MASTER LEASE AGREEMENT
THIS MASTER LEASE AGREEMENT (THE "LEASE") IS MADE THE 15TH DAY OF APRIL, 1999
BETWEEN LEASING TECHNOLOGIES INTERNATIONAL, INC., WITH ITS PRINCIPAL OFFICE AT
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (THE "LESSOR"), AND YOUNETWORK CORPORATION, A
DELAWARE CORPORATION, WITH ITS PRINCIPAL OFFICE AT ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ (THE "LESSEE"). THE PARTIES HERETO AGREE AS FOLLOWS:
1. LEASE:
This Lease establishes the general terms and conditions by which Lessor
may lease to Lessee the Equipment (the "Equipment") listed on each Equipment
Schedule executed periodically pursuant to this Lease. Each such Equipment
Schedule shall incorporate by reference the terms of this Lease, and shall be a
separate lease agreement as to the Equipment listed thereon for all purposes,
including default. In the event of any conflict between the terms and conditions
of this Lease and the terms and conditions of any Equipment Schedule(s) or
Rider(s) thereto, the terms and conditions of such Equipment Schedule(s) or
Rider(s) shall prevail.
2. DEFINITIONS:
(a) The "Installation Date" means the date determined in accordance
with the applicable Equipment Schedule.
(b) The "Commencement Date" means, as to any item of Equipment
designated on any Equipment Schedule where the Installation Date for such item
of Equipment falls on the first day of the month, that date, or, in any other
case, the first day of the month following the month in which such Installation
Date falls.
(c) The "Daily Rental" means 1/30th of the amount set forth as the
monthly rental in the applicable Equipment Schedule.
3. TERM OF LEASE:
The term of this Lease, as to all Equipment designated on any Equipment
Schedule, shall commence on the Installation Date for such Equipment, and shall
continue for an initial period ending that number of months as is specified on
the applicable Equipment Schedule from the Commencement Date for the last item
of Equipment to be installed (the "Initial Term"). The term of this Lease for
all such Equipment shall be automatically extended for successive monthly
periods until terminated in accordance with this Lease. Any termination shall be
effective only on the last day of the Initial Term or the last day of any such
successive period.
4. RENTAL:
The monthly rental payable hereunder is as set forth in the Equipment
Schedule(s). Rental shall begin to accrue on the Installation Date for each item
of Equipment and shall be due and payable by Lessee in advance on the first day
of each month. If the Installation Date does not fall on the first day of a
month, the rental for that period of time from the Installation Date until the
Commencement Date shall be an amount equal to the Daily Rental multiplied by the
number of days from (and including) the Installation Date to (but not including)
the Commencement Date and shall be due and payable on the Installation Date. In
addition to the monthly rental set forth in the Equipment Schedule(s), Lessee
shall pay to Lessor an amount equal to all taxes paid, payable or required to be
collected by Lessor, however designated, which are levied or based on the
rental, on the Lease or on the Equipment or on its purchase for lease hereunder,
or on its use, lease, operation, control or value (including, without
limitation, state and local privilege or excise taxes based on gross revenue),
any penalties or interest in connection therewith which are attributable to
Lessee's negligence or taxes or amounts in lieu thereof paid or payable by
Lessor in respect of the foregoing, but excluding taxes based on Lessor's net
income. Personal property taxes assessed on the Equipment during the term hereof
shall be paid by Lessee. Lessee agrees that Lessor, or Lessor's agent may file
all required property tax returns and reports and pay all taxes thereon
pertaining to the Equipment. In such event, Lessee shall reimburse Lessor or
Lessor's agent for all costs and expenses incurred in connection therewith,
provided that such costs and expenses (including property taxes) shall not
exceed the property taxes pursuant to statutory tax rates and regulations. If
requested by Lessor, Lessee agrees to file, on behalf of Lessor, all required
property tax returns and reports concerning the Equipment with all appropriate
governmental agencies, and, within not more than thirty (30) days after the due
date of such filing to send Lessor confirmation of such filing.
Interest on any past due payments, including but not limited to
administrative charges and any other charges or fees arising out of or related
to this Lease (excluding any payments relating to taxes which have not been
timely paid other than due to Lessee's conduct), shall accrue at the rate of 1
1/2% per month, or if such rate shall exceed the maximum rate allowed by law,
then at such maximum rate, and shall be payable on demand. Charges for taxes,
penalties and interest shall be promptly paid by Lessee when invoiced by Lessor.
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As security for the full performance of all of Lessee's obligations
under each Equipment Schedule, Lessee shall, simultaneously with the execution
and delivery of each Equipment Schedule, deposit with Lessor the amount set
forth on such Equipment Schedule. The security deposit shall be promptly
returned to Lessee by Lessor upon the expiration of such Equipment Schedule and
return or purchase of all Equipment, as the case may be, provided that all
Lessee obligations under such Equipment Schedule have been fulfilled.
5. INSTALLATION, USE AND QUIET POSSESSION OF EQUIPMENT:
(a) Lessee, at its own expense, will provide the required suitable
electric current to operate the Equipment and appropriate installation
facilities as specified by the manufacturer.
(b) Any equipment, cards, disks, tapes or other items not specified in
the Equipment Schedule(s) which are used on or in connection with the Equipment
must meet the specifications of the manufacturer and shall be acquired by Lessee
at its own expense.
(c) Lessee shall use the Equipment solely in connection with Lessee's
business and for no other purpose. Subject to the preceding sentence, Lessee
shall be entitled to unlimited usage of the Equipment without extra charge by
Lessor.
(d) Unless otherwise set forth in the applicable Equipment Schedule,
Lessee will at all times keep the Equipment in its sole possession and control.
The Equipment shall not be moved from the location stated in the applicable
Equipment Schedule without the prior written consent of Lessor.
(e) After prior notice to Lessor, Lessee may, at its own expense, make
alterations in or add attachments to the Equipment, provided such alterations or
attachments do not interfere with the normal and satisfactory operation or
maintenance of the Equipment or with Lessee's ability to obtain and maintain the
maintenance contract required by Section 5(h) hereof. The manufacturer or other
organization selected by Lessee and approved in writing by Lessor to maintain
the Equipment ("Maintenance Organization") may incorporate engineering changes
or make temporary alterations to the Equipment upon request of Lessee. All such
alterations and attachments shall be and become the property of Lessor or, at
the option of Lessee, shall be removed by Lessee and the Equipment restored, at
Lessee's expense, to its original condition as of the Installation Date thereof,
reasonable wear and tear only excepted, and upon the removal and restoration,
the alteration and/or attachment which was made by Lessee shall become the
property of Lessee.
(f) So long as Lessee is not in default hereunder, neither Lessor nor
any party claiming through or under Lessor shall interfere with Lessee's use or
possession of any Equipment during the term of this Lease.
(g) Lessee shall, during the term of this Lease, at its expense, keep
the Equipment in good working order and condition reasonable wear and tear
excepted and make all necessary adjustments, repairs and replacements and shall
not use or permit the Equipment to be used in any manner or for any purpose for
which, in the opinion of the manufacturer, the Equipment is not designed or
reasonably suitable.
(h) Unless otherwise set forth in the applicable Equipment Schedule,
Lessee shall, during the term of this Lease, at its own expense, enter into and
maintain in force a contract with the manufacturer or the Maintenance
Organization covering at least prime shift maintenance of each item of
Equipment. Such contract shall commence upon expiration of the manufacturer's
warranty period, if any, relating to such item. Lessee shall furnish Lessor with
a copy of such contract(s).
(i) At the termination of the applicable Equipment Schedule, Lessee at
its expense shall return, if permitted by the applicable Equipment Schedule, not
less than all the Equipment subject thereto to Lessor (at the location
designated by Lessor within the Continental United States) in the same operating
order, repair, condition and appearance as on the Installation Date, reasonable
wear and tear only excepted, with all engineering and safety changes prescribed
by the manufacturer or Maintenance Organization incorporated therein. Lessee
shall, prior to such termination, arrange and pay for any repairs, changes and
manufacturer's certifications as are necessary for the manufacturer or
Maintenance Organization to accept the Equipment under contract maintenance at
its then standard rates. Lessee shall return all accessories supplied with the
Equipment, including but not limited to all manuals, cables and software
diskettes. Lessee shall promptly pay, after receipt of an invoice therefore, all
costs and expenses pertaining to the replacement of any missing items and for
the repair of any Equipment, together with any audit, inspection or
certification charges reasonably incurred by Lessor.
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6. LEASEHOLD RIGHTS AND INSPECTION:
(a) Lessee shall have no interest in the Equipment other than the
rights acquired as a lessee hereunder and the Equipment shall remain personalty
regardless of the manner in which it may be installed or attached. Lessee shall,
at Lessor's request, affix to the Equipment, tags, decals or plates furnished by
Lessor, indicating Lessor's ownership and Lessee shall not permit their removal
or concealment. Lessee shall replace any such tag, decal or plate which may be
removed or destroyed or become illegible. Lessee shall keep all Equipment free
from any marking or labeling which might be interpreted as a claim of ownership
thereof by Lessee or any party other than Lessor or anyone claiming through
Lessor.
(b) Lessee shall keep the Equipment free and clear of all liens and
encumbrances except liens or encumbrances arising through the actions or
omissions of Lessor. LESSEE SHALL NOT ASSIGN OR OTHERWISE ENCUMBER THIS LEASE OR
ANY OF ITS RIGHTS HEREUNDER OR SUBLEASE THE EQUIPMENT WITHOUT THE PRIOR WRITTEN
CONSENT OF LESSOR except that Lessee may assign this Lease or sublease the
Equipment to its parent or any subsidiary corporation, or to a corporation which
shall have acquired all or substantially all of the property of Lessee by
merger, consolidation or purchase. No permitted assignment or sublease shall
relieve Lessee of any of its obligations hereunder.
(c) Lessor or its agents shall have free access to the Equipment at all
reasonable times for the purpose of inspection and for any other purpose
contemplated by this Lease.
(d) Lessee shall immediately notify Lessor of all details concerning
any damage to, or loss of, the Equipment arising out of any event or occurrence
whatsoever, including but not limited to, the alleged or apparent improper
manufacture, functioning or operation of the Equipment.
7. NO WARRANTIES BY LESSOR:
Lessee represents that, at the Installation Date thereof, it shall have
(a) thoroughly inspected the Equipment; (b) determined for itself that all items
of Equipment are of a size, design, capacity and manufacture selected by it; and
(c) satisfied itself that the Equipment is suitable for Lessee's purposes.
LESSOR SUPPLIES THE EQUIPMENT AS IS AND NOT BEING THE MANUFACTURER OF THE
EQUIPMENT, THE MANUFACTURER'S AGENT OR THE SELLER'S AGENT, MAKES NO WARRANTY OR
REPRESENTATION, EITHER EXPRESS OR IMPLIED AS TO THE EQUIPMENT'S MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE, DESIGN, CONDITION, QUALITY, CAPACITY, MATERIAL
OR WORKMANSHIP OR AS TO PATENT INFRINGEMENT OR THE LIKE, it being agreed that
all such risks, as between Lessor and Lessee, are to be borne by Lessee. Lessee
agrees to look solely to the manufacturer or to suppliers of the Equipment for
any and all warranty claims and any and all warranties made by the manufacturer
or the supplier of Lessor are, to the extent to which the same may be
assignable, hereby assigned to Lessee for the term of the applicable Equipment
Schedule. Lessee agrees that Lessor shall not be responsible for the delivery,
installation, maintenance, operation or service of the Equipment or for delay or
inadequacy of any or all of the foregoing. Lessor shall not be responsible for
any direct or consequential loss or damage resulting from the installation,
operation or use of the Equipment or otherwise. Lessee will defend, indemnify
and hold Lessor harmless against any and all claims, demands and liabilities
arising out of or in connection with the design, manufacture, possession or
operation of the Equipment.
8. RISK OF LOSS ON LESSEE:
(a) Beginning on the Installation Date thereof and continuing until the
Equipment is either returned to Lessor or purchased by Lessee as provided in
this Lease, Lessee relieves Lessor of responsibility for all risks of physical
damage to or loss or destruction of the Equipment, howsoever caused. During the
term of this Lease as to any Equipment Schedule, Lessee shall, at its own
expense, keep in effect "all risk" property insurance and public liability
insurance policies covering the Equipment designated in each Equipment Schedule.
The public liability insurance policy shall be in such amount as is reasonably
acceptable to Lessor. The "all risk" property insurance policy shall be for an
amount not less than the replacement cost of the Equipment. Lessor, its
successors and assigns and/or such other party as may be designated by any
thereof to Lessee, in writing, shall be named as additional insureds and loss
payees on such policies, which shall be written by an insurance company of
recognized responsibility which is reasonably acceptable to Lessor. Evidence of
such insurance coverage shall be furnished to Lessor no later than the
Installation Date set forth in the Equipment Schedule(s) and, from time to time,
thereafter as Lessor may request. Such policies shall provide that no less than
ten days written notice shall be given Lessor and any other party named as loss
payee prior to cancellation of such policies for any reason. To the extent of
Lessor's interest therein, Lessee hereby irrevocably appoints Lessor or any
other party named as loss payee as Lessee's attorney-in-fact coupled with an
interest to make claim for, receive payment of, and execute any and all
documents that may be required to be provided to the insurance carrier in
substantiation of any such claim for loss or damage under said insurance
policies, and to endorse Lessee's name to any and all drafts or checks in
payment of the loss proceeds.
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(b) If any item of Equipment is rendered unusable as a result of any
physical damage to, or destruction of, the Equipment, Lessee shall give to
Lessor immediate notice thereof and this Lease shall continue in full force and
effect without any abatement of rental. Lessee shall determine, within fifteen
(15) days after the date of occurrence of such damage or destruction, whether
such item of Equipment can be repaired. In the event Lessee determines that the
item of Equipment cannot be repaired, Lessee shall either, at its expense,
promptly replace such item of Equipment and convey title to such replacement to
Lessor free and clear of all liens and encumbrances, and this Lease shall
continue in full force and effect as though such damage or destruction had not
occurred, or pay Lessor therefor in cash the Stipulated Loss Value (defined
below) within thirty (30) days of such loss or damage. "Stipulated Loss Value,"
as used herein, shall be an amount as shown on Exhibit A to the applicable
Equipment Schedule. In the event Lessee determines that such item of Equipment
can be repaired, Lessee shall cause such item of Equipment to be promptly
repaired. All proceeds of insurance received by Lessor, the designated loss
payee, or Lessee under the policy referred to in the preceding paragraph of this
Section shall be applied toward the cost of any such repair or replacement so
long as Lessee shall not be in default of its obligations hereunder.
9. EVENTS OF DEFAULT AND REMEDIES:
The occurrence of any one of the following shall constitute an Event of
Default hereunder:
(a) Lessee fails to pay an installment of rent on or before the date
when the same becomes due and payable and such failure continues for a period of
five days;
(b) Lessee attempts to remove, sell, transfer, encumber, sublet or part
with possession of the Equipment or any items thereof, except as expressly
permitted herein;
(c) Lessee shall fail to observe or perform any of the other material
obligations required to be observed or performed by Lessee hereunder and such
failure shall continue uncured for ten (10) days after written notice thereof to
Lessee by Lessor or the then assignee hereof;
(d) Lessee ceases doing business as a going concern, makes an
assignment for the benefit of creditors, admits in writing its inability to pay
its debts as they become due, files a voluntary petition of bankruptcy, is
adjudicated a bankrupt or an insolvent, files a petition seeking for itself any
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar arrangement under any present or future statute, law or regulation or
files an answer admitting the material allegations of the petition filed against
it in any such proceeding, consents to or acquiesces in the appointment of a
trustee, receiver, or liquidator of it or of all or any substantial part of its
assets or properties, or if it or its shareholders shall take any action looking
to its dissolution or liquidation;
(e) Within sixty (60) days after the commencement of any proceedings
against Lessee seeking reorganization, arrangement, readjustment, liquidation,
dissolution or similar relief under any present or future statute, law or
regulation, such proceedings shall not have been dismissed or stayed, or if
within sixty (60)days after the appointment without Lessee's consent or
acquiescence of any trustee, receiver or liquidator of it or of all or any
substantial part of its assets and properties, such appointment shall not be
vacated;
(f) Lessee defaults in the performance or observation of any material
term, condition or covenant of any loan agreement, indenture, trust agreement,
lease or similar agreement to which Lessee is a party or by which Lessee is
bound and such default continues beyond any applicable cure period;
(g) Lessee enters into any transaction, the effect of which adversely
affects (i) a material portion of Lessee's business value and (ii) the ability
of Lessee, in Lessor's reasonable judgment, to repay Lessee's obligations under
the Lease as they become due.
Upon the occurrence of an Event of Default, Lessor may at its option do
any one or more of the following: (i) by notice to Lessee terminate this Lease
as to any or all Equipment Schedules; (ii) whether or not this Lease is
terminated as to any or all Equipment Schedules, take possession on not less
than three (3) days' notice of any or all of the Equipment listed on any or all
Equipment Schedules, wherever situated, and for such purpose, enter upon any
premises without liability for so doing or Lessor may cause Lessee and Lessee
hereby agrees, to return said Equipment to Lessor as provided in this Lease;
(iii) recover from Lessee, as liquidated damages for loss of a bargain and not
as a penalty, all past due amounts as well as an amount equal to the present
value of all monies to be paid by Lessee during the remaining Initial Term or
any successive period then in effect, calculated by discounting at the rate of
six percent (6%) per annum compounded monthly, which payment shall become
immediately due and payable; and (iv) sell, dispose of, hold, use or lease any
Equipment as Lessor in its sole discretion may determine (and Lessor shall not
be obligated to give preference to the sale, lease or other disposition of the
Equipment over the sale, lease or other disposition of similar equipment owned
or leased by Lessor).
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In the event that Lessee shall have first paid to Lessor or its assigns
the liquidated damages referred to in (iii) above, Lessee shall thereafter be
entitled to receive all rentals or proceeds received from any reletting or sale
of the Equipment during the balance of the Initial Term (after deduction of
Lessor's expected residual value of the Equipment at the expiration of the
Initial Term or any extension thereof and of all expenses incurred in connection
therewith) said amount never to exceed the amount of the liquidated damages paid
by Lessee. Lessee agrees that Lessor shall have no obligation to sell the
Equipment. Lessee shall in any event remain fully liable for reasonable damages
as provided by law and for all costs and expenses incurred by Lessor or its
assigns on account of such default including but not limited to all court costs
and reasonable attorney's fees. Lessee hereby agrees that, in any event, it will
be liable for any deficiency after any lease or other disposition of the
Equipment. The rights afforded Lessor hereunder shall not be deemed to be
exclusive, but shall be in addition to any rights or remedies provided by law.
10. NET LEASE:
Except as otherwise specifically provided in this Lease, it is
understood and agreed that this is a net lease, and that, as between Lessor and
Lessee, Lessee shall be responsible for all costs and expenses of every nature
whatsoever arising out of or in connection with or related to this Lease or the
Equipment (including, but not limited to, equipment inspection, tagging,
transportation in and out, rigging, manufacturer's approved packing,
installation, certification costs and disconnect charges). Lessee hereby agrees
that in the event that Lessee fails to pay or perform any obligation under this
Lease, Lessor may, at its option, pay or perform said obligation and any payment
made or expense incurred by Lessor in connection therewith shall become
additional rent which shall be due and payable by Lessee upon demand. Lessee
acknowledges that Lessor may, from time to time, and at Lessee's request,
execute and deliver purchase orders pertaining to the purchase of equipment to
be leased pursuant to this Lease. Lessee agrees that it will indemnify and hold
Lessor harmless from and against any and all loss, cost, liability and expense
that Lessor may incur as a result of the execution and delivery of such purchase
orders.
11. ASSIGNMENT:
Lessee agrees that Lessor may transfer or assign all or any part of
Lessor's right, title, and interest in, under or to the Equipment and this Lease
and any or all sums due or to become due pursuant to any of the above, to any
third party (the "Assignee") for any reason and that the Assignee may so
re-assign and transfer. Lessee agrees that upon receipt of written notice from
Lessor or Assignee of such assignment, Lessee shall perform all of its
obligations hereunder for the benefit of Assignee and any successor assignee
and, if so directed, shall pay all sums due or to become due thereunder directly
to the Assignee or to any other party designated by the Assignee. Lessee hereby
covenants, represents and warrants as follows and agrees that the Assignee and
any successor assignee shall be entitled to rely on and shall be considered a
third party beneficiary of the following covenants, representations and
warranties: (i) Lessee's obligations hereunder are absolute and unconditional
and are not subject to any abatement, reduction, recoupment, defense, offset or
counterclaim available to Lessee for any reason whatsoever including operation
of law, defect in the Equipment, failure of Lessor or Assignee to perform any of
its obligations hereunder or for any other cause or reason whatsoever, whether
similar or dissimilar to the foregoing; (ii) Lessee shall not look to Assignee
or any successor assignee to perform any of Lessor's obligations hereunder;
(iii) Lessee will not amend or modify this Agreement without the prior written
consent of the Assignee and any successor assignee; and (iv) Lessee will send a
copy to Assignee and any successor assignee of each notice which Lessee sends to
Lessor.
12. REPRESENTATIONS AND WARRANTIES OF LESSEE AND LESSOR:
Lessee represents and warrants to Lessor and its assigns, as follows:
1. The execution, delivery and performance of this Lease has been duly
authorized and, upon execution by Lessor and Lessee, will constitute a valid
obligation binding upon and enforceable against Lessee in accordance with its
terms, subject to laws governing creditors' rights;
2. The performance by Lessee will not result in any material breach,
default or violation of, Lessee's certificate of incorporation or by-laws or any
agreement to which Lessee is a party;
Lessee is in good standing in its jurisdiction of incorporation and in to those
foreign jurisdictions where qualification is legally required, and where failure
to qualify would have a material adverse effect on Lessee and its subsidiaries
as a whole.
4. Any and all financial statements or other information with respect
to Lessee heretofore furnished by Lessee to Lessor was, when furnished, and
remains at the time of execution of this Lease, true and complete, subject to
normal year-end adjustments.
Lessor represents and warrants to Lessee as follows:
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1. The execution, delivery and performance of this Lease has been duly
authorized and, upon execution by Lessor and Lessee, will constitute a valid
obligation binding upon and enforceable against Lessor in accordance with its
terms, subject to laws governing creditors' rights; and
2. The performance by Lessor will not result in any breach, default or
violation of, Lessor's certificate of incorporation or by-laws or any agreement
to which Lessor is a party;
The foregoing representations and warranties shall survive the
expiration or termination of this Lease.
13. END OF LEASE:
Provided (i) no Event of Default has occurred and is continuing and
(ii) Lessee has made all payments in accordance with the Lease, upon written
notice furnished by Lessee no later than four (4) months prior to the expiration
of the Initial Term, Lessee shall, with respect to each Equipment Schedule elect
only such alternatives as may be set forth on the Equipment Schedule.
To the extent that any of such alternatives involves a determination of
Fair Market Value, the Fair Market Value shall be defined and determined by the
provisions of this Section. For purposes hereof, Fair Market Value shall mean
the amount that would obtain in a retail arm's length transaction between an
informed and willing lessee-buyer in possession and an informed and willing
lessor-seller. Rental charges previously paid pursuant to the applicable
Equipment Schedule shall have no effect on the determination of Fair Market
Value. Unless otherwise stated in the Equipment Schedule: the Fair Market Value
for items set forth on the Equipment Schedule which do not have a readily
ascertainable market value, (including but not limited to software, cabling and
certain equipment) shall be determined by multiplying the Lessor's acquisition
cost of such items by a fraction, the numerator of which shall be the Fair
Market Value of the other items and the denominator of which shall be the
Lessor's acquisition cost of such other items; and the determination of Fair
Market Value shall be based upon the assumption that all items set forth on the
Equipment Schedule or included with the Equipment may be transferred to, and
used by, a third party user. In such determination, all alternative uses in the
hands of each buyer or lessee, including, without limitation, the further
leasing of the Equipment shall be taken into account in making such
determination.
If, on or before a date which is sixty (60) days prior to the
expiration of the Initial Term, Lessor and Lessee are unable to agree upon a
determination of the Fair Market Value of the Equipment, the Fair Market Value
(to be determined in accordance with the definition set forth in this Section)
shall, upon written request by Lessee therefor, be conclusively established not
less than thirty (30) days prior to the expiration of the Initial Term by an
independent appraiser selected by Lessor. Lessor shall notify Lessee of the name
and address of said appraiser. The costs of such appraiser shall be paid by
Lessee within ten (10) days after receipt of an invoice therefor. The Lease,
including the obligation to pay monthly rentals, shall remain in effect pending
the determination of Fair Market Value.
14. ADDITIONAL COLLATERAL:
In order to secure the prompt and full performance of all of Lessee's
obligations (the "Obligations") arising under the Lease, the Lessee hereby
grants to Lessor a first priority security interest in the assets set forth on
Exhibit A annexed hereto and made a part hereof, as additional collateral (the
"Collateral") for the performance of the Obligations. Lessee agrees to deliver
to Lessor, at any time or times hereafter, any Uniform Commercial Code financing
statements and amendments and all other agreements, documents and instruments
requested by Lessor to perfect and maintain Lessor's security interest in the
Collateral and pay any cost incurred in connection with the filing or recording
of such documents, agreements or instruments. Lessee represents and warrants
that it has title to the equipment, free and clear of all liens, claims or
encumbrances and that the obligations pertaining to the other Equipment subject
to this Lease shall apply to the Collateral, including but not limited to the
obligation to adequately insure and maintain the Collateral and to inform Lessor
of any change in the location of the Collateral. Upon a default under the Lease
in the payment or performance of any of the Obligations which continues beyond
any grace or cure periods, Lessor shall have all of the rights of a secured
party under the Uniform Commercial Code. Provided that no Event of Default
exists, the lien set forth herein shall be released by Lessor, upon Lessee's
receipt, on or after April 15, 1999, of $5,000,000 in cash in additional equity
in the form of non-callable, non-redeemable common stock of Lessee. Lessor
agrees that upon written request from Lessee, it will subordinate the security
interest set forth herein to an institutional lender that provides a line of
credit or other borrowing facility to Lessee of not less than $500,000 and will
execute and deliver such documents as the institutional lender may reasonably
request in order to effectuate such subordination.
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15. MISCELLANEOUS:
(a) During the term of this Lease, Lessee hereby agrees to deliver to
Lessor or Assignee and any successor assignee a copy of Lessee's monthly
unaudited financial statements, and the annual financial budget for the upcoming
year as soon as available and as it may be adjusted during the year. Lessee
shall also furnish, as soon as available and in any event within ninety (90)
days after the last day of Lessee's fiscal year, a copy of Lessee's annual
audited statements and consolidating and consolidated balance sheet, if any, as
of the end of such fiscal year, accompanied by the opinion of an independent
certified public accounting firm of recognized standing or its present
accounting firm, ▇▇▇▇▇▇▇ ▇▇▇▇▇ and Company CPA P.C. The Lessee shall furnish
such other financial information as may be reasonably requested by Lessor,
including but not limited to any material changes in budgets or financial
reports furnished to the Lessee's Board of Directors or Shareholders.
(b) This Lease constitutes the entire agreement between Lessee and
Lessor with respect to the Equipment, and except as agreed upon in writing no
covenant, condition or other term or provision hereof may be waived or modified
orally.
(c) All notices hereunder shall be in writing and shall be delivered in
person or sent by registered or certified mail, postage prepaid, or by facsimile
transmission (confirmed by registered mail as set forth in this section) to the
address of the other party as set forth herein or to such other address as such
party shall have designated by proper notice.
(d) This Lease shall be binding upon and inure to the benefit of Lessor
and Lessee and their respective successors and assigns (including any subsequent
assignee of Assignee).
(e) If any term or provision of this Lease or the application thereof
to any person is, to any extent, invalid or unenforceable, the remainder of this
Lease, or the application of such provision to the person other than those to
which it is invalid or unenforceable, shall not be affected thereby, and each
provision of this Lease shall be valid and be enforced to the fullest extent
permitted by law.
(f) No waiver of any of the terms and conditions hereof shall be
effective unless in writing and signed by the party against whom such waiver is
sought to be enforced. Any waiver of the terms hereof shall be effective only in
the specific instance and for the specific purpose given. The subsequent
acceptance of rental payments hereunder by Lessor shall not be deemed a waiver
of any prior existing breach by Lessee regardless of Lessor's knowledge of such
prior existing breach at the time of acceptance of such rental payments. Where
permitted by law, Lessee authorizes any attorney of record, Clerk of Court or
Prothonotary of any state to appear for and confess judgment (a) against Lessee
for all amounts as to which Lessee is in default under this Agreement and (b)
against Lessee in any action for writ of replevin or possession of the
Equipment. No bond shall be required.
(g) Lessor is hereby authorized by Lessee to cause this Lease or other
instruments, including Uniform Commercial Code Financing Statements to be filed
or recorded for the purpose of showing Lessor's interest in the Equipment and
Lessee agrees that Lessor may execute such instruments for and on behalf of
Lessee. All filing fees reasonably incurred by Lessor in connection therewith
and filing fees incurred by Lessor's assignees in perfecting security interests
shall be paid by Lessee or reimbursed to Lessor by Lessee.
(h) No consent or approval provided for herein shall be binding upon
Lessor unless signed on its behalf by an officer of Lessor. THIS LEASE AND EACH
EQUIPMENT SCHEDULE SHALL BE DEEMED TO HAVE BEEN MADE IN THE STATE OF CONNECTICUT
AND SHALL BE GOVERNED IN ALL RESPECTS BY THE LAWS OF SUCH STATE. The Lessee
accepts for itself the non-exclusive jurisdiction of any Federal or State court
of competent jurisdiction in the State of Connecticut in any action, suit or
proceeding of any kind against it which arises out of or by reason of this Lease
or any Equipment Schedule.
(i) Lessee acknowledges that the late payment by Lessee to Lessor of
monthly rental and other sums due hereunder will cause Lessor harm and to incur
costs not contemplated by this Lease, the precise amount and severity of which
will be difficult to ascertain. Such costs include, but are not limited to,
administrative, accounting and legal charges which Lessor may incur due to such
late payment. Accordingly, if any monthly rent or any other sum due from Lessee
shall not be received by Lessor or Lessor's assignee within twenty (20) days
after the same is due, Lessee shall pay to Lessor or Lessor's assignee a late
charge equal to five per cent (5%) of such overdue amount monthly until such
overdue amount is paid. Lessee acknowledges that such late charge represents a
fair and reasonable estimate of the cost Lessor will incur by reason of a late
payment by Lessee. Acceptance of such late charge by Lessor shall in no event
constitute a waiver of Lessee's default, if any, with respect to such overdue
amounts, nor prevent Lessor from exercising any of the other rights and remedies
which Lessor may have pursuant to this Lease.
(j) The obligations which Lessee is required to perform during the term
of this Lease shall survive the expiration or other termination of this Lease.
(k) Lessee will promptly execute and deliver to Lessor such further
documents and assurances and take such further action as Lessor may reasonably
request in order to effectuate the intent and purpose of this Lease and to
establish and protect the rights,
7
interests and remedies intended to be created in favor of Lessor hereunder,
including without limitation, the execution and filing of financing statements
and continuation statements with respect to this Lease, the Equipment and any
Equipment Schedule. Lessee authorizes Lessor to effect any such filing and
Lessor's reasonable expenses (together with the reasonable expenses of Lessor's
assignees in this regard) shall be payable by Lessee on demand.
16. ADDITIONAL LEASE FINANCING:
Lessee agrees that it will finance the next $1,400,000 of its equipment
financing transactions (the "Additional Transactions) with Lessor upon the terms
and conditions set forth on Exhibit B. Notwithstanding anything to the contrary
herein, Lessor shall not be obligated to finance such Additional Transactions
unless Lessee has received the additional equity as set forth in Section 14 of
this Lease.
LESSOR: LESSEE:
LEASING TECHNOLOGIES INTERNATIONAL, INC. YOUNETWORK CORPORATION
BY: BY:
--------------------------------- -----------------------------
NAME: NAME:
--------------------------------- -----------------------------
TITLE: TITLE:
--------------------------------- -----------------------------
DATE: DATE:
--------------------------------- -----------------------------
8
EXHIBIT A TO
MASTER LEASE AGREEMENT DATED APRIL 15, 1999 (THE "LEASE")
BETWEEN LEASING TECHNOLOGIES INTERNATIONAL, INC. (THE "LESSOR")
AND YOUNETWORK CORPORATION (THE "LESSEE")
COLLATERAL
All of the assets of the Lessee, wherever located and whether now owned or
hereafter acquired or arising, and all proceeds therefrom, including but not
limited to:
(i) all of the Lessee's inventory, goods, wares, merchandise, raw
materials, software, supplies, work in process, finished goods, and other
personal property of every kind and description held for sale or lease or
furnished or to be furnished under any contract of service, and all goods which
are in transit, and all returned, repossessed and rejected goods of the
foregoing description, and any other tangible personal property held by the
Lessee for licensing, processing, sale or other business purpose or to be used,
licensed or consumed in the Lessee's business;
(ii) all machinery, equipment, motor vehicles, furniture, office
equipment and supplies, plant equipment, tools, dies, molds, fixtures and
leasehold improvements of Lessee, of every kind and description, wherever
located and including all additions, improvements, accessions and substitutions
thereto;
(iii) accounts receivable now owned or hereafter acquired and all
proceeds thereof. "Accounts Receivable" means all accounts receivable of Lessee,
including but not limited to (a) all notes, drafts, acceptances and other
instruments representing or evidencing a right to payment for goods sold or
leased, or services rendered, whether or not earned by performance; (b) all
general intangibles of Lessee that constitute debts, obligations or liabilities
owed to Lessee arising out of or in connection with such accounts receivable;
(c) all of Lessee's chattel paper of every kind and description from account
Lessees including all additions thereto and substitutions therefor; (d) all
files, records (including, without limitation computer programs, disks, tapes
and related electronic data processing media) and writings of Lessee or in which
Lessee has an interest in any way relating to the foregoing property and all
rights of Lessee to the retrieval from third parties of electronically processed
and recorded information pertaining to any of such property; (e) all of Lessee's
documents and instruments constituting or evidencing the foregoing and (f) all
guaranties and securities for, and all proceeds of any of the foregoing;
(iv) all of Lessee's other general intangibles, now existing or
hereafter acquired, including without limitation, all copyrights, royalties,
trademarks, tradenames, service marks, patents and proprietary rights,
blueprints, drawings, designs, trade secrets, plans, diagrams, schematics, and
assembly and display materials relating thereto and all customer lists;
(v) all insurance proceeds, whether arising out of any of the foregoing
or otherwise.
LESSOR: LESSEE:
LEASING TECHNOLOGIES INTERNATIONAL, INC. YOUNETWORK CORPORATION
BY: BY:
--------------------------------- -----------------------------
NAME: NAME:
--------------------------------- -----------------------------
TITLE: TITLE:
--------------------------------- -----------------------------
DATE: DATE:
--------------------------------- -----------------------------
9
EXHIBIT B
TO
MASTER LEASE AGREEMENT DATED APRIL 15, 1999 (THE "LEASE")
BETWEEN LEASING TECHNOLOGIES INTERNATIONAL, INC. (THE "LESSOR")
AND YOUNETWORK CORPORATION (THE "LESSEE")
ADDITIONAL TRANSACTIONS
-----------------------
Date: 5/21/99
Lessee: YouNetwork Corporation Equipment Location: New York
Equipment: New brand name computers, servers and other hardware to be
approved by LTI.
Cost (approximate): $1,400,000
Commencement: Prior to 9/1/99
Term: 36 Months
Rate Factor: .03118
Monthly Rental: $43,582
Warrant Coverage: 7% of lease line, 7 year warrants to purchase common (or
preferred) stock at a price of most recent equity
investment offering.
Other: 1. Last month in advance
2. Subject to YouNetwork Corporation's raising $5MM in new
equity.
End of Lease Option: Upon written notice in accordance with Section 3 of Master
Lease Agreement, you may:
1. Renew lease at FMV rate for 12 months;
2. Purchase equipment at FMV;
3. Renew lease for 12 months at 60% of existing rent,
equipment may then be purchased at end of 12 months for
$1.00;
4. Return the equipment subject to a remarketing charge
equal to 5% of Cost.
Note: The Rate Factor is subject to change upon any changes in the Prime Rate
prior to drawdowns.
TRANSACTION IS SUBJECT TO CREDIT AND FINAL EQUIPMENT APPROVAL.
