EXHIBIT 11.2
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MASTER
CONDITIONAL SALE AGREEMENT
between
Lucent Technologies Inc., InterNetworking Systems
and
Communications Equipment Leasing Corp.
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TABLE OF CONTENTS
Page
1. DEFINITIONS............................................................ 2
2. SALE OF EQUIPMENT...................................................... 5
2.1 Delivery and Sale................................................. 5
2.2 Shipping Documents................................................ 5
3. PURCHASE PRICE; PAYMENT AND PREPAYMENT................................. 6
3.1 Purchase Price.................................................... 6
3.2 Payments of Purchase Price Balance................................ 6
3.3 Overdue Amounts................................................... 6
3.4 Payments.......................................................... 6
3.5 Prepayment........................................................ 6
3.6 Purchaser's Obligations Unconditional............................. 7
3.7 Purchase Price Balance............................................ 8
4. TITLE TO EQUIPMENT; SELLER COVENANTS................................... 8
4.1 Retention of Title by Seller; Grant of Security Interest......... 8
4.2 Transfer of Title................................................ 9
4.3 Application of Payments.......................................... 10
4.4 Seller Covenants................................................. 10
5. CONDITIONS PRECEDENT AND CONDITIONS SUBSEQUENT........................ 10
5.1 Conditions Precedent to Seller's Conditional Sale................ 10
5.2 Conditions Precedent to Lease of Equipment....................... 11
6. REPRESENTATIONS AND WARRANTIES........................................ 12
6.1 Warranties of Seller............................................. 12
6.2 Representations and Warranties of Purchaser...................... 13
7. COVENANTS............................................................. 14
7.1 Reports, Etc..................................................... 14
7.2 Preservation of Corporate Existence.............................. 15
7.3 Maintenance...................................................... 15
8. POSSESSION AND USE OF THE EQUIPMENT................................... 15
8.1 Use of the Equipment............................................. 15
8.2 Transfer of Title or Possession.................................. 15
8.3 Liens............................................................ 15
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9. TAXES 16
10. INSURANCE............................................................. 16
11. RISK OF LOSS.......................................................... 16
12. INDEMNIFICATION....................................................... 17
13. EVENTS OF DEFAULT..................................................... 17
14. REMEDIES.............................................................. 18
15. RETURN OF EQUIPMENT................................................... 19
16. IDENTIFICATION........................................................ 19
17. NOTICES............................................................... 19
18. GENERAL............................................................... 20
18.1 Expenses........................................................ 20
18.2 Relationship Of The Parties.................................... 21
18.3 Entire Agreement, Merger And Modification, No Waivers,
Severability.................................................. 21
18.4 Limitation Of Liability......................................... 21
18.5 Interpretation.................................................. 21
18.6 Submission to Jurisdiction...................................... 22
18.7 Immunity........................................................ 22
18.8 Assignment...................................................... 22
18.9 Further Acts.................................................... 22
18.10 No Waiver of Rights............................................. 22
18.11 No Oral Modification; Oral Agreements........................... 23
18.12 Survival........................................................ 23
18.13 Successors and Assigns.......................................... 23
18.14 Counterparts.................................................... 23
18.15 Confidentiality................................................. 23
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MASTER CONDITIONAL SALE AGREEMENT
THIS MASTER CONDITIONAL SALE AGREEMENT dated as of August ___, 1999, is entered
into by and between Lucent Technologies Inc., InterNetworking Services (together
with its successors and assigns, "Seller"), a corporation organized and existing
under the laws of the State of Delaware, U.S.A., and Communications Equipment
Leasing Corp. (together with its permitted successors and assigns, "Purchaser"),
a corporation organized and existing under the laws of the British Virgin
Islands.
RECITALS
WHEREAS, the Seller is in the business of, among other things, selling
telecommunications equipment;
WHEREAS, the Purchaser is an Affiliate of various operating companies that,
among other businesses, provide telecommunications services;
WHEREAS, the Purchaser and the Seller desire to structure a master
arrangement whereby, from time to time, the Purchaser will purchase
telecommunications equipment from the Seller and Seller will sell such equipment
to Purchaser on a conditional sale basis;
WHEREAS, from time to time Purchaser may lease such equipment, on an
operating lease basis, to certain of its Affiliates in North, Central and South
America (the "Region");
WHEREAS, CELC/IFX, LLC owns all of the outstanding shares of the Purchaser
and has agreed, in favor of the Seller, to guarantee the obligations of the
Purchaser hereunder, and in connection herewith, and to provide a charge over
shares of the Purchaser to the Seller to secure its obligations under such
guarantee; and
WHEREAS, the ultimate parent of the Purchaser, IFX Corporation has agreed,
in favor of the Seller, to guarantee the obligations of the Purchaser hereunder,
and in connection herewith; and
WHEREAS, among other conditions, it is a condition precedent to the entry
by the Seller into this Agreement that CELC/IFX, LLC and IFX Corporation deliver
such guarantees and CELC/IFC, LLC delivers such charge over shares;
NOW THEREFORE, in consideration of the foregoing, the promises set forth
herein and other good and valuable consideration, the receipt and sufficiency of
which hereby are acknowledged, the Seller and the Purchaser agree as follows:
AGREEMENT
1. DEFINITIONS
Unless the context otherwise requires, the following terms shall have the
following meanings for all purposes of this Agreement and shall apply equally to
the singular and the plural forms of the terms herein defined:
"Affiliate" with respect to any Person, means any other Person, at the time such
determination is made, directly or indirectly controlling, controlled by or
under common control with such Person. For the purposes of this definition,
"control" (including "controlled by" and "under common control with") means, at
the time such determination is made, the power, directly or indirectly, to
direct or cause the direction of the management and policies of such Person
whether through the ownership of voting securities or by contract or otherwise.
"Agreement", "this Agreement", "herein", "hereunder", "hereof" or other words of
like import mean this Conditional Sale Agreement, as it may hereafter be
amended, supplemented or modified from time to time.
"Bill of Sale" means, with respect to any item of Equipment, a bill of sale to
be executed by Seller in favor of Purchaser in respect of such Equipment, which
bill of sale shall be substantially in the form of Exhibit A hereto.
"Business Day" means any day other than a Saturday, Sunday or other day on which
commercial banking institutions in New York, New York, or Alameda, California
are authorized or required by law to close.
"Charge Over Shares" means the charge over shares governed by the laws of the
British Virgin Islands provided by CELC/IFX, LLC with respect to the shares of
the Purchaser to the Seller to secure its obligations under the Guarantee in
favor of Seller by CELC/IFX, LLC.
"Claim" means any and all liabilities, losses, damages, actions, suits, demands,
claims of any kind and nature (including, without limitation, claims relating to
environmental discharge, cleanup or compliance), and all costs and expenses
whatsoever to the extent they may be actually incurred or suffered by an
Indemnified Person in connection therewith (including, without limitation,
reasonable attorneys' fees and expenses), fines, penalties (and other charges of
applicable governmental authorities), licensing fees relating to any item of
Equipment, damage to or loss of use of property (including, without limitation,
consequential or special damages to third parties or damages to Purchaser's
property), or bodily injury to or death of any person (including, without
limitation, any agent or employee of Purchaser).
"Collateral" has the meaning specified in Section 4.1.
"Conditional Sale Documents" means this Agreement, each Shipping Document, the
Note, each Lease, each Lease Assignment, each Guarantee, the Charge Over Shares
and any other supplement, document, instrument, certificate, amendment,
modification, assignment or agreement related to, contemplated by or executed in
connection with any of the foregoing.
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"Default" means any event or condition that, with the giving of notice or the
passage of time, or both, would constitute an Event of Default.
"Dollars" or "$" means the legal currency of the United States of America.
"Equipment" means any or all of the equipment, from time to time, sold by the
Seller to the Purchaser and identified in each Shipping Document delivered by
Seller in accordance with the provisions hereof.
"Event of Default" has the meaning specified in Section 14.
"Event of Loss" means, in respect of any item of Equipment, the occurrence of
any event or circumstance that has resulted (i) in such item of Equipment being
lost, stolen, destroyed or damaged beyond economic repair, (ii) in the
condemnation, confiscation, seizure or requisition of title to or use of such
item of Equipment or (iii) in an insurance settlement on the basis of a total
loss or compromised total loss of such item of Equipment.
"Governmental Approval" means all licenses, permits, consents and approvals of,
the giving of notices to, and the registration, recording and filing of all
documents with, and the taking of all other actions in respect of any
governmental or quasi-governmental authority (including, without limitation, any
court or judicative body) in the United States, any state or municipality
therein or in the British Virgin Islands or any other applicable country or
jurisdiction.
"Guarantee" means the Guarantee in favor of Seller by each Guarantor
substantially in the form of Exhibit C hereto.
"Guarantor" means each of IFX Corporation, a Delaware corporation, IFX/EN Inc.,
a Delaware corporation, Emerging Networks, Inc., a British Virgin Islands
corporation, CELC/IFX, LLC, a Delaware limited liability company and any other
Affiliate of the Purchaser that owns, directly or indirectly, outstanding shares
of a Lessee.
"Indemnified Person" means Seller and its officers, directors, shareholders,
partners, and employees.
"Lease" means each lease entered into between the Purchaser and a Qualified
Lessee pursuant to which Equipment is leased, which lease shall be substantially
in the form of Exhibit D hereto; provided that the parties may, by mutual
agreement, modify the terms or form of such lease to address country specific
issues, including without limitation any relevant regulatory and tax issues, in
accordance with Section 8.2.
"Lien" means any mortgage, pledge, lien, charge, assignment, encumbrance, lease,
exercise of rights, security interest, claim or right of another.
"Mandatory Prepayment Event" means any of the events, conditions or
circumstances specified in Section 3.5(b).
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"Maturity Date" means, with respect to an item of Equipment, the date that is
(i) the first day after the conclusion of the forty second (42nd) Monthly Period
in respect of such Equipment, provided that if such date is not a Business Day,
the Maturity Date shall be the last Business Day of such Monthly Period or (ii)
such earlier date to which the Maturity Date may be accelerated in accordance
with the provisions of this Agreement.
"Monthly Period" means, with respect to any Equipment, (i) initially, the period
from, and including, the first day of the calendar month following the calendar
month in which the Shipment Date for such Equipment occurs to, and including,
the last day of such calendar month and (ii) thereafter, each calendar month
prior to the Maturity Date in respect of such Equipment, provided, however, that
if the Shipment Date in respect of such Equipment occurs on or prior to the
first Business Day of a calendar month then, in respect of such Equipment,
subclause (i) of this definition shall not be applicable and the first Monthly
Period in respect of such Equipment shall commence on the first day of the
calendar month in which the Shipment Date of such Equipment occurs.
"Note" means the promissory note evidencing the payment obligations of the
Purchaser hereunder, which promissory note shall be substantially in the form of
Exhibit B hereto.
"Overdue Rate" means the per annum interest rate that equals the lesser of (i)
the maximum rate of interest permitted by applicable law and (ii) 15.75%.
"Payment Date" means, with respect to each Monthly Period, the first Business
Day of such Monthly Period.
"Payment Event" means, in respect of each item of Equipment and as determined by
the Seller, the full, final and unconditional payment by the Purchaser of the
Purchase Price in respect of such item of Equipment together with all accrued
and unpaid interest thereon and all other amounts then due and owing in respect
of such item of Equipment hereunder.
"Permitted Liens" means (a) the title and interest of Seller under this
Agreement and the rights of Seller hereunder and under the Conditional Sale
Documents and of any Qualified Lessee under a Lease, and (b) prior to the
expiration or termination of the Term, liens for Taxes, assessments or other
governmental charges or levies imposed on Purchaser or any Lessee which are not
delinquent, or which are in good faith being contested by Purchaser or such
Qualified Lessee by appropriate proceedings (and for the payment of which
adequate reserves satisfactory to Seller have been provided), so long as such
proceedings do not involve any risk of the sale, forfeiture or loss of the
Equipment, or Seller's interests with respect thereto.
"Person" means any individual, sole proprietorship, corporation, partnership,
joint venture, association, joint-stock company, trust, unincorporated
organization, institution, entity or government (national, federal, state,
provincial or local, or any agency, instrumentality, division or body thereof).
"Prepayment Value" means, in respect of any item of Equipment, an amount
calculated in respect of such Equipment in accordance with Section 3.5(a).
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"Purchase Price" means, in respect of any item of Equipment, the amount due to
the Seller for the purchase of such item of Equipment (exclusive of costs to be
paid by Purchaser in connection with the delivery of such Equipment for freight,
installation, maintenance, professional services and taxes), which amount shall
be set out in the invoice issued by the Seller in respect of such item of
Equipment.
"Purchase Price Balance" means, in respect of any item of Equipment at any time,
the amount of the Purchase Price for such Equipment that has not then been paid
which amount will be determined in accordance with Section 3.7 hereof.
"Qualified Lessee" means any Person organized under the laws of a jurisdiction,
and conducting business in, the Region which is an Affiliate of the Purchaser
and a direct or indirect subsidiary of IFX Corporation.
"Shipping Documents" means, with respect to each item of Equipment, the
documents delivered by Seller in respect thereof in accordance with Section 2.2.
"Shipment Date" means, in respect of any Equipment, the date on which such
equipment is shipped by, or on behalf of, the Seller to the Purchaser (or to its
direction) which date shall be the date designated as such in a Shipping
Document.
"Standard Terms" means Seller's standard terms of sale as such terms may be
amended, modified or supplemented from time to time.
"Term" means the period from the first Shipment Date hereunder until the date on
which all obligations of Purchaser to Seller hereunder and under the other
Conditional Sale Documents shall have been satisfied.
2. SALE OF EQUIPMENT
2.1 Delivery and Sale. From time to time on any Business Day on or prior
to June 30, 2000, Seller will sell, and Purchaser will purchase, Equipment
subject to the terms of this Agreement and to the Standard Terms provided that
at no time may the aggregate Purchase Price in respect of all Equipment sold and
purchased hereunder exceed $10,000,000. On each Shipment Date, the Seller shall
be deemed to sell, and the Purchaser shall be deemed to purchase, the relevant
Equipment subject to the terms of this Agreement and to the Standard Terms. In
the event of any inconsistency between the provisions of this Agreement and the
Standard Terms, the provisions of this Agreement will prevail.
2.2 Shipping Documents. Concurrently with the shipment of each item of
Equipment to Purchaser, Seller shall deliver to the Purchaser shipping documents
that identify such Equipment and the Shipping Date for such Equipment. The
information set forth in such shipping documents shall be binding on the
Purchaser absent manifest error.
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3. PURCHASE PRICE; PAYMENT AND PREPAYMENT
3.1 Purchase Price. In consideration of the shipment by Seller of any
Equipment, Purchaser hereby agrees to pay the Purchase Price for such Equipment,
together with interest on the Purchase Price Balance for such Equipment from
time to time, on the dates and in the amounts determined in accordance with
Section 3.2. The interest with respect to the Purchase Price Balance of each
item of Equipment shall accrue (x) from, and including, the first day of the
calendar month following the calendar month in which the Shipment Date in
respect of such Equipment occurs (y) to, but excluding, the Maturity Date for
such Equipment.
3.2 Payments of Purchase Price Balance. On each Payment Date in respect of
each Monthly Period for each item of Equipment, the Purchaser shall pay to
Seller, an amount that equals the product of (i) the Purchase Price for such
Equipment and (ii) the factor set forth as the payment factor in Schedule I
hereto opposite such Monthly Period. The Purchaser shall also pay the
outstanding Purchase Price Balance in respect of any Equipment in full on the
Maturity Date in respect of such Equipment together with any other amounts due
in respect of such Equipment hereunder.
3.3 Overdue Amounts. If (i) any amount payable by Purchaser pursuant to
Section 3.2 is not paid in full within ten (10) days of the due date therefor or
(ii) any other amount payable by the Purchaser under this Agreement (including,
without limitation, Section 13) or any other Conditional Sale Document is not
paid in full when due, then Purchaser shall pay to Seller, to the extent
permitted by law, an additional amount equal to interest at the Overdue Rate on
the amount not paid for each day during the period from, and including the due
date to, but excluding, the date on which such amount is paid in full.
3.4 Payments. All payments to Seller hereunder shall be made, in Dollars,
by wire transfer in immediately available funds to Seller c/o the account of
Ascend Communications, Inc. at Wells Fargo Bank, Oakland Main Office, Oakland,
California, Account No. 52298073, ABA No.: 011 000 390, or to such other
person(s) or account(s) as Seller may designate from time to time.
3.5 Prepayment.
(a) Optional Prepayment. So long as no Event of Default shall have
occurred and be continuing hereunder, the Purchaser shall have the right, upon
giving at least thirty (30) days' prior written notice to Seller, to prepay the
Purchase Price Balance which is then outstanding with respect to all or any
items of Equipment provided that any prepayment in respect of less than all
items of Equipment shall be in a minimum amount of $500,000. Such notice shall
specify the amount and the date of such prepayment (which date shall be a
Payment Date) and, in the case of a prepayment in respect of less than all items
of Equipment, the Equipment to which such prepayment relates. Once given, any
such notice shall be irrevocable. On the date specified for prepayment, the
Purchaser shall pay to the Seller the amounts payable by the Purchaser on such
Payment Date pursuant to Section 3.2, the Prepayment Value of the Equipment in
respect of which the Purchase Price Balance is being prepaid and any other
amounts payable in respect of such Equipment hereunder. The Prepayment Value in
respect of any item of Equipment shall be the amount determined by the Seller to
equal the then present
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value of the amounts that would have been payable by the Purchaser under Section
3.2 with respect to such Equipment discounted at a rate equal to the per annum
yield to maturity for United States Treasury obligations (as published in the
Wall Street Journal) as of the prepayment date with a like term maturity to the
weighted average life of such remaining payments plus 150 (one hundred fifty)
basis points.
(b) Mandatory Prepayments. Purchaser shall immediately prepay the
aggregate Purchase Price Balance of all Equipment which is then outstanding, all
unpaid interest determined by Seller to have accrued on such amount, the
Prepayment Value in respect of such Equipment and all other amounts outstanding
hereunder, under the Note and under the other Conditional Sale Documents within
five (5) Business Days following receipt of notice from Seller (stating in
reasonable detail the basis for such notice), that this Agreement or any other
Conditional Sale Document has become, or is determined to be, illegal, invalid
or unenforceable, or for any other reason does not constitute a valid
reservation of title in the Equipment in favor of Seller, or is not effective to
continue a validly perfected first priority security interest, as the case may
be, in favor of Seller in respect of all of the Collateral, or Purchaser or any
Affiliate of Purchaser takes any action, directly or indirectly, to challenge
the legality, validity or binding effect of this Agreement, or any other
Conditional Sale Document provided that Purchaser shall not be required to make
any payment of Prepayment Value if prepayment under this Section 3.5(b) results
from facts or circumstances not within the control of, or caused by, Purchaser.
3.6 Purchaser's Obligations Unconditional. Purchaser's obligation to pay
the full amount of the Purchase Price and interest thereon for the Equipment and
all other amounts payable to Seller hereunder, under the Note and under the
other Conditional Sale Documents (each, a "Payment") shall be absolute and
unconditional under any and all circumstances, shall not be subject to notice or
demand unless otherwise provided herein, and shall not be affected by any
circumstance of any character, including, without limitation: (a) any setoff,
counterclaim, deduction, recoupment, abatement, suspension, deferment,
diminution, proration, defense or other right which Purchaser may have against
Seller or any other Person for any reason whatsoever, including any claim of
Purchaser against Seller or any other Person; (b) any defect in the title,
condition, design, operation or fitness for use, or any damage to, or loss or
destruction of, or any Lien upon the Equipment or the interruption or cessation
or restriction in the use or possession thereof by Purchaser for any reason
whatsoever; (c) any condemnation, expropriation, requisition or other taking of
the Equipment; (d) any bankruptcy, insolvency, reorganization, composition,
adjustment, dissolution, liquidation or other like proceedings by or against
Purchaser, Seller or any other Person; (e) any change, extension, waiver,
indulgence or other act or omission in respect of any obligation or liability of
Purchaser or Seller except as otherwise expressly provided thereby; (f) any
failure by Purchaser or any Affiliate to obtain any anticipated tax allowances
or other tax benefits in the United States or elsewhere; or (g) any other
circumstance, happening or event whatsoever, whether or not similar to the
foregoing and whether or not Purchaser or Seller shall have had any knowledge,
actual or otherwise, of any of the foregoing. If for any reason whatsoever this
Agreement shall be terminated in whole or in part by operation of law or
otherwise, except as specifically provided herein, Purchaser nonetheless agrees
to pay to Seller an amount equal to the aggregate Purchase Price Balance of all
Equipment at the time of payment, plus interest accrued to the date of payment,
the Prepayment Value in respect of such Equipment and all other amounts payable
hereunder and
PAGE 7
under any other Conditional Sale Document, and, upon such payment in full,
Seller shall, to the extent permitted by applicable law, transfer the title to
the Equipment which has been retained by Seller hereunder to Purchaser and
otherwise comply with the provisions of Section 4.2. Except as otherwise
expressly provided hereunder, to the extent permitted by applicable law,
Purchaser waives and disclaims all rights now or hereafter conferred by statute
or otherwise to terminate, cancel, quit or surrender this Agreement or the
Equipment or to any abatement, suspension, deferment, diminution, reduction or
proration of any payment on account of any occurrence described in this
Agreement. Each payment paid by Purchaser hereunder shall be final, and
Purchaser shall not seek to recover all or any part of such payment from Seller,
or from whosoever may be entitled thereto, for any reason whatsoever.
Notwithstanding the foregoing, Purchaser shall not be required to make any
payment of Prepayment Value if payment under this Section 3.6 results from facts
or circumstances not within the control of, or caused by, Purchaser.
3.7 Purchase Price Balance. As long as no Default or Event of Default has
occurred and is continuing, the Purchase Price Balance, at any time of the
determination thereof, in respect of any item of Equipment will equal (x) the
product of (i) the Purchase Price for such Equipment and (ii) the factor set
forth as the purchase price balance factor in Schedule I hereto opposite the
then most recent Monthly Period in respect of which a Payment Date has occurred
minus (y) any other payments allocated to reduce the Purchase Price Balance of
such Equipment hereunder. Upon the occurrence, and during the continuation of,
a Default or an Event of Default, the Purchase Price Balance at such time in
respect of any item of Equipment shall be such amount as the Seller may, in good
faith, determine. The Seller shall maintain in its records a running
calculation of the Purchase Price Balance in respect of such Equipment which
calculation, absent manifest error, shall be deemed conclusively correct. The
aggregate Purchase Price Balance of any Equipment may be adjusted upward if and
to the extent that at any time all or any part of any payment theretofore
received by Seller from or on behalf of Purchaser pursuant to Section 3.2 or
3.5(a) in respect of such Equipment, or any of the other obligations of
Purchaser hereunder or under the Note or any other Conditional Sale Document, is
or must be rescinded, released, rebated or returned by Seller to Purchaser, any
Qualified Lessee or any other person for any reason whatsoever (including,
without limitation, the insolvency, bankruptcy, winding-up or reorganization of
Purchaser, any Qualified Lessee or any other person, or in respect of any
obligation owed to any Qualified Lessee under the Lease Documents), in which
case, the obligations of Purchaser, shall, for purposes of this Agreement and
the other Conditional Sale Documents, be deemed to be readjusted or reinstated
to the extent of any such recovery notwithstanding such payment, as though such
payment had not been made. The allocation of any such upward adjustment to the
Purchase Price Balance of the Equipment shall be made by Seller in the good
faith exercise of its reasonable discretion.
4. TITLE TO EQUIPMENT; SELLER COVENANTS
4.1 Retention of Title by Seller; Grant of Security Interest.
Notwithstanding the shipment of the Equipment to Purchaser and its possession
and use thereof by Purchaser or any Qualified Lessee, Seller shall and does
hereby retain, to the exclusion of Purchaser to the extent permitted by
applicable law, the full title to and property interest in the Equipment and all
proceeds thereof.
PAGE 8
In addition, to secure its obligations hereunder and under each other
Conditional Sale Document, Purchaser hereby grants, pledges, transfers, assigns
and sets over to Seller and hereby mortgages, charges and assigns to Seller all
of Purchaser's right, title and interest in and to the following:
(w) the Equipment;
(x) any lease of all or any part of the Equipment (including, without
limitation, any Lease), any contract assigning or otherwise transferring to
Purchaser any right, title or interest in, to or under any lease or granting to
Purchaser any security interest in any lease or in amounts due thereunder,
together with all renewals of any such lease, sublease or any such contract
executed from time to time, and all payments, including, without limitation, all
payments of rent, all insurance proceeds (other than public liability insurance
proceeds) and all other amounts due or to become due thereunder;
(y) all rents, deposits, commitment fees, option payments, reserves,
agreed value payments, issues, profits, revenues, products and other income,
together with and the right to receive any of the foregoing, relating to all or
any portion of the Equipment or any other of the foregoing, whenever acquired,
including, without limitation, the proceeds of any insurance maintained with
respect to any of the foregoing and all proceeds of any condemnation,
expropriation or requisition payable with respect to any of the foregoing and
all proceeds payable or received with respect to an Event of Loss; and
(z) all proceeds of the foregoing.
All of the property described in this Section 4.1 shall be referred to
hereinafter collectively as the "Collateral".
Subject to Section 4.2, Seller shall continue to retain such title,
interest and property in the Equipment and the other Collateral, as security for
the prompt payment when due of the Purchase Price Balance, and interest thereon,
any other sums due and owing to Seller pursuant to the terms of this Agreement
and the other Conditional Sale Documents, and the performance and observance by
Purchaser of all the agreements, covenants and provisions herein and in the
other Conditional Sale Documents.
4.2 Transfer of Title. Upon a Payment Event in respect of any item of
Equipment, and without releasing or limiting any obligations of Purchaser under
this Agreement or any other Conditional Sale Documents which by their terms
survive the Maturity Date of such Equipment or the expiration or termination of
this Agreement, Seller shall (a) release its security interest in such Equipment
and the Collateral related thereto, (b) transfer to Purchaser good and
marketable title to such Equipment, free of any Liens created by or through the
Seller, by execution and delivery to Purchaser of a Bill of Sale for the
Equipment, and (c) execute and deliver (at Purchaser's sole cost and expense)
such documents or take such actions evidencing such release of security interest
and transfer of title as Purchaser shall reasonably request including, without
limitation, the cancellation of all filings in respect of such Equipment which
reflect Seller's interest therein.
PAGE 9
4.3 Application of Payments.
(a) As long as no Event of Default has occurred and is continuing,
Seller shall apply any amount realized or received pursuant to the Conditional
Sale Documents promptly upon the receipt of same in the following order: first,
to payment of any interest payable pursuant to Section 3.3; second, to payment
of any Prepayment Value, cost, expense or indemnity payable hereunder; third, to
payment of any amount payable pursuant to Section 3.2; fourth, to payment of any
other amounts (other than Purchase Price Balance) payable hereunder; and fifth,
to payment of the Purchase Price Balance in respect of such Equipment.
(b) As long as an Event of Default has occurred and is continuing,
Seller shall apply amounts realized or received pursuant to the Conditional Sale
Documents, promptly upon receipt of the same, against the Purchase Price
Balance, any Prepayment Value, all interest thereon and any other amounts then
due to Seller under any Conditional Sale Document in such manner as Seller, in
its sole discretion, deems appropriate.
4.4 Seller Covenants. Seller hereby agrees for the benefit of Purchaser
that, unless an Event of Default shall have occurred and be continuing, Seller
shall not interfere with or deprive the Purchaser or applicable Qualified Lessee
of the peaceful and quiet enjoyment of the Equipment or exercise any right of a
"Lessor" under any Lease.
5. CONDITIONS PRECEDENT AND CONDITIONS SUBSEQUENT
5.1 Conditions Precedent to Seller's Conditional Sale. The obligation
of Seller to sell the Equipment to Purchaser hereunder is subject, to the extent
described below in this Section 5.1, to the satisfaction of each of the
following conditions precedent:
(a) Purchaser Documents. Seller shall have received, on or prior to
the first Shipment Date hereunder, (i) the Note duly executed by the Purchaser
and in full force and effect; (ii) the Guarantee of each of IFX Corporation,
IFX/EN, Inc., Emerging Networks, Inc. and CELC/IFX, LLC duly executed and
delivered by the Guarantor thereof and in full force and effect; and (iii) the
Charge Over Shares duly executed and delivered by CELC/IFX, LLC thereof and in
full force and effect.
(b) Certain Conditions. On each Shipment Date, the representations
and warranties of Purchaser in Section 6 will be true and correct and by its
acceptance of the Equipment Purchaser shall be deemed to have represented to
Seller that, such representations and warranties are true and correct.
(c) Proof of Corporate Action. On or prior to the first Shipment Date
hereunder, Seller shall have received copies of the corporate resolutions,
delegations and all other documents supporting and evidencing all corporate
action taken by Purchaser and each Guarantor to authorize the execution and
delivery of each Conditional Sale Document to which it is a party, certified by
the Secretary or other duly authorized officer of Purchaser or Guarantor, as the
case may be, and all other documents which Seller may reasonably request
relating to the legal existence of Purchaser and each Guarantor, the corporate
authority for and the validity of
PAGE 10
this Agreement and all other Conditional Sale Documents thereunder and any other
matters relevant thereto, all in form and substance reasonably satisfactory to
Seller.
(d) Insurance. On or prior to each Shipment Date, Seller shall have
received the broker's report and certificates of insurance with respect to the
insurance required to be maintained pursuant to Section 10 in respect of the
related Equipment, in each case, in form and substance satisfactory to Seller.
(e) Opinions of Counsel. On or prior to the first Shipment Date
hereunder, Seller shall have received an opinion of British Virgin Islands
counsel to the Purchaser, in form and substance reasonably satisfactory to
Seller, dated the date of this Agreement and addressed to Seller.
(f) Registration and Recording. On or prior to the first Shipment
Date hereunder, Seller shall have received evidence satisfactory to Seller that
(i) Uniform Commercial Code financing statements have been duly executed and
delivered by Purchaser, as debtor, and Seller, as secured party, and have been
duly filed in all places within the States of Illinois and Florida; (ii) all
registrations, recordings, filings or any other action with any relevant
government authority in the British Virgin Islands have been duly completed; and
(iii) all registrations, recordations, filings or any other action have been
duly completed in all other places in which such filings are necessary or
advisable, in the opinion of counsel for Seller, to establish, maintain,
preserve, perfect and protect Seller's rights, titles and interests under the
Conditional Sale Documents in and to the Collateral.
(g) Consents and Approvals. On or prior to the first Shipment Date
hereunder, all approvals and consents of any trustee or holder of any
indebtedness or obligation of Purchaser or any Guarantor which are required in
connection with any of the transactions contemplated by the Conditional Sale
Documents, shall have been duly obtained, and evidence thereof reasonably
satisfactory in form and substance to Seller, certified by duly authorized
officers of Purchaser or Guarantor, as the case may be, shall have been
delivered to Seller.
(h) Other Matters. On each Shipment Date, all other matters incident
to the purchase and conditional sale of the Equipment, the Lease Agreements
shall be reasonably satisfactory to Seller. Without limiting the generality of
the foregoing, (i) in Seller's reasonable good faith judgment (A) all action
necessary or advisable to protect or maintain Seller's rights, titles and
interests under the Conditional Sale Documents and in the Equipment have been
taken, and (B) the Conditional Sale Documents and the transactions contemplated
thereby shall comply in all material respects with legal and regulatory
requirements of the jurisdiction in which the Equipment is to be located, and
(ii) no sales, use, value added, stamp or transfer type tax (however named or
described) that has not been paid or indemnified by Purchaser shall be imposed
on Seller as a result of the Conditional Sale Documents or the transactions
contemplated thereby, including, without limitation, sales tax imposed in the
country and local jurisdiction in which the Equipment is, or is intended to be,
located.
5.2 Conditions Precedent to Lease of Equipment. The Purchaser agrees that
the lease of any Equipment to a Qualified Lessee is subject, to the extent
described below in this Section 5.2, to the satisfaction of each of the
following conditions precedent:
PAGE 11
(a) Lease Documents. Prior to the lease of any Equipment to a
Qualified Lessee, Seller shall have approved the form of Lease, the Lease shall
be in full force and effect and Seller shall have received (i) a chattel paper
counterpart of the Lease, (ii) any relevant Guarantee, (iii) the organizational
documents of the Qualified Lessee and (iv) originals, or copies, duly certified
in a manner satisfactory to Seller, of all documents to be delivered to
Purchaser at the closing with respect to the Lease.
(b) Registration and Recording. Prior to the lease of any Equipment
to a Qualified Lessee, Seller shall have received evidence satisfactory to
Seller that:
(i) upon the lease of such Equipment, the Seller will retain
full ownership rights to and interest in the Equipment, and the Seller will have
a first-priority security interest in the corresponding Lease and other
Collateral under applicable law of the jurisdiction in which such Equipment is
to be located; and
(ii) precautionary Uniform Commercial Code financing statements
and all registrations, recordations, filings or any other similar action with
any relevant government authority in the British Virgin Islands or any other
relevant jurisdiction have been duly executed by the relevant Qualified Lessee,
as lessee, and Purchaser, as lessor, and listing Seller as assignee, and shall
be promptly duly filed in the States of Illinois and Florida, the British Virgin
Islands or any other applicable jurisdiction, to establish, maintain, preserve,
perfect and protect Seller's rights, titles and interests in and to the relevant
Lease.
(c) Consents and Approvals. On or prior to the lease of any Equipment
to a Qualified Lessee, all appropriate action, if any, required to have been
taken in connection with such Lease shall have been duly taken by any
governmental authority or agency having jurisdiction, and Purchaser shall have
furnished to Seller copies of all governmental consents, permits and approvals,
if any, required for the execution, delivery or performance of such Lease.
6. REPRESENTATIONS AND WARRANTIES
6.1 Warranties of Seller. SELLER MAKES NO REPRESENTATION OR WARRANTY IN
THIS AGREEMENT OF ANY KIND, EXPRESS OR IMPLIED, WITH RESPECT TO ANY OF THE
EQUIPMENT, ITS MERCHANTABILITY, OR ITS FITNESS FOR A PARTICULAR PURPOSE. SELLER
SHALL NOT BE LIABLE TO PURCHASER OR ANY OTHER PERSON (INCLUDING ANY LESSEE) FOR
DIRECT, INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING FROM THE
USE OF THE EQUIPMENT, OR FOR DAMAGES BASED ON STRICT OR ABSOLUTE TORT LIABILITY
OR SELLER'S PASSIVE NEGLIGENCE. EACH OF PURCHASER AND SELLER HEREBY ACKNOWLEDGES
THAT ANY MANUFACTURER'S OR SUPPLIER'S WARRANTIES WITH RESPECT TO THE EQUIPMENT
ARE FOR THE BENEFIT OF BOTH PURCHASER AND SELLER. NOTWITHSTANDING THE FOREGOING,
PURCHASER'S OBLIGATIONS TO MAKE EACH PAYMENT DUE, OR OTHERWISE PERFORM ITS
OBLIGATIONS, UNDER THIS AGREEMENT ARE ABSOLUTE AND UNCONDITIONAL.
PAGE 12
6.2 Representations and Warranties of Purchaser. Purchaser makes the
following representations, warranties and covenants as of the date hereof and as
of each Shipment Date that:
(a) Corporate Status and Power. The Purchaser (a) is a corporation
duly organized, validly existing and in good standing or the equivalent under
the laws of the jurisdiction of its organization, (b) has all powers required to
conduct its business, (c) has full corporate power, authority and legal right to
execute, deliver and perform this Agreement and each other Conditional Sale
Document to which it is party and to carry out the transactions contemplated
hereby.
(b) Due Execution and Enforceability. Each of this Agreement and
each other Conditional Sale Document to which it is party has been duly executed
and delivered by the Purchaser and constitutes the valid and binding obligation
of the Purchaser, enforceable against Purchaser in accordance with its terms
except as such enforceability may be limited by bankruptcy or similar laws
applicable to creditors generally or by general principles of equity.
(c) Non-Contravention. Neither the execution and delivery by the
Purchaser of this Agreement or any other Conditional Sale Document to which it
is a party nor the consummation by the Purchaser of the transactions
contemplated hereby or thereby is an event that, of itself or with the giving of
notice or the passage of time or both, will (a) conflict with the certificate of
incorporation or by-laws of the Purchaser; (b) violate any material judgment,
decree or order or statute, rule or regulation applicable to the Purchaser, (c)
contravene or result in any breach of, or constitute a default under any
indenture, mortgage, material contract or other material agreement to which
Purchaser is a party or by which Purchaser or any of its properties may be bound
or affected, or (d) result in the creation of any Lien (excepting the Lien
arising pursuant to the Conditional Sale Documents), charge or encumbrance upon
any property of Purchaser.
(d) Government Approvals. All Governmental Approvals, if any,
required in connection with the execution and delivery by Purchaser of the
Conditional Sale Documents to which Purchaser is a party, the consummation of
the transactions by Purchaser contemplated thereby, and the performance of its
obligations thereunder, have been, or will be contemporaneously with the
delivery of the Equipment hereunder, obtained, given or accomplished.
(e) Litigation. There is no action or proceeding pending or, to the
knowledge of Purchaser, overtly threatened against or affecting Purchaser or any
of the Collateral before any court or other governmental authority or
arbitration body which, if adversely determined, is reasonably likely to
materially and adversely affect the financial condition of Purchaser or the
ability of Purchaser to perform its obligations under the Conditional Sale
Documents to which it is party, or which questions in any respect, directly or
indirectly, the legality, validity, binding effect or enforceability of any of
the Conditional Sale Documents or any part or portion thereof, or any action
contemplated thereby.
(f) No Default. No Default or Event of Default has occurred and is
continuing or will result from the purchase of the relevant Equipment or
consummation of the other
PAGE 13
transactions contemplated by the Conditional Sale Documents; and to the best of
Purchaser's knowledge, there does not exist any material default or failure of
condition or performance under any Lease by a Qualified Lessee or by Purchaser
in its capacity as Lessor thereunder.
(g) All Disclosures Made. No document, certificate or statement
furnished by Purchaser to Seller in connection with the transactions
contemplated by this Agreement contains any untrue statement of a material fact
or omits a material fact necessary to make the statements contained therein not
misleading. There is no fact which Purchaser has not disclosed to Seller in
writing which materially adversely affects or, so far as Purchaser can
reasonably foresee, will materially adversely affect the ability of Purchaser to
carry on its business and perform its obligations under this Agreement and the
other Conditional Sale Documents.
(h) Leases Comply with Applicable Law. In respect of any Lease, to
the knowledge of Purchaser after reasonably inquiry, the form of Lease to be
entered into by the Purchaser and the Qualified Lessee in connection with the
corresponding Equipment complies with the requirements of all applicable laws
and contains all information and disclosures required by such applicable laws.
7. COVENANTS
Purchaser agrees that during the Term, unless Seller shall otherwise consent in
writing:
7.1 Reports, Etc. Purchaser shall furnish to Seller the following
described reports, notices and information:
(a) Notice of Default or Event of Default. Promptly upon becoming
aware of the existence of any condition or event which constitutes a Default or
an Event of Default, a written notice signed by a senior officer of Purchaser
specifying the nature and period of existence thereof and what action Purchaser
is taking or proposes to take with respect thereto;
(b) Equipment Location. Promptly upon installation or relocation of
any Equipment, a list showing the installation locations of such Equipment and
the serial numbers of such Equipment, if any.
(c) Financial Performance of Purchaser. Promptly, but in any event
no later than 30 days from the date on which they are filed with the Securities
and Exchange Commission, copies of the 10K and 10Q filings of IFX Corporation.
Promptly, but in any event no later than 60 days after the end of each fiscal
quarter and 90 days after the end of each fiscal year, financial statements of
the Purchaser for such period certified by a senior officer of Purchaser as
having been prepared in accordance with generally accepted accounting principles
and fairly presenting the financial condition of the Purchaser.
(d) Requested Information. Promptly upon request, such other data
and information as from time to time Seller may reasonably request, including
information on the operating performance and projected performance, periodic
information regarding acquisition activity and the subscriber base in each
country in the Region in which the Purchaser and its
PAGE 14
Affiliates operate. Information provided to the Purchaser pursuant this clause
(d) shall be subject to the confidentiality provisions of Section 18.15 hereof.
7.2 Preservation of Corporate Existence. (a) Purchaser shall maintain and
preserve its corporate existence; (b) Purchaser shall do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
franchises and all rights necessary to carry on its business and operations; and
(c) Purchaser shall not, without the prior written consent of Seller,
consolidate with or merge or amalgamate into (or attempt any such consolidation,
merger or amalgamation) any other corporation or permit any other corporation to
merge into it, provided that the foregoing shall not apply to any consolidation
or merger of Purchaser with any Guarantor or with any subsidiary of Purchaser so
long as such Guarantor or Purchaser, as applicable, is the survivor and no
Default or Event of Default will result therefrom.
7.3 Maintenance. Purchaser shall maintain, or cause to be maintained, the
Equipment in good operating order and appearance, protect the Equipment from
deterioration, other than normal wear and tear, and will not use, or permit to
be used, the Equipment for any purpose other than that for which it is intended
and is permitted by applicable law.
8. POSSESSION AND USE OF THE EQUIPMENT
8.1 Use of the Equipment. Purchaser shall not, and shall not permit any
third party to, operate, use or locate the Equipment, or any part thereof,
except as otherwise provided in this Agreement.
8.2 Transfer of Title or Possession. Purchaser shall not, and shall cause
each Lessee not to, without the prior written consent of Seller, lease, sublease
or otherwise in any manner deliver, transfer or relinquish possession of the
Equipment, or sell or convey any or all of its right, title and interest in or
to any part thereof; provided, however, that, Purchaser may, without the prior
written consent of Seller but subject to the conditions precedent set out
herein, lease the Equipment to a Qualified Lessee pursuant to a Lease; further,
provided, that if the Purchaser and Seller are unable to agree to amendments to
the Lease required for a particular jurisdiction within 30 days from the
Shipment Date for such Equipment, the Equipment shall be deemed sold to the
Purchaser on the Standard Terms.
Notwithstanding any lease of the Equipment permitted under this
Section 8.2, (1) Purchaser shall remain primarily liable hereunder for the
performance of all of the terms of this Agreement to the same extent as if such
permitted lease had not occurred, and (2) in connection with any permitted lease
hereunder, Purchaser, at its own expense, shall take or cause to be taken all
action reasonably requested by Seller to be taken, including filings,
registrations and recordations, to preserve, and to continue to evidence the
retention by Seller of title to the Equipment and the security interest in the
other Collateral and Seller's other rights under the Conditional Sale Documents.
8.3 Liens. Purchaser shall not, directly or indirectly, create, incur or
assume or suffer to be created, incurred, assumed or to exist any Lien of any
kind (other than Permitted Liens) on any of its rights, titles and interests in
or under this Agreement or any of the other Conditional
PAGE 15
Sale Documents or its rights and interests in and to the Equipment or any part
thereof or any of the other Collateral, and if any such Lien other than any
Permitted Lien does exist, Purchaser, at its sole cost and expense, shall
promptly remove the same.
9. TAXES
Purchaser hereby assumes liability for, and shall pay when due, and, on a net
after-tax basis, shall indemnify, protect and hold harmless Seller against all
fees, taxes and governmental charges (including, without limitation, interest
and penalties) of any nature imposed on or in any way relating to Seller,
Purchaser, any Qualified Lessee, any item of Equipment, this Agreement or any
Lease, except state and local taxes on or measured by Seller's net income (other
than any such tax which is in substitution for or relieves Purchaser from the
payment of taxes it would otherwise be obligated to pay or reimburse to Seller
as herein provided) and federal taxes on Seller's net income. Purchaser shall,
at its expense, file when due with the appropriate authorities any and all tax
and similar returns, and reports required to be filed with respect thereto, for
which it has indemnified Seller hereunder or, if requested by Seller, notify
Seller of all such requirements and furnish Seller with all information required
for Seller to effect such filings. Any fees, taxes or other charges paid by
Seller upon failure of Purchaser to make such payments shall, at Seller's
option, become immediately due from Purchaser to Seller and shall be subject to
the Overdue Charge from the date paid by Seller until the date reimbursed by
Purchaser. Purchaser shall have no obligation to indemnify Seller under this
Section 9 to the extent that any tax or governmental charge results from the
failure by Seller to take all steps which are reasonable and customary in the
ordinary course of Seller's business to avail itself of any and all exemptions
from liability for, or reductions in, any such taxes or governmental charges.
10. INSURANCE
The Purchaser shall, or shall cause the corresponding Lessee, to maintain
insurance with financially sound and reputable insurers, of the kinds and in the
amounts customarily insured against by companies engaged in the same or similar
business and similarly situated. The Purchaser shall, or shall cause the
corresponding Lessee, to pay all insurance premiums payable as and when due. The
Seller shall be named as sole loss payee or additional insured, as applicable,
with respect to each such insurance policy.
11. RISK OF LOSS
Risk of loss in respect of each item of Equipment shall pass to Purchaser on the
Shipment Date in respect thereof. Upon the occurrence of an Event of Loss,
Purchaser shall promptly pay to Seller the applicable Purchase Price Balance of
the Equipment subject to the Event of Loss, interest on the Purchase Price
Balance thereof from the most recent Payment Date in respect thereof to the date
of payment at a per annum rate of 13.75% and the Prepayment Value determined by
Seller with respect to such Equipment. Upon payment by Purchaser of the amounts
in the preceding sentence, Seller will transfer to Purchaser, "AS IS, WHERE IS,
PAGE 16
WITHOUT RECOURSE, REPRESENTATION OR WARRANTY," all of Lessor's right, title and
interest, if any, in such items of Equipment.
12. INDEMNIFICATION
Purchaser assumes liability for, and shall pay when due, and shall indemnify,
reimburse and hold each Indemnified Person harmless from and against all Claims,
directly or indirectly relating to or arising out of the acquisition, use,
manufacture, purchase, shipment, transportation, delivery, installation, lease
or sublease, ownership, operation, possession, control, storage, return or
condition of any item of Equipment (regardless of whether such item of Equipment
is at the time in the possession of Purchaser), the falsity of any non-tax
representation or warranty of Purchaser or Purchaser's failure to comply with
the terms of this Agreement during the Term. The foregoing indemnity shall
cover, without limitation, (i) any Claim in connection with a design or other
defect (latent or patent) in any item of Equipment, (ii) any Claim for
infringement of any patent, copyright, trademark or other intellectual property
right, or (iii) any Claim for negligence or strict or absolute liability in
tort; provided, however, that Purchaser shall not indemnify Seller in respect of
any Claim to the extent resulting from the gross negligence, willful misconduct
or bad faith of Seller.
Such indemnities shall continue in full force and effect, notwithstanding the
expiration or termination of this Agreement. Upon Seller's written demand,
Purchaser shall assume and diligently conduct, at its sole cost and expense, the
entire defense of any Indemnified Person against any indemnified Claim described
in this Section 12. Purchaser shall not settle or compromise any Claim against
or involving Seller without first obtaining Seller's written consent thereto,
which consent shall not be unreasonably withheld. Purchaser shall give Seller
prompt notice of any occurrence, event or condition in connection with which
Seller may be entitled to indemnification hereunder. The provisions of this
Section 12 are in addition to, and not in limitation of, the provisions of
Section 9.
13. EVENTS OF DEFAULT
An Event of Default shall occur if (i) Purchaser fails to make any payment due
under Section 3.2 hereof within ten (10) days of the due date therefor or any
other payment required under this Agreement when due and such failure continues
for a period of three (3) days after written notice from Seller, or (ii)
Purchaser fails to perform or observe any other covenant, condition or agreement
to be performed or observed by it or breaches any provision contained in this
Agreement or in any other document furnished to Seller in connection herewith,
and such failure or breach continues for a period of thirty (30) days after
written notice from Seller, or (iii) Purchaser without Seller's consent,
attempts to assign this Agreement or sell, transfer, encumber, part with
possession (other than under a Lease permitted hereunder) of any item of
Equipment; or (iv) Purchaser makes any representation or warranty herein or in
any document furnished by Purchaser in connection herewith, which shall have
been materially false or inaccurate when made or at the time to which such
representation or warranty relates; (v) an Event of Default (as therein defined)
under any Guarantee shall occur; or (vi) Purchaser or any Qualified Lessee shall
commit an act of bankruptcy or become insolvent or bankrupt or make an
assignment for the benefit of creditors or consent to the appointment of a
trustee or receiver or either shall be
PAGE 17
appointed for them or for a substantial part of its property without its
consent, or bankruptcy reorganization, or insolvency proceedings shall be
instituted by or against them, and if instituted against them, shall not be
vacated or dismissed within sixty (60) days. Any Event of Default shall be
deemed material and a substantial impairment of Seller's interests for the
purposes of this Agreement, the UCC, and any other applicable law.
14. REMEDIES
Upon the occurrences of any Event of Default and at any time thereafter,
provided such Event of Default is then continuing, Seller may, in its
discretion, do any one or more of the following:
(a) accelerate the Maturity Date in respect of any or all Equipment;
(b) recover any accrued and unpaid amounts which are due and owing
under any Conditional Sale Document plus interest at the Overdue Rate;
(c) recover any amounts due under any indemnity then determinable,
plus interest at the Overdue Rate;
(d) require that Purchaser return the Equipment in accordance with
Section 15 hereof;
(e) enter the premises where such Equipment is located and take
immediate possession of and remove the same, all without liability to Seller or
its agents for such entry;
(f) exercise the rights of "Lessor" under any Lease;
(g) sell any or all of the Equipment at public or private sale, with
or without notice to Seller or advertisement, or otherwise dispose of, hold,
use, operate, lease to others or keep idle such Equipment, all free and clear of
any rights of Purchaser and without any duty to account to Purchaser for such
action or inaction or for any proceeds with respect thereto; and
(h) exercise any other right or remedy which may be available to it
under the UCC or other applicable law including the right to recover damages for
the breach hereof.
In addition, Purchaser shall be liable for, and reimburse Seller for, all
reasonable legal fees and all commercially reasonable costs and expenses
incurred by Seller as a result of the foregoing defaults or the exercise of
Seller's remedies, including without limitation, recovering possession of the
Equipment, selling or leasing the Equipment (including broker's and sales
representative's fees and commissions), and placing any Equipment in the
condition required by Section 15. No remedy referred to in this Section is
intended to be exclusive, but each shall be cumulative and in addition to any
other remedy referred to above or otherwise available to Seller at law or in
equity. No express or implied waiver by Seller of any default shall constitute
a waiver of any other default by Seller, or a waiver of any of Seller's right.
PAGE 18
15. RETURN OF EQUIPMENT
If required to return any Equipment to the Seller hereunder, Purchaser shall, at
its expense and risk, cause such Equipment to be removed, disassembled, and
placed in the same condition as when delivered to Seller (reasonable wear and
tear excepted) and properly crate such Equipment for shipment and deliver it to
a common carrier designated by Seller. Purchaser will ship such Equipment,
F.O.B. destination, to any address specified in writing by Seller within the
continental United States. All additions, attachments, alterations and repairs
made or placed upon any of the Equipment shall become part of such Equipment and
shall be the property of Seller. The Equipment when returned to Seller pursuant
to this Section 15 shall comply with the requirements of this Agreement.
16. IDENTIFICATION
The Equipment shall bear the respective manufacturers' serial numbers.
Purchaser, at its sole cost and expense, shall mark, or cause to be marked,
legibly each item of Equipment on or before placing such Equipment into service
and thereafter during the Term for so long as such Equipment is subject to the
terms hereof, with a metal plate, disc, or other marking of the customary size
no smaller than ten centimeters by seven centimeters (10cm. x 7cm) and bearing a
legend as follows:
"THIS EQUIPMENT IS OWNED BY LUCENT TECHNOLOGIES INC., INTERNETWORKING SERVICES
AND IS SUBJECT TO A CONDITIONAL SALE AGREEMENT BETWEEN LUCENT TECHNOLOGIES INC.,
INTERNETWORKING SERVICES AND COMMUNICATIONS EQUIPMENT LEASING CORP. AND IS
LEASED TO [QUALIFIED LESSEE NAME] AND MAY NOT BE USED BY ANY OTHER PERSON
WITHOUT THE PRIOR WRITTEN CONSENT OF LUCENT TECHNOLOGIES INC. INTERNETWORKING
SERVICES AND COMMUNICATIONS EQUIPMENT LEASING CORP."
or such other legend as may be reasonably requested by Seller to evidence the
fact that the Equipment are subject to this Agreement. Purchaser shall not
remove or deface, and shall require each Lessee to agree not to remove or
deface, any metal plate, disc or other marking so placed on the Equipment or the
identifying serial number of the Equipment or any part thereof and, in the event
of such removal or defacement, shall promptly cause such metal plate, disc,
other marking or serial number to be replaced.
17. NOTICES
Except as otherwise specifically set forth in this Agreement, all notices,
demands, requests or other communications which may be or are required to be
given, served, or sent by any party pursuant to this Agreement shall be in
writing and shall be personally delivered, mailed by first-class, registered or
certified mail, return receipt requested, postage prepaid, sent by Federal
Express or other recognized overnight delivery service, addressed as follows:
PAGE 19
If to the Purchaser, to:
----------------------
----------------------
with a copy to:
----------------------
----------------------
Attn:
----------------------
If to the Seller, to: Maribeth Harper
Assistant Secretary
Lucent Technologies Inc., InterNetworking Systems
1701 Harbor Bay Parkway
Alameda, CA 94502
with a copy to: David Sousa, Manager of Corporate Finance
Each party may designate by notice in writing a new address to which any notice,
demand, request or communication may thereafter be so given, served or sent.
Each notice, demand, request or communication which shall be delivered, mailed
or transmitted in the manner described above shall be deemed sufficiently given,
served, sent or received for all purposes at such time as is delivered to the
addressee (with an affidavit of personal delivery, the return receipt or the
delivery receipt being deemed conclusive, but not exclusive, evidence of such
delivery) or at such time as delivery is refused by the addressee upon
presentation.
18. GENERAL
18.1 Expenses. Without limitation of the terms of Section 12, Purchaser agrees,
promptly upon demand, to pay to Seller all out-of-pocket costs and expenses
(including reasonable attorneys fee) incurred by Seller in connection with this
Agreement, the enforcement of any rights and remedies created in connection with
the Conditional Sale Documents, or the entering into or giving or withholding of
any future amendments or supplements or waivers or consents with respect
thereto, as well as,
(a) out of pocket costs payable to third parties arising with respect to
the documentation of the Lease, perfection of the Seller's security first
priority interest in the Collateral and rights to the Equipment located outside
the continental United States, subject to the prior approval of the Purchaser,
such approval not to be unreasonably withheld or delayed; and
(b) all other expenses in connection with such transactions including,
without limitation, all fees, taxes, expenses, and other charges (including,
without limitation, reasonable fees and expenses of counsel) payable in
connection with (i) any transfer of possession of or the replacement of the
Equipment as provided in this Agreement, (ii) the recording or filing of
PAGE 20
instruments, including the Conditional Sale Documents, any financing statements,
company charges and other filings described in this Agreement, (iii) any
transfer of title to the Equipment pursuant to Section 4 and the removal of any
Liens on the Equipment in connection therewith other than any fees, charges or
expenses incurred in connection with the removal of any Seller Liens, and (iv)
the taking, possession, removing, storing, repairing, leasing or selling of the
Equipment as part of Seller's enforcement of any remedies under this Agreement,
the Note or the other Conditional Sale Documents. Except as set forth herein,
each party hereto shall pay its own expenses (including legal and accounting
fees) incurred in the negotiation, documentation and review of the Agreement and
any due diligence efforts expended in connection with its execution.
18.2 Relationship Of The Parties. Nothing in this Agreement shall be
construed as making either party a joint venturer, partner, agent,
representative, or employee of the other party. The parties' status is that of
independent contractors and, except as otherwise expressly set forth herein, the
parties shall be responsible for determining the method, details, and means of
performing their obligations described herein. Each party shall solely be
responsible for its own employees. This Agreement is not intended to confer any
right upon any person other than the parties to this Agreement.
18.3 Entire Agreement, Merger And Modification, No Waivers, Severability.
This Agreement and the Exhibits contains the entire understanding between the
Seller and the Purchaser with respect to the subject matter hereof and merges
and supersedes all prior and contemporaneous agreements, dealings and
negotiations. No modification, alteration or amendment shall be effective unless
made in writing, dated and signed by duly authorized representatives of both
parties. No waiver of any breach hereof shall be held to be a waiver of any
other or subsequent breach. If any provision of this Agreement is determined by
a court of competent jurisdiction to be invalid, illegal or unenforceable, such
determination shall not affect the validity of the remaining provisions unless
the Seller determines in its discretion that the court's determination causes
this Agreement to fail in any of its essential purposes.
18.4 Limitation Of Liability. In no event shall either party be liable to
the other for any speculative, indirect, special or consequential damages,
including but not limited to lost profits, even if advised of the possibility of
such damages, in connection with performance under this Agreement.
18.5 Interpretation.
(a) Headings. Table of contents and section headings used herein are
for convenience only and shall not in any way affect the construction of, or be
taken into consideration in interpreting, this Agreement.
(b) References. Any reference to a specific Section or Section
number shall be interpreted as a reference to that Section of this Agreement
unless otherwise expressly provided.
(c) Incorporation of Exhibits and Schedules. All annexes, schedules
and exhibits referenced in and attached to this Agreement are by this reference
incorporated into and made a part of this Agreement.
PAGE 21
(d) Governing Law. THIS AGREEMENT AND THE NOTE AND ALL THE RIGHTS
AND OBLIGATIONS HEREUNDER AND THEREUNDER AND ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE THEREOF SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS., BUT NOT THE CHOICE OF LAW PROVISIONS, OF THE
STATE OF CALIFORNIA, U.S.A..
18.6 Submission to Jurisdiction. The parties hereto hereby irrevocably and
unconditionally submit to the non-exclusive jurisdiction of the California
courts and of any United States federal courts sitting in California with
respect to any disputes arising out of or in connection with this Agreement.
18.7 Immunity. Purchaser agrees that in any legal action or proceedings
against it or its assets in connection with this Agreement or the other
Conditional Sale Documents, no immunity from legal action or proceedings
(including, without limitation, suit, attachment prior to judgment, other
attachment, the obtaining of judgment, execution or other enforcement) shall be
claimed by or on behalf of Purchaser or with respect to its assets, irrevocably
waives any such right of immunity which it or its assets now have or may
hereafter acquire or which may be attributed to it or its assets and consents
generally in respect of any such legal action or proceedings to the giving of
any relief or the issue of any process in connection with such action or
proceedings including, without limitation, the making, enforcement or execution
against any property whatsoever (irrespective of its use or intended use) of any
order or judgment which may be made or given in such action or proceedings.
18.8 Assignment. Seller may at any time, without notice to or the consent
of Purchaser or any other Person, sell, assign, transfer, convey, grant
participations in or otherwise dispose of to one or more persons, and any
assignee, transferee, participant or other recipient may resell, reassign,
retransfer or reconvey, at any time and from time to time, all or any portion of
the Note any interest of Seller in any of the Collateral and/or the Conditional
Sale Documents, and the rights, benefits and advantages of Seller hereunder and
under the other Conditional Sale Documents. Seller shall promptly notify
Purchaser of any such sale, assignment, transfer, conveyance, participation or
disposal provided that the failure to provide such notice shall not adversely
affect the transfer contemplated thereby.
18.9 Further Acts. Subject to the limitations otherwise provided herein,
Purchaser shall from time to time do and perform such other and further acts and
execute and deliver any and all such other and further instruments as may be
required by law or reasonably requested by Seller to establish, maintain and
protect the rights, title, interests and remedies intended to be created or
provided hereunder and under the other Conditional Sale Documents in favor of
Seller and to carry out and effect the intent and purposes of this Agreement and
the other Conditional Sale Documents. Without limiting the generality of the
foregoing, Purchaser shall, at its own cost and expense, promptly furnish to
Seller such information as may be required to enable Seller to file any reports,
including tax returns, required to be filed by Seller with any governmental
authority because of Seller's interests in the Equipment or in the other
Collateral.
18.10 No Waiver of Rights. No waiver of or delay or omission in the
exercise of any right or remedy provided herein or in any other Conditional Sale
Document or otherwise
PAGE 22
available to Seller shall impair, affect or be construed as a waiver of its
rights thereafter to exercise the same. Any single or partial exercise by Seller
of any right or remedy provided herein or in any other Conditional Sale Document
shall not preclude any other or further exercise of any other right or remedy.
Any extension of time for payment hereunder or other indulgences granted to
Purchaser shall not alter, affect or waive Seller's rights or the obligations of
Purchaser hereunder or under any other Conditional Sale Document, except in
accordance with the explicit terms of such extension.
18.11 No Oral Modification; Oral Agreements. No term or provision of this
Agreement or the Note may be waived, modified, terminated or discharged orally,
but only by an instrument in writing signed by the party against which the
enforcement of the change, waiver, discharge or termination is sought.
18.12 Survival. Any other provisions contained in this Agreement to the
contrary notwithstanding, it is hereby agreed that, except as otherwise provided
herein, the provisions of Sections 9, 12, 14, 15 and 18, shall survive the
expiration, cancellation, completion or termination hereof to the extent
required thereby for their full observance and performance.
18.13 Successors and Assigns. This Agreement shall be binding on and shall
inure to the benefit of the parties hereto and their respective successors and
permitted assigns, including, without limitation, the subrogees and participants
of Seller.
18.14 Counterparts. This Agreement may be executed by the parties hereto in
several counterparts, each of which when so executed shall be deemed to be an
original, and all such counterparts shall together constitute but one and the
same instrument.
18.15 Confidentiality. Purchaser and Seller understand that certain
commercial and financial information contained in this Agreement and each other
Conditional Sale Agreement is considered by Purchaser and Seller as privileged
and confidential. Purchaser and Seller each agree that it shall treat this
Agreement and the terms hereof as privileged and confidential and will not, or
permit its agents and advisers to, without the prior written consent of the
other, disclose the terms and conditions of or the existence of this Agreement
or the agreements of the parties contained herein to any third person or persons
except (i) to legal counsel or auditors in connection with the transactions
contemplated hereby, (ii) as may be required by law or in connection with legal
proceedings, and (iii) to any transferee or assignee of Seller hereunder. In
connection with any permitted disclosure of the terms and conditions of or the
existence of this Agreement and each other Conditional Sale Agreement or the
agreements contained herein to any person or entity, Purchaser or Seller, as the
case may be, and such party's agents and advisers, shall request, and shall use
reasonable efforts to obtain, confidential treatment of such information.
PAGE 23
IN WITNESS WHEREOF, the Seller and the Purchaser have caused this Agreement
to be executed as of the date stated at the beginning of this Agreement.
LUCENT TECHNOLOGIES INC., COMMUNICATIONS EQUIPMENT
INTERNETWORKING SERVICES LEASING CORP.
By: By:
-------------------------- --------------------------
Name: Name:
-------------------------- --------------------------
Title: Title:
-------------------------- --------------------------
SCHEDULE I
Purchase Purchase Price
Month Price Factor Balance Factor
----- ------------- --------------
1 0.00000 1.0103531
2 0.00000 1.0204760
3 0.00000 1.0195812
4 0.01146 1.0183365
5 0.01146 1.0173907
6 0.01146 1.0121751
7 0.01572 1.0062315
8 0.01572 1.0009007
9 0.01572 0.9951815
10 0.01572 0.9897366
11 0.01572 0.9839058
12 0.01572 0.9704845
13 0.02358 0.9569247
14 0.02358 0.9429061
15 0.02358 0.9290614
16 0.02358 0.9147644
17 0.02358 0.9006551
18 0.02358 0.8785397
19 0.03144 0.8553152
20 0.03144 0.8327304
21 0.03144 0.8096337
22 0.03144 0.7865759
23 0.03144 0.7630168
24 0.03144 0.7394764
25 0.03144 0.7156923
26 0.03144 0.6914229
27 0.03144 0.671414
28 0.03144 0.6423856
29 0.03144 0.6175963
30 0.03144 0.5846903
31 0.03930 0.5508579
32 0.03930 0.5172610
33 0.03930 0.4831436
34 0.03930 0.4488456
35 0.03930 0.4140427
36 0.03930 0.3790293
37 0.03930 0.3436535
38 0.03930 0.3077966
39 0.03930 0.2716833
40 0.03930 0.2351053
41 0.03930 0.1982394
42 0.03930 0.0002918
0.20000