UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 19, 1995
CIRRUS LOGIC, INC.
(Exact name of registrant as specified in its charter)
CALIFORNIA 0-17795 77-0024
(State or other jurisdiction of (Commission (I.R.S. Emp
incorporation or organization) file Number) Identificatio
3100 West Warren Avenue, Fremont, CA 94538
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (510) 623-8300
Not Applicable
(Former name or former address, if changed from last report)
<PAGE>
Item 5. Other Events
Under its MiCRUS joint venture agreement, MiCRUS has completed approxim
$176 million of equipment lease financings which have been guaranteed b
Company.
On June 19, 1995, Cirrus Logic, Inc. (the "Registrant") guaranteed
a MASTER LEASE AGREEMENT for approximately $66 million of semiconductor
manufacturing equipment between General Electric Capital Corporation as
Lessor and MICRUS, a New York general partnership, as Lessee. Enclosed
Exhibit 99.1 to this Current Report on Form 8-K is the text of the MAST
LEASE AGREEMENT and the CIRRUS GUARANTY, both dated June 19, 1995.
On June 24, 1996, Cirrus Logic, Inc. (the "Registrant") guaranteed
a MASTER LEASE AGREEMENT for approximately $10 million of semiconductor
manufacturing equipment between General Electric Capital Corporation as
Lessor and MICRUS, a New York general partnership, as Lessee. Enclosed
Exhibit 99.2 to this Current Report on Form 8-K is the text of the MAST
LEASE AGREEMENT and the CIRRUS GUARANTY, both dated June 24, 1996.
On June 28, 1996, Cirrus Logic, Inc. (the "Registrant") guaranteed
a MASTER LEASE AGREEMENT for approximately $100 million of semiconducto
manufacturing equipment between COMDISCO, INC., as Lessor and MICRUS, a
York general partnership, as Lessee. Enclosed as Exhibit 99.3 to this
Report on Form 8-K is the text of the MASTER LEASE AGREEMENT and the CI
GUARANTY, both dated June 28, 1996.
Item 7. Financial Statements and Exhibits
(c) Exhibits
99.1 MASTER LEASE AGREEMENT dated as of June 19, 1995 by
and between GENERAL ELECTRIC CAPITAL CORPORATION, as
and MICRUS, a New York general partnership, as Lesse
the CIRRUS GUARANTY.
99.2 MASTER LEASE AGREEMENT dated as of June 24, 1996 by
and between GENERAL ELECTRIC CAPITAL CORPORATION, as
and MICRUS, a New York general partnership, as Lesse
the CIRRUS GUARANTY.
99.3 MASTER LEASE AGREEMENT dated as of June 28, 1996 by
and between COMDISCO, INC., as Lessor and MICRUS, a
New York general partnership, as Lessee and the CIRR
GUARANTY.
CIRRUS LOGIC, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
CIRRUS LOGIC, INC.
(Registrant)
December 20, 1996 /s/ Thomas F. Kelly
Date Thomas F. Kelly
Executive Vice President, Finance and
Administration, Chief Financial Officer,
and Treasurer
(Principal Financial and Accounting Offic
EXHIBIT 99.1
MASTER LEASE AGREEMENT
dated as of June 19, 1995,
by and between
WILMINGTON TRUST COMPANY,
NOT INDIVIDUALLY BUT SOLELY AS TRUSTEE
as Lessor
and
MICRUS,
as Lessee
MASTER LEASE AGREEMENT
TABLE OF CONTENTS Page
I. LEASING . . . . . . . . . . . . 1
II. TERM, RENT AND PAYMENT . . 2
III. TAXES. . . . . . . . . . . 2
IV. LIENS. . . . . . . . . . . 3
V. QUIET ENJOYMENT . . . . . . . . 3
VI. PERSONAL PROPERTY. . . . . 3
VII. DELIVERY, OPERATION, MAINTENANCE AND REPORTING 3
VIII. RELOCATION. . . . . . . . 4
IX. MODIFICATIONS. . . . . . . 4
X. SUBSTITUTION OF ITEMS . . . . . 6
XI. LESSEE ASSIGNMENT AND SUBLEASE 6
XII. INSPECTION AND MARKING . . 8
XIII. STIPULATED LOSS VALUE. . . 8
XIV. LOSS OR DAMAGE . . . . . . 8
XV. INSURANCE. . . . . . . . . 9
XVI. RETURN OF EQUIPMENT. . . . 9
XVII. LEASE DEFAULT. . . . . . . 9
XVIII. LESSOR ASSIGNMENT. . . . . 11
XIX. NET LEASE; NO SET-OFF, ETC. 12
XX. INDEMNIFICATION. . . . . . 12
XXI. DISCLAIMER . . . . . . . . 13
XXII. REPRESENTATIONS AND WARRANTIES OF LESSEE . . . . . 13
XXIII. OWNERSHIP FOR TAX PURPOSES; GRANT OF SECURITY INTEREST;
USURY SAVINGS. . . . . . . . . 14
XXIV. EARLY TERMINATION. . . . . 15
XXV. END OF BASIC TERM LEASE OPTIONS 16
(a) Renewal. . . . . . . . . . 17
(b) Return . . . . . . . . .. 17
(c) Purchase . . . . . . . . 18
(d) Notice of Election . . . 18
XXVI. END OF RENEWAL TERM LEASE OPTIONS 18
(a) Extension. . . . . . . . . 19
(b Return . . . . . . . . . 19
(c) Purchase . . . . . . . .. 20
(d) Notice of Election . . . . 20
XXVII. MISCELLANEOUS. . . . . . . 21
XXVIII. CHOICE OF LAW; JURISDICTION 23
XXIX. CHATTEL PAPER. . . . . . . 23
XXX. SCOPE OF LIABILITY . . . . 23
XXXI. LIMITATION OF LIABILITY. . 23
EXHIBITS
No. 1 - Additional Collateral
No. 2 - Purchase Order Assignment and Consent
No. 3 - Letter of Credit Agreement
No. 4 - Corporate Guaranty
No. 5 - IBM Guaranty
No. 6 - Real Property Waiver
No. 7 - Bill of Sale
MASTER LEASE AGREEMENT
THIS MASTER LEASE AGREEMENT, dated as of the 19th day of June,
1995 ("Agreement"), between WILMINGTON TRUST COMPANY, not
individually but solely as Trustee (the "Trustee") pursuant to
that certain Equipment Trust Agreement dated as of June, 1995 (the
"Trust Agreement"), with General Electric Capital Corporation,
with an office at Rodney Square North, 1100 North Market Street,
Wilmington, Delaware 19890 (hereinafter called, together with its
successors and assigns, if any, "Lessor"), and MICRUS, a New York
general partnership with its mailing address and chief place of
business at 1580 Route 52, Zip 92-C, Hopewell Junction, New York
12533 (hereinafter called "Lessee").
WITNESSETH:
I. LEASING:
(a) Subject to the terms and conditions set forth below, Lessor
agrees to lease to Lessee, and Lessee agrees to lease from Lessor,
the equipment ("Equipment") described in Annex A to any schedule
hereto ("Schedule"). Terms defined in a Schedule and not
otherwise defined herein shall have the meanings ascribed to them
in such Schedule.
(b) The obligation of Lessor to purchase Equipment from the
manufacturer or supplier thereof ("Supplier") and to lease the
same to Lessee under any Schedule shall be subject to receipt by
Lessor, prior to the Lease Commencement Date (with respect to such
Equipment), of each of the following documents in form and
substance satisfactory to Lessor: (i) a Schedule relating to the
Equipment then to be leased hereunder, (ii) a Purchase Order
Assignment and Consent in substantially the form attached hereto
as Exhibit No. 2, unless the item of the Equipment (an "Item")
shall have been delivered, in which case Lessor shall receive a
Bill of Sale in substantially the form attached hereto as Exhibit
No. 7 with respect to such Item, (iii) evidence of insurance which
complies with the requirements of Section XV, (iv) a Corporate
Guaranty in substantially the form attached hereto as Exhibit No.
3 (the "Guaranty"), duly executed by Cirrus Logic, Inc.
("Guarantor"), (v) a Letter of Credit Agreement in substantially
the form attached hereto as Exhibit No. 4 (the "Letter of Credit
Agreement"), duly executed by Guarantor, (vi) the Letter of Credit
pursuant to the Letter of Credit Agreement, (vii) a Real Property
Waiver in substantially the form attached hereto as Exhibit No.
6, duly executed by each holder of an interest in the Location (as
such term is hereinafter defined) where the Equipment will be
located, (viii) a Certificate of Delivery (in the form of Annex F
to the applicable Schedule) with respect to such Item, and (ix)
such other documents as Lessor may reasonably request. As a
further condition to such obligations of Lessor, Lessee shall
execute and deliver to Lessor a Certificate of Acceptance (in the
form of Annex B to the applicable Schedule) covering such
Equipment (1) concurrently with delivery of such Equipment if the
purchase order with the Supplier does not provide for a period of
testing after delivery; or (2) within sixty (60) days after
delivery of such Equipment (but not later than December 29, 1995)
if the purchase order with the Supplier provides for a period of
testing after delivery. Lessor hereby appoints Lessee its agent
for inspection and acceptance of the Equipment from the Supplier.
Upon execution by Lessee of any Certificate of Acceptance, the
Equipment described thereon shall be deemed to have been delivered
to, and irrevocably accepted by, Lessee for lease hereunder.
(c) Each funding under this Agreement shall be in an amount not
less than Ten Million Dollars ($10,000,000.00) except the last
funding which shall cover any residual amount, and there shall be
no more than six (6) fundings in the aggregate. The aggregate
amount of all fundings under this Agreement shall not exceed
Seventy Million Dollars ($70,000,000.00). The composition of the
Equipment described in Annex A to each Schedule shall reasonably
be satisfactory to Lessor.
II. TERM, RENT AND PAYMENT:
(a) Lessee's right to use the Equipment shall commence on the
date of execution by Lessee of the Certificate of Delivery for
such Equipment ("Lease Commencement Date"). The Basic Term
Commencement Date shall be, and the rent payable hereunder (the
"Rent") shall commence on, the first day of the calendar month
next following the date that Lessee executes and delivers a
Certificate of Acceptance with respect to all of the Items of
Equipment listed on a Schedule. The term of this Agreement shall
be the period specified in the applicable Schedule. If any term
is extended, the word "Term" shall be deemed to refer to all
extended terms, and all provisions of this Agreement shall apply
during any extended terms, except as may be otherwise specifically
provided in writing.
(b) Rent shall be paid to Lessor by wire transfer of immediately
available funds to Lessor's Servicing Agent, General Electric
Capital Corporation (the "Servicing Agent") at: Bankers Trust New
York, New York, New York 10006, Account No. 50-202-962, ABA No.
021-001-033, or to such other account as Lessor may direct in
writing; and shall be effective upon receipt. Payments of Rent
shall be in the amount set forth in, and due in accordance with,
the provisions of the applicable Schedule. In no event shall any
Rent payments be refunded to Lessee.
III. TAXES:
Lessee shall report (to the extent that it is legally
permissible) and pay promptly all taxes, fees and assessments due,
imposed, assessed or levied against any Equipment (or the
purchase, ownership, delivery, leasing, possession, use or
operation thereof), this Agreement (or any rentals or receipts
hereunder), any Schedule, Lessor or Lessee by any United States
Federal, state or local government or taxing authority during or
related to the term of this Agreement, including, without
limitation, all license and registration fees, and all sales, use,
personal property, excise, stamp or other taxes, imposts, duties
and charges, together with any penalties, fines or interest
thereon, except that Lessee shall have no liability for taxes
imposed (a) by the United States of America or any state or
political subdivision thereof which are on or measured by the net
or gross income or net or gross receipts of Lessor or which are
characterized as franchise, net worth or shareholder's capital
taxes or which are expressly in substitution for, or relieve
Lessor from, any of the foregoing taxes (in each case other than
sales, use, value-added, license, property or similar taxes), (b)
by reason of the fact that Lessor shall not be an entity organized
under the laws of the United States of America or any state
thereof, (c) on or in connection with any voluntary transfer,
assignment or disposition by Lessor of the Equipment or any part
thereof or any interest arising hereunder or under any related
document (other than a transfer pursuant to the exercise by Lessor
of remedies under this Agreement) or any involuntary transfer,
assignment or disposition by Lessor of any such item or interest
resulting from any bankruptcy or other proceedings for the relief
of debtors involving Lessor, or (d) while Lessee shall be
contesting such taxes (all such taxes, fees and assessments for
which Lessee shall have liability under this Section III being
hereinafter called "Taxes"). Lessee shall (i) reimburse Lessor
upon receipt of written request for reimbursement for any Taxes
charged to or assessed against Lessor, (ii) on request of Lessor,
submit to Lessor written evidence of Lessee's payment of Taxes,
(iii) on all reports or returns show the ownership of the
Equipment by Lessee, and (iv) on request of Lessor, send a copy
thereof to Lessor. Lessor shall give Lessee prompt notice if it
shall receive any claim for Taxes or if it shall determine that
any Taxes shall be payable and, at the request and expense of
Lessee, Lessor shall contest such Taxes so long as such contest
shall not involve any material risk of forfeiture of the Equipment
(unless Lessee shall have provided security against such risk in a
manner reasonably satisfactory to Lessor). For purposes of this
Section III, the term "Lessor" shall include any person who holds
a beneficial interest in Lessor.
IV. LIENS:
(a) Lessee shall not directly or indirectly create, incur,
assume or suffer to exist any lien on or with respect to the
Equipment except Permitted Liens. As used herein, "Permitted
Liens" shall mean liens which are (i) the Agreement, (ii) the
rights of any sublessee or operator permitted by the terms of this
Agreement, (iii) those asserted by persons claiming by or through
Lessor, (iv) a security interest in favor of the New York State
Urban Development Corporation, which security interest shall be
subject and subordinate to the interest of Lessor in the Equipment
(the "New York State Lien"), (v) liens for fees, taxes, levies,
imposts, duties or other governmental charges of any kind which
are not yet delinquent or are being contested in good faith by
appropriate proceedings which suspend the collection thereof, (vi)
liens of mechanics, materialmen, laborers, employees or suppliers
and similar liens arising by operation of law, incurred by Lessee
in the ordinary course of business for sums that are not yet
delinquent or are being contested in good faith by negotiations or
by appropriate proceedings which suspend the collection thereof,
and (vii) liens arising out of any judgments or awards against
Lessee which have been adequately bonded to protect Lessor's
interests or with respect to which a stay of execution has been
obtained pending an appeal or proceeding for review.
(b) Lessee will promptly notify Lessor thereof and, at Lessee's
own expense, take such action as may be necessary duly to
discharge any such lien other than Permitted Liens.
V.QUIET ENJOYMENT:
Notwithstanding any other provision of this Agreement, so long as
no Material Lease Default shall have occurred and be continuing,
as between Lessee and Lessor, Lessee shall have the exclusive
rights to possession and control of all the Equipment and neither
Lessor nor any person acting or claiming through Lessor will take
any action that shall interfere with the peaceful and quiet
enjoyment of the use or nonuse of any item of the Equipment (an
"Item") by Lessee, and Lessee shall have the right to use or not
use such Item in its sole discretion (but, in all events, shall be
required to maintain the Equipment as specified herein). The
foregoing is not intended to limit the inspection rights and the
rights in connection with a return of the Items granted by Lessee
hereunder. As used herein, "Material Lease Default" shall mean
any Lease Default (as hereinafter defined) other than a Lease
Default resulting pursuant to Section XVII(a)(3) of this
Agreement.
VI. PERSONAL PROPERTY:
Lessee and Lessor agree for the purposes of this Agreement that
the Items and every part thereof and title thereto are and shall
be considered as and shall remain personal and not real property
to all persons and for all purposes.
VII. DELIVERY, OPERATION, MAINTENANCE AND REPORTING:
(a) The Equipment shall be shipped directly from the Supplier to
Lessee.
(b) Lessee shall not use any Item or authorize any third party
to use any Item in either case, in breach of any applicable laws
(other than applicable laws as to which noncompliance would not
adversely affect the business, operations or properties of Lessee
and so long as such noncompliance shall not involve any material
danger of the sale, forfeiture or loss of such Item or the
imposition of any criminal liability on Lessor).
(c) Lessee at its own expense shall at all times during the Term
applicable to each Item maintain such Item in accordance with good
commercial maintenance standards and practices followed from time
to time by Lessee and International Business Machines Corporation
("IBM") in the operation and maintenance of similar kinds of
properties owned or leased by it. Lessee shall keep each such
Item fit for its intended use, in good and efficient working order
(ordinary wear and tear excepted), and in as good condition
(ordinary wear and tear excepted) as on the Lease Commencement
Date for such Item of Equipment.
(d) Lessee will promptly report to Lessor in writing if any Item
of the Equipment is lost or damaged where the estimated repair
costs would exceed One Hundred Thousand Dollars ($100,000.00) or
is otherwise involved in an accident causing serious personal
injury or significant property damage.
VIII. RELOCATION:
For purposes of this Agreement, the term "Location" shall mean
any building or buildings owned and/or operated by Lessee,
Guarantor or IBM, or any of their solvent subsidiaries,
collectively referred to by such party as a "site". The initial
Location for the Equipment leased under this Agreement is the IBM
East Fishkill site which incorporates the Hudson Valley Research
Park. Lessee may not relocate any of the Items from the initial
Location without Lessor's prior written consent (which shall not
unreasonably be withheld) unless the following conditions are
satisfied:
(a) the Item is relocated to a Location located in the
contiguous Continental United States of America and the owner of
the Location has provided Lessor with the appropriate landlord
waiver;
(b) Lessee shall have provided Lessor with written notice of the
intention to relocate such Items in accordance with the terms
hereof at least ten (10) Business Days prior to the date such
relocation is commenced;
(c) no Material Lease Default shall have occurred and be
continuing;
(d) all reasonable out-of-pocket costs and expenses incurred by
Lessor in connection with such relocation shall be paid by
Lessee;
(e) the Equipment is located at not more than three (3)
Locations; and
(f) Lessee executes and delivers to Lessor such documents and
instruments as reasonably may be required by Lessor in connection
with such relocation of the Equipment, including (without
limitation) Uniform Commercial Code financing statements to be
filed at Lessee's expense.
If Lessee moves any Item to a different building within a
Location, promptly thereafter Lessee shall deliver to Lessor an
itemization identifying the specific building to which such Item
was moved.
IX. MODIFICATIONS:
(a) Lessee, at its own expense from time to time, may make any
modification to any Item that Lessee may deem desirable in the
conduct of its business if Lessee complies with all applicable
laws relating thereto; provided, however, that Lessee shall not
have the right to make any such modification that could materially
impair such Item from being operated as designed or diminish the
value, utility or remaining useful life of such Item to an
independent third-party user.
(b) Title to each modification shall vest as follows:
(i) in the case of each modification for which Lessor shall
have provided financing of the cost of such modification effective
on the date such modification shall have been incorporated into
such Item, Lessor shall acquire title to such modification without
further act;
(ii) in the case of each modification for which Lessor shall
not have provided financing of the cost of such modification,
Lessee shall retain title to such modification; and
(iii) notwithstanding subparagraph (ii) above, in the
case of modifications which remain upon return of the Item to
Lessor at the end of the Term applicable to an Item so modified,
title to such modifications shall vest in Lessor at the end of the
Term applicable to such Item at no cost to Lessor and without
further action by Lessee; provided, however, that Lessee shall
take such actions as reasonably may be required by Lessor to
evidence the transfer of title.
Immediately upon title to a modification vesting in Lessor
pursuant to Paragraph (b)(i) of this Section, such modification
shall, without further act, become subject to this Agreement and
be deemed part of the applicable Item for all purposes.
Modifications title to which remains in Lessee pursuant to this
Section shall not be deemed a part of the applicable Item and
shall not be subject to this Agreement.
(c) Lessee may request Lessor to finance the cost of any
modification (a "Modification Financing"), on terms acceptable to
Lessee and Lessor. Lessor shall comply with any such request
subject to the following conditions precedent to Lessor's
obligation:
(i) there shall have been no material adverse change in the
business and financial condition of Guarantor;
(ii) no Material Lease Default shall have occurred and be
continuing;
(iii) all governmental actions related to Lessee and the
Item subject to the modification required to effect the
Modification Financing shall have been obtained; and
(iv) such request is approved in writing by General
Electrical Capital Corporation and the other Participants (as such
term is hereinafter defined), including satisfaction of each such
person's underwriting criteria and approval of the proposed
modification.
(d) Subject to compliance with applicable law and so long as no
Material Lease Default shall have occurred and be continuing, if
Lessor and Lessee cannot agree on the terms of a proposed
Modification Financing, Lessee may purchase (upon sixty (60) days'
notice to Lessor, on the Rent Payment Date specified in such
notice) the Item which was to have been modified at a purchase
price equal to the Stipulated Loss Value of such Item computed as
of such Rent Payment Date plus any accrued Rent and other charges
hereunder due with respect to such Item as of such Rent Payment
Date.
(e) Subject to compliance with applicable law and so long as no
Material Lease Default shall have occurred and be continuing,
Lessee may remove, at its own expense, any modification to which
Lessee shall have title as provided in Paragraph (b) above;
provided, that, unless Lessee shall have given notice of its
desire to purchase such Item, at its own expense and prior to the
end of the Term applicable to the Item subject to such
modification, Lessee shall repair any damage to such Item caused
by such removal, and such Item remains in the condition required
hereunder.
X. SUBSTITUTION OF ITEMS:
Provided that no Material Lease Default shall have occurred and
be continuing, at Lessee's expense, Lessee may at any time
substitute a comparable Item of the Equipment for any Item (a
"Substituted Item") in accordance with the terms of this Section.
On a quarterly basis, Lessee shall notify Lessor of all
substitutions made during the preceding quarter. At such time as
the aggregate original Capitalized Lessor's Cost of all
Substituted Items (other than Items replaced pursuant to Section
XIII(a) hereof) exceeds twenty percent (20%) of the aggregate
original Capitalized Lessor's Cost of all Equipment leased
hereunder, Lessee's option to substitute additional Items shall be
subject to Lessor's prior written consent (which consent shall not
unreasonably be withheld). If Lessee shall elect to substitute an
Item of the Equipment pursuant hereto, Lessee shall, at its sole
cost and expense, convey to Lessor a comparable item of equipment
(a "Replacement Item"), free and clear of all liens other than
Permitted Liens, that has at least the value, utility and
remaining useful life and is in as good operating condition as the
Substituted Item, assuming that the Substituted Item had been
maintained in accordance with this Agreement. In addition, Lessee
shall pay to the Servicing Agent an administrative fee of Three
Thousand Dollars ($3,000.00) per notice of substitution (provided,
however, that such administrative fee shall not exceed Twelve
Thousand Dollars ($12,000.00) per calendar year), and Lessee shall
execute and deliver to Lessor such documents and instruments as
reasonably may be required by Lessor in connection with such
replacement, including (without limitation) Uniform Commercial
Code financing statements to be filed at Lessee's expense. Upon
compliance by Lessee with the terms of the two (2) preceding
sentences, Lessor will transfer to Lessee, on an AS IS BASIS (as
hereinafter defined) all of Lessor's interest in and to in such
Substituted Item. Lessor shall not be required to make and may
specifically disclaim any representation or warranty as to the
condition of such Substituted Item and other matters (except that
Lessor shall warrant that it has conveyed whatever interest it
received in the Substituted Item free and clear of any liens or
encumbrances created by, through or under Lessor). Lessor shall
execute and deliver to Lessee such Uniform Commercial Code
Statements of Termination as reasonably may be required in order
to terminate any interest of Lessor in and to the Substituted
Item. Lessee will be subrogated to all claims of Lessor, if any,
against third parties to the extent the same relate to physical
damage to or loss of such Substituted Item, and such Substituted
Item shall no longer be subject to this Agreement. For all
purposes hereof, the Replacement Item so substituted shall after
such transfer be part of the property leased hereunder and be an
"Item". No such substitution shall result in any change in Rent.
XI. LESSEE ASSIGNMENT AND SUBLEASE:
(a) Lessee shall have and retain throughout the Term with
respect to any Item control over the operation and use of such
Item, and may, so long as no Lease Default shall have occurred and
be continuing, without the consent of Lessor, assign its interest
in this Agreement or sublease, license, transfer control of, or
permit any other person to use, all or any part of any Item or
Items during the Term, subject to the following terms and
conditions:
(i) Lessee shall remain primarily liable to Lessor for the
performance of all the terms of this Agreement to the same extent
as if such assignment, sublease or arrangement had not occurred
and the Guaranty shall remain in full force and effect against
Guarantor;
(ii) such assignment, sublease or arrangement shall be in
compliance with all applicable laws;
(iii) such assignment, sublease or arrangement as to any
Item shall not extend beyond the stated Term with respect to such
Item as then in effect for such Item, and any rights created
thereby in an Item shall be fully subject and subordinate to this
Agreement;
(iv) such assignment, sublease or arrangement shall not
subject Lessor to any regulation by any governmental agency;
(v) such assignment, sublease or arrangement shall be to
Guarantor or to a solvent affiliate of Lessee, Guarantor or IBM,
organized under the laws of any state of, and located in, the
United States;
(vi) Lessee shall have given prior written notice to Lessor
of any such assignment, sublease or arrangement;
(vii) Lessee shall obtain and deliver to Lessor such
Uniform Commercial Code financing statements executed by the
assignee or sublessee and Lessee, as reasonably may be required by
Lessor, to be filed at Lessee's expense; and
(viii) all reasonable costs and expenses (including
attorney's fees and expenses) incurred by Lessor in connection
with such assignment, sublease or arrangement shall be paid by
Lessee.
Lessee may make any such assignment, sublease or arrangement to a
person other than those persons listed above provided such person
is organized under the laws of any state of, and located in, the
United States and is not a non-profit, tax-exempt entity; and
provided further that such assignment, sublease or arrangement
complies with subparagraphs (i) through (iv) and (vi) through
(viii) above, with Lessor's prior written consent, which consent
shall not unreasonably be withheld.
Notwithstanding the foregoing, if Guarantor, IBM or their
subsidiaries who are partners in Lessee decide to dissolve Lessee,
Lessee may assign its leasehold interest in this Agreement in its
entirety to Guarantor, IBM or a solvent subsidiary of either
thereof, or to a solvent general partnership of which IBM or a
solvent subsidiary of IBM is the managing general partner;
provided, that (1) the Guaranty will survive any such assignment
and remains in full force and effect against Guarantor, and (2)
subparagraphs (ii), (iii), (iv), (vi) and (vii) above shall be
complied with.
(b) Lessee shall not consolidate or merge into any person or
sell, transfer, convey or lease all or substantially all its
properties or assets as an entirety to any Person, unless:
(i) the successor entity formed by such consolidation or
into which it is merged or the successor entity that acquires by
conveyance, transfer or lease all or substantially all its assets
as an entirety, shall be organized under the laws of the United
States of America, a state thereof or the District of Columbia,
shall be authorized under all applicable laws to operate the
Equipment and perform its obligations under this Agreement and all
related documents (the "Operative Documents") to the same extent
as Lessee and (at Lessee's expense) shall deliver to Lessor an
opinion of counsel reasonably satisfactory in form and substance
to the effect that the obligations of Lessee hereunder have been
assumed by the successor entity by operation of law without any
further act by such successor entity, or an agreement in form and
substance reasonably satisfactory to Lessor containing an
assumption by such successor entity of the due and punctual
performance of each covenant and condition of the Operative
Documents to be performed or observed by Lessee;
(ii) immediately after giving effect to such transaction, no
Material Lease Default shall have occurred and be continuing; and
(iii) the Guaranty shall remain in full force and effect
against Guarantor and applicable to the successor.
Upon any such consolidation or merger, or any sale, conveyance,
transfer or lease of substantially all the assets of Lessee in
accordance with this Section, the successor entity formed by such
consolidation or into which the Lessee shall be merged or to which
such sale, conveyance, transfer or lease shall be made, shall
succeed to, and be substituted for, and may exercise every right
and power and shall be subject to, each and every obligation of
Lessee under the Operative Documents to which it is a party with
the same effect as if such successor corporation had been named as
Lessee therein.
(c) The dissolution of Lessee shall not cause this Agreement to
terminate, or otherwise constitute a Lease Default, so long as,
prior to the effective date of such dissolution, Lessee shall have
complied with Paragraph (b) of this Section (whereupon the
assignee of Lessee's rights thereunder shall become Lessee for all
purposes hereunder and under the other Operative Documents).
XII. INSPECTION AND MARKING:
Subject to Lessee's reasonable standard security procedures and
operational requirements), during the normal business hours of
Lessee, Lessor may (at its own expense), upon reasonable prior
notice, inspect the Equipment. Lessee shall affix to any Item,
according to Lessor's instructions, any reasonable identifying
labels, plates or tags supplied by Lessor which do not interfere
with such Item's operation.
XIII. STIPULATED LOSS VALUE:
Lessee shall promptly and fully notify Lessor in writing if any
Item of Equipment shall be or become, lost, stolen, destroyed,
irreparably damaged in the determination of Lessee, or permanently
rendered unfit for use from any cause whatsoever (such occurrences
being hereinafter called "Casualty Occurrences"). On the Rent
Payment Date next succeeding a Casualty Occurrence (the "Payment
Date"), Lessee shall either (as selected by Lessee):
(a) replace the Item of Equipment having suffered the Casualty
Occurrence as provided in Section X hereof; or
(b) pay Lessor the sum of (x) the Stipulated Loss Value of such
Item calculated in accordance with Annex C to the applicable
Schedule as of the Rent Payment Date next following such Casualty
Occurrence ("Calculation Date"); and (y) all rental and other
amounts which are due hereunder as of the Payment Date. Upon
payment of all sums due hereunder, the term of this lease as to
such Item shall terminate and (except in the case (i) of the loss,
theft or complete destruction of such unit, or (ii) where the
insurer requires possession of the damaged unit), Lessee shall be
entitled to recover possession of such unit.
XIV. LOSS OR DAMAGE:
Lessee hereby assumes and shall bear the entire risk of any loss,
theft, damage to, or destruction of, any Item of Equipment from
any cause whatsoever from the Lease Commencement Date.
XV. INSURANCE:
Lessee agrees, at its own expense, to keep all Equipment insured
for such amounts as specified in Paragraph D of the Equipment
Schedule and against such hazards as Lessor may require,
including, but not limited to, insurance for damage to or loss of
such Equipment and liability coverage for personal injuries, death
or property damage, with Lessor named as additional insured and
with a loss payable clause in favor of Lessor, as its interest may
appear, with respect to all losses in excess of One Hundred
Thousand Dollars ($100,000.00), irrespective of any breach of
warranty or other act or omission of Lessee. Such policies may
include such deductibles or self-insured retentions as are
acceptable to Lessor. All such policies shall be with companies,
and on terms, reasonably satisfactory to Lessor. Lessee agrees to
deliver to Lessor evidence of insurance satisfactory to Lessor
and, upon Lessor's determination that such insurance is
satisfactory to it, Lessor shall certify to Lessee that such
insurance is satisfactory to Lessor. No insurance shall be
subject to any co-insurance clause. During the existence of a
Lease Default hereunder, Lessee hereby appoints Lessor as Lessee's
attorney-in-fact to make proof of loss and claim for insurance,
and to make adjustments with insurers and to receive payment of
and execute or endorse all documents, checks or drafts in
connection with payments made as a result of such insurance
policies. Any expense of Lessor in adjusting or collecting
insurance shall be borne by Lessee. Lessee will not make
adjustments with insurers except (i) with respect to claims for
damage to any Item of Equipment where the repair costs do not
exceed One Hundred Thousand Dollars ($100,000.00), or (ii) with
Lessor's written consent. Said policies shall provide that the
insurance may not be altered or cancelled by the insurer until
after thirty (30) days written notice to Lessor. Lessee may, at
its option, apply proceeds of insurance not in excess of One
Hundred Thousand Dollars ($100,000.00), in whole or in part, to
(i) repair or replace Equipment or any portion thereof, or (ii)
satisfy any obligation of Lessee to Lessor hereunder. Provided
that no Material Lease Default shall then have occurred and be
continuing, Lessor shall apply proceeds of insurance in excess of
One Hundred Thousand Dollars ($100,000.00), in whole or in part,
as elected by Lessee pursuant to Section XIII hereof, to (i)
repair or replace Equipment or any portion thereof, or (ii)
satisfy any obligation of Lessee to Lessor hereunder.
XVI. RETURN OF EQUIPMENT:
Upon any expiration or termination of this Agreement or any
Schedule, unless Lessee shall have exercised its early termination
option pursuant to Section XXIV hereof, or its extension option
pursuant to Section XXVI(a) hereof, or its renewal option pursuant
to Section XXV(a), hereof, or its purchase option pursuant to
Section XXV(c) or Section XXVI(c) hereof, Lessee shall promptly,
at its own cost and expense: (i) perform any testing and repairs
required to place the affected Items of Equipment in the same
condition and appearance as when received by Lessee (ordinary wear
and tear excepted) and in good working order for their originally
intended purpose; (ii) if deinstallation, disassembly or crating
is required, cause such Items to be deinstalled, disassembled and
crated by qualified personnel of Lessee or IBM, or by an
authorized manufacturer's representative or such other service
person as is satisfactory to Lessor; and (iii) within ten (10)
days after such expiration or termination, ship such Items, free
and clear of all liens and encumbrances (other than the New York
State Lien), to a location within the forty-eight (48) contiguous
continental United States as Lessor shall direct; and Lessee shall
provide, at its expense, transit insurance payable to Lessor for
the Equipment in the amount of the then Stipulated Loss Value of
the Equipment.
XVII. LEASE DEFAULT:
(a) Lessor may in writing declare this Agreement in default
("Lease Default") if: (1) Lessee breaches its obligation to pay
Rent when due hereunder and fails to cure the breach within ten
(10) days; (2) Lessee breaches its obligation to pay any sum
(other than Rent) when due and fails to cure that breach within
five (5) days after written notice thereof; (3) Lessee breaches
any of its insurance obligations under Section XV; (4) Lessee
breaches any of its other obligations hereunder and fails to cure
that breach within thirty (30) days after written notice thereof;
provided, however, that if such breach (A) is curable, (B) cannot
be remedied within the thirty (30) day period, (C) Lessee
commences reasonable efforts to effect such remedy within the
thirty (30) day period and diligently pursues such efforts, and
(D) does not involve any substantial danger of the sale,
forfeiture or loss of the Equipment or of Lessor's interest
therein, then Lessee shall have an additional period of sixty (60)
days to effect such remedy); (5) any representation or warranty
made by Lessee in connection with this Agreement shall be false or
misleading when made in any material respect; (6) Lessee becomes
insolvent or ceases to do business as a going concern (unless the
provisions of Section XI(c) hereof are satisfied); (7) any
Equipment is illegally used; (8) a petition is filed by Lessee
under any bankruptcy or insolvency laws; (9) a petition is filed
against Lessee under any bankruptcy or insolvency laws and is not
dismissed within sixty (60) days; (10) Lessee shall have
terminated its existence as a general partnership, consolidated
with, merged into, or conveyed or leased substantially all of its
assets as an entirety to any person (such actions being referred
to as an "Event"), unless the provisions of Section XI hereof are
satisfied or not less than sixty (60) days prior to such Event:
(x) such person is organized and existing under the laws of the
United States or any state, and executes and delivers to Lessor an
agreement containing an effective assumption by such person of the
due and punctual performance of this Lease; and (y) Lessor is
reasonably satisfied as to the creditworthiness of such person; or
(11) subject to the provisions set forth in Paragraph (b) of this
Section, there occurs a default under Section 6(b)(2) of the
Guaranty. Such declaration shall apply to all Schedules except as
specifically excepted by Lessor.
(b) Lessor shall provide written notice to IBM upon the
occurrence of a default under Section 6(b)(2) of the Guaranty and,
for a period of thirty (30) days after the giving of such notice
(the "30-day Period"), if no other Material Lease Default has then
occurred and is continuing Lessor shall not declare this Agreement
to be in default as a result of such occurrence and shall not
exercise any remedies hereunder as a result of such occurrence,
provided that all Rent and other payments becoming due hereunder
are paid as and when due during such 30-day Period. Prior to the
expiration of such 30-day Period, IBM may (at its sole
discretion): (1) cause to be delivered to Lessor an irrevocable
letter of credit (in form and substance satisfactory to Lessor)
issued by a national bank acceptable to Lessor in an amount equal
to the Rent becoming due during the next succeeding ninety (90)
day period (the "Subsequent Rent"), or (2) deliver to Lessor a
written guaranty of IBM, in substantially the form attached hereto
as Exhibit No. 5, guaranteeing the payment as and when due of the
Subsequent Rent. If IBM timely provides the required letter of
credit or guaranty, for an additional ninety (90) days after the
original 30-day Period, if no other Material Lease Default has
then occurred and is continuing, Lessor shall not declare this
Agreement to be in default as a result of such occurrence and
shall not exercise any remedies hereunder as a result of such
occurrence. Upon the expiration of such subsequent ninety (90)
day period, unless IBM has (i) delivered to Lessor a written
guaranty of IBM, in substantially the form attached hereto as
Exhibit No. 5, (ii) purchased all the Equipment for its then
Stipulated Loss Value, plus all unpaid Rent and other amounts due
hereunder, (iii) received an assignment of all right, title,
interest and obligations of Lessee in, under and pursuant to this
Agreement, and IBM has accepted such assignment and assumed such
obligations, or (iv) taken such other action acceptable to Lessor
(in its sole discretion), then Lessor may exercise all rights and
remedies hereunder.
(c) After a Lease Default has occurred and is continuing, Lessee
shall, upon demand, forthwith pay to Lessor (i) as liquidated
damages for loss of a bargain and not as a penalty, the
Termination Value of the Equipment (calculated as of the Rent
Payment Date next preceding the declaration of Lease Default), and
(ii) all Rent and other sums then having become due hereunder; and
upon payment of such sums and all other costs, charges and
expenses incurred by Lessor (including attorney's fees and
expenses) as a result of the occurrence of Lease Default, Lessor
will transfer to Lessee, on an AS IS BASIS (as hereinafter
defined), all of Lessor's interest in and to the Equipment (and
Lessor shall not be required to make and may specifically disclaim
any representation or warranty as to the condition of the
Equipment and other matters, except that Lessor shall warrant that
it has conveyed whatever interest it received in the Equipment
free and clear of any lien or encumbrance created by, through or
under Lessor), and Lessor shall execute and deliver to Lessee such
Uniform Commercial Code Statements of Termination as reasonably
may be required in order to terminate any interest of Lessor in
and to the Equipment. If Lessee fails to pay the amounts
specified in the preceding sentence, then, at the request of
Lessor, Lessee shall comply with the provisions of Section XVI
hereof. Lessee hereby authorizes Lessor to enter, with or without
legal process, any premises where any Equipment is located and
take possession thereof. Lessor may, but shall not be required
to, sell Equipment at private or public sale, in bulk or in
parcels, with or without notice, and without having the Equipment
present at the place of sale; or Lessor may, but shall not be
required to, lease, otherwise dispose of or keep idle all or part
of the Equipment. The proceeds of sale, lease or other
disposition, if any, shall be applied in the following order of
priorities: (1) to pay all of Lessor's costs, charges and
expenses incurred in taking, removing, holding, repairing and
selling, leasing or otherwise disposing of Equipment; then, (2) to
the extent not previously paid by Lessee, to pay Lessor all sums
due from Lessee hereunder; then (3) to reimburse to Lessee any
sums previously paid by Lessee as liquidated damages; and (4) any
surplus shall be paid to Lessee. Lessee shall pay any deficiency
in clauses (1) and (2) forthwith.
(d) The foregoing remedies are cumulative, and any or all
thereof may be exercised in lieu of or in addition to each other
or any remedies at law, in equity, or under statute. Lessee
waives notice of sale or other disposition (and the time and place
thereof), and the manner and place of any advertising. If
permitted by law, Lessee shall pay reasonable attorney's fees
actually incurred by Lessor in enforcing the provisions of this
Lease and any ancillary documents. Waiver of any default shall
not be a waiver of any other or subsequent default.
XVIII. LESSOR ASSIGNMENT:
(a) Lessor may not, without the consent of Lessee (which consent
shall not unreasonably be withheld, delayed or conditioned),
assign this Agreement or any Schedule, or the right to enter into
any Schedule except to a successor trustee pursuant to the Trust
Agreement. The Servicing Agent shall act as the fiscal agent for
any assignee unless the Servicing Agent is removed by Lessor as a
result of its failure or inability to perform such duties. Lessee
agrees to confirm in writing receipt of a notice of an approved
assignment as reasonably may be requested by assignee. Lessee
hereby waives and agrees not to assert against any such assignee
any defense, set-off, recoupment claim or counterclaim which
Lessee has or may at any time have against Lessor or any other
person for any reason whatsoever.
(b) Lessee acknowledges that it has been advised that the
interest of Lessor in this Agreement, the Equipment Schedules,
related instruments and documents and/or the Equipment may be
conveyed to, in whole or in part, certain third parties (each
being herein referred to as a "Participant" and, collectively, as
the "Participants") without the consent of Lessee (the
"Syndication"). Lessee agrees reasonably to cooperate with Lessor
in connection with the Syndication, including the execution and
delivery of such other documents, instruments, notices, opinions,
certificates and acknowledgements as reasonably may be required by
Lessor or such Participant; provided, however, in no event shall
Lessee be required to consent to any change that would adversely
affect any of the terms of the transactions contemplated herein;
and provided further, however, that Lessor shall be responsible
for its own costs and expenses incurred in connection with the
Syndication. Each Participant shall be required to comply with
the provisions of Section V hereof.
(c) Lessor and each Participant agrees that it will not
advertise or publish the fact that it has furnished financing to,
or otherwise entered into the transactions contemplated hereby
with Lessee, Guarantor or IBM without first obtaining the written
consent of such person. Notwithstanding any other provision of
any Operative Document, Lessor and the Participants will not have
any right to use any trademark or trade name of, or otherwise
refer to Lessee, Guarantor or IBM in any promotion or publication
without first obtaining the written consent of such person.
(d) Lessor and each Participant agrees that it shall not amend
the provisions of Section 9.01 of the Trust Agreement, pertaining
to the transfer of the Participant's interests.
(e) Subject always to the foregoing and to Section XI hereof,
this Agreement inures to the benefit of, and is binding upon, the
successors and assigns of the parties hereto.
XIX. NET LEASE; NO SET-OFF, ETC.:
This Agreement is a net lease. Lessee's obligation to pay Rent
and other amounts due hereunder shall be absolute and
unconditional. Lessee shall not be entitled to any abatement or
reductions of, or set-offs against, said Rent or other amounts,
including, without limitation, those arising or allegedly arising
out of claims (present or future, alleged or actual, and including
claims arising out of strict liability in tort or negligence of
Lessor) of Lessee against Lessor under this Agreement or
otherwise. This Agreement shall not terminate and the obligations
of Lessee shall not be affected by reason of any defect in or
damage to, or loss of possession, use or destruction of, any
Equipment from whatsoever cause. It is the intention of the
parties that Rents and other amounts due hereunder shall continue
to be payable in all events in the manner and at the times set
forth herein unless the obligation to do so shall have been
terminated pursuant to the express terms hereof.
XX. INDEMNIFICATION:
(a) Lessee hereby agrees to indemnify, save and keep harmless
Lessor, the Participants, the Servicing Agent, their agents,
employees, successors and assigns, from and against any and all
damages, penalties, injuries, claims, actions and suits (including
legal and other expenses), of whatsoever kind and nature, in
contract or tort, except as to taxes which are covered in Section
III hereof only (provided, however, that each such party is liable
for its own gross negligence or willful misconduct and shall not
be indemnified hereunder as a result thereof; and provided
further, however, that the Servicing Agent shall be liable for any
obligations it has under any other agreements and shall not be
indemnified hereunder therefor) (and including, but not limited
to, Lessor's strict liability in tort), arising out of (i) the
selection, manufacture, purchase, acceptance or rejection of
Equipment, the ownership of Equipment during the term of this
Agreement, and the delivery, lease, possession, maintenance, uses,
condition, return or operation of Equipment (including, without
limitation, latent and other defects, whether or not discoverable
by Lessor or Lessee and any claim for patent, trademark or
copyright infringement or environmental damage), or (ii) any claim
by a third party attributable to the maintenance or use of such
Item by Lessee, any sublessee or employees of Lessee. Lessee
shall, upon request, defend any actions based on, or arising out
of, any of the foregoing.
(b) Lessee hereby agrees to pay the fees and expenses of
Wilmington Trust Company, as Trustee becoming due under the Trust
Agreement, upon receipt of an invoice therefor.
(c) All of Lessor's and the Servicing Agent's rights, privileges
and indemnities contained in this Section XX shall survive the
expiration or other termination of this Agreement and the rights,
privileges and indemnities contained herein are expressly made for
the benefit of, and shall be enforceable by Lessor, its successors
and assigns.
XXI. DISCLAIMER:
LESSEE ACKNOWLEDGES THAT IT HAS SELECTED THE EQUIPMENT WITHOUT
ANY ASSISTANCE FROM LESSOR, ITS AGENTS OR EMPLOYEES. LESSOR DOES
NOT MAKE, HAS NOT MADE, NOR SHALL BE DEEMED TO MAKE OR HAVE MADE,
ANY WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, WRITTEN
OR ORAL, WITH RESPECT TO THE EQUIPMENT LEASED HEREUNDER OR ANY
COMPONENT THEREOF, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY AS
TO DESIGN, COMPLIANCE WITH SPECIFICATIONS, QUALITY OF MATERIALS OR
WORKMANSHIP, MERCHANTABILITY, FITNESS FOR ANY PURPOSE, USE OR
OPERATION, SAFETY, PATENT, TRADEMARK OR COPYRIGHT INFRINGEMENT, OR
(EXCEPT AS EXPRESSLY PROVIDED HEREIN) TITLE. All such risks, as
between Lessor and Lessee, are to be borne by Lessee. Without
limiting the foregoing, Lessor shall have no responsibility or
liability to Lessee or any other person with respect to any of the
following (i) any liability, loss or damage caused or alleged to
be caused directly or indirectly by any Equipment, any inadequacy
thereof, any deficiency or defect (latent or otherwise) therein,
or any other circumstance in connection therewith; (ii) the use,
operation or performance of any Equipment or any risks relating
thereto; (iii) any interruption of service, loss of business or
anticipated profits or consequential damages; or (iv) the
delivery, operation, servicing, maintenance, repair, improvement
or replacement of any Equipment. If, and so long as, no default
exists under this Lease, Lessee shall be, and hereby is,
authorized during the term of this Lease to assert and enforce, at
Lessee's sole cost and expense, from time to time, in the name of
and for the account of Lessor and/or Lessee, as their interests
may appear, whatever claims and rights Lessor may have against any
Supplier of the Equipment.
XXII. REPRESENTATIONS AND WARRANTIES OF LESSEE:
Lessee hereby represents and warrants to Lessor that on the date
hereof and on the date of execution of each Schedule:
(a) Lessee has adequate power and capacity to enter into, and
perform under, this Agreement and all related documents (together,
the "Documents") and is duly qualified to do business wherever
necessary to carry on its present business and operations,
including the jurisdiction(s) where the Equipment is or is to be
located, where the failure to be so qualified would have a
material adverse effect.
(b) The Documents have been duly authorized, executed and
delivered by Lessee and constitute valid, legal and binding
agreements, enforceable in accordance with their terms, except to
the extent that the enforcement of remedies therein provided may
be limited under applicable bankruptcy and insolvency laws and
equitable principles.
(c) No approval, consent or withholding of objections is
required from any governmental authority or instrumentality with
respect to the entry into or performance by Lessee of the
Documents except such as have already been obtained.
(d) The entry into and performance by Lessee of the Documents
will not: (i) violate any judgment, order, law or regulation
applicable to Lessee or any provision of that certain Partnership
Agreement dated as of September 30, 1994, between Cirel Inc. and
MiCrus Holdings Inc.; or (ii) result in any breach of, constitute
a default under or result in the creation of any lien, charge,
security interest or other encumbrance upon any Equipment pursuant
to any indenture, mortgage, deed of trust, bank loan or credit
agreement or other instrument (other than this Agreement) to which
Lessee is a party.
(e) There are no suits or proceedings pending or (to Lessee's
knowledge) threatened in court or before any commission, board or
other administrative agency against or affecting Lessee, which
will have a material adverse effect on the ability of Lessee to
fulfill its obligations under this Agreement.
(f) Lessee is a general partnership duly organized and will be
at all times validly existing under the laws of the State
specified in the first sentence of this Agreement (except in
accordance with the provisions of Section XI(c) hereof). Cirel,
Inc. and MiCrus Holdings Inc. are the sole general partners of
Lessee.
(g) The Equipment will at all times be used for commercial or
business purposes.
XXIII. OWNERSHIP FOR TAX PURPOSES; GRANT OF SECURITY INTEREST;
USURY SAVINGS:
(a) For Federal, state and local income tax purposes, Lessor
will treat Lessee as the owner of the Equipment. Accordingly,
Lessor will not claim any tax benefits available to an owner of
the Equipment.
(b) In order to secure the prompt payment of the Rent and all of
the other amounts from time to time outstanding under and with
respect to the Schedules, and the performance and observance by
Lessee of all the agreements, covenants and provisions thereof
(including, without limitation, all of the agreements, covenants
and provisions of this Agreement, which are incorporated therein
by reference), Lessee hereby grants to Lessor a first priority
security interest in (1) the Equipment leased under the Schedules,
and (2) Lessee's interest in the personal property described on
Exhibit No. 1 now or hereafter attached to this Agreement which is
leased to Lessee by Cirel, Inc. , and any and all substitutions,
replacements or exchanges therefor, and modifications, additions,
attachments, accessions and accessories thereto, made pursuant to
the terms hereof or of the lease from Cirel, Inc., in each such
case in which Lessee shall from time to time acquire an interest
(the "Additional Collateral"), and any and all insurance and/or
other proceeds (but without power of sale) of the property in and
against which a security interest is granted hereunder. Lessee
shall not directly or indirectly create, incur, assume or suffer
to exist any lien on or with respect to the Additional Collateral
except Permitted Liens and a security interest in favor of Cirel,
Inc., which security interest shall be subject and subordinate to
the interest of Lessor in the Additional Collateral. Lessee shall
use, maintain and insure the Additional Collateral as provided
herein with respect to the Equipment. Not more than three (3)
times during the Term, Lessee shall initial and deliver to Lessor
an Exhibit No. 1 to be attached hereto describing the Additional
Collateral, together with such Uniform Commercial Code financing
statements or statements of amendment as reasonably may be
required by Lessor, to be filed at Lessee's expense.
(c) It is the intention of the parties hereto to comply with any
applicable usury laws to the extent that any Schedule is
determined to be subject to such laws; accordingly, it is agreed
that, notwithstanding any provision to the contrary in any
Schedule or the Lease, in no event shall any Schedule require the
payment or permit the collection of interest in excess of the
maximum amount permitted by applicable law. If any such excess
interest is contracted for, charged or received under any Schedule
or the Lease, or in the event that all of the principal balance
shall be prepaid, so that under any of such circumstances the
amount of interest contracted for, charged or received under any
Schedule or the Lease shall exceed the maximum amount of interest
permitted by applicable law, then in such event (1) the provisions
of this paragraph shall govern and control, (2) neither Lessee
nor any other person or entity now or hereafter liable for the
payment hereof shall be obligated to pay the amount of such
interest to the extent that it is in excess of the maximum amount
of interest permitted by applicable law, (3) any such excess which
may have been collected shall be either applied as a credit
against the then unpaid principal balance or refunded to Lessee,
at the option of Lessee, and (4) the effective rate of interest
shall be automatically reduced to the maximum lawful contract rate
allowed under applicable law as now or hereafter construed by the
courts having jurisdiction thereof. It is further agreed that
without limitation of the foregoing, all calculations of the rate
of interest contracted for, charged or received under any Schedule
or the Lease (the "Interest") which are made for the purpose of
determining whether such rate exceeds the maximum lawful contract
rate, shall be made, to the extent permitted by applicable law, by
amortizing, prorating, allocating and spreading the Interest in
equal parts during the period of the full Term. Notwithstanding
the foregoing, if any applicable state law is amended or the law
of the United States of America preempts any applicable state law,
so that it becomes lawful for Lessor to receive a greater interest
per annum rate than is presently allowed, Lessee agrees that, on
the effective date of such amendment or preemption, as the case
may be, the lawful maximum hereunder shall be increased to the
maximum interest per annum rate allowed by the amended state law
or the law of the United States of America (but not in excess of
the interest rate contemplated hereunder).
XXIV. EARLY TERMINATION:
On or after the First Termination Date (specified in the
applicable Schedule), Lessee may, so long as no Material Lease
Default then exists hereunder, from time to time (i) terminate
this Agreement as to any Item of the Equipment (provided, however,
that the aggregate original Capitalized Lessor's Cost of all Items
of the Equipment terminated pursuant to this clause (i) shall not
exceed twenty (20) percent of the aggregate original Capitalized
Lessor's Cost of all Equipment described on all Schedules executed
hereunder) which have not previously been terminated under this
clause (i), or (ii) terminate this Agreement as to all Items of
the Equipment then leased pursuant to an individual Schedule, as
of a Rent Payment Date (the date of termination of this Agreement
pursuant to this Section or otherwise being hereinafter referred
to as the "Termination Date") upon at least ninety (90) days'
prior written notice to Lessor. In such notice, Lessee shall
specify whether Lessee elects to purchase the Item of the
Equipment pursuant to Paragraph (b) hereof, or to cause the Item
of the Equipment to be sold to a third party pursuant to Paragraph
(a) hereof.
(a) If Lessee elects to cause the Item of the Equipment to be
sold to a third party, Lessee shall, and Lessor may, solicit cash
bids for the Item of the Equipment on an AS IS, WHERE IS BASIS,
without recourse or warranty, express or implied, of any kind
whatsoever ("AS IS BASIS"). On or prior to the Termination Date,
Lessee shall (i) certify to Lessor any bids received by Lessee and
the expiration date for such bids, (ii) pay to the Servicing Agent
an administrative fee of Three Thousand Dollars ($3,000.00) per
notice of termination, and (iii) pay to Lessor (A) the Termination
Value (calculated as of the Termination Date) for the Equipment,
and (B) all Rent and other sums due and unpaid as of the
Termination Date with respect to the applicable Item of the
Equipment. Provided that all amounts due hereunder with respect
to the applicable Item of the Equipment have been paid on the
Termination Date, Lessor and Lessee shall sell the applicable Item
of the Equipment on an AS IS BASIS for cash to the highest bidder
and (within fifteen (15) Business Days after receipt of good
collected funds) refund the proceeds of such sale (net of any
related out-of-pocket expenses) to Lessee. Upon satisfaction of
the conditions specified in this Paragraph (a), Lessor will
transfer, on an AS IS BASIS all of Lessor's interest in and to the
Equipment. Lessor shall not be required to make and may
specifically disclaim any representation or warranty as to the
condition of such Equipment and other matters (except that Lessor
shall warrant that it has conveyed whatever interest it received
in the applicable Item of the Equipment free and clear of any
liens or encumbrances created by, through or under Lessor).
Lessor shall execute and deliver to Lessee such Uniform Commercial
Code Statements of Termination as reasonably may be required in
order to terminate any interest of Lessor in and to the applicable
Item of the Equipment. If such sale is not consummated due to the
fault of the potential buyer, no termination shall occur and
Lessor shall refund the Termination Value (less any out-of-pocket
expenses incurred by the Servicing Agent) to Lessee within fifteen
(15) Business Days of the expiration date set forth in the
Lessee's certification of the bid related to such sale. Lessor
shall cause the Servicing Agent to conduct any such sale promptly
and with the same consideration that the Servicing Agent would
afford to the sale of its own assets. If any such sale is not
consummated due to the fault of Lessor or the Servicing Agent,
then (i) the termination shall be deemed to have occurred as of
the expiration date set forth in Lessee's certification of the bid
related to such sale, (ii) the Termination Value shall be repaid
by Lessor to Lessee, and (iii) title to the applicable Equipment
shall vest in Lessor.
(b) If Lessee elects to purchase the applicable Item of the
Equipment, on the Termination Date, Lessee shall pay to Lessor in
cash the purchase price for the applicable Item of the Equipment,
determined as hereinafter provided. The purchase price of the
applicable Item of the Equipment shall be an amount equal to the
Termination Value (calculated as of the Termination Date) for the
applicable Item of the Equipment, plus all sales taxes upon sale.
Lessee shall also pay to Lessor all Rent and other sums due and
unpaid as of the Termination Date applicable Item of the
Equipment. Upon satisfaction of the conditions specified in this
Paragraph (b), Lessor will transfer, on an AS IS BASIS all of
Lessor's interest in and to the with respect to the applicable
Item of the Equipment. Lessor shall not be required to make and
may specifically disclaim any representation or warranty as to the
condition of such Item of the Equipment and other matters (except
that Lessor shall warrant that it has conveyed whatever interest
it received in the applicable Item of the Equipment free and clear
of any lien or encumbrance created by, through or under Lessor).
Lessor shall execute and deliver to Lessee such Uniform Commercial
Code Statements of Termination as reasonably may be required in
order to terminate any interest of Lessor in and to the applicable
Item of the Equipment.
As used herein, "Termination Value" shall mean the sum of the
applicable Stipulated Loss Value plus the Make Whole Amount. For
purposes hereof, "Make Whole Amount" shall mean a premium equal to
the excess, if any, of (i) the aggregate present value as of the
Termination Date of the sum of (A) the remaining scheduled Rent
payments with respect to the applicable Item of the Equipment,
plus (B) the full amount of the applicable Fixed Purchase Price
with respect to the applicable Item of the Equipment that but for
termination of this Agreement would be payable on the last Rent
Payment Date during the then applicable Basic Term or Renewal
Term, discounted to the date of payment at the Reinvestment Rate,
over (ii) the aggregate present value as of the Termination Date
of the sum of (A) the remaining scheduled Rent payments with
respect to the applicable Item of the Equipment, plus (B) the full
amount of the applicable Fixed Purchase Price with respect to the
applicable Item of the Equipment that but for termination of this
Agreement would be payable on the last Rent Payment Date during
the then applicable Basic Term or Renewal Term, discounted to the
date of payment at the Assumed Interest Rate; provided, however,
that if the Reinvestment Rate is equal to or higher than the
Assumed Interest Rate, the Make Whole Amount shall be zero. For
purposes hereof, "Reinvestment Rate" shall mean the sum of (i) the
Applicable Treasury Yield plus (ii) fifty (50) basis points. The
term "Applicable Treasury Yield" at any time shall mean the yield
to maturity of United States Treasury Notes with a maturity equal
to the remaining average life of the Term of the Lease as
published in The Wall Street Journal two (2) Business Days prior
to the Termination Date. If no maturity exactly corresponds to
such remaining Term, the Applicable Treasury Yield shall be
interpolated on a straight-line basis, utilizing the yields for
the two maturities which most closely correspond to the requisite
maturity. For purposes hereof, "Assumed Interest Rate" shall mean
the sum of (i) the Base Index, plus (ii) one hundred twenty-five
(125) basis points. "Base Index" shall mean the five (5)-year
Treasury Constant Maturities rate as published in The Wall Street
Journal on the second Business Day immediately preceding the Lease
Commencement Date.
XXV. END OF BASIC TERM LEASE OPTIONS:
Provided that no Material Lease Default shall have occurred and
be continuing, Lessee shall have the option, upon the expiration
of the Basic Term of the applicable Schedule, to return, or to
purchase, or to renew the term of this Agreement with respect to,
all (but not less than all) of the Equipment leased under an
individual Schedule executed hereunder upon the following terms
and conditions.
(a) Renewal. So long as Lessee shall not have exercised its
option to return the Equipment pursuant to Paragraph (b) of this
Section, nor exercised its purchase option pursuant to Paragraph
(c) of this Section, Lessee shall have the option, upon the
expiration of the Basic Term of the applicable Schedule, to renew
the Agreement with respect to all, but not less than all, of the
Equipment leased under an individual Schedule for the renewal term
specified in Paragraph B of the applicable Schedule (the "Renewal
Term") at the Basic Term Lease Rate Factor.
(b) Return. So long as Lessee shall not have exercised its
option to renew this Agreement pursuant to Paragraph (a) of this
Section, nor exercised its purchase option pursuant to Paragraph
(c) of this Section, Lessee shall have the option, upon the
expiration of the Basic Term of an individual Schedule, to return
all (but not less than all) of the Equipment described on an
individual Schedule, to Lessor upon the following terms and
conditions: If Lessee desires to exercise this option, Lessee
shall (i) pay to Lessor on the last day of the term of this
Agreement with respect to the applicable individual Schedule, in
addition to the scheduled Rent then due on such date and all other
sums then due hereunder, a terminal rental adjustment amount equal
to the Basic Term Fixed Purchase Price of such Equipment, and (ii)
return the Equipment to Lessor in accordance with Section XVI
hereof. That portion of the terminal rental adjustment amount
paid by Lessee to Lessor as is equal to the Basic Term Residual
Risk Amount shall be held in escrow by Lessor and deposited in an
interest-bearing account, invested in Permitted Investments (as
such term is hereinafter defined). Thereafter, upon return of all
of the Equipment described on the applicable Schedule, Lessor
shall arrange for the commercially reasonable sale, scrap or other
disposition of such Item of the Equipment. Lessee fully shall
cooperate with Lessor in consummating such sale, scrap, or other
disposition of the Equipment. Such sale, scrap or disposition
shall occur promptly and Lessor shall conduct such sale, scrap or
disposition with the same consideration that the Servicing Agent
would afford to the sale, scrap or disposition of such Item of its
own assets. Upon satisfaction of the conditions specified in this
Paragraph (b), Lessor and Lessee will transfer to the
purchaser(s), on an AS IS BASIS all of their interest in and to
the applicable Equipment. Lessor shall not be required to make
and may specifically disclaim any representation or warranty as to
the condition of such Equipment and other matters (except that
Lessor shall warrant that it has conveyed whatever interest it
received in such Equipment free and clear of any liens or
encumbrances created by, through or under Lessor). Lessor shall
execute and deliver to Lessee such Uniform Commercial Code
Statements of Termination as reasonably may be required in order
to terminate any interest of Lessor in and to the applicable
Equipment. Promptly following the sale, scrap or other
disposition of an Item of the Equipment and receipt by Lessor in
good collected funds of the sales proceeds, if any, with respect
to such Item of the Equipment, (1) Lessor shall pay to Lessee from
the escrow account an amount equal to the Basic Term Residual Risk
Amount (as specified in the Schedule) of such Item of the
Equipment (less all reasonable actual out-of-pocket costs,
expenses and fees incurred by the Servicing Agent, including
storage, reasonable and necessary maintenance and other
remarketing fees incurred in connection with the sale, scrap, or
disposition of such Item of the Equipment); (2) Lessor shall pay
from the escrow account all reasonable actual out-of-pocket costs,
expenses and fees of the Servicing Agent, including storage,
reasonable and necessary maintenance and other re-marketing fees
incurred in connection with the sale, scrap, or disposition of
such Item of the Equipment; and (3) any excess sales proceeds then
remaining shall be held in escrow by Lessor and deposited in an
interest-bearing account, invested in Permitted Investments.
Promptly after the sale, scrap or other disposition of all of the
Equipment described on the applicable Schedule and receipt by
Lessor in good collected funds of the sales proceeds with respect
thereto, Lessor shall pay to Lessee an amount equal to all net
proceeds, if any, of such sale, scrap or other disposition in
excess of the Basic Term Residual Risk Amount of the Equipment
already paid to Lessee, and Lessor will also pay to Lessee all
interest earned on the amount held in escrow. As used herein,
"Permitted Investments" shall mean the following securities which
shall mature within thirty (30) days of the date of purchase:
(i) direct obligations of the United States of America; or
(ii) obligations fully guaranteed by the United States of
America; or
(iii) certificates of deposit issued by, or bankers'
acceptances of, or time deposits or a deposit account with, any
bank, trust company or national banking association incorporated
or doing business under the laws of the United States of America
or one of its States, having a combined capital and surplus not
less than $100,000,000 and having a rating of "B" or better from
the Keefe Bank Watch Service; or
(iv) commercial paper rated A-1/P-1 by Standard & Poor's
Corporation and Moody's Investors Service, Inc., respectively (or
if neither such organization shall rate such commercial paper at
any time, by any nationally recognized rating organization in the
United States of America) equal to the highest rating assigned by
such rating organization.
(c) Purchase. So long as Lessee shall not have exercised its
option to renew this Agreement pursuant to Paragraph (a) of this
Section, nor exercised its option to return the Equipment pursuant
to Paragraph (b) of this Section, Lessee shall have the option,
upon the expiration of the Basic Term of each individual Schedule,
to purchase all (but not less than all) of the Equipment described
on such Schedule upon the following terms and conditions: If
Lessee desires to exercise this option with respect to the
Equipment described on an individual Schedule, Lessee shall pay to
Lessor on the last day of the term of this Agreement with respect
to such individual Schedule, in addition to the scheduled Rent
then due on such date and all other sums then due hereunder with
respect to the Equipment described on the applicable Schedule, in
cash the purchase price for the Equipment so purchased, determined
as hereinafter provided. The purchase price of the Equipment
shall be an amount equal to the Basic Term Fixed Purchase Price of
such Equipment (as specified on such Schedule), plus all sales
taxes and all other reasonable and documented out-of-pocket
expenses incurred by Lessor in connection with such sale,
including, without limitation, any such expenses incurred based on
a notice from Lessee to Lessor that Lessee intended to return any
such Items of Equipment. Upon satisfaction of the conditions
specified in this Paragraph, Lessor will transfer, on an AS IS
BASIS, all of Lessor's interest in and to the applicable
Equipment. Lessor shall not be required to make and may
specifically disclaim any representation or warranty as to the
condition of such Equipment and other matters (except that Lessor
shall warrant that it has conveyed whatever interest it received
in the Equipment free and clear of any lien or encumbrance created
by, through or under Lessor). Lessor shall execute and deliver to
Lessee such Uniform Commercial Code Statements of Termination as
reasonably may be required in order to terminate any interest of
Lessor in and to the applicable Equipment.
(d) Notice of Election. Lessee shall give Lessor written notice
of its election of the options specified in this Section not less
than one hundred fifty (150) days nor more than three hundred
sixty-five (365) days before the expiration of the Basic Term of
an individual Schedule. Such election shall be effective with
respect to all Equipment described on the applicable Schedule. If
Lessee fails timely to provide such notice, without further action
Lessee automatically shall be deemed to have elected to renew the
term of this Agreement pursuant to Paragraph (a) of this Section
described on the applicable Schedule. XXVI. END OF RENEWAL TERM
LEASE OPTIONS.
Provided that no Material Lease Default shall have occurred and
be continuing, if Lessee exercised its option to renew this
Agreement pursuant to Section XXV, then Lessee shall have the
option, upon the expiration of the Renewal Term of each Schedule,
to return, or to purchase, or to extend the term of this Agreement
with respect to, all (but not less than all) of the Equipment
leased under an individual Schedule upon the following terms and
conditions.
(a) Extension. So long as Lessee shall not have exercised its
option to return the Equipment described on an individual Schedule
pursuant to Paragraph (b) of this Section, nor exercised its
purchase option pursuant to Paragraph (c) of this Section, Lessee
shall have the option, upon the expiration of the Renewal Term, to
extend the Agreement with respect to all, but not less than all,
of the Equipment described on an individual Schedule for an
additional term of twelve (12) months (the "Extension Term") at a
monthly rental to be paid in arrears on the same day of each month
on which the prior Renewal Term Rent installment was paid (except
that the last installment shall be paid on the last day of the
Extension Term), and calculated so as to amortize the Renewal Term
Fixed Purchase Price of such Equipment described on an individual
Schedule over the Extension Term, together with interest thereon
at a rate per annum equal to one hundred twenty-one (125) basis
points over the then current yield to maturity of U.S. Treasury
Notes having a one year maturity, in twelve (12) equal monthly
installments. At the end of the Extension Term, provided that
Lessee is not then in default under this Agreement or any other
agreement between Lessor and Lessee, Lessee shall purchase all,
and not less than all, of such Equipment described on an
individual Schedule for $1.00 cash, together with all rent and
other sums then due on such date, plus all sales taxes and all
other reasonable and documented out-of-pocket expenses incurred by
Lessor in connection with such transfer. Upon satisfaction of the
conditions specified in this Paragraph (a), Lessor will transfer,
on an AS IS BASIS, all of Lessor's interest in and to the
applicable Equipment. Lessor shall not be required to make and may
specifically disclaim any representation or warranty as to the
condition of the Equipment and any other matters (except that
Lessor shall warrant that it has conveyed whatever interest it
received in the Equipment free and clear of any lien or
encumbrance created by, through or under Lessor). Lessor shall
execute and deliver to Lessee such Uniform Commercial Code
Statements of Termination as reasonably may be required in order
to terminate any interest of Lessor in and to the applicable
Equipment.
(b) Return. So long as Lessee shall not have exercised its
extension option pursuant to Paragraph (a) of this Section, nor
exercised its purchase option pursuant to Paragraph (c) of this
Section, Lessee shall have the option, upon the expiration of the
Renewal Term of an individual Schedule, to return all (but not
less than all) of the Equipment described on an individual
Schedule, to Lessor upon the following terms and conditions: If
Lessee desires to exercise this option, Lessee shall (i) pay to
Lessor on the last day of the term of this Agreement with respect
to the applicable individual Schedule, in addition to the
scheduled Rent then due on such date and all other sums then due
hereunder, a terminal rental adjustment amount equal to the
Renewal Term Fixed Purchase Price of such Equipment, and (ii)
return the Equipment to Lessor in accordance with Section XVI
hereof. That portion of the terminal rental adjustment amount
paid by Lessee to Lessor as is equal to the Renewal Term Residual
Risk Amount shall be held in escrow by Lessor and deposited in an
interest-bearing account, invested in Permitted Investments.
Thereafter, upon return of all of the Equipment described on the
applicable Schedule, Lessor shall arrange for the commercially
reasonable sale, scrap or other disposition of such Equipment.
Lessee fully shall cooperate with Lessor in consummating such
sale, scrap, or other disposition of the Equipment. Such sale,
scrap or disposition shall occur promptly and Lessor shall conduct
such sale, scrap or disposition with the same consideration that
the Servicing Agent would afford to the sale, scrap or disposition
of its own assets. Upon satisfaction of the conditions specified
in this Paragraph (b), Lessor and Lessee will transfer to the
purchaser(s) on an AS IS BASIS all of Lessor's interest in and to
the applicable Equipment. Lessor shall not be required to make
and may specifically disclaim any representation or warranty as to
the condition of such Equipment and other matters (except that
Lessor shall warrant that it has conveyed whatever interest it
received in such Equipment free and clear of any liens or
encumbrances created by, through or under Lessor). Lessor shall
execute and deliver to Lessee such Uniform Commercial Code
Statements of Termination as reasonably may be required in order
to terminate any interest of Lessor in and to the applicable
Equipment. Promptly following the sale, scrap or other
disposition of an Item of the Equipment and receipt by Lessor in
good collected funds of the sales proceeds, if any, with respect
to such Item of the Equipment, Lessor shall pay to Lessee from the
escrow account an amount equal to the Renewal Term Residual Risk
Amount (as specified in the Schedule) of such Item of the
Equipment (less all reasonable actual out-of-pocket costs,
expenses and fees, including storage, reasonable and necessary
maintenance and other remarketing fees incurred in connection with
the sale, scrap, or disposition of such Item of the Equipment);
(2) Lessor shall pay from the escrow account all reasonable actual
out-of-pocket costs, expenses and fees of the Servicing Agent,
including storage, reasonable and necessary maintenance and other
re-marketing fees incurred in connection with the sale, scrap, or
disposition of such Item of the Equipment; and (3) any excess
sales proceeds then remaining shall be held in escrow by Lessor
and deposited in an interest-bearing account, invested in
Permitted Investments. Promptly after the sale, scrap or other
disposition of all of the Equipment described on the applicable
Schedule and receipt by Lessor in good collected funds of the
sales proceeds with respect thereto, Lessor shall pay to Lessee an
amount equal to all of that portion of the net proceeds, if any,
of such sale, scrap or other disposition in excess of the Renewal
Term Residual Risk Amount of the Equipment already paid to Lessee
up to the Renewal Term Fixed Purchase Price of the applicable
Equipment, plus fifty (50) percent of all net proceeds, if any, of
such sale, scrap or other disposition in excess of the Renewal
Term Fixed Purchase Price of all of the applicable Equipment, and
Lessor will also pay to Lessee interest earned on the amount held
in escrow attributable to that portion of the escrowed amount
distributed to Lessee.
(c) Purchase. So long as Lessee shall not have exercised its
extension option pursuant to Paragraph (a) of this Section, nor
exercised its option to return the Equipment pursuant to Paragraph
(b) of this Section, Lessee shall have the option, upon the
expiration of the Renewal Term of each individual Schedule, to
purchase all (but not less than all) of the Equipment described on
such Schedule upon the following terms and conditions: If Lessee
desires to exercise this option with respect to the Equipment
described on an individual Schedule, Lessee shall pay to Lessor on
the last day of the term of this Agreement with respect to such
individual Schedule, in addition to the scheduled Rent then due on
such date and all other sums then due hereunder with respect to
the Equipment described on the applicable Schedule, in cash the
purchase price for the Equipment so purchased, determined as
hereinafter provided. The purchase price of the Equipment shall
be an amount equal to the Renewal Term Fixed Purchase Price of
such Equipment (as specified on such Schedule), plus all sales
taxes and all other reasonable and documented expenses incurred by
Lessor in connection with such sale, including, without
limitation, any such expenses incurred based on a notice from
Lessee to Lessor that Lessee intended to return any such Items of
Equipment. Upon satisfaction of the conditions specified in this
Paragraph (c), Lessor will transfer, on an AS IS BASIS, all of
Lessor's interest in and to the applicable Equipment. Lessor shall
not be required to make and may specifically disclaim any
representation or warranty as to the condition of such Equipment
and other matters (except that Lessor shall warrant that it has
conveyed whatever interest it received in the Equipment free and
clear of any lien or encumbrance created by, through or under
Lessor). Lessor shall execute and deliver to Lessee such Uniform
Commercial Code Statements of Termination as reasonably may be
required in order to terminate any interest of Lessor in and to
the applicable Equipment.
(d) Notice of Election. Lessee shall give Lessor written notice
of its election of the options specified in this Section not less
than one hundred fifty (150) days nor more than three hundred
sixty-five (365) days before the expiration of the Renewal Term of
each individual Schedule. Such election shall be effective with
respect to all Equipment described on such Schedule. If Lessee
fails timely to provide such notice, without further action Lessee
automatically shall be deemed to have elected to purchase the
Equipment described on an individual Schedule pursuant to
Paragraph (c) of this Section.
XXVII. MISCELLANEOUS:
(a) LESSEE HEREBY UNCONDITIONALLY WAIVES ITS RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF, DIRECTLY OR INDIRECTLY, THIS LEASE, ANY OF THE RELATED
DOCUMENTS, ANY DEALINGS BETWEEN LESSEE AND LESSOR RELATING TO THE
SUBJECT MATTER OF THIS TRANSACTION OR ANY RELATED TRANSACTIONS,
AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED BETWEEN LESSEE
AND LESSOR. The scope of this waiver is intended to be all
encompassing of any and all disputes that may be filed in any
court (including, without limitation, contract claims, tort
claims, breach of duty claims, and all other common law and
statutory claims). THIS WAIVER IS IRREVOCABLE MEANING THAT IT MAY
NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS LEASE, ANY RELATED DOCUMENTS, OR TO ANY
OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS TRANSACTION OR ANY
RELATED TRANSACTION. In the event of litigation, this Agreement
may be filed as a written consent to a trial by the court.
(b) Any cancellation or termination by Lessor, pursuant to the
provision of this Agreement, any Schedule, supplement or amendment
hereto, or the lease of any Equipment hereunder, shall not release
Lessee from any other then outstanding obligations to Lessor
hereunder.
(c) All Equipment shall at all times remain personal property
regardless of the degree of its annexation to any real property
and shall not by reason of any installation in, or affixation to,
real or personal property become a part thereof.
(d) Time is of the essence of this Agreement. Lessor's failure
at any time to require strict performance by Lessee of any of the
provisions hereof shall not waive or diminish Lessor's right
thereafter to demand strict compliance therewith.
(e) Each of the parties agrees, upon request of the other party,
to execute any instrument reasonably necessary or expedient for
filing, recording or perfecting the interest of the parties
hereunder.
(f) All notices required to be given hereunder shall be in
writing, personally delivered, delivered by overnight courier
service, sent by facsimile transmission (with confirmation of
receipt), or sent by certified mail, return receipt requested,
addressed to the other party at its respective address stated
above or at such other address as such party shall from time to
time designate in writing to the other party; and shall be
effective from the date of receipt.
(g) This Agreement and any Schedule and Annexes thereto, and
that certain commitment letter dated February 7, 1995, by General
Electric Capital Corporation to Guarantor, constitute the entire
agreement of the parties with respect to the subject matter
hereof. NO VARIATION OR MODIFICATION OF THIS AGREEMENT OR ANY
WAIVER OF ANY OF ITS PROVISIONS OR CONDITIONS, SHALL BE VALID
UNLESS IN WRITING AND SIGNED BY AN AUTHORIZED REPRESENTATIVE OF
THE PARTIES HERETO. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
(h) The representations, warranties and covenants of Lessee
herein shall be deemed to survive the closing hereunder. Lessor's
obligations to acquire and lease specific Items of Equipment shall
be conditioned upon Lessee providing to Lessor such information
with respect to Lessee's financial condition as Lessor may
require, and Lessor being satisfied that there shall have been no
material adverse change in the business or financial condition of
Lessee from the date of execution hereof. The obligations of
Lessee under Sections III, XVI and XX which accrue during the term
of this Agreement and obligations which by their express terms
survive the termination of this Agreement, shall survive the
termination of this Agreement.
(i) In case of a failure of Lessee to comply with any provision
of this Agreement, Lessor shall have the right, but shall not be
obligated to, effect such compliance, in whole or in part; and all
moneys spent and expenses and obligations incurred or assumed by
Lessor in effecting such compliance shall constitute additional
rent due to Lessor within five (5) days after the date Lessor
sends notice to Lessee requesting payment and providing reasonable
details. Lessor's effecting such compliance shall not be a waiver
of Lessee's default.
(j) Any Rent not paid when due hereunder and which remains
unpaid for more than ten (10) days, or any other amount not paid
to Lessor when due hereunder, shall bear interest, both before and
after any judgment or termination hereof, at the lesser of twelve
percent (12%) per annum or the maximum rate allowed by law (the
"Late Charge Rate").
(k) Any provisions in this Agreement and any Schedule which are
in conflict with any statute, law or applicable rule shall be
deemed omitted, modified or altered to conform thereto.
(l) Lessor represents and covenants to Lessee that Lessor has
full authority to enter into this Agreement and that, conditioned
upon Lessee performing all of the covenants and conditions hereof,
as to claims of Lessor or persons claiming under Lessor, Lessee
shall peaceably and quietly hold, possess and use the Equipment
during the term of this Agreement, subject to the terms and
provisions hereof.
(m) The Operative Documents are confidential documents among the
parties thereto and, for a period of seven (7) years from the date
hereof, each party (the "Relevant Party") agrees to use its best
efforts (i.e., in accordance with procedures adopted by such
Relevant Party in good faith to protect confidential information
of third parties delivered to such Relevant Party) to keep the
same confidential and not disclose the Operative Documents to any
third party without the prior written consent of Lessor, IBM and
Guarantor; provided that nothing herein shall be deemed to prevent
any such disclosure by the Relevant Party:
(i) to its auditors or attorneys;
(ii) to any other persons requiring access to such
information in connection with the normal business operations of
such Relevant Party (including portfolio review and analysis), and
such Relevant Party shall be responsible for such person acting in
compliance herewith;
(iii) to (or as required by) any regulatory authorities;
(iv) in connection with the enforcement or attempted
enforcement of any of the Operative Documents;
(v) to any person expressing an interest in acquiring,
directly or indirectly, the Relevant Party's interest in the
Operative Documents (and who agrees to be bound by the provisions
of this Paragraph (m)); or
(vi) as required by any subpoena or civil investigative
demand or any applicable law or governmental authority.
XXVIII. CHOICE OF LAW; JURISDICTION:
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK
(WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES OF SUCH STATE),
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE,
REGARDLESS OF THE LOCATION OF THE EQUIPMENT. The parties agree
that any action or proceeding arising out of or relating to this
Agreement may be commenced in the United States District Court for
the Southern District of New York.
XXIX. CHATTEL PAPER:
To the extent that any Schedule would constitute chattel paper,
as such term is defined in the Uniform Commercial Code as in
effect in any applicable jurisdiction, no security interest
therein may be created through the transfer or possession of this
Lease in and of itself without the transfer or possession of the
original of a Schedule executed pursuant to this Lease and
incorporating this Agreement by reference; and no security
interest in this Agreement and a Schedule may be created by the
transfer or possession of any counterpart of the Equipment
Schedule other than the original thereof, which shall be
identified as the document marked "Original" and all other
counterparts shall be marked "Duplicate".
XXX. SCOPE OF LIABILITY: Notwithstanding any other provision of
this Agreement or any other Operative Documents executed in
connection herewith (expressly excepting the Guaranty and the
Letter of Credit Agreement), there shall be no recourse against
Lessee or any of its partners, officers or employees, for any
liability to Lessor or any Participant arising in connection with
any breach or default under this Agreement, except to the extent
the same is enforced against the Equipment and the Additional
Collateral and any proceeds thereof (including, without
limitation, insurance proceeds thereof); and Lessor and the
Participants shall look solely to the Equipment and the Additional
Collateral and any proceeds thereof (including, without
limitation, insurance proceeds thereof) in enforcing rights and
obligations under and in connection with this Agreement and the
other Operative Documents (expressly excepting the Guaranty and
the Letter of Credit Agreement); provided that the foregoing
provisions of this Section XXX shall not (i) constitute a waiver,
release or discharge of any of Lessee's obligations hereunder, or
of any of the terms, covenants, conditions or provisions of this
Agreement or the other Operative Documents, or (ii) limit or
restrict the right of Lessor to name Lessee as a defendant in any
action or suit for a judicial foreclosure or for the exercise of
any other remedy under or with respect to this Agreement, so long
as no judgment in the nature of a deficiency judgment shall be
enforced against Lessee or any of its partners, officers or
employees out of any property, assets or funds other than the
Equipment or the Additional Collateral and any proceeds thereof
(including, without limitation, insurance proceeds thereof).
XXXI. LIMITATION OF LIABILITY: It is expressly understood and
agreed by the parties hereto that (a) this Agreement is executed
and delivered by Wilmington Trust Company, not individually or
personally but solely as trustee of MiCrus Equipment Trust 1995-1
under the Trust Agreement (the "Trust"), in the exercise of the
powers and authority conferred and vested in it, (b) each of the
representations, undertakings and agreements herein made on the
part of the Trust is made and intended not as personal
representations, undertakings and agreements by Wilmington Trust
Company but is made and intended for the purpose of binding only
the Trust, (c) nothing herein contained shall be construed as
creating any liability on Wilmington Trust Company, individually
or personally, to perform any covenant either expressed or implied
contained herein, all such liability, if any, being expressly
waived by MiCrus by any Person claiming by, through or under
MiCrus, and (d) under no circumstances shall Wilmington Trust
Company be personally liable for the payment of any indebtedness
or expenses of the Trust or be liable for the breach or failure of
any obligation, representation, warranty or covenant made or
undertaken by the Trust under this Agreement or the other
Operative Documents.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, Lessee and Lessor have caused this Agreement
to be executed by their duly authorized representatives as of the
date first above written.
LESSOR: LESSEE:
WILMINGTON TRUST COMPANY, MICRUS, a New York general partnership
NOT INDIVIDUALLY BUT
SOLELY AS TRUSTEE By: CIREL INC.,
General Partner
By:/s/ Donald G. MacKelcan By:/s/ Sam S. Srinivasan
Name: Donald G. MacKelcan Name: Sam S. Srinivasan
Title: Senior Financial Title:
Services Officer
By: MICRUS HOLDINGS, INC.,
General Partner
By:/s/ Eric G. Johnson
Name: Eric G. Johnson
CORPORATE GUARANTY
Date: June 19, 1995
Wilmington Trust Company,
not individually but solely as Trustee
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
To induce you to enter into that certain Master Lease
Agreement dated as of the date hereof, as now or hereafter amended
(the "Agreement"), and/or any Schedules or other documents or
instruments evidencing or relating to, any lease, loan, extension
of credit or other financial accommodation made pursuant to the
Agreement (collectively "Account Documents" and each an "Account
Document") to MICRUS, a general partnership organized and existing
under the laws of the State of New York ("Customer"), but without
in any way binding you to do so, the undersigned, for Ygood and
valuable consideration, the receipt and sufficiency of which is
hereby acknowledged ("Guarantor"), does hereby:
(a) agree to pay to you, for the period from and including
each applicable Lease Commencement Date to each applicable Basic
Term Commencement Date (the "Interim Period"), interim rent for
each Item of the Equipment, calculated as the product of the
Interest Rate times the Funding Amount with respect to such Item
(as specified on the Equipment Schedule) divided by three hundred
sixty (360), multiplied by the number of days in the Interim
Period. As used herein, "Interest Rate" shall mean that
percentage per annum calculated as the sum of one hundred (100)
basis points plus the LIBOR Rate redetermined monthly. As used
herein, "LIBOR Rate" shall mean, with respect to the Interim
Period, an interest rate per annum (rounded upward to the next
higher whole multiple of 1/16th percent if such rate is not such a
multiple), equal at all times during the Interim Period to the
quotient of (1) the rate per annum (rounded upward to the next
higher whole multiple of 1/16th percent if such rate is not such a
multiple) as determined on the basis of the average of the rates
offered by a majority of the banks in the London interbank market
for deposits in U.S. Dollars for thirty (30) days, to the extent
the rates offered by these banks appear in The Wall Street Journal
on the third Business Day next preceding the Lease Commencement
Date, redetermined monthly on the last Business Day of each
calendar month), divided by (2) a number equal to 1.00 minus the
aggregate (without duplication) of the rates (expressed as a
decimal fraction) of the LIBOR Reserve Requirements current on the
Business Day next preceding the Lease Commencement Date. As used
herein, "LIBOR Reserve Requirements" means, for the Interim
Period, the maximum reserves (whether basic, supplemental,
marginal, emergency or otherwise) prescribed by the Board of
Governors of the Federal Reserve System (or any successor) with
respect to liabilities or assets consisting of or including
"Eurocurrency liabilities" (as defined in Regulation D of the
Board of Governors of the Federal Reserve System) having a term
equal to the Interim Period. Interim rent shall be paid to you by
wire transfer of immediately available funds to your Servicing
Agent, General Electric Capital Corporation, at: Bankers Trust
New York, New York, New York 10006, Account No. 50-202-962, ABA
No. 021-001-033, or to such other account as you may direct in
writing; and shall be effective upon receipt. Such interim rent
shall be due on the earlier of: (x) the applicable Basic Term
Commencement Date, or (y) December 29, 1995; provided, however,
that if such date is not a Business Day, the interim rent
otherwise due on such date shall be payable on the immediately
preceding Business Day. Notwithstanding the foregoing, if Lessee
does not execute and deliver to you a Certificate of Acceptance
with respect to all of the Items of the Equipment listed on a
Schedule within sixty (60) days after the applicable Lease
Commencement Date (the "Expiration Date"), then the Interim Period
shall expire on the Expiration Date and Guarantor shall pay to you
on the Expiration Date the interim rent then due plus the
Capitalized Lessor's Cost then having been paid by you with
respect to all of the Items of the Equipment listed on the
Schedule. Upon receipt of such payment, so long as no Lease
Default shall then have occurred and be continuing, you will
transfer to Guarantor, on an AS IS BASIS, all your interest in and
to the applicable Items of the Equipment. You shall not be
required to make and may specifically disclaim any representation
or warranty as to the condition of the Items of the Equipment and
any other matters (except that you shall warrant that you have
conveyed whatever interest you received in the Items of the
Equipment free and clear of any lien or encumbrance created by,
through or under you). You shall execute and deliver to Guarantor
such Uniform Commercial Code Statements of Termination as
reasonably may be required in order to terminate your interest in
and to the applicable Items of the Equipment. Capitalized terms
used herein without definition shall have the meaning given them
in the Account Documents; and
(b) guarantee to you, your successors and assigns, the due
regular and punctual payment of any sum or sums of money which the
Customer may owe to you now or at any time hereafter pursuant to
or evidenced by an Account Document, and whether it represents
principal, interest, rent, late charges, indemnities, an original
balance, an accelerated balance, liquidated damages, a balance
reduced by partial payment, a deficiency after sale or other
disposition of any leased equipment, collateral or security, or
any other type of sum of any kind whatsoever that the Customer may
owe to you now or at any time hereafter pursuant to or evidenced
by an Account Document, and does hereby further guarantee to you,
your successors and assigns, the due, regular and punctual
performance of any other duty or obligation of any kind or
character whatsoever that the Customer may owe to you now or at
any time hereafter in connection with or pursuant to the Account
Documents (all such payment and performance obligations being
collectively referred to as "Obligations"). Undersigned does
hereby further guarantee to pay upon demand all losses, costs,
attorneys' fees and expenses which may be suffered by you by
reason of Customer's default or default of the undersigned.
1. This Guaranty is a guaranty of prompt payment and
performance (and not merely a guaranty of collection). Nothing
herein shall require you to first seek or exhaust any remedy
against the Customer, its successors and assigns, or any other
person obligated with respect to the Obligations, or to first
foreclose, exhaust or otherwise proceed against any leased
equipment, collateral or security which may be given in connection
with the Obligations. It is agreed that you may, upon any breach
or default of the Customer, or at any time thereafter, make demand
upon the undersigned and receive payment and performance of the
Obligations, with or without notice or demand for payment or
performance by the Customer, its successors or assigns, or any
other person. Suit may be brought and maintained against the
undersigned at your election, without joinder of the Customer or
any other person as parties thereto. The obligations of each
signatory to this Guaranty shall be joint and several.
2. The undersigned agrees that its obligations under this
Guaranty shall be primary, absolute, continuing and unconditional,
irrespective of and unaffected by any of the following actions or
circumstances (regardless of any notice to or consent of the
undersigned): (a) the genuineness, validity, regularity and
enforceability of the Account Documents or any other document; (b)
any extension, renewal, amendment, change, waiver or other
modification of the Account Documents or any other document; (c)
the absence of, or delay in, any action to enforce the Account
Documents, this Guaranty or any other documents; (d) your failure
or delay in obtaining any other guaranty of the Obligations
(including without limitation, your failure to obtain the
signature of any other guarantor hereunder); (e) the release of,
extension of time for payment or performance by or any other
indulgence granted to the Customer or any other person with
respect to the Obligations by operation of law or otherwise; (f)
the existence, value, condition, loss, subordination or release
(with or without substitution) of or failure to have title to or
perfect and maintain a security interest in, or the time, place
and manner of any sale or other disposition of any leased
equipment, collateral or security given in connection with the
Obligations, or any other impairment (whether intentional or
negligent, by operation of law or otherwise) of the rights of the
undersigned; (g) the Customer's voluntary or involuntary
bankruptcy, assignment for the benefit of creditors,
reorganization, or similar proceedings affecting the Customer or
any of its assets; or (h) any other action or circumstances which
might otherwise constitute a legal or equitable discharge or
defense of a surety or guarantor.
3. This Guaranty may be terminated upon delivery to you (at
your address shown above) of a written termination notice from the
undersigned. However, as to all Obligations (whether matured,
unmatured, absolute, contingent or otherwise) incurred by the
Customer prior to your receipt of such written termination notice
(and regardless of any subsequent amendment, extension or other
modification which may be made with respect to such Obligations),
this Guaranty shall nevertheless continue and remain undischarged
until all such Obligations are indefeasibly paid and performed in
full.
4. The undersigned agrees that this Guaranty shall remain
in full force and effect or be reinstated (as the case may be) if
at any time payment or performance of any of the Obligations (or
any part thereof) is rescinded, reduced or must otherwise be
restored or returned by you, all as though such payment or
performance had not been made. If, by reason of any bankruptcy,
insolvency or similar laws affecting the rights of creditors, you
shall be prohibited from exercising any of your rights or remedies
against the Customer or any other person or against any property,
then, as between you and the undersigned, such prohibition shall
be of no force and effect, and you shall have the right to make
demand upon, and receive payment from, the undersigned of all
amounts and other sums that would be due to you upon a default
with respect to the Obligations.
5. The undersigned covenants and agrees that: (a) it will
provide to Lessor: (1) within ninety (90) days after the end of
each of its fiscal years, its balance sheet and related statement
of income and statement of cash flows of Guarantor, prepared in
accordance with generally accepted accounting principles
consistently applied ("GAAP"), all in reasonable detail and
certified by independent certified public accountants of
recognized standing selected by the undersigned; (2) within sixty
(60) days after the end of each quarter of its fiscal year, its
balance sheet and related statement of income and statement of
cash flows for such quarter, internally prepared in accordance
with GAAP and certified by its chief financial officer; and (3)
within thirty (30) days after the date on which they are filed,
all regular periodic reports, forms and other filings required to
be made by the undersigned to the Securities and Exchange
Commission, including (without limitation) Forms 8K, 10K and 10Q;
(b) it will promptly execute and deliver to you such further
documents, instruments and assurances and take such further action
as you from time to time reasonably may request in order to carry
out the intent and purpose of this Guaranty and to establish and
protect the rights and remedies created or intended to be created
in your favor hereunder; and (c) upon the expiration or earlier
termination of the Term under the Agreement with respect to any
Item, Guarantor will cause the obligations secured by the New York
State Lien to be prepaid in whole or in part, as and to the extent
necessary to cause the New York State Lien to be released with
respect to such Item.
6. The undersigned shall be deemed to be in default
hereunder ("Default") if: (a) it shall fail to perform or observe
any covenant, condition or agreement to be performed or observed
by it hereunder and such failure shall continue unremedied for a
period of thirty (30) days after the earlier of the actual
knowledge of Guarantor or written notice thereof to the
undersigned by you; or (b) it shall (1) be generally not paying
its debts as they become due, (2) take action for the purpose of
invoking the protection of any bankruptcy or insolvency law, or
any such law is invoked against or with respect to it or its
property, and such petition filed against it is not dismissed
within sixty (60) days; or (c) there is an anticipatory
repudiation of its obligations pursuant to this Guaranty; or (d)
any certificate, statement, representation, warranty or audit
contained herein or heretofore or hereafter furnished with respect
to this Guaranty by or on behalf of the undersigned proving to
have been false in any material respect at the time as of which
the facts therein set forth were stated or certified, or having
omitted any substantial contingent or unliquidated liability or
claim against it; or (e) it shall be in default under any
obligation for an amount in excess of $1,000,000.00 for borrowed
money, for the deferred purchase price of property or any lease
agreement, and the creditor thereunder shall have declared such
obligation to be accelerated; or (f) the corporate existence of
the undersigned is terminated and its obligations in connection
with this Guaranty are not assumed by a successor in interest
reasonably satisfactory to you; or (g) as a result of or in
connection with a material change in the ownership of the capital
stock of the undersigned and the debt to worth ratio of the
undersigned equals or exceeds twice its debt to worth ratio as of
the date of this Guaranty, without your prior written consent. As
used herein, "debt to worth ratio" shall mean the ratio of (1)
total liabilities which, in accordance with GAAP, would be
included in the liability side of a balance sheet, to (2) tangible
net worth including the sum of the par or stated value of all
outstanding capital stock, surplus and undivided profits, less any
amounts attributable to good will, patents, copyrights, mailing
lists, catalogs, trademarks, bond discount and underwriting
expenses, organization expenses and other intangibles, all as
determined in accordance with GAAP. Notwithstanding the
foregoing, the events specified in sub-parts (c), (f) and (g) of
this Section 6 shall not constitute a Default hereunder if, prior
to the occurrence of the events specified in any of such
sub-parts, Guarantor delivers or causes to be delivered to you an
irrevocable stand-by letter of credit ("Letter of Credit") which
shall be (w) in an amount equal to the then Stipulated Loss Value
of the Equipment, (x) issued by a bank which is acceptable to you
in your sole discretion, (y) substantially in the form of Exhibit
A attached to the Letter of Credit Agreement (or in such other
form as may be acceptable to you in your sole discretion), and (z)
for an initial term of one (1) year with automatic annual renewals
thereafter (without amendment except for extension of the
then-current expiration date by an additional year). You shall
have the right, with or without notice to or demand upon
Guarantor, to draw upon the Letter of Credit by presenting to the
issuer one or more sight drafts and any other necessary documents,
and to receive (in a lump sum or in several sums from time to time
at your sole discretion) and retain an amount not to exceed, in
the aggregate, that available under the Letter of Credit, as and
to the extent you otherwise would have been able to demand payment
or performance by the undersigned pursuant to this Guaranty. Once
all obligations of Customer pursuant to the Account Documents have
been indefeasibly paid and performed in full, you shall release
the Letter of Credit and provide Guarantor with written notice to
that effect or, if you have then drawn under the Letter of Credit,
any remaining excess proceeds from the drawing under the Letter of
Credit shall be remitted by you to Guarantor. In any event, the
undersigned shall remain liable under this Guaranty for any
deficiency. If Guarantor is required to provide the Letter of
Credit hereunder and fails to do so, then upon your demand,
Guarantor shall pay to you the then Stipulated Loss Value of the
Equipment.
7. Upon a Default hereunder, you may, at your option,
declare this Guaranty to be in default by written notice to the
undersigned (without election of remedies), and at any time
thereafter, may do any one or more of the following, all of which
are hereby authorized by the undersigned:
A. sue for and recover all damages then or thereafter
incurred by you as a result of such Default; and/or
B. seek specific performance of the obligations of the
undersigned hereunder.
In addition, the undersigned shall be liable for all
reasonable attorneys' fees and other costs and expenses incurred
by reason of any Default or the exercise of your remedies
hereunder and/or under the Account Document. No right or remedy
referred to herein is intended to be exclusive, but each shall be
cumulative, and shall be in addition to any other remedy referred
to above or otherwise available at law or in equity, and may be
exercised concurrently or separately from time to time.
8. Notice of acceptance of this Guaranty and of any default
by the Customer or any other person is hereby waived.
Presentment, protest, demand, and notice of protest, demand and
dishonor of any of the Obligations, and the exercise of
possessory, collection or other remedies for the Obligations, are
hereby waived. The undersigned warrants that it has adequate
means to obtain from the Customer on a continuing basis financial
data and other information regarding the Customer and is not
relying upon you to provide any such data or other information.
Without limiting the foregoing, notice of adverse change in the
Customer's financial condition or of any other fact which might
materially increase the risk of the undersigned is also waived.
All settlements, compromises, accounts stated and agreed balances
made in good faith between the Customer, its successors or
assigns, and you shall be binding upon and shall not affect the
liability of the undersigned.
9. Payment of all amounts now or hereafter owed to the
undersigned by the Customer or any other obligor for any of the
Obligations is hereby subordinated in right of payment to the
indefeasible payment in full to you of all Obligations and is
hereby assigned to you as security therefor. The undersigned
hereby irrevocably and unconditionally waives and relinquishes all
statutory, contractual, common law, equitable and all other claims
against the Customer and any other obligor for any of the
Obligations, any collateral therefor, or any other assets of the
Customer or any such other obligor, for subrogation,
reimbursement, exoneration, contribution, indemnification, setoff
or other recourse in respect of sums paid of payable to you by the
undersigned hereunder, and the undersigned hereby further
irrevocably and unconditionally waives and relinquishes any and
all other benefits which it might otherwise directly or indirectly
receive or be entitled to receive by reason of any amounts paid
by, or collected or due from, it, the Customer or any other
obligor for any of the Obligations, or realized from any of their
respective assets.
10. (a) THE UNDERSIGNED HEREBY UNCONDITIONALLY WAIVES ITS
RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON
OR ARISING OUT OF, DIRECTLY OR INDIRECTLY, THIS GUARANTY, THE
OBLIGATIONS GUARANTEED HEREBY, ANY OF THE RELATED DOCUMENTS, ANY
DEALINGS BETWEEN US RELATING TO THE SUBJECT MATTER HEREOF OR
THEREOF, AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED BETWEEN
US. The scope of this waiver is intended to be all encompassing
of any and all disputes that may be filed in any court (including,
without limitation, contract claims, tort claims, breach of duty
claims, and all other common law and statutory claims). THIS
WAIVER IS IRREVOCABLE MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
GUARANTY, THE OBLIGATIONS GUARANTEED HEREBY, OR ANY RELATED
DOCUMENTS. In the event of litigation this Guaranty may be filed
as a written consent to a trial by the court.
(b) As used in this Guaranty, the word "person" shall
include any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated
organization, or any government or any political subdivision
thereof.
(c) This Guaranty is intended by the parties as a final
expression of the guaranty of the undersigned and is also intended
as a complete and exclusive statement of the terms thereof. No
course of dealing, course of performance or trade usage, nor any
paid evidence of any kind, shall be used to supplement or modify
any of the terms hereof. There are no conditions to the full
effectiveness of this Guaranty. This Guaranty and each of its
provisions may only be waived, modified, varied, released,
terminated or surrendered, in whole or in part, by a duly
authorized written instrument signed by you. No failure by you to
exercise your rights hereunder shall give rise to any estoppel
against you, or excuse the undersigned from performing hereunder.
Your waiver of any right to demand performance hereunder shall
not be a waiver of any subsequent or other right to demand
performance hereunder.
(d) This Guaranty shall bind the undersigned's successors
and assigns and the benefits thereof shall extend to and include
your successors and assigns. In the event of default hereunder,
you may at any time inspect undersigned's records, or at your
option, undersigned shall furnish you with a current independent
audit report.
(e) THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
NEW YORK (WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES OF
SUCH STATE), INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE. The parties agree that any action or proceeding
arising out of or relating to this Agreement may be commenced in
the United States District Court for the Southern District of New
York. If any provisions of this Guaranty are in conflict with any
applicable statute, rule or law, then such provisions shall be
deemed null and void to the extent that they may conflict
therewith, but without invalidating any other provisions hereof.
(f) All notices required to be given hereunder shall be
deemed adequately given if sent by certified mail to the addressee
at its address stated herein, or at such other place as such
addressee may have designated in writing.
(g) Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
(h) Each signatory on behalf of a corporate guarantor
warrants that he had authority to sign on behalf of such
corporation and by so signing, to bind said guarantor corporation
hereunder.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, this Guaranty is executed the day and year
above written.
ATTEST: CIRRUS LOGIC, INC.
/s/ Sam S. Srinivasan By: /s/ Michael L. Hackworth
Secretary/Assistant Secretary Name: Michael L. Hackworth
Title: President
3100 West Warren Avenue
Fremont, California 94538
EXHIBIT 99.2
MASTER LEASE AGREEMENT
dated as of June 24, 1996,
by and between
GENERAL ELECTRIC CAPITAL CORPORATION,
FOR ITSELF AND AS AGENT FOR CERTAIN PARTICIPANTS,
as Lessor
and
MICRUS,
as Lessee
MASTER LEASE AGREEMENT
TABLE OF CONTENTS
Page
I. LEASING . . . . . . . . . . . . . . . . . . . . . . . . 1
II. TERM, RENT AND PAYMENT. . . . . . . . . . . . . . . . . 2
III. TAXES . . . . . . . . . . . . . . . . . . . . . . . . . 2
IV. LIENS . . . . . . . . . . . . . . . . . . . . . . . . . 3
V. QUIET ENJOYMENT . . . . . . . . . . . . . . . . . . . . 3
VI. PERSONAL PROPERTY . . . . . . . . . . . . . . . . . . . 3
VII. DELIVERY, OPERATION, MAINTENANCE AND REPORTING. . . . 3
VIII. RELOCATION. . . . . . . . . . . . . . . . . . . . . . . 4
IX. MODIFICATIONS . . . . . . . . . . . . . . . . . . . . . 4
X. SUBSTITUTION OF ITEMS . . . . . . . . . . . . . . . . . 6
XI. LESSEE ASSIGNMENT AND SUBLEASE. . . . . . . . . . . . . 6
XII. INSPECTION AND MARKING. . . . . . . . . . . . . . . . . 8
XIII. STIPULATED LOSS VALUE . . . . . . . . . . . . . . . . . 8
XIV. LOSS OR DAMAGE. . . . . . . . . . . . . . . . . . . . . 8
XV. INSURANCE . . . . . . . . . . . . . . . . . . . . . . . 9
XVI. RETURN OF EQUIPMENT . . . . . . . . . . . . . . . . . . 9
XVII. LEASE DEFAULT . . . . . . . . . . . . . . . . . . . . . 9
XVIII. LESSOR ASSIGNMENT . . . . . . . . . . . . . . . . . . . 11
XIX. NET LEASE; NO SET-OFF, ETC. . . . . . . . . . . . . . . 12
XX. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . 12
XXI. DISCLAIMER. . . . . . . . . . . . . . . . . . . . . . . 13
XXII. REPRESENTATIONS AND WARRANTIES OF LESSEE. . . . . . . . 13
XXIII. OWNERSHIP FOR TAX PURPOSES; GRANT OF SECURITY
INTEREST; USURY SAVINGS . . . . . . . . . . . . . . . . . . . 14
XXIV. EARLY TERMINATION . . . . . . . . . . . . . . . . . . . 14
XXV. END OF BASIC TERM LEASE OPTIONS . . . . . . . . . . . . 16
(a) Renewal. . . . . . . . . . . . . . . . . . . . . . 16
(b) Return . . . . . . . . . . . . . . . . . . . . . . 16
(c) Purchase . . . . . . . . . . . . . . . . . . . . . 17
(d) Notice of Election . . . . . . . . . . . . . . . . 18
XXVI. END OF RENEWAL TERM LEASE OPTIONS . . . . . . . . . . . 18
(a) Extension. . . . . . . . . . . . . . . . . . . . . 18
(b(b) Return. . . . . . . . . . . . . . . . . . . . 19
(c) Purchase . . . . . . . . . . . . . . . . . . . . . 19
(d) Notice of Election . . . . . . . . . . . . . . . . 20
XXVII. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . 20
XXVIII. CHOICE OF LAW; JURISDICTION. . . . . . . . . . . . 22
XXIX. CHATTEL PAPER . . . . . . . . . . . . . . . . . . . . . 22
XXX. SCOPE OF LIABILITY. . . . . . . . . . . . . . . . . . . 23
EXHIBITS
No. 1 - [Intentionally Omitted]
No. 2 - Purchase Order and Consent
No. 3 - [Intentionally Omitted]
No. 4 - Corporate Guaranty
No. 5 - IBM Guaranty
No. 6 - Real Property Waiver
No. 7 - Bill of SaleMASTER LEASE AGREEMENT
THIS MASTER LEASE AGREEMENT, dated as of the 24th day of
June, 1996 ("Agreement"), between GENERAL ELECTRIC CAPITAL
CORPORATION, FOR ITSELF AND AS AGENT FOR CERTAIN
PARTICIPANTS, with an office at 303 International Circle, Suite 300,
Hunt Valley, Maryland 21031 (or its successors and assigns with respec
a Schedule (as such term is hereinafter defined), if any, being hereina
called a "Lessor" and, collectively with respect to all Schedules, the
"Lessors"), and MICRUS, a New York general partnership with its mailing
address and chief place of business at 1580 Route 52, P. O. Box 1279,
Hopewell Junction, East Fishkill, New York 12533 (hereinafter called
"Lessee").
WITNESSETH:
I. LEASING:
(a) Subject to the terms and conditions set forth below, Lessor a
lease to Lessee, and Lessee agrees to lease from Lessor, the equipment
("Equipment") described in Annex A to any schedule hereto ("Schedule").
Terms defined in a Schedule and not otherwise defined herein shall have
the meanings ascribed to them in such Schedule.
(b) The obligation of Lessor to purchase Equipment from the
manufacturer or supplier thereof ("Supplier") and to lease the same to
Lessee under any Schedule shall be subject to receipt by Lessor, prior
Lease Commencement Date (with respect to such Equipment), of each of
the following documents in form and substance satisfactory to Lessor:
Schedule relating to the Equipment then to be leased hereunder, (ii) a
Purchase Order Assignment and Consent in substantially the form attache
hereto as Exhibit No. 2, unless the item of the Equipment (an "Item") s
have been delivered, in which case Lessor shall receive a Bill of Sale
substantially the form attached hereto as Exhibit No. 7 with respect to
Item, (iii) evidence of insurance which complies with the requirements
Section XV, (iv) a Corporate Guaranty in substantially the form attache
hereto as Exhibit No. 4 (the "Guaranty"), duly executed by Cirrus Logic
Inc. ("Guarantor"), (v) a Real Property Waiver in substantially the fo
attached hereto as Exhibit No. 6, duly executed by each holder of an
interest in the Location (as such term is hereinafter defined) where t
Equipment will be located, (vi) a Certificate of Delivery (in the form
Annex F to the applicable Schedule) with respect to such Item, and (vii
such other documents as Lessor may reasonably request. As a further
condition to such obligations of Lessor, Lessee shall execute and deliv
Lessor a Certificate of Acceptance (in the form of Annex B to the
applicable Schedule) covering such Equipment (1) concurrently with
delivery of such Equipment, which delivery shall occur not later than
November 30, 1996 if the purchase order with the Supplier does not
provide for a period of testing after delivery; or (2) within sixty (60
after delivery of such Equipment if the purchase order with the Supplie
provides for a period of testing after delivery. Lessor hereby appoint
Lessee its agent for inspection and acceptance of the Equipment from th
Supplier. Upon execution by Lessee of any Certificate of Acceptance, t
Equipment described thereon shall be deemed to have been delivered to,
and irrevocably accepted by, Lessee for lease hereunder.
(c) Each funding under this Agreement shall be in an amount not l
than Ten Million Dollars ($10,000,000.00) except the last funding which
shall cover any residual amount, and there shall be no more than six (6
fundings in the aggregate. The aggregate amount of all fundings under
Agreement shall not exceed Sixty Million Dollars ($60,000,000.00). The
composition of the Equipment described in Annex A to each Schedule shal
reasonably be satisfactory to Lessor.
II. TERM, RENT AND PAYMENT:
(a) Lessee's right to use the Equipment shall commence on the dat
execution by Lessee of the Certificate of Delivery for such Equipment
("Lease Commencement Date"). The Basic Term Commencement Date
shall be, and the rent payable hereunder (the "Rent") shall commence on
the first day of the calendar month next following the date that Lessee
executes and delivers a Certificate of Acceptance with respect to all o
Items of Equipment listed on a Schedule. The term of this Agreement sh
be the period specified in the applicable Schedule. If any term is ext
the word "Term" shall be deemed to refer to all extended terms, and all
provisions of this Agreement shall apply during any extended terms, exc
as may be otherwise specifically provided in writing.
(b) Rent shall be paid to Lessor by wire transfer of immediately avail
funds to Lessor at: Bankers Trust New York, New York, New York 10006,
Account No. 50-202-962, ABA No. 021-001-033, or to such other account
as Lessor may direct in writing; and shall be effective upon receipt.
Payments of Rent shall be in the amount set forth in, and due in accord
with, the provisions of the applicable Schedule. In no event shall any
payments be refunded to Lessee.
(c) Rent hereunder shall be calculated on the basis of an implici
determined as the sum of (i) the five (5)-year Treasury Constant Maturi
rate as published in The Wall Street Journal in effect on the second
Business Day preceding the funding date, plus (ii) one hundred seventy-
(175) basis points.
III. TAXES:
Lessee shall report (to the extent that it is legally permissible)
promptly all taxes, fees and assessments due, imposed, assessed or levi
against any Equipment (or the purchase, ownership, delivery, leasing,
possession, use or operation thereof), this Agreement (or any rentals o
receipts hereunder), any Schedule, Lessor or Lessee by any United State
Federal, state or local government or taxing authority during or relate
the term of this Agreement, including, without limitation, all license
registration fees, and all sales, use, personal property, excise, stamp
taxes, imposts, duties and charges, together with any penalties, fines
interest thereon, except that Lessee shall have no liability for taxes
(a) by the United States of America or any state or political subdivisi
thereof which are on or measured by the net or gross income or net or g
receipts of Lessor or which are characterized as franchise, net worth o
shareholder's capital taxes or which are expressly in substitution for,
relieve Lessor from, any of the foregoing taxes (in each case other tha
sales, use, value-added, license, property or similar taxes), (b) by re
the fact that Lessor or any Participant (as such term is hereinafter de
shall not be an entity organized under the laws of the United States of
America or any state thereof, (c) on or in connection with any voluntar
transfer, assignment or disposition by Lessor of the Equipment or any p
thereof or any interest arising hereunder or under any related document
(other than a transfer pursuant to the exercise by Lessor of remedies u
this Agreement) or any involuntary transfer, assignment or disposition
Lessor of any such item or interest resulting from any bankruptcy or ot
proceedings for the relief of debtors involving Lessor, or (d) while Le
shall be contesting such taxes (all such taxes, fees and assessments fo
which Lessee shall have liability under this Section III being hereinaf
called "Taxes"). Lessee shall (i) reimburse Lessor upon receipt of wri
request for reimbursement for any Taxes charged to or assessed against
Lessor, (ii) on request of Lessor, submit to Lessor written evidence of
Lessee's payment of Taxes, (iii) on all reports or returns show the
ownership of the Equipment by Lessee, and (iv) on request of Lessor, se
a copy thereof to Lessor. Lessor shall give Lessee prompt notice if it
receive any claim for Taxes or if it shall determine that any Taxes sha
payable and, at the request and expense of Lessee, Lessor shall contest
Taxes so long as such contest shall not involve any material risk of
forfeiture of the Equipment (unless Lessee shall have provided security
against such risk in a manner reasonably satisfactory to Lessor). For
purposes of this Section III, the term "Lessor" shall include any perso
holds a beneficial interest in Lessor.
IV. LIENS:
(a) Lessee shall not directly or indirectly create, incur, assume
to exist any lien on or with respect to the Equipment except Permitted
Liens. As used herein, "Permitted Liens" shall mean liens which are (i
created or permitted by the Agreement, (ii) the rights of any sublessee
operator permitted by the terms of this Agreement, (iii) those asserted
persons claiming by or through Lessor, (iv) liens for fees, taxes, levi
imposts, duties or other governmental charges of any kind which are not
delinquent or are being contested in good faith through appropriate
proceedings which suspend the collection thereof, (v) liens of mechanic
materialmen, laborers, employees or suppliers and similar liens arising
operation of law, incurred by Lessee in the ordinary course of business
sums that are not yet delinquent or are being contested in good faith
through negotiations or through appropriate proceedings which suspend t
collection thereof, and (vi) liens arising out of any judgments or awar
against Lessee which have been adequately bonded to protect Lessor's
interests or with respect to which a stay of execution has been obtaine
pending an appeal or proceeding for review.
(b) Lessee will promptly notify Lessor of any such lien other tha
Permitted Liens and, at Lessee's own expense, take such action as may b
necessary duly to discharge any such lien other than Permitted Liens.
V. QUIET ENJOYMENT:
Notwithstanding any other provision of this Agreement, so long as
Material Lease Default shall have occurred and be continuing, as betwee
Lessee and Lessor, Lessee shall have the exclusive rights to possession
control of all the Equipment and neither Lessor nor any person acting o
claiming through Lessor will take any action that shall interfere with
peaceful and quiet enjoyment of the use or nonuse of any item of the
Equipment (an "Item") by Lessee, and Lessee shall have the right to use
not use such Item in its sole discretion (but, in all events, shall be
to maintain the Equipment as specified herein). The foregoing is not
intended to limit the inspection rights and the rights in connection wi
return of the Items granted by Lessee hereunder. As used herein, "Mate
Lease Default" shall mean any Lease Default (as hereinafter defined) ot
than a Lease Default resulting pursuant to Section XVII(a)(3) of this
Agreement.
VI. PERSONAL PROPERTY:
Lessee and Lessor agree for the purposes of this Agreement that th
Items and every part thereof and title thereto are and shall be conside
and shall remain personal and not real property to all persons and for
purposes. All Equipment shall at all times remain personal property
regardless of the degree of its annexation to any real property and sha
by reason of any installation in, or affixation to, real or personal pr
become a part thereof.
VII. DELIVERY, OPERATION, MAINTENANCE AND REPORTING:
(a) The Equipment shall be shipped directly from the Supplier to
Lessee.
(b) Lessee shall not use any Item or authorize any third party to
Item in either case, in breach of any applicable laws (other than appli
laws as to which noncompliance would not adversely affect the business,
operations or properties of Lessee and so long as such noncompliance sh
not involve any material danger of the sale, forfeiture or loss of such
or the imposition of any criminal liability on Lessor).
(c) Lessee at its own expense shall at all times during the Term
applicable to each Item maintain such Item in accordance with good
commercial maintenance standards and practices followed from time to
time by Lessee and International Business Machines Corporation ("IBM")
in the operation and maintenance of similar kinds of properties owned o
leased by it. Lessee shall keep each such Item fit for its intended us
good and efficient working order (ordinary wear and tear excepted), and
as good condition (ordinary wear and tear excepted) as on the Lease
Commencement Date for such Item of Equipment.
(d) Lessee will promptly report to Lessor in writing if any Item
Equipment is lost or damaged where the estimated repair costs would
exceed One Hundred Thousand Dollars ($100,000.00) or is otherwise
involved in an accident causing serious personal injury or significant
property damage.
VIII. RELOCATION:
For purposes of this Agreement, the term "Location" shall mean any
building or buildings owned and/or operated by Lessee, Guarantor or IBM
or any of their solvent subsidiaries, collectively referred to by such
a "site". The initial Location for the Equipment leased under this
Agreement is the IBM East Fishkill site which incorporates the Hudson
Valley Research Park. Lessee may not relocate any of the Items from th
initial Location without Lessor's prior written consent (which shall no
unreasonably be withheld) unless the following conditions are satisfied
(a) the Item is relocated to a Location located in the contiguous
Continental United States of America and the owner of the Location has
provided Lessor with the appropriate landlord waiver;
(b) Lessee shall have provided Lessor with written notice of the
intention to relocate such Items in accordance with the terms hereof at
ten (10) Business Days prior to the date such relocation is commenced;
(c) no Material Lease Default shall have occurred and be continui
(d) all reasonable out-of-pocket costs and expenses incurred by L
in connection with such relocation shall be paid by Lessee;
(e) the Equipment is located at not more than three (3) Locations
(f) Lessee executes and delivers to Lessor such documents and
instruments as reasonably may be required by Lessor in connection with
such relocation of the Equipment, including (without limitation) Unifor
Commercial Code financing statements to be filed at Lessee's expense.
If Lessee moves any Item to a different building within a Location
promptly thereafter Lessee shall deliver to Lessor an itemization ident
the specific building to which such Item was moved.
IX. MODIFICATIONS:
(a) Lessee, at its own expense from time to time, may make any
modification to any Item that Lessee may deem desirable in the conduct
its business if Lessee complies with all applicable laws relating there
provided, however, that Lessee shall not have the right to make any suc
modification that could materially impair such Item from being operated
designed or diminish the value, utility or remaining useful life of suc
to an independent third-party user.
(b) Title to each modification shall vest as follows:
(i) in the case of each modification for which Lessor shall
provided financing of the cost of such modification effective on the da
such modification shall have been incorporated into such Item, Lessor s
acquire title to such modification without further act;
(ii) in the case of each modification for which Lessor shall
provided financing of the cost of such modification, Lessee shall retai
to such modification; and
(iii) notwithstanding subparagraph (ii) above, in the cas
modifications which remain upon return of the Item to Lessor at the end
the Term applicable to an Item so modified, title to such modifications
vest in Lessor at the end of the Term applicable to such Item at no cos
Lessor and without further action by Lessee; provided, however, that
Lessee shall take such actions as reasonably may be required by Lessor
evidence the transfer of title.
Immediately upon title to a modification vesting in Lessor pursuant to
Paragraph (b)(i) of this Section, such modification shall, without furt
become subject to this Agreement and be deemed part of the applicable
Item for all purposes. Modifications title to which remains in Lessee
pursuant to this Section shall not be deemed a part of the applicable I
and shall not be subject to this Agreement.
(c) Lessee may request Lessor to finance the cost of any modifica
"Modification Financing"), on terms acceptable to Lessee and Lessor.
Lessor shall comply with any such request subject to the following
conditions precedent to Lessor's obligation:
(i) there shall have been no material adverse change in the
and financial condition of Guarantor;
(ii) no Material Lease Default shall have occurred and be con
(iii) all governmental actions related to Lessee and the Ite
to the modification required to effect the Modification Financing shall
been obtained; and
(iv) such request is approved in writing by General Electrica
Corporation and the other Participants, or (if the Schedule with respec
the Equipment as to which such modification pertains has then been
assigned) the assignee from Lessor, including satisfaction of each such
person's underwriting criteria and approval of the proposed modificatio
(d) Subject to compliance with applicable law and so long as no
Material Lease Default shall have occurred and be continuing, if Lessor
Lessee cannot agree on the terms of a proposed Modification Financing,
Lessee may purchase (upon not less than sixty (60) days' notice to Less
on the Rent Payment Date specified in such notice) the Item which was t
have been modified at a purchase price equal to the Stipulated Loss Val
of such Item computed as of such Rent Payment Date plus any accrued
Rent and other charges hereunder due with respect to such Item as of su
Rent Payment Date.
(e) Subject to compliance with applicable law and so long as no
Material Lease Default shall have occurred and be continuing, Lessee ma
remove, at its own expense, any modification to which Lessee shall have
title as provided in Paragraph (b) above; provided, that, unless Lessee
have given notice of its desire to purchase such Item, at its own expen
prior to the end of the Term applicable to the Item subject to such
modification, Lessee shall repair any damage to such Item caused by suc
removal, and such Item shall remain in the condition required hereunder
X. SUBSTITUTION OF ITEMS:
Provided that no Material Lease Default shall have occurred and be
continuing, at Lessee's expense, Lessee may at any time substitute a
comparable Item of the Equipment for any Item (a "Substituted Item") in
accordance with the terms of this Section. On a quarterly basis, Lesse
shall notify each affected Lessor of all substitutions made during the
preceding quarter with respect to such Lessors. At such time as the
aggregate original Capitalized Lessor's Cost of all Substituted Items (
than Items replaced pursuant to Section XIII(a) hereof) exceeds twenty
percent (20%) of the aggregate original Capitalized Lessor's Cost of al
Equipment leased hereunder, Lessee's option to substitute additional It
shall be subject to the applicable Lessor's prior written consent (whic
consent shall not unreasonably be withheld). If Lessee shall elect to
substitute an Item of the Equipment pursuant hereto, Lessee shall, at i
cost and expense, convey to the applicable Lessor a comparable item of
equipment (a "Replacement Item"), free and clear of all liens other tha
Permitted Liens, that has at least the value, utility and remaining use
and is in as good operating condition as the Substituted Item, assuming
the Substituted Item had been maintained in accordance with this
Agreement. In addition, Lessee shall pay to such affected Lessors an
administrative fee of Three Thousand Dollars ($3,000.00) per notice of
substitution (provided, however, that such administrative fee shall not
exceed in the aggregate with respect to all Lessors Twelve Thousand
Dollars ($12,000.00) per calendar year; and provided, further, however
such administrative fee shall be allocated pro rata among the affected
Lessors at the sole expense of such Lessors), and Lessee shall execute
deliver to Lessor such documents and instruments as reasonably may be
required by Lessor in connection with such replacement, including (with
limitation) Uniform Commercial Code financing statements to be filed at
Lessee's expense. Upon compliance by Lessee with the terms of the two
preceding sentences, Lessor will transfer to Lessee, on an AS IS BASIS
hereinafter defined) all of Lessor's interest in and to such Substitute
Lessor shall not be required to make and may specifically disclaim any
representation or warranty as to the condition of such Substituted Item
other matters (except that Lessor shall warrant that it has conveyed
whatever interest it received in the Substituted Item free and clear of
liens or encumbrances created by, through or under Lessor). Lessor sha
execute and deliver to Lessee such Uniform Commercial Code Statements
of Termination as reasonably may be required in order to terminate any
interest of Lessor in and to the Substituted Item. Lessee will be subr
to all claims of Lessor, if any, against third parties to the extent th
relate to physical damage to or loss of such Substituted Item, and such
Substituted Item shall no longer be subject to this Agreement. For all
purposes hereof, the Replacement Item so substituted shall after such
transfer be part of the property leased hereunder and be an "Item". No
substitution shall result in any change in Rent.
XI. LESSEE ASSIGNMENT AND SUBLEASE:
(a) Lessee shall have and retain throughout the Term with respect
Item control over the operation and use of such Item, and may, so long
no Lease Default shall have occurred and be continuing, without the
consent of Lessor, assign its interest in this Agreement or sublease, l
transfer control of, or permit any other person to use, all or any part
Item or Items during the Term, subject to the following terms and
conditions:
(i) Lessee shall remain primarily liable to Lessor for the p
of all the terms of this Agreement to the same extent as if such assign
sublease or arrangement had not occurred and the Guaranty shall remain
full force and effect against Guarantor;
(ii) such assignment, sublease or arrangement shall be in com
with all applicable laws;
(iii) such assignment, sublease or arrangement as to any
not extend beyond the stated Term with respect to such Item as then in
effect for such Item, and any rights created thereby in an Item shall b
subject and subordinate to this Agreement;
(iv) such assignment, sublease or arrangement shall not subje
Lessor to any regulation by any governmental agency;
(v) such assignment, sublease or arrangement shall be to Gua
or to a solvent affiliate of Lessee, Guarantor or IBM, organized under
laws of any state of, and located in, the United States;
(vi) Lessee shall have given prior written notice to Lessor o
assignment, sublease or arrangement;
(vii) Lessee shall obtain and deliver to Lessor such Unif
Commercial Code financing statements executed by the assignee or
sublessee and Lessee, as reasonably may be required by Lessor, to be fi
at Lessee's expense; and
(viii) all reasonable costs and expenses (including attorn
and expenses) incurred by Lessor in connection with such assignment,
sublease or arrangement shall be paid by Lessee.
Lessee may make any such assignment, sublease or arrangement to a
person other than those persons listed above provided such person is
organized under the laws of any state of, and located in, the United St
and is not a non-profit, tax-exempt entity; and provided further that s
assignment, sublease or arrangement complies with subparagraphs (i)
through (iv) and (vi) through (viii) above, with Lessor's prior written
consent, which consent shall not unreasonably be withheld.
Notwithstanding the foregoing, if Guarantor, IBM or their subsidia
who are partners in Lessee decide to dissolve Lessee, Lessee may assign
leasehold interest in this Agreement in its entirety to Guarantor, IBM
solvent subsidiary of either thereof, or to a solvent general partnersh
which IBM or a solvent subsidiary of IBM is the managing general partne
provided, that (1) the Guaranty will survive any such assignment and
remains in full force and effect against Guarantor, and (2) subparagrap
(ii), (iii), (iv), (vi) and (vii) above shall be complied with.
(b) Lessee shall not consolidate or merge into any person or sell
transfer, convey or lease all or substantially all its properties or as
entirety to any Person, unless:
(i) the successor entity formed by such consolidation or int
is merged or the successor entity that acquires by conveyance, transfer
lease all or substantially all its assets as an entirety, shall be orga
the laws of the United States of America, a state thereof or the Distri
Columbia, shall be authorized under all applicable laws to operate the
Equipment and perform its obligations under this Agreement and all rela
documents (the "Operative Documents") to the same extent as Lessee and
(at Lessee's expense) shall deliver to Lessor an opinion of counsel
reasonably satisfactory in form and substance to the effect that the
obligations of Lessee hereunder have been assumed by the successor enti
by operation of law without any further act by such successor entity, o
agreement in form and substance reasonably satisfactory to Lessor
containing an assumption by such successor entity of the due and punctu
performance of each covenant and condition of the Operative Documents t
be performed or observed by Lessee;
(ii) immediately after giving effect to such transaction, no
Lease Default shall have occurred and be continuing; and
(iii) the Guaranty shall remain in full force and effect
Guarantor and applicable to the successor.
Upon any such consolidation or merger, or any sale, conveyance, transfe
or lease of substantially all the assets of Lessee in accordance with t
Section, the successor entity formed by such consolidation or into whic
Lessee shall be merged or to which such sale, conveyance, transfer or l
shall be made, shall succeed to, and be substituted for, and may exerci
every right and power and shall be subject to, each and every obligatio
Lessee under the Operative Documents to which it is a party with the sa
effect as if such successor corporation had been named as Lessee therei
(c) The dissolution of Lessee shall not cause this Agreement to
terminate, or otherwise constitute a Lease Default, so long as, prior t
effective date of such dissolution, Lessee shall have complied with
Paragraph (b) of this Section (whereupon the assignee of Lessee's right
thereunder shall become Lessee for all purposes hereunder and under the
other Operative Documents).
XII. INSPECTION AND MARKING:
Subject to Lessee's reasonable standard security procedures and
operational requirements), during the normal business hours of Lessee,
Lessor may (at its own expense), upon reasonable prior notice, inspect
Equipment. Lessee shall affix to any Item, according to Lessor's
instructions, any reasonable identifying labels, plates or tags supplie
Lessor which do not interfere with such Item's operation.
XIII. STIPULATED LOSS VALUE:
Lessee shall promptly and fully notify Lessor in writing if any It
Equipment shall be or become, lost, stolen, destroyed, irreparably dama
in the determination of Lessee, or permanently rendered unfit for use f
any cause whatsoever (such occurrences being hereinafter called "Casual
Occurrences"). On the Rent Payment Date next succeeding a Casualty
Occurrence (the "Payment Date"), Lessee shall either (as selected by
Lessee):
(a) replace the Item of Equipment having suffered the Casualty
Occurrence as provided in Section X hereof; or
(b) pay Lessor the sum of (x) the Stipulated Loss Value of such I
calculated in accordance with Annex C to the applicable Schedule as of
Rent Payment Date next following such Casualty Occurrence ("Calculation
Date"); and (y) all Rent and other amounts which are due hereunder as o
such Rent Payment Date. Upon payment of all sums due hereunder, the
term of this lease as to such Item shall terminate and (except in the c
of the loss, theft or complete destruction of such unit, or (ii) where
insurer requires possession of the damaged unit), Lessee shall be entit
recover possession of such unit.
XIV. LOSS OR DAMAGE:
Lessee hereby assumes and shall bear the entire risk of any loss,
damage to, or destruction of, any Item of Equipment from any cause
whatsoever from the Lease Commencement Date.
XV. INSURANCE:
Lessee agrees, at its own expense, to keep all Equipment insured f
such amounts as specified in Paragraph D of the Equipment Schedule and
against such hazards as Lessor may require, including, but not limited
insurance for damage to or loss of such Equipment and liability coverag
for personal injuries, death or property damage, with Lessor named as
additional insured and with a loss payable clause in favor of Lessor, a
interest may appear, with respect to all losses in excess of One Hundre
Thousand Dollars ($100,000.00), irrespective of any breach of warranty
other act or omission of Lessee. Such policies may include such
deductibles or self-insured retentions as are acceptable to Lessor. Al
policies shall be with companies, and on terms, reasonably satisfactory
Lessor. Lessee agrees to deliver to Lessor evidence of insurance
satisfactory to Lessor and, upon Lessor's determination that such insur
is satisfactory to it, Lessor shall certify to Lessee that such insuran
satisfactory to Lessor. No insurance shall be subject to any co-insura
clause. During the existence of a Lease Default hereunder, Lessee here
appoints Lessor as Lessee's attorney-in-fact to make proof of loss and
for insurance, and to make adjustments with insurers and to receive
payment of and execute or endorse all documents, checks or drafts in
connection with payments made as a result of such insurance policies.
expense of Lessor in adjusting or collecting insurance shall be borne b
Lessee. Lessee will not make adjustments with insurers except (i) with
respect to claims for damage to any Item of Equipment where the repair
costs do not exceed One Hundred Thousand Dollars ($100,000.00), or (ii)
with Lessor's written consent. Said policies shall provide that the in
may not be altered or cancelled by the insurer until after thirty (30)
written notice to Lessor. Lessee may, at its option, apply proceeds of
insurance not in excess of One Hundred Thousand Dollars ($100,000.00),
in whole or in part, to (i) repair or replace Equipment or any portion
thereof, or (ii) satisfy any obligation of Lessee to Lessor hereunder.
Provided that no Material Lease Default shall then have occurred and be
continuing, Lessor shall apply proceeds of insurance in excess of One
Hundred Thousand Dollars ($100,000.00), in whole or in part, as elected
Lessee pursuant to Section XIII hereof, to (i) repair or replace Equipm
any portion thereof, or (ii) satisfy any obligation of Lessee to Lessor
hereunder.
XVI. RETURN OF EQUIPMENT:
Upon any expiration or termination of this Agreement or any Schedu
unless Lessee shall have exercised its early termination option pursuan
Section XXIV hereof, or its extension option pursuant to Section XXVI(a
hereof, or its renewal option pursuant to Section XXV(a), hereof, or it
purchase option pursuant to Section XXV(c) or Section XXVI(c) hereof,
Lessee shall promptly, at its own cost and expense: (i) perform any te
and repairs required to place the affected Items of Equipment in the sa
condition and appearance as when received by Lessee (ordinary wear and
tear excepted) and in good working order for their originally intended
purpose; (ii) if deinstallation, disassembly or crating is required, ca
Items to be deinstalled, disassembled and crated by qualified personnel
Lessee or IBM, or by an authorized manufacturer's representative or suc
other service person as is satisfactory to Lessor; and (iii) within ten
days after such expiration or termination, ship such Items, free and cl
all liens and encumbrances, to a location within the forty-eight (48)
contiguous continental United States as Lessor shall direct; and Lessee
provide, at its expense, transit insurance payable to Lessor for the
Equipment in the amount of the then Stipulated Loss Value of the
Equipment.
XVII. LEASE DEFAULT:
(a) Each Lessor may in writing declare this Agreement in default
respect to the Equipment listed on a Schedule of such Lessor ("Lease
Default") if: (1) Lessee breaches its obligation to pay Rent to the app
Lessor when due hereunder with respect to such Equipment and fails to
cure the breach within ten (10) days; (2) Lessee breaches its obligatio
pay to the applicable Lessor any sum (other than Rent) when due hereund
and fails to cure that breach within five (5) days after written notice
(3) Lessee breaches any of its insurance obligations with respect to th
applicable Equipment under Section XV; (4) Lessee breaches any of its
other obligations hereunder with respect to the applicable Equipment an
fails to cure that breach within thirty (30) days after written notice
provided, however, that if (A) such breach is curable, (B) such breach
cannot be remedied within the thirty (30) day period, (C) Lessee
commences reasonable efforts to effect such remedy within the thirty (3
day period and diligently pursues such efforts, and (D) such breach doe
involve any substantial danger of the sale, forfeiture or loss of the
applicable Equipment or of Lessor's interest therein, then Lessee shall
an additional period of sixty (60) days to effect such remedy); (5) any
representation or warranty made by Lessee in connection with this
Agreement shall be false or misleading when made in any material respec
(6) Lessee becomes insolvent or ceases to do business as a going concer
(unless the provisions of Section XI(c) hereof are satisfied); (7) any
applicable Equipment is illegally used; (8) a petition is filed by Less
under any bankruptcy or insolvency laws; (9) a petition is filed agains
Lessee under any bankruptcy or insolvency laws and is not dismissed
within sixty (60) days; (10) Lessee shall have terminated its existence
general partnership, consolidated with, merged into, or conveyed or lea
substantially all of its assets as an entirety to any person (such acti
referred to as an "Event"), unless the provisions of Section XI hereof
satisfied or not less than sixty (60) days prior to such Event: (x) su
person is organized and existing under the laws of the United States or
state, and executes and delivers to Lessor an agreement containing an
effective assumption by such person of the due and punctual performance
of this Lease with respect to the applicable Equipment; and (y) Lessor
reasonably satisfied as to the creditworthiness of such person; or (11)
subject to the provisions set forth in Paragraph (b) of this Section, t
occurs a default under Section 6(b)(2) of the Guaranty.
(b) Each Lessor shall provide written notice to IBM upon the
occurrence of a default under Section 6(b)(2) of the Guaranty and, for
period of thirty (30) days after the giving of such notice (the "30-day
Period"), if no other Material Lease Default has then occurred and is
continuing such Lessor shall not declare this Agreement to be in defaul
result of such occurrence and shall not exercise any remedies hereunder
result of such occurrence, provided that all Rent and other payments
becoming due hereunder are paid as and when due during such 30-day
Period. Prior to the expiration of such 30-day Period, IBM may (at its
discretion): (1) cause to be delivered to such Lessor an irrevocable l
credit (in form and substance satisfactory to Lessor) issued by a natio
bank acceptable to Lessor in an amount equal to the Rent becoming due
during the next succeeding ninety (90) day period (the "Subsequent Rent
or (2) deliver to such Lessor a written guaranty of IBM, in substantial
form attached hereto as Exhibit No. 5, guaranteeing the payment as and
when due of the Subsequent Rent. If IBM timely provides the required
letter of credit or guaranty, for an additional ninety (90) days after
original 30-day Period, if no other Material Lease Default has then occ
and is continuing, such Lessor shall not declare this Agreement to be i
default as a result of such occurrence and shall not exercise any remed
hereunder as a result of such occurrence. Upon the expiration of such
subsequent ninety (90) day period, unless IBM has (i) delivered to such
Lessor a written guaranty of IBM, in substantially the form attached he
as Exhibit No. 5, (ii) purchased all the Equipment with respect to such
Lessor for its then Stipulated Loss Value, plus all unpaid Rent and oth
amounts due hereunder, (iii) received an assignment of all right, title
interest and obligations of Lessee in, under and pursuant to this Agree
and IBM has accepted such assignment and assumed such obligations, or
(iv) taken such other action acceptable to such Lessor (in its sole
discretion), then such Lessor may exercise all rights and remedies
hereunder.
(c) After a Lease Default has occurred and is continuing, Lessee
upon demand, forthwith pay to each affected Lessor (i) as liquidated
damages for loss of a bargain and not as a penalty, the Termination Val
of the Equipment (calculated as of the Rent Payment Date next preceding
the declaration of Lease Default), and (ii) all Rent and other sums the
having become due hereunder; and upon payment of such sums and all
other costs, charges and expenses incurred by such Lessor (including
attorney's fees and expenses) as a result of the occurrence of Lease De
Lessor will transfer to Lessee, on an AS IS BASIS (as hereinafter defin
all of Lessor's interest in and to the Equipment (and Lessor shall not
required to make and may specifically disclaim any representation or
warranty as to the condition of the Equipment and other matters, except
Lessor shall warrant that it has conveyed whatever interest it received
Equipment free and clear of any lien or encumbrance created by, through
under Lessor), and Lessor shall execute and deliver to Lessee such Unif
Commercial Code Statements of Termination as reasonably may be
required in order to terminate any interest of Lessor in and to the
Equipment. If Lessee fails to pay the amounts specified in the precedi
sentence, then, at the request of such Lessor, Lessee shall comply with
provisions of Section XVI hereof. Lessee hereby authorizes Lessor to
enter, with or without legal process, any premises where any Equipment
located and take possession thereof. Lessor may, but shall not be requ
to, sell Equipment at private or public sale, in bulk or in parcels, wi
without notice, and without having the Equipment present at the place o
sale; or Lessor may, but shall not be required to, lease, otherwise dis
or keep idle all or part of the Equipment. The proceeds of sale, lease
other disposition, if any, shall be applied in the following order of p
(1) to pay all of such Lessor's costs, charges and expenses incurred in
taking, removing, holding, repairing and selling, leasing or otherwise
disposing of Equipment; then, (2) to the extent not previously paid by
Lessee, to pay such Lessor all sums due from Lessee hereunder; then (3)
reimburse to Lessee any sums previously paid by Lessee as liquidated
damages; and (4) any surplus shall be paid to Lessee. Subject to the
limitations set forth in Article XXX hereof, Lessee shall pay any defic
in clauses (1) and (2) forthwith.
(d) The foregoing remedies are cumulative, and any or all thereof
be exercised in lieu of or in addition to each other or any remedies at
equity, or under statute. Lessee waives notice of sale or other dispos
(and the time and place thereof), and the manner and place of any
advertising. If permitted by law, Lessee shall pay reasonable attorney
actually incurred by such Lessor in enforcing the provisions of this Le
and any ancillary documents. Waiver of any default shall not be a waiv
of any other or subsequent default.
XVIII. LESSOR ASSIGNMENT:
(a) Lessor may not, without the consent of Lessee (which consent
not unreasonably be withheld, delayed or conditioned; provided, however
any such assignee shall qualify as a Transferee (as such term is herein
defined)), assign this Agreement or any Schedule, or the right to enter
any Schedule. Lessor shall act as the fiscal agent for any assignee un
Lease Default has then occurred hereunder, in which case such assignee
may act directly hereunder. Lessee agrees to confirm in writing receip
notice of an approved assignment with respect to a Schedule (in whole,
not in part) as reasonably may be requested by assignee. Lessee hereby
waives and agrees not to assert against any such assignee any defense,
off, recoupment, claim or counterclaim which Lessee has or may at any
time have against Lessor or any other person for any reason whatsoever.
(b) Lessee acknowledges that it has been advised that the interes
Lessor in this Agreement, the Equipment Schedules, related instruments
and documents and/or the Equipment may be conveyed to, in whole or in
part, certain third parties (each being herein referred to as a "Parti
and, collectively, as the "Participants") without the consent of Lessee
"Syndication"). Lessee agrees reasonably to cooperate with Lessor in
connection with the Syndication, including the execution and delivery o
such other documents, instruments, notices, opinions, certificates and
acknowledgements as reasonably may be required by Lessor or such
Participant; provided, however, in no event shall Lessee be required to
consent to any change that would adversely affect any of the terms of t
transactions contemplated herein; and provided further, however, that
Lessor shall be responsible for its own costs and expenses incurred in
connection with the Syndication. Each Participant shall be required to
comply with the provisions of Section V hereof and qualify as a Transfe
(c) Each Lessor and each Participant agrees that it will not adve
publish the fact that it has furnished financing to, or otherwise enter
the transactions contemplated hereby with Lessee, Guarantor or IBM
without first obtaining the written consent of such person. Notwithsta
any other provision of any Operative Document, Lessors and the
Participants will not have any right to use any trademark or trade name
or otherwise refer to Lessee, Guarantor or IBM in any promotion or
publication without first obtaining the written consent of such person.
(d) A Participant may at any time assign any or all of its rights
obligations, title and interest as such Participant to any Transferee w
(5) Business Days' notice to Lessor, Lessee, Guarantor and IBM Credit
Corporation. As used herein, "Transferee" shall mean a corporation, ba
insurance company, trust company or national banking association, or an
affiliate of any thereof, incorporated or doing business under the laws
United States or one of the states thereof, having at the time of trans
consolidated net worth or combined capital and surplus of at least
$20,000,000.00, which is not a direct competitor of or then in litigati
adverse to Lessee, Guarantor, IBM or IBM Credit Corporation.
(e) Subject always to the foregoing and to Section XI hereof, thi
Agreement inures to the benefit of, and is binding upon, the successors
assigns of the parties hereto.
XIX. NET LEASE; NO SET-OFF, ETC.:
This Agreement is a net lease. Lessee's obligation to pay Rent an
amounts due hereunder shall be absolute and unconditional. Lessee shal
not be entitled to any abatement or reductions of, or set-offs against,
Rent or other amounts, including, without limitation, those arising or
allegedly arising out of claims (present or future, alleged or actual,
including claims arising out of strict liability in tort or negligence
of Lessee against Lessor under this Agreement or otherwise. This
Agreement shall not terminate and the obligations of Lessee shall not b
affected by reason of any defect in or damage to, or loss of possession
or destruction of, any Equipment from whatsoever cause. It is the inte
of the parties that Rents and other amounts due hereunder shall continu
be payable in all events in the manner and at the times set forth herei
unless the obligation to do so shall have been terminated pursuant to t
express terms hereof.
XX. INDEMNIFICATION:
(a) Lessee hereby agrees to indemnify, save and keep harmless Les
the Participants, their agents, employees, successors and assigns, from
against any and all damages, penalties, injuries, claims, actions and s
(including legal and other expenses), of whatsoever kind and nature, in
contract or tort, except as to taxes which are covered in Section III h
only (provided, however, that each such party is liable for its own gro
negligence or willful misconduct and shall not be indemnified hereunder
a result thereof) (and including, but not limited to, Lessor's strict l
tort), arising out of (i) the selection, manufacture, purchase, accepta
rejection of Equipment, the ownership of Equipment during the term of t
Agreement, and the delivery, lease, possession, maintenance, uses,
condition, return or operation of Equipment (including, without limitat
latent and other defects, whether or not discoverable by Lessor or Less
and any claim for patent, trademark or copyright infringement or
environmental damage), or (ii) any claim by a third party attributable
maintenance or use of such Item by Lessee, any sublessee or employees o
Lessee. Lessee shall, upon request, defend any actions based on, or ar
out of, any of the foregoing.
(b) All of Lessor's and the Participants' rights, privileges and
indemnities contained in this Section XX shall survive the expiration o
other termination of this Agreement, and the rights, privileges and
indemnities contained herein are expressly made for the benefit of, and
shall be enforceable by Lessor, the Participants, and its and their suc
and assigns.
XXI. DISCLAIMER:
LESSEE ACKNOWLEDGES THAT IT HAS SELECTED THE
EQUIPMENT WITHOUT ANY ASSISTANCE FROM LESSOR, ITS
AGENTS OR EMPLOYEES. LESSOR DOES NOT MAKE, HAS NOT
MADE, NOR SHALL BE DEEMED TO MAKE OR HAVE MADE, ANY
WARRANTY OR REPRESENTATION, EITHER EXPRESS OR
IMPLIED, WRITTEN OR ORAL, WITH RESPECT TO THE
EQUIPMENT LEASED HEREUNDER OR ANY COMPONENT
THEREOF, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY
AS TO DESIGN, COMPLIANCE WITH SPECIFICATIONS, QUALITY
OF MATERIALS OR WORKMANSHIP, MERCHANTABILITY,
FITNESS FOR ANY PURPOSE, USE OR OPERATION, SAFETY,
PATENT, TRADEMARK OR COPYRIGHT INFRINGEMENT, OR
(EXCEPT AS EXPRESSLY PROVIDED HEREIN) TITLE. All such risks,
as between Lessor and Lessee, are to be borne by Lessee. Without limit
the foregoing, Lessor shall have no responsibility or liability to Less
any other person with respect to any of the following: (i) any liabili
or damage caused or alleged to be caused directly or indirectly by any
Equipment, any inadequacy thereof, any deficiency or defect (latent or
otherwise) therein, or any other circumstance in connection therewith;
the use, operation or performance of any Equipment or any risks relatin
thereto; (iii) any interruption of service, loss of business or anticip
profits or consequential damages; or (iv) the delivery, operation, serv
maintenance, repair, improvement or replacement of any Equipment. If,
and so long as, no default exists under this Lease, Lessee shall be, an
hereby is, authorized during the term of this Lease to assert and enfor
Lessee's sole cost and expense, from time to time, in the name of and f
the account of Lessor and/or Lessee, as their interests may appear, wha
claims and rights Lessor may have against any Supplier of the Equipment
XXII. REPRESENTATIONS AND WARRANTIES OF LESSEE:
Lessee hereby represents and warrants to Lessor that on the date h
and on the date of execution of each Schedule:
(a) Lessee has adequate power and capacity to enter into, and per
under, this Agreement and all related documents (together, the
"Documents") and is duly qualified to do business wherever necessary to
carry on its present business and operations, including the jurisdictio
where the Equipment is or is to be located, where the failure to be so
qualified would have a material adverse effect.
(b) The Documents have been duly authorized, executed and deliver
by Lessee and constitute valid, legal and binding agreements, enforceab
accordance with their terms, except to the extent that the enforcement
remedies therein provided may be limited under applicable bankruptcy an
insolvency laws and equitable principles.
(c) No approval, consent or withholding of objections is required
any governmental authority or instrumentality with respect to the entry
or performance by Lessee of the Documents except such as have already
been obtained.
(d) The entry into and performance by Lessee of the Documents wil
not: (i) violate any judgment, order, law or regulation applicable to
or any provision of that certain Partnership Agreement dated as of
September 30, 1994, between Cirel Inc. and MiCrus Holdings, Inc.; or (i
result in any breach of, constitute a default under or result in the cr
any lien, charge, security interest or other encumbrance upon any
Equipment pursuant to any indenture, mortgage, deed of trust, bank loan
credit agreement or other instrument (other than this Agreement) to whi
Lessee is a party.
(e) There are no suits or proceedings pending or (to Lessee's
knowledge) threatened in court or before any commission, board or other
administrative agency against or affecting Lessee, which will have a
material adverse effect on the ability of Lessee to fulfill its obligat
under this Agreement.
(f) Lessee is a general partnership duly organized and will be at
times validly existing under the laws of the State specified in the fir
sentence of this Agreement (except in accordance with the provisions of
Section XI(c) hereof). Cirel Inc. and MiCrus Holdings, Inc. are the so
general partners of Lessee.
(g) The Equipment will at all times be used for commercial or bus
purposes.
XXIII. OWNERSHIP FOR TAX PURPOSES; GRANT OF SECURITY
INTEREST; USURY SAVINGS:
(a) For Federal, state and local income tax purposes, Lessor will
Lessee as the owner of the Equipment. Accordingly, Lessor will not cla
any tax benefits available to an owner of the Equipment.
(b) In order to secure the prompt payment of the Rent and all of
other amounts from time to time outstanding under and with respect to t
Schedules, and the performance and observance by Lessee of all the
agreements, covenants and provisions thereof (including, without
limitation, all of the agreements, covenants and provisions of this
Agreement, which are incorporated therein by reference), Lessee hereby
grants to Lessor a first priority security interest in (i) the Equipmen
under the Schedules and any and all substitutions, replacements or
exchanges therefor, and (ii) (other than modifications, additions,
attachments, accessories and accessions thereto made pursuant to Sectio
XI (b)(ii) hereof) modifications, additions, attachments, accessions an
accessories thereto, made pursuant to the terms hereof, in which Lessee
shall from time to time acquire an interest, and any and all insurance
other proceeds (but without power of sale) of the property in and again
which a security interest is granted hereunder.
(c) It is the intention of the parties hereto to comply with any
usury laws to the extent that any Schedule is determined to be subject
such laws; accordingly, it is agreed that, notwithstanding any provisio
the contrary in any Schedule or the Lease, in no event shall any Schedu
require the payment or permit the collection of interest in excess of t
maximum amount permitted by applicable law. If any such excess interes
is contracted for, charged or received under any Schedule or the Lease,
in the event that all of the principal balance shall be prepaid, so tha
any of such circumstances the amount of interest contracted for, charge
received under any Schedule or the Lease shall exceed the maximum
amount of interest permitted by applicable law, then in such event (1)
provisions of this paragraph shall govern and control, (2) neither Les
nor any other person or entity now or hereafter liable for the payment
hereof shall be obligated to pay the amount of such interest to the ext
that it is in excess of the maximum amount of interest permitted by
applicable law, (3) any such excess which may have been collected shall
either applied as a credit against the then unpaid principal balance or
refunded to Lessee, at the option of Lessee, and (4) the effective rat
interest shall be automatically reduced to the maximum lawful contract
allowed under applicable law as now or hereafter construed by the court
having jurisdiction thereof. It is further agreed that without limitat
the foregoing, all calculations of the rate of interest contracted for,
or received under any Schedule or the Lease (the "Interest") which are
made for the purpose of determining whether such rate exceeds the
maximum lawful contract rate, shall be made, to the extent permitted by
applicable law, by amortizing, prorating, allocating and spreading the
Interest in equal parts during the period of the full Term. Notwithsta
the foregoing, if any applicable state law is amended or the law of the
United States of America preempts any applicable state law, so that it
becomes lawful for Lessor to receive a greater interest per annum rate
is presently allowed, Lessee agrees that, on the effective date of such
amendment or preemption, as the case may be, the lawful maximum
hereunder shall be increased to the maximum interest per annum rate
allowed by the amended state law or the law of the United States of
America (but not in excess of the interest rate contemplated hereunder)
XXIV. EARLY TERMINATION:
On or after the First Termination Date (specified in the applicabl
Schedule), Lessee may, so long as no Material Lease Default then exists
hereunder, from time to time (i) terminate this Agreement as to any Ite
the Equipment (provided, however, that the aggregate original Capitaliz
Lessor's Cost of all Items of the Equipment terminated pursuant to this
clause (i) shall not exceed twenty (20) percent of the aggregate origin
Capitalized Lessor's Cost of all Equipment described on all Schedules
executed hereunder) which have not previously been terminated under thi
clause (i), or (ii) terminate this Agreement as to all Items of the Equ
then leased pursuant to an individual Schedule, as of a Rent Payment Da
(the date of termination of this Agreement pursuant to this Section or
otherwise being hereinafter referred to as the "Termination Date") upon
least ninety (90) days' prior written notice to Lessor. In such notice
shall specify whether Lessee elects to purchase the Item of the Equipme
pursuant to Paragraph (b) hereof, or to cause the Item of the Equipment
be sold to a third party pursuant to Paragraph (a) hereof.
(a) If Lessee elects to cause the Item of the Equipment to be sol
third party, Lessee shall, and Lessor may, solicit cash bids for the It
the Equipment on an AS IS, WHERE IS BASIS, without recourse or
warranty, express or implied, of any kind whatsoever ("AS IS BASIS").
or prior to the Termination Date, Lessee shall (i) certify to such affe
Lessors any bids received by Lessee and the expiration date for such bi
(ii) pay to such affected Lessors an administrative fee of Three Thousa
Dollars ($3,000.00) per notice of termination to be allocated pro rata
them, and (iii) pay to Lessor (A) the Termination Value (calculated as
the Termination Date) for the Equipment, and (B) all Rent and other sum
due and unpaid as of the Termination Date with respect to the applicabl
Item of the Equipment. Provided that all amounts due hereunder with
respect to the applicable Item of the Equipment have been paid on the
Termination Date, Lessor and Lessee shall sell the applicable Item of t
Equipment on an AS IS BASIS for cash to the highest bidder and (within
fifteen (15) Business Days after receipt of good collected funds) refun
proceeds of such sale (net of any related out-of-pocket expenses) to Le
Upon satisfaction of the conditions specified in this Paragraph (a), Le
will transfer, on an AS IS BASIS all of Lessor's interest in and to the
Equipment. Lessor shall not be required to make and may specifically
disclaim any representation or warranty as to the condition of such
Equipment and other matters (except that Lessor shall warrant that it h
conveyed whatever interest it received in the applicable Item of the
Equipment free and clear of any liens or encumbrances created by, throu
or under Lessor). Lessor shall execute and deliver to Lessee such Unif
Commercial Code Statements of Termination as reasonably may be
required in order to terminate any interest of Lessor in and to the app
Item of the Equipment. If such sale is not consummated due to the faul
the potential buyer, no termination shall occur and Lessor shall refund
Termination Value (less any out-of-pocket expenses incurred by Lessor)
Lessee within fifteen (15) Business Days of the expiration date set for
the Lessee's certification of the bid related to such sale. Lessor sha
conduct any such sale promptly and with the same consideration that Les
would afford to the sale of its own assets. If any such sale is not
consummated due to the fault of Lessor, then (i) the termination shall
deemed to have occurred as of the expiration date set forth in Lessee's
certification of the bid related to such sale, (ii) the Termination Val
be repaid by Lessor to Lessee, and (iii) title to the applicable Equipm
shall vest in Lessor.
(b) If Lessee elects to purchase the applicable Item of the Equip
on the Termination Date, Lessee shall pay to Lessor in cash the purchas
price for the applicable Item of the Equipment, determined as hereinaft
provided. The purchase price of the applicable Item of the Equipment s
be an amount equal to the Termination Value (calculated as of the
Termination Date) for the applicable Item of the Equipment, plus all sa
taxes upon sale. Lessee shall also pay to Lessor all Rent and other su
due and unpaid as of the Termination Date applicable to such Item of th
Equipment. Upon satisfaction of the conditions specified in this Parag
(b), Lessor will transfer, on an AS IS BASIS all of Lessor's interest i
to the applicable Item of the Equipment. Lessor shall not be required
make and may specifically disclaim any representation or warranty as to
condition of such Item of the Equipment and other matters (except that
Lessor shall warrant that it has conveyed whatever interest it received
applicable Item of the Equipment free and clear of any lien or encumbra
created by, through or under Lessor). Lessor shall execute and deliver
Lessee such Uniform Commercial Code Statements of Termination as
reasonably may be required in order to terminate any interest of Lessor
and to the applicable Item of the Equipment.
As used herein, "Termination Value" shall mean the sum of the
applicable Stipulated Loss Value plus the Make Whole Amount. For
purposes hereof, "Make Whole Amount" shall mean a premium equal to the
excess, if any, of (i) the aggregate present value as of the Terminatio
of the sum of (A) the remaining scheduled Rent payments with respect to
the applicable Item of the Equipment, plus (B) the full amount of the
applicable Fixed Purchase Price with respect to the applicable Item of
Equipment that but for termination of this Agreement would be payable o
the last Rent Payment Date during the then applicable Basic Term or
Renewal Term, discounted to the date of payment at the Reinvestment Rat
over (ii) the aggregate present value as of the Termination Date of the
of (A) the remaining scheduled Rent payments with respect to the
applicable Item of the Equipment, plus (B) the full amount of the appli
Fixed Purchase Price with respect to the applicable Item of the Equipme
that but for termination of this Agreement would be payable on the last
Rent Payment Date during the then applicable Basic Term or Renewal
Term, discounted to the date of payment at the Assumed Interest Rate;
provided, however, that if the Reinvestment Rate is equal to or higher
the Assumed Interest Rate, the Make Whole Amount shall be zero. For
purposes hereof, "Reinvestment Rate" shall mean the sum of (i) the
Applicable Treasury Yield plus (ii) fifty (50) basis points. The term
"Applicable Treasury Yield" at any time shall mean the yield to maturit
United States Treasury Notes with a maturity equal to the remaining
average life of the Term of the Lease as published in The Wall Street
Journal two (2) Business Days prior to the Termination Date. If no
maturity exactly corresponds to such remaining Term, the Applicable
Treasury Yield shall be interpolated on a straight-line basis, utilizin
yields for the two maturities which most closely correspond to the requ
maturity. For purposes hereof, "Assumed Interest Rate" shall mean the
of (i) the Base Index, plus (ii) one hundred seventy-five (175) basis p
"Base Index" shall mean the five (5)-year Treasury Constant Maturities
as published in The Wall Street Journal on the second Business Day
immediately preceding the Lease Commencement Date.
XXV. END OF BASIC TERM LEASE OPTIONS:
Provided that no Material Lease Default shall have occurred and be
continuing, Lessee shall have the option, upon the expiration of the Ba
Term of the applicable Schedule, to return, or to purchase, or to renew
term of this Agreement with respect to, all (but not less than all) of
Equipment leased under an individual Schedule executed hereunder upon
the following terms and conditions.
(a) Renewal. So long as Lessee shall not have exercised its opti
return the Equipment pursuant to Paragraph (b) of this Section, nor
exercised its purchase option pursuant to Paragraph (c) of this Section
Lessee shall have the option, upon the expiration of the Basic Term of
applicable Schedule, to renew the Agreement with respect to all, but no
less than all, of the Equipment leased under an individual Schedule for
renewal term specified in Paragraph B of the applicable Schedule (the
"Renewal Term") at a monthly rental, payable in arrears on the Rent
Payment Date, calculated as the product of the Capitalized Lessor's Cos
the Equipment and the Basic Term Lease Rate Factor.
(b) Return. So long as Lessee shall not have exercised its optio
renew this Agreement pursuant to Paragraph (a) of this Section, nor
exercised its purchase option pursuant to Paragraph (c) of this Section
Lessee shall have the option, upon the expiration of the Basic Term of
individual Schedule, to return all (but not less than all) of the Equip
described on an individual Schedule, to Lessor upon the following terms
and conditions: If Lessee desires to exercise this option, Lessee shal
pay to Lessor on the last day of the term of this Agreement with respec
the applicable individual Schedule, in addition to the scheduled Rent t
due on such date and all other sums then due hereunder, a terminal rent
adjustment amount equal to the Basic Term Fixed Purchase Price of such
Equipment, and (ii) return the Equipment to Lessor in accordance with
Section XVI hereof. That portion of the terminal rental adjustment amo
paid by Lessee to Lessor as is equal to the Basic Term Residual Risk
Amount shall be held in escrow by Lessor and deposited in an interest-
bearing account, invested in Permitted Investments (as such term is
hereinafter defined). Thereafter, upon return of all of the Equipment
described on the applicable Schedule, Lessor shall arrange for the
commercially reasonable sale, scrap or other disposition of such Item o
Equipment. Lessee fully shall cooperate with Lessor in consummating su
sale, scrap, or other disposition of the Equipment. Such sale, scrap o
disposition shall occur promptly and Lessor shall conduct such sale, sc
or disposition with the same consideration that Lessor would afford to
sale, scrap or disposition of such Item of its own assets. Upon satisf
of the conditions specified in this Paragraph (b), Lessor and Lessee wi
transfer to the purchaser(s), on an AS IS BASIS all of their interest i
to the applicable Equipment. Lessor shall not be required to make and
specifically disclaim any representation or warranty as to the conditio
such Equipment and other matters (except that Lessor shall warrant that
has conveyed whatever interest it received in such Equipment free and c
of any liens or encumbrances created by, through or under Lessor). Les
shall execute and deliver to Lessee such Uniform Commercial Code
Statements of Termination as reasonably may be required in order to
terminate any interest of Lessor in and to the applicable Equipment.
Promptly following the sale, scrap or other disposition of an Item of t
Equipment and receipt by Lessor in good collected funds of the sales
proceeds, if any, with respect to such Item of the Equipment, (1) Lesso
shall pay to Lessee from the escrow account an amount equal to the Basi
Term Residual Risk Amount (as specified in the Schedule) of such Item o
the Equipment (less all reasonable actual out-of-pocket costs, expenses
fees incurred by Lessor, including storage, reasonable and necessary
maintenance and other remarketing fees incurred in connection with the
sale, scrap, or disposition of such Item of the Equipment); (2) Lessor
pay from the escrow account all reasonable actual out-of-pocket costs,
expenses and fees of Lessor, including storage, reasonable and necessar
maintenance and other re-marketing fees incurred in connection with the
sale, scrap, or disposition of such Item of the Equipment; and (3) any
excess sales proceeds then remaining shall be held in escrow by Lessor
deposited in an interest-bearing account, invested in Permitted Investm
Promptly after the sale, scrap or other disposition of all of the Equip
described on the applicable Schedule and receipt by Lessor in good
collected funds of the sales proceeds with respect thereto, Lessor shal
to Lessee an amount equal to all net proceeds, if any, of such sale, sc
other disposition in excess of the Basic Term Residual Risk Amount of t
Equipment already paid to Lessee, and Lessor will also pay to Lessee al
interest earned on the amount held in escrow. As used herein, "Permit
Investments" shall mean the following securities which shall mature wit
thirty (30) days of the date of purchase:
(i) direct obligations of the United States of America; or
(ii) obligations fully guaranteed by the United States of Am
(iii) certificates of deposit issued by, or bankers' accepta
time deposits or a deposit account with, any bank, trust company or nat
banking association incorporated or doing business under the laws of th
United States of America or one of its States, having a combined capita
and surplus not less than $100,000,000 and having a rating of "B" or be
from the Keefe Bank Watch Service; or
(iv) commercial paper rated A-1/P-1 by Standard & Poor's
Corporation and Moody's Investors Service, Inc., respectively (or if ne
such organization shall rate such commercial paper at any time, by any
nationally recognized rating organization in the United States of Ameri
equal to the highest rating assigned by such rating organization.
(c) Purchase. So long as Lessee shall not have exercised its opt
renew this Agreement pursuant to Paragraph (a) of this Section, nor
exercised its option to return the Equipment pursuant to Paragraph (b)
this Section, Lessee shall have the option, upon the expiration of the
Term of each individual Schedule, to purchase all (but not less than al
the Equipment described on such Schedule upon the following terms and
conditions: If Lessee desires to exercise this option with respect to
Equipment described on an individual Schedule, Lessee shall pay to Less
on the last
day of the Basic Term of this Agreement with respect to such individual
Schedule, in addition to the scheduled Rent then due on such date and a
other sums then due hereunder with respect to the Equipment described o
the applicable Schedule, in cash the purchase price for the Equipment s
purchased, determined as hereinafter provided. The purchase price of t
Equipment shall be an amount equal to the Basic Term Fixed Purchase
Price of such Equipment (as specified on such Schedule), plus all sales
taxes and all other reasonable and documented out-of-pocket expenses
incurred by Lessor in connection with such sale, including, without
limitation, any such expenses incurred based on a notice from Lessee to
Lessor that Lessee intended to return any such Items of Equipment. Upon
satisfaction of the conditions specified in this Paragraph, Lessor will
transfer, on an AS IS BASIS, all of Lessor's interest in and to the app
Equipment. Lessor shall not be required to make and may specifically
disclaim any representation or warranty as to the condition of such
Equipment and other matters (except that Lessor shall warrant that it h
conveyed whatever interest it received in the Equipment free and clear
any lien or encumbrance created by, through or under Lessor). Lessor s
execute and deliver to Lessee such Uniform Commercial Code Statements
of Termination as reasonably may be required in order to terminate any
interest of Lessor in and to the applicable Equipment.
(d) Notice of Election. Lessee shall give Lessor written notice
election of the options specified in this Section not less than one hun
fifty (150) days nor more than three hundred sixty-five (365) days befo
the expiration of the Basic Term of an individual Schedule. Such elect
shall be effective with respect to all Equipment described on the appli
Schedule. If Lessee fails timely to provide such notice, without furth
action Lessee automatically shall be deemed to have elected to renew th
term of this Agreement pursuant to Paragraph (a) of this Section descri
on the applicable Schedule.
XXVI. END OF RENEWAL TERM LEASE OPTIONS.
Provided that no Material Lease Default shall have occurred and be
continuing, if Lessee exercised its option to renew this Agreement purs
to Section XXV, then Lessee shall have the option, upon the expiration
the Renewal Term of each Schedule, to return, or to purchase, or to ext
the term of this Agreement with respect to, all (but not less than all)
Equipment leased under an individual Schedule upon the following terms
and conditions.
(a) Extension. So long as Lessee shall not have exercised its op
return the Equipment described on an individual Schedule pursuant to
Paragraph (b) of this Section, nor exercised its purchase option pursua
Paragraph (c) of this Section, Lessee shall have the option, upon the
expiration of the Renewal Term, to extend the Agreement with respect to
all, but not less than all, of the Equipment described on an individual
Schedule for an additional term of twelve (12) months (the "Extension
Term") at a monthly rental to be paid in arrears on the same day of eac
month on which the prior Renewal Term Rent installment was paid (except
that the last installment shall be paid on the last day of the Extensio
and calculated so as to amortize the Renewal Term Fixed Purchase Price
such Equipment described on an individual Schedule over the Extension
Term, together with interest thereon at a rate per annum equal to two
hundred fifty (250) basis points over the then current yield to maturit
U.S. Treasury Notes having a one year maturity, in twelve (12) equal
monthly installments. At the end of the Extension Term, provided that
Lessee is not then in default under this Agreement or any other agreeme
between Lessor and Lessee, Lessee shall purchase all, and not less than
of such Equipment described on an individual Schedule for $1.00 cash,
together with all rent and other sums then due on such date, plus all s
taxes and all other reasonable and documented out-of-pocket expenses
incurred by Lessor in connection with such transfer. Upon satisfaction
the conditions specified in this Paragraph (a), Lessor will transfer, o
IS BASIS, all of Lessor's interest in and to the applicable Equipment.
Lessor shall not be required to make and may specifically disclaim any
representation or warranty as to the condition of the Equipment and any
other matters (except that Lessor shall warrant that it has conveyed
whatever interest it received in the Equipment free and clear of any li
encumbrance created by, through or under Lessor). Lessor shall execute
and deliver to Lessee such Uniform Commercial Code Statements of
Termination as reasonably may be required in order to terminate any
interest of Lessor in and to the applicable Equipment.
(b) Return. So long as Lessee shall not have exercised its exten
option pursuant to Paragraph (a) of this Section, nor exercised its pur
option pursuant to Paragraph (c) of this Section, Lessee shall have the
option, upon the expiration of the Renewal Term of an individual Schedu
to return all (but not less than all) of the Equipment described on an
individual Schedule, to Lessor upon the following terms and conditions:
Lessee desires to exercise this option, Lessee shall (i) pay to Lessor
last day of the Renewal Term of this Agreement with respect to the
applicable individual Schedule, in addition to the scheduled Rent then
on such date and all other sums then due hereunder, a terminal rental
adjustment amount equal to the Renewal Term Fixed Purchase Price of
such Equipment, and (ii) return the Equipment to Lessor in accordance w
Section XVI hereof. That portion of the terminal rental adjustment amo
paid by Lessee to Lessor as is equal to the Renewal Term Residual Risk
Amount shall be held in escrow by Lessor and deposited in an interest-
bearing account, invested in Permitted Investments. Thereafter, upon re
of all of the Equipment described on the applicable Schedule, Lessor sh
arrange for the commercially reasonable sale, scrap or other dispositio
such Equipment. Lessee fully shall cooperate with Lessor in consummati
such sale, scrap, or other disposition of the Equipment. Such sale, sc
disposition shall occur promptly and Lessor shall conduct such sale, sc
or disposition with the same consideration that the Lessor would afford
the sale, scrap or disposition of its own assets. Upon satisfaction of
conditions specified in this Paragraph (b), Lessor and Lessee will tran
the purchaser(s) on an AS IS BASIS all of Lessor's interest in and to t
applicable Equipment. Lessor shall not be required to make and may
specifically disclaim any representation or warranty as to the conditio
such Equipment and other matters (except that Lessor shall warrant that
has conveyed whatever interest it received in such Equipment free and c
of any liens or encumbrances created by, through or under Lessor). Les
shall execute and deliver to Lessee such Uniform Commercial Code
Statements of Termination as reasonably may be required in order to
terminate any interest of Lessor in and to the applicable Equipment.
Promptly following the sale, scrap or other disposition of an Item of t
Equipment and receipt by Lessor in good collected funds of the sales
proceeds, if any, with respect to such Item of the Equipment: (1) Less
shall pay to Lessee from the escrow account an amount equal to the
Renewal Term Residual Risk Amount (as specified in the Schedule) of suc
Item of the Equipment (less all reasonable actual out-of-pocket costs,
expenses and fees, including storage, reasonable and necessary maintena
and other remarketing fees incurred in connection with the sale, scrap,
disposition of such Item of the Equipment); (2) Lessor shall pay from t
escrow account all reasonable actual out-of-pocket costs, expenses and
of Lessor, including storage, reasonable and necessary maintenance and
other re-marketing fees incurred in connection with the sale, scrap, or
disposition of such Item of the Equipment; and (3) any excess sales
proceeds then remaining shall be held in escrow by Lessor and deposited
an interest-bearing account, invested in Permitted Investments. Prompt
after the sale, scrap or other disposition of all of the Equipment desc
on the applicable Schedule and receipt by Lessor in good collected fund
the sales proceeds with respect thereto, Lessor shall pay to Lessee an
amount equal to all of that portion of the net proceeds, if any, of suc
scrap or other disposition in excess of the Renewal Term Residual Risk
Amount of the Equipment already paid to Lessee up to the Renewal Term
Fixed Purchase Price of the applicable Equipment, plus fifty (50) perce
all net proceeds, if any, of such sale, scrap or other disposition in e
the Renewal Term Fixed Purchase Price of all of the applicable Equipmen
and Lessor will also pay to Lessee interest earned on the amount held i
escrow attributable to that portion of the escrowed amount distributed
Lessee.
(c) Purchase. So long as Lessee shall not have exercised its ext
option pursuant to Paragraph (a) of this Section, nor exercised its opt
return the Equipment pursuant to Paragraph (b) of this Section, Lessee
have the option, upon the expiration of the Renewal Term of each
individual Schedule, to purchase all (but not less than all) of the Equ
described on such Schedule upon the following terms and conditions: If
Lessee desires to exercise this option with respect to the Equipment
described on an individual Schedule, Lessee shall pay to Lessor on the
day of the Renewal Term of this Agreement with respect to such individu
Schedule, in addition to the scheduled Rent then due on such date and a
other sums then due hereunder with respect to the Equipment described o
the applicable Schedule, in cash the purchase price for the Equipment s
purchased, determined as hereinafter provided. The purchase price of t
Equipment shall be an amount equal to the Renewal Term Fixed Purchase
Price of such Equipment (as specified on such Schedule), plus all sales
taxes and all other reasonable and documented expenses incurred by Less
in connection with such sale, including, without limitation, any such
expenses incurred based on a notice from Lessee to Lessor that Lessee
intended to return any such Items of Equipment. Upon satisfaction of th
conditions specified in this Paragraph (c), Lessor will transfer, on an
BASIS, all of Lessor's interest in and to the applicable Equipment. Les
shall not be required to make and may specifically disclaim any
representation or warranty as to the condition of such Equipment and ot
matters (except that Lessor shall warrant that it has conveyed whatever
interest it received in the Equipment free and clear of any lien or
encumbrance created by, through or under Lessor). Lessor shall execute
and deliver to Lessee such Uniform Commercial Code Statements of
Termination as reasonably may be required in order to terminate any
interest of Lessor in and to the applicable Equipment.
(d) Notice of Election. Lessee shall give Lessor written notice
election of the options specified in this Section not less than one hun
fifty (150) days nor more than three hundred sixty-five (365) days befo
the expiration of the Renewal Term of each individual Schedule. Such
election shall be effective with respect to all Equipment described on
Schedule. If Lessee fails timely to provide such notice, without furth
action Lessee automatically shall be deemed to have elected to purchase
Equipment described on an individual Schedule pursuant to Paragraph (c)
of this Section.
XXVII. MISCELLANEOUS:
(a) LESSEE HEREBY UNCONDITIONALLY WAIVES ITS RIGHTS
TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF, DIRECTLY OR INDIRECTLY, THIS
LEASE, ANY OF THE RELATED DOCUMENTS, ANY DEALINGS
BETWEEN LESSEE AND LESSOR RELATING TO THE SUBJECT
MATTER OF THIS TRANSACTION OR ANY RELATED
TRANSACTIONS, AND/OR THE RELATIONSHIP THAT IS BEING
ESTABLISHED BETWEEN LESSEE AND LESSOR. The scope of this
waiver is intended to be all encompassing of any and all disputes that
be filed in any court (including, without limitation, contract claims,
claims, breach of duty claims, and all other common law and statutory
claims). THIS WAIVER IS IRREVOCABLE MEANING THAT IT MAY
NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE
WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS LEASE,
ANY RELATED DOCUMENTS, OR TO ANY OTHER DOCUMENTS
OR AGREEMENTS RELATING TO THIS TRANSACTION OR ANY
RELATED TRANSACTION. In the event of litigation, this Agreement
may be filed as a written consent to a trial by the court.
(b) Any cancellation or termination by Lessor, pursuant to the pr
of this Agreement, any Schedule, supplement or amendment hereto, or the
lease of any Equipment hereunder, shall not release Lessee from any oth
then outstanding obligations to Lessor hereunder.
(c) Time is of the essence of this Agreement. Lessor's failure a
time to require strict performance by Lessee of any of the provisions h
shall not waive or diminish Lessor's right thereafter to demand strict
compliance therewith.
(d) Each of the parties agrees, upon request of the other party,
execute any instrument reasonably necessary or expedient for filing,
recording or perfecting the interest of the parties hereunder.
(e) All notices required to be given hereunder shall be in writin
personally delivered, delivered by overnight courier service, sent by
facsimile transmission (with confirmation of receipt), or sent by certi
mail, return receipt requested, addressed to the other party at its res
address stated above or at such other address as such party shall from
to time designate in writing to the other party; and shall be effective
the date of receipt.
(f) This Agreement and any Schedule and Annexes thereto, constitu
the entire agreement of the parties with respect to the subject matter
NO VARIATION OR MODIFICATION OF THIS AGREEMENT OR
ANY WAIVER OF ANY OF ITS PROVISIONS OR CONDITIONS,
SHALL BE VALID UNLESS IN WRITING AND SIGNED BY AN
AUTHORIZED REPRESENTATIVE OF THE PARTIES HERETO. Any
provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the exte
prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provisio
any other jurisdiction.
(g) The representations, warranties and covenants of Lessee herei
be deemed to survive the closing hereunder. Lessor's obligations to ac
and lease specific Items of Equipment shall be conditioned upon Lessee
providing to Lessor such information with respect to Lessee's financial
condition as Lessor may require, and Lessor being satisfied that there
have been no material adverse change in the business or financial condi
of Lessee from the date of execution hereof. The obligations of Lessee
under Sections III, XVI and XX which accrue during the term of this
Agreement and obligations which by their express terms survive the
termination of this Agreement, shall survive the termination of this
Agreement.
(h) In case of a failure of Lessee to comply with any provision o
Agreement, Lessor shall have the right, but shall not be obligated to,
such compliance, in whole or in part; and all moneys spent and expenses
and obligations incurred or assumed by Lessor in effecting such complia
shall constitute additional rent due to Lessor within five (5) days aft
date Lessor sends notice to Lessee requesting payment and providing
reasonable details. Lessor's effecting such compliance shall not be a
of Lessee's default.
(i) Any Rent not paid when due hereunder and which remains unpaid
for more than ten (10) days, or any other amount not paid to Lessor whe
due hereunder, shall bear interest, both before and after any judgment
termination hereof, at the lesser of twelve percent (12%) per annum or
maximum rate allowed by law (the "Late Charge Rate").
(j) Any provisions in this Agreement and any Schedule which are i
conflict with any statute, law or applicable rule shall be deemed omitt
modified or altered to conform thereto.
(k) Lessor represents and covenants to Lessee that Lessor has ful
authority to enter into this Agreement and that, conditioned upon Lesse
performing all of the covenants and conditions hereof, as to claims of
Lessor or persons claiming under Lessor, Lessee shall peaceably and
quietly hold, possess and use the Equipment during the term of this
Agreement, subject to the terms and provisions hereof.
(l) The Operative Documents are confidential documents among the
parties thereto and, for a period of seven (7) years from the date here
each party (the "Relevant Party") agrees to use its best efforts (i.e.,
accordance with procedures adopted by such Relevant Party in good faith
protect confidential information of third parties delivered to such Rel
Party) to keep the same confidential and not disclose the Operative
Documents to any third party without the prior written consent of Lesso
IBM and Guarantor; provided that nothing herein shall be deemed to
prevent any such disclosure by the Relevant Party:
(i) to its auditors or attorneys;
(ii) to any other persons requiring access to such informatio
connection with the normal business operations of such Relevant Party
(including portfolio review and analysis), and such Relevant Party shal
responsible for such person acting in compliance herewith;
(iii) to (or as required by) any regulatory authorities;
(iv) in connection with the enforcement or attempted enforcem
any of the Operative Documents;
(v) to any person expressing an interest in acquiring, direc
indirectly, the Relevant Party's interest in the Operative Documents (a
who agrees to be bound by the provisions of this Paragraph (l)); or
(vi) as required by any subpoena or civil investigative deman
applicable law or governmental authority.
XXVIII. CHOICE OF LAW; JURISDICTION:
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER SHALL IN ALL RESPECTS BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT
REGARD TO THE CONFLICT OF LAWS PRINCIPLES OF SUCH
STATE), INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, REGARDLESS OF THE
LOCATION OF THE EQUIPMENT. The parties agree that any action or
proceeding arising out of or relating to this Agreement may be commence
in the United States District Court for the Southern District of New Yo
XXIX. CHATTEL PAPER:
To the extent that any Schedule would constitute chattel paper, a
term is defined in the Uniform Commercial Code as in effect in any
applicable jurisdiction, no security interest therein may be created th
the transfer or possession of this Lease in and of itself without the t
or possession of the original of a Schedule executed pursuant to this L
and incorporating this Agreement by reference; and no security interest
this Agreement and a Schedule may be created by the transfer or possess
of any counterpart of the Equipment Schedule other than the original
thereof, which shall be identified as the document marked "Original" an
all other counterparts shall be marked "Duplicate".
XXX. SCOPE OF LIABILITY:
Notwithstanding any other provision of this Agreement or any other
Operative Documents executed in connection herewith (expressly exceptin
the Guaranty), there shall be no recourse against Lessee or any of its
partners, officers or employees, for any liability to Lessor or any Par
arising in connection with any breach or default under this Agreement,
except to the extent the same is enforced against the Equipment and any
proceeds thereof (including, without limitation, insurance proceeds
thereof); and Lessor and the Participants shall look solely to the Equi
and any proceeds thereof (including, without limitation, insurance proc
thereof) in enforcing rights and obligations under and in connection wi
this Agreement and the other Operative Documents (expressly excepting
the Guaranty); provided that the foregoing provisions of this Section X
shall not (i) constitute a waiver, release or discharge of any of Lesse
obligations hereunder, or of any of the terms, covenants, conditions or
provisions of this Agreement or the other Operative Documents, or (ii)
or restrict the right of Lessor to name Lessee as a defendant in any ac
suit for a judicial foreclosure or for the exercise of any other remedy
or with respect to this Agreement, so long as no judgment in the nature
deficiency judgment shall be enforced against Lessee or any of its part
officers or employees out of any property, assets or funds other than t
Equipment and any proceeds thereof (including, without limitation,
insurance proceeds thereof).
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, Lessee and Lessor have caused this Master
Lease Agreement to be executed by their duly authorized representatives
of the date first above written.
LESSOR: LESSEE:
GENERAL ELECTRIC CAPITAL CORPORATION, MICRUS, a New York general part
FOR ITSELF AND AS AGENT FOR
CERTAIN PARTICIPANTS By: CIREL INC.,
General Partner
By: By:
Name: Name:
Title: Title:
By: MICRUS HOLDINGS, INC.,
General Partner
By:
Name:
CORPORATE GUARANTY
Date: June 24, 1996
General Electric Capital Corporation,
For Itself and as Agent for
Certain Participants
303 International Circle
Suite 300
Hunt Valley, Maryland 21031
To induce you to enter into that certain Master Lease Agreement da
as of the date hereof, as now or hereafter amended (the "Agreement"),
and/or any Schedules or other documents or instruments evidencing or
relating to, any lease, loan, extension of credit or other financial
accommodation made pursuant to the Agreement (collectively "Account
Documents" and each an "Account Document") to MICRUS, a general
partnership organized and existing under the laws of the State of New Y
("Customer"), but without in any way binding you to do so, the
undersigned, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged ("Guarantor"), does hereby:
(a) agree to pay to you, for the period from and including each
applicable Lease Commencement Date to each applicable Basic Term
Commencement Date (the "Interim Period"), interim rent for each Item of
the Equipment, calculated as the product of the Interest Rate times the
Funding Amount with respect to such Item (as specified on the Equipment
Schedule) divided by three hundred sixty (360), multiplied by the numbe
of days in the Interim Period. As used herein, "Interest Rate" shall m
that percentage per annum calculated as the sum of one hundred (100) ba
points plus the LIBOR Rate redetermined monthly. As used herein,
"LIBOR Rate" shall mean, with respect to the Interim Period, an intere
rate per annum (rounded upward to the next higher whole multiple of
1/16th percent if such rate is not such a multiple), equal at all times
the Interim Period to the quotient of (1) the rate per annum (rounded
upward to the next higher whole multiple of 1/16th percent if such rate
not such a multiple) as determined on the basis of the average of the r
offered by a majority of the banks in the London interbank market for
deposits in U.S. Dollars for thirty (30) days, to the extent the rates
by these banks appear in The Wall Street Journal on the third Business
next preceding the Lease Commencement Date, redetermined monthly on
the last Business Day of each calendar month thereafter), divided by (2
number equal to 1.00 minus the aggregate (without duplication) of the r
(expressed as a decimal fraction) of the LIBOR Reserve Requirements
current on the Business Day next preceding the Lease Commencement
Date. As used herein, "LIBOR Reserve Requirements" means, for the
Interim Period, the maximum reserves (whether basic, supplemental,
marginal, emergency or otherwise) prescribed by the Board of Governors
the Federal Reserve System (or any successor) with respect to liabiliti
assets consisting of or including "Eurocurrency liabilities" (as define
Regulation D of the Board of Governors of the Federal Reserve System)
having a term equal to the Interim Period. Interim rent shall be paid
by wire transfer of immediately available funds to you at: Bankers Tru
New York, New York, New York 10006, Account No. 50-202-962, ABA
No. 021-001-033, or to such other account as you may direct in writing;
shall be effective upon receipt. Such interim rent shall be due on the
of: (x) the applicable Basic Term Commencement Date, or (y) November
30, 1996; provided, however, that if such date is not a Business Day, t
interim rent otherwise due on such date shall be payable on the immedia
preceding Business Day. Notwithstanding the foregoing, if Lessee does
execute and deliver to you a Certificate of Acceptance with respect to
the Items of the Equipment listed on a Schedule within sixty (60) days
the applicable Lease Commencement Date (the "Expiration Date"), then th
Interim Period shall expire on the Expiration Date and Guarantor shall
to you on the Expiration Date the interim rent then due plus the Capita
Lessor's Cost then having been paid by you with respect to all of the I
of the Equipment listed on the Schedule. Upon receipt of such payment,
long as no Lease Default shall then have occurred and be continuing, yo
will transfer to Guarantor, on an AS IS BASIS, all your interest in and
the applicable Items of the Equipment. You shall not be required to ma
and may specifically disclaim any representation or warranty as to the
condition of the Items of the Equipment and any other matters (except t
you shall warrant that you have conveyed whatever interest you received
the Items of the Equipment free and clear of any lien or encumbrance
created by, through or under you). You shall execute and deliver to
Guarantor such Uniform Commercial Code Statements of Termination as
reasonably may be required in order to terminate your interest in and t
applicable Items of the Equipment. Capitalized terms used herein witho
definition shall have the meaning given them in the Account Documents;
and
(b) guarantee to you, your successors and assigns, the due regula
punctual payment of any sum or sums of money which the Customer may
owe to you now or at any time hereafter pursuant to or evidenced by an
Account Document, and whether it represents principal, interest, rent,
charges, indemnities, an original balance, an accelerated balance, liqu
damages, a balance reduced by partial payment, a deficiency after sale
other disposition of any leased equipment, collateral or security, or a
other type of sum of any kind whatsoever that the Customer may owe to
you now or at any time hereafter pursuant to or evidenced by an Account
Document, and does hereby further guarantee to you, your successors and
assigns, the due, regular and punctual performance of any other duty or
obligation of any kind or character whatsoever that the Customer may ow
to you now or at any time hereafter in connection with or pursuant to t
Account Documents (all such payment and performance obligations being
collectively referred to as "Obligations"). Undersigned does hereby fu
guarantee to pay upon demand all losses, costs, attorneys' fees and exp
which may be suffered by you by reason of Customer's default or default
the undersigned.
1. This Guaranty is a guaranty of prompt payment and performance
(and not merely a guaranty of collection). Nothing herein shall requir
to first seek or exhaust any remedy against the Customer, its successor
assigns, or any other person obligated with respect to the Obligations,
first foreclose, exhaust or otherwise proceed against any leased equipm
collateral or security which may be given in connection with the
Obligations. It is agreed that you may, upon any breach or default of
Customer, or at any time thereafter, make demand upon the undersigned
and receive payment and performance of the Obligations, with or without
notice or demand for payment or performance by the Customer, its
successors or assigns, or any other person. Suit may be brought and
maintained against the undersigned at your election, without joinder of
Customer or any other person as parties thereto. The obligations of ea
signatory to this Guaranty shall be joint and several.
2. The undersigned agrees that its obligations under this Guaran
be primary, absolute, continuing and unconditional, irrespective of and
unaffected by any of the following actions or circumstances (regardless
any notice to or consent of the undersigned): (a) the genuineness, vali
regularity and enforceability of the Account Documents or any other
document; (b) any extension, renewal, amendment, change, waiver or othe
modification of the Account Documents or any other document; (c) the
absence of, or delay in, any action to enforce the Account Documents, t
Guaranty or any other documents; (d) your failure or delay in obtaining
other guaranty of the Obligations (including without limitation, your f
to obtain the signature of any other guarantor hereunder); (e) the rele
extension of time for payment or performance by or any other indulgence
granted to the Customer or any other person with respect to the Obligat
by operation of law or otherwise; (f) the existence, value, condition,
subordination or release (with or without substitution) of or failure t
title to or perfect and maintain a security interest in, or the time, p
manner of any sale or other disposition of any leased equipment, collat
or security given in connection with the Obligations, or any other
impairment (whether intentional or negligent, by operation of law or
otherwise) of the rights of the undersigned; (g) the Customer's volunta
involuntary bankruptcy, assignment for the benefit of creditors,
reorganization, or similar proceedings affecting the Customer or any of
assets; or (h) any other action or circumstances which might otherwise
constitute a legal or equitable discharge or defense of a surety or gua
3. This Guaranty may be terminated upon delivery to you (at your
address shown above) of a written termination notice from the undersign
However, as to all Obligations (whether matured, unmatured, absolute,
contingent or otherwise) incurred by the Customer prior to your receipt
such written termination notice (and regardless of any subsequent
amendment, extension or other modification which may be made with
respect to such Obligations), this Guaranty shall nevertheless continue
remain undischarged until all such Obligations are indefeasibly paid an
performed in full.
4. The undersigned agrees that this Guaranty shall remain in ful
and effect or be reinstated (as the case may be) if at any time payment
performance of any of the Obligations (or any part thereof) is rescinde
reduced or must otherwise be restored or returned by you, all as though
such payment or performance had not been made. If, by reason of any
bankruptcy, insolvency or similar laws affecting the rights of creditor
shall be prohibited from exercising any of your rights or remedies agai
the Customer or any other person or against any property, then, as betw
you and the undersigned, such prohibition shall be of no force and effe
and you shall have the right to make demand upon, and receive payment
from, the undersigned of all amounts and other sums that would be due t
you upon a default with respect to the Obligations.
5. The undersigned covenants and agrees that: (a) it will provi
Lessor: (1) within ninety (90) days after the end of each of its fisca
its balance sheet and related statement of income and statement of cash
flows of Guarantor, prepared in accordance with generally accepted
accounting principles consistently applied ("GAAP"), all in reasonable
detail and certified by independent certified public accountants of
recognized standing selected by the undersigned; (2) within sixty (60)
after the end of each quarter of its fiscal year, its balance sheet and
statement of income and statement of cash flows for such quarter, inter
prepared in accordance with GAAP and certified by its chief financial
officer; and (3) within thirty (30) days after the date on which they a
all regular periodic reports, forms and other filings required to be ma
the undersigned to the Securities and Exchange Commission, including
(without limitation) Forms 8K, 10K and 10Q; and (b) it will promptly
execute and deliver to you such further documents, instruments and
assurances and take such further action as you from time to time reason
may request in order to carry out the intent and purpose of this Guaran
and to establish and protect the rights and remedies created or intende
be created in your favor hereunder.
6. The undersigned shall be deemed to be in default hereunder
("Default") if: (a) it shall fail to perform or observe any covenant,
condition or agreement to be performed or observed by it hereunder and
such failure shall continue unremedied for a period of thirty (30) days
the earlier of the actual knowledge of Guarantor or written notice ther
the undersigned by you; or (b) it shall (1) be generally not paying its
as they become due, (2) take action for the purpose of invoking the
protection of any bankruptcy or insolvency law, or any such law is invo
against or with respect to it or its property, and such petition filed
is not dismissed within sixty (60) days; or (c) there is an anticipator
repudiation of its obligations pursuant to this Guaranty; or (d) any
certificate, statement, representation, warranty or audit contained her
heretofore or hereafter furnished with respect to this Guaranty by or o
behalf of the undersigned proving to have been false in any material re
at the time as of which the facts therein set forth were stated or cert
having omitted any substantial contingent or unliquidated liability or
against it; or (e) it shall be in default under any obligation for an a
excess of $1,000,000.00 for borrowed money, for the deferred purchase
price of property or any lease agreement, and the creditor thereunder s
have declared such obligation to be accelerated; or (f) the corporate
existence of the undersigned is terminated and its obligations in conne
with this Guaranty are not assumed by a successor in interest reasonabl
satisfactory to you; or (g) as a result of or in connection with a mate
change in the ownership of the capital stock of the undersigned and the
to worth ratio of the undersigned equals or exceeds twice its debt to w
ratio as of the date of this Guaranty, without your prior written conse
used herein, "debt to worth ratio" shall mean the ratio of (1) total li
which, in accordance with GAAP, would be included in the liability side
a balance sheet, to (2) tangible net worth including the sum of the par
stated value of all outstanding capital stock, surplus and undivided pr
less any amounts attributable to good will, patents, copyrights, mailin
catalogs, trademarks, bond discount and underwriting expenses,
organization expenses and other intangibles, all as determined in
accordance with GAAP. Notwithstanding the foregoing, the events
specified in sub-parts (c), (f) and (g) of this Section 6 shall not con
Default hereunder if, prior to the occurrence of the events specified i
of such sub-parts, Guarantor delivers or causes to be delivered to you
irrevocable stand-by letter of credit ("Letter of Credit") which shall
in an amount equal to the then Stipulated Loss Value of the Equipment,
issued by a bank which is acceptable to you in your sole discretion, (y
substantially in the form of Exhibit A attached hereto (or in such othe
as may be acceptable to you in your sole discretion), and (z) for an in
term of one (1) year with automatic annual renewals thereafter (without
amendment except for extension of the then-current expiration date by a
additional year). You shall have the right, with or without notice to
demand upon Guarantor, to draw upon the Letter of Credit by presenting
the issuer one or more sight drafts and any other necessary documents,
to receive (in a lump sum or in several sums from time to time at your
discretion) and retain an amount not to exceed, in the aggregate, that
available under the Letter of Credit, as and to the extent you otherwis
would have been able to demand payment or performance by the
undersigned pursuant to this Guaranty. Once all obligations of Custome
pursuant to the Account Documents have been indefeasibly paid and
performed in full, you shall release the Letter of Credit and provide
Guarantor with written notice to that effect or, if you have then drawn
the Letter of Credit, any remaining excess proceeds from the drawing un
the Letter of Credit shall be remitted by you to Guarantor. In any eve
undersigned shall remain liable under this Guaranty for any deficiency.
Guarantor is required to provide the Letter of Credit hereunder and fai
do so, then upon your demand, Guarantor shall pay to you the then
Stipulated Loss Value of the Equipment.
7. Upon a Default hereunder, you may, at your option, declare th
Guaranty to be in default by written notice to the undersigned (without
election of remedies), and at any time thereafter, may do any one or mo
of the following, all of which are hereby authorized by the undersigned
A. sue for and recover all damages then or thereafter incurred by
a result of such Default; and/or
B. seek specific performance of the obligations of the undersigne
hereunder.
In addition, the undersigned shall be liable for all reasonable at
fees and other costs and expenses incurred by reason of any Default or
exercise of your remedies hereunder and/or under the Account Document.
No right or remedy referred to herein is intended to be exclusive, but
shall be cumulative, and shall be in addition to any other remedy refer
above or otherwise available at law or in equity, and may be exercised
concurrently or separately from time to time.
8. Notice of acceptance of this Guaranty and of any default by t
Customer or any other person is hereby waived. Presentment, protest,
demand, and notice of protest, demand and dishonor of any of the
Obligations, and the exercise of possessory, collection or other remedi
the Obligations, are hereby waived. The undersigned warrants that it h
adequate means to obtain from the Customer on a continuing basis financ
data and other information regarding the Customer and is not relying up
you to provide any such data or other information. Without limiting th
foregoing, notice of adverse change in the Customer's financial conditi
of any other fact which might materially increase the risk of the
undersigned is also waived. All settlements, compromises, accounts sta
and agreed balances made in good faith between the Customer, its
successors or assigns, and you shall be binding upon and shall not affe
liability of the undersigned.
9. Payment of all amounts now or hereafter owed to the undersign
the Customer or any other obligor for any of the Obligations is hereby
subordinated in right of payment to the indefeasible payment in full to
of all Obligations and is hereby assigned to you as security therefor.
undersigned hereby irrevocably and unconditionally waives and
relinquishes all statutory, contractual, common law, equitable and all
claims against the Customer and any other obligor for any of the
Obligations, any collateral therefor, or any other assets of the Custom
any such other obligor, for subrogation, reimbursement, exoneration,
contribution, indemnification, setoff or other recourse in respect of s
paid or payable to you by the undersigned hereunder, and the undersigne
hereby further irrevocably and unconditionally waives and relinquishes
and all other benefits which it might otherwise directly or indirectly
or be entitled to receive by reason of any amounts paid by, or collecte
due from, it, the Customer or any other obligor for any of the Obligati
or realized from any of their respective assets for any of the Obligati
10. (a) THE UNDERSIGNED HEREBY UNCONDITIONALLY
WAIVES ITS RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION BASED UPON OR ARISING OUT OF, DIRECTLY OR
INDIRECTLY, THIS GUARANTY, THE OBLIGATIONS
GUARANTEED HEREBY, ANY OF THE RELATED DOCUMENTS,
ANY DEALINGS BETWEEN US RELATING TO THE SUBJECT
MATTER HEREOF OR THEREOF, AND/OR THE RELATIONSHIP
THAT IS BEING ESTABLISHED BETWEEN US. The scope of this
waiver is intended to be all encompassing of any and all disputes that
be filed in any court (including, without limitation, contract claims,
claims, breach of duty claims, and all other common law and statutory
claims). THIS WAIVER IS IRREVOCABLE MEANING THAT IT MAY
NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS GUARANTY, THE
OBLIGATIONS GUARANTEED HEREBY, OR ANY RELATED
DOCUMENTS. In the event of litigation this Guaranty may be filed as a
written consent to a trial by the court.
(b) As used in this Guaranty, the word "person" shall include any
individual, corporation, partnership, joint venture, association, joint
company, trust, unincorporated organization, or any government or any
political subdivision thereof.
(c) This Guaranty is intended by the parties as a final expressio
guaranty of the undersigned and is also intended as a complete and
exclusive statement of the terms thereof. No course of dealing, course
performance or trade usage, nor any paid evidence of any kind, shall be
used to supplement or modify any of the terms hereof. There are no
conditions to the full effectiveness of this Guaranty. This Guaranty a
each of its provisions may only be waived, modified, varied, released,
terminated or surrendered, in whole or in part, by a duly authorized wr
instrument signed by you. No failure by you to exercise your rights
hereunder shall give rise to any estoppel against you, or excuse the
undersigned from performing hereunder. Your waiver of any right to
demand performance hereunder shall not be a waiver of any subsequent or
other right to demand performance hereunder.
(d) This Guaranty shall bind the undersigned's successors and ass
and the benefits thereof shall extend to and include your successors an
assigns. In the event of default hereunder, you may at any time inspec
undersigned's records, or at your option, undersigned shall furnish you
a current independent audit report.
(e) THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER SHALL IN ALL RESPECTS BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT
REGARD TO THE CONFLICT OF LAWS PRINCIPLES OF SUCH
STATE), INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE. The parties agree that any action or
proceeding arising out of or relating to this Agreement may be commence
in the United States District Court for the Southern District of New Yo
If any provisions of this Guaranty are in conflict with any applicable
rule or law, then such provisions shall be deemed null and void to the
that they may conflict therewith, but without invalidating any other
provisions hereof.
(f) All notices required to be given hereunder shall be deemed
adequately given if sent by certified mail to the addressee at its addr
stated herein, or at such other place as such addressee may have design
in writing.
(g) Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability witho
invalidating the remaining provisions hereof, and any such prohibition
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
(h) Each signatory on behalf of a corporate guarantor warrants th
had authority to sign on behalf of such corporation and by so signing,
bind said guarantor corporation hereunder.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, this Guaranty is executed the day and year
above written.
ATTEST: CIRRUS LOGIC, INC.
By:
Secretary/Assistant Secretary Name:
Title:
3100 West Warren Avenue
Fremont, California 94538
EXHIBIT 99.3
MASTER LEASE AGREEMENT
dated as of June 28, 1996
by and between
COMDISCO, INC., as Lessor
and
MICRUS, a New York general partnership, as Lessee
TABLE OF CONTENTS
Page
1. PROPERTY LEASED. 1
2. TERM. 1
3. RENT AND PAYMENT. 1
4. SELECTION AND WARRANTY AND DISCLAIMER OF WARRANTIES. 1
4.1. Selection.. 1
4.2. Warranty and Disclaimer of Warranties 2
5. TITLE AND ASSIGNMENT. 2
5.1. Title.. 2
5.2. Relocation or Sublease 2
5.3. Assignment by Lessor to a Secured Party 3
5.4. Assignment by Lessor to Assignee and Participants. 4
5.5. Restrictions on Lessor, Assignee, Secured Party
and the Participants. 5
6. NET LEASE AND TAXES AND FEES. 6
6.1. Net Lease. 6
6.2. Taxes and Fees 6
6.3. Reservation of Right. 6
7. CARE, USE AND MAINTENANCE, ATTACHMENTS AND
RECONFIGURATIONS AND INSPECTION BY LESSOR. 6
7.1. Care, Use and Maintenance. 6
7.2. Attachments and Reconfigurations. 7
7.3. Inspection by Lessor 7
8. REPRESENTATIONS AND WARRANTIES OF LESSEE. 7
9. DELIVERY AND RETURN OF EQUIPMENT. 7
10. LABELING. 8
11. INDEMNITY. 8
12. RISK OF LOSS. 9
13. DEFAULT, REMEDIES AND MITIGATION. 9
13.1. Default 9
13.2.Remedies: 11
13.3.Mitigation
14. Intentionally Omitted. 11
15. ADDITIONAL PROVISIONS. 11
15.1. Entire Agreement. 11
15.2. No Waiver. 12
15.3. Binding Nature. 12
15.4. Survival of Obligations. 12
15.5. Notices 12
15.6. Applicable Law 12
15.7. Severability. 12
15.8. Counterparts 13
15.9. Additional Documents. 13
15.10. Electronic Communications 13
15.11. Scope of Liability 13
15.12. Confidentiality: 13
15.13. Definitions. 14
MASTER LEASE AGREEMENT
MASTER LEASE AGREEMENT (this "Master Lease") dated as of June
28, 1996, by and between COMDISCO, INC. ("Lessor") and MICRUS, a
New York general partnership ("Lessee").
IN CONSIDERATION of the mutual agreements described below,
the parties agree as follows (all capitalized terms are defined in
Section 15.13):
1.PROPERTY LEASED.
Lessor hereby leases to Lessee and Lessee hereby leases from
Lessor, subject to the terms and conditions of this Master Lease,
the items of equipment (the "Equipment") described in the lease
schedules executed or to be executed hereunder (each a
"Schedule"). Each Schedule shall constitute a separate and
independent lease and contractual obligation of Lessee and shall
incorporate the terms and conditions of this Master Lease and any
additional provisions contained in such Schedule. In the event of
a conflict between the terms and conditions of this Master Lease
and any additional provisions of such Schedule, the additional
provisions of such Schedule shall prevail with respect to such
Schedule only.
2.TERM.
On the Commencement Date Lessee will be deemed to accept the
Equipment (a) as evidenced by Lessee's delivery of a Lease
Schedule in the form of Exhibit A to Lessor or (b) in the case of
Lessee's delivery of a Lease Schedule in the form of Exhibit B as
evidenced by Lessee's delivery of a Commencement Certificate in
the form of Exhibit C to Lessor, and by such delivery of a Lease
Schedule under (a) above or of a Lease Schedule and a Commencement
Certificate under (b) above, as applicable, Lessee will be bound
to its rental obligations for each item of Equipment ("Item"), and
the term of a Schedule ("Term") will begin and continue through
the Initial Term. Except as set forth in a Schedule, no
termination may be effective prior to the expiration of the
Initial Term.
3.RENT AND PAYMENT.
Rent is due and payable in advance, in immediately available
funds, on the first day of each Rent Interval to the Paying Agent
at the location specified in the Schedule or such other payee and
location as specified by Lessor by written notice to Lessee not
less than 30 days prior to the applicable payment date. Interim
Rent is due and payable within 30 days after invoice. If any
payment is not made when due, Lessee will pay interest at the
Overdue Rate.
4.SELECTION AND WARRANTY AND DISCLAIMER OF WARRANTIES.
4.1. Selection. Lessee acknowledges that it has selected the
Equipment and disclaims any reliance upon statements made by
Lessor.
4.2. Warranty and Disclaimer of Warranties. Lessor warrants
to Lessee that, so long as no Event of Default exists, Lessor will
not disturb Lessee's quiet and peaceful possession and
unrestricted use of each Item. To the extent permitted by the
manufacturer, Lessor assigns to Lessee during the term of the
Schedule any manufacturer's warranties for each Item. LESSOR
MAKES NO OTHER WARRANTY, EXPRESS OR IMPLIED, AS TO ANY MATTER
WHATSOEVER, INCLUDING, WITHOUT LIMITATION, THE MERCHANTABILITY OF
EACH ITEM OR ITS FITNESS FOR A PARTICULAR PURPOSE. Lessor is not
responsible for any liability, claim, loss, damage or expense of
any kind (including strict liability in tort) caused by each Item
except for any loss or damage caused by the negligent acts of
Lessor. In no event is Lessor responsible for special, incidental
or consequential damages.
5.TITLE AND ASSIGNMENT.
5.1. Title. Lessee holds the Equipment subject and
subordinate to the rights of the, Lessor, any Assignee and any
Secured Party. If an Event of Default exists or Lessor has
requested in writing of Lessee and Lessee has failed to respond
within 10 days to such request, Lessee authorizes Lessor, as
Lessee's agent, to prepare, execute and file in Lessee's name
precautionary Uniform Commercial Code financing statements showing
the interest of the, Lessor, and any Assignee or Secured Party in
the Equipment and to insert serial numbers in Schedules as
appropriate. Except as provided in Sections 5.2 and 7.2 hereof
and a Schedule, Lessee will, at its expense, keep the Equipment
free and clear of any liens or encumbrances of any kind (other
than Permitted Liens) and will indemnify and hold Lessor, any
Assignee and any Secured Party harmless from and against any loss
caused by Lessee's failure to do so.
5.2. Relocation or Sublease. Upon prior written notice to
Lessor, Lessee may relocate any Item to any location within the
continental United States, provided (i) such Item will not be
used by an entity exempt from federal income tax, and (ii) all
additional costs (including any administrative fees, additional
taxes and insurance coverage) are reconciled and promptly paid by
Lessee. Lessee shall have and retain throughout the Term with
respect to any Item control over the operation and use of such
Item, and may, so long as no Event of Default exists, without the
consent of Lessor, assign Lessee's interest in this Master Lease
or sublease, license, transfer control of, or permit any other
person to use, all or any part of any Item or Items during the
Term, subject to the following terms and conditions:
(i) Lessee shall remain primarily liable to Lessor for the
performance of all the terms of this Master Lease to the same
extent as if such assignment, sublease or arrangement had not
occurred, and the Guaranty shall remain in full force and
effect against Guarantor;
(ii) such assignment, sublease or arrangement shall be in
compliance with all applicable laws;
(iii) such assignment, sublease or arrangement as to any Item
shall not extend beyond the stated Term with respect to such
Item as then in effect for such Item, and any rights created
thereby in an Item shall be fully subject and subordinate to
this Master Lease;
(iv) such assignment, sublease or arrangement shall be to
Guarantor or to a solvent affiliate of Lessee, Guarantor or
International Business Machines Corporation ("IBM"),
organized under the laws of any state of, and located in, the
United States;
(v) such assignment, sublease or arrangement shall not
subject Lessor to any regulation by any governmental agency;
(vi) Lessee shall give prior written notice to Lessor of any
such assignment, sublease or arrangement;
(vii) Lessee shall obtain and deliver to Lessor such Uniform
Commercial Code financing statements executed by the assignee
or sublessee and Lessee, as reasonably may be required by
Lessor, to be filed at Lessee's expense; and
(viii) all reasonable costs and expenses (including
attorney's fees and expenses) incurred by Lessor in
connection with such assignment, sublease or arrangement
shall be paid by Lessee.
No relocation or sublease will relieve Lessee of any of its
obligations under this Master Lease and the relevant Schedule.
Upon the dissolution of Lessee, Lessee may assign its leasehold
interest in this Master Lease in its entirety to Guarantor, IBM or
a solvent subsidiary of either thereof, or to a solvent general
partnership of which IBM or a solvent subsidiary of IBM is the
managing general partner; provided that (1) the Guaranty survives
any such assignment to Guarantor or its solvent subsidiary and
remains in full force and effect against Guarantor or, if such
assignment is to a solvent subsidiary of IBM, IBM will provide a
guaranty substantially in the form of Exhibit E attached hereto
(provided, however, such guaranty shall not include paragraph 3 of
Exhibit E therein), and (2) subparagraphs (ii), (iii), (iv) and
(vi) above shall be complied with.
5.3. Assignment by Lessor to a Secured Party. Lessor may not
grant a security interest in all or any part of a Schedule to a
Secured Party unless (a) Lessor delivers five (5) Business Days
prior written notice to Lessee setting forth the identity of any
proposed Secured Party and the Items on which such proposed
Secured Party is intended to have a Lien ("Notice") (b) any
proposed Secured Party qualifies as a Transferee (as such term is
hereinafter defined), and (c) Lessee confirms in writing the
qualification of such proposed Secured Party within a reasonable
time after such Notice. If such an event should occur, and upon
delivery by Lessor of written notice to Lessee confirming the
status of such party as a Secured Party and the Items on which it
has a Lien, the term Lessor will include the security interest of
such Secured Party with respect to such Schedule; provided,
however, any assignment, sale, or other transfer by Lessor will
not relieve Lessor of its obligations to Lessee and will not
change Lessee's duties or increase the burdens or risks imposed on
Lessee. Lessee consents to such assignments to a Transferee, and
will acknowledge them in a written notice given to Lessee. Any
successor to a Secured Party must also be a Transferee. Lessee
also agrees that at any time an Event of Default exists:
(a) The Secured Party will be entitled to exercise all of
Lessor's rights with respect to such Schedule subject to a
lien in favor of the Secured Party, but will not be obligated
to perform any of the obligations of Lessor with regard to
such Equipment; provided, however, the Secured Party will not
disturb Lessee's quiet and peaceful possession and
unrestricted use of the Equipment so long as no Event of
Default exists.
(b) To the extent applicable, Lessee will pay all Rent and
all other amounts payable to the Paying Agent for the benefit
of the Secured Party, despite any defense or claim which
Lessee has against Lessor. Notwithstanding anything to the
contrary contained herein, Lessee reserves its right to have
recourse directly against Lessor for any defense or claim.
(c) Subject to and without impairment of Lessee's leasehold
rights in the Equipment, Lessee will hold the Equipment for
the Secured Party to the extent of the Secured Party's rights
in such Equipment and to the extent such rights do not exceed
the rights of the Lessor (or conflict with Lessee's rights of
quiet enjoyment hereunder) and have been notified in writing
to Lessee.
5.4. Assignment by Lessor to Assignee and Participants.
(a) Lessor may not, without the consent of Lessee (which
consent shall not unreasonably be withheld, delayed or
conditioned; provided, however, any Assignee must qualify as
a Transferee), assign this Master Lease or any Schedule, in
whole but not in part, or the right to enter into any
Schedule to an Assignee. Lessor or the Paying Agent shall
act as the Paying Agent for any Assignee unless an Event of
Default exists hereunder, in which case such Assignee may act
directly in lieu of Lessor or Paying Agent, as the case may
be, hereunder. Lessee agrees to confirm in writing receipt
of a notice of an approved assignment with respect to a
Schedule (in whole, but not in part) as reasonably may be
requested by Assignee. Lessee hereby waives, and agrees not
to assert against any such Assignee, any defense, set-off,
recoupment, claim or counterclaim that Lessee has or may at
any time have against Lessor or any other person for any
reason whatsoever. Notwithstanding anything to the contrary
contained herein, Lessee reserves its right to have recourse
directly against Lessor for any defense or claim. Each
Assignee shall be required to assume, in a writing delivered
to Lessee, all obligations of Lessor, including the first
sentence of Section 4.2 and Section 5.6.
(b) Subject to the terms set forth in the last sentence of
this Section 5.4(b), Lessee acknowledges that it has been
advised that the interest of Lessor in this Master Lease, the
Schedules, related instruments and documents and/or the
Equipment may be conveyed to, in whole or in part, certain
third parties (each being herein referred to as a
"Participant" and, collectively, as the "Participants")
without the consent of Lessee (the "Syndication"). Lessee
agrees to cooperate reasonably with Lessor in connection with
the Syndication, including the execution and delivery of such
other documents, instruments, notices, opinions, certificates
and acknowledgments as reasonably may be required by Lessor
or such Participant; provided, however, in no event shall
Lessee be required to consent to any change that would
adversely affect any of the terms of the transactions
contemplated herein; and provided further, however, that
Lessor shall be responsible for its own costs and expenses
incurred in connection with the Syndication. Each
Participant shall be required to comply with the provisions
of the first sentence of Section 4.2 hereof and to qualify as
a Transferee.
5.5. Restrictions on Lessor, Assignee, Secured Party and the
Participants.
(a) Each of Lessor, any Assignee, Security Party and the
Participants agrees that it will not advertise or publish the
fact that it has furnished financing to, or otherwise entered
into the transactions contemplated hereby with, Lessee,
Guarantor or IBM without first obtaining the written consent
of such Person. Notwithstanding any other provision of this
Master Lease, a Schedule, the Guaranty or any documents
executed in connection with the Master Lease (collectively,
"Operative Documents"), Lessor, any Assignee, Security Party
and the Participants will not have any right to use any
trademark or trade name of, or otherwise refer to, Lessee,
Guarantor or IBM in any promotion or publication without
first obtaining the written consent of such Person.
(b) A Participant may at any time assign any or all of its
rights, obligations, title and interest as such Participant
to any Transferee with five (5) Business Days' notice to
Lessor, Lessee, Guarantor, IBM and IBM Credit Corporation.
As used herein, "Transferee" shall mean a corporation, bank,
insurance company, trust company or national banking
association, or any affiliate of any thereof, incorporated or
doing business under the laws of the United States or one of
the states thereof, having at the time of transfer a
consolidated net worth or combined capital and surplus of at
least $20,000,000.00, which is not a direct competitor of or
then in litigation adverse to Lessee, Guarantor or IBM or
which is then in litigation adverse to IBM Credit
Corporation.
(c) Subject always to the foregoing and to Sections 5.2, 5.3
and 5.4 hereof, this Master Lease inures to the benefit of,
and is binding upon, the successors and assigns of the
parties hereto.
5.6 No Lessor Liens. Lessor and Lessor's successors and
assigns (including, without limitation, any Assignee, Secured
Party or Participant) shall not directly or indirectly create,
incur or suffer to exist any lien on or disposition of title of
any Item or any portion thereof that either (i) results from
claims against Lessor not related to the transactions contemplated
by the Operative Documents or (ii) results from an affirmative
act of Lessor to create such a lien or disposition and that is
neither consented to by the Lessee nor taken in connection with
any Event of Default (all such liens referred to in clauses (i)
and (ii) being herein called "Lessor Liens"). Lessor agrees that
it will, at its own cost and expense, promptly take such action as
may be necessary duly to discharge any Lessor Lien attributable to
it and will make restitution and hold harmless Lessee from and
against any costs or expenses (including legal fees and expenses)
and any reduction in the amount payable under this Master Lease,
as a result of the imposition or enforcement of any such Lessor
Lien attributable to it.
6.NET LEASE AND TAXES AND FEES.
6.1. Net Lease. Each Schedule constitutes a net lease.
Lessee's obligation to pay Rent and all other amounts is absolute
and unconditional and is not subject to any abatement, reduction,
set-off, defense, counterclaim, interruption, deferment or
recoupment for any reason whatsoever.
6.2. Taxes and Fees. Lessee will pay when due or reimburse
Lessor for all taxes, fees or any other charges by any
governmental authority (except only federal, state and local taxes
on or measured by the capital or the net income of Lessor),
together with any related interest or penalties not arising from
the negligence of Lessor, accrued for or arising from the
Equipment and/or this Master Lease during the term of each
Schedule. Lessor will file all personal property tax returns for
the Equipment and pay all property taxes due. Lessee will
reimburse Lessor for such property taxes within thirty (30) days
of receipt of an invoice therefor.
6.3. Reservation of Right. Notwithstanding anything to the
contrary contained herein, Lessee reserves the right to recover
damages resulting from any breach by Lessor, any Assignee, any
Secured Party or any Participant of Lessor's obligation under this
Master Lease to protect quiet and peaceful possession and
unrestricted use and enjoyment of each Item by Lessee.
7.CARE, USE AND MAINTENANCE, ATTACHMENTS AND RECONFIGURATIONS AND
INSPECTION BY LESSOR.
7.1. Care, Use and Maintenance. (a)Lessee shall not use any
Item, or authorize any third party to use any Item, in breach of
any applicable laws (other than applicable laws as to which
noncompliance would not adversely affect the business, operations
or properties of Lessee and so long as such noncompliance shall
not involve any material danger of the sale, forfeiture or loss of
such Item or the imposition of any criminal liability on Lessor).
(b)Lessee at its own expense shall at all times during the Term
applicable to each Item maintain such Item in accordance with good
commercial maintenance standards and practices followed from time
to time by Lessee in the operation and maintenance of similar
kinds of properties owned or leased by them. Lessee shall keep
each such Item fit for its intended use, in good and efficient
working order (ordinary wear and tear excepted), and in as good
condition (ordinary wear and tear excepted) as it was in on the
Commencement Date for such Item of Equipment. (c)Lessee will
promptly report to Lessor in writing if any Item is lost or
damaged and the estimated replacement or repair costs would exceed
One Hundred Thousand Dollars ($100,000), or is otherwise involved
in an accident causing serious personal injury or significant
property damage.
7.2. Attachments and Reconfigurations. Notwithstanding
anything to the contrary contained herein or in a Schedule, no
consent of Lessor shall be required for any alterations,
modification, repairs, upgrades or enhancements (collectively,
"Alterations") to the Equipment during the Initial Term or any
extension thereof, provided, however, that if such Alterations
should impair or degrade the remarketability, fair market value or
use of the Equipment, then prior to return of Equipment, Lessee at
its expense will restore the Equipment as required in Section 9.
In the event Lessee elects either to purchase or renew at the end
of the Initial Term or extension thereof and Alterations have
impaired or degraded the Fair Market Value of the Equipment, then
both parties agree the determination of the Fair Market Value
shall be based on the Equipment in the same operating order,
repair and appearance as when installed (normal wear and tear
excluded). Alternatively, without limiting the foregoing, Lessee
may return the Equipment with the Alteration. If the Alteration
has been purchased by Lessee, upon return, Lessor will remarket
the altered equipment and remit 100% of the Fair Market Value of
Alteration to Lessee. The Lessor, at its sole discretion, may
lease Alterations to Lessee under mutually agreeable terms. 7.3.
Inspection by Lessor. Upon request, Lessee, during reasonable
business hours and subject to Lessee's security and operational
requirements, will make the Equipment and its related log and
maintenance records available to Lessor for inspection.
8. REPRESENTATIONS AND WARRANTIES OF LESSEE.
Lessee represents and warrants that for this Master Lease and
each Schedule: (a)The execution, delivery and performance of the
Lessee have been duly authorized by all necessary corporate or
partnership action; (b) The individual executing was duly
authorized to do so; (c)This Master Lease and each Schedule
constitute legal, valid and binding agreements of the Lessee
enforceable in accordance with their terms; and
9. DELIVERY AND RETURN OF EQUIPMENT.
Lessee assumes the full expense of transportation of the
Equipment to its initial location, installation, deinstallation,
and return to a location within the continental United States
(including without limitation the expense of in-transit insurance)
all pursuant to Lessee's operating requirements and manufacturer's
specifications (as applicable). Upon any expiration or
termination of this Master Lease or any Schedule, unless Lessee
has exercised its early termination option, extension option,
renewal option, or purchase option pursuant hereto, Lessee shall
promptly, at its own cost and expense: (i) perform any testing
and repairs required to place the affected Item in the same
condition and appearance as when received by Lessee (ordinary wear
and tear excepted) meeting all original equipment manufacturer's
specifications for continued manufacturer's maintenance, but only
to the extent such manufacturer's specifications and maintenance
are then commercially available, and, to the extent reasonably
available, accompanied by all associated documents, manuals,
maintenance records, spare parts and accessories for the duration
of the Initial Term, and in good working order for its originally
intended purpose; (ii) if deinstallation, disassembly or crating
is required, cause such Item to be deinstalled, disassembled and
crated by qualified personnel of Lessee or IBM, or by an
authorized manufacturer's representative or such other service
person as is satisfactory to Lessor; and (iii) within ten (10)
days after such expiration or termination, ship such Item, free
and clear of all liens and encumbrances (other than Lessor Liens),
to a location within the forty-eight (48) contiguous continental
United States as Lessor shall direct; and Lessee shall provide, at
its expense, transit insurance payable to Lessor for the Equipment
in the amount of the then Casualty Value of the Equipment. The
Lessee agrees that during the last six months of the Term with
respect to such Item, it will cooperate in all reasonable respects
with efforts of the Lessor to lease lessees or purchasers by
providing access to the Item as then being used and to the records
relating to maintenance and performance for inspection during
normal working hours upon prior written notice to Lessee,
including providing access to Lessor and a representative of the
manufacturer to audit such Item prior to any decommissioning of
such Item during such six month period; provided, however, that
such cooperation shall be subject to the Lessee's reasonable
operational and security requirements.
10. LABELING.
Upon request, Lessee will provide unique equipment numbering
for each Item that is tracked to the list of Items on a Schedule.
Lessee will keep all Equipment free from any other marking or
labeling which might be interpreted as a claim of ownership.
11. INDEMNITY.
Lessee will indemnify and hold Lessor, any Assignee and any
Secured Party harmless from and against any and all claims, costs,
expenses, damages and liabilities, including reasonable attorney's
fees, arising out of the ownership (for strict liability in tort
only), selection, possession, leasing, operation, control, use,
maintenance, delivery, return or other disposition of the
Equipment (including, without limitation, latent and other
defects, whether or not discoverable by Lessor or Lessee, and any
claim for patent, trademark or copyright infringement or
environmental damage). However, Lessee is not responsible to a
party indemnified hereunder, for any claims, costs, expenses,
damages and liabilities occasioned by the negligent acts or
willful misconduct of such indemnified party. Lessee agrees to
carry bodily injury and property damage liability insurance during
the term of the Master Lease in amounts and against risks
customarily insured against by Lessee on equipment owned by it.
Any amounts received by Lessor under that insurance will be
credited against Lessee's obligations under this Section.
12.RISK OF LOSS.
Effective upon delivery and until the Equipment is returned,
Lessee relieves Lessor of responsibility for all risks of physical
damage to or loss or destruction of the Equipment. With respect
to all losses in excess of One Hundred Thousand Dollars
($100,000), Lessee will carry casualty insurance for each Item in
an amount not less than the Casualty Value. All policies for such
insurance will name Lessor and any Secured Party as additional
insureds, and as loss payees, and will provide for at least thirty
(30) days' prior written notice to Lessor of cancellation or
expiration. Lessee will furnish appropriate evidence of such
insurance. Provided that no Event of Default exists, Lessor shall
apply proceeds of insurance with respect to losses in excess of
One Hundred Thousand Dollars ($100,000), in whole or in part, as
elected by Lessee pursuant to this Section 12, to (i) repair or
replace Equipment or any part thereof, or (ii) satisfy any
obligation of Lessee to Lessor hereunder. Lessee shall promptly
repair any damaged Item if such Item is damaged and the estimated
repair costs would exceed One Hundred Thousand Dollars ($100,000)
and unless such Item has suffered a Casualty Loss. Within fifteen
(15) days of a Casualty Loss, Lessee will provide written notice
of that loss to Lessor, and Lessee will, at Lessee's option,
either (a) replace the Item with Like Equipment, and marketable
title to the Like Equipment will automatically vest in Lessor, or
(b) pay the Casualty Value, and after that payment and the payment
of all other amounts due and owing hereunder, Lessee's obligation
to pay further Rent for the Item will cease, and (except in case
(i) of the loss, theft or complete destruction of such Item, or
(ii) where the insurer requires possession of the damaged Item)
Lessee shall be entitled to recover possession of and title to
such Item and Lessor shall transfer (without any representation,
recourse or warranty whatsoever except as to the absence of Lessor
Liens) such Item, including title to such Item to the Lessee and
the Lessor shall execute and deliver such documents evidencing
such transfer and take such further action as the Lessee shall
reasonably request.
13.DEFAULT, REMEDIES AND MITIGATION.
13.1.Default. Lessor of a defaulted Schedule may in writing
declare this Master Lease in default with respect to the Equipment
listed on such defaulted Schedule upon the occurrence of any one
or more of the following Events of Default: (a)Lessee's failure to
pay Rent with respect to such Schedule or other amounts payable by
Lessee with respect to such Equipment listed on such Schedule when
due if that failure continues for ten (10) days after written
notice; or (b)Lessee's failure to perform any other term or
condition of such Schedule or the material inaccuracy of any
representation or warranty made by Lessee in such Schedule or in
any document or certificate furnished to Lessor hereunder with
respect to the Equipment listed on such Schedule if that failure
or inaccuracy continues for thirty (30) days after written notice;
provided, however, that if (A) such breach is curable, (B) such
breach cannot be remedied within the thirty (30) day period, (C)
Lessee commences reasonable efforts to effect such remedy within
the thirty (30) day period and diligently pursues such efforts,
and (D) such breach does not involve any substantial danger of the
sale, forfeiture or loss of the applicable Equipment or of
Lessor's interest therein, then Lessee shall have an additional
period of sixty (60) days to effect such remedy; or (c)An
assignment by Lessee for the benefit of its creditors, the failure
by Lessee to pay its debts when due, the insolvency of Lessee, the
filing by Lessee of any petition under any bankruptcy or
insolvency law or for the appointment of a trustee or other
officer with similar powers, the filing of a petition against
Lessee under any bankruptcy or insolvency laws which is not
dismissed within sixty (60) days, the adjudication of Lessee as
insolvent, the liquidation of Lessee (unless Lessee has assigned
its rights and obligations under this Master Lease and each
Schedule pursuant to Section 5.2), or the taking of any action for
the purpose of the foregoing; or (d)Subject to the notice and cure
provisions set forth below, an assignment by Guarantor for the
benefit of its creditors, the failure by Guarantor to pay its
debts when due, the insolvency of Guarantor, the filing by
Guarantor of any petition under any bankruptcy or insolvency law
or for the appointment of a trustee or other officer with similar
powers, the filing of a petition against Guarantor under any
bankruptcy or insolvency laws which is not dismissed within sixty
(60) days, the adjudication of Guarantor as insolvent, the
liquidation of Guarantor, or the taking of any action for the
purpose of the foregoing. Lessor shall provide written notice to
IBM upon the occurrence of an event under clause (d) above and,
until thirty (30) days after the giving of such notice (the
"30-day Period"), so long as no other Event of Default exists,
Lessor shall not declare this Master Lease to be in default as a
result of such occurrence and shall not exercise any remedies
hereunder as a result of such occurrence, provided that all Rent
and other payments becoming due hereunder are paid as and when due
during such 30-day Period. Prior to the expiration of such 30-day
Period, IBM may (at its sole discretion): (1) cause to be
delivered to Lessor an irrevocable letter of credit (in form and
substance satisfactory to Lessor) issued by a national bank
acceptable to Lessor in an amount equal to the Rent becoming due
during the next succeeding ninety (90) day period (the "Subsequent
Rent"), or (2) deliver to Lessor a written guaranty of IBM, in
substantially the form of guaranty executed by Guarantor,
guaranteeing the payment as and when due of the Subsequent Rent.
If IBM timely provides the required letter of credit or guaranty,
for an additional ninety (90) days after the original 30-day
Period, and if no other Event of Default exists, Lessor shall not
declare this Master Lease to be in default as a result of such
occurrence and shall not exercise any remedies hereunder as a
result of such occurrence. Upon the expiration of such subsequent
ninety (90) day period, unless IBM has (i) delivered to Lessor a
written guaranty of IBM, in substantially the form of Exhibit E
hereto, (ii) purchased all the Equipment with respect to Lessor
for (A) with respect to up to, but not to exceed seventy percent
(70%) of the original Aggregate Funding Amount, an amount
calculated in accordance with the procedure used to calculate the
Prepayment Purchase Price, and (B) with respect to the remaining
Items, an amount equal to the Fair Market Value of such Items
(provided, however, that all Items that are designated by an
asterisk (*) on such Schedule A shall be included as part of the
aggregate purchase limit of seventy percent (70%)), and paid all
unpaid Rent and other amounts due hereunder, in which case Lessor
shall transfer (without any representation, recourse or warranty
whatsoever except as to the absence of Lessor Liens) such
Equipment, including title to such Equipment, to the Lessee and
the Lessor shall execute and deliver such documents evidencing
such transfer and take such further action as the Lessee shall
reasonably request, (iii) received an assignment of all rights,
title, interest and obligations of Lessee in, under and pursuant
to this Master Lease, and has accepted such assignment and assumed
such obligations, or (iv) taken such other action acceptable to
Lessor (in its sole discretion), then Lessor may exercise all
rights and remedies hereunder. 13.2.Remedies. Upon the occurrence
and continuation of any of the above Events of Default, Lessor, at
its option, may: (a)enforce Lessee's performance of the provisions
of the applicable Schedule by appropriate court action in law or
in equity; (b) recover from Lessee any related damages and/or
expenses, including Default Costs; (c)with notice and demand,
recover all sums due and accelerate and recover the present value
of the remaining payment stream of all Rent due under the
defaulted Schedule (discounted at the same rate of interest at
which such defaulted Schedule was discounted with a Secured Party
plus any prepayment fees charged to Lessor by the Secured Party,
or if there is no Secured Party, then discounted at 6%) together
with all Rent and other amounts currently due as liquidated
damages and not as a penalty; (d)with notice and process of law
and in compliance with Lessee's operational and security
requirements, enter on Lessee's premises to remove and repossess
the Equipment without being liable to Lessee for damages due to
the repossession, except those resulting from Lessor's, its
assignees' or agents' or representatives' negligence or willful
misconduct; and (e)pursue any other remedy permitted by law or
equity. The above remedies, in Lessor's discretion and to the
extent permitted by law, are cumulative and may be exercised
successively or concurrently.
14.Intentionally Omitted.
15. ADDITIONAL PROVISIONS.
15.1. Entire Agreement. (a)This Master Lease, each Schedule
and the other Operative Documents shall constitute the complete
and exclusive statement of the terms of the agreement of Lessor
and Lessee with respect to the Equipment leased thereby, and shall
automatically cancel and supersede any and all prior oral or
written agreements or understandings between the parties
concerning the Equipment. The headings of this Master Lease and
each Schedule shall be for convenience of reference only and shall
form no part of this Master Lease or such Schedule. (b) ANY
AMENDMENT OF THIS MASTER LEASE OR A SCHEDULE MAY ONLY BE
ACCOMPLISHED BY A WRITING SIGNED BY THE PARTY AGAINST WHOM THE
AMENDMENT IS SOUGHT TO BE ENFORCED.
15.2. No Waiver. No action taken by Lessor or Lessee shall
be deemed to constitute a waiver of compliance with any
representation, warranty or covenant contained in this Master
Lease or a Schedule. The waiver by Lessor or Lessee of a breach
of any provision of this Master Lease or a Schedule will not
operate or be construed as a waiver of any subsequent breach.
15.3. Binding Nature. Each Schedule is binding upon, and
inures to the benefit of, Lessor and its permitted assigns.
15.4. Survival of Obligations. All Lessee agreements,
obligations, including but not limited to those arising under
Section 6.2, representations and warranties contained in this
Master Lease, any Schedule or any document delivered in connection
with those agreements are for the benefit of Lessor and any
Assignee or Secured Party and shall survive the execution,
delivery, expiration or termination of this Master Lease.
15.5. Notices. Any notice, request or other communication
to either party by the other will be given in writing and deemed
received upon the earlier of actual receipt or three days after
mailing if mailed postage prepaid by first-class to Lessor (to the
attention of "Lease Administrator") or Lessee, at the address set
out in the applicable Schedule, or one day after it is sent by
courier or facsimile transmission if receipt is verified by the
receiving party.
15.6. Applicable Law. THIS MASTER LEASE AND EACH SCHEDULE
WILL BE GOVERNED AND CONSTRUED FOR ALL PURPOSES IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO
CONFLICT -OF- LAW PROVISIONS. THE PARTIES HERETO AGREE THAT THIS
MASTER LEASE ALONG WITH ANY SCHEDULE HERETO CONSTITUTES A "FINANCE
LEASE" AS DEFINED IN SECTION 103 OF ARTICLE 2A OF THE UNIFORM
COMMERCIAL CODE; PROVIDED, HOWEVER, NO RIGHTS OR REMEDIES REFERRED
TO IN ARTICLE 2A OF THE UNIFORM COMMERCIAL CODE WILL BE CONFERRED
ON LESSEE IF THEY CONTRADICT AN EXPRESS PROVISION OF THIS MASTER
LEASE.
15.7. Severability. If any one or more of the provisions of
this Master Lease or any Schedule are for any reason held invalid,
illegal or unenforceable, the remaining provisions of this Master
Lease and any such Schedule will be unimpaired, and any invalid,
illegal or unenforceable provision replaced by a mutually
acceptable valid, legal and enforceable provision that is closest
to the original intention of the parties.
15.8. Counterparts. This Master Lease and any Schedule may
be executed in any number of counterparts, each of which will be
deemed an original, but all such counterparts together will
constitute one and the same instrument. If Lessor grants a
security interest in all or any part of a Schedule, the Equipment
or sums payable thereunder or thereon, only that counterpart
Schedule marked "Secured Party's Original" can transfer Lessor's
rights, and all other counterparts will be marked "Duplicate."
15.9. Additional Documents. Lessee will, upon execution of
this Master Lease and as may be requested thereafter, provide
Lessor with a secretary's certificate of incumbency and authority
and any other documents reasonably requested by Lessor. Upon the
execution of each Schedule with an aggregate Rent in excess of
$2,000,000, Lessee will provide Lessor with an opinion from
Lessee's counsel regarding the representations and warranties in
Section 8. Lessee will furnish, upon request, audited financial
statements for the most recent period.
15.10. Electronic Communications. Each of the parties may
communicate with the other by electronic means under mutually
agreeable terms.
15.11. Scope of Liability. Notwithstanding any other
provision of this Master Lease or any other Operative Documents
executed in connection herewith (expressly excepting the
Guaranty), there shall be no recourse against Lessee or any of its
partners, officers or employees, for any liability to Lessor,
Assignee, Secured Party or any Participant arising in connection
with any breach or default under this Master Lease, except to the
extent the same is enforced against the Equipment and any proceeds
thereof (including, without limitation, insurance proceeds
thereof); and Lessor, Assignee, Secured Party and the Participants
shall look solely to the Equipment and any proceeds thereof
(including, without limitation, insurance proceeds thereof) in
enforcing rights and obligations under and in connection with this
Master Lease and the other Operative Documents (expressly
excepting the Guaranty); provided that the foregoing provisions of
this Section 15.11 shall not (i) constitute a waiver, release or
discharge of any of Lessee's obligations hereunder or of any of
the terms, covenants, conditions or provisions of this Master
Lease or the other Operative Documents, or (ii) limit or restrict
the right of Lessor to name Lessee as a defendant in any action or
suit for a judicial foreclosure or for the exercise of any other
remedy under or with respect to this Master Lease, so long as no
judgment in the nature of a deficiency judgment shall be enforced
against Lessee or any of its partners, officers or employees out
of any property, assets or funds other than the Equipment and any
proceeds thereof (including, without limitation, insurance
proceeds thereof).
15.12. Confidentiality. The Operative Documents are
confidential documents among the parties thereto and, for a period
of seven (7) years from the date hereof, each party thereto (the
"Relevant Party") agrees to use its best efforts (i.e., in
accordance with procedures adopted by such Relevant Party in good
faith to protect confidential information of third parties
delivered to such Relevant Party) to keep the same confidential
and not disclose the Operative Documents to any third party
without the prior written consent of Lessor, IBM and Guarantor;
provided that nothing herein shall be deemed to prevent any such
disclosure by the Relevant Party: (i)to its auditors or attorneys;
(ii)to any other persons requiring access to such information in
connection with the normal business operations of such Relevant
Party (including portfolio review and analysis), and such Relevant
Party shall be responsible for such persons acting in compliance
herewith; (iii)in connection with the enforcement or attempted
enforcement of any of the Operative Documents; (iv)to any person
expressing an interest in acquiring, directly or indirectly, the
Relevant Party's interest in the Operative Documents (and who
agrees to be bound by the provisions of this Section 15.13); or
(v)to (or as required by) any subpoena or civil investigative
demand or any applicable law or governmental or regulatory
authority.
15.13. Waiver of Jury Trial. THE LESSEE AND LESSOR EACH
WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS
MASTER LEASE, THE OTHER OPERATIVE DOCUMENTS, OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER
LITIGATION OF ANY TYPE BROUGHT BY ANY PARTY AGAINST ANOTHER PARTY,
OR ANY SECURED PARTY, PARTICIPANT OR ASSIGNEE, WHETHER WITH
RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE LESSEE
AND THE LESSOR EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION
SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY.
15.14. Appraisals. (a) If Lessee and Lessor are unable to
agree upon the Fair Market Value or Fair Market Rental Value (each
a "Value") of Equipment at any time, and the parties are unable to
resolve such dispute pursuant to reasonable negotiations among
themselves and if either Lessor or Lessee shall have given written
notice to the other requesting determination of such Value by
appraisal (provided, however, no such notice shall be given
earlier than 12 months prior to the end of the Initial Term for
such Item), Lessor and Lessee shall consult for the purpose of
appointing a mutually acceptable independent appraiser. If they
are unable to agree on an appraiser within 30 days of the giving
of such notice, then Lessor or Lessee may apply to the American
Arbitration Association (or its successor, the "Association") for
a list of independent appraisers qualified to determine such
Value. If either Lessor or Lessee does not find an acceptable
appraiser on such list, it may request a second list from the
Association. The Lessor and Lessee shall each select one
appraiser from the list. The Association will be asked to
commission the two appraisers so chosen to determine such Value,
with identical instructions being given to each and without
revealing (and Lessor and Lessee shall not reveal) which party
chose which appraiser. The appraiser or appraisers appointed
pursuant to the foregoing procedure shall be instructed to
determine such Value within 20 days after such appointment and
such determination shall be final and binding upon the parties.
If two appraisers shall be appointed, their determinations shall
be reported only to the Association, which shall be asked to
average them and report only the average (and not the individual
determinations) to the Lessee and Lessor and such average shall
constitute the determination of the appraisers. The fees and
expenses of the appraiser or appraisers shall be shared equally by
Lessor and Lessee unless either (i) the Value so determined shall
be greater than 110% of the Value proposed by Lessor, in which
event the Lessee shall pay such costs, or (ii) the Value so
determined shall be less than 90% of the Value proposed by Lessor,
in which event Lessor shall pay such costs.
15.15. Definitions.
30- Day Period - shall have the meaning set forth in Section
13.1. Affiliate - means any entity that directly or
indirectly, through one or more intermediaries, controls or
is controlled by, or is under common control with, Lessor.
Aggregate Funding Amount - is defined in the Schedule.
Assignee - means Transferee to whom Lessor has sold or
assigned its rights as owner and Lessor of Equipment.
Attachment - means any accessory, equipment or device and the
installation thereof that does not impair the original
function or use of the Equipment and is capable of being
removed without causing material damage to the Equipment and
is not an accession to the Equipment.
Business Day -means any day other than a Saturday, Sunday or
other day on which commercial banks in New York City or San
Francisco are authorized or required by law to close.
Casualty Loss - means an event whereby any Item shall be or
becomes lost, stolen, destroyed, irreparably damaged in the
determination of Lessee, or permanently rendered unfit for
use from any cause whatsoever.
Casualty Value -is defined in the Schedule.
Commencement Certificate - means the certificate provided by
Lessor which must be signed by Lessee within ten days after
the Commencement Date as requested by Lessor.
Commencement Date - is defined in the Schedule.
Default Costs - means reasonable attorney's fees resulting
from an Event of Default or Lessor's enforcement of its
remedies as a result of an Event of Default.
Equipment - shall have the meaning as set forth in Section 1.
Equipment Cost - is defined in the Schedule.
Equipment Vendor - is defined in the Purchase Agreement.
Event of Default - means the events described in Section
13.l.
Fair Market Value - means, with regards to any Item, at any
time, the aggregate amount that would be obtainable in an
arm's-length transaction between an informed and willing
buyer/user purchasing the Equipment in place for its
originally intended use and an informed and willing seller
under no compulsion to sell; provided, however, the Fair
Market Value shall not include the value of any Alterations
other than Alterations financed or purchased by Lessor.
Guarantor - means Cirrus Logic, Inc.
Guaranty - means the guaranty executed by Guarantor as of the
date hereof in the form of Exhibit D hereto.
IBM - means International Business Machines Corporation.
Initial Term - means the period of time beginning on the
first day of the first full Rent Interval following the
Commencement Date for all Items on a Schedule and continuing
for the number of Rent Intervals indicated on such Schedule.
Installation Date - means the day on which Equipment is
installed and qualified for a commercially available
manufacturer's standard maintenance contract or warranty
coverage, if available.
Interim Rent - means the pro rata portion of Rent due for the
period from the Commencement Date to but not including the
first day of the first full Rent Interval included in the
Initial Term.
Item - shall have the meaning set forth in Section 2.
Lease Rate Factor -is defined in the Schedule.
Lessor Liens - shall have the meaning set forth in Section
5.6.
Like Equipment - means a comparable item of Equipment, free
and clear of all liens other than Permitted Liens, that has
at least the value, utility and remaining useful life of and
is in as good operating condition as the substituted or
replaced Item, assuming that the substituted or replaced Item
was maintained in accordance with this Master Lease.
Like Part - means a substituted part that is lien free and of
the same manufacturer and part number as the removed part,
and that when installed on the Equipment will be eligible for
maintenance coverage with the manufacturer of the Equipment.
Master Lease - shall have the meaning set forth in the
recitals.
Notice Period - means the time period described in a Schedule
during which Lessee may give Lessor notice of the termination
of the term of that Schedule.
Operative Documents - shall have meaning set forth in Section
5.5(a).
Overdue Rate - means the lesser of 12% per year or the
maximum rate permitted by the law of the state where the
Equipment is located.
Participant or Participants - shall have the meaning set
forth in Section 5.4(b).
Paying Agent - is defined in the Schedule.
Permitted Liens - means
(i) liens that are created or permitted by this Master
Lease,
(ii) the rights of any sublessee or operator permitted
by the terms of this Master Lease,
(iii) those rights asserted by persons claiming by or
through Lessor,
(iv) liens for fees, taxes, levies, imposts, duties or
other governmental charges of any kind which are not yet
delinquent or are being contested in good faith by
appropriate proceedings that suspend the collection
thereof,
(v) liens of mechanics, materialmen, laborers,
employees or suppliers and similar liens arising by
operation of law, incurred by Lessee in the ordinary
course of business for sums that are not yet delinquent
or are being contested in good faith by negotiations or
by appropriate proceedings that suspend the collection
thereof, and
(vi) liens arising out of any judgments or awards
against Lessee which have been adequately bonded to
protect Lessor's interests or with respect to which a
stay of execution has been obtained pending an appeal or
proceeding for review.
Person - means any individual, partnership, corporation,
trust, unincorporated organization, government or department
or agency thereof and any other entity.
Prepayment Purchase Price - is defined in the Schedule.
Purchase Agreement - a purchase agreement in the form of
Exhibit B hereto.
Reconfiguration - means any change to Equipment that would
upgrade or downgrade the performance capabilities of the
Equipment in any way.
Relevant Party - shall have the meaning set forth in Section
15.13.
Rent - means the rent, including Interim Rent, that Lessee
will pay for each Item, expressed in a Schedule either as a
specific amount or as an amount equal to the Equipment cost
multiplied by the Lease Rate Factor, plus all other amounts
due to Lessor under this Master Lease or a Schedule.
Rent Interval - means a full calendar month or quarter as
indicated on a Schedule.
Replacement Equipment - is defined in the Schedule.
Schedule - shall have the meaning as set forth in Section 1.
Secured Party - means a Transferee to whom Lessor has granted
a security interest in a Schedule and related Equipment for
the purpose of securing a loan.
Subsequent Rent - shall have the meaning set forth in Section
13.1.
Syndication - shall have the meaning set forth in Section
5.4(b).
Term - shall have the meaning set forth in Section 2.
Total Equipment Cost - is defined in the Schedule.
Transferee - shall have the meaning set forth in Section
5.4(a).
IN WITNESS WHEREOF, the parties hereto have executed this Master
Lease on or as of the day and year first above written.
COMDISCO, INC., MICRUS,
as Lessee as Lessor
By: MICRUS HOLDINGS INC.,
as general partner
By: /s/ Michael F. Herman
Michael F. Herman
Title: President Comdisco
Electronics Group
By: /s/ Eric G. Johnson
Eric G. Johnson
Title: Director, Business Office
CIREL INC.
as general partner
By: /s/ George N. Alexy
George N. Alexy
Title: Senior Vice President, Marke
CIRRUS GUARANTY
In consideration for Comdisco, Inc. ("Comdisco") entering
into the Master Lease Agreement dated as of June 28,1996, and all
of its related Equipment Schedules issued pursuant thereto (the
"Lease") with MiCRUS (as "Lessee"), a general partnership
organized and existing under the laws of the State of New York,
the undersigned hereby guarantees the prompt and complete
performance by the Lessee of all the terms and conditions of said
Lease to be performed by it, including but not limited to, the
prompt payment of all rentals and other sums payable thereunder.
The undersigned further agrees to indemnify and hold Comdisco, its
successors and assigns, harmless from and against any and all
liability, loss, damage or expense, including attorneys fees and
court costs, which Comdisco, its successors and assigns, may incur
or sustain by reason of the failure of the Lessee to fully perform
and comply with the terms and conditions of said Lease.
This is a continuing, absolute and unconditional guaranty of
performance and payment and not of collection. The undersigned
specifically waives any right to subrogation, setoff or
counterclaim, and any defense for changes in applicable law or any
other circumstances which might constitute a legal or equitable
defense or discharge of a guarantor or surety. The undersigned
waives any right to require a proceeding first against the Lessee
or to exhaust any security for the performance of the obligations
of the Lessee, and waives notice of acceptance hereof and of
defaults hereunder. The undersigned agrees that the liability of
the undersigned shall not be affected or decreased by any
amendment, termination, extension, renewal, waiver or modification
of said Lease or the rejection or disaffirmance thereof in
bankruptcy or like proceedings and that certain obligations under
the Lease may be accelerated upon any nonpayment thereof by the
Lessee. This Guaranty shall be specifically assignable to and
inure to the benefit of Lessor's Assignee and Secured Party to the
extent such assignment, transfer or grant of security interest is
permitted under the Lease and is irrevocable so long as there are
any obligations of Lessee remaining under the Lease. The
undersigned acknowledges that its obligations under this Guaranty
are in no way or manner limited by the provisions contained in
Section 15.11 of the Lease. This Guaranty shall be governed by
and construed in accordance with the laws of the State of New
York.
Dated: June 28, 1996.
CIRRUS LOGIC, INC.
(Guarantor)
By: /s/ George N. Alexy
George N. Alexy
Title: Senior Vice President, Marketing
