EXHIBIT 10.10
MASTER LEASE AGREEMENT
THIS MASTER LEASE AGREEMENT (THE "LEASE") IS MADE THE 3RD DAY OF SEPTEMBER, 1996
BETWEEN LEASING TECHNOLOGIES INTERNATIONAL, INC., WITH ITS PRINCIPAL OFFICE AT
SOUNDVIEW PLAZA, 0000 XXXX XXXXXX, XXXXXXXX, XX 00000 (THE "LESSOR"), AND POWER
INTEGRATIONS, INC., WITH ITS PRINCIPAL OFFICE AT 000 XXXXX XXXXXXXX XXXXXX,
XXXXXXXXX, XX 00000 (THE "LESSEE"). THE PARTIES HERETO AGREE AS FOLLOWS:
1. LEASE:
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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. If the provisions of an Equipment Schedule conflict with the
provisions of this Lease, the provisions of such Equipment Schedule shall
prevail.
2. DEFINITIONS:
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(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 the 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:
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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:
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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
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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 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. 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 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.
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, 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.
As security for the full performance of all of the 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 the Lessee by the Lessor upon the expiration of such Equipment
Schedule and return of all Equipment, provided that all Lessee obligations under
such Equipment Schedule have been fulfilled.
5. INSTALLATION, USE AND QUIET POSSESSION OF EQUIPMENT:
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(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.
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(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 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 shall,
at its expense, return 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.
6. LEASEHOLD RIGHTS AND INSPECTION:
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(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
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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:
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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:
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(a) Beginning on the Installation Date thereof and continuing until the
Equipment is returned to Lessor 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
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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.
(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:
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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 after Lessee's receipt of written notice;
(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 obligations
required to be observed or performed by Lessee hereunder and such failure shall
continue uncured for twenty (20) days after written notice thereof to Lessee by
Lessor or the then assignee hereof.
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(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 thirty (30) 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 if within thirty
(30) 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 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 which adversely affects a
significant portion of the business value of Lessee and which affects the
ability of the Lessee to repay the Lessee's obligations under the Lease.
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).
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 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
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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:
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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, 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:
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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:
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Lessee represents and warrants to Lessor and its assigns, 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 Lessee in accordance with its
terms, subject to laws governing creditors' rights;
2. The performance by Lessee will not result in any breach, default or
violation of, Lessee's certificate of incorporation or by-laws or any agreement
to which Lessee is a party;
3. Lessee is in good standing in its jurisdiction of incorporation and in
any jurisdiction in which any of the Equipment is to be located; and
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.
Lessor represents and warrants to Lessee 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 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:
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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 may, with respect to each Equipment Schedule (if set forth
in such Equipment Schedule) either:
(a) Extend the Initial Term for not less than all the Equipment (i) for the
additional period set forth on the applicable Equipment Schedule, and (ii) at
the Monthly Rental set forth on the Equipment Schedule. Provided all payments
have been made in accordance with the Lease and there shall be no default under
the Lease by Lessee, title to the Equipment shall pass to Lessee at the
expiration of the 12 month extension and upon payment of $1.00.;
(b) Extend the Initial Term for not less than all the Equipment for an
additional 12 months at Fair Market Value rental;
(c) Purchase not less than all the Equipment at Fair Market Value for a
purchase price equal to the Fair Market Value thereof as of the end of the
Initial Term, plus any taxes applicable at the time of purchase. The purchase
price shall be paid by Lessee to Lessor at least thirty (30) days before the
expiration of the Initial Term;
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(d) Terminate the applicable Equipment Schedule and return not less than
all the Equipment, subject to a remarketing charge equal to the percentage set
forth in the applicable Equipment Schedule of Lessor's original Purchase Price
for the Equipment;
(e) Purchase not less than all the Equipment at fifteen percent (15%) of
Lesssor's original Purchase Price, plus any taxes applicable at the time of
purchase; or
(f) Such other alternatives as may be set forth on the Equipment Schedule.
Not less than ninety (90) days prior to the end of the Initial Term, Lessee may
provide written notice to Lessor of Lessee's intention to exercise the purchase
or extension option described above. If, on or before a date 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, such fair
market value shall be determined in accordance with the procedure for appraisal
as described below. After a determination of the fair market value of the
Equipment has been made in accordance with the procedure described below, Lessee
may exercise its option to purchase the Equipment for the fair market value
thereof by delivering written notice to Lessor not more than ten (10) days after
completion of appraisal as described below.
Appraisal shall mean a procedure whereby two independent appraisers, neither of
whom shall be a manufacturer of such Items of Equipment, one chosen by Lessee
and one by Lessor, shall mutually agree upon the amount in question based upon
the definition set forth below. Each party shall deliver a written notice to
the other party appointing its appraiser on or before a date sixty days prior to
the expiration of the Initial Term. If within fifteen (15) days after
appointment of the two appraisers as described above, the two appraisers are
unable to agree upon the amount in question, a third independent appraiser, who
shall not be a manufacturer of such Items of Equipment, shall be chosen within
five (5) business days thereafter by the mutual consent of such first two
appraisers or, if such first two appraisers fail to agree upon the appointment
of a third appraiser, such appointment shall be made by an authorized
representative of the American Arbitration Association or any organization
successor thereof. The decision of the third appraiser so appointed and chosen
shall be given ten (10) business days after the selection of such third
appraiser. Lessee shall pay the fees and expenses of all appraisers, if any.
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.
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If, for any reason, the parties are unable to agree on the Fair Market Value
with respect to said purchase or rental, then the Lease with respect to the
Equipment shall remain in full force and effect.
14. MISCELLANEOUS:
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(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. 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.
10
(h) 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.
(i) No consent or approval provided for herein shall be binding upon Lessor
unless signed on its behalf by an officer of Lessor. THIS LEASE 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.
(j) 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.
(k) The obligations which Lessee is required to perform during the term of
this Lease shall survive the expiration or other termination of this Lease.
(l) 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, 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.
LESSOR: LESSEE:
Leasing Technologies International, Inc. Power Integrations, Inc.
BY:_____________________________________ BY:_________________________________
NAME:___________________________________ NAME:_______________________________
TITLE:__________________________________ TITLE:______________________________
DATE:___________________________________ DATE:_______________________________
11
CERTIFICATE OF INCUMBENCY
-------------------------
Re: Master Lease Agreement dated September 3, 1996
Between Leasing Technologies International, Inc.
and Power Integrations, Inc.
I, *__________________________________________________, hereby certify that
[print name of certifying officer, other than signatory]
I am the duly elected, qualified, and presently serving *_______________________
[office of certifying
_________ of Power Integrations, Inc., (the "Company").
officer]
I further certify that each of the persons listed below was duly elected to
and on the date hereof holds the office set forth opposite his name and that the
signature appearing opposite the name of such officer is the genuine signature
of such officer. Such person has the power and authority to execute any and all
documents on behalf of the Company relating to the above referenced transaction
and to bind the Company to perform in accordance with the terms thereof,
NAME OF SIGNATORY OFFICE SIGNATURE
----------------- ------ ---------
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of the
Company this____________day of___________________1996.
*BY:__________________________________
[signature of certifying officer]
NAME:________________________________
TITLE:_______________________________
* certifying officer must be other than signatory.
12
REQUEST FOR INSURANCE
---------------------
LESSOR: LEASING TECHNOLOGIES INTERNATIONAL, INC.
SOUNDVIEW PLAZA
0000 XXXX XXXXXX
XXXXXXXX, XX 00000
LESSEE: POWER INTEGRATIONS, INC.
000 XXXXX XXXXXXXX XXXXXX
XXXXXXXXX, XX 00000
Pursuant to Section 8(a) of the Master Lease Agreement dated September 3, 1996
("Lease"), Lessor hereby requests that Lessee provide a Certificate(s) of
Insurance as evidence of both casualty and liability insurance coverage on the
equipment leased to Lessee under the Lease. Such Certificate(s) should name
Leasing Technologies International, Inc., Soundview Plaza, 0000 Xxxx Xxxxxx,
Xxxxxxxx, XX 00000 and its assigns as loss payees and additional insureds as
their interests may appear. Please refer to Section 8(a) of the Lease and the
attached Leasing Insurance Requirements for additional instructions.
Lessee, by authorized signature below, acknowledges the obligations under the
Lease to protect the equipment identified therein against all risks of loss, and
hereby confirms that applicable Certificate(s) of Insurance have been requested
from________________________________. (Fill in name of Insurance Agent/Broker).
LESSEE: POWER INTEGRATIONS, INC.
BY: _________________________________
NAME: ______________________________
TITLE:_______________________________
DATE:________________________________
13
LEASING INSURANCE REQUIREMENTS
------------------------------
LIABILITY INSURANCE:
-------------------
All liability policies are to meet, at the minimum, the following requirements:
(a) Minimum limits of liability are:
Bodily Injury: $1,000,000 per occurrence
Property Damage: $50,000 per occurrence
(b) All liability insurance policies are to specify Lessor, its assigns, and/or
such other party designated by Lessor as additional insureds, and must be
effective at the time of shipment of the Equipment from the seller.
PROPERTY INSURANCE:
------------------
All property insurance policies are to meet, at the minimum, the following
requirements:
(a) All-risk Property insurance coverage in an amount equal to the replacement
cost of the Equipment.
(b) All property insurance policies are to specify Lessor, its assigns, and/or
such other party designated by Lessor as loss payees and must be effective
at the time of shipment of the Equipment from the seller.
GENERAL:
-------
(1) All insurance policies are to provide that in the event of material
change to the policy (i.e., terms, conditions, limits, broker or
insurer, or cancellation of the policy or any part) either by the
insured or the insurance company, the insurer will provide 10 days'
prior written notice of such material change or cancellation to
Lessor and its specified assigns.
(2) All insurance policies are to provide that violation of terms,
conditions, or warranties of the policy by the insured or others will
not invalidate the insurance insofar as the interest of Lessor and
its specified assigns is concerned.
(3) In order to eliminate multiple certifications, we encourage blanket
liability and All-Risk coverage warranted to remain in force until at
lease 10 days' prior written notice is provided as aforesaid.
14
LTI
LEASING TECHNOLOGIES INTERNATIONAL, INC.
Date:___________ Return by mail or fax to: Leasing Technologies
International, Inc.,
0000 Xxxx Xxxxxx, Xxxxxxxx, XX 00000
Phone: (000) 000-0000 Fax: (000) 000-0000
LEASE APPLICATION
LESSEE
Legal Name________________________________ Trade Name__________________________
Address___________________________ City ________________________ State _____
Zip_______
Phone ____________________ Fax ___________________ Years in Business__________
Description of Business________________________________________________________
Business Type: Corporation ____ Proprietorship ____ Partnership ____
Fed. I. D.# _______________
CEO's Name ________________________ Title ___________________ Phone__________
Address________________________________________________________________________
Contact Officer's Name ______________________ Title__________________________
Address________________________________________________________________________
Auditor & Partner __________________________ Phone#___________________________
Law Firm & Partner___________________________ Phone # ________________________
Duns # ______________________________________
BANK AND CREDIT REFERENCES
Bank Name ______________________________ Address_____________________________
Contact _______________________ Phone # __________________
Checking Acct #_____________
Date Opened ______________________ Loan Acct # ______________Date______________
Lessor Name __________________________________
Address_______________________________
Contact _____________________ Phone # ____________________ Acc't #____________
Other Creditor _________________________Address_______________________________
Contact _____________________ Phone # _________________ Acc't #______________
TRADE SUPPLIER REFERENCES
Trade Name _____________________ Phone # ________________Contact____________
Trade Name _____________________ Phone # ________________Contact____________
Trade Name _____________________ Phone # ________________Contact____________
OTHER INFORMATION TO BE SUPPLIED
1) FINANCIALS: LAST TWO FISCAL AUDITS & YEAR-TO-DATE INTERIM FINANCIALS
2) MOST RECENT BUSINESS PLAN AND/OR OFFERING MEMORANDUM
3) LIST OF ALL COMPANY OFFICERS & DIRECTORS
4) LIST OF MAJOR SHAREHOLDERS WITH PERCENTAGE OWNERSHIP
5) LIST OF EQUIPMENT TO BE LEASED. INCLUDE QTY, DESCRIPTIONS, BRANDS, MODELS,
COST.
I HEREBY AUTHORIZE THE INVESTIGATION AND REVIEW OF ALL THE ABOVE CREDIT
INFORMATION.
BY:__________________________________ TITLE _____________________________
15
EQUIPMENT SCHEDULE NO.______("EQUIPMENT SCHEDULE")
TO
MASTER LEASE AGREEMENT DATED_______________, 1996 ("LEASE")
BETWEEN LEASING TECHNOLOGIES INTERNATIONAL, INC. ("LESSOR")
AND____________________________("LESSEE")
1. EQUIPMENT:
MODEL/ PURCHASE SERIAL
QTY FEATURE DESCRIPTION MFR PRICE NUMBER
--- ------- ----------- --- ----- ------
2. EQUIPMENT LOCATION:
3. INSTALLATION DATE:______________________. If this space is not completed,
the Installation Date shall be: the date which the Vendor(s) determines to
be the date of installation, which, Lessee agrees, will not occur without
Lessor's prior written consent or the fifth day following delivery of the
Equipment to the location set forth in Section 2, whichever is earlier; or
in the case of Equipment which is the subject of a sale and leaseback
between Lessor and Lessee, the date upon which Lessor obtains title to the
Equipment from Lessee (but not later than the date Lessor pays for the
Equipment).
4. COMMENCEMENT DATE:_____________________. (Subject to the terms and
conditions of Section 3 of the Lease, if all of the Equipment is not
installed on the same date).
5. INITIAL TERM:_________________________months.
6. MONTHLY RENTAL: $___________. The Monthly Rental set forth in this section
is conditional upon Lessor acquiring the Equipment at a purchase price of
$____ and Lessor obtaining financing for such purchase at a 8.25% Prime
Interest Rate. Lessor and Lessee agree that the Monthly Rental shall be
increased by $____ for each one-quarter of one percent (1/4 of 1%) by
which the Prime Interest Rate (as stated by Citibank N.A.) increases prior
to the Commencement Date, or the date Lessor has received sufficient
documentation so as to finance the Lease, whichever is later. Lessee
agrees that it shall confirm the amount of the rental payable hereunder
after adjustment, if any, in such form as Lessor may request.
7. LESSOR'S OBLIGATIONS: Lessor's obligations under this Equipment Schedule
are subject to there being no tax legislation enacted prior to the
Installation Date which would have an adverse effect on the rights or
anticipated benefits to Lessor or any Assignee.
8. SECURITY DEPOSIT: $______________.
Page 1 of 2
16
EQUIPMENT SCHEDULE NO.______("EQUIPMENT SCHEDULE")
TO
MASTER LEASE AGREEMENT DATED_______________, 1996 ("LEASE")
BETWEEN LEASING TECHNOLOGIES INTERNATIONAL, INC. ("LESSOR")
AND____________________________("LESSEE")
9. 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 to Lessor no earlier than one hundred
eighty (180) days and no later than ninety (90) days prior to the expiration of
the Initial Term, Lessee may either:
(a) Extend the Initial Term for not less than all the Equipment for an
additional 12 months at Fair Market Value rental;
(b) Purchase not less than all the Equipment at Fair Market Value for a
purchase price equal to the Fair Market Value thereof as of the end of
the Initial Term, plus any taxes applicable at the time of purchase.
The purchase price shall be paid by Lessee to Lessor at least thirty
(30) days before the expiration of the Initial Term; or
(c) Extend the Initial Term for not less than all the Equipment for an
additional 12 months at a Monthly Rental equal to________% of the
Monthly Rental paid by Lessee during the Initial Term, provided all
payments have been made in accordance with the Lease and there shall be
no default under the Lease by Lessee, title to the Equipment shall pass
to Lessee at the expiration of the 12 month extension and upon payment
of $1.00;
(d) Return not less than all the Equipment, subject to a remarketing charge
equal to_______% of the Purchase Price.
10. LEASE AGREEMENT: All of the terms, covenants and conditions set forth in
the Lease are incorporated herein by reference as if the same had been set forth
herein in full.
LESSOR: LESSEE:
LEASING TECHNOLOGIES INTERNATIONAL,
INC.
BY:____________________________ BY:_________________________
NAME:__________________________ NAME:_______________________
TITLE:_________________________ TITLE:______________________
DATE:__________________________ DATE:_______________________
Page 2 of 2
17
CERTIFICATE OF ACCEPTANCE
-------------------------
To: Leasing Technologies International, Inc.
Soundview Plaza
0000 Xxxx Xxxxxx
Xxxxxxxx, XX 00000
From:_______________________________, Lessee under that certain Master Lease
Agreement ("Lease") dated____________________________,hereby certifies to
Leasing Technologies International, Inc., Lessor under the said Lease, that, to
wit:
1. The Lessee is a corporation in good standing in_____________, the state
of its incorporation.
2. The signatures which appear in said Lease have been duly authorized
by the Lessee and the Lease constitutes a valid and binding
obligation of, and is enforceable by its terms against Lessee.
3. All items of computer equipment ("Equipment") described in Equipment
Schedule No.______to the said Lease, have been delivered to Lessee.
4. The equipment has been received and inspected, and is approved and
accepted by Lessee, effective__________________________________, 1996.
5. As of the date hereof, the Lessee's interest in the Equipment is free
and clear of any liens and encumbrances other than those created by
and in favor of the Lessor.
6. The Lessee hereby represents and warrants that no event of Default or
event which, with the giving of notice or the lapse of time, or both,
would become such an Event of Default has occurred and is continuing
under the Lease.
7. The Lessee hereby represents and warrants that the Lessee has
obtained all insurance policies, with respect to the Equipment, that
may be required under the terms of the Lease and such policies are in
full force and effect.
Lessee is delivering this Certificate to Lessor pursuant to and in connection
with the said Lease.
LESSEE:
BY:________________________________
NAME:______________________________
TITLE:_____________________________
DATE:______________________________
18
EQUIPMENT SCHEDULE NO.___
TO
MASTER LEASE AGREEMENT DATED____________
EXHIBIT A
---------
STATEMENT OF CASUALTY VALUES
----------------------------
Monthly Stipulated Monthly Stipulated Loss
Pmt. Made Value* Pmts. Made Value
--------- ------ ---------- -----
1 125.00 19 94.22
2 123.29 20 92.51
3 121.58 21 90.80
4 119.87 22 89.09
5 118.16 23 87.38
6 116.45 24 85.67
7 114.74 25 83.96
8 113.03 26 82.25
9 111.32 27 80.54
10 109.61 28 78.83
11 107.90 29 77.12
12 106.19 30 75.41
13 104.48 31 73.70
14 102.77 32 71.99
15 101.66 33 70.28
16 99.35 34 68.57
17 97.64 35 66.86
18 95.93 36 65.15
* Expressed as a percentage of Lessor's original purchase price for the
equipment.
LESSOR: LESSEE:
LEASING TECHNOLOGIES INTERNATIONAL,
INC.
BY:____________________________ BY:_________________________
NAME:__________________________ NAME:_______________________
TITLE:_________________________ TITLE:______________________
DATE:__________________________ DATE:_______________________
19
LEASING TECHNOLOGIES INTERNATIONAL, INC.
LEASE ADMINISTRATION DEPARTMENT
GUIDELINES TO A SMOOTH CLOSING
In order to easily and efficiently process your Leaseline takedowns, the
following is a list of information required to prepare the necessary lease
documentation:
WHEN THE EQUIPMENT IS BEING PURCHASED BY LTI FROM THE VENDOR:
Provide detailed equipment description including manufacturer (brand name) and
model number.
. Provide copies of quotes and/or purchase orders.
. Provide contact and phone number of the vendor(s), which are necessary for LTI
to forward Purchase Orders or Assignment of Purchase Orders.
. Indicate any equipment location which may be different from headquarters.
. NOTE: Eliminate any small cost items with extensive lead times.
WHEN THE EQUIPMENT HAS ALREADY BEEN PURCHASED BY THE LESSEE:
. Provide copies of invoices including detailed equipment description support as
above.
. Provide proof of payment (i.e. cancelled checks and/or bills of sale).
. Provide lienholder name and address (if there are any blanket liens against
the company's assets).
. Provide a floppy diskette using Lotus for Windows or Excel containing the
equipment list in the following format: Quantity, Description (detailed vs.
general), Manufacturer, Cost, Serial Numbers and Locations (if Multiple).
. NOTE: Equipment included in a purchase/leaseback will be depreciated from the
date of the original invoice using a 36 month straight line depreciation.
HELPFUL HINTS:
. Additional Charges: i.e. transportation, installation, sales tax, will not be
------------------ ---
included in lease.
. Leaseholds/Fixtures: Will not be included in lease transactions.
--------------------
Administrators: Xxxxx Xxxxxxxx, Xxxxxxx Xxxxxx and Xxxxx Xxx
Supervisor: Xxxxx Xxxxxx
THANK YOU FOR SELECTING LTI, WE LOOK FORWARD TO WORKING WITH YOU.
20
