Master Lease Agreement - Imperial Bank Equipment

EXHIBIT 10.8


MASTER LEASE AGREEMENT
DATED AS OF July 7,2000


The Master Lease AGREEMENT ("Master Lease"), is entered into as of July 7, 2000, between Imperial Bank Equipment Leasing Division, a division of Aerial Bank (hereinafter called "Lessor", having its principal place of business at 9920 La Cienega Boulevard, Inglewood, California 90301, and Chorum Technologies, Inc., a Corporation (hereinafter called "Lessee"), having its principal place of business at 1303 E. Arapaho Road, Richardson, TX 75081-2444.


I. LOCATION OF DEFINED TERMS


----------------------------------------------------------------------------------------------------------------
Lease Lease
------ ----- Defined Term Section Sub-Section Defined Term Section Sub-Section ------------ ------- ----------- ------------- ------- ----------- Acceptance Date II D Interim Rent IV A Assignee X A Interim Rental Term III C Casualty Value VII C Item of Equipment II A Certificate of Acceptance II D Lease Rate Factor IV A Claims IX Lease Term III D Damage VII A Lien VIII C Daily Lease Rate Factor IV A Loss VII A End of Term Notice XII A Master Lease Introduction Equipment II A Purchase Documents II C Event of Default XI A Rent IV A Fair Market Value XII C Rent Due Date IV B Improvement V C Renewal Term XII D Initial Term III B Rental Period Option IV B Equipment Repair Notice XIII B Schedule II B Equipment Inspection Fee XIII B Seller II C ----------------------------------------------------------------------------------------------------------------------------


II. LEASE OF EQUIPMENT


(A) Lease. Lessor agrees to lease to Lessee, and Lessee agrees to lease from
----- Lessor, subject to the terms and conditions of the Master Lease, the equipment and related operating systems and other software (collectively, together with all substitutions and replacements, the "Equipment," and individually, an "Item of Equipment" described in the equipment schedules (each a "Schedule") executed from time to time pursuant to the Master Lease.


(B) Schedules. Each Schedule substantially in the form of that attached, when
--------- executed by Lessor and Lessee, shall constitute a separate lease and shall incorporate by reference the terms and conditions of the Master Lease and any additional terms and conditions agreed upon by the parties. In the event of a conflict between the provisions of the Master Lease and a Schedule, the provisions of the Schedule shall control.


(C) Equipment Procurement. Provided that no Event of Default or event which with
--------------------- notice or lapse of time or both would constitute an Event of Default has occurred and is continuing and subject to the representations and warranties set forth in Section VIII, Lessor may from time to time procure equipment requested by Lessee and lease it to Lessee pursuant to the Master Lease and a Schedule; provided, however, Lessor shall not purchase any Equipment unless Lessee is unconditionally bound to lease it under the terms of the Master Lease and a Schedule. Lessee


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authorizes Lessor, in reliance on Lessee's written request, to enter into purchase orders, contracts or other documents ("Purchase Documents") for acquisition of the Equipment with the seller of the Equipment ("Seller").


(D) Delivery Installation and Acceptance. Lessor or its designated
------------------------------------ representative shall arrange for delivery and installation of the Equipment at the location specified in the applicable Schedule. Lessee shall pay all costs associated with packing, transportation, taxes, duties, insurance, delivery, installation, testing and support of the Equipment. Lessor will have no liability for any delay or failure of the Seller to deliver or service the Equipment or, license any software. Acceptance shall also be deemed to occur upon the date of execution by Lessee of a Certificate of Acceptance in the form of that attached. Lessee hereby authorizes Lessor to insert in any Schedule the date of acceptance (the "Acceptance Date") for any Item of Equipment as well as such items as serial numbers and the Equipment description and cost resulting from any orders or change orders occurring after the Schedule is executed. In the event of replacement by the supplier or manufacturer of any Equipment that is determined after acceptance to be defective, the Equipment list and serial numbers on the applicable Schedule shall be deemed amended to rafted the substitute Equipment.


III. TERM


(A) Master Lease Term. Unless otherwise extended by the parties hereto, the term
----------------- of the Master Lease shall begin upon execution hereof by Lessor and Lessee and continue through the last date on which any Schedule entered into pursuant to the Master Lease remains in effect.


(B) Initial Term. The initial term under each Schedule shall begin on the first
------------ Rent Due Date occurring after the Acceptance Date under such Schedule and shall continue through the end of the month of the number of months set forth in the Schedule as the initial term ("Initial Term").


(C) Interim Rental Term. Prior to the commencement of the Initial Term under
------------------- each Schedule, Rent shall be due and payable to Lessor for the period beginning on the Acceptance Date and continuing to the first Rent Due Date of the Initial Term ("Interim Rental Term").


(D) Lease Term. "Lease Term" shall mean for each Schedule the Interim Rental
---------- Term, the Initial Term, and all Renewal Terms.


IV. RENT


(A) Rent. Rent for the Equipment under each Schedule for each Rental Period (Rents shall be an amount equal to the product of the percentage ("Lease Rate Factor") set forth in such Schedule multiplied by the total cost of the Equipment, as set forth in such Schedule. Rent for the Interim Rental Term ("interim Rent" or any other partial rent period will be prorated on a daily basis in an amount equal to 1/30/th/ of the monthly Rent ("Daily Lease Rate Factor"). Rent is payable in immediately available funds to Lessor at the address or in accordance with the wire transfer instructions set forth in such Schedule or as otherwise directed by Lessor.


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(B) Rent Due Date. Rent under each Schedule (other than Rent for the Interim
------------- Rental Term) shall be payable in advance, on each rent due date ("Rent Due Date") of the period ("Rental Period"), as set forth in such Schedule. Rent for the Interim Rental Term shall be due and payable on the first Rent Due Date of the Initial Term.


(C) Past Due Amounts. To the extent permitted by applicable law, Lessee will pay
---------------- on demand a late charge as stipulated under each schedule on each installment of Rent and any other sums payable hereunder which remain unpaid for more than ten days after the due date thereof.


(D) NONCANCELABLE RENT AND LEASE OBLIGATIONS. ALL LEASES HEREUNDER SHALL BE NET
---------------------------------------- LEASES. LESSEE'S OBLIGATION TO PAY RENT AND OTHER AMOUNTS DUE UNDER THE MASTER LEASE AND EACH SCHEDULE SHALL BE ABSOLUTE AND UNCONDITIONAL, AND SHALL NOT BE SUBJECT TO ANY SET OFF, COUNTERCLAIM, ABATEMENT, REDUCTION, RECOUPMENT, INTERRUPTION OR DEFENSE FOR ANY REASONS WHATSOEVER THIS AGREEMENT SHALL NOT TERMINATE NOR SHALL THE OBLIGATIONS OF LESSEE BE AFFECTED BY REASON OF ANY DEFECT IN OR DAMAGE TO, OR LOSS OF USE OR POSSESSION OF, OR DESTRUCTION OF ANY EQUIPMENT FROM ANY CAUSE WHATSOEVER. IT IS THE INTENTION OF THE PARTIES THAT, RENTS AND OTHER AMOUNTS DUE HEREUNDER SHALL CONTINUE TO BE PAYABLE IN ALL EVENTS IN THE MANNER AND AT THE TIMES SET FORTH HEREIN UNLESS THE OBLIGATION IS TERMINATED PURSUANT TO THE EXPRESS TERMS HEREOF. THE MASTER LEASE AND THE SCHEDULES CANNOT BE PREPAID OR TERMINATED BY LESSEE DURING THE TERM THEREOF UNLESS AGREED TO IN WRITING BY LESSOR.


V. EQUIPMENT OWNERSHIP, USE, MAINTENANCE AND PROTECTION


(A) Ownership and Use. Lesser shall use the Equipment in a manner which will not
----------------- disqualify it for manufacturer maintenance, and in compliance with all laws, rules and regulations of every governmental authority having jurisdiction over the Equipment and within the provisions of all polities of insurance carried by Lessee. Lessee shall obtain all permits, licenses or other authorizations necessary for the operation and use of the Equipment Lessee shall pay all costs, expenses, fees and charges incurred in connection with the use and operation of the Equipment Upon Lessors request, Lessee will affix and maintain, in a prominent place on each Item of Equipment, plates, tags or other identifying markings indicating Lessor's ownership of the Equipment. Lessee shall not move any Item of Equipment from the location set forth on the applicable Schedule without the prior written consent of Lessor, which consent shall not be unreasonably withheld. Lessor may upon reasonable prior notice to Lessee and during regular business hours inspect the Equipment


(B) Lessors Entitlement to Tax Benefits. Lessee acknowledges that Lessor is the
----------------------------------- only party entitled to claim tax benefits provided by federal, state and local income tax law to the owner of the Equipment ("Tax Benefits"); and Lessee agrees to characterize the relationship herein established as a lease. If requested by Lessor, Lessee shall furnish Lessor with records and other information necessary to claim such Tax Benefits. Lessee shall not, and shall not permit any permitted sub-lessee or assignee to, take or omit to take any action that may result in the


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disqualification of the Equipment for, or any recapture of all or any portion of the Tax Benefits afforded the Equipment


(C) Improvements. Lessee shall have the right, or the right to cause the Seller
------------ or another nationally recognized and experienced maintenance provider, to affix or install any accessory, feature, device, improvement, modification, addition, accession or upgrade ("Improvement") that is compatible with the Equipment In the event an Improvement is financed, a party other than Lessor may not finance it. If Lessor finances any Improvement, it will be leased under the Schedule covering the related Equipment and the Master Lease term for the Improvement will be coterminous with such Schedule. Prior to the return of the Equipment Lessee may (if it so chooses and if the Improvement is not financed by Lessor) and shall (if Lessor so requests) remove the Improvements or cause the Improvements to be removed by the Setter or another nationally recognized and experienced maintenance provider, and restore or cause to be restored the Equipment to its original state, ordinary wear and tear excepted. Lessee shall not remove any original parts from the Equipment without Lessor's prior written consent Any Improvements not removed from the Equipment upon its return or upon the occurrence of an Event of Default shall, at Lessor's option, become the property of Lessor.


(D) Maintenance. Lessee shall, at its own cost and expense and at all times
----------- during the Master Lease Term, take all actions necessary to maintain or cause to be maintained by the Seller, manufacturer or a third party maintenance provider reasonably acceptable to Lessor, the Equipment and all Improvements in good working order, condition and repair, at the Equipment manufacturer's most current engineering levels (including replacement of all parts which become damaged or worn out), and in compliance with such maintenance and repair standards as are set forth in the manufacturers manual pertaining to the Equipment and as otherwise may be required to enforce warranty claims against each vendor and manufacturer of each item of Equipment and in compliance with all requirements of law. Lessee will not discriminate such maintenance between owned and leased equipment Lessee shall comply with all instructions issued by the manufacturer of the Equipment, and Lessee assumes and agrees to pay any cost necessary to have the manufacturer re-certify that the Equipment will be eligible upon resale or release by Lessor, for the manufacturers maintenance contract at the manufacturers standard rates as required under Section XII(B).


(E) Insurance. (1) Lessee will insure for the following risks with insurers of
--------- recognized responsibility: (a) All risk of loss and physical damage to the Equipment to an amount not less than the greater of (i) the fair market replacement value or (ii) the aggregate Casualty Value of all Equipment from time to time and; (b) Comprehensive public liability and property damage insurance with respect to the condition, possession, maintenance operation and use of the Equipment in an amount not less than $1,000,000 for each occurrence. Such insurance shall be in full force and effect by not later than the Installation Date for each item of Equipment and shall remain in effect until such time as each item of Equipment has been returned to, and accepted by, Lessor in accordance with the provisions of Section XII(B) hereof.


(F) Delivery of Insurance Certificates. Lessee shall deliver to Lessor and any
---------------------------------- Assignees) a valid Certificate of Insurance for each such insurance policy upon the execution thereof and a Certificate of Insurance for each renewal policy not less than 30 days prior to the expiration of


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the original policy or any renewal policy. Such insurance shall (1) Include as additional parties insured and loss payees Lessor and any Assignee(s), (2) provide that such insurance shall not be materially changed or canceled without at least 30 days prior notice to Lessor and such Assignees, and (3) provide that such policy shall not be invalidated by any negligence of, or breach of warranty by, Lessee. Upon the request of Lessor, Lessee shall provide any additional data related to the insurance as Lessor reasonably requests.


(G) Failure to Provide Insurance. Lessee acknowledges and agrees that if Lessee
---------------------------- fails to provide any required insurance or fails to continue such insurance in force, Lessor may do so at Lessee's expense. The cost of any such insurance, at the option of Lessor, shall be payable on demand or shall be added to the Master Lease indebtedness. LESSEE ACKNOWLEDGES THAT IF LESSOR SO PURCHASES ANY SUCH INSURANCE, THE INSURANCE WILL PROVIDE LIMITED PROTECTION AGAINST PHYSCIAL DAMAGE TO THE EQUIPMENT, UP TO THE BALANCE OF THE MASTER LEASE; HOWEVER LESSEE'S EQUITY IN THE EQUIPMENT MAY NOT BE INSURED. IN ADDITION, THE INSURANCE MAY NOT PROVIDE ANY PUBLIC LIABILITY OR PROPERTY DAMAGE INDEMNIFICATION AND MAY NOT MEET THE REQUIREMENT OF ANY FINANCIAL RESPONSIBILITY LAWS.


VI. DISCLAIMER OF WARRANTIES; LIMITATION OF REMEDIES


LESSOR IS NOT A MANUFACTURER, SUPPLIER OR DEALER OF THE EQUIPMENT AND HAS NOT INSPECTED THE EQUIPMENT PRIOR TO DELIVERY TO AND ACCEPTANCE BY LESSEE. LESSOR HAS NOT MADE AND DOES NOT MAKE ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO THE EQUIPMENT, INCLUDING, WITHOUT LIMITATION, ANY REPRESENTATION OR WARRANT. AS TO TITLE, CONDITION, QUALITY, DESIGN, CAPACITY, VALUE, DURABILITY, SUITABILITY, SAFETY, OR COMPLIANCE WITH ANY LAW. RULE, REGULAT10N OR SPECIFICATION, AS TO MERCHANTABILITY OR FITNESS FOR USE OR FITNESS FOR A PARTICULAR PURPOSE, OR AS TO PATENT, COPYRIGHT OR TRADEMARK INFRINGEMENT, IT BEING AGREED THAT THE EQUIPMENT IS LEASED 'AS IS' AND THAT ALL SUCH RISKS, AS BETWEEN LESSOR AND LESSEE, ARE TO BE BORNE BY LESSEE. LESSEE ACKNOWLEDGES THAT IT HAS SELECTED THE EQUIPMENT FROM THE SELLER THEREOF ON THE BASIS OF LESSEE'S JUDGMENT AND EXPRESSLY DISCLAIMS ANY RELIANCE UPON ANY STATEMENT MADE BY LESSOR OR ITS AGENTS. LESSOR SHALL NOT IN ANY EVENT BE LIABLE FOR ANY INDIRECT, CONSEQUENTIAL OR SPECIAL DAMAGES, EVEN IF LESSOR HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.


VII. RISK OF LOSS


(A) Risk of Loss. Lessee shall bear the entire risk of the Equipment if damaged,
------------ destroyed or rendered permanently unfit or unavailable for use after its shipment to Lessee and until it is accepted by Lessor in accordance with Section XII(B) hereof.


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(B) Damage/Event of Loss. (1) In the event any item of Equipment is damaged to a
-------------------- material extent by any occurrence whatsoever, Lessee shall promptly notify Lessor and shall determine within 15 days of the date of such notice whether such item of Equipment can be repaired If such Equipment can be repaired, Lessee shall at its cost and expense repair such Equipment to its original condition. (2) In the event any item of Equipment shall be lost, stolen, destroyed, damaged beyond repair, or rendered permanently unfit or unavailable for use (through a governmental taking or any other event), for any reason whatsoever (any such occurrence being referred to as an "Event of Loss", Lessee shall promptly notify Lessor and pay to Lessor, on the first day of the month immediately following such Event of Loss, an amount equal to the Casualty Value applicable to such item of Equipment calculated as of the immediately preceding Rent Due Date plus any unpaid Rent and the installment of Rent for such item of Equipment due on the Rent Due Date following the Event of Loss. After the payment of such amounts, Lessee's obligation to pay further Basic Rent for such item of Equipment shall cease, but Lessee's obligation to pay Interim Rent, if any, for such item of Equipment, and to pay Rent for all other items of Equipment shall remain unchanged. (3) Following payment of the Casualty Value and Rent for an item of Equipment in accordance with the provisions sentence 2 of this Section VII(B), Lessor shall transfer title to such item of Equipment to Lessee on an AS IS, WHERE IS basis without representation or warranty.


(C) Casualty Value. The Casualty Value from time to time for any item of
-------------- Equipment subject to a Schedule shall be an amount equal to the greater of *) the item of Equipment's installed/in-place fair market value at the time of the Casualty Value determination, or (2) 110% of the Item(s) of Equipment cost as of the Acceptance Date, declining in even monthly steps to 15% at expiration and remaining at that value thereafter.


(D) Disposition of Insurance and Other Proceeds. The proceeds of insurance or
------------------------------------------- any condemnation of an item of Equipment for which an Event of Loss has occurred shall be paid to Lessor (to the extent that Lessor has not previously received all Casualty Value and other payments required to be made by Lessee pursuant to the Master Lease), and the remainder, if any, shall be paid to Lessee. The proceeds of insurance with respect to damage to an item of Equipment, the repair of which, in the opinion of Lessee, is practicable shall unless an Event of Default hereunder has occurred and is continuing be applied either to such repair or to the reimbursement of Lessee for the cost of such repair.


VIII. LESSEE'S REPRESENTATIONS, WARRANTIES AND COVENANTS


(A) Representations and Warranties. Lessee represents, warrants and covenants to
------------------------------ Lessor, as of the date of the Master Lease and as of the date of each Schedule, that: (1) Lessee's execution, delivery and performance of the Master Lease and each Schedule have been duly authorized by all necessary action on the part of Lessee, and the Master Lease and each Schedule constitute legal, valid and binding obligations of Lessee; (2) the execution and delivery by Lessee of the Master Lease and each Schedule and the performance of its obligations thereunder do not conflict with or result In a material breach of Lessee's organizational documents or applicable law, or any judgment order, writ, injunction, decree, rule or regulation of any court, administrative agency or other governmental authority, or any agreement or other instrument to which Lessee is a party or by which it is bound; (3) there are no pending or, to the knowledge of


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Lessee, threatened actions or proceedings that could materially adversely affect the ability of Lessee to perform its obligations under the Master Lease and the Schedules; (4) there has been no material adverse change in Lessee's financial condition since the date of the Master Lease; and (5) Lessee has obtained the proper licenses to use, or ownership of, any software which is or may be used in connection with the Equipment


(B) Assignment and Transfer. LESSEE SHALL NOT, WITHOUT THE PRIOR WRITTEN
----------------------- CONSENT OF LESSOR SELL, TRANSFER, ASSIGN. SUBLEASE (EXCEPT, UPON PRIOR WRITTEN NOTICE TO LESSOR, A SUBLEASE TO A WHOLLY OWNED OR CONTROLLED SUBSIDIARY OR TO ITS PARENT), PLEDGE OR HYPOTHECATE THE MASTER LEASE, ANY SCHEDULE, THE EQUIPMENT OR ANY PART THEREOF OR ANY INTEREST THEREIN. Lessee shall not, without the prior written consent of Lessor, which shall not be unreasonably withheld, merge or consolidate with any corporation or other entity (unless Lessee is the surviving entity or the surviving entity continues the business of Lessee and assumes the Master Lease and ail Schedules) and shall not sell, transfer or otherwise dispose of all or any substantial part of Lessee's assets.


(C) No Liens. Lessee shall not directly or Indirectly create, incur, assume or
-------- allow to exist any lien, mortgage, pledge, security interest, charge, encumbrance, right, or claim of any kind ("Lien" on or with respect to the Master Lease, any Schedule or any item of Equipment. Lessee will promptly notify Lessor in writing of the existence of any Lien and will promptly, at Lessee's expense, cause any such Lien to be duly discharged.


(D) Payment of Taxes. Lessee shall reimburse Lessor for, and indemnify and hold
---------------- Lessor harmless from, all sales, use, personal property, stamp or other taxes, and all levies, imposts, duties, charges, fees, assessments or withholdings of any nature whatsoever (other than those measured by Lessor's net income), together with any penalties, fines or interest thereon which are at any time levied, assessed or imposed on the Equipment or any interest of Lessor or Lessee therein or on the sale, purchase, delivery, ownership, possession, use or operation of the Equipment or the rentals or other amounts payable under this Agreement or any Schedule. If requested by Lessor or if filing by Lessee is required by law, Lessee shall prepare and file, or cause to be prepared and filed, all necessary fortes for the assessment of such taxes and shall promptly send to Lessor a copy of such filing.


(E) Financial Reports. Lessee shall upon execution hereof, and for the term of
----------------- the Master Lease and any Schedules, amendments, extensions and addendums thereto, furnish or caused to be furnished to Lessor the following: (1) the audited annual financial statements of Lessee within 120 days after the close of each fiscal year; (2) quarterly financial statements in a form reasonably acceptable to Lessor within 60 days after the close of each fiscal quarter, and (3) monthly financial statements in a forth reasonably acceptable to Lessor within 30 days after the close of each fiscal month.


(F) Further Assu ...