set forth on the cover page of this Lease.
(z) "Rental Payment" means, for any Schedule, the monthly rent
payment for the Units identified in such Schedule.
(aa) "Residual Value" has the meaning set forth in Paragraph 22(b)
of this Lease.
(ab) "Schedule" means a schedule in the form of Exhibit F to this
Lease identifying this Lease and incorporating this Lease by
reference, which is executed by both parties hereto.
(ac) "UCC" means the Uniform Commercial Code as in effect in the
State of California from time to time.
(ad) "Unit" means an item of Equipment.
2. LEASE. Lessor leases to Lessee, and Lessee hires and takes
from Lessor, subject to the terms and conditions set forth in this Lease, the
Units described in the Schedules executed hereunder. Each Schedule shall
constitute a separate and independent lease and contractual obligation of
Lessee incorporating the terms of this Lease. Lessor's commitment to fund
Schedules under this Lease continues through the Funding Expiration Date and is
limited to the amount of the Master Lease Line; provided, however, that Lessor,
acting in its sole discretion, may terminate or modify its funding commitment
at any time if: (a) there is any material adverse change to the general
affairs, management, results of operations, condition (financial or otherwise)
or prospects of Lessee, whether or not arising from transactions in the
ordinary course of business, (b) there is any material adverse deviation by
Lessee from the business plan (as it may have been supplemented in writing) of
Lessee presented to Lessor, since the date first written on the cover page of
this Lease, (c) any Event of Default or event which with the passage of time or
notice or both would constitute an Event of Default exists, or (d) if any term
or condition in any Schedule is not satisfied prior to the Acceptance Date with
respect to such Schedule. Each Schedule shall be funded in an amount not less
than the Minimum Funding Amount and not more frequently than the Maximum
Funding Frequency. Except to the extent otherwise permitted by Lessor from
time to time, no Unit of Equipment shall have a unit cost of less than $1,000
or be subject to a single invoice of less than $5,000.
3. EQUIPMENT SUBJECT TO LEASE. Lessee shall select the type and
quantity of Equipment (which Equipment shall in each case be Eligible Equipment
acceptable to Lessor) to be subject to each Schedule. Subject to the terms and
conditions of this Lease: (i) if such Equipment is not previously owned by
Lessee and is not subject to a purchase order issued by Lessee, Lessor shall at
Lessee's direction order each Unit from the respective suppliers, and upon
delivery and acceptance by Lessee each such Unit shall be leased to Lessee
hereunder; (ii) if Lessee has previously issued its purchase order to a
supplier, Lessee shall execute a Purchase Order Assignment assigning such
purchase order to Lessor and the Units subject to such purchase order, upon
delivery and acceptance by Lessee, shall be leased to Lessee hereunder; or
(iii) if Lessee owns the Equipment which it intends to make subject to this
Lease (which Equipment shall have been new and placed in service by Lessee not
more than one hundred eighty (180) days prior to the date of this Lease),
Lessee shall execute a ▇▇▇▇ of Sale transferring title to such Equipment to
Lessor at the purchase price agreed to between Lessor and Lessee. All
sale/leaseback Equipment will be purchased at fair market value based upon an
appraisal. All appraisal costs will be borne by Lessee. Subject to the
restrictions set forth in the definition of Eligible Equipment, Equipment
consisting of software may be funded under a Schedule without obtaining
assignment or sublicensing documentation from the vendor so long as the
aggregate Cost of software supplied by such vendor does not exceed $30,000. In
cases in which the aggregate Cost of software supplied by a vendor exceeds
$30,000, Lessor may require that such assignment or sublicensing documentation
in form and substance satisfactory to Lessor be executed prior to the inclusion
of the software as Equipment on any Schedule. Lessee acknowledges that Lessor
may have the ability to obtain discounts or rebates not available to Lessee
from suppliers from which Lessor buys in volume. Any
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discounts or rebates remitted to Lessee shall be turned over to Lessor and Cost
of the Equipment set forth on any Schedule shall be deemed to be the Cost net
of such discount or rebate. Any request by Lessee to Lessor to purchase
Equipment directly or by assignment of a purchase order shall be irrevocable.
4. TERM. This Lease is effective upon execution hereof by Lessor
and shall continue until full performance of every provision of this Lease;
provided that Lessor's obligations to fund any Schedule are subject to the
prior satisfaction by Lessee of the conditions set forth in Part 1 of Addendum
I to this Lease. All obligations under each Schedule shall commence upon
Lessee's execution of an Acceptance Certificate and Schedule for the Units to
be subject to such Schedule and Lessor's countersignature on such Schedule;
provided that Lessor's obligation to fund such Schedule is subject to the prior
satisfaction by Lessee of the conditions set forth in Part 2 of Addendum I to
this Lease. The Initial Lease Term with respect to each Schedule shall begin
on the first day of the month following the Acceptance Date.
5. RENTAL PAYMENTS.
(a) Advance Rental. Upon execution of this Lease, Lessee shall
pay to Lessor an advance payment in an amount equal to the Rent Factor
multiplied by the Master Lease Line (plus applicable taxes) (the "Advance
Rental") less any commitment fee previously paid. A pro-rata portion of the
Advance Rental shall be deemed to prepay as of the date of this Lease the last
Rental Payment for each Schedule. If the Master Lease Line has not been fully
expended by the Funding Expiration Date, Lessor shall retain the unutilized
portion of the Advance Rental as compensation for expenses unless the Master
Lease Line has not been fully expended due to Lessor's financial inability to
fund Schedules as requested.
(b) Interim Rent. If the Acceptance Date with respect to any
Schedule shall be other than the first day of the month, Lessee shall make
interim rental payments ("Interim Rent") for each day from and including the
Acceptance Date, through and including the last day of the month prior to the
beginning of the Initial Lease Term in an amount equal to one-thirtieth of the
monthly Rental Payment set forth on the Schedule. Such Interim Rent shall be
due and payable on the first day of the calendar month following the month for
which such payment is assessed.
(c) Rental Payments. Lessee shall pay to Lessor, as rental for
Equipment during each month of the Initial Lease Term of any Schedule and
during any Holdover Period, an amount equal to the Rent Factor set forth on the
cover page of this Lease multiplied by the total Cost of the Equipment to
Lessor, which amount shall be due and payable in advance on the first day of
each calendar month during the Initial Lease Term and during any Holdover
Period. In addition to any other remedies that Lessor may have under this
Lease, if Lessee fails to pay any Rental Payment or Interim Rent or other
amount herein provided within five (5) business days after the same is due,
Lessee shall pay to Lessor a late charge of three percent (3%) of such amount
plus interest from the due date until the date of payment, calculated at the
rate of one and five tenths percent (1.5%) per month, or at the highest rate
permitted by applicable law, whichever is less, to compensate Lessor for
additional bookkeeping and collection expense. All Rental Payments, Advance
Rental, Interim Rent, late charges and other amounts for which Lessee is liable
shall be paid to Lessor at its address as set forth above or as otherwise
directed by Lessor.
6. CHARACTERIZATION OF LEASE; WARRANTIES; WAIVERS; LIABILITY.
(a) Characterization of Lease. It is the intent of Lessor and
Lessee that this Lease be a true lease and not a lease intended as security or
a conditional sales agreement. Lessor and Lessee agree to treat this Lease as
a true lease for income tax purposes. Lessor and Lessee agree that this Lease
is a "finance lease" as that term is defined by Section 10103(a)(7) of the UCC.
With respect to the Equipment subject to each Schedule, Lessee acknowledges and
warrants as of the date of such Schedule that (i) Lessee has received a copy of
the contract(s) pursuant to which Lessor acquired the Equipment (the "Supply
Contract"), or (ii) Lessee has reviewed and approved the Supply Contract, or
(iii) Lessor has informed Lessee in writing that Lessee may have rights under
the Supply Contract and that Lessee should contact the supplier for a
description of any such rights. LESSOR AND LESSEE
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AGREE THAT THIS LEASE IS A "NET" LEASE, AND LESSEE'S OBLIGATION TO MAKE RENTAL
PAYMENTS AND PAY OTHER SUMS WHEN DUE AND OTHERWISE PERFORM ITS OBLIGATIONS
UNDER THIS LEASE SHALL BE ABSOLUTE AND UNCONDITIONAL, AND SHALL NOT BE SUBJECT
TO OR AFFECTED BY OR REDUCED BY ANY ABATEMENT, REDUCTION, SET-OFF, DEFENSE,
COUNTERCLAIM, INTERRUPTION, DEFERMENT, RECOUPMENT OR OTHER RIGHT WHICH LESSEE
MAY HAVE AGAINST LESSOR, THE MANUFACTURER OR SUPPLIER OF THE EQUIPMENT OR ANY
OTHER PERSON. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, NO DEFECT OR
UNFITNESS OF ANY ITEM OF EQUIPMENT NOR OTHER CLAIM REGARDING CONDITION OR USE
OF THE EQUIPMENT SHALL RELIEVE LESSEE OF THE OBLIGATION TO MAKE RENTAL
PAYMENTS, PAY ANY OTHER SUM WHEN DUE OR OTHERWISE PERFORM ANY OTHER OBLIGATION
DUE TO LESSOR AND ITS SUCCESSORS AND ASSIGNS UNDER THIS LEASE.
(b) Warranties. Lessor warrants that, so long as no Event of
Default has occurred and is continuing, neither Lessor nor its successors or
Assignees or anyone acting or claiming through Lessor will interfere with
Lessee's quiet enjoyment and use of the Equipment. EXCEPT FOR LESSOR'S
WARRANTY OF QUIET ENJOYMENT, LESSEE HAS NOT RELIED UPON LESSOR IN SELECTING THE
EQUIPMENT AND ACKNOWLEDGES THAT LESSOR HAS MADE NO REPRESENTATION OR WARRANTY
OF ANY KIND, EXPRESS OR IMPLIED, WITH RESPECT TO THE EQUIPMENT, INCLUDING
WITHOUT LIMITATION ITS CONDITION, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR
PURPOSE. Until the Lease is terminated, Lessor hereby assigns to Lessee and
Lessee shall have the benefit of, any and all manufacturer's warranties,
service agreements and intellectual property indemnities, if any, with respect
to each Unit. Lessee's remedy for the breach of any such warranty,
indemnification or service agreement shall be against the manufacturer or
supplier of such Equipment and not against Lessor, nor shall any such breach
have any effect whatsoever on the rights and obligations of Lessor or Lessee
hereunder.
(c) Waivers. With respect to any Schedule, after the Acceptance
Date for such Schedule, Lessee hereby specifically waives any and all rights
and remedies conferred upon Lessee by UCC Sections 10508 through 10522 as
against Lessor, including (without limitation) Lessee's rights to (i) cancel or
repudiate this Lease, (ii) reject or revoke acceptance of any Unit, (iii)
recover damages from Lessor for breach of warranty or for any other reason,
(iv) claim a security interest in any rejected property in Lessee's possession
or control, (v) deduct from Rental Payments all or any part of any claimed
damages resulting from Lessor's default under this Lease, (vi) accept partial
delivery of the Equipment, (vii) "cover" by making any purchase or lease of
other property in substitution for property due from Lessor, (viii) recover
from the Lessor any general, special, incidental or consequential damages, for
any reason whatsoever, and (ix) seek specific performance, replevin or the like
for any of the Units. Notwithstanding the foregoing, nothing in this Lease
shall be construed as a waiver of Lessee's right to seek a separate recovery of
any Rental Payment that is not due and payable under this Lease, and Lessee
retains the right to seek damages or other remedies on account of Lessor's
failure to perform its obligations under this Lease.
(d) Liability. LESSEE ACKNOWLEDGES THAT LESSOR IS NOT THE
MANUFACTURER, SUPPLIER OR DISTRIBUTOR OF THE EQUIPMENT, THAT SAID ENTITIES ARE
NOT AGENTS OF LESSOR, THAT LESSEE RENTS THE EQUIPMENT "AS IS", AND THAT LESSOR
HAS ACCEPTED NO RESPONSIBILITY FOR THE TRANSPORTATION, INSTALLATION OR REQUIRED
LICENSING NECESSARY FOR THE TRANSFER, INSTALLATION OR USE OF THE EQUIPMENT.
LESSEE HEREBY WAIVES ANY CLAIM (INCLUDING ANY CLAIM BASED ON STRICT OR ABSOLUTE
LIABILITY IN TORT) WHICH IT MIGHT HAVE AGAINST LESSOR FOR ANY LOSS, DAMAGE
(INCLUDING INCIDENTAL OR CONSEQUENTIAL DAMAGE) OR EXPENSE CAUSED DIRECTLY OR
INDIRECTLY BY THE EQUIPMENT, ITS USE OR MAINTENANCE, OR ANY DELAY OR FAILURE TO
PROVIDE ANY UNIT OF EQUIPMENT, OR ANY INTERRUPTION OF SERVICE OR LOSS OF USE OF
THE EQUIPMENT EXCEPT (AT THE END OF THE LEASE TERM, WHETHER AT STATED MATURITY
OR BY EARLY TERMINATION, IF ANY EQUIPMENT IS BEING RETURNED TO LESSOR) THOSE
CAUSED BY LESSOR'S GROSS NEGLIGENCE AND WILLFUL MISCONDUCT. If any Unit is
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unsatisfactory for any reason, Lessee shall make any claim against the
manufacturer or supplier of the Unit and not against Lessor. Lessor shall not
be liable for specific performance of this Lease or for damages if for any
reason a supplier declines, delays or fails to fill any order.
7. ADJUSTMENTS FOR ACTUAL COST. Upon Lessee's request, Lessor
may, but shall have no obligation to, fund a Schedule which would cause the
aggregate Cost of Equipment on all Schedules funded under this Lease to exceed
the Master Lease Line. If at any time the actual aggregate Cost of all
Equipment exceeds the Master Lease Line, the Advance Rental shall be increased
proportionately. Lessee shall pay any additional sums for Advance Rental due
under this Lease within five (5) business days after receiving notice from
Lessor. Lessee may not request funding for a Schedule which would cause the
aggregate Cost of Equipment under all Schedules funded under this Lease to
exceed the Lease Line by more than ten percent (10%).
8. TITLE. All Equipment shall remain personal property, and the
title thereto shall remain exclusively in Lessor, notwithstanding the manner in
which any Unit may be attached to realty. Lessee agrees, upon the request of
Lessor at any time during the Lease Term, to affix or permit Lessor to affix,
in a permanent and inconspicuous place on any Unit, labels supplied by Lessor
identifying the Equipment as property of Lessor, and shall not alter or remove
any such label from any Unit. Lessee shall keep the Equipment free from any
and all liens and encumbrances except those created by Lessor. Lessee shall
give Lessor immediate notice of any judicial process or encumbrance affecting
the Equipment and shall indemnify and save Lessor harmless from any loss or
damage caused thereby, including without limitation court costs, reasonable
attorney fees and expenses.
9. FILING. Lessee shall execute or use its best efforts to cause
to be executed, at Lessee's sole expense, such supplemental instruments,
financing statements and landlord's waivers as Lessor deems necessary or
advisable and shall cooperate to defend the title of Lessor in the Equipment by
filing or otherwise; provided, however, that Lessee shall not bear such
expenses resulting from the sale or assignment of this Lease by Lessor. Lessee
authorizes Lessor to record in any state, this Lease and any financing
statements, security agreements and landlord's waivers with respect to the
Equipment or any collateral provided by Lessee to Lessor. Lessee agrees to
give Lessor thirty (30) days written notice of any change in Lessee's name or
place of business. Lessee agrees to give written notice to Lessor as soon as
Lessee has knowledge of any change of ownership of the real property upon which
or within which the Equipment is located.
10. TAXES. Lessee shall pay in a timely fashion, and shall
indemnify and hold Lessor harmless against all federal, state and local taxes,
assessments, license and registration fees, and other governmental charges of
any kind, including, without limitation,those levied on motor vehicles or
trailers, and any interest or penalties thereon, which may be levied, directly
or indirectly, against the Equipment or with respect to its ordering,
purchasing, delivery, ownership, possession, use, leasing, documentation, and
return or other disposition thereof, regardless of whether such taxes and fees
are levied against Lessor or Lessee; provided, however, that Lessee shall have
the right to contest any such taxes assessments, license and registration fees
or charges with the applicable authorities. Such taxes and fees to be paid by
Lessee shall include, without limitation, property, sales, rent, franchise,
gross receipts, lease, and use taxes, and any other tax measured by gross
Rental Payments, but shall not include income or franchise taxes based on
Lessor's net income and payable by Lessor on its receipt of Rental Payments
hereunder. Personal property taxes shall be reasonably estimated by Lessor and
billed to Lessee as of the date of assessment each year. Upon receipt by
Lessor of the final personal property tax assessment and invoice, Lessor shall
invoice or credit Lessee, as applicable, for any differences of such final
assessment and Lessor's original estimate. Lessor shall have the right, but
not the obligation, to pay any such taxes or fees regardless of whether levied
against Lessor or Lessee. Any and all sales or use taxes levied against
Lessor's purchase of Equipment shall be added to the total Cost of such
Equipment as specified on the Schedule under which such Equipment is added to
this Lease. With the exception of taxes and fees which are added to the total
Cost of Equipment hereunder, Lessee shall reimburse Lessor within five (5)
business days after receipt of invoice from Lessor specifying the amount of,
and reason for, any payment by Lessor of amounts for which Lessee is liable
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under this Paragraph 10. Lessee shall timely prepare and file all reports and
returns which are required to be made with respect to such taxes and/or fees,
and all such reports shall show Lessor as owner of the Equipment.
11. ASSIGNMENTS AND SUBLEASES.
(a) EXCEPT AS PERMITTED BY PARAGRAPH 14, WITHOUT THE PRIOR WRITTEN
CONSENT OF LESSOR, LESSEE SHALL NOT ASSIGN, PLEDGE, GRANT A SECURITY INTEREST
IN, OTHERWISE ENCUMBER, SUBLEASE OR TRANSFER, OR IN ANY WAY DISPOSE OF OR
OTHERWISE RELINQUISH POSSESSION OR CONTROL OVER (COLLECTIVELY, A "TRANSFER")
ITS RIGHTS WITH RESPECT TO ANY UNIT OF EQUIPMENT OR ALL OR ANY PART OF ITS
RIGHTS AND OBLIGATIONS UNDER THIS LEASE. If notwithstanding the foregoing, a
Transfer by Lessee takes place, the rights of the sublessee or other transferee
will be subject and subordinate to all of the terms of this Lease, including
Lessor's right of repossession on the occurrence of an Event of Default.
Lessee will remain primarily liable for the performance of all of the terms of
this Lease to the same extent as if the sublease or transfer of possession had
not occurred. Lessor and Lessee agree that any purchase of all or
substantially all of Lessee's assets, any merger or consolidation into or with
Lessee regardless of whether Lessee is the surviving entity or any entity
acquiring more than thirty percent (30%) of Lessee's voting securities shall be
deemed to be a Transfer under this Lease; provided, however, that no such
consent shall be required if Lessee presents to Lessor evidence reasonably
satisfactory to Lessor that the surviving entity shall have a financial
condition which is at least as good as that of Lessee and can reasonably be
expected to be capable of performing Lessee's obligations under this Lease.
(b) Lessor shall have the right, in its sole discretion, to
assign, sell, pledge, grant a security interest in or otherwise encumber its
rights under this Lease or one or more Schedules and/or with respect to the
Equipment subject to this Lease or such Schedule(s) to one or more persons or
entities (each, an "Assignee"). Lessee acknowledges that an assignment, sale
or other encumbrance by Lessor would not materially change Lessee's duties
under the Lease or materially increase its burdens or risks. Without prejudice
to any rights that Lessee may have against Lessor, Lessee agrees that it will
not assert against an Assignee any claim or defense that it may have against
Lessor.
(c) Lessee acknowledges that it is Lessor's intention to assign
this Lease and/or one or more Schedules and the related Equipment to one or
more limited partnerships with which Lessor is affiliated (each, a "Lessor
Affiliate") and agrees that upon any such assignment the sole liability for
performance of Lessor's obligations hereunder shall fall upon such Lessor
Affiliate which shall assume such obligations and Lessor shall be fully
released from such liabilities and that the limited partners of such Lessor
Affiliate shall have no personal liability for the performance or observance of
this Lease. A Lessor Affiliate which succeeds to the rights and interests of
Lessor under this Paragraph 11(c) shall be bound by the terms of this Lease
without alteration and any claim or defense which Lessee may have had against
Lessor prior to such assignment may only be asserted against the assignee
Lessor Affiliate.
(d) Subject to the foregoing, this Lease inures to the benefit of,
and is binding upon, the heirs, legatees, representatives, successors and
assigns of Lessee and Lessor.
12. REPRESENTATIONS AND WARRANTIES.
(a) Lessee warrants and represents the following as of the date
hereof: (i) Lessee is a corporation duly organized, validly existing and in
good standing under the laws of the state of its incorporation and is duly
qualified and authorized to do business in the state(s) where the Equipment
will be located; (ii) Lessee has the full corporate power, authority and legal
right and has obtained all approvals and consents and has given all notices
necessary to execute and deliver this Lease and perform the terms hereof and of
each Schedule; (iii) there is no action, proceeding or claim pending or,
insofar as Lessee knows, threatened against Lessee or any of its subsidiaries
before any court or administrative agency which might have a material adverse
effect on the business, condition or
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operations of Lessee or any subsidiary; and (iv) this Lease has been and each
Schedule will be duly executed and delivered by Lessee and constitute or will
constitute the valid, binding and enforceable obligations of Lessee except as
such enforcement may be limited by laws relating to bankruptcy, insolvency or
the enforcement of creditors rights generally or by rules of law concerning
equitable remedies.
(b) Lessee agrees that by its signature on each Schedule it shall
be deemed to have warranted and represented the following as of the Acceptance
Date of such Schedule: (i) all of the Units subject to such Schedule are
accurately described in Annex A attached to such Schedule, have been fully
assembled and conform to all applicable performance criteria; (ii) the
requirements of this Lease and of Lessor with respect to the identification of
the Units have been met; and (iii) each of the representations and warranties
set forth in clause (a) of this Paragraph 12 remains true and correct.
13. USE AND INDEMNITY. Lessee shall use the Equipment only in
Lessee's business. Except as set forth in ▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ agrees not to
allow the Equipment to be used by other than its employees, consultants and
agents. Lessee acknowledges that the Equipment is leased for commercial
purposes and not for personal, family or household use. Lessee agrees to
indemnify and hold Lessor, and Lessor's officers, directors, shareholders,
partners, affiliates, agents, servants, successors and Assignees, harmless
against any and all liabilities, losses, damages, actions, claims and expenses
of any kind and nature, including, without limitation, court costs and
reasonable attorneys' fees and expenses (each, a "Claim"), directly or
indirectly related to or arising in connection with the breach of any
representation or warranty of Lessee under this Lease or the manufacture,
purchase, licensing, lease or sublease, delivery, installation, operation, use,
ownership, maintenance, storage, relocation, return or condition of any Unit of
the Equipment (regardless of whether such Unit is at the time in the possession
or control of Lessee) arising from acts during the Term of each Schedule and
prior to any redelivery of the Equipment to Lessor, except to the extent any
such claims, actions, liabilities and expenses result from the gross negligence
or willful misconduct of Lessor. The foregoing indemnity shall cover, without
limitation, (i) any Claim in connection with a design or other defect (latent
or patent) in any Unit, (ii) any Claim for infringement of any patent,
copyright, trademark or other intellectual property right, (iii) any Claim
resulting from the presence on or under or the escape, seepage, leakage,
spillage, discharge, emission or release from any Unit of any Hazardous
Materials, including, without limitation, any Claims asserted or arising under
any Environmental Law, or (iv) any Claim for negligence or strict or absolute
liability in tort. Upon Lessor's written demand, Lessee shall assume and
diligently conduct, at its sole cost and expense, the entire defense of Lessor
and its agents, employees, successors and assigns against any indemnified Claim
described in this Paragraph 13. Lessee shall not settle or compromise any
Claim against or involving Lessor without first obtaining Lessor's written
consent thereto, which consent shall not be unreasonably withheld. The
foregoing indemnity shall continue in full force and effect notwithstanding the
termination or cancellation of this Lease, whether by expiration of time,
operation of law or otherwise.
14. LOCATION. Lessee shall keep the Equipment at its place of
business as specified above or on the Schedules. Lessee shall not permit any
Equipment to be moved to a new location without the prior written consent of
Lessor; provided, however, that Equipment may be used from time to time by
Lessee's customers for demonstration purposes at Lessee's customer locations so
long as the aggregate original Cost of such Equipment at any time located at a
customer location does not exceed $40,000.
15. RIGHT OF INSPECTION. Lessor and its agents shall have the
right, at any time during normal business hours upon 24 hours notice to Lessee,
to inspect and photograph the Equipment, to review all maintenance records
related to the Equipment and, during the last ninety (90) days of the
Noncancellable Term of each respective Schedule, to demonstrate the Equipment
specified thereon to prospective purchasers (provided that Lessee has not given
notice of its intention to purchase the Equipment); provided, however, Lessor
shall give five (5) days' notice to Lessee of any such demonstration.
16. MAINTENANCE. Lessee shall exercise due and proper care in the
use, repair and servicing of the Equipment. Lessee shall, at its own expense,
make all repairs and replacements required to maintain the
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Equipment in good working condition in accordance with manufacturers'
specifications and Lessor's requirements, and shall pay all other operating
expenses relating to the Equipment. Lessee shall have the right, with written
notice to Lessor thereof, to make any alterations, additions or improvements to
any Unit which do not render the Unit in such a condition that it cannot, prior
to the expiration, cancellation or other termination of this Lease, be restored
to its original condition, reasonable wear and tear alone excepted; provided
that no such alteration, addition or improvement shall be made by Lessee if as
a result thereof any warranties made by the supplier of the Unit would be
canceled or terminated. If Lessee does not exercise its option to purchase the
Equipment, as specified in Paragraph 17, or if this Lease shall be earlier
terminated or cancelled for any reason, Lessee shall restore each Unit to its
original condition, reasonable wear and tear alone excepted, prior to the
expiration, cancellation or other termination of each respective Schedule. All
replacement parts and additions incorporated into a Unit shall become the
property of Lessor immediately upon incorporation; provided, however, that
Lessor shall transfer to Lessee title to any alterations, additions and
improvements which were made by Lessee at its own expense to each item of
Equipment purchased by Lessee pursuant to the provisions of Paragraph 17.
Lessee agrees to maintain and provide upon request of Lessor all internal
maintenance reports relating to the Equipment.
17. PURCHASE OPTION. Upon written notice to Lessor not less than
ninety (90) days nor more than one hundred eighty (180) days prior to the last
day of the Noncancellable Term of any Schedule executed pursuant to this Lease,
if Lessee has fulfilled all of its obligations hereunder, Lessee shall have the
right to purchase all, but not less than all, of the Equipment under such
Schedule, for the aggregate Fair Market Value of such Equipment (plus
applicable taxes); provided, however, that Lessee shall be obligated, at the
end of the Noncancellable Term for each Schedule, to purchase all software
funded pursuant to such Schedules under Facility A of this Lease pursuant to
the provisions of this Paragraph 17. Lessor and Lessee hereby agree that for
the purposes of Lessee's purchase option as set forth in this Paragraph 17, the
Fair Market Value of software funded pursuant to this Lease shall be, on the
last day of the Noncancellable Term of the Schedule covering the software,
fifteen percent (15%) of such software's original cost, as reasonably
determined by the parties. With the exception of software funded under any
Schedules of this Lease, should Lessor and Lessee fail to agree upon the Fair
Market Value of the Equipment, said price shall be determined by an independent
appraiser, and the cost of the appraisal shall be borne equally by both Lessor
and Lessee. Notwithstanding the date on which Lessee exercises this option,
Lessee shall acquire no rights of title to any Equipment, nor shall title to
any Unit be transferred to Lessee after the exercise of this purchase option
until the expiration of the Noncancellable Term for the Schedule on which such
Unit is specified. Lessee shall remain liable for all Rental Payments and
other obligations due under each Schedule until the expiration of the
Noncancellable Term of such Schedule. Any Equipment sold by Lessor shall be
sold "AS IS", "WHERE IS", and with no warranties, express or implied, including
without limitation implied warranties of merchantability and fitness for any
particular purpose. Except as set forth above with respect to software, "Fair
Market Value" is defined, with respect to all Equipment funded under this
Lease, as the estimated amount at which the property might be expected to
exchange in an arm's length transaction between a willing buyer (other than a
used equipment dealer) and a willing seller, neither being under compulsion,
each having reasonable knowledge of all relevant facts, and with equity to
both, with the assumptions that the Units (i) are being sold "in place and in
use," (ii) are free and clear of all liens and encumbrances, and (iii) are in
the condition required by Paragraph 16 of this Lease.
18. RETURN OF EQUIPMENT. Upon ninety (90) days' written notice to
Lessor, in the event Lessee has not exercised its purchase option as specified
in Paragraph 17, after such notification and upon the expiration, cancellation
or other termination of the Noncancellable Term of each Schedule, Lessee shall,
at Lessee's sole expense, properly pack and return the Equipment, insured,
unencumbered and in the same condition as when received by Lessee, reasonable
wear and tear alone excepted, by such carriers as Lessor shall reasonably
approve and to such place as designated by Lessor. Should Lessee fail to give
notice of its intent to return or fail to return the Equipment as directed
above, all obligations of Lessee under this Lease, including Rental Payments,
shall remain in full force and effect for the period from the end of the
Initial Lease Term until ninety (90) days after notice is given to Lessor of
Lessee's intent to return or purchase the Equipment (the "Holdover Period").
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19. FINANCIAL STATEMENTS; OTHER INFORMATION.
(a) Lessee shall provide to Lessor the financial statements
specified in this Paragraph 19 (a), prepared in accordance with generally
accepted accounting principles, consistently applied (the "Financial
Statements"); provided, however, that after the effective date of the initial
registration statement covering a public offering of Lessee's securities, the
term "Financial Statements" shall be deemed to refer only to those statements
required to be filed by the Securities and Exchange Commission, to be provided
no less frequently than quarterly.
(i) As soon as practicable (and in any event within
thirty (30) days after the end of each month), a reasonably detailed balance
sheet as of the end of such month and the related statements of income or loss,
cash flow and capital structure of the Lessee during such month (including
notification of the commencement of any material litigation by or against
Lessee), certified by Lessee's Chief Executive Officer or Chief Financial
Officer to fairly present the data reflected therein.
(ii) As soon as practicable (and in any event within one
hundred twenty (120) days after the end of each fiscal year), audited balance
sheets as of the end of such year (consolidated if applicable), and related
statements of income or loss, retained earnings or deficit, cash flows and
capital structure of Lessee for such year, setting forth in comparative form
the corresponding figures for the preceding fiscal year, and accompanied by an
audit report and opinion of the independent certified public accountants of
recognized national standing selected by Lessee.
(b) Lessee shall promptly furnish to Lessor any additional
information (including but not limited to tax returns, income statements,
balance sheets, and names of principal creditors) as Lessor reasonably believes
necessary to evaluate Lessee's continuing financial obligations (the
"Additional Information").
(c) Lessor agrees to preserve the confidentiality of all
information provided to it hereunder by Lessee regarding the Lessee and its
business which Lessee designates as confidential and which is otherwise not
generally known (except to the extent any disclosure of such information is
required by a court of competent jurisdiction or governmental authority).
20. TAX INDEMNIFICATION. Lessee acknowledges that this Lease has
been entered into on the basis that Lessor or Lessor's Assignee intends to
claim such depreciation, interest deductions and other tax benefits (the "Tax
Benefits") as are provided to an owner of Equipment under the Internal Revenue
Code of 1986, as amended (the "Code") and corresponding provisions of state
law. If Lessor or Lessor's Assignee shall not have the right to claim or there
shall be disallowed, deferred, recaptured or otherwise made unavailable with
respect to Lessor or Lessor's Assignee all or any portion of the Tax Benefits
as a result of an act or failure to act by Lessee in contravention of any of
the terms and conditions of the Lease, Lessee shall promptly pay to Lessor or
Lessor's Assignee, an amount which, on an after-tax basis, will compensate
Lessor or Lessor's Assignee for the value of the lost Tax Benefits. The Tax
Benefits shall be deemed to have been disallowed or recaptured upon the
earliest of (i) the adjustment by a taxing authority of the tax return of
Lessor to reflect such loss (but only if such adjustment will actually result
in a tax payment); or (ii) the payment by Lessor to the Internal Revenue
Service or state taxing authority of the tax increase resulting from such lost
Tax Benefits. Lessee shall have the right to contest any disallowance or
recapture of tax benefits. Lessor or Lessor's Assignee shall be deemed not to
have the right to claim the Tax Benefits if, in the opinion of Lessor's
independent tax counsel, reasonably acceptable to Lessee, there is no
reasonable basis for claiming the Tax Benefits.
21. ADDITIONAL LESSOR RIGHTS. A representative of Lessor shall
have the right to meet with Lessee's Chief Executive Officer and Chief
Financial Officer once each quarter throughout the lease term to review and
discuss the operating performance and financial condition of the Company.
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22. RISK OF LOSS. Lessee assumes the entire risk of loss, theft
and damage of the Equipment from any cause whatsoever during the term of each
Schedule and prior to any redelivery of Equipment to Lessor, and no such event
shall relieve Lessee of any obligation under this Lease. Lessee shall notify
Lessor in writing within ten (10) days after any such event. Lessee agrees
that Lessor shall have the following remedies upon each occurrence of the
following events:
(a) In the case of damage of any kind whatsoever to any Unit
(unless such Unit is damaged beyond repair), Lessee shall, at Lessee's sole
expense and with Lessor's reasonable consent, (i) restore such Equipment to its
original condition, reasonable wear and tear alone excepted, or (ii) replace it
with like equipment of the same or later model in good condition. Upon
Lessee's replacement of any Equipment as specified in clause (ii) of this
Paragraph 22(a), Lessee shall transfer title to such replaced Equipment to
Lessor.
(b) If any Unit is determined by Lessor to be damaged beyond
repair, or if Lessor has reasonable cause to believe that any Unit is stolen or
lost and such Unit is not returned to its proper location within thirty (30)
days after notice thereof to Lessee, Lessee shall, at Lessee's option,
immediately: (i) replace such Unit with like equipment of the same or later
model in good condition, in which case such Unit shall be substituted for the
damaged Unit on the relevant Schedule, and Rental Payments shall continue
throughout the Lease Term of the Schedule to which the Unit becomes subject
without any interruption, or (ii) pay to Lessor the sum of (A) the aggregate
unpaid rent due for the balance of the Noncancellable Term for the Unit
involved, discounted to present value at the Discount Rate; plus (B) the then
estimated Fair Market Value of the Unit involved, calculated as of the
expiration of the Noncancellable Term (the "Residual Value"), discounted to
present value at the Discount Rate; plus (C) any tax payments or
indemnification for which Lessee is liable under Paragraphs 10 and 20; plus any
other amounts with respect to such Unit for which Lessee is liable under this
Lease; provided, however, the option specified in clause (i) of this Paragraph
22(b) shall not be available if an Event of Default has occurred and is
continuing. Upon payment under clause (ii) of Paragraph 22(b), this Lease
shall terminate with respect to the Unit(s) paid for, and Lessee shall become
entitled to such Unit(s) "AS IS" AND "WHERE IS" WITHOUT ANY WARRANTY, EXPRESS
OR IMPLIED, INCLUDING WITHOUT LIMITATION ANY WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE.
(c) Any proceeds paid to Lessor from the personal property
insurance specified in Paragraph 23(a)(i) shall be applied to Lessee's
obligations under this Paragraph 22.
23. INSURANCE.
(a) Lessee shall, at its own expense, maintain the following types
of insurance, with companies with an A-5 Best rating or better, acceptable to
Lessor, until such time as Lessee has returned the Equipment as specified in
Paragraph 18 or taken title to the Equipment pursuant to Paragraph 17:
(i) Personal property insurance on all property owned by
Lessee (including without limitation all of the Equipment) in an agreed amount
based upon the following:
(A) Standard "all risk" property insurance,
including boiler and machinery insurance, earthquake insurance, if
applicable, and flood insurance if any Equipment is located in an
identified "flood hazard area," in which flood insurance has been made
available pursuant to the National Flood Insurance Act of 1968;
(B) The amount of such insurance shall be not
less than the greater of the fair market value or the full
undepreciated replacement value of the Equipment. The amount of such
insurance allocable to loss or damage or personal property shall not
have a deductible in excess of one thousand dollars ($1,000.00) per
occurrence.
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(C) Such insurance shall contain an endorsement
issued by the insurer (as opposed to a certificate issued by an agent
of the insurer) in which Lessor is named as loss payee with respect to
the Equipment, and shall set aside the amount stated in Paragraph
23(a)(i)(B) for the sole benefit of, and payable directly to, Lessor.
(ii) Employee dishonesty insurance payable to Lessor with
respect to the theft of the Equipment, such employee dishonesty insurance to
have a policy limit of $250,000.00.
(iii) Business interruption insurance in an amount at all
times equal to the total Rental Payments to become due during the six months
following the date of calculation. In the event of any interruption of
Lessee's business, the amount payable to Lessor shall be equal to the actual
loss of Rental Payments suffered by Lessor as the result of such interruption,
and shall be payable to Lessor within thirty (30) days from the date of loss,
and on a month-to-month basis thereafter, until Lessee's business is returned
to a fully operational state, plus ninety (90) days.
(iv) Commercial general liability insurance covering
bodily injury (including death) and property damage, naming Lessor, its
directors, officers, agents and employees as an Additional Insureds on all
policies (evidenced by an endorsement issued by the insurer (as opposed to a
certificate issued by an agent of the insurer)), and providing total limits in
amounts as are at the time carried by entities engaged in the same or similar
business and which are similarly situated, but in no event less than two
million dollars ($2,000,000.00) for combined single limit occurrence. All such
policies shall cover any injury or damage occasioned by, or occurring upon,
Lessee's premises, products, operations and, at Lessor's option, explosion,
collapse and underground hazards. All such policies shall contain contractual
liability coverage including all liability assumed under this agreement, and a
cross liability clause providing that such insurance shall, except with respect
to the limits of liability, apply separately to each insured.
(v) Workers compensation insurance.
(b) All insurance specified in this Paragraph 23 shall be primary
over, and in no event shall, any insurance carried by Lessor be called upon to
contribute to any loss relating to or arising out of this Lease. All insurance
shall be in effect, and shall be evidenced by policies and/or endorsements
delivered to Lessor no later than twenty (20) days after the date upon which
Lessee executes this Lease. Notwithstanding anything to the contrary contained
in this Lease, Lessor shall have no obligation to purchase any Equipment until
all policies are in place. All such policies shall provide for at least thirty
(30) days' prior written notice to Lessor in the event of any cancellation,
non-renewal or material change in coverage, and Lessor shall receive a copy of
any and all endorsements or other documentation relating to such policies.
(c) Should Lessee, at any time during the Lease Term, be without
sufficient insurance, as determined by Lessor in accordance with the provisions
of this Paragraph 23, Lessee appoints Lessor as its agent to obtain such
coverage, and promises to pay to Lessor the entire cost of such coverage.
24. DEFAULT. Each of the following events shall constitute an
"Event of Default" under this Lease:
(a) Nonpayment, by the due date specified herein, of any Rental
Payment or other payment required of Lessee under the terms of this Lease, and
such nonpayment shall continue for a period of five (5) business days;
(b) Noncompliance with any or all of the provisions of Paragraph
23, and such noncompliance shall continue for a period of five (5) days after
notice thereof is given to Lessee;
(c) Lessee shall have made a misstatement or false statement of,
or omitted to state, a material fact in connection with the execution,
performance or nonperformance of this Lease or any Schedule, or if any
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representation or warranty of Lessee in this Lease, any Schedule or any
Acceptance Certificate is inaccurate or false;
(d) Except to the extent permitted by Paragraph 14, if Lessee,
without Lessor's prior written consent, shall have removed, parted possession
with, sold transferred, encumbered, assigned or sublet the Equipment or
Lessee's interest under this Lease or attempted to do any of the foregoing; or
if Lessee shall have converted any interest of Lessor arising under this Lease
or any purchase order, or resulting from the purchase of Equipment or attempted
to convert any of the foregoing;
(e) If Lessee, without Lessor's prior written consent, shall
encumber or grant a security interest in (other than for valid business
purposes in the ordinary course of business with respect to license agreements
or similar agreements), sell, transfer or assign to any holder of equity
securities of Lessee Lessee's rights, title and interest in all patents, patent
applications, invention disclosures, copyrights, copyright applications,
trademarks (including service marks), trademark registrations, trade names,
computer software and hardware, microcode and source code, trade secrets,
know-how and processes owned by Lessee or other intellectual property rights;
(f) If any of Lessee's credit or financial information submitted
to Lessor at any time (including but not limited to due diligence materials,
Financial Statements and Additional Information) contains any misstatement or
false statement of a material fact, or fails to state therein any material fact
necessary to make the statements made, in light of the circumstances under
which they were made, not misleading;
(g) If Lessee shall become "insolvent" as defined in Section
101(32) of the United States Bankruptcy Code;
(h) If any single final judgment for payment of money damages in
excess of fifty thousand dollars ($50,000.00), or aggregate final judgments for
payment of money damages in excess of one hundred thousand dollars
($100,000.00), shall be rendered against Lessee and shall remain undischarged
for a period of sixty (60) days (unless during such period execution shall not
be effectively stayed in which case there shall be no grace period under this
Paragraph 24(h));
(i) If any substantial part of Lessee's property shall be
subjected to any levy, seizure, involuntary assignment, attachment, application
or sale for or by any creditor or governmental agency which is not removed,
terminated or stayed within twenty (20) days;
(j) If any single indebtedness of Lessee exceeding the sum of
fifty thousand dollars ($50,000.00), or aggregate indebtedness exceeding the
sum of one hundred thousand dollars ($100,000.00), under any other lease or
contract for the borrowing of money or on account of the deferred purchase
price of property shall be accelerated, or subject to acceleration upon the
giving of notice, passage of time or both as a result of a default by Lessee,
or the obligee with respect to such indebtedness shall exercise any other
remedy it may have as a result of such default; provided, however, that this
Paragraph 21(j) shall not apply to the acceleration of or the exercise of
remedies with respect to indebtedness to CSC Intelicom, Inc. under that certain
Promissory Note in the principal amount of $500,000, dated as of December 13,
1992;
(k) If an order, judgement or decree shall be entered by any court
having jurisdiction for (i) relief in respect of Lessee in an involuntary case
under any applicable bankruptcy, insolvency or other similar law (as now or
hereafter in effect), (ii) appointing of receiver, liquidator, assignee,
trustee, custodian, sequestrator (or similar official) for Lessee or for any
substantial part of its property, or sequestering any substantial part of the
property of Lessee, or (iii) liquidating of Lessee's affairs, and any such
order, judgement or decree shall remain in force undismissed, unstayed or
unvacated for a period of sixty (60) days after the date of entry thereof; or
if Lessee shall seek relief of any kind under any such law or consent to any of
the foregoing; or
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(l) Nonperformance of any of Lessee's obligations under this Lease
other than those described elsewhere in this Paragraph 24, and such
nonperformance shall continue for a period of twenty (20) days after notice
thereof is given to Lessee.
25. REMEDIES. Upon the occurrence and during the continuance of
any Event of Default, Lessor or its agent shall have the right, without demand
or prior notice, in Lessor's sole discretion, to exercise any one or more of
the following remedies:
(a) To cancel this Lease and all Schedules;
(b) To declare the damages specified in Paragraph 26 to be
immediately due and payable;
(c) To take possession of any or all Units of Equipment with or
without any court order or other process of law, and for this purpose Lessor
and/or its agents may enter upon any premises of or under the control or
jurisdiction of Lessee or any agent of Lessee, without liability for suit,
action or other proceeding by Lessee (except those based upon Lessor's or
Lessor's agent's gross negligence or willful misconduct) and remove the
Equipment therefrom; Lessee further agrees, on demand, to assemble the
Equipment and make it available to Lessor at a place to be designated by Lessor
which is reasonably convenient to Lessor and Lessee; notwithstanding the
foregoing, such taking of possession shall not relieve Lessee of its
obligations to pay damages as set forth in Paragraph 26.
(d) To exercise any other right or remedy which may be available
to Lessor under the UCC or any other applicable law.
26. DAMAGES. Lessor's damages, in the event of default by Lessee,
shall include (in addition to all other damages available to Lessor under
applicable law): (i) the due and unpaid balance of Rental Payments and all
other amounts payable hereunder plus late charges and interest due under
Paragraph 5(c) (but not more than the maximum rate permitted by law) for the
period after the date such payments were due, (ii) the aggregate of all
remaining Rental Payments through the end of the Noncancellable Term of each
Schedule, discounted to present value at the Discount Rate, (iii) the Residual
Value (unless the Equipment is returned to Lessor in the condition required by
Section 18), discounted to present value at the Discount Rate, (iv) any
indemnification payments due hereunder plus interest at a rate equal to the
lesser of 1.5% per month or the maximum rate permitted by law for the period
after the date such payments were due, (v) reasonable costs of repossession,
recovery, storage and repairs and of lease or sale to a third party, plus (vi)
all other reasonable expenses including court costs and reasonable attorneys'
fees and expenses. Lessor's obligation to mitigate said damages and any
reduction of the amounts due to Lessor shall be limited as follows:
(a) Lessor shall make best efforts to mitigate its damages by
re-leasing the Equipment to a third party, and any rentals received in
consideration for such third party's use of said Equipment during any period of
the Noncancellable Term of any Schedule shall be applied only to that portion
of Lessor's damages resulting from loss of rentals that Lessor would have
received from Lessee during the same period had Lessee not become in default.
Amounts received from such third party shall be applied in mitigation of
Lessor's damages only to the extent such amounts are payable in connection with
such third party's periodic rental obligations as specified in the preceding
sentence; in no event shall any other amount received from such third party,
including without limitation as a security deposit or as an advance on periodic
rental obligations, be applied in mitigation of Lessor's damages hereunder.
(b) Lessor shall have no obligation to sell any of the Equipment;
however, any amounts received from a sale to a third party shall be applied to
Lessor's damages as specified in this ▇▇▇▇▇▇▇▇▇ ▇▇.
-▇▇-
▇▇
▇▇. MISCELLANEOUS.
(a) If more than one Lessee is named in or added to this Lease,
the liability of each shall be joint and several.
(b) All notices related hereto shall be mailed to Lessor or Lessee
at its respective address as specified on the cover page of this Lease, or at
such other address as either party may designate upon ten days written notice
to the other party.
(c) Paragraph titles are solely for convenience and are not an aid
in the interpretation of this Lease.
(d) Time is of the essence of this Lease and each of its
provisions.
(e) If notwithstanding the intent of the parties this Lease and
any Schedules hereto are determined to be a lease for security or a security
agreement, Lessee shall have been deemed to have granted to Lessor a security
interest in all of Lessee's right, title and interest in and to the Equipment
and the proceeds thereof to secure all of Lessee's obligations to Lessor
arising hereunder.
(f) This Lease may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same
instrument; provided, however, that to the extent, if any, that this Lease
constitutes chattel paper (as such term is defined in the Uniform Commercial
Code as in effect in any applicable jurisdiction), no security interest in this
Lease may be created through the transfer or possession of any counterpart of
this Lease or any Schedule other than the original counterparts marked
"Original Counterpart No. 1".
28. LESSOR'S PERFORMANCE OF LESSEE'S OBLIGATIONS. If Lessee shall
fail duly and promptly to perform any of its obligations under this Lease,
Lessor may, at its option and at any time, perform the same without waiving any
default on the part of Lessee, or any of Lessor's rights. Lessee shall
reimburse Lessor, within five (5) days after notice thereof is given to Lessee,
for all expenses and liabilities incurred by Lessor in the performance of
Lessee's obligations.
29. NONWAIVER; RIGHTS AND REMEDIES CUMULATIVE. Lessor's failure
at any time to require strict performance by Lessee shall not constitute waiver
of, or diminish, Lessor's right to demand strict compliance with any provision
of this Lease. Waiver by Lessor of any default shall not constitute waiver of
any other default. No rights or remedies referred to herein shall be
exclusive, but shall be cumulative and in addition to any other right or remedy
set forth herein or otherwise available to Lessee at law or in equity.
30. SURVIVAL OF OBLIGATIONS; LIMITATIONS ON ACTIONS. All
agreements, covenants, representations and warranties of Lessee contained in
this Lease or in the Schedules or other documents delivered pursuant hereto or
in connection herewith shall survive the execution and delivery, and the
expiration, cancellation or other termination of this Lease. Any action by
Lessee against Lessor for any default by Lessor under this Lease shall be
commenced within one (1) year after Lessee obtains knowledge of the facts
underlying any such cause of action.
31. SEVERABILITY. If any provision or remedy herein provided is
determined invalid under applicable law, such provision shall be inapplicable
and deemed omitted; but the remaining provisions, including remaining default
remedies, shall be given effect in accordance with their terms.
32. UPGRADES, ADDITIONS AND ATTACHMENTS. Any added memory,
upgrades, additions and attachments to Equipment previously placed under this
Lease shall, upon approval by Lessor, be included on a
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Schedule, with a Noncancellable Term that is coterminous with the Equipment to
which such added memory, upgrade, addition or attachment is being attached.
33. CHOICE OF LAW. THIS LEASE SHALL BE DEEMED TO HAVE BEEN MADE
AND ACCEPTED AND PERFORMED IN THE COUNTY OF SAN FRANCISCO, IN THE STATE OF
CALIFORNIA, WHERE THE LESSOR'S PRINCIPAL PLACE OF BUSINESS IS LOCATED. THIS
LEASE AND ALL TRANSACTIONS HEREUNDER, AND ALL RIGHTS AND LIABILITIES OF THE
PARTIES HERETO, SHALL BE DETERMINED AND GOVERNED AS TO THE VALIDITY,
INTERPRETATION, ENFORCEMENT AND EFFECT BY THE LAWS OF THE STATE OF CALIFORNIA.
THE LESSEE HEREBY CONSENTS, IN ALL ACTIONS AND PROCEEDINGS ARISING DIRECTLY OR
INDIRECTLY FROM THIS LEASE, TO THE EXCLUSIVE JURISDICTION OF THE FEDERAL
DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA OR ANY STATE COURT
LOCATED WITHIN SAN FRANCISCO COUNTY IN THE STATE OF CALIFORNIA. LESSEE HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS LEASE.
Lessee Initials: /s/ ▇▇ ▇▇▇▇▇▇ Initials: /s/ KJC
----------- -----------
34. ENTIRE AGREEMENT. This instrument and any confidentiality
agreement executed in connection herewith constitutes the entire agreement
between the parties and may not be modified except in writing executed by
Lessor and Lessee. No supplier or agent of Lessor is authorized to bind Lessor
or to waive or modify any term of this Lease.
Lessee Initials: /s/ ▇▇ ▇▇▇▇▇▇ Initials: /s/ KJC
----------- -----------
The undersigned representative of Lessee affirms that he or she has
read and understood this Lease and is duly authorized to execute this Lease on
behalf of Lessee and that, if Lessee is a corporation, this Lease is entered
into with consent of Lessee's Board of Directors and stockholders if so
required.
IN WITNESS WHEREOF, the parties hereto execute this noncancellable
Lease as of the date on the cover page hereof.
LESSEE: LESSOR:
CORAL SYSTEMS, INC. DOMINION VENTURES, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: President & CEO Title: CFO
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This Lease incorporates the following Addenda as if fully set forth herein:
Addendum I
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ADDENDUM I
TO MASTER EQUIPMENT
LEASE AGREEMENT NO. 10450
DATED AUGUST 9, 1995
Conditions to Lessor's Obligations
By their initials below and on the signature page of the
Master Lease Agreement referenced in the upper right corner of this page,
Lessor and Lessee agree that the Lease incorporates the following terms:
Part 1: On or prior to the date of execution of the Lease by
Lessor, Lessor shall have received in form and substance
satisfactory to Lessor:
(a) Copies, certified, in substantially the manner set
forth in Exhibit E to the Lease, by the Secretary or
Assistant Secretary of: (A) the Articles of
Incorporation and By-Laws of Lessee (as amended to
the date of the Lease) and (B) the resolutions
adopted by Lessee's board of directors authorizing
the transaction and the documents being executed in
connection therewith.
(b) A Good Standing Certificate (including tax status if
available) with respect to Lessee from Lessee's
state of incorporation, dated a date reasonably
close to the date of acceptance of the Lease by
Lessor.
(c) Evidence of the insurance coverage required by
Paragraph 23 of the Lease.
(d) All necessary consents of shareholders and other
third parties with respect to the subject matter of
the Lease and the other documents being executed in
connection therewith.
(e) Landlord waiver(s) in the form of Exhibit A.
(f) The Advance Rental plus applicable taxes.
(g) The Certificate regarding IBM Master Pension Plan.
(h) All other documents as Lessor shall have reasonably
requested.
Part 2: Prior to any funding of a Schedule, each of the conditions
set forth in Part 1 of this Addendum I shall have been
satisfied and Lessor shall have received in form and
substance satisfactory to Lessor:
(a) Such documentation as Lessor may request with
respect to invoices, purchase orders, canceled
checks and the like relating to the Equipment to be
subject to the Schedule.
(b) A Purchase Order Assignment or ▇▇▇▇ of Sale if
applicable.
(c) A UCC-1 financing statement duly executed by Lessee.
(d) An Acceptance Certificate with respect to the
Equipment to be subject to the Schedule.
Initials /s/ KJC (Lessor)
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ADDENDUM I Initials /s/ EJ (Lessee)
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