Document:

Exhibit
10.39

 

	
   

  	
   

  	
  Master
  Lease Agreement

  
	
  BNY Leasing EdgeSM
  Lease Processing Center

  	
   

  	
  PHONE: (800)
  347-4015

  
	
  1111 Old Eagle School
  Road, Wayne, PA 19087

  	
   

  	
  FAX: (800)
  743-0178

  

 

LESSEE

	
  Full Legal Name

  Dendrite International, Inc.

  	
   

  	
  Phone Number

  (908) 541-5843

  
	
  Billing Address

  1405-1425 Route 206 South, Bedminster, NJ 07921

  	
   

  	
  Fax Number

  (908) 541-5939

  
	
  Send Invoice to
  Attention of:

  Tina Morollo, Accounts Payable Manager

  	
   

  	
   

  

 

TERMS
AND CONDITIONS

 

This MASTER LEASE
AGREEMENT (“Agreement”) is dated as of September 20, 2004, and is by and
between BNY Leasing Edge Corporation, the “Lessor”, with offices and a Lease
Processing Center located at 1111 Old Eagle School Road, Wayne, Pennsylvania
19087, its successors and assigns (“Lessor”) and the above referenced lessee (“Lessee”).
The parties hereto for good and valuable consideration and intending to be
legally bound hereby agree as follows:

1.  LEASE OF EQUIPMENT. This Agreement establishes the general
terms and conditions under which Lessor may, from time to time, lease Equipment
(as hereinafter defined) to Lessee. The terms hereof shall be deemed to form a
part of each Master Lease Schedule (“Lease”) executed by the parties which
references this Agreement. “Equipment” 
shall mean all items of equipment, software and maintenance set out in
any Lease. Lessee hereby requests Lessor to purchase the Equipment from the
supplier(s) thereof (hereinafter called “Vendor and/or Manufacturer”, as
applicable) and to lease the Equipment to Lessee on the terms and conditions
contained herein. Each Lease shall constitute a separate lease agreement
incorporating all the terms hereof. In the event of a conflict between the
provisions of any Lease and the provisions hereof, the provisions of the Lease
shall prevail.

The amount of the Lease Payments
on each Lease (“Lease Payments”) are based upon the estimated total cost of the
Equipment on the applicable Schedule. The Lease Payments shall be adjusted
proportionately upward or downward if the actual total cost of the Equipment on
the applicable Lease exceeds or is less than the estimate and Lessee authorizes
Lessor to adjust the Lease Payments by up to fifteen percent (15%) in that
event.

Unless Lessor has
provided Lessee with a written commitment to the contrary, Lessee authorizes
Lessor to adjust the Lease Payment on each Lease to increase or decrease the
implicit rate of the Lease Payment to the Lessor in an amount equal to any
increase or decrease in the rate of Treasury Notes with a comparable term to
the term of the Lease from the date the Lessor quoted the Lease Rate to the
date Lessor accepts the Lease.

2.  TERM AND RENT. This
Agreement shall become effective upon acceptance and execution by Lessor at its
corporate offices, as specified above, and shall remain effective at least
until the expiration of the term of the last Lease hereunder. Each Lease shall
become effective upon acceptance and execution by Lessor and shall be for the
term provided therein. The term of each Lease shall commence on the
Commencement Date, as defined in the Lease with an interim term and Base Term
Commencement Date as set forth therein and shall thereafter continue until all
obligations of the Lessee under the Lease shall have been fully performed
(“Lease Term”). Interim Rent and Base Term Rent shall be due and payable as set
forth in the Lease. All payments made by or on behalf of Lessee hereunder shall
be non-refundable. LESSEE’S OBLIGATION TO PAY SUCH LEASE PAYMENTS SHALL BE
ABSOLUTE AND UNCONDITIONAL AND IS NOT SUBJECT TO ANY ABATEMENT, SET-OFF,
DEFENSE OR COUNTER-CLAIM FOR ANY REASON WHATSOEVER. All payments hereunder
shall be made to Lessor at its address specified above (or such other place as
Lessor, in writing, directs) without notice or demand therefor. If the term of
a Lease is extended, “Lease Term” shall be deemed to refer to all extensions
thereof. All provisions of this Agreement shall apply during any extended term
except as may be otherwise specifically provided in this Agreement, in a Lease,
or in any subsequent written agreement of the parties.

3.  DELIVERY AND ACCEPTANCE. Delivery
and installation arrangements and costs, unless included in the cost of the
Equipment to Lessor and upon which the Lease Payments were computed, are the
sole responsibility of Lessee. Lessee agrees to accept the Equipment when
delivered, installed and operating to Manufacturer’s specifications and to
execute the Delivery and Acceptance Certificate supplied by Lessor as evidence
thereof. Lessee agrees to hold Lessor harmless from specific performance of
this Agreement and from damages, if for any reason, the Vendor fails to
deliver, or delays in delivery of, the Equipment so ordered or if the Equipment
is unsatisfactory for any reason whatsoever. Lessee agrees that any delay in
delivery of the Equipment shall not affect the validity of this Agreement, any
Lease or the obligation to make Lease Payments thereunder. Lessee’s execution
of the Delivery and Acceptance Certificate shall conclusively establish that
the Equipment covered thereby is acceptable to Lessee for all purposes of the
Lease related thereto.

The Lessee agrees to
provide a suitable installation environment for the Equipment as specified in
the applicable Manufacturer’s manual, if any, and except as otherwise specified
by Manufacturer, to furnish all labor required for unpacking and placing each
item of Equipment in the desired location. Without limiting the generality of
the foregoing, the foundation or floor on which the Equipment is to be
installed, shall be in accordance with the builder’s specifications, and the
power for the Equipment shall be in accordance with the builder’s
specifications and the local electrical code.

If Lessee has entered
into any purchase, licensing or maintenance agreements with the Vendor and/or
the Manufacturer (“Acquisition Agreement”) covering the Equipment or any
portion thereof, Lessee transfers and assigns to Lessor all of Lessee’s rights,
but none of its obligations (except for Lessee’s obligation to pay for the
Equipment upon Lessor’s acceptance of the Lease) in and to the Acquisition
Agreement, including without limitation the right to take title to the
Equipment.

If Lessee cancels or
terminates a Lease prior to delivery of the Equipment or if Lessee fails or
refuses to sign the Delivery and Acceptance Certificate within a reasonable
time, not to exceed five (5) business days, after the Equipment has been
delivered, installed and is operating to Manufacturer’s specifications, Lessor
shall have the option of treating the Lease as cancelled by Lessee and Lessee
shall automatically assume all of Lessor’s rights and obligations as purchaser
of the Equipment, whether under an Acquisition Agreement or otherwise.

IT IS HEREBY AGREED THAT
LESSOR IS NOT RESPONSIBLE FOR THE PERFORMANCE, MAINTENANCE OR SERVICING OF THE
EQUIPMENT AND LEASES SAME “AS-IS.”

4.  SELECTION OF EQUIPMENT AND DISCLAIMER OF
WARRANTY.  Lessee has
selected both the Equipment and the Vendor and/or Manufacturer from whom Lessor
covenants to purchase the Equipment at Lessee’s request. LESSEE ACKNOWLEDGES
THAT LESSOR HAS NO EXPERTISE OR SPECIAL FAMILIARITY ABOUT OR WITH RESPECT TO
THE EQUIPMENT. LESSEE AGREES THAT THE EQUIPMENT LEASED HEREUNDER IS LEASED
“AS-IS” AND IS OF A SIZE, DESIGN AND CAPACITY SELECTED BY LESSEE AND THAT
LESSEE IS SATISFIED THAT THE SAME IS SUITABLE FOR LESSEE’S PURPOSES, AND THAT
LESSOR HAS MADE NO REPRESENTATION OR WARRANTY WITH RESPECT TO THE SUITABILITY
OR DURABILITY OF SAID EQUIPMENT FOR THE PURPOSES AND USES OF LESSEE, OR ANY
OTHER REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT THERETO,
INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE. LESSOR FURTHER DISCLAIMS ANY LIABILITY FOR LOSS, DAMAGE OR
INJURY TO LESSEE OR THIRD PARTIES AS A RESULT OF ANY DEFECTS, LATENT OR
OTHERWISE, IN THE EQUIPMENT WHETHER ARISING FROM THE APPLICATION OF THE LAWS OF
STRICT LIABILITY OR OTHERWISE. If the Equipment is not properly installed, does
not operate as represented or warranted by the Vendor and/or Manufacturer, or
is unsatisfactory for any reason, Lessee shall make any claim on account
thereof solely against the Vendor and/or Manufacturer and shall, nevertheless,
pay Lessor all Lease Payments under the Lease and shall not set up against
Lessee’s obligations any such claims as a defense, counterclaim, set-off or otherwise.
So long as Lessee is not in breach or default of this Agreement or any Lease
hereunder, Lessor hereby assigns to Lessee, solely for the purpose of making
and prosecuting any such claim, any rights which Lessor may have against the
Vendor and/or Manufacturer for breach of warranty or other representation
respecting any item of the Equipment. All proceeds of any warranty recovery by
Lessee from the Vendor and/or Manufacturer of any item of the Equipment shall
first be used to repair or replace the affected item.

LESSEE ACKNOWLEDGES THAT
NEITHER THE VENDOR NOR ANY SALESPERSON, EMPLOYEE, REPRESENTATIVE OR AGENT OF
THE VENDOR AND/OR MANUFACTURER IS AN AGENT OR REPRESENTATIVE OF LESSOR, AND
THAT NONE OF THE ABOVE IS AUTHORIZED TO WAIVE OR ALTER ANY TERM, PROVISION OR
CONDITION OF THIS AGREEMENT OR ANY LEASE HEREUNDER, OR MAKE ANY REPRESENTATION
OR WARRANTY WITH RESPECT TO THIS AGREEMENT, ANY LEASE HEREUNDER OR THE
EQUIPMENT LEASED HEREUNDER. Lessee further acknowledges and agrees that Lessee,
in executing this Agreement and each Lease hereunder, has relied solely upon
the terms, provisions and conditions contained herein and therein, and any
other statements, warranties, or representations, if any, by the Vendor and/or
Manufacturer, or any salesperson, employee, representative or agent of the
Vendor and/or Manufacturer, have not been relied upon, and shall not in any way
affect Lessee’s obligation to make the Lease Payments and otherwise perform as
set forth in this Agreement and each Lease.

REGARDLESS OF CAUSE,
LESSEE WILL NOT ASSERT ANY CLAIM WHATSOEVER AGAINST LESSOR FOR LOSS OF
ANTICIPATORY PROFITS OR ANY OTHER INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES,
NOR SHALL LESSOR BE RESPONSIBLE FOR ANY DAMAGES OR COSTS WHICH MAY BE ASSESSED
AGAINST LESSEE IN ANY ACTION FOR INFRINGEMENT OF ANY UNITED STATES LETTERS
PATENT OR COPYRIGHT. LESSOR MAKES NO WARRANTY AS TO THE TREATMENT OF THIS
AGREEMENT OR ANY LEASE HEREUNDER FOR TAX OR ACCOUNTING PURPOSES.

NOTWITHSTANDING ANY
PROVISION CONTAINED HEREIN TO THE CONTRARY, LESSEE DOES NOT WAIVE ANY RIGHTS OR
REMEDIES IT MAY HAVE AGAINST THE VENDOR AND/OR MANUFACTURER OF THE EQUIPMENT.

5.  TITLE, PERSONAL PROPERTY AND LOCATION. Except
for Leases with a $1.00 purchase option or where the Lessee is required to
purchase the Equipment at the end of the Lease term, the Equipment is, and
shall at all times be and remain the sole and exclusive property of Lessor, and
Lessee, notwithstanding any trade-in or down payment made by Lessee or on its
behalf with respect to the Equipment, shall have no right, title or interest
therein or thereto, except as to the use thereof subject to the terms and
conditions

 

1

 

of this Agreement and the
related Lease hereunder. To the extent that the license for the Software
(“License”) allows title to Software to pass to Lessee, such title shall vest
and remain in Lessor. To the extent such vesting requires a specific written
conveyance, Lessee hereby conveys to Lessor any title it has or may hereafter acquire
in the Software and relinquishes any subsequent claim of title in the Software,
including any rights to purchase the Software and to retain rights to use the
same beyond the Lease Term. If any provision of this paragraph requires for its
effectiveness Licensor’s prior written consent because the License limits
transfers, encumbrance or assignment of the Software, then Lessee shall assist
Lessor, if so requested, in obtaining such consent.

Lessee will not directly
or indirectly create, incur, assume or suffer to exist any lien on or with
respect to the Equipment or Lessor’s title thereto, except such liens as may
arise through the independent acts or omissions of the Lessor. Lessee, at its
own expense, will promptly pay, satisfy or otherwise take such actions as may
be necessary to keep the Equipment free and clear of any and all such liens.
The Equipment is, and at all times shall remain, personal property
notwithstanding that the Equipment or any item thereof may now be, or hereafter
become, in any manner affixed or attached to, or imbedded in, or permanently
resting upon real property or any improvement thereof or attached in any manner
to what is permanent. If requested by Lessor prior to or at any time during the
Lease Term, Lessee will obtain and deliver to Lessor waivers of interest or
liens in recordable form, satisfactory to Lessor, from all persons claiming any
interest in the real property on which an item of the Equipment is installed or
located.

The Equipment shall be
kept at the address designated in each Lease and shall not be removed therefrom
without the prior written consent of the Lessor, which consent shall not be
unreasonably withheld. Lessor may require plates or markings to be affixed to
or placed on the Equipment indicating the Lessor’s ownership of the Equipment.

6.  USE AND MAINTENANCE.
Lessee shall use the Equipment solely in the conduct of its business and in a
careful and proper manner consistent with the requirements of all applicable
insurance policies; shall only permit qualified personnel to operate the
Equipment and shall not discontinue the use of the Equipment during the Lease
Term. Lessee will not modify the Equipment in any way without the prior written
consent of Lessor, which consent shall not be unreasonably withheld. Lessee
shall not attach or incorporate the Equipment to or in any other item of
equipment or software in such a manner that the Equipment becomes or may be
deemed to have become an accession to or a part of such other item of equipment
or software.

At its own expense,
Lessee will cause the Equipment to be kept, used and maintained as recommended
by the Manufacturer and Manufacturer’s maintenance manuals and plans by
competent and duly qualified personnel only approved by the Manufacturer, in
accordance with applicable governmental regulations, if any, and for business
purposes only and in as good operating condition as when delivered to Lessee
hereunder, ordinary wear and tear resulting from proper use alone excepted, and
will provide all maintenance and service and make all repairs or replacements
reasonably necessary for such purpose. Lessee shall record in a log book all
maintenance and repair performed on the Equipment and deliver the same to
Lessor from time to time as requested by Lessor and upon termination of the
Lease.

If any parts or
accessories forming part of the Equipment become worn out, lost, destroyed,
damaged beyond repair or otherwise permanently rendered unfit for use, Lessee,
at its own expense, shall within a reasonable time cause such parts or
accessories to be replaced by replacement parts or accessories which are free
and clear of all liens, encumbrances or rights of others and have a utility at
least equal to the parts or accessories replaced. All equipment, software
accessories, upgrades, parts and replacements for or which are added to or
become attached to the Equipment, which are essential to the operation of the
Equipment or which cannot be detached from the Equipment without materially
interfering with the operation of the Equipment or adversely affecting the
value and utility which the Equipment would have had without the addition
thereof, shall immediately become the property of Lessor, and shall be deemed
incorporated in the Equipment and subject to the terms of this Agreement and
the related Lease as if originally leased hereunder. Lessee shall not make any
material alterations to the Equipment without the prior written consent of
Lessor, which consent shall not be unreasonably withheld.

Upon reasonable advance
notice, Lessor shall have the right to inspect the Equipment, log book and all
other maintenance records with respect thereto, if any, at any reasonable time
during normal business hours.

In the event the Lease
Payments include the cost of maintenance and/or service being provided by
Vendor and/or Manufacturer, Lessee acknowledges that Lessor is not responsible
for providing any required maintenance and/or service for the Equipment. Lessee
shall make all claims for service and/or maintenance solely to the Vendor
and/or Manufacturer and Lessee’s obligation to make all required Lease Payments
shall remain unconditional.

7.  ASSIGNMENT. LESSEE MAY NOT
ASSIGN THIS AGREEMENT, ANY LEASE OR THE RIGHTS HEREUNDER, NOR SHALL THE LESSEE
SUBLEASE OR LEND THE EQUIPMENT OR SUBMIT IT TO BE USED BY ANYONE OTHER THAN
LESSEE’S EMPLOYEES WITHOUT THE PRIOR WRITTEN CONSENT OF LESSOR, WHICH CONSENT
SHALL NOT BE UNREASONABLY WITHHELD. Lessor may at any time assign all or part
of any interest in this Agreement or any Lease and in each item of the Equipment
and monies to become due to Lessor hereunder; and, Lessor may grant security
interests in the Equipment, subject to the Lessee’s rights therein. In such
events, all the provisions of this Agreement or any Lease hereunder for the
benefit of Lessor shall inure to the benefit of and be exercised by or on
behalf of such assignee, but the assignee shall not be liable for or be
required to perform any of Lessor’s obligations to Lessee. The Lessor may
direct that all Lease Payments due and to become due under this Agreement or
any Lease hereunder and assigned by Lessor shall be paid directly to assignee,
upon notice of such assignment to Lessee. The right of the assignee to the
payment of the assigned Lease Payments, the performance of all Lessee’s obligations
and to exercise any other of Lessor’s rights hereunder shall not be subject to
any defense, counterclaim or set-off which the Lessee may have or assert
against the Lessor, and the Lessee hereby agrees that it will not assert any
such defenses, set-offs, counterclaims and claims against the assignee. No such
assignment by Lessor shall relieve Lessor of its obligations or limit or
otherwise affect Lessee’s rights and/or obligations hereunder.

8.  RETURN OF EQUIPMENT, STORAGE.
The Lessee shall, at its sole expense, surrender each item of the Equipment
then subject to any Lease hereunder at the expiration or earlier termination of
the Lease Term by delivering the item to the Lessor at a location accessible by
common carrier and designated by the Lessor within the Continental United
States or, if specified by the Lessor, into the custody of a carrier designated
by the Lessor. In the case of Software, Lessee shall destroy all intangible
items constituting such Software and shall deliver to Lessor all tangible items
constituting such Software. At Lessor’s request, Lessee shall also certify in a
form acceptable to Lessor that: (i) Lessee has complied with the above Software
return provisions, (ii) Lessee will not use the Software after the expiration
or earlier termination of the Lease Term; and (iii) Lessee shall permit Lessor
and/or the Vendor of the Software to inspect Lessee’s locations to verify
compliance with the terms hereof.

If the item of the
Equipment is delivered into the custody of a carrier, the Lessee shall arrange
for the shipping of the item and its insurance in transit in accordance with
the Lessor’s instructions and at the Lessee’s sole expense. The Lessee, at its
sole expense, shall completely sever and disconnect the Equipment from the
Lessee’s property, all without liability of the Lessor to the Lessee, or to any
person claiming through or under the Lessee, for damage or loss caused by such
severance and disconnection. The Lessee, at its sole expense, shall pack or
crate the Equipment or its component parts carefully and in accordance with any
recommendations of the Manufacturer with respect to similar new software or
equipment before surrendering the Equipment to the Lessor. The Lessee shall
deliver to the Lessor the plans, specifications, operation manuals and other
warranties and documents furnished by the Manufacturer or Vendor of the
Equipment and such other documents in the Lessee’s possession relating to the
maintenance and methods of operation of such Equipment.

When an item of Software
or Equipment is surrendered to the Lessor it shall be in the condition and
repair required to be maintained under this Agreement. It will also be free of
all evidence of advertising or insignia placed on it by the Lessee and meet all
legal and regulatory conditions necessary for the Lessor to sell or lease it to
a third party and be free of all liens. If Lessor reasonably determines that an
item of Software or Equipment, once it is returned, is not in the condition
required hereby, Lessor may cause the repair, service, upgrade, modification or
overhaul of the item of Software or Equipment to achieve such condition and
upon demand, Lessee shall promptly reimburse Lessor for all amounts reasonably
expended in connection with the foregoing.

Should Lessee not return
the Equipment at the end of the Lease Term, Lessee shall continue to make Lease
Payments to Lessor in the sum equal to the last Lease Payment and at the same
intervals as set out in the Lease as a month-to-month lease term (or other term
as designated by Lessor) until returned by Lessee or until returned upon demand
therefor by Lessor. The acceptance of said Lease Payments by Lessor shall not
waive Lessor’s right to have the Equipment promptly returned to Lessor pursuant
to the provisions hereof, nor shall the acceptance of said Lease Payments be
deemed to be an extension of the Lease Term.

Upon written request of
the Lessor, the Lessee shall provide free storage for any item of Equipment for
a period not to exceed 60 days after expiration of its Lease Term before
returning it to the Lessor. The Lessee shall arrange for the insurance
described to continue in full force and effect with respect to such item during
its storage period and the Lessor shall reimburse the Lessee on demand for the
incremental premium cost of providing such insurance.

9.   LOSS OR DAMAGE. Lessee
hereby assumes and shall bear the entire risk of loss (including theft,
requisition of use, erasure or inoperability) or destruction of or damage to
the Equipment from any and every cause whatsoever, whether or not insured,
until the Equipment is returned to Lessor. No such loss or damage shall relieve
Lessee from any obligation under this Agreement or any Lease hereunder, which
shall continue in full force and effect. In the event of damage to or loss or
destruction of the Equipment (or any item thereof), Lessee shall promptly
notify Lessor in writing of such fact and shall, at the option of Lessor, (a)
place the same in good repair, condition and working order, (b) replace the
Software and/or Equipment with like Software and/or Equipment in good repair,
condition and working order, acceptable to Lessor and transfer clear title to
or a right to use, as appropriate, such Software and/or replacement Equipment
to Lessor, whereupon such Software and/or Equipment shall be subject to the
Lease and be deemed the Equipment for purposes hereof, or (c) on the due date
for the next Lease Payment or upon the expiration of the Lease, whichever first
occurs, pay to Lessor: (i) the Stipulated Loss Value therefor as may be
specified in the Lease plus all Lease Payments then due, or if the Lease does
not provide for Stipulated Loss Values, (ii) the present value of the total of
all unpaid Lease Payments for the entire Lease Term plus the estimated fair
market value of the Equipment at the end of the originally scheduled Lease Term
or the agreed upon purchase option price, if any, all of which shall be
discounted to the date of payment at the lesser of (i) a per annum interest
rate equivalent to that of a U.S. Treasury constant maturity obligation (as
reported by the U.S. Treasury Department) that would have a repayment term
equal to the remaining Lease term, all as reasonably determined by Lessor; or
(ii) 3% per annum (each the “Present Value Rate”), whereupon the Lease shall
terminate with respect thereto. All proceeds of insurance received by Lessor as
a result of such loss or damage shall, where applicable, be applied toward the
replacement or repair of the Equipment or the payment of the obligations of
Lessee hereunder.

10.  INSURANCE. Prior to the
Lease Commencement Date, Lessee shall obtain, maintain and keep the Equipment
insured against all risks of loss or damage from every cause whatsoever
including, without limitation, loss by fire, theft, “mysterious disappearance”,
collision, earthquake, flood and such other risks of loss as are customarily
insured against on the type of Equipment leased hereunder by businesses of the
type in which Lessee is engaged, in an amount not less than the replacement
cost or Stipulated Loss Value of the Equipment, whichever is greater, without
deductible and without co-insurance. Lessee shall maintain such insurance
coverage for the entire Lease Term. Lessee shall also obtain and maintain for
the entire Lease Term, comprehensive public liability insurance covering
liability for bodily injury, including death, and property damage resulting
from the purchase, ownership, leasing, maintenance, use, operation or return of
the Equipment with a combined single limit of not less than Two Million Dollars
($2,000,000.00) per occurrence. If Lessee is a doctor, hospital or other health
care provider, Lessee shall furnish Lessor with evidence of sufficient
professional liability

 

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insurance. All said
insurance shall be in a form and an amount and with companies reasonably
satisfactory to Lessor. Lessor, its successors or assigns, shall be the sole
named loss payee with respect to insurance for damage to or loss of the
Equipment and shall be named as an additional insured on the public liability
insurance. Lessee shall pay all premiums for such insurance and shall deliver
to Lessor the original policy or policies of insurance, certificates of
insurance, or other evidence satisfactory to Lessor evidencing the insurance
required thereby, along with proof, satisfactory to Lessor, of the payment of
the premiums for such insurance policies. All insurance shall provide for at
least sixty (60) days advance written notice to Lessor before any cancellation,
expiration or material modification thereof and also provide that no act or
default of any person other than Lessor, its agents or those claiming under
Lessor, will affect Lessor’s right to recover under such policy or policies in
case of loss. Lessee hereby irrevocably appoints Lessor as Lessee’s
attorney-in-fact (which power shall be deemed coupled with an interest) to make
claim for, receive payment of, and execute and endorse all documents, checks or
drafts received in payment for loss or damage under any such insurance policy.
Unless Lessee is in default, Lessee may with the prior written approval of
Lessor, settle and adjust all such claims. Lessee agrees if Lessee shall fail
to procure, maintain, and pay for such insurance, Lessor shall have the right,
but not the obligation, to obtain such insurance on behalf of Lessee. In the
event Lessor does obtain such insurance, Lessee agrees to pay an insurance fee
in addition to each Lease Payment due from the Lessee, on which the Lessor may
make a profit.

11.
 WAIVER AND INDEMNITY.
Lessee assumes and agrees to indemnify, defend and keep harmless Lessor, its
agents and employees, from and against any and all losses, damages, injuries,
claims, demands and expenses, including legal, consulting and expert expenses (other
than such as may directly and proximately result from the gross negligence or
willful misconduct of Lessor, its agents or employees), arising on account of
the ordering (whether by Acquisition Agreement or otherwise), acquisition,
delivery, installation or rejection of the Equipment, the possession,
maintenance, use, condition (including without limitation, latent and other
defects and whether or not discoverable by Lessor or Lessee, ownership, any
claim in tort for strict liability, and any claim for patent, trademark or
copyright infringement) or operation of any item of the Equipment, and by
whomsoever used or operated, during the Lease Term with respect to that item of
the Equipment, the loss, damage, destruction, environmental impact, removal, return,
surrender, sale or other disposition of the Equipment, or any item thereof.
Lessor shall give Lessee prompt notice of any claim or liability hereby
indemnified against. Lessee shall be entitled to control the defense thereof,
so long as Lessee is not in Default hereunder; provided, however, that Lessor
shall have the right to approve defense counsel selected by Lessee. The
obligations contained in this paragraph continue beyond the termination of the
Lease if the liability occurred during the Lease Term.

12.  TAX TREATMENT AND INDEMNIFICATION.
(a) Unless otherwise provided for in a specific Lease, it is acknowledged and
agreed by the parties that they are entering into this Agreement and each Lease
on the following income tax assumptions: (i) that Lessor and the consolidated
group of which Lessor is a member (all references to Lessor in this Section
include such consolidated group) will be treated for all federal income tax
purposes (and to the extent allowable, for state and local tax purposes) as the
owner of all Equipment leased pursuant to this Agreement and each Lease; (ii)
that, for federal and state income tax purposes, each Lease will be treated as
a “true lease” of the Equipment; (iii) that Lessor will be entitled to take (x)
accelerated Depreciation deductions under applicable state law (“Depreciation
Deductions”), (y) accelerated cost recovery deductions (“Recovery Deductions”)
under Section 167(a) and Section 168 (b)(1) of the Internal Revenue Code of
1986, as amended, and the regulations promulgated thereunder (the “Code”), and
(z) the special depreciation allowance (“Bonus Deduction”) under Code Section
168 (k); and (iv) that Lessor will have the maximum federal and state income
tax rate applicable to corporations in effect as of the date of Lessor’s Lease
execution (“Determination Date”) during each applicable Lease term (which
maximum federal and state income tax rate shall remain constant during such
term).

(b)  The Lessee acknowledges and agrees that each
Lease has been executed by Lessor based upon the following representations and
warranties of Lessee: (i) Lessor will not, under the Code, be required to
include in its gross income, for federal income tax purposes, any amount with
respect to any improvement, modification or addition made, or permitted to be
made, by Lessee to any item of Equipment; (ii) at the time the Lessee accepts
each item of Equipment under each Lease, each such item of Equipment shall have
been placed in service within the meaning of Code Section 167 and Code Section 168,
but not prior thereto, and the “original use” (as the term is used under the
Code) of such item shall commence with Lessor; (iii) Lessor shall be entitled
to (x) the maximum available Depreciation Deductions applicable to corporations
(determined as of the Determination Date) based on the cost of each item of
Equipment as specified in the applicable Lease (“Cost”), (y) Recovery
Deductions based upon each item of Equipment Cost over the recovery period, and
in those percentages of the Equipment’s unadjusted basis (reduced under any
Code requirements) for the years, indicated in the applicable Lease, by using
(A) the 200% declining balance method permitted under Code Section 168,
changing to straight line at such time as will maximize the recovery deductions,
(B) the half year convention and (C) no salvage value, unless otherwise
required by operation of Code Section 168 (d) (3) (A), and (z) the Bonus
Deduction based upon the applicable Equipment Cost for the year and percentage
indicated in the applicable Lease; (iv) for purposes of determining the amount
of the Recovery Deductions, Lessor’s basis for the Equipment will at least
equal Lessor’s Equipment Cost; (v) no item of Equipment is limited use property
within the meaning of Rev. Proc. 76-30; (vi) for federal income tax purposes,
all amounts included in the gross income of Lessor with respect to each item of
Equipment will be treated as derived from or allocable to sources within the
United States; and (vii) all Equipment information furnished by Lessee in
writing to Lessor or Lessor’s agents was accurate at the time given.

(c)  If by reason of (1) the breach or inaccuracy
in law or in fact of any of the representations or warranties set forth in
Subsection (b) of this Section, (2) the inaccuracy of any statement or
information in any letter or document furnished to Lessor by or on behalf of
Lessee in connection with the transactions contemplated under this Agreement or
any Lease (“Related Documents”), (3) the Lessee, an Affiliate (defined below),
assignee or sublessee of Lessee or any user or person or entity in possession
of any Equipment (x) committing any act, irrespective of whether such act is
required or permitted by this Agreement or any Lease (including but not limited
to any improvement, modification, addition, alteration, substitution,
replacement or relocation of any item of Equipment), or (y) failing or omitting
to take any action required under this Agreement, or any Lease or Related
Document or otherwise or (4) any change in the Code occurring after the date
hereof, Lessor will (i) lose the right to claim, will not have the right to
claim or shall not claim as the result of its good faith determination that
such claim is not properly allowable, or shall suffer a disallowance or
deferral of, or shall be required to recapture all or any portion of the
Recovery Deductions, Depreciation Deductions and/or Bonus Deduction as to any
item of the Equipment, (ii) be required to include in its gross income any
amount in respect to (x) any alteration, modification or addition, any item,
other than an alteration, modification or addition which is permitted without
adverse tax consequences to Lessor under Rev. Procs. 75-21, 76-30 or 79-48 or
(y) any transaction contemplated by this Agreement or any Lease (other than
rent paid by the Lessee), or (iii) suffer a decrease in Lessor’s net return
over the then remaining portion of the Lease Term (any such occurrence referred
to hereinafter as “Loss”), then at Lessor’s option either (x) the rent will, on
and after the next succeeding date for the payment thereof upon notice to
Lessee by Lessor that a Loss has occurred, and describing the amount as to
which Lessor intends to claim indemnification and the reason for such
adjustment in reasonable detail, be increased by such amount, which will cause
Lessor’s net return over the then remaining portion of the Lease Term (taking
into account the tax effect from deferred utilization of tax basis resulting
from changes in the method of calculating Recovery Deductions, Depreciation
Deductions and Bonus Deduction) to equal the net return that would have been
available if such loss had not occurred, or (Y) in lieu of a rent increase,
Lessee shall pay to Lessor on such next succeeding date for the payment of rent
such sum as will cause Lessor’s net return over the term of the Lease in
respect of the Equipment to equal to the net return that would have been
available if such Loss had not occurred (all such net return computations to as
determined by Lessor). If such Loss occurs after the expiration or termination
of a Lease, Lessor will notify Lessee of such Loss and Lessee will, within
sixty (60) days after such notice, pay to Lessor such sum as required by the
preceding clause (y). Lessee will forthwith pay on demand to Lessor an amount
on an after-tax basis which will be equal to the amount of any interest and/or
penalties which may be assessed by the United States or any state against
Lessor as a result of the Loss.

(d)  Lessee agrees that neither it nor any person
controlled by it, in control of it, or under common control with it, directly
or indirectly (an “Affiliate”), will at any time file any Federal, state or
local income tax return in the United States that is inconsistent with the
assumptions set forth in Subsection (a) of this Section or with the
representations and warranties set forth in Subsection (b) of this Section or
file any other document in a manner that causes a Loss. Lessee and each
Affiliate will file such returns, execute such documents and take such actions as
may be reasonable and necessary to facilitate accomplishment of the intent
hereof. Lessee will maintain sufficient records to enable the Lessor to
determine and verify its federal and state income tax liability with respect to
the transactions contemplated by each Lease and to determine and verify its
potential tax liability with respect to each other taxing jurisdiction. In
addition, within 30 days after notice Lessee shall provide such information as
Lessor may reasonably request to enable Lessor to fulfill its tax return filing
obligation, to respond to requests for information, to verify information in
connection with any income tax audit and to participate effectively in any tax
contest.

(e)  For purposes of this Section, a Loss will
occur upon the earliest of (1) the happening of any event which may cause such
Loss, (2) the payment by Lessor to the Internal Revenue Service of the tax
increase resulting from such Loss, or (3) the adjustment of the tax return of
Lessor to reflect such Loss. Lessor will be responsible for, and will not be
entitled to a payment under this Section on account of any Loss due solely to
one or more of the following events: (i) the failure of Lessor to have
sufficient taxable income to benefit from the Recovery Deductions, Depreciation
Deductions and/or Bonus Deduction; (ii) any disposition of the Equipment by
Lessor prior to an Event of Default which has occurred and is continuing under
the Lease; or (iii) the failure of Lessor to timely or properly claim the
Recovery Deductions, Depreciation Deductions and/or Bonus Deduction on its tax
returns, unless Lessor shall have previously determined, based upon a written
opinion of tax counsel to Lessor, that substantial authority does not exist in
favor of making such claim or such failure is due to Lessee not timely
providing Lessor with information require by Subsection (d).

(f) The indemnities and
assumptions of liability provided herein and all Lessor’s rights and privileges
herein will inure to the benefit of Lessor’s successors and assigns and will
continue in full force and effect notwithstanding the expiration or termination
of the Lease.

13.  EVENTS OF DEFAULT. The
term “Event of Default” shall mean any one or more of the following:

(a)   Lessee shall fail to make any Lease Payment,
or any other payment, as it becomes due and such failure is not cured within 10
days; or

(b)  Lessee shall fail to perform or observe any
of the covenants set forth in Paragraph 10; or

(c)  Lessee shall fail to perform or observe any
other covenant, condition or agreement to be performed or observed by it
hereunder or in any Lease and such failure is not cured within 30 days after
the date of notice thereof by Lessor to Lessee; or

(d)  Lessee or any Guarantor of Lessee’s
obligations hereunder (“Guarantor”) shall enter into any transaction of merger
or consolidation in which it is not the surviving entity or sell, transfer,
pledge or otherwise dispose of all or substantially all of its assets
(“Assets”) unless the surviving entity or the entity acquiring such Assts
assumes all the duties and obligations of Lessee hereunder or such Guarantor
under its guaranty and which merger, consolidation, sale, transfer or
disposition must be approved in writing by Lessor; or

(e)  (i) Lessee or any Guarantor shall liquidate,
dissolve or otherwise cease to do business as a going concern or shall commence
any action (A) for relief under any existing or future law of any jurisdiction,
domestic or foreign, relating to bankruptcy, insolvency, reorganization or
relief of debtors, or (B) seeking appointment of a receiver, custodian or other
similar official for it or for its Assets or making a general assignment for
the benefit of its creditors; or (ii) there shall be commenced against Lessee
any action (A) of a nature referred to in clause (i) which results in the entry
of an order for relief or any such other relief and remains undismissed or
undischarged for a period of 30 days, or (B) seeking

 

3

 

attachment, execution or
similar process against its assets which results in the entry of an order for
any such relief which shall not be vacated or discharged within 30 days from
the entry thereof; or (iii) Lessee shall generally not, or be unable to, pay
its debts as they come due; or

(f)  Lessee or any Guarantor shall die or become
incompetent; or

(g)  Any representation or warranty made by
Lessee or any Guarantor, or any financial or other statement of Lessee or any
Guarantor,  furnished Lessor in
connection with this Agreement or any Lease hereunder shall prove at any time
to have been untrue or misleading in any material respect; or

(h)  Lessee or any Guarantor defaults on any
indebtedness for borrowed money, lease, or installment sale obligation, in each
case when any applicable grace period for such obligation has expired and the
lender, lessor or creditor has commenced to exercise any remedy, but only if
the indebtedness or other obligation is in an amount equal to or in excess of
$50,000; or

(i)  the financial condition or operations of
Lessee or any Guarantor shall change such that in the judgment of Lessor,
Lessor’s risk is materially adversely affected; or

(j)  Lessee shall default in its obligations
under a License; or

(k) The validity of this
Agreement, any Lease or any, guarantee thereof shall be contested or declared
null and void or Lessee or any Guarantor shall deny it has any liability or
obligation under or with respect to this Agreement, any Lease or any guarantee
thereof; or

(l) any Guarantor shall
fail to perform or observe any covenant, term or condition of its Guaranty and
such failure shall continue unremedied for a period of 15 days after the date
of notice thereof by Lessor to such Guarantor.

14.  REMEDIES. Upon the
occurrence of any Event of Default, Lessor may declare this Agreement or any
Lease hereunder to be in default and exercise any one or more of the following
remedies:

(a)   Declare the entire unpaid balance of Lease
Payments for the unexpired term of the Lease hereunder immediately due and
payable and similarly accelerate the balances due under any other Leases
between Lessor and Lessee without notice or demand, (b) Sue for and recover all
Lease Payments and other monies due and to become due under any and all Leases
hereunder, plus the estimated fair market value of the Equipment at the end of
the originally scheduled Lease Term or any agreed upon Purchase Option, all of
which shall be discounted to the date of default at the Present Value Rate
(defined in Section 9 hereof), but only to the extent permitted by law, (c)
Charge Lessee interest on all monies due Lessor at

the rate of eighteen
percent (18%) per annum from the date of default until paid but in no event
more than the maximum rate permitted by law, (d) Charge Lessee a returned-check
or non-sufficient funds charge (“NSF Charge”) to reimburse Lessor for the time
and expense incurred with respect to each check that is returned for any reason
including non-sufficient or uncollected funds, such NSF Charge is stipulated
and liquidated at $25.00; (e) Require Lessee to assemble all Equipment and
Software at Lessee’s expense, at a place reasonably designated by Lessor, (f)
Remove any physical obstructions for removal of the Equipment from the place
where the Equipment is located and take possession of any or all items of the
Equipment, without demand or notice, wherever same may be located,
disconnecting and separating all such items of the Equipment from any other
property, with or without any court order or pre-taking hearing or other
process of law, it being understood that facility of repossession in the event
of default is a basis for the financial accommodation reflected by this
Agreement or any Lease hereunder. Lessee hereby waives any and all damages
occasioned by such retaking except such damages as may be caused by Lessor’s
gross negligence or willful misconduct. Lessor may, at its option, use, ship,
store or repair any or all items of the Equipment so removed and shall sell,
lease or otherwise dispose of any such Equipment at a private or public sale.
Lessor may expose the Equipment and resell or lease the Equipment at Lessee’s
premises at reasonable business hours without being required to remove the
Equipment. In the event Lessor disposes of the Equipment, Lessor shall give
Lessee credit for any sums received by Lessor from the sale or lease of the
Equipment after deduction of the expenses of sale or lease. The credit for any
sums to be received by Lessor from such lease during the remaining portion of
the Lease Term shall be discounted to the commencement date of such lease at an
annual rate equal to the implicit rate of interest of such lease. Lessee shall
also be liable for and shall pay to Lessor (i) all expenses incurred by Lessor
in connection with the enforcement of any of Lessor’s remedies, including all
expenses of repossessing, storing, shipping, repairing and selling the
Equipment, and (ii) Lessor’s reasonable attorney’s fees. Lessor and Lessee
acknowledge the difficulty in establishing a value for the unexpired Lease Term
and owing to such difficulty agree that the provisions of this paragraph
represent an agreed measure of damages and are not to be deemed a forfeiture or
penalty.

In the case of Software,
it is acknowledged and agreed that the unauthorized use, disclosure or transfer
of the Software could cause Lessor incalculable and irreparable harm.
Therefore, if Lessee is found to be using (in whatever manner) any portion of
the Software after the applicable Lease Term or after an Event of Default and
Lessor’s written demand for Lessee to return the Software or if the licensor of
the Software terminates a License or Lessee’s right to use the Software
thereunder, then liquidated damages shall immediately be payable to Lessor in
an amount equal to two (2) times the license fees paid or payable with respect
to the Software being used.

Whenever any payment is
not made by Lessee when due hereunder, Lessee agrees to pay to Lessor, not
later than one month thereafter, an amount calculated at the rate of five cents
per one dollar for each such delayed payment but only to the extent permitted
by law. Such amount shall be payable in addition to all amounts payable by
Lessee as a result of the exercise of any of the remedies herein provided.

All remedies of Lessor
hereunder are cumulative, are in addition to any other remedies provided for by
law, and may, to the extent permitted by law, be exercised concurrently or
separately. The exercise of any one remedy shall not be deemed to be an
election of such remedy or to preclude the exercise of any other remedy. No
failure on the part of the Lessor to exercise and no delay in exercising any
right or remedy shall operate as a waiver thereof or modify the terms of this
Agreement or any Lease hereunder. A waiver of default shall not be a waiver of
any other or subsequent default. Lessor’s recovery hereunder shall in no event
exceed the maximum recovery permitted by law.

15.  LAWS, REGULATIONS AND TAXES.
Lessee shall comply with all laws, regulations and orders relating or
pertaining to the Equipment, this Agreement or any Lease hereunder and Lessee
shall be responsible for, as and when due, and shall indemnify and hold Lessor
harmless from and against all present and future taxes and other governmental
charges, or any increases therein (including, without limitation, sales, use,
leasing and stamp taxes and license and registration fees) and amounts in lieu
of such taxes and charges and any penalties or interest on any of the
foregoing, imposed, levied upon, in connection with, or as a result of the
purchase, ownership, delivery, leasing, possession or use of the Equipment, or
based upon or measured by the Lease Payments or receipt with respect to this
Agreement or any Lease hereunder. Lessee shall not, however, be obligated to
pay any taxes on or measured by Lessor’s net income. Lessee authorizes Lessor
to add to the amount of each Lease Payment any sales, use or leasing tax that
may be imposed on or measured by such Lease Payment. Lessee shall pay Lessor on
demand, as additional rent, the amount of the personal property tax required to
be paid by Lessor as owner (if applicable) of the Equipment, plus a fee for
Lessor collecting and administering any taxes, assessments or fees and
remitting them to the appropriate authorities and interest thereon at the
highest legal rate allowed, from the date due until fully paid. In the event
Lessee does not pay all sums specified above, Lessor has the right, but not the
obligation, to pay the same. If Lessor shall so pay any of the aforementioned,
then the Lessee shall remit such amount with the next Lease Payment plus a fee
for Lessor’s collecting and administering any taxes, assessments or fees and
remitting them to the appropriate authorities.

16.  UCC FILINGS AND FINANCIAL STATEMENTS.
Lessee authorizes Lessor to file a financing statement with respect to the
Equipment signed only by the Lessor where permitted by the Uniform Commercial
Code or other applicable law. Lessee hereby appoints Lessor as Lessee’s
attorney-in-fact to execute such financing statement on Lessee’s behalf and to
do all acts or things which Lessor may deem necessary to protect Lessor’s title
and interest hereunder. Lessor and Lessee further agree that a carbon,
photographic or other reproduction of this Agreement or any Lease hereunder may
be filed as a financing statement and shall be sufficient as a financing
statement under the Uniform Commercial Code or other applicable law. It is the
intent of the parties that this is a true lease, and the filing of a financing
statement under the Uniform Commercial Code or other applicable law shall not
be construed as evidence that any security interest was intended to be created,
but only to give public notice of Lessor’s ownership of the Equipment. If any
Lease hereunder has a $1.00 purchase option or the Lessee is required to
purchase the Equipment at the end of the Lease term or this Agreement or any
Lease hereunder is otherwise deemed at any time to be one intended as security,
then Lessee grants Lessor a security interest in the Equipment and the proceeds
from the sale, lease or other disposition of the Equipment. Lessee agrees to
pay Lessor a fee to reimburse Lessor’s expenses for the preparation and filing
of all such financing statements, for Lessor’s other documentation costs and
for all ongoing administration costs during each Lease term.

Lessee agrees to submit
financial statements or tax returns if its financial statements are unaudited
within 90 days from the end of its fiscal year and Lessee warrants to Lessor
that all financial statements furnished and to be furnished have been and will
be prepared in accordance with generally accepted accounting principles, are an
accurate reflection of Lessee’s financial condition and that there has been no
material adverse change in the financial condition of Lessee or any guarantor
of Lessee’s obligations since the dates of preparation and submission of the
financial statements submitted to Lessor. Lessee agrees to deliver to Lessor at
any time or times hereafter such information or documents, including, without
limitation, certified resolutions, financial statements and legal opinions, as
Lessor may request.

17.  SECURITY DEPOSIT. Lessor
shall retain any security deposit set forth on each Lease as security for the
performance by Lessee of its obligations hereunder. Any security deposit so
taken shall be non-interest bearing. Lessor may, but shall not be obligated to,
apply any security deposit to cure any Event of Default hereunder, in which
event Lessee shall promptly restore any amount so applied. If Lessee is not in
default in any of Lessee’s obligations hereunder, any security deposit will be
returned to Lessee without interest at the termination of the Lease related
thereto except as otherwise required by law. Lessee hereby grants to Lessor a
security interest in the cash comprising the security deposit from time to time
together with the proceeds thereof to secure the prompt performance as and when
due of all obligations of Lessee hereunder.

18.   WARRANTY OF BUSINESS PURPOSE.
Lessee hereby warrants and represents that the Equipment will be used for
business purposes, and not for personal, family or household purposes. Lessee
acknowledges that Lessor has relied upon this representation in entering into
this Agreement and each Lease hereunder.

19.   LESSEE REPRESENTATIONS AND WARRANTIES.
Lessee hereby represents, warrants and covenants to Lessor the following with
respect to each Lease as of the date Lessee executes the Delivery and
Acceptance Receipt related thereto: (a) Lessee is organized and validly
existing under the laws of the state of its organization, with adequate power
and capacity to enter into the Lease, all documents related to the purchase of
the Equipment and any other documents required to be delivered in connection
with the Lease or the Equipment (hereinafter “Documents”) and is duly qualified
to do business wherever necessary to carry on its present business, including
all states where the Equipment is to be located; (b) the Documents have been
duly authorized, executed and delivered by Lessee and constitute valid, legal
and binding agreements, enforceable in accordance with their terms, except to
the extent that the enforcement of remedies therein provided may be limited
under applicable bankruptcy and insolvency laws; (c) no approval, consent or
withholding of objections is required from any federal, state or local
governmental authority or instrumentality with respect to the entry into or
performance by Lessee of the Documents, except such as have already been
obtained; (d) the entry into and performance by Lessee of its obligations under
the Documents will not (i) violate any judgment, order, law or regulation
applicable to Lessee or (ii) result in any breach of, constitute a default
under or result in the creation of any lien, charge, security interest or other
encumbrance upon any item of the Equipment pursuant to any indenture, mortgage,
deed of trust, bank loan or credit agreement or other instrument (other than
the Lease or any purchase money security interest retained by any supplier) to
which Lessee is a party; (e) there are no suits or proceedings pending or
threatened in court or before any

 

4

 

regulatory commission,
board or other administrative governmental agency against or affecting Lessee,
which will have a material adverse effect on the ability of Lessee to fulfill
its obligations under the Lease; and (f) the balance sheet and statement of
income of Lessee, or of any consolidated group of which Lessee is a member,
heretofore delivered to Lessor have been prepared in accordance with generally
accepted accounting principles and fairly present the financial position of
Lessee or the consolidated group of companies of which Lessee is a member on
and as of the date thereof and the results of its or their operations for the
period or periods covered thereby. Since the date of such balance sheet and
statement of income there has been no material adverse change in the financial
or operating condition of Lessee or of its consolidated group.

20.  JOINT AND SEVERAL. All
obligations of Lessee if more than one, shall be joint and several.

21.  HEADINGS. All paragraph
headings are inserted for reference purposes only and shall not affect the
interpretation or meaning of this Agreement or any Lease hereunder.

22.   FURTHER ASSURANCES.
Lessee agrees to execute or obtain and deliver to Lessor at Lessor’s request
such additional documents as Lessor may reasonably deem necessary to protect
Lessor’s interest in the Equipment, this Agreement and any Lease.

23.  NOTICE. Written notices to
be given hereunder shall be deemed to have been given when delivered personally
or deposited in the United States mails, postage prepaid, addressed to such
party at its address set forth above or at such other address as such party may
have subsequently provided in writing.

24.  SUPPLIER’S CONTRACT.
Lessor and Lessee agree that each Lease is a Finance Lease as that term is
defined in Article 2A of the Uniform Commercial Code. Lessee acknowledges that
Lessor has apprised Lessee of the identity of the Equipment supplier. Lessor
hereby notifies Lessee that Lessee may have rights pursuant to the contract
with the supplier and the Lessee may contact the supplier for a description of
any rights or warranties that Lessee may have under this contract.

23.  LESSEE’S WAIVERS. Lessee
hereby waives any and all rights and remedies granted Lessee by Sections 508
through 522 of Article 2A of the Uniform Commercial Code including, by way of
example only and not as a limitation, the right to repudiate any Lease and
reject the Equipment; the right to cancel any Lease; the right to revoke
acceptance of the Equipment; the right to grant a security interest in the
Equipment in Lessee’s possession and control for any reason; the right to
recover damages thereunder for any breach of warranty or for any other reason
deduct all or any part of the claimed damages resulting from Lessor’s default,
if any, under any Lease; the right to accept partial delivery of the Equipment;
the right to “cover” by making any purchase or leases of or contract to
purchase or lease Equipment in substitution for those due from Lessor; the
right to recover any general, special, incidental or consequential damages, for
any reason whatsoever; and the right to specific performance, replevin, detinue,
sequestration, claim and delivery and the like for the Equipment. The waivers
contained herein shall not constitute a waiver by Lessee of any of its rights
or remedies against the Vendor and/or Manufacturer of the Equipment.

26.  CHOICE OF LAW/JURISDICTION AND PROCESS.
This Agreement and each Lease hereunder shall be binding and effective when
accepted by Lessor at its corporate office in Wayne, Pennsylvania, shall be
deemed to have been made in Wayne, Pennsylvania and, except for local filing
requirements and laws relating to conflict of laws, shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania.
Lessee hereby consents and agrees that non-exclusive jurisdiction, personal or
otherwise, over Lessee and the Equipment shall be with the courts of the
Commonwealth of Pennsylvania or the Federal District Court for the Eastern
District of Pennsylvania, solely at Lessor’s option, with respect to any
provision of this Agreement or any Lease hereunder. Lessee agrees that service
of process in any action or proceeding may be duly effected upon Lessee by
mailing such process via certified mail, return receipt requested. LESSEE ALSO
AGREES TO WAIVE ITS RIGHT TO A TRIAL BY JURY.

27.  ENTIRE AGREEMENT, NON-WAIVER AND SEVERABILITY.
This Agreement and each Lease hereunder contain the entire agreement and
understanding between Lessee and Lessor relating to the subject matter of each
Lease. No agreements or understandings shall be binding on the parties hereto
unless set forth in writing and signed by the parties. Time is of the essence
in this Agreement and each Lease hereunder. No waiver by Lessor of any breach
or default shall constitute a waiver of any additional or subsequent breach or
default by Lessor nor shall it be a waiver of any of Lessor’s rights. Any
provision of this Agreement or any Lease hereunder which for any reason may be
held unenforceable in any one jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such unenforceability without invalidating the
remaining provisions of this Agreement or any Lease hereunder, and any such
unenforceability in any one jurisdiction shall not render such provision
unenforceable in any other jurisdiction.

28.  WAIVER OF JURY TRIAL. EACH
OF LESSOR AND LESSEE WAIVES AND AGREES TO WAIVE THE RIGHT TO TRIAL BY JURY IN
ANY ACTION OR PROCEEDING BETWEEN LESSOR AND LESSEE BASED UPON, ARISING OUT OF
OR IN ANY WAY CONNECTED TO THIS AGREEEMENT, ANY LEASE OR ANY TRANSACTION
CONTEMPLATED HEREBY.

IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be duly executed by their
authorized representatives as of the date first above written.

 

LESSEE SIGNATURE

You agree to all of the
Terms and Conditions contained in this Agreement, and in any attachments to
same (all of which are included by reference) and become part of this
Agreement. You acknowledge to have read and agreed to all the Terms and
Conditions and understand that the Leases are non-cancelable for the full term
shown therein. This Agreement shall not be binding upon Lessor or become
effective unless and until Lessor executes the Agreement. The Equipment subject
to this Agreement and the Leases is not for home or personal use.

 

	
  Signature 

  	
   

  
	
   

  	
  KATHLEEN DONOVAN

  
	
  Date 

  	
   

  
	
   

  	
  September 24, 2004

  
	
  Print Name 

  	
   

  
	
   

  	
  Kathleen Donovan

  
	
  Title 

  	
   

  
	
   

  	
  SR. VP & CFO

  
	
  Legal
  Name of Corporation of Partnership

  DENDRITE INTERNATIONAL, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  LESSOR

  	
   

  
	
  Lessor Signature

  	
   

  	
  Date 

  	
   

  
	
   

  	
  ANDREW ROSENBERG

  	
   

  	
  9/29/04

  
	
  Print Name 

  	
   

  
	
   

  	
  Andrew Rosenberg

  
	
  Title 

  	
   

  
	
   

  	
  Director, Operations

  
	
  For

  	
   

  
	
  BNY LEASING EDGE
  CORPORATION

  
	
  Lease Number

  	
   

  

 

© 2004 All Rights
Reserved. Printed in the U.S.A. 04BNY060 4/04

 

5

 

MASTER
LEASE AGREEMENT ADDENDUM

 

This Master Lease
Agreement Addendum (“Addendum”) is made part of and amends that certain Master
Lease Agreement dated as of September 20, 2004 (“Agreement”) by and between BNY
Leasing Edge Corporation (“Lessor”) and Dendrite International, Inc.
(“Lessee”).  Unless otherwise defined
herein, capitalized terms shall have the definition set forth in the Agreement.

 

NOW, THEREFORE, for good
and valuable consideration, intending to be legally bound and pursuant to the
terms and conditions of the Agreement, it is hereby agreed as follows:

 

1.             The following shall become a part of the Agreement:

 

FINANCIAL COVENANTS.  The Lessee shall not:

 

(a)                                  permit
its LEVERAGE RATIO as determined at the end of any fiscal quarter to be more
than 2.00 to 1.00.

(b)                                 permit
its INTEREST COVERAGE RATIO as determined at the end of any fiscal quarter to
be less than 2.00 to 1.00.

(c)                                  permit
its NET WORTH at any time to be less than $130,000,000 plus (i) seventy-five
percent (75%) of the amount of the net proceeds to the Lessee of any offering
of new equity interests issued by the Lessee after June 30, 2003, plus (ii) on
a cumulative basis commencing with the fiscal quarter beginning April 1, 2003,
fifty percent (50%) of NET INCOME (if positive) for any fiscal quarter
beginning on or after April 1, 2003.

(d)                                 permit
its FIXED CHARGE COVERAGE RATIO as determined at the end of any fiscal quarter
to be less than 1.75 to 1.00.

(e)                                  have
EBIT of less than zero for any period consisting of four consecutive quarters.

 

DEFINED TERMS.  Words or phrases used in the forgoing
“Financial Covenants” Section to the Agreement shall, for the sole purposes of
the Financial Covenants,  be defined as
set forth in that certain Credit Agreement dated as of June 16, 2003 among
Dendrite International, Inc. The Lenders Party thereto and JPMorgan Chase Bank,
as administrative agent, as amended on September 24, 2004.

 

2.             Section 12.  TAX
TREATMENT AND INDEMNIFICATION.

 

The following sentence
shall be included at the beginning of this section: “ The tax treatment and
indemnification provisions outlined herein shall not apply to Leases with a
$1.00 purchase option.”

 

Section 13.  EVENTS OF DEFAULT.

 

Subsection (a):  This subsection shall be amended and
restated as follows:

“(a)  Lessee shall fail to make any Lease Payment,
or any other payment, as it becomes due and such failure is not cured within 15
days; or”

 

Subsection (h):  This subsection shall be amended and
restated as follows:

“(h) Lessee or any
Guarantor defaults on any indebtedness for borrowed money, lease, or
installment sale obligation, in each case when any applicable grace period for
such obligation has expired and the lender, lessor or creditor, respectively,
has commenced to exercise any remedy, but only if Lessee fails to adhere to the
Financial Covenants set forth herein, or”

 

1

 

Subsection (i):  This subsection shall be amended and
restated as follows:

“(i) the Lessee fails to
adhere to the Financial Covenants set forth herein and the financial condition
or operations of Lessee shall change such that in the reasonable judgment of
Lessor, Lessor’s risk is materially adversely affected; or”

 

Subsection (j):  This subsection shall be deleted in its
entirety.

 

Section 14.  REMEDIES.

 

The eleventh (11th)
sentence in the second (2nd) paragraph shall be amended and restated as
follows:

“Lessee shall also be
liable for and shall pay to Lessor (i) all reasonable expenses incurred by
Lessor in connection with the enforcement of any of Lessor’s remedies,
including all reasonable expenses of repossessing, storing, shipping, repairing
and selling the Equipment, and (ii) Lessor’s reasonable attorney’s fees.”

 

SECTION 15 LAWS,
REGULATIONS AND TAXES.

 

The reference in the 2nd
sentence to “net income” shall be replaced with “income”.

 

3.             It is expressly agreed by the parties that this Addendum
is supplemental to the Agreement which is by reference made a part hereof and
all the terms and conditions and provisions thereof, unless specifically
modified herein, are to apply to this Addendum and are made a part of this
Addendum as though they were expressly rewritten.

 

4.             In the event of any conflict, inconsistency or
incongruity between the provisions of this Addendum and any of the provisions
of the Agreement, the provisions of this Addendum shall in all respects govern
and control.

 

IN WITNESS WHEREOF, the
parties have caused this Addendum to be executed on the dates set forth below.

 

	
  Dated:

  	
  9/24/04

  	
   

  	
  LESSEE:  DENDRITE INTERNATIONAL, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  KATHLEEN DONOVAN

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Print name:

  	
  Kathleen Donovan

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Sr. VP & CFO

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
  9/29/04

  	
   

  	
  LESSOR:  BNY LEASING EDGE CORPORATION.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  ANDREW ROSENBERG

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Print name:

  	
  Andrew Rosenberg

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Director, Operations

  	
   

  
									

 

2<PAGE>

                                                                     EXHIBIT 4.1

            AMENDMENT TO THE SHAREHOLDER PROTECTION RIGHTS AGREEMENT

         THIS AMENDMENT TO THE SHAREHOLDER PROTECTION RIGHTS AGREEMENT (this
"Amendment"), dated as of September 29, 2004, is by and between Intelligroup,
Inc., a New Jersey corporation (the "Company"), and the American Stock Transfer
& Trust Company, as Rights Agent (the "Rights Agent").

                                R E C I T A L S:

         A. The Company and the Rights Agent are parties to that certain
Shareholder Protection Rights Agreement, dated as of November 6, 1998 (the
"Rights Agreement"); capitalized terms used herein but not otherwise defined
herein shall have the respective meanings ascribed to such terms in the Rights
Agreement.

         B. Section 5.4 of the Rights Agreement provides that, prior to the
Separation Date, the Company may, and the Rights Agent shall if the Company so
directs, amend any provision of the Rights Agreement without the consent of any
holders of Rights.

         C. The definition of "Separation Date" does not exist in the Rights
Agreement, and it is apparent on the face of the Rights Agreement that the
reference to "Separation Date" must be intended to refer to the "Separation
Time" since an alternative reading would permit the amendment of the Rights
Agreement by the Company without restriction pursuant to Section 5.4 thereof
even after the Separation Time.

         D. The Company has directed that the Rights Agent, in accordance with
Article V of the Rights Agreement, amend the Rights Agreement to correct the
mistake in the Rights Agreement to give meaning to the definition of "Separation
Time" therein and in certain respects as specifically set forth herein in
connection with the transactions contemplated by that certain Purchase
Agreement, dated as of September 29, 2004, by and among the Company and the
purchasers (the "Purchasers") party thereto (the "Purchase Agreement").

         NOW, THEREFORE, in consideration of the premises and the respective
agreements set forth herein, the parties hereto agree as follows:

         1. AMENDMENT TO THE RIGHTS AGREEMENT. The Rights Agreement is amended
as follows:

                  1.1 SUBSTITUTED DEFINITION. Section 1.1 of the Rights
Agreement is amended by amending and restating the definition of "Expiration
Time" in its entirety as follows:

                  "Expiration Time" shall mean September 29, 2004.

                  1.2 CORRECTED DEFINITION. The definition of "Separation Time"
is amended by replacing ""Separation Time"" with ""Separation Date"".

<PAGE>

         2 NO FURTHER RIGHTS OF RIGHTHOLDERS. Pursuant to Section 5.4 of the
Rights Agreement, as amended hereby, the Rights and the Rights Agreement shall
expire on September 29, 2004 and no Person shall have any rights pursuant to the
Rights Agreement or any Right after September 29, 2004.

         3. REFERENCES. From and after the date of this Amendment, all
references to the "Shareholder Protection Rights Agreement" shall be deemed to
refer to the Rights Agreement, as amended by this Amendment.

         4. COUNTERPARTS. This Amendment may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which, when
taken together, shall constitute one and the same instrument.

         5. CAPTIONS. The captions in this Amendment are inserted for
convenience of reference only and in no way define, describe or limit the scope
or intent of this Amendment or any of the provisions hereof.

         6. GOVERNING LAW. This Amendment shall be a contract made under and
governed by the laws of the State of New Jersey, without regard to conflict of
laws principles.

                  -Remainder of Page Intentionally Left Blank-
                            [Signature Page Follows]

                                       2
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the day and year first set forth above.

                                       INTELLIGROUP, INC.

                                       By:     /s/ Nagarjun Valluripalli
                                               -------------------------
                                       Name:   Nagarjun Valluripalli
                                       Title:  Chief Executive Officer

AMERICAN STOCK TRANSFER
& TRUST COMPANY

By: /s/ Barry F. Rosenthal
    ----------------------------
Name:  Barry F. Rosenthal
Title: Vice President

     Signature Page to Amendment to Shareholder Protection Rights Agreement

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