MASTER EQUIPMENT LEASE AGREEMENT

 

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                                                                   Exhibit 10.28

 

                                                                        MELA IV

                                                                        (01/99)

                                                MASTER EQUIPMENT LEASE AGREEMENT

                                                DATED JUNE 24, 2004

 

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<S>                                                            <C>

LESSEE:           WESTERN DIGITAL TECHNOLOGIES, INC.           LESSOR:   CIT TECHNOLOGIES CORPORATION,

                                                                         d/b/a CIT SYSTEMS LEASING

 

STREET ADDRESS:   20511 Lake Forest Drive                      ADDRESS:  2285 Franklin Road

                                                                         Bloomfield Hills, MI  48302

 

CITY/STATE/ZIP:   Lake Forest, CA  92630                       LEASE

                                                               NUMBER:

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      1.    AGREEMENT. Lessor agrees to lease to Lessee and Lessee agrees to

lease from Lessor the equipment (Equipment) described in any schedule (Schedule)

that incorporates this Master Equipment Lease Agreement (Agreement) by

reference. A Schedule shall incorporate this Agreement by reference by listing

the above-referenced Lease Number thereon. Such lease shall be governed by the

terms and conditions of this Agreement, as well as by the terms and conditions

set forth in the applicable Schedule. Each Schedule shall constitute an

agreement separate and distinct from this Agreement and any other Schedule. In

the event of a conflict between the provisions of this Agreement and a Schedule,

the provisions of the Schedule shall govern.

 

      2.    ASSIGNMENT OF PURCHASE DOCUMENTS. Lessee shall execute and deliver

to Lessor a writing acceptable to Lessor whereby Lessor is assigned all of

Lessee's rights and interest in and to: (a) the Equipment described in the

applicable Schedule and (b) any purchase order, contract or other documents

(collectively, Purchase Documents) relating thereto that Lessee has entered into

with the Seller (as specified in the applicable Schedule). If Seller is not an

affiliate of Lessor, Lessee shall deliver to Lessor a writing acceptable to

Lessor whereby Seller acknowledges, and provides any required consent to, such

assignment. If Lessee has not entered into any Purchase Document for the

Equipment with Seller, Lessee authorizes Lessor to act as Lessee's agent to

issue a purchase order to Seller for the Equipment and for associated matters,

and such purchase order shall be subject to this Section 2 and all references in

this Agreement to Purchase Documents shall include such purchase order. By

executing the applicable Schedule, Lessee represents and warrants that Lessee

either (y) has reviewed, approved and received a copy of the applicable Purchase

Documents or (z) has been informed by Lessor (i) of the identity of the Seller,

(ii) that Lessee may have rights under the Purchase Documents and (iii) that

Lessee may contact Seller for a description of such rights. The foregoing

information shall not be applicable if the Equipment specified in the Schedule

is not new equipment being purchased by Lessor for lease to Lessee.

 

      3.    DELIVERY; ACCEPTANCE. Lessee shall cause the Equipment to be

delivered, at Lessee's expense, to Lessee at the Equipment Location (as

specified in the applicable Schedule) and Lessee shall accept the Equipment upon

the later of (a) the installation, at Lessee's expense, of the Equipment or (b)

the satisfaction of the acceptance criteria, if any, specified in the applicable

Purchase Documents. In any event, Lessee shall evidence its acceptance of the

Equipment and commencement of the lease with respect thereto by executing and

delivering to Lessor a commencement certificate (Commencement Certificate) in a

form acceptable to Lessor within five (5) business days after delivery. By

executing and delivering a Commencement Certificate to Lessor, (x) Lessee

represents and warrants that it has selected the Equipment and Seller specified

on the applicable Schedule and (y) Lessee has irrevocably accepted such

Equipment under lease. Lessee shall reimburse Lessor for any late payment,

interest on late payment or any other similar fee or charge imposed by Seller as

the result of Lessee's failure to timely furnish to Lessor all pertinent lease

documentation.

 

      4.    PURCHASE OF EQUIPMENT. Provided that no Event of Default (as defined

in Section 18) exists, and no event has occurred and is continuing that with

notice or the lapse of time or both would constitute an Event of Default, Lessor

shall be obligated to purchase the Equipment from Seller and to lease the

Equipment to Lessee if (and only if) Lessor receives on or before the Latest

Commencement Date (as specified in the applicable Schedule) the related

Commencement Certificate and Schedule (both executed by Lessee), and such other

documents or assurances as Lessor may reasonably request. The foregoing

information shall not be applicable if the Equipment specified in the Schedule

is not new equipment being purchased by Lessor for lease to Lessee.

 

      5.    TERM. The initial term of each Schedule (Initial Term) shall begin

on the date specified as the Commencement Date on the Commencement Certificate

with respect to such Schedule and shall continue for the period specified in

such Schedule. Any renewal term of a Schedule (Renewal Term) shall begin on the

expiration of, as applicable, the Initial Term or any preceding Renewal Term

(collectively, Term).

 

      6.    RENT; LATE CHARGES. Lessee shall pay Lessor the first Rental Payment

(as specified in the applicable Schedule) for the Equipment on or before the

Commencement Date of the applicable Schedule, and shall pay Lessor the remaining

periodic Rental Payments on or before the periodic payment dates specified in

the applicable Schedule or, if periodic payment dates are not specified, on or

before the corresponding day of each subsequent period during the Initial Term

of the applicable Schedule, regardless of whether Lessee has received notice

that such Rental Payments are due. Additionally, if pursuant to this Agreement

or the applicable Schedule the Term is extended or a renewal option exercised,

Lessee shall also pay all Rental Payments required with respect thereto. All

Rental Payments will be sent to Lessor's above-referenced address, or to such

other address as specified by Lessor in writing. Lessee agrees to pay Lessor

interest at the rate of 1-1/2% per month (or such lesser rate as is the maximum

rate allowable under applicable law) on any Rental Payment (or other amount due

hereunder) that is not paid within 10 days of its due date.

 

      7.    INSURANCE. At its own expense, Lessee shall provide and maintain the

following insurance: (a) insurance against the loss or theft of or damage to the

Equipment for the greater of the Stipulated Loss Value (computed as described in

the applicable Schedule) or full

 

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replacement value thereof, naming Lessor as a loss payee; and (b) public

liability and third party property damage insurance, naming Lessor as an

additional insured. Such insurance shall be in a form, amount and with companies

reasonably satisfactory to Lessor, shall contain the insurer's agreement to give

Lessor 30 days' prior written notice before cancellation or material change

thereof, and shall be payable to Lessor pursuant to Section 7(a) above,

regardless of any act, omission or breach by Lessee. Lessee shall deliver to

Lessor the certificates of such insurance on or before the Commencement Date of

the applicable Schedule, and at such other times as Lessor may reasonably

request. If no Event of Default exists, and no event has occurred and is

continuing that with notice or the lapse of time or both would constitute an

Event of Default, the proceeds of any insurance required under clause (a) hereof

that have been paid to Lessor shall be applied against Lessee's obligations to

Lessor under Section 12 hereof.

 

      8.    TAXES. Lessee shall reimburse Lessor for (or pay directly, but only

if instructed by Lessor) all taxes, fees, and assessments that may be imposed by

any taxing authority on the Equipment, on its purchase, ownership, delivery,

possession, operation, rental, return to Lessor or its purchase by Lessee

(collectively, Taxes); provided, however, that Lessee shall not be liable for

any such Taxes (whether imposed by the United States of America or by any other

domestic or foreign taxing authority) imposed on or measured by Lessor's net

income or tax preference items. Lessee's obligation includes, but is not limited

to, the obligation to pay all license and registration fees and all sales, use,

personal property and other taxes and governmental charges, together with any

penalties, fines and interest thereon, that may be imposed during the Term of

the applicable Schedule. Lessee is liable for these Taxes whether they are

imposed upon Lessor, Lessee, the Equipment, this Agreement or the applicable

Schedule. If Lessee is required by law or administrative practice to make any

report or return with respect to such Taxes, Lessee shall promptly advise Lessor

thereof in writing and shall cooperate with Lessor to ensure that such reports

are properly filed and accurately reflect Lessor's interest in the Equipment.

Lessor has no obligation to contest any such Taxes, however Lessee may do so

provided that: (a) Lessee does so in its own name and at its own expense; (b)

the contest does not and will not result in any lien attaching to any Equipment

or otherwise jeopardize Lessor's right to any Equipment; and (c) Lessee

indemnifies Lessor for all expenses (including legal fees and costs),

liabilities and losses that Lessor incurs as a result of any such contest.

 

      9.    REPAIRS; USE; LOCATION; LABELS. Lessee shall: (a) at its own

expense, keep the Equipment in good repair, condition and working order and

maintained in accordance with the manufacturer's recommended engineering and

maintenance standards; (b) use the Equipment lawfully and exclusively in

connection with its business operations and for the purpose for which the

Equipment was designed and intended; and (c) without Lessor's prior written

consent, not move the Equipment from the Equipment Location. If Lessor supplies

Lessee with labels stating that the Equipment is owned by Lessor, Lessee shall

affix such labels to the Equipment pursuant to Lessor's instructions.

 

      10.   MAINTENANCE; INSPECTION; ALTERATIONS. At its own expense, Lessee

shall: (a) [in Lessee's reasonable discretion,] enter into and maintain a

maintenance agreement for the Equipment with the manufacturer or other party

acceptable to Lessor; (b) maintain the Equipment in the same condition as when

delivered, subject only to ordinary wear and tear, and in good operating order

and appearance; (c) make all alterations or additions to the Equipment that may

be required or supplied by the Seller, the manufacturer or which is otherwise

legally necessary; and (d) make no other alterations or additions to the

Equipment (except for alterations or additions that will not impair the value or

performance of the Equipment and that are readily removable without damage to

the Equipment). Any modifications, alterations or additions that Lessee makes to

the Equipment (except as permitted by Section 10(d) above) shall become Lessor's

property and shall also be deemed to be Equipment. Upon request, Lessor, or any

party designated by Lessor, shall have the right to inspect the Equipment and

Lessee's applicable maintenance agreement and records at any reasonable time.

 

      11.   PERSONAL PROPERTY; LIENS AND ENCUMBRANCES; TITLE. The Equipment

shall at all times remain personal property, notwithstanding that the Equipment,

or any part thereof, may be (or becomes) affixed or attached to real property or

any improvements thereon. Except for the interest of Lessor, Lessee shall keep

the Equipment free and clear of all levies, liens and encumbrances of any nature

whatsoever. Except as expressly set forth in this Agreement, the Equipment shall

at all times remain the property of Lessor and Lessee shall have no right, title

or interest therein.

 

      12.   RISK OF LOSS. As between Lessor and Lessee, Lessee shall bear the

entire risk of loss, theft, destruction or damage to the Equipment from any

cause whatsoever or requisition of the Equipment by any governmental entity or

the taking of title to the Equipment by eminent domain or otherwise

(collectively, Loss). Lessee shall advise Lessor in writing within 10 days of

any such Loss. Except as provided below, no such Loss shall relieve Lessee of

the obligation to pay Lessor Rental Payments and all other amounts owed

hereunder. In the event of any such Loss, Lessor, at its option, may: (a) if the

Loss has not materially impaired the Equipment (in Lessor's reasonable

judgment), require Lessee, upon Lessor's demand, to place the Equipment in good

condition and repair reasonably satisfactory to Lessor; or (b) if the Loss has

materially impaired the Equipment (in Lessor's reasonable judgment), require

Lessee, upon Lessor's demand, to pay Lessor its anticipated return (Lessor's

Return), which shall consist of the following amounts: (i) the Rental Payments

(and other amounts) then due and owing under the applicable Schedule; plus (ii)

the Stipulated Loss Value (computed as described in the applicable Schedule) of

the Equipment; plus (iii) all other amounts that become due and owing under the

applicable Schedule, but only to the extent such amounts are not included in the

moneys paid to Lessor pursuant to clauses (i) and (ii) above. Upon Lessor's full

receipt of such Lessor's Return: (y) the applicable Schedule shall terminate,

and except as provided in Section 24, Lessee shall be relieved of all

obligations under the applicable Schedule; and (z) Lessor shall transfer all of

its interest in the Equipment to Lessee "AS IS, WHERE IS," and without any

warranty, express or implied from Lessor, other than the absence of any liens or

claims by, through, or under Lessor. Notwithstanding clause (b) hereof, Lessee

may, at its option, continue Rental Payments under the applicable Schedule,

without interruption, and replace the damaged Equipment with Equipment of

identical model, manufacturer, and condition (Replacement Equipment) (in which

case Lessee shall cause the Replacement Equipment to be delivered to a location

acceptable to Lessor and shall convey title (lien free) to the Lessor whereupon

the Replacement Equipment shall be subject to all of the terms and conditions of

this Agreement and the applicable Schedule).

 

      13.   NON-CANCELABLE NET LEASE. ALL LEASES HEREUNDE