Master Lease Agreement

Master Lease Agreement

MASTER LEASE AGREEMENT dated as of , by and between , having its principal office and place of business at and , having its principal office and place of business at .

WITNESSETH:

WHEREAS, Lessee has contracted, or will contract, for the purchase of certain items of equipment (the "Equipment") for use in Lessee's business; and

WHEREAS, Lessee desires to lease rather than to purchase the Equipment, and the lessor desires to acquire the Equipment and lease same to Lessee; and

WHEREAS, Lessee has assigned or, concurrently with its execution hereof, will assign to Lessor all of Lessee's rights to purchase the Equipment, and Lessor agrees to lease to Lessee, and Lessee agrees to lease from Lessor, the Equipment subject to the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the mutual covenants herein contained, the parties hereto agree as follows:

1. Property Leased

In consideration of the rent to be paid by Lessee and the covenants and agreements of Lessee hereinafter set forth, Lessor hereby leases to Lessee all of the items listed on the Equipment Schedule, annexed hereto as Exhibit A and made a part hereof (hereinafter the "Equipment"). Any additional Equipment Schedules shall be substantially in the form of the annexed Schedule, shall incorporate therein all of the terms and conditions of this Master Lease, and shall contain such additional terms and conditions as Lessor and Lessee shall agree upon. Lessee authorizes Lessor to insert in each Equipment Schedule the serial number and other data identifying the Equipment.

2. Term

The term of this Master Lease shall commence on the date first set forth above and shall continue in effect thereafter so long as any Equipment Schedule entered into pursuant to this Master lease remains in effect.

The lease term for each Equipment Schedule shall commence on the date (the "Commencement Date") which is the first to occur of the day on which the Equipment listed on said Equipment Schedule is installed and approved for coverage under a prime shift maintenance contract by the manufacturer thereof, or the seventh (7th) day after delivery by Lessor if a delay of installation and approval is caused by Lessee; provided, however, that if the Equipment is specified as "new" in such Equipment Schedule then the date of installation of such Equipment shall constitute the Commencement Date. The lease term shall continue for the number of months set forth in such Equipment Schedule (hereinafter called the "Initial Term"), beginning on the Commencement Date. On the Commencement Date the Lessee will execute and deliver to the Lessor a letter, in a form to be specified by the Lessor, which confirms such Commencement Date.

3. Rent and Payment

Lessee shall pay to Lessor, as rental for the Equipment during each month of the Initial Term of any Equipment Schedule, the Monthly Rent set forth in such Equipment Schedule, which shall be due and payable in advance during such Initial Term on the Commencement Date and on the same day of each subsequent calendar month as the Commencement Date. Rent shall be paid to Lessor by check or wire transfer so as to constitute immediately available funds at the address of Lessor set forth above or at such other place as Lessor shall designate in writing, or, if to Lessor's Secured Party or Trustee (as defined in Section 6.3 below) at such place as such Secured Party or Trustee shall designate in writing. Whenever any payment (of rent or otherwise) is not made when due hereunder, Lessee shall pay interest on such amount at the rate of one percent (1%) per month or the maximum allowable rate of interest permitted by the law of the state where the Equipment is located, whichever is less, to the date of payment. Lessor and Lessee agree that Lessee's obligation to pay all Monthly Rent and any and all amounts payable by Lessee to Lessor or any Secured Party or Trustee under any Equipment Schedule shall not be subject to any abatement, reduction, set-off, defense, counterclaim, interruption, deferment, or recoupment so long as Lessee shall quietly enjoy the use of the Equipment hereunder, and that such payments shall be and continue to be payable for the term of this Lease.

4. Lessor's Warranties, Disclaimer of Warranties and Limited Liability

4.1 Lessor's Warranties and Representations

The Lessor warrants and represents that:

(a) It is a corporation duly organized, validly existing and in good standing under the laws of the state of its incorporation, and has the power, authority, and legal right to execute, deliver, and perform this Master Lease and any Equipment Schedule hereunder, that this Master Lease has been duly authorized, executed, and delivered by it and is a legal and valid obligation of Lessor enforceable against it in accordance with its terms;

(b) The execution, delivery, and performance by Lessor of this Master Lease and each Equipment Schedule are not in violation of the charter documents or By-laws of Lessor, of any indenture, mortgage, credit agreement, license, or other agreement or instrument to which Lessor is a party or by which Lessor or its property is bound, or of any judgment or order or any federal or state law, governmental rule or regulation applicable to the Lessor, and same do not require the consent or approval of, the giving of notice to, the registration with, or the taking of any other action with respect to any governmental authority or agency under the existing federal law or state law governing Lessor; and

(c) Lessor is the owner of the Equipment or of the right to purchase same, subject to the rights of any Secured Party, and that Lessor will have such title to the Equipment prior to enforcing any of its rights against Lessee in connection thereto; and

(d) There exist no liens affecting the title of Lessor to the Equipment resulting from the acts of Lessor except liens permitted under this Master Lease, and the rights of Lessee under said lease.

(e) Lessor is adequately capitalized to perform its obligations under this Master Lease and will, upon request of Lessee during the Initial Term hereof and any Renewal Terms, provide to Lessee its audited financial statements and/or statement of its net worth.

(f) There are no existing or threatened legal proceedings against Lessor which will have any adverse effect upon its ability to perform its obligations under this Master Lease.

4.2 Disclaimer of Warranties

OTHER THAN THOSE STATED HEREIN, LESSOR MAKES NO WARRANTY EXPRESS OR IMPLIED, AS TO ANY MATTER WHATSOEVER, INCLUDING, WITHOUT LIMITATION, THE DESIGN OR CONDITION OF THE EQUIPMENT, ITS MERCHANTABILITY OR ITS FITNESS OR CAPACITY OR DURABILITY FOR ANY PARTICULAR PURPOSE, THE QUALITY OF THE MATERIAL OR WORKMANSHIP OF THE EQUIPMENT OR CONFORMITY OF THE EQUIPMENT TO THE PROVISIONS AND SPECIFICATIONS OF ANY PURCHASE ORDER OR ORDERS RELATING THERETO AND, AS TO LESSOR, LESSEE LEASES THE EQUIPMENT "AS IS."

4.3 Limitation of Liability

Lessor shall not be liable to Lessee for any liability, claim, loss, damage, or expense of any kind or nature (including strict liability in tort) caused by or arising in connection with, directly or indirectly, the selection, quality, condition, merchantability, suitability, fitness, operation, or performance of the Equipment, any inadequacy thereof for any purpose, any deficiency or defect therein, the use or maintenance thereof, any repairs, servicing, adjustments thereto, any delay in providing or failure to provide any part thereof, any interruption or loss of service or use thereof, any loss of business, or any other damage whatsoever; provided that Lessor shall be liable to Lessee for any such loss or damage caused by the gross negligence or willful misconduct of lessor, or its agents and representatives.

5. Lessee's Warranties

Lessee hereby represents and warrants that, with respect to this Master Lease and each Equipment Schedule executed hereunder:

(a) The execution, delivery, and performance thereof by Lessee have been duly authorized by all necessary corporate action.

(b) The individual executing such was duly authorized to do so.

(c) The Master Lease and each Equipment Schedule constitute legal, valid, and binding agreements of Lessee enforceable in accordance with their respective terms.

(d) The Equipment is personal property and when subjected to use by Lessee will not be or become fixtures under applicable law.

(e) Lessee shall furnish, upon request by Lessor, audited financial statements for its most recent accounting period.

(f) Lessee has made the selection of the Equipment based on its own judgment and expressly disclaims any reliance upon statements made by the Lessor.

6. Title, Assignment and Quiet Enjoyment

6.1 Title

Nothing contained in any Equipment Schedule shall give or convey to Lessee any right, title, or interest in or to the Equipment, except as a lessee as set forth therein, and Lessee represents and agrees that Lessee shall hold the Equipment subject and subordinate to the rights of Lessor, and any Secured Party or Trustee (as defined in Section 6.3) and Lessee shall furnish Lessor with such documentation as Lessor shall reasonably require with respect thereto. Lessor is hereby authorized by Lessee, at Lessor's expense, to cause to be filed this Master Lease, any Equipment Schedule, or any statement or other instrument in respect of any Equipment Schedule as may be required by law showing the interest of Lessor, any Secured Party and any Trustee in the Equipment and Lessee agrees to execute and deliver Uniform Commercial Code financing statements reasonably requested by Lessor for such purpose.

6.2 Assignment, Sublease, or Relocation by Lessee

Upon at least thirty (30) days' prior written notice to Lessor, Lessee may assign this Master Lease or any Equipment Schedule or sublease the Equipment to any party, or relocate the Equipment to any location, within any state of the continental United States which shall have in effect the Uniform Commercial Code, provided that Lessor, any Secured Party and any Trustee, in such parties' sole discretion, shall have approved such assignee, sublessee or location and provided (i) that all costs of any nature whatsoever (including any additional property taxes or other taxes and any additional expenses of insurance coverage) resulting from any relocation, assignment, or sublease shall be promptly paid by Lessee upon presentation to Lessee of evidence supporting such cost, and (ii) any assignment or sublease shall be made expressly subject and subordinate to the terms of this Master Lease and Lessee shall assign its rights under said assignment or sublease to Lessor, any Secured Party and any Trustee as additional collateral and security for Lessee's obligations hereunder. In the event of a relocation, assignment, or sublease, Lessee, its assignee, or its sublessee, if any, shall cooperate with Lessor in taking all reasonable measures to protect the title of Lessor, and the interest of any Secured Party and Trustee to and in the Equipment. No relocation, assignment, or sublease permitted hereunder shall relieve Lessee from any of its obligations under this Lease.

6.3 Assignment by Lessor

Lessee acknowledges and understands that the terms and conditions of each Equipment Schedule have been fixed by Lessor in anticipation of its ability to assign its interest or otherwise grant a security interest under each Equipment Schedule and the Equipment listed therein in whole or in part to a security assignee (the "Secured Party") for the purpose of securing a loan to Lessor. Such Secured Party may be represented by a bank or trust company acting as a trustee (the "Trustee"). After such assignments or granting of a security interest, the term "Lessor" shall include, as the case may be, any such Trustee and Secured Party. Lessee hereby consents to and shall acknowledge every such assignment or granting of a security interest as shall be designated by written notice given by Lessor to Lessee and further covenants and agrees that:

(a) Any such Secured Party or Trustee shall have and be entitled to exercise any and all discretions, rights, and powers of Lessor hereunder or under any Equipment Schedule, but such Secured Party or Trustee shall not be obligated to perform any of the obligations of Lessor hereunder or under any Equipment Schedule other than Lessor's obligation not to disturb Lessee's quiet and peaceful possession of the Equipment and unrestricted use thereof for its intended purpose during the term hereof so long as Lessee is not in default of any of the provisions hereof;

(b) After notice from Lessor to do so, Lessee will pay all Monthly Rent and any and all other amounts payable by Lessee under any Equipment Schedule to such Secured Party or Trustee, notwithstanding any defense or claim of whatever nature, either by reason of breach of such Equipment Schedule or otherwise which it may now or hereafter have as against Lessor (Lessee reserving its right to have recourse directly against Lessor on account of any such defense or claim); and

(c) Subject to and without impairment of Lessee's leasehold rights in and to the Equipment, Lessee holds the Equipment for such Secured Party or Trustee to the extent of such Secured Party's rights therein.

6.4 Quiet Enjoyment

Lessor covenants that Lessee shall have the right of quiet enjoyment and possession of the Equipment and each item of Equipment thereof during the Initial Term of each Equipment Schedule and any Renewal Term with respect thereto and hereby covenants that it will not (i) interfere with Lessee's quiet enjoyment or possession of any item of Equipment during the Initial Term of each Equipment Schedule and any Renewal Term with respect thereto or (ii) take any other action during the Initial Term of any Equipment Schedule and any Renewal Term with respect thereto which would result in any defect in the title to, or the existence of third party rights with respect to, any item of the Equipment, or would result in the loss or destruction of any such item or any interruption or cessation in the enjoyment or possession of such item by Lessee for any reason whatsoever, so long, in all cases, as an Event of Default, as defined below, shall not have occurred and be continued; provided, however, that Lessee shall not use, operate, or maintain or permit the use, operation, or maintenance, through a sublease, assignment or otherwise, of any Equipment otherwise than as permitted by this Master Lease and the applicable Equipment Schedule.

7. Taxes and Fees

7.1 Taxes and Fees

Lessee agrees that, during the term of this Master Lease, in addition to the Monthly Rent and all other amounts provided herein to be paid, it will promptly pay all taxes, assessments and other governmental charges (including penalties and interest, if any, other than those resulting from the failure of Lessor on request to supply information to, or otherwise cooperate with, Lessee, and fees for titling or registration if required) levied or assessed:

(a) upon the interest of Lessee in the Equipment or upon the use or operation thereof or on the earnings of Lessee arising therefrom; and

(b) against Lessor on account of its acquisition or ownership of the Equipment or any part thereof, or the use or operation thereof or the leasing thereof to Lessee, or the Monthly Rent herein provided for, or the earnings of Lessor arising therefrom; provided, however, that Lessee shall not be responsible for any taxes based on net income of Lessor or for any taxes based on gross income of Lessor (other than gross receipts taxes) which may hereafter be imposed in a particular jurisdiction as a substitute for and not in addition to taxes based on net income. Lessee agrees to file, on behalf of Lessor, all required personal property tax returns and reports concerning the Equipment (other than where Lessee as a result of a requirement of a particular law notifies Lessor that such returns or reports must be filed by Lessor) with all appropriate governmental agencies.

7.2 Right to Dispute Taxes

Lessee may in good faith and by appropriate legal proceedings contest the validity, applicability or amount of any personal property or other taxes assessed or levied upon the Equipment or its use and Lessor agrees to cooperate with Lessee in any such contest, and will permit Lessee to contest the same in the name of Lessor (or in the name of Lessee) as Lessee may determine, all at Lessee's sole cost and expense. Notwithstanding anything to the contrary contained in this Master Lease, the non-payment of any such taxes by Lessee in connection with such contest shall not be deemed a default hereunder until final determination in such contest and expiration of any due date established therein.

8. Care and Maintenance, and Inspection by Lessor, of the Equipment

8.1 Care and Maintenance

Lessee shall, at its sole expense, at all times during the term of each Equipment Schedule, maintain the Equipment in good operating order, repair, condition, and appearance and protect the Equipment from deterioration, other than normal wear and tear. Lessee shall not use the Equipment for any purpose other than that for which it was designed. Lessee shall, at its sole expense, enter into and maintain in force, for the term of each Equipment Schedule, a prime shift maintenance contract with the manufacturer of the Equipment or such other party as shall be acceptable to Lessee. Lessor hereby transfers and assigns to Lessee any and all warranties, obligations and duties of the manufacturer of the equipment, or licensor of the software identified in any Equipment Schedule and hereby irrevocably authorizes the Lessee during the term of this agreement to exercise and enforce in Lessor's name (or Lessee's name) all of the Lessor's rights granted under the manufacturer's purchase agreement or applicable software license; provided, however, that Lessee shall indemnify and hold Lessor or its assignee harmless from and against any and all claims, costs, expenses, damages, losses, and liabilities incurred or suffered by Lessor as a result of or incident to any action by Lessee in connection therewith.

8.2 Alterations and Attachments

Lessee will not, without the prior written consent of Lessor, affix or install any accessory, equipment, or device on the Equipment leased hereunder which will either impair the originally intended function or use of such Equipment or cannot be readily removed without causing material damage to such Equipment. All such accessories, equipment, and devices furnished, attached, or affixed to the Equipment shall thereupon become the property of Lessor (except such as may be readily removed without causing material damage to the Equipment). Lessee will not, without the prior written consent of Lessor and subject to such conditions as Lessor may impose for its protection, affix the Equipment to any real property if, as a result thereof, the Equipment will become a fixture under applicable law. Nothing in this paragraph shall be deemed to prohibit Lessee from authorizing and making minor repairs and enhancements to the Equipment without Lessor's prior consent, which do not impair its function and which are authorized or recommended by the manufacturer of such Equipment.

8.3 Inspection by Lessor

Upon the request of Lessor, and subject to Lessor's procedures for safeguarding property and information on its premises, Lessee shall, at reasonable times during business hours, make the Equipment available to Lessor for inspection at the place where it is normally located and shall make Lessee's service log and other maintenance records pertaining to the Equipment available to Lessor for inspection.

9. Delivery and Return of Equipment

Lessee hereby assumes the full expense of transportation and in-transit insurance to Lessee's premises and installation thereat of the Equipment. Upon termination (by expiration or otherwise) of an Equipment Schedule, Lessee shall, pursuant to Lessor's instructions and at Lessee's full expense (including, without limitation, expenses of transportation and in-transit insurance), return the Equipment to Lessor, at a location within the continental United States designated by Lessor, in the same operating order, repair, condition and appearance as when received, less normal depreciation and wear and tear, and excepting physical loss, damage, or destruction for which Lessee is not responsible as provided in Section 11.

10. Indemnity

Lessee shall not be entitled under the terms of this Master Lease as a party indemnified hereunder for any claims, costs, expenses, damages, and liabilities occasioned by the gross negligence or willful misconduct of such indemnified party.

11. Risk of Loss and Insurance

The responsibilities of Lessee and Lessor with respect to the risk of loss and insurance of the Equipment shall be as set forth in the Equipment Schedule. Lessee shall, at its own expense, carry 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, and any amounts received by Lessor with respect to such insurance shall be credited against Lessee's obligations hereunder.

12. Default

12.1 Definition

The occurrence of any one or more of the following events (herein called "Events of Default") shall constitute a default under an Equipment Schedule:

(a) Default by Lessee in the payment of any installment of Monthly Rent or other charge payable by Lessee under such Equipment Schedule as and when the same becomes due and payable and such default continues for a period of ten (10) days after receipt of notice from Lessor or its Secured Party that such payment is due; or

(b) Default by Lessee in the performance of any other term, covenant or condition of such Equipment Schedule or the inaccuracy in any material respect of any representation or warranty made by Lessee in such Equipment Schedule or in any document or certificate furnished to the Lessor in connection therewith, which default or inaccuracy shall continue for a period of fifteen (15) days after notice; or

(c) The making of an assignment by Lessee for the benefit of its creditors or the admission by Lessee in writing of its inability to pay its debts as they become due, or the insolvency of Lessee, or the filing by Lessee of a voluntary petition in bankruptcy, or the adjudication of Lessee as a bankrupt, or the filing by Lessee of any petition or answer seeking for itself any reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under any present or future statute, law or regulation, or the filing of any answer by Lessee admitting, or the failure by Lessee to deny, the material allegations of a petition filed against it for any such relief, or the seeking or consenting by Lessee to, or acquiescence by Lessee in, the appointment of any trustee, receiver or liquidator of Lessee or of all or any substantial part of the properties of Lessee, or the inability of Lessee to pay its debts when due, or the commission by Lessee of any act of bankruptcy as defined in the Federal Bankruptcy Laws, as amended; or

(d) The failure by Lessee, within sixty (60) days after the commencement of any proceeding against Lessee seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under any present or future statute, law, or regulation, to obtain the dismissal of such proceeding or, within sixty (60) days after the appointment, without the consent or acquiescence of Lessee, of any trustee, receiver, or liquidator of Lessee of all or any substantial part of the properties of Lessee, to vacate such appointment; or

(e) The default by Lessee under any other Equipment Schedule or other agreement between Lessee and Lessor or its Secured party hereunder.

12.2 Remedies

Upon the occurrence of any one or more Events of Default, Lessor, at its option, may (1) proceed by appropriate court action or actions either at law or in equity to enforce performance by Lessee of the applicable covenants and terms of the applicable Equipment Schedule, or to recover from Lessee any and all damages or expenses which Lessor shall have sustained by reason of Lessee's default in such performance or on account of Lessor's enforcement of its remedies thereunder, or (2) accelerate the balance of the monthly rentals thereafter accruing under the applicable Equipment Schedule, which, together with all rent and other amounts then due, shall become immediately due and payable, as liquidated damages and not as a penalty, and Lessor shall have the right to the extent permitted by law: (i) to recover all sums so due thereunder including all costs and expenses incurred in connection with the enforcement of any right or remedy hereunder; (ii) to retake immediate possession of the Equipment without any process of law and for such purpose Lessor may enter peacefully and without force upon premises where the Equipment may be located and may remove the same therefrom without being liable to Lessee therefor, except that Lessor shall be liable for damages resulting from the fault or negligence of Lessor, Lessor's Secured Party or their respective agents and representatives in any such entry or repossession; (iii) to sell, lease or otherwise dispose of all or any portion of the Equipment, with the privilege of becoming the purchaser thereof, at public or private sale, for cash or on credit, in which event Lessor shall apply the cash proceeds from any sale or other disposition (less the estimated fair market value of the Equipment at the expiration of the Initial Term or any extension thereof), or the present value of the rentals under any lease for a term not to exceed the expiration of the Initial Term or any extension thereof (all such amounts to be called "Proceeds" hereinafter), less all costs and expenses incurred in connection with the recovery, repair, or storage of the Equipment or the transaction itself, against all sums due from Lessee and to the extent and in the manner permitted by law, Lessee shall be liable to Lessor for, and Lessor may recover from Lessee, the amount by which the Proceeds of any such transaction, less the expenses of retaking, storing, repairing, and the transaction itself, incurred by Lessor, is less than all sums due from Lessee under the applicable Equipment Schedule; and (iv) to pursue any other remedy permitted by law or equity. The above remedies, to the extent permitted by law, any one or more of which Lessor need not, in its discretion, exercise, shall be deemed cumulative and may be exercised successively or concurrently.

13. Option to Purchase

Upon the termination of the Initial Term of the Master Lease, or of any Renewal period, Lessee shall have an option to purchase the Equipment on any Equipment Schedule or any portion thereof at its then current fair market value. Lessee shall exercise this option by written notice to the Lessor not less than twenty (20) days prior to the termination of such lease term.

14. Confidentiality

Lessee and Lessor agree that each shall keep confidential and secure and not disclose to any other party any information concerning the business, customers, processes and methods of the other party which it acquires in the course of its performance of this Master Lease and any Equipment Schedule hereunder.

15. Miscellaneous

15.1 Entire Agreement

Lessor and Lessee acknowledge that there are no agreements or understandings, written or oral, between Lessor and Lessee with respect to the Equipment other than as set forth herein and in each Equipment Schedule and that this Master Lease Agreement and each Equipment Schedule contains the entire agreement between Lessor and Lessee with respect thereto. Neither this Master Lease nor any Equipment Schedule may be altered, modified, terminated, or discharged except by a writing signed by the party against whom such alteration, modification, termination, or discharge is sought.

15.2 Binding Nature

Each Equipment Schedule shall be binding upon, and shall inure to the benefit of, Lessor, Lessee and their respective successors, legal representatives, and assigns, except, in the case of any Secured Party, to the extent set forth in Subsection 6.3 hereof.

15.3 Survival of Obligations

All agreements, representations, and warranties contained in this Master Lease, any Equipment Schedule, or any document delivered pursuant hereto or in connection herewith shall be for the benefit of Lessor and any Assignee or Secured Party and shall survive the execution and delivery of this Master Lease and the expiration or other termination of this Master Lease.

15.4 Notices

Any notice, request, or other communication to either party by the other as provided for herein shall be given in writing and only shall be deemed received upon the earlier of receipt or three days after mailing if mailed postage prepaid by regular mail or airmail to Lessor (to the attention of "Lease Administrator") or Lessee, as the case may be, at the address for such party set forth in the Equipment Schedule or at such changed address as may be subsequently submitted by written notice of either party.

15.5 Governing Law

The Master Lease has been, and each Equipment Schedule will have been, made, executed, and delivered in the State of California and shall be governed and construed for all purposes under and in accordance with the laws of the State of California.

15.6 Severability

In the event any one or more of the provisions of this Master Lease and/or any Equipment Schedule shall for any reason be held invalid, illegal, or unenforceable, the remaining provisions of this Master Lease and/or any such Equipment Schedule shall be unimpaired, and the invalid, illegal, or unenforceable provision shall be replaced by a mutually acceptable valid, legal, and enforceable provision, which comes closest to the intention of the parties underlying the invalid, illegal, or unenforceable provision.

IN WITNESS WHEREOF, the parties hereto have executed this Master Lease on or as of the day and year first above written.