EXHIBIT 10.11
MASTER EQUIPMENT LEASE
THIS LEASE, made this 8th day of January 1999 between BOSTON FINANCIAL & EQUITY
CORPORATION, (herein called "Lessor"), a Massachusetts corporation with its
principal place of business at 00 Xxxxxxxx Xx., Xxxxxx, Xxxxxxxxxxxxx
00000-0000, and THE MUSIC CONNECTION CORPORATION (herein called "Lessee"), a
Delaware corporation, with its principal place of business at 0000 Xxxxxx
Xxxxxx, Xxxxx 000, Xxxxxx, XX 00000.
WITNESSETH
In consideration of the premises, the parties covenant and agree as follows:
1. Definitions. As herein used:
1.1 "Equipment" means the equipment manufactured or sold by the
Manufacturers or Distributors described in the Schedule of Leased
Equipment ("Schedule") annexed hereto and made a part hereof,
together with any replacements or substitution of parts,
improvements or additions thereto, and such other equipment which,
by agreement, may from time to time be hereafter described on any
supplemental schedule of leased equipment ("Schedule") which may be
annexed hereto and made a part hereof (the equipment on all such
schedules being collectively herein referred to as "Equipment"). The
term "Equipment" also includes all software and other intellectual
property described on the Schedule as well as operating software and
application software used or usable in connection with any item set
forth on any Schedule whether or not such software or other
intellectual property is specifically identified on the Schedule,
and also includes all tangible representations of all such software.
1.2 "Commencement Date" means the first day of the calendar quarter
following the date of the Lessee's written acceptance of the
delivery of all of the Equipment.
1.3 "Monthly Rent" means the amount of rent payable by Lessee each month
pursuant to Paragraph 3 of the Schedule as well as all maintenance
charges payable, if any, if, according to the Schedule, Lessor is
furnishing maintenance as indicated on the Schedule.
1.4 "Net Proceeds of Sale" means the net amount received by Lessor after
deducting from the gross proceeds of sale of the Equipment or in the
event of a subsequent lease by the Lessor, the net present value of
rent due under such subsequent lease, all expenses incurred in the
termination of this lease and any amounts for which, if not paid,
Lessor would be liable or which, if not paid, would constitute a
lien on the Equipment.
1.5 "Lessor's Depreciated Book Value" means the original cost of the
Equipment less the straight line depreciation for five year
property, all as reflected on Lessor's books of account.
1.6 "Lease Term" means the period specified in Section 2 of the
applicable Schedule thereof.
1.7 "Addendum" means any amendment to this Master Equipment Lease which
is specifically identified as such, and when so identified shall be
a part hereof.
2. Lessor does hereby lease to the Lessee, and Lessee hereby leases and hires
from the Lessor the Equipment subject to the terms, provisions, conditions
and agreements in this Lease set forth.
3. Delivery. Lessee hereby acknowledges: (a) the Equipment is of the
manufacture, design and capacity selected by Lessee; (b) the Equipment is
suitable for Lessee's purposes, and (c) Lessor has made no representation
or warranty, expressed or implied, with respect to the Equipment or any of
the foregoing matters. Lessor will assign or otherwise make available to
Lessee all of Lessor's rights (if any and if assignable) under the
manufacturer's warranty on the Equipment and maintenance agreement
relating thereto, all costs and charges thereof and therefore to be borne
by Lessee.
At the termination of the applicable Schedule, Lessee shall, at its
expense, return the Equipment subject thereto to Lessor at the location
designated by Lessor within the continental United States by surface
transportation, only if not shipped directly to a successor Lessee. The
Equipment returned to Lessor shall, at the time it is disconnected from
its then location in Lessee's premises, be in the same condition and
working order as when delivered to Lessee, reasonable wear and tear and
casualty loss excepted, and shall be at the then current engineering
change level recommended by the Equipment Manufacturer (if required in the
Schedule).
4. In addition to the Monthly Rent, Lessee shall pay, promptly when due, all
costs, expenses, fees, charges and taxes incurred in connection with the
use and operation of the Equipment. Such items shall include, but not be
limited to:
4.1.1 all costs of operating the Equipment.
4.1.2 all federal, state, county, municipal or other taxes whatsoever,
without proration, and any penalties and interest thereon ("Taxes")
(including any Taxes with an assessment date which occurred during
the Lease Term or any extension thereof). If the payment due date or
reimbursement date for a Tax should occur after the expiration or
termination of the Lease Term or any extension thereof, Lessee's
liability for such Tax shall survive such expiration or termination.
4.1.3 all shipping, installation, and transportation charges from the
manufacturer or vendor to the installation site.
4.1.4 all de-installation, shipping and transportation charges from the
installation site to a location designated by the Lessor at the
conclusion of the Lease or any extension thereof.
4.2 If Lessee should fail to pay any of the costs, expenses, fees,
charges and taxes (including attorney's fees) for which Lessee is
liable hereunder. Lessor may, but shall not be required to, pay the
same for the account
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of Lessee. Lessee shall reimburse Lessor, upon demand, for the full
amount of any such costs, expenses, fees, charges and taxes paid by
Lessor.
4.3 If, at the termination of the applicable Schedule, Lessee falls to
return to Lessor the Equipment subject thereto in accordance with
the provisions of the second paragraph of Section 3, Lessee shall,
until such Equipment is so returned: pay to Lessor on account of
damages a monthly amount equal to the amount shown in Section 5 of
such Schedule, and perform or observe all other of its agreements
and covenants under this Lease; but such payment, performance, and
observance shall not limit or impair Lessor's right to recover the
Equipment or any other of Lessor's rights under this Lease, nor
shall it represent an extension of the term provided in the
applicable Schedule, nor shall it represent a consent by the Lessor
to such failure by Lessee to return, and, in all events
notwithstanding such payment, performance and observance, Lessee's
obligation so to return shall remain in full force and effect.
5. Use of Equipment. Lessee shall use the Equipment only for lawful purposes
in the regular course of its business or the business of any subsidiary or
affiliate of Lessee within the United States or its possessions. Lessee
shall, concurrently with the execution of this Lease, notify Lessor in
writing where all Equipment is principally located, and upon any change in
such principal location of any Equipment, notify Lessor in writing within
ten (10) days thereafter of the new principal location of such Equipment.
Lessee shall use every reasonable precaution to prevent loss or damage to
Equipment from fire and other hazards. Lessee's servants and agents shall
cooperate fully with Lessor in the investigation of any claims and suits
relating to the Equipment. Lessee shall keep the Equipment free from all
liens and encumbrances. This Lease and the interest of Lessee hereunder
shall not be assigned, alienated, pledged or hypothecated voluntarily by
Lessee or by operation of law, nor shall Lessee permit the Equipment to
come into the possession of any third person except a subsidiary or
affiliate of Lessee, provided, however, that Lessee shall remain obligated
to Lessor hereunder with respect to any such Equipment.
6. Lessee will enter into a Master Maintenance Agreement with Lessor. Except
to the extent of the Lessor's obligation to provide maintenance (as
provided in the aforesaid Master Maintenance Agreement) Lessee shall, at
its own expense, keep the Equipment in first-class condition and repair
and in good and efficient working order (including the replacement or
substitution of parts, improvements or additions to the Equipment). Lessee
shall not, without Lessor's prior written consent, make any substitution
of any part(s) of the Equipment, whether or not such part(s) are
specifically identified by manufacturer or serial number. Without the
prior written consent of Lessor, Lessee will not, through the installation
of accessory devices or any other method, impair the originally intended
function of any Equipment. Any replacement or substitution of parts,
improvements or additions to the Equipment made by Lessee shall become and
remain the property or Lessor.
7. Insurance. Lessee shall, at its expense, procure and maintain, at all
times, in a responsible insurance company acceptable to Lessor, insurance
in an amount not less than the estimated market value of all of the
Equipment, protecting Lessor and Lessee, as their interests may appear,
against loss and/or damage to the Equipment arising out of any risk
covered by fire and extended coverage and by employee theft and
dishonesty. All such insurance shall cover the period from delivery of the
Equipment to Lessee to the date of termination of the Lease with respect
thereto, and shall provide for ten (10) days' prior written notice to
Lessor of any cancellation or reduction in coverage. Lessee shall deliver
to Lessor, within ten (10) days after the Commencement Date, the insurance
policy, and a Certificate of Insurance satisfactory to Lessor. Lessor
shall have no duty to examine such policies or certificates, or to advise
Lessee of any noncompliance of such insurance with this Lease. If Lessee
fails to provide the aforesaid insurance, Lessor may, at its own option,
provide such insurance and add the amount of the premiums to the next
rental installment, together with interest thereon at the rate of Twenty
Four Per Cent (24%) per annum, or the rate permitted by law (whichever is
less), from the date of payment thereof, until paid in full. The proceeds
of such insurance, whether resulting from loss, damage, return premium or
otherwise, shall be payable to Lessor and Lessee, as their interests may
appear. If Lessee should be in default under Section 10 hereof, Lessee
hereby appoints Lessor as Lessee's attorney-in-fact to make claim for,
receive payment of and execute or endorse all documents, checks or drafts
for loss, damage, return premium or otherwise under any insurance policy
issued on Equipment.
8. Indemnity. Lessee shall indemnify and hold Lessor and its officers,
directors, shareholders, and agents, harmless against any and all claims,
demands, liabilities, losses, damages and injuries of whatsoever kind and
nature, direct or consequential, and all fees, costs and expenses relating
to or in any way arising out of the possession, maintenance, use,
operation, control, loss, damage, destruction, return, surrender, sale or
other disposition of the Equipment. The foregoing indemnity shall not be
affected by any termination of the Lease.
9. Termination of Lease of Equipment Through Loss or Destruction. Lessee
shall bear all risks of loss, damage or destruction of the Equipment
during the Lease Term or any extension thereof. In the event the Equipment
is damaged beyond repair, the Lessee shall be liable to the Lessor for an
amount equal to the cost of purchasing similar Equipment less the amount
of any insurance or other recoveries received by the Lessor in connection
therewith.
10. Events of Default. The following events of default by Lessee shall give
rise to rights on the part of Lessor described in Section 11:
10.1 (a) Default In the payment of Monthly Rent
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hereunder, and such default not having been remedied in three (3)
days from due date. (b) Default in the payment or performance of any
other liability, obligation or covenant of Lessee under this Lease
and the continuance of such default for fifteen (15) days after
written notice thereof to Lessee sent by certified mail or via fax;
or
10.2 Breach of any representation or warranty, or default in the
performance of any agreement, of Lessee contained in this Lease; or
10.3 The Making of a general assignment for the benefit of creditors by
Lessee, the suspension of business or the commission by Lessee of
any act amounting to a business failure, any change in, or
termination of, Lessee's corporate existence (except a merger,
consolidation or reorganization in which the obligations of Lessee
are assumed by the surviving corporation), or the levy of an
attachment or filing of a tax lien (other than a Federal Tax lien)
against Lessee affecting Equipment, and the failure of Lessee to
cause such attachment or tax lien to be discharged within thirty
(30) days thereafter, or the filing of a Federal Tax lien against
Lessee, the Equipment or any of Lessee's property; or
10.4 The institution of bankruptcy, reorganization, liquidation or
receivership proceedings by or against Lessee and, if instituted
against Lessee, its consent thereto or the failure to cause such
proceedings to be discharged within thirty (30) days thereafter.
11. Rights of Lessor Upon Default of Lessee. Upon occurrence of any of the
Events of Default described in Section 10, Lessor may, at its discretion,
do one or more of the following:
11.1 Terminate this Lease upon five (5) days' written notice to Lessee
sent by certified mail or via fax;
11.2 Whether or not this Lease be terminated, take immediate possession
of any or all of the Equipment, including substituted parts,
accessories or equipment, wherever situated, and for such purpose,
enter upon any premises without liability for so doing. Lessor shall
hold the Equipment so repossessed free and clear of this Lease and
of any of the rights of Lessee hereunder;
11.3 Whether or not any action has been taken under Section 11.1 or 11.2
above, sell, dispose of, hold, use or lease any Equipment as Lessor
at its sole discretion, may decide, without any duty to account to
Lessee with respect to such action or any proceeds thereof, and free
of any interest of Lessee therein.
If, after default, Lessee should deliver the Equipment to Lessor, or if
Lessor should repossess the Equipment or if Lessor should terminate this
Lease, and in addition to all rights of Lessor set forth above, Lessee
shall be liable for, and Lessor may recover from Lessee, as liquidated
damages for the breach of this Lease: (i) all unpaid rent to the date of
such delivery, repossession or termination, (ii) all rent due to Lessor
between the date of such delivery, repossession or termination and the end
of the present Lease Term, or any extension thereof, (iii) in the event of
a sale pursuant to Section 11.3, the amount of any deficiency existing
between the Net Proceeds of Sale of the Equipment and the Lessor's
Depreciated Book Value of the Equipment at the time of such repossession,
(iv) all such sums payable by Lessee pursuant to the provisions hereof,
(v) all other losses and damages sustained by reason of the default, and
(vi) all costs and expenses, including but not limited to costs associated
with repossession, deinstallation, transportation charges and necessary
repair expenses, incurred by Lessor by reason of the default. If, for any
reason, Lessor should be unable to effect repossession of the Equipment,
Lessor may recover, as liquidated damages, the amounts aforesaid, except
that instead of item (iii), Lessee shall be liable to Lessor in an amount
equal to the replacement cost of the Equipment as determined by the
Lessor.
12. In addition to all other sums payable by Lessee hereunder, Lessee shall
pay to Lessor all expenses incurred by Lessor, including, without
limitation, reasonable attorneys' fees and court expenses of enforcing any
rights of Lessor hereunder, whether against Lessee or any other party
primarily or secondarily liable with respect to the Lessee's obligations
or against the Equipment.
13. Equipment to Be and Remain Personal Property. It is the intention and
understanding of both Lessor and Lessee that all Equipment shall be and at
all times remain personal property.
14. Rentals to be Paid Directly to Lessor. Lessee shall make payment of all
rent and other payments due hereunder directly to Lessor at the following
mailing address: BOSTON FINANCIAL & EQUITY CORPORATION, Xxxx Xxxxxx Xxx
00000, Xxxxxx, Xxxxxxxxxxxxx 00000, or to such other address as Lessor
shall instruct.
15. Miscellaneous
15.1 Time is of the essence hereof.
15.2 This agreement is and is intended to be a True Lease. Lessee does
not acquire hereby any right, title or interest in or to the
Equipment, except the right to use the same under the terms hereof.
Lessor and Lessee agree that for tax purposes this lease will be
treated as a finance lease by the Lessee.
15.3 The relationship between Lessor and Lessee shall always and only be
that of Lessor and Lessee. Lessee shall never at any time during the
term of this Lease for any purpose whatsoever be or become the agent
of the Lessor, and Lessor shall not be responsible for the acts or
omissions of Lessee, or its agents.
15.4 Lessor shall have the right to inspect any Equipment at any
reasonable time; provided however, that such right shall be limited
to the extent required by any applicable United States Government
security regulations.
15.5 Should the Lessee not pay the monthly rental payment when due and
owing under the provisions of this Lease, the Lessee agrees to pay
to the Lessor five per cent (5%) of the monthly payment as a
delinquency charge, or the maximum permitted by law, (whichever is
less).
15.6 Lessor's rights and remedies with respect to any of
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the terms and conditions of this Lease shall be cumulative and not
exclusive, and shall be in addition to all other rights and remedies
in its favor.
15.7 No party hereto shall, by act, delay, omission or otherwise, be
deemed to have waived any of its rights or remedies hereunder, or
under any other instrument executed in connection herewith, unless
such waiver is in writing. A waiver on any one occasion shall not be
construed as a waiver on any future occasion.
15.8 The invalidity of any portion of this Lease shall not affect the
force and effect of the remaining valid portions thereof.
15.9 All notices shall be binding upon the parties hereto if sent to the
address set forth herein (unless a subsequent address has been
furnished) by certified mail, by one party to the other.
15.10 Lessee will provide Lessor with copies of Annual Financial Reports
prepared by Lessee's independent accounting firm within fourteen
(14) days of the issuance of said Report. In addition, Lessee will
provide Lessor with copies of interim, year-to-date or monthly
financial reports which reports shall be prepared at least every
three (3) months. Lessee will make every effort to prepare and
deliver to Lessor all financial reports in a timely fashion upon
request by the Lessor. Lessee also agrees to make available
financial books and records for review by Lessor during regular
business hours, as well as other contracts, agreements, or materials
the Lessor may deem appropriate.
15.11 No representations, warranties, promises, guaranties or agreements,
oral or written, expressed or implied, have been made by either
party hereto with respect to this Lease or the Equipment, except as
expressly provided herein.
15.12 This Lease shall be construed in accordance with the laws of the
Commonwealth of Massachusetts without regard to the choice of law
rules thereof. Lessee hereby irrevocably submits to the jurisdiction
of the courts of said Commonwealth or any federal court sitting
within said Commonwealth, over any suit, action, or proceeding
arising out of or relating to this Lease or the Equipment and agrees
that any suit, action, or proceeding brought by the Lessee against
or involving the Lessor shall be brought only in said courts. Lessee
further consents to process being served in the manner described for
notices under Section 15.9 above.
This Lease constitutes the entire agreement between the parties hereto
with respect to the leasing of the Equipment. Any change or modification
of this Lease must be in writing and signed by the parties hereto.
15.13 Lessor and Lessee, each having had opportunity of review by counsel,
each irrevocably waive all right to trial by jury in any proceeding
hereinafter instituted by or against either of them in respect of
this Lease or arising out of any document executed in connection
herewith or in connection with the Equipment.
16. Lessor may assign its rights under this Lease and (1) If Lessor does
assign this Lease, the assignee shall be entitled, upon notifying the
Lessee, to performance of all of Lessee's obligations and agreements under
this Lease and to all of the rights and remedies of the Lessor, and (2)
Lessee will assert no claim or defenses it may have against the Lessor
against the assignee.
17. Lease is conditional upon approval of Lessor, and is neither consummated
nor binding on Lessor until accepted by an authorized officer of Lessor.
Such acceptance will be rendered only after submission of all necessary
information to the Lessor and an evaluation by the Lessor of the
acceptability of the Lessee for the Equipment Lease herein described.
Signature of this Lease by the Lessor shall constitute acceptance and all
aforementioned terms and conditions shall be effective upon endorsement by
the Lessor.
18. Supplemental Equipment Schedules may from time to time be included under
this Master Equipment Lease. The addition of supplemental Schedules is
conditional upon approval by Lessor and is neither consummated nor binding
on Lessor until accepted by an authorized officer of Lessor. Such
acceptance will be rendered only after submission of all necessary
information to the Lessor and an evaluation by the Lessor.
19. The terms and conditions of the Master Equipment Lease and any other
documents associated herewith are confidential and proprietary. Lessee
agrees not to disclose the same to any other party without prior written
consent of Lessor.
IN WITNESS WHEREOF, Lessor and Lessee have duly executed this Lease as of the
day and year first above written.
LESSEE: THE MUSIC CONNECTION CORPORATION LESSOR: BOSTON FINANCIAL & EQUITY
CORPORATION
Signature: /s/ Xxxxxx X. Xxxxxxxx Signature: /s/ [ILLEGIBLE]
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Name: Xxxxxx X. Xxxxxxxx Name: Xxxxx X. [ILLEGIBLE]
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Title: CEO Title: EVP
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Date: 1/8/99 Date: 1/25/99
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Attest: /s/ [ILLEGIBLE] Attest:
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