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EXHIBIT 10.9(a)
CSI
MASTER LEASE AGREEMENT NUMBER 172564
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COMPUTER SALES INTERNATIONAL, INC. In California: CSI Leasing, Inc.
10845 Olive Boulevard In Florida: CSI Computer Sales, Inc.
St. Louis, Missouri 63141
(341) 997-7010
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MASTER LEASE AGREEMENT dated as of March 20, 2000 by and between COMPUTER SALES
INTERNATIONAL, INC. (hereinafter called "Lessor") having its principal office
and place of business at 10845 Olive Boulevard, St. Louis, Missouri 63141, and
INNOTRAC CORPORATION
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(hereinafter called "Lessee") having its principal office and place of business
at
6655 Sugarloaf Parkway
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Duluth, Georgia 30097
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IN CONSIDERATION of the mutual agreements hereinafter set forth and the payment
of rent as herein provided for, the parties hereto agree as follows:
1. LEASE AGREEMENT
Lessor hereby leases to Lessee and Lessee hereby leases from Lessor
all of the equipment and other tangible personal property described in each of
the Equipment Schedules which are executed from time to time by Lessor and
Lessee pursuant to this Master Lease. Each Equipment Schedule shall constitute
a separate lease on the terms and conditions stated therein and, to the extent
not inconsistent with the Equipment Schedule, on the terms and conditions
stated in the Master Lease which shall be incorporated by reference in the
Equipment Schedule. The term "Equipment" as used herein shall mean, with
respect to any Equipment Schedule, the Equipment described therein. The term
"Unit" as used herein shall mean an individual machine on an Equipment Schedule
or an individual feature when such feature is leased separately from a machine.
The term of this Master Lease shall begin on the date set forth above and shall
continue in effect so long as any Equipment Schedule entered into pursuant to
this Master Lease remains in effect.
2. TERM
2.1 COMMENCEMENT DATE: The commencement date ["Commencement Date"]
for each Unit of Equipment will be the date on which such Unit is installed by
the manufacturer or other installer, except that, in the event there is a delay
in the installation of a Unit and such delay is attributable to Lessee, then
the Commencement Date for such Unit shall be five [5] working days following
the date upon which Lessee has been given notice that such Unit is available
for installation. If requested by Lessor, Lessee will promptly execute and
deliver to Lessor a certificate confirming the Commencement Date(s).
2.2 INITIAL TERM: The "Initial Term" of an Equipment Schedule shall
mean the period beginning on the Commencement Date of the Unit having the latest
Commencement Date of the Units on such Equipment Schedule if such Commencement
Date is the first day of a month, and otherwise, the Initial Term shall begin on
the first day of the month immediately following the month in which such latest
Commencement Date falls. The Initial Term of an Equipment Schedule shall
continue for the number of months specified therein and shall automatically be
extended for successive four month periods thereafter at the same Monthly Rental
unless and until terminated by either party giving the other party not less than
120 days prior written notice. Any termination (i) must relate to all of the
Equipment described on the Equipment Schedule to which the notice applies, (ii)
will be effective only on the last day of the Initial Term or on the last day of
any successive four month period, (iii) will be effective only if Lessee returns
all of the Equipment to Lessor in accordance with the terms of the Equipment
Schedule by the day after the scheduled termination date, and (iv) may not be
unilaterally revoked.
3. MONTHLY RENTAL
Lessee shall pay to Lessor the monthly rental ["Monthly Rental"] for
each Unit as set forth in the relevant Equipment Schedule. The Monthly Rental
shall be payable at the above mailing address of Lessor or at such other place
as Lessor may from time to time designate in a written notice to Lessee. The
Monthly Rental for each Unit shall commence on the Commencement Date of such
Unit and shall be due and payable in advance and without demand on the first day
of each month thereafter during the term of this Lease. If the Commencement
Date for a Unit is a day other than the first day of a month. Daily Rental shall
be payable ["Daily Rental" shall equal one-thirtieth of the Monthly Rental for
such Unit] for each day from, and including, the Commencement Date to, but not
including, the first day of the Initial Term, and such total Daily Rental amount
shall be due and payable on the first day of the Initial Term.
4. WARRANTIES
4.1 AFFIRMATIVE WARRANTIES: Lessor represents and warrants that:
[a] The Equipment shall be eligible for the manufacturer's standard
prime shift maintenance contract on installation, provided that, prior to
installation of the Equipment, Lessee makes a written request directly to the
manufacturer for such a maintenance contract.
[b] During the term of this Master Lease, if no Event of Default has
occurred. Lessee's quiet enjoyment and peaceable possession of the Equipment
shall not be interrupted by Lessor or anyone claiming solely through or under
Lessor.
4.2 DISCLAIMER OF WARRANTIES: THE AFFIRMATIVE WARRANTIES SET FORTH
ABOVE ARE IN LIEU OF ALL OTHER WARRANTIES OF LESSOR. LESSOR MAKES NO OTHER
WARRANTIES, EXPRESS OR IMPLIED, AS TO ANY MATTER WHATSOEVER, INCLUDING, WITHOUT
LIMITATION, THE DESIGN OR
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March 20, 2000
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CONDITION OF THE EQUIPMENT, ITS MERCHANTABILITY, FITNESS, CAPACITY OR
SUITABILITY FOR ANY PARTICULAR PURPOSE. THE QUALITY OF THE MATERIAL OR
WORKMANSHIP OF THE EQUIPMENT, OR CONFORMITY OF THE EQUIPMENT TO THE PROVISIONS
AND SPECIFICATIONS OF ANY PURCHASE ORDER OR ORDERS RELATING THERETO. Without
limiting the generality of the foregoing, Lessor shall not be liable to Lessee
for any liability, claim, loss, damage or expense of any kind or nature
[including strict liability in tort] caused directly or indirectly by the
Equipment, any inadequacy thereof for any purpose, any deficiency or defect
therein, whether known or unknown to Lessor. In any event, Lessor shall not be
liable to Lessee for any loss of business or any other incidental or
consequential loss or damage resulting from any cause whatsoever.
4.3 ASSIGNMENT OF WARRANTIES: Lessor hereby assigns to Lessee any and
all manufacturer's warranties, if assignable, and any other such rights that are
assignable as Lessor may have against the manufacturer of the Equipment
provided, however, that Lessee's sole remedy for the breach of any such warranty
or right shall be against the manufacturer and not Lessor.
4.4 SELECTION: Lessee acknowledges, represents and warrants that it
has made the selection of the Equipment based on its own judgement and expressly
disclaims any reliance upon statement made by the Lessor. The Equipment is being
leased for commercial or business purposes only, and will not be used for
consumer, personal, home, or family purposes.
5. NET LEASE
Each Equipment Schedule constitutes a net lease. Lessee shall be solely
responsible for all costs and expenses of every nature arising out of the
possession, use, and operation of the Equipment. Lessee's obligation to pay the
Monthly Rental and all other sums due hereunder shall be absolute and
unconditional and shall not be subject to any setoff, abatement, counterclaim,
recoupment, defense, cancellation, repudiation, rejection of Equipment,
revocation of acceptance of Equipment or any other right that Lessee may have
against Lessor. Except as expressly provided for herein, neither this Master
Lease, nor any Equipment Schedule, shall terminate nor shall the obligations of
Lessee be affected by reason of any defect in, damage to, or any loss or
destruction of the Equipment or any Unit from any cause whatsoever, or the
interference with the use thereof by any private person, corporation, or
governmental authority or as a result of any war, riot, insurrection or Act of
God. It is the express intention of Lessor and Lessee that all Monthly Rental
payable by Lessee under each Equipment Schedule shall be, and continue to be,
payable in all events throughout the term thereof.
6. TAXES
6.1 PAYMENT OF TAXES: Lessee covenants and agrees to pay to the
appropriate taxing authority, and discharge before the same become delinquent,
all taxes, fees, or other charges of any natures whatsoever, without
pro-ration, together with any related interest or penalties ["impositions"] now
or hereafter imposed, assessed or payable during the term of the relevant
Equipment Schedule including any extension thereof (or an imposition relating
to a record date or status date that fell within the term of the relevant
Equipment Schedule including any extension thereof or is otherwise associated
with Lessee's leasing, possession or use of the Equipment) against Lessor,
Lessee or the Equipment by any federal, state, county or local government or
taxing authority upon or with respect to [i] the Equipment or any Unit, [ii]
upon the leasing, ordering, purchase, sale, ownership, use, operation, return
or other disposition thereof, [iii] the Monthly Rental or any other sums due
hereunder with respect to any Equipment Schedule, or [iv] the leasing of the
Equipment [excepting only federal, state and local taxes measured by the net
income of Lessor or any franchise tax upon Lessor measured by Lessor's capital,
capital stock or net worth]. Because the payment due date or reimbursement date
for an Imposition may occur after the expiration or termination of the term of
the relevant Equipment Schedule, it is understood and agreed that
Lessee's liability for such Imposition shall survive the expiration or
termination of the term of the relevant Equipment Schedule.
6.2 BILLING: Lessee shall, to the extent permitted by law, cause all
Impositions to be billed to Lessee. Lessee shall, at its expense, timely file
all forms and returns and timely do all things required to be done in
connection with the levy, assessment and payment of any Impositions, and Lessor
hereby appoints Lessee as Lessor's attorney-in-fact where necessary for such
purposes. Lessee shall submit written evidence to Lessor of the payment of all
Impositions required to be paid by Lessee hereunder promptly after such
payment. Notwithstanding the foregoing, Lessor, in its sole discretion, may pay
any Imposition itself or file any forms or returns with respect thereto. If
Lessor pays any Imposition, Lessee shall, when billed, reimburse Lessor for
such payment.
6.3 CONTEST: Lessee may contact any Imposition by appropriate legal
proceedings provided the nonpayment of such Imposition thereof, or such
proceedings, will not, in the opinion of counsel for Lessor, adversely affect
the title, property interest or rights of Lessor in the Equipment and provided
further that, if requested by Lessor, Lessee has given to Lessor security,
sufficient in form and amount, in Lessor's reasonable judgment, to fully
satisfy the amount of the contested Imposition.
7. DELIVERY AND RETURN
Lessor shall arrange for delivery, and Lessee shall pay, when
billed, all delivery expenses [including, without limitation, transportation
costs and the cost of in-transit insurance] associated with the delivery of each
Unit from its previous location to the location specified in the relevant
Equipment Schedule. Lessee shall inspect each Unit upon delivery, identify any
observable damage prior to accepting delivery, and note any such damage on the
bill of lading. Costs of repair which are not recoverable from the carrier
because of Lessee's failure to properly inspect for observable damage shall be
borne and promptly paid by Lessee. Lessee shall provide a suitable place for
installation of the Equipment with all appropriate facilities as specified by
the manufacturer. Lessor shall arrange and Lessee shall pay for the installation
of each Unit [if Lessee wishes to have the Equipment installed by an installer
other than the manufacturer or some other party approved in writing by Lessor,
then Lessee shall accept the Equipment "as is" and Lessor's warranty set forth
in Paragraph 4.1 (a) shall not apply]. Upon the termination of Lessee's right to
possession of any Unit [by expiration of the term of the relevant Equipment
Schedule or otherwise], Lessee shall, in accordance with Lessor's instructions
and at Lessee's expense {including without limitation transportation costs and
costs of in-transit insurance] return the Unit to such location within the
Continental United States as shall be designated by Lessor. Lessee shall
reimburse Lessor for all expenses paid by Lessor associated with return of the
Unit when billed. Lessee shall return each Unit in the same operating order,
repair, condition and appearance as when received, excepting only normal wear
and tear, and with all engineering changes prescribed by the manufacturer prior
to the termination of Lessee's right of possession incorporated in the Unit.
Lessee, at its expense, shall make any repairs necessary in order to certify the
Equipment as eligible for the manufacturer's prime shift maintenance contract
upon its return and shall have the Unit certified as eligible for the same. At
the time the Equipment is returned, Lessee shall provide a letter from the
manufacturer certifying such maintenance eligibility
8. CARE OF EQUIPMENT
8.1 USE AND MAINTENANCE: Lessee shall, at its expense, maintain the
Equipment in good operating order, repair, and condition. Lessee shall not use
the Equipment for any purpose other than that for which it was designed. Prior
to the delivery date and before any action is taken to install the Equipment,
Lessee shall make a written request to the manufacturer for continued coverage
of the Equipment under one of the manufacturer's standard maintenance
agreements, and shall, at its expense, enter into and maintain in force
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such maintenance agreement for each Unit and provide Lessor with a copy
of such agreement. IF LESSEE FAILS TO MAKE THE PROPER WRITTEN REQUEST TO THE
MANUFACTURER FOR COVERAGE UNDER ONE OF THE MANUFACTURER'S STANDARD MAINTENANCE
AGREEMENTS, THEN LESSEE SHALL ACCEPT THE EQUIPMENT "AS IS" AND LESSOR'S WARRANTY
SET FORTH IN PARAGRAPH 4.1(A) SHALL NOT APPLY. In no event, however, shall
Lessee be required to enter into such a contract for any Unit so long as that
Unit is under a manufacturer's warranty which provides substantially similar
coverage.
8.2 ALTERNATION AND ATTACHMENTS: With the prior written consent of
the Lessor, Lessee may, at its expense, make alterations or add attachments to
the Equipment which are removable and which do not interfere with the normal and
satisfactory operation or maintenance of the Equipment or Lessee's ability to
obtain the maintenance contract required in Section 8.1 above. Upon the
termination of Lessee's right to possession of any Unit, any alterations or
attachments to such Unit shall become the property of Lessor unless removed at
Lessee's expense prior to such termination. Lessor shall have the right,
following termination of Lessee's right to possession of any Unit, to remove any
attachment or alternations made by Lessee to such Unit and dispose of the same
without any liability therefor to Lessee and Lessee shall pay the costs of such
removal when billed.
8.3 INSPECTION: Lessee shall make the Equipment available to Lessor.
Secured Party [hereinafter defined] and Assignee [hereinafter defined] or the
designees of any of them during normal working hours for inspection or for any
other reasonable purpose.
9.2 LOSS OR DAMAGE AGE
9.1 RISK OR LOSS: Lessee shall be responsible for and hereby assumes
the entire risk of the Equipment being lost, damaged, destroyed, stolen, or
otherwise rendered unfit or unavailable for use from the date of delivery to
Lessee to the date of return to Lessor.
9.2 OCCURRENCE OF LOSS: If any Unit is lost, damaged, destroyed,
stolen, or otherwise rendered unfit for use, Lessee shall give to Lessor
immediate notice thereof, and this Master Lease and the applicable Equipment
Schedule shall continue in force and effect without any abatement in the Monthly
Rental. Lessee shall determine within fifteen (15) days after the date of the
occurrence of damage whether such Unit can be repaired. In the event Lessee
determines that such Unit can be repaired, Lessee, at its expense, shall cause
such Unit to be promptly repaired. If a Unit is lost, destroyed or stolen or if
Lessee determines that a damaged Unit cannot be repaired, Lessee shall, at
Lessor's direction, within thirty [30] days of such event either replace the
Unit with an identical Unit, the title to which shall thereupon vest in Lessor
and which thereafter shall be considered the Unit subject to the Equipment
Schedule with no abatement in the Monthly Rental or, in Lessor's sole
discretion, pay to Lessor an amount equal to the Stipulated Loss Value of the
Unit determined as of the date of payment in accordance with the Stipulated Loss
Value Schedule attached to the applicable Equipment Schedule together with all
unpaid Monthly Rental which is due and payable through the date of payment. Upon
such payment, Lessee's obligation to pay further Monthly Rental for such Unit
shall cease.
10. INSURANCE
10.1 PROPERTY INSURANCE: Throughout the term of each Equipment
Schedule, Lessee shall, at its expense, maintain in full force and effect "all
risk" extended coverage, fire and casualty insurance for the Equipment. Such
insurance shall provide for coverage in an amount equal to the greater of the
Stipulated Loss Value or the replacement cost of the Equipment at the time of
loss. Lessor shall be named as the Loss Payee on such policy. In addition, the
policy shall, by means of a standard mortgage clause, named the Secured Party
and Assignee as additional insureds and loss payees as their interest shall
appear. Such policy shall provide that it may not be canceled or materially
altered unless thirty [30] days prior written notice is given to all parties
named therein. Upon Lessor's written request, Lessee shall provide Lessor with a
Certificate of Insurance evidencing such insurance coverage. If, within two
weeks after Lessee's receipt of such request, Lessee has not provided Lessor
with a satisfactory Certificate, then Lessor may, at Lessor's option, obtain
such insurance until Lessee provides the Certificate, and Lessee shall reimburse
Lessor for the cost of such insurance when billed.
10.2 LIABILITY INSURANCE: During the term of this Master Lease,
Lessee, at its expense, shall maintain reasonable, commercial general liability
and property damage insurance with respect to the use, possession and operation
of the Equipment in an amount not less than one million dollars for each
occurrence.
11. INDEMNIFICATION
Lessee shall and does hereby indemnify and hold Lessor, any Assignee,
and any Secured Party, harmless from and against any and all claims, costs,
reasonable attorney's fees, expenses, damages, and liabilities [including those
resulting from the application of strict liability doctrines or statutes]
arising out of Lessee's selection, possession, leasing, operation, control,
use, maintenance, delivery, or return of the Equipment Notwithstanding the
foregoing. Lessee shall not be required to indemnify a party for any claim
resulting from acts of that party which constitute willful misconduct or gross
negligence.
12. ASSIGNMENT, SUBLEASE OR RELATION BY LESSEE
UPON AT LEAST THIRTY [30] DAYS PRIOR WRITTEN NOTICE TO LESSOR, LESSEE
MAY ASSIGN OR SUBLEASE A UNIT TO ANY PARTY, OR RELOCATE A UNIT TO ANY LOCATION,
WITHIN ANY STATE OF THE CONTINENTAL UNITED STATES, PROVIDED THAT LESSOR,
ASSIGNEE AND SECURED PARTY, IN SUCH PARTIES' SOLE DISCRETION, SHALL HAVE
APPROVED SUCH ASSIGNEE, SUBLESSEE, OR LOCATION, AND PROVIDED FURTHER THAT [I]
ALL COSTS OF ANY NATURE WHATSOEVER [INCLUDING ANY ADDITIONAL IMPOSITIONS AND ANY
ADDITIONAL EXPENSES ASSOCIATED WITH FILING NEW PRECAUTIONARY UNIFORM COMMERCIAL
CODE FINANCING STATEMENTS] RESULTING FROM ANY RELOCATION, ASSIGNMENT OR SUBLEASE
SHALL BE BORNE BY LESSEE; [II] ANY ASSIGNMENT OR SUBLEASE SHALL BE MADE
EXPRESSLY SUBJECT AND SUBORDINATE TO THE TERMS OF THIS LEASE; AND [III] LESSEE
SHALL ASSIGN ITS RIGHTS UNDER SUCH ASSIGNMENT OR SUBLEASE TO LESSOR, ASSIGNEE,
OR SECURED PARTY AS ADDITIONAL COLLATERAL AND SECURITY FOR LESSEE'S OBLIGATIONS
HEREUNDER. In the event of a relocation, assignment, or sublessee, Lessee and
its assignee or its sublessee shall cooperate with Lessor in taking all
reasonable measures to protect the title of Lessor or Assignee and the interest
of any Secured Party to and in the Equipment. No relocation, assignment, or
sublease shall relieve Lessee of its primary obligations under the relevant
Equipment Schedule and this Master Lease.
13. ASSIGNMENT BY LESSOR
Lessor shall have the right to assign as security its interest or grant
a security interest in any or all of the Equipment Schedules which may from time
to time be executed and the Units described in any such Equipment Schedules to a
security assignee ["Secured Party"]. Lessor shall also have the right to sell or
otherwise dispose of any or all of the Units described in any Equipment
Schedule, subject to the prior right of Lessee in such Units, and to assign its
interest as Lessor under such Equipment Schedule, to any assignee ["Assignee"].
Any such assignment shall not in any way release Computer Sales International,
Inc. from liability for performance of the Lessor's obligations hereunder.
Lessee acknowledges that any assignment by Lessor will not materially change
Lessee's duties or obligations under the Equipment Schedule nor materially
increase the burden or risk imposed on Lessee. Lessee hereby consents to and
shall acknowledge such assignment or assignments as shall be designated by
written notice to Lessee by Lessor. Lessee further covenants and agrees that:
[a] Any such Secured Party or Assignee shall have and
be entitled to exercise any and all discretions, rights and powers of
Lessor under the Equipment Schedule in which it has an interest,
provided that a Secured Party or Assignee shall not be obligated to
perform any of the obligations of Lessor other than Lessor's
obligations under Paragraph 4.1[b].
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(b) Lessee shall pay directly to the Secured Party or
Assignee all Monthly Rental and all other sums due upon receipt of
notice of any assignment and of instructions to do so; and
(c) After an assignment to a Secured Party or Assignee,
Lessee's obligations hereunder including its obligation to pay the
Monthly Rental and any and all other amounts payable under the
Equipment Schedule by Lessee shall be absolute and unconditional and
shall not be subject to any abatement, reduction, recoupment, defense,
setoff, or counterclaim available to Lessee against Lessor for any
reason whatsoever.
(d) Only one executed counterpart of any Equipment Schedule
shall be marked "Original"; any other executed counterparts shall be
marked "Non-original" or "Copy". No security interest in any Equipment
Schedule may be created through the transfer and possession of any
counterpart other than the "Original", nor shall any sale, assignment
or transfer of any interest in an Equipment possession of any
counterpart other than the "Original", nor shall any sale, assignment
or transfer of any interest in an Equipment Schedule be effective or be
binding upon Lessee through the transfer and possession of any
counterpart other than the "Original".
14. EVENTS OF DEFAULT
The occurrence of any one or more of the following events ("Events of
Default") shall constitute a default under the relevant Equipment Schedule:
(a) Lessee fails to pay the Monthly Rental, or any other
amount due hereunder, on or before the date the same is due and such
failure continues for a period of ten (10) days after receipt of
written notice thereof from Lessor;
(b) any financial statements or information or any other
representation or warranty given to Lessor proves to have been
materially false or misleading as of the date it was given by or on
behalf of Lessee;
(c) Lessee fails to observe or perform any other term,
condition, obligation, agreement or covenant set forth herein, and such
failure continues for a period of ten (10) days after receipt of
written notice thereof from Lessor;
(d) Lessee assigns or attempts to assign this Master Lease or
any Equipment Schedule, or removes, transfers, encumbers, sublets or
parts with possession of any Unit, attempts to do any of the foregoing,
or suffers or permits any of the foregoing to occur except as expressly
permitted herein;
(e) Lessee ceases doing business as a going concern, or it or
its shareholders take any action looking to its dissolution or
liquidation;
(f) the entry of an order for relief under the United States
federal bankruptcy laws or the entry of any other decree or order by a
court having jurisdiction in the premises adjudging the Lessee a
bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment or composition of or in
respect of the Lessee under the United Stated federal bankruptcy laws
or any other applicable federal or state law, or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator (or other
similar official) of the Lessee or of any substantial part of its
property, or the ordering, the winding up or liquidation of its
affairs, and the continuance of any such decree or order unstayed and
in effect for a period of 60 consecutive days;
(g) the commencement by the Lessee of a voluntary case under
the United States federal bankruptcy laws, or the institution by the
Lessee of proceedings to be adjudicated a bankrupt or insolvent, or the
consent by it to the institution of bankruptcy or insolvency
proceedings against it, or the filing by it of a petition or answer or
consent seeking reorganization, an arrangement with creditors or an
order for relief under the United States federal bankruptcy laws or any
other applicable federal or state law, or the consent by it to the
filing of any such petition or to the appointment of a receiver,
liquidator, assignee, trustee, custodian, sequestrator (or other
similar official) of the Lessee or of any substantial part of its
property, or the making by it of an assignment for the benefit of
creditors, or the admission by it in writing of its inability to pay
its debts as they become due, or, to the knowledge of the Lessor, the
taking of corporate action by the Lessee in furtherance of any such
action.
15. REMEDIES
15.1 EXPRESS REMEDIES: If an Event of Default occurs, Lessor may, at
its option, do any or all of the following:
(a) proceed by appropriate court action or actions either at
law or in equity to enforce performance by Lessee of the relevant
Equipment Schedule, and the covenants and terms of this Master Lease to
the extent it pertains to such Equipment Schedule, and to recover from
Lessee any and all damages or expenses, including reasonable attorneys'
fees, which Lessor shall have sustained or incurred by reason of the
Event of Default or on account of Lessor's enforcement of its remedies
hereunder, or
(b) by notice to Lessee, declare immediately due and payable
all monies to be paid by Lessee during the Initial Term (or any
extended term then in effect) of the Equipment Schedule, as liquidated
damages, and not as a penalty, and Lessor shall have the right, to the
extent permitted by law, to (i) recover all monies so declared due and
payable, discounted to the date of payment at the rate of 4% per annum,
or one-half of the then-prevailing prime interest rate charged by
principal New York banks, whichever is less, as liquidated damages, and
not as a penalty; (ii) recover all other amounts which are due or which
become due under the Equipment Schedule; (iii) terminate Lessee's right
to possession (but not Lessee's obligations under this Lease) and to
retake immediate possession of the Equipment without any process of law
and for such purpose Lessor may enter upon premises where the Equipment
may be located and may remove the same therefrom without notice, and
without being liable to Lessee therefor, except that Lessor shall be
liable for damages resulting from the negligence of Lessor, Lessor's
assignee or their respective agents and representatives in any such
entry or repossession; (iv) recover all expenses, including reasonable
attorneys' fees, which Lessor shall have incurred or may incur by
reason of the Event of Default or on account of Lessor's enforcement of
its remedies hereunder; and (v) pursue any other remedy permitted by
law or equity. The possibility of a re-lease or resale under Paragraph
15.2 shall not excuse prompt payment in full by Lessee under this
Paragraph 15.1.
15.2 RE-LEASE OR RESALE: Lessor shall make a reasonable, good faith
effort to retake possession of the Equipment and, if Lessor succeeds in
retaking possession of any Unit, Lessor shall sell or lease each Unit with the
privilege of becoming the purchaser thereof, at public or private sale, for
cash or on credit. Lessee's share of the proceeds of any such sale or lease
("Lessee's Share") shall be the lesser of (x), the amount by which the Re-Lease
Proceeds or the Resale Proceeds of such Unit exceed the Remarketing Costs of
such Unit, and (y), the amount payable by Lessee to Lessor pursuant to
Paragraph 15.1 (b)(i) above with respect to such Unit. Lessor shall credit
Lessee's Share against all amounts owed by Lessee to Lessor under Paragraph
15.1 or otherwise and the remainder of Lessee's share, if any, shall be paid to
Lessee. EXCEPT AS SET FORTH IN THIS PARAGRAPH, LESSEE HEREBY WAIVES ANY RIGHTS
NOW OR HEREAFTER CONFERRED BY STATUTE OR OTHERWISE WHICH MAY REQUIRE LESSOR TO
MITIGATE ITS DAMAGES OR MODIFY OR LIMIT ANY OF LESSOR'S RIGHTS OR REMEDIES
STATED HEREIN. In applying this provision, the following definitions shall
apply:
(a) The "Re-Lease Proceeds" of a Unit shall mean the present
value (discounted to the date of payment using the interest rate at
which Lessor has non-recourse financing or a non-recourse financing
commitment with respect to the re-lease) of the monthly rental payments
for the Unit under a re-lease to a third party, taking into account
only those monthly rental payments under the re-lease which are payable
on or before the last day of the Initial Term or the last day of any
extended term then in effect with respect to the Unit under the
Equipment Schedule. If the re-lease is not financeable, the Re-Lease
Proceeds shall be the monthly rental payments for such period as
received.
(b) The term "Resale Proceeds" of a Unit shall mean the
amount by which the proceeds of any sale of the Unit exceed the
Lessor's estimate of the fair market value of the Unit at the end of
the Initial Term or at the end of any extended term then in effect with
respect to the Unit under this Master Lease.
(c) The term "Remarketing Costs" of a Unit shall mean all
expenses incurred directly or indirectly by Lessor in re-leasing or
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MARCH 20, 2000
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selling the Unit and in obtaining a financing commitment in the case
of a re-lease of a Unit, including without limitation, reasonable fees
and commissions (including a reasonable fee to Lessor) incurred in
locating a buyer, a subsequent lessee or a financing commitment,
attorneys' fees, the cost of recovering the Unit from the Lessee and
transportation, installation, refurbishing, reconditioning and storage
charges.
15.3 NO WAIVER: The waiver by Lessor of any breach of any obligation
of Lessee shall not be deemed a waiver of a breach of any other obligation or of
any subsequent breach of the same or any other obligation. The subsequent
acceptance of rental payments hereunder by lessor shall not be deemed a waiver
of any prior existing breach by Lessee regardless of lessor's knowledge of such
prior existing breach at the time of acceptance of such rental payments.
15.4 CUMULATION: To the extent permitted by law, the above remedies
shall be deemed cumulative and may be exercised successively or concurrently.
16. PERFORMANCE AND EXECUTION
Lessee represents and warrants to Lessor (i) that the execution and
performance of this Master Lease and each Equipment Schedule have been duly
authorized by Lessee and that upon execution by Lessee and Lessor this Master
Lease and each Equipment Schedule will constitute a valid obligation binding
upon, and enforceable against, Lessee in accordance with the terms of the
Master Lease and each Equipment Schedule; (ii) that neither the execution of
this Master Lease or any Equipment Schedule nor the due performance thereof by
Lessee will result in any breach of, or constitute any default under or
violation of, Lessee's certificate or articles of incorporation, Lessee's
by-laws or any agreement to which Lessee is a party or by which any interest of
Lessee may be affected; (iii) that Lessee is in good standing in its state of
incorporation and in the states where any Unit is to be located; (iv) the
persons executing this Master Lease and each Equipment Schedule on behalf of
Lessee have been duly authorized to do so; and (v) that any and all financial
statements and other information with respect to Lessee heretofore furnished by
Lessee to Lessor in connection with negotiations concerning one or more
Equipment Schedules were, when furnished, and remain at the time of execution
of any Equipment Schedule, true and without any misleading omissions, excepting
any changes which have been disclosed in a written notice to Lessor.
17. ADDITIONAL DOCUMENTATION
Lessee shall promptly deliver to Lessor the documentation listed below
which may from time to time be requested by Lessor. If such a request is made
prior to the delivery of any Unit, receipt of such documentation shall be a
condition precedent to Lessor's obligation to deliver such Unit:
(a) financial information including, without limitation, a
copy of Lessee's balance sheet and income statement for Lessee's three
prior fiscal years, certified by independent certified public
accountants and such other current financial information representing
the financial condition and operations of Lessee as Lessor may from
time to time reasonably request;
(b) a certificate of the resolutions of the Board of
Directors of Lessee duly authorizing or ratifying this Master Lease or
any Equipment Schedule executed hereunder;
(c) a certificate of incumbency setting forth names and
signatures of those persons authorized to execute this Master Lease or
any Equipment Schedule on behalf of Lessee;
(d) landlord's and/or mortgagee's waiver, in form and
substance satisfactory to any Assignee or Secured Party, from any
landlord or mortgage of any premises upon which the Unit is located;
(e) an opinion of counsel for Lessee as to the matters set
forth in Paragraph 16 (i through iv) above, and as to such other
matters as Lessor may reasonably request; and
(f) such document confirming the execution of the Lease
necessary or desirable to effect an assignment, to perfect an interest
of Lessor, a Secured Party or Assignee, or for such other purpose
relating to the Master Lease and/or any Equipment Schedule or to an
assignment as Lessor may reasonably request. Lessee hereby appoints
Lessor as Lessee's agent to prepare, execute and file in Lessee's name
precautionary Uniform Commercial Code financing statements in
connection with each Equipment Schedule showing the interest of
Lessor, and any Assignee or Secured Party in the Equipment as
appropriate.
18. GENERAL
18.1 TITLE: This Master Lease is intended to be a true lease and
not a lease intended as security or lease in the nature of a security interest.
Lessee shall, at its expense, protect and defend Lessor's title to the
Equipment and the interest of any Assignee or Secured Party against all persons
claiming against or through Lessee. Lessee shall keep and maintain the
Equipment and this Master Lease free and clear of all liens and encumbrances
(other than those placed on the same by Lessor and the liens for current taxes
not yet payable).
18.2 FIXTURES: Lessee will not affix any Unit of the Equipment to
any real property if, as a result thereof, the Unit will become a fixture under
applicable law.
18.3 ENTIRE AGREEMENT: This Agreement (together with all schedules
and attachments hereto) constitutes the entire agreement between Lessor and
Lessee, and no provision hereof may be amended or modified except in writing
signed by Lessor and Lessee. NO PROVISION OF THIS AGREEMENT MAY BE WAIVED
EXCEPT IN WRITING SIGNED BY THE PARTY FROM WHOM SUCH WAIVER IS SOUGHT, AND
ANY SUCH WAIVER SHALL BE EFFECTIVE ONLY IN THE SPECIFIC INSTANCE AND FOR THE
SPECIFIC PURPOSE GIVEN.
LESSEE'S
INITIALS: /s/
--------
18.4 NOTICES: All notices hereunder shall be in writing and shall be
delivered in person or sent by registered or certified mail, to the address of
the party contained herein, and shall be deemed received three (3) days after
deposit in the United States mail with postage prepaid. Either party may change
its address for notice purposes by notifying the other party in the manner
aforesaid of such change. Lessee shall also send copies of all notices sent to
Lessor, to Secured Party, or Assignee (if any).
18.5 SEVERABILITY: Any provision hereof prohibited by, or unlawful
or unenforceable under, any applicable law of any jurisdiction shall be
ineffective as to such jurisdiction without invalidating the remaining
provisions of this Agreement provided, however, that where the provisions of
any such applicable law may be waived, they are hereby waived by Lessee and
Lessor to the full extent permitted by law.
18.6 GOVERNING LAW: THIS MASTER LEASE AND ALL EQUIPMENT SCHEDULES AND
ANY OTHER INSTRUMENT EXECUTED IN CONNECTION HEREWITH SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED UNDER THE LAWS OF THE STATE OF MISSOURI, WITHOUT
GIVING EFFECT TO PRINCIPLES OF CONFLICTS OR CHOICE OF LAW. NO RIGHTS OR
REMEDIES REFERRED TO IN ARTICLE 2A OF THE UNIFORM COMMERCIAL CODE WILL BE
CONFERRED ON LESSEE UNLESS EXPRESSLY GRANTED IN THIS MASTER LEASE OR AN
EQUIPMENT SCHEDULE. This Master Lease and Equipment Schedules are subject to
acceptance by Lessor at its home office.
18.7 PERFORMANCE OF LESSEE'S OBLIGATIONS: If Lessee shall fail to
make any payment or perform any act required by this Master Lease or any
Equipment Schedule, Lessor may at Lessee's expense, but shall not be obligated
to, make such payment or perform such act without notice to or demand upon
Lessee and without waiving or releasing any obligation or default. Lessee
shall, when billed, reimburse Lessor for any expense incurred hereunder by
Lessor in performing Lessee's obligations. LESSEE MAY NOT ASSIGN ITS
PAGE NO. 5 OF 6 INNOTRAC CORPORATION MASTER LEASE NO. 172564
MARCH 20, 2000
6
RIGHTS OR OBLIGATIONS, EXCEPT AS SPECIFICALLY PROVIDED IN PARAGRAPH 12 OF THIS
MASTER LEASE.
18.8 SURVIVAL. All representations, warranties, indemnities, and
covenants contained in this Master Lease and in any Equipment Schedule, which by
their nature would continue beyond the termination, cancellation or expiration
of the Lease, including, by way of illustration only and not limitation, those
in Paragraphs 6, 10, 11 and 18, shall continue in full force and effect and
shall survive notwithstanding the full payment of all amounts due hereunder or
the termination of Lessee's right to possession of any Unit.
18.9 HEADINGS: Headings and captions are for convenience of reference
only and shall not be construed as part of the Lease.
18.10. OVERDUE PAYMENTS: Any Monthly Rental due Lessor under this
Master Lease, if not paid by the fifth day of the month in which payment became
due, shall accrue interest until paid at a rate equal to one and one-half
percent per month, or the maximum rate permissible by law, whichever is lower.
Any other amounts payable to Lessor by Lessee under this Master Lease are due
and payable within [15] days after the billing date, and, if not paid on or
before such due date, shall accrue interest from the due date until paid at a
rate equal to one and one-half percent per month, or the maximum rate permitted
by law, whichever is lower. Any judgment entered on any amounts owed under this
Master Lease or an Equipment Schedule shall accrue interest until paid at a rate
equal to one and one-half percent per month, or the maximum rate permissible by
law, whichever is lower.
18.11 CONSENT OR APPROVAL. With respect to any provision herein which
calls for the consent or approval of a party, such consent or approval shall not
be unreasonably withheld.
18.12. SUBSTITUTION OF EQUIPMENT. If, at any time during the term of
an Equipment Schedule, Lessor's right to lease the Equipment expires, Lessor
shall promptly provide identical substitute Equipment, and all expenses of such
substitution, including deinstallation, installation and transportation
expenses, shall be borne by Lessor.
18.13 DELIVERY FOR EXAMINATION: Submission of the form of this Master
Lease for examination shall not bind Lessor in any manner, and no obligations
shall arise until this instrument is signed by both Lessor and Lessee.
18.14 TERMS IN EQUIPMENT SCHEDULES: If the provisions of any
Equipment Schedule are inconsistent with the provisions of this Master Lease,
then the provisions of such Equipment Schedule shall control.
PAGE NO. 6 OF 6 INNOTRAC CORPORATION MASTER LEASE NO. 172564
MARCH 20, 2000
7
ADDENDUM ONE TO MASTER LEASE AGREEMENT NO. 172564
This Addendum One to Master Lease Agreement No. 172564 (the "Lease") is
dated as of March 20, 2000, and is entered into by and between COMPUTER SALES
INTERNATIONAL, INC. ("Lessor") and INNOTRAC CORPORATION ("Lessee").
Notwithstanding anything to the contrary contained in the Lease between
the parties hereto, dated on even date herewith, and in consideration of the
mutual promises, covenants, and conditions contained in the Lease and contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto covenant and
agree as follows:
1. CONTROLLING TERMS: This Addendum One shall become a part of the
Lease and shall be read together with the Lease as one single document. To the
extent that there shall be any conflict as between the terms and provisions
contained in the Lease and those contained herein, the terms and provisions set
forth herein shall control.
2. SECTION 2.2 INITIAL TERM: In line 6, delete "120" and insert "60."
3. SECTION 17 ADDITIONAL DOCUMENTATION: Insert the following at the
end of subsection [a]: "As long as Lessee is a publicly owned corporation, the
financial information provided will be that which is publicly available." Delete
subsections [b], [d] and [e] in their entirety.
4. SECTION 18.10 OVERDUE PAYMENTS: In line 1, delete "fifth" and
insert "tenth". In line 4, delete "fifteen [15]" and insert "thirty [30]." In
lines 2, 5 and 6 (continuing to line 7), delete "and one-half."
IN WITNESS WHEREOF, the parties hereto have executed this Addendum One
to Master Lease No. 172564, as of the date set forth below.
8
EXHIBIT 10.9(a)
ADDENDUM ONE TO EQUIPMENT SCHEDULE NO. ONE
MASTER LEASE AGREEMENT NO. 172564
This Addendum One to "Equipment Schedule One, Master Lease Agreement
No. 172564" (the "Lease"), is dated as of March 20, 2000, and is entered into,
by and between COMPUTER SALES INTERNATIONAL, INC. ("Lessor") and INNOTRAC
CORPORATION ("Lessee").
Notwithstanding anything to the contrary contained in the Lease between
the parties hereto, dated on even date herewith and with respect to certain
computer equipment (the "Equipment"), and in consideration of the mutual
promises, covenants, and conditions in the Lease and contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto covenant and agree as follows:
1. CONTROLLING TERMS: This Addendum One shall become a part of
the Lease and shall be read together with the Lease as one single document. To
the extent that there shall be any conflicts as between the terms and provisions
contained in the Lease and those contained herein, the terms and provisions set
forth herein shall control.
2. LESSOR'S PURCHASE OF EQUIPMENT:
a) Lessor will purchase the Equipment directly from the vendor(s)
designated by Lessee.
b) The Total Cost of the Lease (hardware, software license fees and
other costs) is not to exceed $1,353,807.00. If Lessee wants this Lease to cover
costs greater than $1,353,807.00, Lessor, in its sole discretion, may pay the
additional costs.
c) Lessor is not liable for any failure or delay in delivery caused by
the manufacturer, vendor or any other party or condition not within Lessor's
control.
*3. QUANTITIES; MONTHLY RENTAL:
a) This Equipment Schedule covers all machines of the type(s) listed
that are installed at Lessee's facilities between March 1, 2000 and April 30,
2000, inclusive. At this time, Lessee is unable to specify exactly how many
Units will be installed; therefore, the "quantity" column has been left blank.
As Lessee determines the quantities of Equipment it requires, Lessee shall have
the applicable vendor send to Lessor invoices which will reference this Lease
and which will specify machine type(s), quantities, equipment location(s), sales
price, series number(s) and installation date(s) of the Units ordered by Lessee.
Upon receipt of each properly prepared invoice, Lessor shall remit the sales
price to the vendor.
b) Monthly Rental per Unit will equal the "Monthly Lease Rate Factor"
for that Unit, which is specified in the Equipment Schedule or on Exhibit "A",
multiplied by the Unit's cost. On May 1, 2000, or as soon thereafter as is
reasonably practicable, Lessee shall execute a Certificate of Acceptance for all
installed Equipment, which Certificate verifies the actual quantities of
machines; and the Monthly Rental per Unit and the total Monthly Rental for the
Equipment Schedule, both of which will be expressed as dollar amounts.
9
4. INITIAL TERM. The thirty-six (36) month Initial Term shall start
on May 1, 2000, and expire on April 30, 2003. Lessee shall pay to Lessor Daily
Rental as set forth in Section 3 of the Master Lease, for each Unit of Equipment
for each day from, and including, its installation date through, but not
including, May 1, 2000. Daily Rental shall be due in a lump sum on May 1, 2000.
5. STIPULATED LOSS VALUE: Because the actual quantities of
Equipment are unknown at this time, specific dollar amounts cannot be listed on
the Stipulated Loss Value Schedule. Instead, "Manufacturer list price" has been
specified so that, at the time of a loss, the Stipulated Loss Value shall be
equal to the present manufacturer list price for the Unit times the applicable
percentage. The parties agree, however, that on May 1, 2000, or as soon
thereafter as reasonably practicable, a new Stipulated Loss Value Schedule
specifying a dollar amount Base Value shall be executed.
6. SOFTWARE LICENSE FEES AND OTHER COSTS: In consideration of
Lessee's entering into this Lease, Lessor shall pay on Lessee's behalf various
operating and/or application software license fees so that Lessee may use such
software packages in connection with the Equipment. Lessor may also pay other
costs related to the Equipment, on Lessee's behalf. Lessee shall reimburse
Lessor for such costs by (i) paying a daily charge equal to one-thirtieth of the
Soft Cost Factor set forth below times the cost of the software license fee or
other cost for each day from and including the date Lessor pays such fees or
costs through, but not including May 1, 2000, such total daily charges to be
paid in a lump sum on May 1, 2000, and (ii) making a monthly payment to Lessor
equal to the Soft Cost Factor times the cost of the applicable software license
fees or other costs. The resulting monthly payment amount will then be assigned
on a pro-rata basis (pro-rated by Unit cost) to Units of Equipment and will be
treated as additional rental for the lease of the Equipment. The total amount of
software license fees and other costs will not exceed $340,883.00, without
Lessor's prior written consent. The Soft Cost Factor for the first $200,000.00
of soft costs will be .02838, and the Soft Cost Factor for all soft costs in
excess of $200,000.00 will be .031563.
7. INTEREST RATE CONTINGENCY: the Lease Rate and Soft Cost Factors
(the "Rate Factors") specified in this Lease are based upon the yield to
maturity of U.S. Treasury notes maturing in May 2003 (the "Treasury Yield"); the
Treasury Yield is currently 6.5%. Lessor intends to obtain a fixed-rate,
non-recourse loan, using only the Equipment and the Lease as collateral (the
"Loan"). If, at the time the Loan is closed, the then current Treasury Yield
exceeds 6.5%, then the Rate Factors shall be increased by .0001 for each 25
basis points by which the then current Treasury Yield exceeds the current
Treasury Yield of 6.5%. The Rate Factors will be increased only until the then
current Treasury Yield exceeds the current Treasury Yield by 300 basis points.
Any increases in the Treasury Yield in excess of 300 basis points will have no
further effect on the Rate Factors. Increases of the Treasury Yield by
increments of less than 25 basis points will have no effect on the Rate Factors.
8. PURCHASE OPTION: Provided Lessee is not then in default under
the Lease, Lessee may, on the last day of the Initial Term, upon no less than
sixty (60) days prior written notice to Lessor, purchase the Equipment at its
then current fair market value. In the event that Lessee and Lessor cannot agree
on fair market value, then fair market value shall equal the average of three
appraisals obtained from three members of the Information Technology Resellers
Association, the first member to be chosen by Lessor, the second member to be
chosen by Lessee, and the third member to be chosen by the first two members. If
Lessee fails to exercise this option, then the provisions of section 2.2 of the
Master Lease control.
10
IN WITNESS WHEREOF, the parties hereto have executed this Addendum One
to Equipment Schedule No. One, Master Lease No. 172564, as of the date set
forth below.
By: /s/ E. William Gillula By: /s/ Ron Patrick
------------------------------- -------------------------------
Title: Chief Operating Officer & Title: Director of Accounting
CFO
----------------------------- -----------------------------
Date: March 24, 2000 Date: March 11, 2000
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MFM/ATL