C#: 143293
L#: 143294
Master Equipment Lease Agreement
THIS MASTER
EQUIPMENT LEASE AGREEMENT dated as of December 18,2003 (Master
Lease) is made by and between KEY EQUIPMENT
FINANCE, a Division of Key
Corporate Capital Inc., having an address
at 66 South Pearl Street, Albany, NY
12207 (Lessor), and YOCREAM INTERNATIONAL,
INC. with its chief executive
offices located at 5858 N.E. 87th Avenue,
Portland, OR 97220 (Lessee).
1. Lease. Lessor hereby leases
to Lessee, and Lessee hereby leases from
Lessor, Equipment, subject to and upon the
terms set forth herein and in any
equipment schedule executed in connection
herewith (each, a Schedule). Each
Schedule shall constitute a separate and
enforceable lease incorporating all
the terms of this Master Lease (each
Schedule, together with this Master Lease
as it relates to such Schedule, is referred
to herein as a Lease). If any term
of a Schedule conflicts or is inconsistent
with any term of this Master Lease,
the terms of such Schedule shall
govern.
2. Definitions. Unless the
context otherwise requires, as used in the Lease,
the following terms shall have the
respective meanings indicated below and
shall be equally applicable to both the
singular and the plural forms thereof:
Equipment - means each item of property
designated on a Schedule that will be
leased by Lessee pursuant to the Lease,
together with all replacement parts,
additions and accessories incorporated
therein or affixed thereto. Where rights
to receive license fees for Software and
charges for Services supplied or to be
supplied to Lessee are included in the
amount financed by Lessor under the
Lease, references to leasing, purchases,
ownership and administration of
Equipment under the Lease shall be broadly
interpreted to include such
Financed Fees.
Fair Market Rental Value or Fair Market
Sale Value - means the value of
Equipment for lease or sale, in place and
in continued use, which would be
obtained in an arms length transaction
between an informed and willing retail
lessor or seller (under no compulsion to
lease or sell) and an informed and
willing retail lessee or buyer (under no
compulsion to lease or purchase),
assuming that Equipment is in the condition
specified by Sections 10 and 11
hereof, as determined by the parties or, if
the parties cannot agree, by an
American Society of Appraisers certified
appraiser selected by Lessor and paid
for by Lessee.
Financed Fees - means the Software license,
usage, or other fees and the
charges for Services, if any, specified on
a Schedule.
Guarantor - means any guarantor of Lessees
obligations hereunder.
Initial Term Expiration Date - shall have
the meaning specified in the
applicable Schedule.
Lease Documents - means this Master Lease,
a Schedule and all other documents
relating to or provided in connection with
a Lease, prepared by Lessor, and now
or hereafter executed in connection
herewith or therewith, as the same may be
modified, amended, extended or
replaced.
License Agreement - means the software
license agreement(s) between Lessee and
Licensor relating to Software.
Licensor - means the Supplier(s) of
Software, solely in its (their) capacity as
licensor of such Software.
Purchase Agreement - means any purchase
agreement or other contract between a
Supplier and Lessee for the acquisition of
Equipment to be leased or financed
under a Lease.
Rent - means the periodic payments due for
the leasing of Equipment as set
forth on the related Schedule and, where
the context hereof requires, all such
additional amounts as may, from time to
time, be payable under a Lease. The
term Rent shall include interim rent, if
any, as described in Section 5 hereof.
Rent Commencement Date - means, with
respect to Equipment, the date on which
(a) Lessor receives an executed Certificate
of Acceptance for Equipment from
Lessee or (b) Lessor disburses funds for
the purchase of Equipment, as
determined by Lessor in its sole
discretion.
Rent Payment Date - shall have the meaning
specified in the applicable
Schedule.
Services - means all training,
installation, transportation, handling,
maintenance, custom programming,
integration, technical consulting and support
services relating to Equipment and
specified on a Schedule.
Software - means the software and all
related documentation, corrections,
updates and revisions used in connection
with Equipment financed under a
Schedule.
Stipulated Loss Value - shall have the
meaning specified in the applicable
Schedule. Supplier means the manufacturer
or the vendor of the Equipment.
Term - means the Initial Term or any
Renewal Term, each as defined in Section 6
hereof, and any Extended Lease Term or
Interim Term, as defined in the
applicable Schedule.
3. Ordering Equipment.
Lessee hereby assigns
to Lessor all of Lessees
rights, but none of its obligations, under
any Purchase Agreement related to a
Lease. Lessor may (a) accept such
assignment from Lessee of Lessees rights,
but none of Lessees obligations, under any
such Purchase Agreement and/or
(b) issue a purchase order for the
Equipment to the Supplier. Lessee shall
arrange for delivery of Equipment. If
Equipment is subject to an existing
Purchase Agreement between Lessee and the
Supplier, and Equipment has been
delivered to Lessee as of the date of the
Schedule applicable thereto, Lessee
warrants that it has advised Lessor of the
delivery date(s) of such Equipment.
Lessee hereby authorizes Lessor to complete
each Schedule with the serial
numbers and other identification data of
Equipment associated therewith as such
data is received by Lessor.
4. Delivery and Acceptance.
Upon delivery to and acceptance by Lessee of any
Equipment, Lessee shall execute and deliver
to Lessor a Certificate of
Acceptance in form acceptable to Lessor
(Certificate of Acceptance).
LESSOR SHALL HAVE NO OBLIGATION TO ADVANCE
ANY FUNDS HEREUNDER UNLESS AND
UNTIL LESSOR RECEIVES A CERTIFICATE OF
ACCEPTANCE FOR SUCH EQUIPMENT EXECUTED
BY LESSEE.
5. Rent; Delinquent Payments,
(a) Lessee shall pay Rent commencing on the
Rent Commencement Date, and, unless
otherwise set forth on the applicable
Schedule, on the same day of each payment
period thereafter for the balance of
the Term. Rent shall be due whether or not
Lessee has received any notice that
it is due, and all Rent shall be paid to
Lessor at its address set forth on the
Schedule, or as otherwise directed by
Lessor in writing.
b) If Lessee
fails to pay any Rent or other sums under the Lease on or
before the date when the same becomes due,
Lessee shall pay to Lessor (in
addition to and not in lieu of other rights
of Lessor) a late charge equal
to the lesser of five percent of such
delinquent amount or the maximum
permitted by law. Such late charge shall be
payable by Lessee upon demand by
Lessor and shall be deemed Rent hereunder.
Lessee acknowledges and agrees that
the late charge (i) does not constitute
interest, (ii) is an estimate of the
costs Lessor will incur as a result of the
late payment and (iii) is reasonable
in amount.
6. Term; Survival.With respect
to any Equipment, unless otherwise specified
on a Schedule, the initial term of the
Lease (the Initial Term) shall commence
on the earlier of (a) the date risk of loss
is transferred from the Supplier to
Lessee or Lessor or (b) the date on which
such Equipment is delivered to Lessee
and, unless earlier terminated as provided
herein, shall expire on the Initial
Term Expiration Date. Any renewal term of
the Lease (individually, a Renewal
Term) shall commence immediately upon the
expiration of the Initial Term or any
prior Renewal Term, as the case may be,
and, unless earlier terminated as
provided herein, shall expire on the last
day of the period for which the final
payment of Rent is due. All obligations of
Lessee hereunder shall survive the
expiration, cancellation or other
termination of the Term of each Lease.
7. Location; Inspection;
Labels. Equipment shall be delivered to the location
specified in the Schedule and shall not be
removed therefrom without Lessors
prior written consent. Lessor shall have
the right to enter upon the premises
where the Equipment is located and inspect
the Equipment at any reasonable
time. At Lessors request, Lessee shall (a)
affix permanent labels in a
prominent place on Equipment stating
Lessors interest in the Equipment,
(b) keep such labels in good repair and
condition and (c) provide Lessor with
an inventory listing of all labeled
Equipment within thirty days of such
request.
8. Non-Cancelable Lease. THE
LEASE IS A NET LEASE. LESSEES OBLIGATION TO PAY
RENT AND PERFORM ITS OBLIGATIONS HEREUNDER
ARE ABSOLUTE, IRREVOCABLE AND
UNCONDITIONAL AND SHALL NOT BE SUBJECT TO
ANY RIGHT OF SET OFF, COUNTERCLAIM,
DEDUCTION, DEFENSE OR OTHER RIGHT LESSEE
MAY HAVE AGAINST THE SUPPLIER, LESSOR
OR ANY OTHER PARTY PROVIDED, HOWEVER, THAT
NOTHING HEREIN SHALL PRECLUDE LESSEE
FROM ASSERTING ANY SUCH CLAIMS IN A
SEPARATE CAUSE OF ACTION. LESSEE
UNDERSTANDS AND AGREES THAT NEITHER THE
SUPPLIER NOR ANY SALES REPRESENTATIVE
OR OTHER AGENT OF THE SUPPLIER IS AN AGENT
OF LESSOR OR IS AUTHORIZED TO WAIVE
OR ALTER ANY TERM OR CONDITION OF THE
LEASE, AND NO SUCH WAIVER OR ALTERATION
SHALL VARY THE TERMS OF THE LEASE. LESSOR
IS NEITHER A SUPPLIER NOR A LICENSOR,
AND LESSOR IS NOT RESPONSIBLE FOR REPAIRS,
SERVICE OR DEFECTS IN EQUIPMENT.
LESSEE AGREES NOT TO ASSERT AGAINST LESSOR
ANY CLAIMS OR DEFENSES LESSEE MAY
HAVE WITH RESPECT TO EQUIPMENT, AND
UNDERSTANDS THAT IT MAY ASSERT SUCH CLAIMS
AGAINST SUPPLIER OR LICENSOR.
9. Use; Alterations.
(a) Lessee shall
use Equipment lawfully and only in
the manner for which it was designed and
intended and so as to subject it only
to ordinary wear and tear. Lessee shall
comply with all applicable laws.
Lessee shall immediately notify Lessor, in
writing, upon becoming aware of any
existing or threatened investigation, claim
or action by any governmental
authority that could adversely affect
Equipment, Lessor or the Lease. Lessee,
at its own expense, shall make such
alterations, additions or modifications
(each, a Required Alteration) to Equipment
as may be required from time to time
to meet the requirements of applicable law
or a governmental body. All such
Required Alterations shall immediately, and
without further act, be deemed to
constitute Equipment and be fully subject
to the Lease as if originally leased
hereunder. Except as otherwise permitted
herein, Lessee shall not make any
alterations to Equipment without Lessors
prior written consent.
(b)
Lessee, at its own expense, may from time to time add or
install
upgrades or attachments (each an Upgrade)
to Equipment during the Term;
provided, that such Upgrades (i) are
readily removable without causing material
damage to Equipment, (ii) do not materially
adversely affect the Fair Market
Sale Value, the Fair Market Rental Value,
residual value, productive capacity,
utility or remaining useful life of
Equipment and (iii) do not cause Equipment
to become limited use property within the
meaning of Revenue Procedure 2001-28,
2001-19 I.R.B. 1156 (or such other
successor tax provision), as of the date of
installation of such Upgrade. Any such
Upgrades shall remain the property of
Lessee, Upon the expiration or earlier
cancellation of the Lease, Lessee may,
at its option, remove any such Upgrades
and, upon such removal, shall restore
Equipment to the condition required
hereunder.
c) If any
Equipment covered under any Lease becomes attached or affixed
to, or used in connection with, Equipment
covered under another Lease hereunder
(a Related Lease), Lessee agrees that, if
Lessee elects to exercise a purchase
or renewal option under any such Lease, or
if Lessee elects to return Equipment
under any such Lease, then Lessor, in its
sole discretion, may require that all
Equipment leased under all Related Leases
be similarly disposed of.
10. Repairs and Maintenance. Lessee,
at Lessees cost and expense, shall
(a) keep Equipment in good repair, good
operating condition, appearance and
working order in compliance with the
manufacturers recommendations and Lessees
standard practices (but in no event less
than industry practices), (b) take all
actions necessary to ensure that the
Equipment will be eligible, at the
expiration of the Initial Term and any
Renewal Term, for a standard, full
service maintenance contract with the
manufacturer, (c) properly service all
components of Equipment following the
manufacturers written operating and
servicing procedures, (d) enter into and
keep in full force and effect during
the Term a maintenance agreement covering
the Equipment with the manufacturer,
or a manufacturer-approved maintenance
organization, to maintain, service and
repair such Equipment, as otherwise
required herein (but an alternate source of
maintenance may be used by Lessee with
Lessors prior written consent), (e) upon
Lessors request furnish Lessor with an
executed copy of any such maintenance
agreement, and (f) replace any part of the
Equipment that becomes unfit or
unavailable for use from any cause (whether
or not such replacement is covered
by a maintenance agreement) with a
replacement part that, in Lessors sole
opinion, is of the same manufacture, value,
remaining useful life and utility
as the replaced part immediately preceding
the replacement, assuming that such
replaced part was in the condition required
by this Lease. Replacement parts
shall be free and clear of all liens,
constitute Equipment and be fully subject
to this Lease as if originally leased
hereunder.
11. Return of Equipment. Except as otherwise provided
in a Schedule, upon
the expiration or earlier termination or
cancellation of each Lease, Lessee, at
its sole expense, shall de-install,
assemble, pack properly and in accordance
with the manufacturers instructions (under
the supervision of persons cceptable
to Lessor), including labeling of all
components and hardware, and return to
Lessor all, but not less than all,
Equipment by delivering the Equipment to and
unloading it at such location or with such
carrier as Lessor shall specify.
Lessee agrees that (a) Equipment, when
returned, shall be in the condition
required by the Lease, and (b) upon Lessors
request, Lessee will obtain from
the manufacturer (or other maintenance
service provider previously approved by
Lessor or manufacturer) a certificate
stating that such Equipment qualifies for
full maintenance service at the standard
rates and terms then in effect. If, in
the opinion of Lessor, any Equipment fails
to meet the standards set forth
above, Lessee agrees to pay, on demand, all
costs and expenses incurred in
connection with the repairing and restoring
of such Equipment so as to meet
such standards. If Lessee fails to return
any Equipment as required hereunder,
then all of Lessees obligations under the
Lease (including, without limitation,
Lessees obligation to pay Rent for the
Equipment at the rental then applicable
under the Lease) shall continue in full
force and effect until such Equipment
shall have been returned in the condition
required under the Lease.
12. Sublease and Assignment, (a)
LESSEE SHALL NOT, WITHOUT LESSORS PRIOR
WRITTEN CONSENT, (i) SELL, ASSIGN,
TRANSFER, PLEDGE, HYPOTHECATE OR OTHERWISE
DISPOSE OF THE LEASE, EQUIPMENT OR ANY
INTEREST THEREIN, (ii) RENT, SUBLET OR
LEND EQUIPMENT TO ANYONE OR (iii) PERMIT
EQUIPMENT TO BE USED BY ANYONE OTHER
THAN LESSEE OR LESSEES AFFILIATES AND
THEIR RESPECTIVE QUALIFIED EMPLOYEES.
LESSEE ACKNOWLEDGES THAT IT REMAINS PRIMARILY LIABLE FOR ALL
OBLIGATIONS HEREUNDER NOTWITHSTANDING ANY
USE BY AN AFFILIATE.
(b)
Lessor, at any time
with or without notice to Lessee, may sell,
transfer, assign and/or grant a security
interest in all or any part of Lessors
interest in each Lease or any Equipment
(each, a Lessor Transfer). Any
purchaser, transferee, assignee or secured
party of Lessor (each a Lessor
Assignee) shall have and may exercise all
of Lessors rights hereunder with
respect to the items to which any such
Lessor Transfer relates, and Lessee
shall not assert against any Lessor
Assignee any claim that Lessee may have
against Lessor provided, Lessee may assert
any such claim in a separate action
against Lessor. Upon written notice of a
Lessor Transfer, Lessee shall promptly
acknowledge in writing its obligations
under the applicable Lease, shall comply
with the written directions or demands of
any Lessor Assignee and shall make
all payments due under the applicable
Schedule as directed in writing by the
Lessor Assignee. Following such Lessor
Transfer, the term Lessor shall be
deemed to include or refer to each Lessor
Assignee. Lessee will provide
reasonable assistance to Lessor to complete
any transaction contemplated by
this subsection (b).
(c)
Subject to the
restriction on assignment contained in subsection
(a), the Lease Documents shall inure to the
benefit of, and are binding upon,
the successors and assigns of the parties
thereto including, without
limitation, each person who becomes bound
thereto as a new debtor as set forth
in the Uniform Commercial Code (UCC).
13. Risk of Loss; Damage to
Equipment, (a) Lessee shall bear the entire risk
of loss (including without limitation,
theft, destruction, disappearance of or
damage to Equipment from any cause
whatsoever), whether or not insured against,
during the Term of each Lease and until
Equipment is returned to Lessor in
accordance with Section 11 hereof. No such
loss shall relieve Lessee of the
obligation to pay Rent or of any other
obligation under the related Lease.
(b) If any
Equipment is lost, stolen or damaged beyond repair, or
confiscated, seized or the use and/or title
thereof requisitioned to someone
other than Lessee (any such event being a
Total Loss), Lessee shall immediately
notify Lessor of such event. On the next
Rent Payment Date following the
occurrence of the Total Loss, at Lessors
option, Lessee shall either (i)
replace Equipment with equipment that, in
Lessors sole opinion, is of the
same manufacture, value, remaining useful
life and utility as the replaced
Equipment immediately preceding the Total
Loss, assuming such replaced
Equipment was in the condition required by
the Lease or (ii) pay to Lessor the
sum of (A) all Rent due and owing under the
Lease with respect to such
Equipment (at the time of such payment)
plus (B) the Stipulated Loss Value for
the Equipment as of that Rent Payment Date.
If Lessor elects to allow
replacement of Equipment as set forth in
subsection (i) above, Lessee shall
cause the Supplier of such replacement
equipment to deliver to Lessor a bill of
sale for such equipment free and clear of
all liens and encumbrances, and such
replacement equipment shall become
Equipment subject to the applicable Lease.
Upon Lessors receipt of the amounts
specified in subsection (ii) above, Lessee
shall be entitled to Lessors interest in
the replaced Equipment, in its then
condition and location, as is and where is,
without any warranties, express or
implied.
14. Insurance, (a) Lessee shall, at
all times during the Term of each Lease
and at Lessees own cost and expense,
maintain (i) insurance against all risks
of physical loss or damage to Equipment for
the greater of the full replacement
value or the Stipulated Loss Value thereof,
and (ii) commercial general
liability insurance (including blanket
contractual liability coverage and
products liability coverage) for personal
and bodily injury and property
damage per occurrence as stated in each
Schedule.
(b) All
insurance policies required hereunder shall include terms, and
be
with insurance carriers, reasonably
satisfactory to Lessor. Without limiting
the generality of the foregoing, each
policy shall include the following terms:
(i) all physical damage insurance shall
name Lessor and its assigns as loss
payee, (ii) all liability insurance shall
name Lessor and its assigns as
additional insureds, (iii) the policy shall
not be canceled or altered without
at least thirty days advance notice to
Lessor and its assigns and (iv) coverage
shall not be invalidated against Lessor or
its assigns because of any violation
of any condition or warranty contained in
any policy or application therefor by
Lessee or by reason of any action or
inaction of Lessee. On each anniversary of
the Rent Commencement Date during the term
hereof, Lessee shall deliver to
Lessor certificates or other proof of
insurance satisfactory to Lessor
evidencing the coverage required by this
section.
15. Taxes. Lessee shall pay when due and
shall indemnify and hold harmless
Lessor (on an after-tax basis) from and
against any and all taxes, fees,
withholdings, levies, imposts, duties,
assessments and charges of every kind
and nature whatsoever (including any
related penalties and interest) imposed
upon or against Lessor, any Lessor
Assignee, Lessee or any Equipment by any
governmental authority in connection with,
arising out of or otherwise related
to Equipment, the Lease Documents or the
Rent and receipts or earnings arising
therefrom and excepting only all Federal,
state and local taxes on or measured
by Lessors net income. Whenever each Lease
expires, terminates or is canceled
as to any Equipment, Lessee, upon written
request by Lessor, shall advance to
Lessor the amount estimated by Lessor to be
the taxes on said Equipment that
are not yet payable, but for which Lessee
is responsible. At Lessees request,
Lessor shall provide Lessee with Lessors
method of computation of any such
estimated taxes.
16. Lessors Right to Perform for
Lessee. If Lessee fails to perform any of its
obligations contained herein, Lessor may
(but shall not be obligated to) itself
perform such obligations, and the amount of
the reasonable costs and expenses
of Lessor incurred in connection with such
performance, together with interest
on such amount at the lesser of eighteen
percent per annum or the maximum
permitted by law, shall be payable by
Lessee to Lessor upon demand. No such
performance by Lessor shall be deemed a
waiver of any rights or remedies of
Lessor or be deemed to cure the default of
Lessee hereunder.
17. Personal Property; Liens. Lessee
represents and warrants that the
Equipment is, and shall at all times
remain, fully removable personal property
notwithstanding any affixation or
attachment to real property or improvements.
Lessee shall at all times keep Equipment
free and clear from all liens and
encumbrances of any kind or nature other
than those created by, through or
under Lessor. If, in violation of the
foregoing covenant, any prohibited lien
or encumbrance shall attach to Equipment,
Lessee shall (a) give Lessor
immediate written notice thereof and (b)
promptly, at Lessees sole cost and
expense, take such action as may be
necessary to discharge such lien.
18. Default; Remedies, (a) As used
herein, the term Default means any of the
following events: (i) Lessee fails to pay
any Rent or other amount due under a
Lease within ten days after the same shall
have become due; (ii) Lessee or any
Guarantor becomes insolvent or makes an
assignment for the benefit of its
creditors; (iii) a receiver, trustee,
conservator or liquidator of Lessee or
any Guarantor of all or a substantial part
of Lessees or such Guarantors assets
is appointed with or without the
application or consent of Lessee or such
Guarantor, respectively; (iv) a petition is
filed by or against Lessee or any
Guarantor under any bankruptcy, insolvency
or similar law; (v) Lessee or any
Guarantor viol
