Exhibit 10.7
MASTER LEASE AGREEMENT
Comdisco, Inc.--Lessor
MASTER LEASE AGREEMENT dated as of October 30, 1992 by and between
COMDISCO, INC. (hereinafter called "Lessor") having its principal office and
place of business at 0000 Xxxxx Xxxxx Xxxx, Xxxxxxxx, Xxxxxxxx 00000 and
Focal, Inc. (hereinafter called "Lessee") having its principal office and
place of business at Xxx Xxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxx, Xxxxxxxxxxxxx
00000.
1. PROPERTY LEASED. In consideration of the rent to be paid by Lessee and the
covenants and agreements of Lessee hereinafter set forth, Lessor agrees to
lease to Lessee and Lessee to lease from Lessor all of the tangible personal
property listed on each Equipment Schedule executed, from time to time,
pursuant to this Master Lease (with respect to any Equipment Schedule,
hereinafter called the "Equipment"). Each Equipment Schedule shall be
substantially in the form annexed hereto as Exhibit A and made a part hereof,
shall incorporate therein all of the terms and conditions of this Master
Lease and shall contain such additional terms and conditions as Lessor and
Lessee shall agree upon.
2. TERM, COMMENCEMENT DATE AND SUMMARY EQUIPMENT SCHEDULE. 2.1 Term. The term
of this Master Lease shall commence on the date set forth above and shall
continue in effect thereafter so long as any Equipment Schedule entered into
pursuant to this Master Lease remains in effect. Lessor and Lessee agree that
all Equipment Schedules entered into pursuant to this Master Lease Agreement
shall be effective from the date set forth on such Schedule and shall remain
in force until termination by either party upon not less than one hundred
twenty (120) days prior written notice to the other party at its address as
set forth in the applicable Equipment Schedule, which notice shall be
effective upon the first day of the month following receipt (or upon receipt
if such date is the first day of the month); provided, however, that no such
termination shall be effective prior to the expiration of the Initial Term.
2.2 COMMENCEMENT DATE. The commencement date (hereinafter called the
"Commencement Date") with respect to any item of Equipment leased pursuant to
the terms of each applicable Equipment Schedule shall be the date Lessee
accepts such item of Equipment from the Equipment vendor, which date shall be
confirmed by Lessee to Lessor as evidenced by Lessee forwarding an Acceptance
Certificate in the form provided by Lessor, within ten (10) days following
such acceptance. The lease term shall commence on the Commencement Date and
shall continue for the number of full calendar quarters set forth in such
Equipment Schedule (the "Initial Term"). The Initial Term with respect to any
such item of Equipment shall begin on the first day of the calendar quarter
next following the Commencement Date (or commencing on the Commencement Date
if such date is the first day of the calendar quarter) for all items of
Equipment to be leased under the applicable Equipment Schedule.
Notwithstanding the foregoing, if the Equipment subject to such Equipment
Schedule pertains to (i) installed Equipment, the Commencement Date shall be
the date Lessor tenders the purchase price, or (ii) Equipment supplied from
Lessor's inventory, the Commencement Date shall be the date the Equipment is
installed or the seventh day after delivery if a delay in installation is
caused by Lessee.
2.3 SUMMARY EQUIPMENT SCHEDULE. Lessor shall, with respect to any Equipment
Schedule which contemplates the acceptance of Equipment during any period
which exceeds one calendar quarter, summarize all items of Equipment for
which Acceptance Certificates (or "Installation Advice Form" in the case of
IBM Equipment) have been received in the same calendar quarter and which
therefore have an Initial Term which begins on the same date, into a Summary
Equipment Schedule in the form of Exhibit 1 hereto. Each Summary Equipment
Schedule shall incorporate the terms and conditions of this Master Lease and
each applicable Equipment Schedule with respect to those items of Equipment
Listed in the Summary Equipment Schedule. The Summary Equipment Schedule
shall be referred to as an Equipment Schedule and shall constitute a separate
Equipment Schedule for purposes of this Master Lease, including without
Limitation, Section 5.3 thereof. The Initial Term for Equipment listed in
Acceptance Certificates received more than seven (7) days after the end of a
calendar quarter and having an Acceptance Date in the calendar quarter just
ended, shall begin on the first day of the calendar quarter following receipt
of Acceptance Certificates.
3. RENT AND PAYMENT AND LESSOR'S COST. 3.1 Rent and Payment. Lessee shall pay
to Lessor, as rental for the Equipment during each month of the Initial Term
of any Equipment Schedule, an amount equal to the Lease Rate Factor set forth
on each applicable Equipment Schedule multiplied by the total of Lessor's
Cost (as hereinafter defined), which amount (hereinafter called "Monthly
Rent"), shall be due and payable in advance on the first day of each calendar
month during such Initial Term (each such date being hereinafter called a
"Monthly Rent Payment Date"). If the Commencement Date of any Equipment
Schedule shall be other than the first day of the calendar quarter, Lessee
shall make rental payments ("Interim Rent") equal to one-thirtieth of the
Monthly Rent set forth in the Equipment Schedule for each day from and
including the Commencement Date through and including the Last day of the
calendar quarter prior to the beginning of the Initial Term. Rent shall be
paid to Lessor by check or wire transfer so as to constitute immediately
available funds at the address of Lessor set forth above or at such other
place as Lessor shall designate in writing, or, if to an Assignee of Lessor,
at such place as such Assignee shall designate in writing, and shall be paid
free and clear of all claims, demands or setoffs against Lessor or such
Assignee. Whenever any payment (of rent or otherwise) is not made when due
hereunder, Lessee shall pay interest on such amount at the rate of two
percent (2%) per month or the maximum allowable rate of interest permitted by
the law of the state where the Equipment is located, whichever is less (the
"Overdue Rate"), to the date of payment.
3.2 Monthly Rent in Advance. Upon Lessee's execution of each Equipment
Schedule, Lessee agrees to pay to Lessor the amount set forth on the
applicable Equipment Schedule (the "Advance"). So long as Lessee is not in
default of the applicable Equipment Schedule, Lessor shall apply the Advance
against Lessee's Last Monthly Rent Payment. It is agreed that no interest
shall be payable by Lessor to Lessee on the Advance.
3.3 Lessor's Cost. The "Lessor's Cost" as used herein or in such Equipment
Schedule shall be equal to the purchase price which Lessor actually pays for
such Equipment.
4. SELECTION; WARRANTY AND DISCLAIMER OF WARRANTIES. 4.1 Selection. Lessee
acknowledges, represents and warrants that it has made the selection of the
Equipment based on its own judgment, has reviewed and approved any purchase
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documentation rotated thereto and expressly disclaims any reliance upon
statements made by the Lessor. Lessee authorizes Lessor to insert in each
Equipment Schedule the serial number and other identifying data of the
Equipment.
4.2 Warranty and Disclaimer of Warranties. Lessor warrants to Lessee that, so
long as Lessee shall not be in default of any of the provisions of the
applicable Equipment Schedule, neither owner, Lessor, nor any Assignee or
Secured Party (as defined in section 5.3) of Lessor will disturb Lessee's
quiet and peaceful possession of the Equipment and Lessee's unrestricted use
thereof for its intended purpose. LESSOR MAKES NO OTHER WARRANTY, EXPRESS OR
IMPLIED, AS TO ANY MATTER WHATSOEVER, INCLUDING, WITHOUT LIMITATION, THE
DESIGN OR CONDITION OF THE EQUIPMENT, ITS MERCHANTABILITY OR ITS FITNESS OR
CAPACITY OR DURABILITY FOR ANY PARTICULAR PURPOSE, THE QUALITY OF THE
MATERIAL OR WORKMANSHIP OF THE EQUIPMENT OR CONFORMITY OF THE EQUIPMENT TO
THE PROVISIONS AND SPECIFICATIONS OF ANY PURCHASE ORDER OR ORDERS RELATING
THERETO; AND, AS TO LESSOR, LESSEE LEASES THE EQUIPMENT "AS IS". Lessor shall
not be liable, to any extent whatever, for the selection, quality, condition,
merchantability, suitability, fitness, operation or performance of the
Equipment. Without limiting the generality of the foregoing, Lessor shall not
be liable to Lessee for any liability, claim, loss, damage or expense of any
kind or nature (including strict liability in tort) caused, directly or
indirectly, by the Equipment or any inadequacy thereof for any purpose, or
any deficiency or defect therein, or the use or maintenance thereof, or any
repairs, servicing or adjustments thereto; or any delay in providing or
failure to provide any part thereof, or any interruption or loss of service
or use thereof, or any loss of business, or any damage whatsoever and
howsoever caused except for any such loss or damage caused by the willful
misconduct of the Lessor or its agents or representatives. In addition, in no
event shall either Lessor or Lessee be liable to the other for special and
consequential damages arising from or as a result of a default or failure to
perform any term and covenant contained in this Master Lease Agreement.
Lessor hereby appoints Lessee as Lessor's agent to assert, during the term of
the applicable Equipment Schedule, any right Lessor may have to enforce the
manufacturer's warranties, if any; provided, however, that Lessee shall
indemnify and hold Lessor or its Assignee harmless from and against any and
all claims, costs, expenses, damages, losses and liabilities incurred or
suffered by Lessor as a result of or incident to any action by Lessee in
connection therewith. Lessee hereby agrees that Lessee shall not exercise any
rights or warranties which may adversely affect Lessor's title to the
Equipment without prior written consent of Lessor and its assigns.
5. TITLE AND ASSIGNMENT. 5.1 Title. Nothing contained in any Equipment
Schedule shall give or convey to Lessee any right, title or interest in or to
the Equipment, except as a Lessee as set forth therein, and Lessee represents
and agrees that Lessee shall hold the Equipment subject and subordinate to
the rights of the owner, Lessor, any Assignee and any Secured Party (as
defined in Section 5.3) and Lessee shall furnish Lessor with such
documentation as Lessor shall reasonably require with respect thereto. Lessor
is hereby authorized by Lessee, at Lessee's expense, to cause this Master
Lease, any Equipment Schedule or any statement or other instrument in respect
of any Equipment Schedule as may be required by law showing the interest of
Lessor, any Assignee and any secured Party in the Equipment to be filed, and
Lessee agrees to execute and deliver Uniform Commercial Code financing
statements requested by Lessor for such purpose. Lessee shall, at its
expense, protect and defend Lessor's title as well as the interest of any
Assignee and any Secured Party against all persons claiming against or
through Lessee and shall at all times keep the Equipment free and clear from
any legal process, liens or encumbrances whatsoever and shall give Lessor
immediate written notice thereof and shall indemnify and hold Lessor, any
Assignee and any Secured Party harmless from and against any loss caused
thereby.
5.2 ASSIGNMENT, SUBLEASE OR RELOCATION BY LESSEE, UPON THE WRITTEN CONSENT OF
LESSOR, ANY ASSIGNEE AND ANY SECURED PARTY (AS DEFINED IN SECTION 5.3)
OBTAINED AT LEAST SIXTY (60) DAYS IN ADVANCE (WHICH CONSENT WILL NOT BE
UNREASONABLY WITHHELD), LESSEE MAY ASSIGN OR SUBLEASE THE EQUIPMENT TO ANY
PARTY, OR RELOCATE THE EQUIPMENT TO ANY LOCATION WITHIN ANY STATE OF THE
CONTINENTAL UNITED STATES WHICH SHALL HAVE IN EFFECT THE UNIFORM COMMERCIAL
CODE, PROVIDED (1) THAT ALL COSTS OF ANY NATURE WHATSOEVER (INCLUDING ANY
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ADDITIONAL PROPERTY TAXES OR OTHER TAXES AND ANY ADDITIONAL EXPENSES OF
INSURANCE COVERAGE) RESULTING FROM ANY RELOCATION, ASSIGNMENT OR SUBLEASE
SHALL BE PROMPTLY PAID BY LESSEE UPON PRESENTATION TO LESSEE OF EVIDENCE
SUPPORTING SUCH COST, AND (II) ANY ASSIGNMENT OR SUBLEASE SHALL BE MADE
EXPRESSLY SUBJECT AND SUBORDINATE TO THE TERMS OF THIS LEASE AND LESSEE SHALL
ASSIGN ITS RIGHTS UNDER SAID ASSIGNMENT OR SUBLEASE TO LESSOR, ANY ASSIGNEE
AND ANY SECURED PARTY AS ADDITIONAL COLLATERAL AND SECURITY FOR LESSEE'S
OBLIGATIONS HEREUNDER. If Lessee fails to so notify Lessor and, as a result
of such failure, Lessor has paid or is required by the jurisdiction where the
Equipment was originally located to continue to pay taxes of the sort for
which Lessee is responsible under Section 6.2 below, then Lessee shall
reimburse Lessor for such taxes, which payment (less Lessor's reasonable
costs and expenses) will be refunded to Lessee if and when Lessor receives a
corresponding refund from said jurisdiction. In the event of a relocation,
assignment or sublease, Lessee, its assignee, or its sublessee, if any, shall
cooperate with Lessor in taking all reasonable measures to protect the title
of Lessor or any Assignee and the interest of any Secured Party to and in the
Equipment. No relocation, assignment or sublease permitted hereunder shall
relieve Lessee from any of its obligations under this Lease. Lessee hereby
grants to Lessor the right and opportunity to submit or match the last
proposal for the sublease or assignment of the Equipment, and to submit a
proposal for the financing of any equipment which is replacing Equipment
leased pursuant to this Master Lease.
5.3 Assignment by Lessor. Lessee acknowledges and understands that the terms
and conditions of each Equipment Schedule have been fixed by Lessor in
anticipation of its ability to sell and assign its interest or grant a
security interest under each Equipment Schedule and the Equipment Listed
therein in whole or in part to a security assignee (the "Secured Party") for
the purpose of securing a Loan to the Lessor. The Lessor may also sell and
assign its rights as owner and Lessor of the Equipment under any Equipment
Schedule to an assignee (the "Assignee"). After such assignments the term
Lessor shall mean, as the case may be, such Assignee and/or any Secured
Party. Notwithstanding the foregoing, any assignment by Lessor shall not
relieve Lessor of its obligations to Lessee. The Lessee hereby consents to
such assignment or assignments as shall be designated by written notice given
by Lessor to Lessee and further covenants and agrees that (a) any such
Secured Party shall have and be entitled to exercise any and all discretions,
rights and powers of Lessor hereunder or under any Equipment Schedule, but
such Secured Party shall not be obligated to perform any of the obligations
of Lessor hereunder or under any Equipment schedule, provided, however that
such Secured Party shall not disturb Lessee's quiet and peaceful possession
of the Equipment and unrestricted use thereof for its intended purpose during
the term hereof so long as Lessee is not in default of any of the provisions
hereof and such Secured Party continues to receive all amounts of Monthly
Rent payable under such Equipment Schedule; (b) Lessee will pay all Monthly
Rent and any and all other amounts payable by Lessee under any Equipment
schedule to such Secured Party, notwithstanding any defense or claim of
whatever nature, whether by reason of breach of such Equipment Schedule or
otherwise which it may or might now or hereafter have as against Lessor
(Lessee reserving its right to have recourse directly against Lessor on
account of any such defense or claim); and (c) Subject to and without
impairment of Lessee's leasehold rights in and to the Equipment, Lessee holds
the Equipment for such Secured Party to the extent of such Secured Party's
rights therein.
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6. NET LESSEE TAXES AND FEES. 6.1 Net Lease. Lessor and Lessee acknowledge
and agree that each Equipment Schedule constitutes a net lease and that
Lessee's obligation to pay all Monthly Rent and any and all amounts payable
by Lessee under any Equipment Schedule shall be absolute and unconditional
and shall not be subject to any abatement, reduction, set-off, defense,
counterclaim, interruption, deferment or recoupment for any reason
whatsoever, and that such payments shall be and continue to be payable in all
events.
6.2 Taxes and Fees. Lessee covenants and agrees to pay when due or reimburse
and indemnify and hold the Lessor harmless from and against all taxes, fees
or other charges of any nature whatsoever (together with any related interest
or penalties) now or hereafter imposed or assessed during the term of each
Equipment Schedule against Lessor, Lessee or the Equipment by any Federal,
state, county, or local governmental authority upon or with respect to the
Equipment or upon the ordering, purchase, safe, ownership, delivery, leasing,
possession, use, operation, return or other disposition thereof or upon the
rents, receipts or earnings arising therefrom or upon or with respect to any
Equipment Schedule (excepting only Federal, state and local taxes based on or
measured solely by the net income of Lessor). Notwithstanding the foregoing,
unless otherwise specified in the Equipment Schedule, Lessor shall be
responsible for the filing of all personal property tax returns in respect of
the Equipment and shall pay all taxes indicated thereon. Lessee shall
reimburse Lessor for all such taxes within ten (10) days of receipt of
Lessor's invoice therefor.
7. CARE AND USE, MAINTENANCE AND REPAIR, AND INSPECTION BY LESSOR. 7.1 Care,
Use and Maintenance. Lessee shall, at its sole expense, at all times during
the term of each Equipment Schedule, maintain the Equipment in good operating
order, repair, condition and appearance and protect the Equipment from
deterioration, other than normal wear and tear. Lessee shall not use the
Equipment for any purpose other than that for which it was designed. Lessee
shall, at its sole expense, enter into and maintain in force, for the term of
each Equipment Schedule, an appropriate maintenance contract with the
manufacturer of the Equipment, or such other party as shall be acceptable to
Lessor, and shall provide Lessor with a copy of such contract and all
supplements thereto which are applicable to the Equipment. If Lessee has the
Equipment maintained by a party other than the manufacturer, Lessee shall
assume any costs necessary to have the manufacturer recertify the Equipment
upon the expiration of the Initial Term or any extension thereof, and
further, said Equipment will remain on lease pursuant to the applicable
Equipment Schedule until such Equipment shall be recertified. For the
purposes of this Section, any reference to "Equipment" shall include any
software included in any such Equipment Schedule and any reference to
"manufacturer" shall mean the Licensor thereof.
7.2 Alterations and Attachments. Lessee will not, without the prior written
consent of Lessor (which consent shall not be unreasonably withheld), affix
or install any accessory, equipment or device on the Equipment which cannot
be removed or would otherwise reduce the value of the Equipment below the
value the Equipment would have had if such accessory equipment or device had
not been attached. All such accessories, equipment and devices furnished,
attached or affixed to the Equipment shall thereupon become the property of
Lessor (except such as may be readily removed without causing material damage
to the Equipment), Lessee will not, without the prior written consent of
Lessor and subject to such conditions as Lessor may Impose for its
protection, affix the Equipment to any real property if, as a result thereof,
the Equipment xxxx become a fixture under applicable law.
7.3 Inspection by Lessor. Upon the request of Lessor, Lessee shall at
reasonable times during business hours make the Equipment available to Lessor
for inspection at the place where it is normally located and shall make
Lessee's log and maintenance records, if applicable, pertaining to the
Equipment available to Lessor for inspection.
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8. REPRESENTATION AND WARRANTIES OF LESSEE. Lessee hereby represents,
warrants and covenants that, with respect to the Master Lease and each
Equipment Schedule executed hereunder:
(a) The Lessee is a corporation duly organized and validly existing in
good standing under the Laws of the jurisdiction of its incorporation, is
duly qualified to do business in each jurisdiction (including the
jurisdiction where the Equipment is, or is to be, located) where its
ownership or lease of property or the conduct of its business requires such
qualification; and has full corporate power and authority to hold property
under the Master Lease and each Equipment Schedule and to enter into and
perform its obligations under such Lease.
(b) The execution and delivery by the Lessee of the Master Lease and each
Equipment Schedule and its performance thereunder have been duly authorized
by all necessary corporate action on the part of the Lessee, and the Master
Lease and each Equipment Schedule are not inconsistent with the Lessee's
Certificate of incorporation or Bylaws, do not contravene any law or
governmental rule, regulation or order applicable to it, do not and will not
contravene any provision of, or constitute a default under, any indenture,
mortgage, contract or other instrument to which it is a party or by which it
is bound, and the Master Lease and each Equipment Schedule constitute legal,
valid and binding agreements of the Lessee, enforceable in accordance with
their terms.
(c) There are no actions, suits or proceedings pending or, to the
knowledge of the Lessee, threatened against or affecting the Lessee in any
court or before any governmental commission, board or authority which, if
adversely determined, will have a material adverse effect on the ability of
the Lessee to perform its obligations under the Master Lease and each
Equipment Schedule.
(d) The Equipment is personal property and when subjected to use by the
Lessee will not be or become fixtures under applicable law.
(e) The Lessee has no material liabilities or obligations, absolute or
contingent (individually or in the aggregate), except the liabilities and
obligations of the Lessee as set forth in the Financial Statements and
liabilities and obligations which have occurred in the ordinary course of
business, and which have not been, in any case or in the aggregate,
materially adverse to Lessee's ongoing business.
(f) To the best of the Lessee's knowledge, the Lessee owns, possesses,
has access to, or can become licensed on reasonable terms under all patents,
patent applications, trademarks, trade names, inventions, franchises,
licenses, permits, computer software and copyrights necessary for the
operation of its business as now conducted, with no known infringement of, or
conflict with, the rights of others.
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(g) The Lessee has in full force and effect insurance policies, with
extended coverage, insuring the Lessee and its property and business against
such losses and risks, and in such amounts, as are customary for corporations
engaged in a similar business and similarly situated.
(h) All material contracts, agreements and instruments to which the
Lessee is a party are in full force and effect in all material respects, and
are valid, binding and enforceable by the Lessee in accordance with their
respective terms, subject to the effect of applicable bankruptcy and other
similar laws affecting the rights of creditors generally, and rules of law
concerning equitable remedies.
(i) No representation or warranty of or information provided by Lessee
contained in this Master Lease any other documents (including Lessee's
business plan), certificate or exhibit furnished or to be furnished to Lessor
pursuant thereto or in connection herewith (when read together) contains any
untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements contained herein, in light of the
circumstances under which they are made, not misleading.
(j) The Lessee has not granted rights to manufacture or assemble its
products to any other entity.
(k) With the exception of minor indebtedness incurred in the ordinary
course of business, the Lessee is not indebted to any employee, shareholder,
officer or director of the Lessee, and no such employee, shareholder, officer
or director is indebted to the Lessee.
(l) The information contained in Lessee's business plan provided to
Lessor (the "Business Plan"), is true and correct in all material respects
and; as of the date hereof, such Business Plan is currently in effect and
there have been no material changes to the Business Plan or the forecasts or
projections contained therein.
9. DELIVERY AND RETURN OF EQUIPMENT. Lessee hereby assumes the full expense
of transportation and in-transit insurance to Lessee's premises and
installation thereat of the Equipment. Upon termination (by expiration or
otherwise) of each Equipment Schedule, Lessee shall, pursuant to Lessor's
instructions and at Lessee's full expense (including, without limitation,
expenses of transportation and in-transit insurance), return the Equipment to
Lessor in the same operating order, repair, condition and appearance as when
received, less normal depreciation and wear and tear. Lessee shall return the
Equipment to Lessor at its address set forth herein or at such other address
within the continental United States as directed by Lessor, provided,
however, that Lessee's expense shall be Limited to the cost of returning the
equipment to Lessor's address as set forth herein.
10. LABELING. Lessee covenants and agrees that, upon the request of Lessor,
it shall cause the Equipment to be plainly, permanently and conspicuously
marked, by stenciling or by metal tag or plate affixed thereto, indicating
Lessor's interest in the Equipment. Lessee shall replace any such stenciling,
tag 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 so claiming through Lessor.
11. INDEMNITY. Lessee shall and does hereby indemnify and hold Lessor, any
Assignee and any Secured Party harmless from and against any and all claims,
costs, expenses, damages and liabilities, including reasonable attorneys'
fees, arising out of bodily injury and property damage liability as it
relates to the ownership (as it relates to strict liability in tort only),
selection, possession, Leasing, renting, operation, control, use,
maintenance, delivery, return or other disposition of the Equipment. Lessee
shall, at its own expense, carry bodily injury and property damage liability
insurance during the term of the Master Lease in amounts and against risks
customarily insured against by the Lessee
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on equipment owned by it. Any amounts received by Lessor with respect to such
insurance shall be credited against the Lessee's obligations hereunder.
12. RISK OF LOSS. (a) Effective upon delivery of the Equipment to Lessee and
until the Equipment is returned to Lessor as provided in the Master Lease,
Lessee relieves Lessor of responsibility for all risks of physical damage to
or loss or destruction of the Equipment, howsoever caused. During the
continuance of the Master Lease as to any Equipment Schedule, Lessee shall,
at its own expense, cause to be carried and maintained casualty insurance
with respect to each item of Equipment designated in the Equipment schedule
in an amount not less than the Casualty Value (as hereinafter defined). If
requested by the Lessor, all policies with respect to such insurance shall
name the Lessor as additional insured and (together with any Secured Party)
as loss payee, and shall provide for at least thirty (30) days prior written
notice to the Lessor, Assignee and Secured Party by the underwriter or
insurance company in the event of cancellation or expiration. The Lessee
shall, upon request of the Lessor, furnish appropriate evidence of such
insurance; (b) If any item of Equipment is lost or rendered unusable as a
result of any physical damage to or destruction of such item of Equipment,
Lessee shall give to Lessor prompt notice thereof and the Master Lease and
the Equipment Schedule shall continue in effect without any abatement of
rent. Lessee shall determine, within fifteen (15) days after the date of
occurrence of such loss, damage or destruction, whether such item of
Equipment can be repaired. If Lessee determines that such item of Equipment
can be repaired, Lessee, at its expense, shall cause such item of Equipment
to be promptly repaired. If Lessee determines that such item of Equipment is
Lost or cannot be repaired, Lessee shall promptly notify the Lessor and such
Equipment shall be deemed to have suffered a "Casualty Loss" for purposes of
this Section as of the date of the occurrence of such Loss. Within said
fifteen (15) days Lessee shall notify the Lessor of the Equipment which has
suffered a Casualty Loss and Lessee shall either (A) replace Equipment which
has suffered a Casualty Loss with equipment of the same mode, type and
feature configuration, in which case the replacement equipment shall become
the Equipment, this Lease shall continue in full force and effect, and title
in such Equipment shall vest in Lessor free and clear of all liens, claims
and encumbrances or (B) pay the Casualty Value, as defined below. If the
Casualty Value is paid, any installment of rent with respect to such
Equipment due prior to the date of the Casualty Loss shall remain due and
payable. After the payment of such Casualty Value and all other amounts due
and owing with respect to such Equipment, Lessee's obligation to pay further
rent for such Equipment shall cease. Except in the case of loss or total
destruction, Lessor will be entitled to recover all Equipment for which a
Casualty Value has been paid; provided, however, that Lessee shall dispose of
such Equipment for the best price obtainable (on an "as-is, where-is" basis
without representation or warranty express or implied), and Lessee shall be
entitled to retain all amounts received for the Equipment up to the Casualty
Value and Lessee's reasonable costs of disposition attributable thereto, and
shall remit the excess, if any, to Lessor. As used herein, "Casualty Value"
shall mean the Casualty Value set forth in the Casualty Value Table (attached
to the applicable Equipment Schedule) applicable on the Rent Payment Date
next preceding the date of Casualty Loss.
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13. DEFAULT AND REMEDIES. (a) Lessee shall be in default of any Equipment
Schedule upon (i) failure to pay any installment of Monthly Rent or other
charge payable by Lessee under such Equipment schedule as and when the same
becomes due and payable and such default continues for a period of five (5)
days after written notice; (ii) failure to perform any other term, covenant
or condition of such Equipment Schedule or the inaccuracy in any material
respect of any representation or warranty made by the Lessee in such
Equipment Schedule or in any document or certificate furnished to the Lessor
in connection therewith, which default or inaccuracy shall continue for a
period of ten (10) days after written notice; (iii) the making of an
assignment by Lessee for the benefit of its creditors or the admission by
Lessee in writing of its inability to pay its debts as they become due, or
the insolvency of Lessee, or the filing by Lessee of a voluntary petition in
bankruptcy, or the adjudication of Lessee as a bankrupt, or the filing by
Lessee of any petition or answer seeking for itself any reorganization,
arrangement, composition, readjustment, liquidation, dissolution, or similar
relief under any present or future statute, Law or regulation, or the filing
of any answer by Lessee admitting, or the failure by Lessee to deny, the
material allegations of a petition filed against it for any such relief, or
the seeking or consenting by Lessee to, or acquiescence by Lessee in, the
appointment of any trustee, receiver or liquidator of Lessee or of all or any
substantial part of the properties of Lessee, or the inability of Lessee to
pay its debts when due, or the commission by Lessee of any act of bankruptcy
as defined in the Federal Bankruptcy Act, as amended; (iv) failure by Lessee,
within sixty (60) days after the commencement of any proceeding against
Lessee seeking any reorganization, arrangement, composition, readjustment,
Liquidation, dissolution or similar relief under any present or future
statute, law or regulation, to obtain the dismissal of such proceeding or,
within sixty (60) days after the appointment, without the consent or
acquiescence of Lessee, of any trustee, receiver or liquidator of Lessee or
of all or any substantial part of the properties of Lessee, to vacate such
appointment; or (v) default by Lessee under any other Equipment Schedule or
other agreement between Lessee and Lessor or its assignee or Secured Party
hereunder.
(b) Upon default, Lessor, at its option, may (1) proceed by appropriate
court action or actions either at law or in equity to enforce performance by
Lessee of the applicable covenants and term of the applicable Equipment
schedule, or to recover from Lessee any and all damages or expenses,
including reasonable attorneys' fees, which Lessor shall have sustained by
reason of Lessee's default of any covenants of the applicable Equipment
Schedule or on account of Lessor's enforcement of its remedies thereunder, or
(2) upon notice, accelerate the balance of the Monthly Rent thereafter
accruing under the applicable Equipment Schedule, to the present value
thereof (discounted at a rate equal to nine (9%) per annum), which, together
with all rent and other amounts then due shall become immediately due and
payable, as liquidated damages and not as a penalty, and Lessor shall have
the right to the extent permitted by law: (i) to recover all sums so due
thereunder; (ii) to retake immediate possession of the Equipment without any
process of law and for such purpose Lessor may enter upon premises where the
Equipment may be located and may remove the same therefrom without notice,
and without being liable to Lessee therefor except for damage caused by the
gross negligence or willful misconduct of Lessor or its agents or
representatives; (iii) to sell, lease or otherwise dispose of all or any
portion of the Equipment, with the privilege of becoming the purchaser
thereof, at public or private sale, for cash or on credit and without notice
of its intention to do so or of its doing so, in which event Lessor shall
apply the cash proceeds from any sale or other disposition (less the
estimated Fair Market Value of the Equipment at the expiration of the Initial
Term or any extension thereof), or the present value (discounted at the
Overdue Rate) of the monthly rent under any other lease for a term not to
exceed the expiration of the Initial Term or any extension thereof (all such
amounts to be called "Proceeds" hereinafter), less all costs and expenses
incurred in connection with the recovery, repair or storage of the Equipment
or the transaction itself, against all sums due from Lessee and to the extent
and in the manner permitted by law; Lessee shall be liable to Lessor for, and
Lessor may recover from Lessee, the amount by which the Proceeds of any such
transaction, less the expenses of retaking, storing, repel ring and the
9
transaction itself, including reasonable attorneys, fees incurred by Lessor,
are less than all sums due from Lessee under the applicable Equipment
Schedule; and (iv) to pursue any other remedy permitted by law or equity. The
above remedies, to the extent permitted by law, any one of which Lessor need
not, in its discretion, exercise, shall be deemed cumulative and may be
exercised successively or concurrently. Lessee shall reimburse Lessor for all
costs and expenses incurred in connection with the enforcement of any right
or remedy under such Equipment Schedule, including reasonable attorneys'
fees. Except as set forth in this Section and to the extent permitted by
applicable law, Lessee hereby waives any rights now or hereafter conferred by
statute or otherwise which may require Lessor to sell, Lease or otherwise use
any Equipment in mitigation of Lessor's damage or which may otherwise limit
or modify any of Lessor's rights or remedies, provided, however, that Lessor
shall use its best efforts to sell or re-lease the Equipment in accordance
with its usual business procedures and the proceeds therefrom shall be
applied against the amounts owed by Lessee in accordance with the formula set
forth above. Fair Market Value of the Equipment shall be determined on the
basis of and shall be the aggregate amount which would be obtainable at the
expiration of the Initial Term or any extension thereof in an arms-length
transaction between an informed and willing buyer/user under no compulsion to
buy and an informed and willing seller under no compulsion to sell.
14. BOARD ATTENDANCE. Lessor or its duly appointed representative shall have
the right to attend Lessee's corporate Board of Directors meetings and Lessee
shall give Lessor reasonable notice in advance of any special Board of
Directors meeting, which notice shall provide an agenda of the subject matter
to be discussed at such board meeting. Lessee shall provide Lessor with a
certified copy of the minutes of each Board of Directors meeting within
thirty (30) days following the date of such meeting held during the term of
this Lease.
15. FINANCIAL STATEMENTS. (a) Notwithstanding anything to the contrary
contained herein, Lessee shall provide to Lessor the financial statements
specified in this Section 15, prepared in accordance with generally accepted
accounting principles, consistently applied (the "Financial Statements");
provided, however, 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 to only those statements
required by the Securities and Exchange Commission, to be provided no less
frequently than quarterly. For purposes of complying with this Section 15,
Lessee shall provide to Lessor (i) as soon as practicable (and in any event
within thirty (30) days) after the end of each month, a reasonably detailed
statement of revenues, costs, expenses, orders received, backlog, shipments,
commitments, contingencies, and changes in the financial position and capital
structure of the Lessee incurred during such month (including the
commencement of any material litigation by or against Lessee and a trial
balance of all accounts on both an adjusted and unadjusted basis), certified
by Lessee's Chief Executive or Financial officer to be true and correct; and
(ii) as soon as practicable (and in any event within ninety (90) 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 toss,
retained earnings or deficit and changes in the financial position 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
selected by Lessee.
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(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 ability to meet financial obligations (the
"Additional Information").
16. MERGER, SALE, ETC. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN
SECTION 5.2 HEREIN, UPON ANY CONSOLIDATION OR MERGER OF THE LESSEE WITH OR
INTO MY OTHER CORPORATION OR CORPORATIONS (WHETHER OR NOT AFFILIATED WITH THE
LESSEE), OR SUCCESSIVE CONSOLIDATIONS OR MERGERS IN WHICH THE LESSEE OR ITS
SUCCESSOR OR SUCCESSORS SHALL BE A PARTY OR PARTIES, OR UPON MY SALE OR
CONVEYANCE OF ALL OR SUBSTANTIALLY ALL OF THE PROPERTY OF THE LESSEE TO ANY
OTHER PERSON OR ENTITY, THE LESSEE SHALL OBTAIN THE WRITTEN CONSENT OF LESSOR
PRIOR TO SUCH MERGER, SALE OR CONSOLIDATION ("MERGER"), WHICH CONSENT MAY BE
WITHHELD AT THE DISCRETION OF LESSOR, AND IN THE EVENT LESSOR WITHHOLDS
CONSENT, THEN ALL LEASES ENTERED INTO PURSUANT TO THIS MASTER LEASE AGREEMENT
PRIOR TO SUCH MERGER SHALL BE DEEMED TERMINATED EFFECTIVE THE DATE OF THE
CLOSING OF SUCH MERGER, AND LESSEE SHALL, ON THE DATE OF SUCH CLOSING, PAY
LESSOR, AS A TERMINATION FEE, ALL RENTS WHICH ARE DUE OR WOULD BECOME DUE
DURING THE INITIAL TERM, BUT FOR SUCH TERMINATION, DISCOUNTED AT SIX PERCENT
(6%). IF LESSOR CONSENTS TO SUCH MERGER, LESSEE WILL CAUSE ANY SUCH SUCCESSOR
TO CONTINUE TO MAKE THE DUE AND PUNCTUAL PAYMENT OF ALL MONTHLY RENT, AND THE
DUE AND PUNCTUAL PERFORMANCE AND OBSERVANCE OF ALL COVENANTS AND OBLIGATIONS
OF THE LESSEE HEREUNDER AND UNDER THE LEASE TO BE ASSUMED BY THE CORPORATION
(IF OTHER THAN THE LESSEE) FORMED BY SUCH CONSOLIDATION, OR THE CORPORATION
INTO WHICH THE LESSEE SHALL HAVE BEEN MERGED OR BY THE PERSON OR ENTITY WHICH
SHALL HAVE ACQUIRED SUCH PROPERTY.
17. MISCELLANEOUS. 17.1 Entire Agreement. Lessor and Lessee acknowledge that
there are no agreements or understandings, written or oral, between Lessor
and Lessee with respect to the Equipment, other then as set forth herein and
in each Equipment Schedule and that this Master Lease Agreement and each
Equipment schedule contains the entire agreement between Lessor and Lessee
with respect thereto. Neither this Master Lease nor any Equipment Schedule
may be altered, modified, terminated or discharged except by a writing signed
by the party against whom such alteration, modification, termination or
discharge is sought.
17.2 NO WAIVER. No omission, or delay, by Lessor at any time to enforce any
right or remedy reserved to it, or to require performance of any of the
terms, covenants or provisions hereof by Lessee at any time designated, shall
be a waiver of any such right or remedy to which Lessor is entitled, nor
shall it in any way affect the right of Lessor to enforce such provisions
thereafter.
17.3 BINDING NATURE. Each Equipment Schedule shall be binding upon, and shall
inure to the benefit of Lessor, Lessee, and their respective successors,
legal representatives and assigns, except, in the case of any Secured Party,
to the extent set forth in Section 5.3.
17.4 SURVIVAL OF OBLIGATIONS. All agreements, representations and warranties
contained in this Master Lease, in any Equipment Schedule or in any document
delivered pursuant hereto or in connection herewith shall be for the benefit
of Lessor and any assignee or Secured Party and shall survive the execution
and delivery of this Master Lease and the expiration or other termination of
this Master Lease.
17.5 NOTICES. Any notice, request or other communication to either party by
the other as provided for herein shall be given in writing and only shall be
deemed received upon the earlier of receipt or three (3) days after mailing
if mailed postage prepaid by regular or airmail to Lessor (to the attention
of "Lease Administrator") or Lessee, as the case may be,
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at the address for such party set forth in the Equipment Schedule or at such
changed address as may be subsequently submitted by written notice of either
party.
17.6 APPLICABLE LAW. This Master Lease has been, and each Equipment Schedule
will have been made, executed and delivered in the State of Illinois and
shall be governed and construed for all purposes under and in accordance with
the laws of the State of Illinois.
17.7 SEVERABILITY. In the event any one or more of the provisions of this
Master Lease and/or any Equipment Schedule shall for any reason be held
invalid, illegal or unenforceable, the remaining provisions of this Master
Lease and/or any such Equipment Schedule shall be unimpaired, and the
invalid, illegal or unenforceable provision shall be replaced by a mutually
acceptable valid, legal and enforceable provision which comes closest to the
intention of the parties underlying the invalid, illegal or unenforceable
provision.
17.8 COUNTERPARTS. This Master Lease and any Equipment Schedule may be
executed in any number of counterparts, each of which shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument. If Lessor grants a security interest in all or any part of
an Equipment Schedule, the Equipment covered thereby and/or sums payable
thereunder, only that counterpart Equipment Schedule marked "Secured Party's
Original" shall be effective to transfer Lessor's rights therein and all
other counterparts shall be marked "Duplicate" to indicate that they are not
the "Secured Party's Original".
17.9 RELEASE OF LESSOR'S OBLIGATIONS TO LEASE EQUIPMENT. If there is (i) a
failure by Lessee to make Lease payments on the first day of each month as
due; (ii) a default under this Master Lease or any Equipment Schedule
hereunder; (iii) any default by Lessee with respect to any indebtedness of
the Lessee for borrowed money, by virtue of which the holders of such
indebtedness shall have the right to demand immediate payment of such
indebtedness (regardless of whether such right shall have been exercised);
(iv) there is an adverse change in Lessee's credit standing; or (v) Lessor,
in the reasonable exercise of its judgment and in good faith, shall have
determined that the Lessee is unable to perform its obligations under this
Lease; then Lessor, at its option and upon prior written notice to Lessee,
shall be relieved of its obligation to tease any equipment hereunder with a
Commencement Date occurring after the date of such notice. In addition Lessee
agrees to reaffirm the representations, warranties and covenants contained
herein from time to time as requested by Lessor's written notice.
17.10 LANDLORD/MORTGAGEE WAIVER. Lessee agrees to provide Lessor with a
Landlord/Mortgagee Waiver with respect to the Equipment. Such waiver shall be
in a form satisfactory to Lessor.
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17.11 EQUIPMENT PROCUREMENT CHARGES/PROGRESS PAYMENTS. Lessee hereby agrees
that Lessor shall not, by virtue of its entering into this Lease, be required
to remit any payments to any manufacturer or other third party until Lessee
accepts the Equipment subject to this Lease and in accordance with Section
2.2 "Commencement Date" hereof.
17.12 ADDITIONAL MATTERS. (a) Lessee, upon execution of this Master Lease and
thereafter upon execution of each Equipment Schedule, shall provide Lessor
with certification with respect to incumbency and authority and an opinion
from Lessee's counsel addressed to Lessor or any Secured Party with respect
to the representations and warranties set forth in subparagraphs (a) through
(e) of Section 8 above and shall also supply such other documents as Lessor
may reasonably request. If Lessee shall fail to timely and properly deliver
any of the aforesaid documents within fourteen (14) days of the execution of
this Master Lease and each Equipment Schedule, Lessor, in its discretion and
notwithstanding anything to the contrary contained in Section 2 hereof, may
postpone the commencement of the Initial Term to the first day of the
calendar quarter following receipt of all required documents. Lessor shall
give Lessee prompt written notice of any such postponement; (b) Section
headings are for convenience only and shall not be construed as part of this
Master Lease.
IN WITNESS WHEREOF, the parties hereto have executed this Master Lease on
or as of the day and year first above written.
LESSEE: FOCAL, INC. LESSOR, COMDISCO INC.,
By:/s/ W. Xxxxxxxx Xxxxx By: /s/ [unreadable signature]
Title: Director of Finance Title: President
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EXHIBIT #1
SUMMARY EQUIPMENT SCHEDULE
LESSEE: C
EQUIPMENT SCHEDULE NO. C SL NUMBER C
FOR PERIOD BEGINNING C AND ENDING C
MASTER LEASE DATE C
INITIAL TERM START DATE C INITIAL TERM C
TOTAL LESSOR'S COST C RENT C
LEASE RATE FACTOR C
ACCEPTANCE DOC TYPE C
[ ] IF BOX IS CHECKED, THERE ARE AMENDMENTS TO THIS EQUIPMENT SCHEDULE WHICH
ARE SHOWN ON THIS DOCUMENT AND/OR AN ATTACHMENT. PLEASE CALL 000-000-0000
X5451 WITH QUESTIONS REGARDING THIS LEASE.
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