Exhibit 10.8a
MASTER LEASE AGREEMENT
This Master Lease Agreement ("Lease") is
entered into as of December 22, 2003 by
and between The Walden Asset Group, LLC, a
Delaware limited liability company
("Lessor") having its principal place of
business at 1 Hollis St., Wellesley, MA
02482 and Playboy Entertainment Group, Inc,
a Delaware corporation ("Lessee")
having its principal place of business at
680 North Lake Shore Drive, Chicago,
Illinois 60611.
As used in this Master Equipment Lease, the
terms "Estimated Delivery Date",
"Acceptance Date", "Basic Rent Date",
"Monthly Lease Factor", "Daily Lease
Factor", "Lessor's Cost", "Casualty Value",
"Casualty Overdue Rate", "Overdue
Rate", "Installation Site", Manufacturer",
"Machine Type", "Model Number" and
"Serial Number" shall have the meanings
with respect to each Item of Equipment
set forth on the Equipment Schedule which
describes that Item of Equipment. If
not set forth in an Equipment Schedule,
capitalized terms shall have the meaning
set forth in this Lease.
1. LEASE OF EQUIPMENT: Subject to the terms
and conditions, contained herein,
Lessor hereby leases to Lessee, and Lessee
leases from Lessor, the items of
personal property (herein referred to
collectively as the "Equipment," or
individually, as an "Item of Equipment")
described more fully in one or more
Equipment Schedules executed by Lessor and
Lessee, designated Exhibit A and
numbered sequentially.
Each Equipment Schedule shall be considered
a separate and enforceable lease
incorporating the terms and conditions of
this Lease. An executed counterpart of
this Lease (including any supplements,
addenda, or riders hereto) or photocopy
hereof, together with an executed Equipment
Schedule, marked "Original", shall
be the original of the lease for the
Equipment described on such Schedule and
together they constitute and shall be
referred to herein as the "Lease" with
respect to such Equipment. All other
executed counterparts of the Equipment
Schedule shall be marked "Duplicate". To
the extent that this Lease constitutes
chattel paper, as such term is defined in
the Uniform Commercial Code of the
applicable jurisdiction, no security
interest in this Lease may be created
through the transfer of possession of any
counterpart other than the Original of
an Equipment Schedule. Notwithstanding the
delivery of the Equipment to, and its
possession and use by Lessee, Lessor shall
retain the full legal title to the
Equipment, it being expressly understood
that this Lease is an agreement of
lease only.
2. TERM AND RENEWAL. At such time as all
Equipment listed on an Equipment
Schedule is operational, in good working
order and available for use by Lessee,
Lessee shall complete and deliver to Lessor
an executed equipment acceptance
("Equipment Acceptance"). Lessee shall make
available to Lessor such information
as Lessor shall reasonably request from
time to time in respect of the
installation of the Equipment. In the event
(a) Lessee shall fail timely to
execute and deliver to Lessor such
Equipment Acceptance or (b) Lessee shall
reject the Equipment, in either case for
any reason whatsoever other than the
fault of Lessor, all obligations, if any,
of Lessor to each vendor with
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Exhibit 10.8a
respect to the Equipment shall be deemed
those of Lessee and Lessee shall
indemnify and hold Lessor harmless from any
and all liability, damages, and
reasonable expenses including reasonable
attorneys' fees arising therefrom.
The lease term ("Term") shall commence as
of the date specified on the
applicable Equipment Acceptance (as to such
Equipment Schedule, the
"Commencement Date") and continue through
the last day of the final month of the
number of months provided in the Equipment
Schedule unless theretofore extended
pursuant to its terms or terminated
pursuant to or upon the occurrence of an
Event of Default (the "Expiration Date").
Lessee shall give Lessor notice of
Lessee's intention to return the Equipment
at least 60 days prior to the
Expiration Date of the applicable Equipment
Schedule, and the term of such
Equipment Schedule shall automatically be
extended one month for each thirty-day
period or portion thereof Lessee fails to
give such notice.
Upon 60 days prior written notice to
Lessor, Lessee may, at its option ("Renewal
Option"), renew the Equipment Schedule in
respect of all, but not less than all,
of the Equipment covered under the
Equipment Schedule upon the same terms and
conditions as provided for in the Lease
Agreement and the Equipment Schedule
(other than Term and Rent), upon the
following terms and conditions: (a) The
Basic Rent due in respect of the Equipment
shall be the fair market monthly rent
for continued use by Lessee as determined
by agreement between Lessor and Lessee
(or, in the absence of such an agreement,
by an independent appraisal at
Lessee's expense by an appraiser mutually
acceptable to Lessee and Lessor) and
(b) the Casualty Value during the term of
such renewed Equipment Schedule shall
be 100% of the fair market value of the
Equipment at the Expiration Date of the
applicable Equipment Schedule as determined
by agreement between Lessor and
Lessee (or, in the absence of such an
agreement, by an independent appraisal at
Lessee's expense by an appraiser mutually
acceptable to Lessee and Lessor), and
(c) the term shall be agreed by the parties
and in no case less than twelve
months.
The terms of each Equipment Schedule hereto
are subject to all conditions and
provisions of this Lease as it may at any
time be amended in accordance with the
terms hereof.
3. NON-CANCELABLE LEASE. This Lease cannot
be canceled or terminated during the
Term except as expressly provided
herein.
4. NET LEASE. This Lease is a net lease and
Lessee agrees that its obligations
to pay all rent and other sums payable
hereunder and the rights of Lessor and
Assignee (defined in Section 18) in and to
such rent, are absolute and
unconditional and are not subject to any
abatement, reduction, setoff, defense,
counterclaim or recoupment due or alleged
to be due to, or by reason of, any
past, present or future claims which Lessee
may have against Lessor, any
Assignee, the manufacturer or seller of the
Equipment. Lessee shall maintain in
effect all licensing and registration of
the Equipment as may, from time to
time, be required by federal, state or
local law or regulation and shall
operate, maintain and use the Equipment in
accordance with all applicable
federal, state or local laws or
regulations, including without limitation all
applicable rules and regulations of the
Federal Communications Commission. The
provisions of this Section shall survive
the expiration or earlier
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Exhibit 10.8a
termination of each Equipment Schedule.
5. RENT: The Lessee shall pay to the Lessor
or its Assignee the following
amounts ("Basic Rent"), for each item of
Equipment:
(a) On the Commencement Date (but only if
the Commencement Date occurs on the
first day of a calendar month) and on each
successive Basic Rent Date
thereafter, an amount equal to the Monthly
Lease Factor multiplied by Lessor's
Cost of the Item of Equipment. In addition,
on the Commencement Date, unless the
Commencement Date occurs on the first day
of a calendar month, Lessee shall pay
to Lessor an amount equal to the product of
(a) the Daily Lease Factor
multiplied by (b) the number of days from
(and including) the Commencement Date
to (and excluding) the First Basic Rent
Date multiplied by (c) Lessor's Cost of
the Item of Equipment; and
(b) In the event of a Casualty Occurrence
(as defined in Section 13 of this
Lease), on the date provided herein, any
amount payable hereunder as Casualty
Value and any other amounts payable
pursuant to the Equipment Schedule; and
(c) within 10 days of demand therefor by
Lessor, any other amount payable
hereunder by Lessee, to the Lessor or
others; and
(d) on demand, to the extent permitted by
applicable law, interest at the
Overdue Rate (as provided in the
appropriate Equipment Schedule) on any payment
of Basic Rent or other monies which have
not been received by the Lessor or its
assignee in available funds on the
applicable due date. Such interest shall
accrue on any unpaid amount at the Overdue
Rate from the applicable due date
until paid, and shall be paid by Lessee
within 10 days of receipt of written
notice that such payment is past due.
6. LESSOR COMMITMENT. So long as Lessee
complies with all of its obligations
hereunder and Lessor has not given notice
(or been deemed to have given notice)
of an Event of Default pursuant to Section
19, Lessor agrees to lease to Lessee
the Items of Equipment described on each
Equipment Schedule and agrees that
neither Lessor or anyone acting at Lessor's
direction, nor Assignee or anyone
acting at Assignee's direction) shall
disturb Lessee's quiet and peaceful
possession and use of such Equipment for
its intended purpose, provided,
however, Lessor shall have no obligation
hereunder until the execution and
delivery of each such Equipment Schedule
and Equipment Acceptance by Lessor and
Lessee.
7. NO WARRANTIES BY LESSOR. (a) Lessee
acknowledges and agrees that it has made
the selection of the Equipment based upon
its own judgment, that the Equipment
is of a size, design, capacity, condition,
quality, durability and manufacture
selected by Lessee, and that the Equipment
is suitable for Lessee's purposes.
Lessee expressly disclaims any reliance
upon any statements or representations
made by Lessor EXCEPT AS OTHERWISE
SPECIFICALLY PROVIDED HEREIN. LESSOR MAKES NO
REPRESENTATIONS OR WARRANTIES TO LESSEE OR
ANY OTHER PERSON OF ANY KIND, EXPRESS
OR IMPLIED, AS TO ANY MATTER
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Exhibit 10.8a
WHATSOEVER, INCLUDING WITHOUT LIMITATION
WITH RESPECT TO THE SIZE, DESIGN
CAPACITY, CONDITION, QUALITY, DURABILITY,
SUITABILITY, MANUFACTURE OR
PERFORMANCE OF THE EQUIPMENT, ITS
MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE OR WITH RESPECT TO INFRINGEMENT
(INCLUDING WITHOUT LIMITATION
INFRINGEMENT OF PATENTS OR TRADEMARKS) OR
THE LIKE. LESSOR SHALL HAVE NO
LIABILITY TO LESSEE OF ANY KIND OR NATURE
WHATSOEVER, NOR SHALL THERE BE ANY
ABATEMENT OF RENTAL, ARISING OUT OF OR IN
CONNECTION WITH (I) ANY DEFICIENCY OR
DEFECT IN THE EQUIPMENT, (II) THE USE OR
PERFORMANCE OF THE EQUIPMENT OR (III)
ANY LOSS OF BUSINESS OR OTHER CONSEQUENTIAL
LOSS OR DAMAGE WHETHER OR NOT
RESULTING FROM ANY OF THE FOREGOING.
SUBJECT TO THE LIMITATIONS SET FORTH IN
SECTION 15, LESSEE WILL DEFEND, INDEMNIFY
AND HOLD LESSOR HARMLESS AGAINST ANY
AND ALL DEMANDS, CLAIMS, COSTS, LOSSES,
DAMAGES AND LIABILITIES ARISING OUT OF
OR IN CONNECTION WITH THE DESIGN,
MANUFACTURE, POSSESSION, OPERATION OR USE OF
THE EQUIPMENT. Lessee agrees to look solely
to the manufacturer or vendor of the
Equipment for all warranties made by
manufacturer or vendor. Any such warranties
are hereby assigned to Lessee for the term
of this Lease. Lessor appoints Lessee
as its agent and confers on Lessee the
authority to settle any and all warranty
claims with respect to the Equipment
arising during the Term, on Lessor's
behalf. Lessee agrees to inform Lessor, or
its Assignee, as to the extent and
kind of all claims made against vendors or
manufacturers under the warranties
issued on the Equipment. Lessee further
agrees that any Equipment, which is
exchanged for Equipment under the Lease,
shall become the property of the
Lessor, or its Assignee, for the purpose of
this Lease. No warranty settlement
in excess of $10,000.00 may be made for
cash without the approval of the Lessor
or its Assignee.
(b) Lessee understands and agrees that
neither the vendor, the manufacturer nor
any representative or other agent of the
vendor or manufacturer is an agent of
Lessor. Neither the vendor nor the
manufacturer, nor any representative or agent
of either is authorized to waive or alter
any term or condition of this Lease,
and no representations as to the Equipment
or any other matter by the vendor or
the manufacturer shall in any way affect
Lessee's duty to pay the Basic Rent and
perform its other obligations as set forth
in this Lease.
(c) Lessee hereby authorizes Lessor to
insert in this Lease and each Equipment
Schedule hereto the serial numbers, and
other identification data, of the
Equipment when determined by Lessor.
8. REPRESENTATIONS AND WARRANTIES. (a)
Lessee represents and warrants that:
(i) it is
a corporation, is duly organized, validly existing and in good
standing under laws of the state of its
incorporation, and is duly aqualified to
do business in each state where the
Equipment will be located;
(ii) it
has full power and authority to execute and deliver this Lease
and
perform its obligations hereunder and this
Lease has been duly authorized and
constitutes the legal, valid and
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Exhibit 10.8a
binding obligations of Lessee enforceable
in accordance with its terms;
(iii) this
Lease will not contravene any law, regulation or judgment
affecting Lessee or result in any breach of
any agreement or other instrument
binding on Lessee;
(iv) no
consent of Lessee's shareholders or holder of any indebtedness,
or
filing with, or approval of, any
governmental agency or commission, is a
condition to the performance of the
provisions hereof;
(v) there
is no action or proceeding pending or threatened against Lessee
before any court or administrative agency
which might have a materially adverse
effect on the business, financial condition
or operations of Lessee;
(vi) no
deed of trust, mortgage or third party interest (other than
Permitted Liens) has attached to the
Equipment; and
(vii) the
Equipment will remain at all times, under applicable law,
removable personal property notwithstanding
the manner in which the Equipment
may be attached to any real property, free
and clear of any lien or encumbrance
in favor of Lessee or any other person
other than (A) any lien or encumbrance,
to the extent created by or through Lessor
or any Assignee (a "Lessor Lien") and
(B) any lien or encumbrance that is (i)
created or expressly permitted by the
Lease or any another agreement or
instrument executed or approved in writing by
Lessor and Lessee; (ii) unindemnified Taxes
or Taxes (as defined below) either
not yet due and payable or being contested
in good faith in accordance with
Section 16; (iii) construction
materialmen's, mechanics', workers', repairmen's,
employees' or other like levy, lien or
encumbrance arising in the ordinary
course of business for amounts either not
overdue for a period of more than 60
days or being contested in good faith by
appropriate proceedings provided that
there is no risk of imminent foreclosure or
seizure; or (iv) arising out of
judgments or awards against Lessee which at
the time are being contested in good
faith by appropriate proceedings provided
that there is no risk of imminent
foreclosure or seizure (collectively,
"Permitted Liens").
(b) Lessor represents and warrants
that:
(i) it is
a limited liability company, is duly organized, validly
existing
and in good standing under laws of the
state of its organization, and is duly
qualified and in good standing in all
jurisdictions where necessary to enter
into this Lease;
(ii) it
has full power and authority to execute and deliver this Lease
and
perform its obligations hereunder and this
Lease has been duly authorized and
constitutes the legal, valid and binding
obligations of Lessor enforceable in
accordance with its terms;
(iii) this
Lease will not contravene any law, regulation or judgment
affecting Lessor or result in any breach of
any agreement or other instrument
binding on Lessor;
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Exhibit 10.8a
(iv) no
consent of Lessor's shareholders or holder of any indebtedness,
or
filing with, or approval of, any
governmental agency or commission, is a
condition to the performance of the
provisions hereof; and
(v) there
is no action or proceeding pending or threatened against Lessee
before any court or administrative agency
which might have a materially adverse
effect on the business, financial condition
or operations of Lessor.
9. EQUIPMENT ORDERING. Lessee shall be
responsible for all packing, rigging,
transportation and installation charges for
the Equipment. Lessee shall arrange
for delivery of Equipment, unless otherwise
specified in the Equipment Schedule,
so that it can be accepted in accordance
with Section 10 hereof. Lessee hereby
agrees to indemnify and hold Lessor
harmless from any claims, liabilities, costs
and expenses, including reasonable attorney
fees, incurred by Lessor arising out
of any purchase orders or assignments
executed by Lessor with respect to any
Equipment or services relating thereto.
10. LESSEE ACCEPTANCE. Lessee shall return
to Lessor the signed and dated
Acceptance Certificate attached hereto as
Exhibit "B":
(a) acknowledging the Equipment has been
received, installed and is ready for
use and
(b) accepting it as satisfactory in all
respects for the purposes of the Lease.
11. OWNERSHIP, LOCATION AND INSPECTION OF
EQUIPMENT.
(a) Nothing contained in this Lease or in
any Equipment Schedule shall give or
convey to Lessee any right, title or
interest in or to the Equipment, except the
right to retain, possess and use the
Equipment as a lessee for the Term (and the
right to exercise any purchase option
contained in any Equipment Schedule). Upon
the request of Lessor made at any time
during the Term of any Equipment
Schedule, Lessee shall affix and maintain
on the Equipment leased pursuant to
such Equipment Schedule, tags, decals,
plates or labels (supplied by Lessor)
indicating the interest of Lessor in the
Equipment.
(b) Lessee shall at all times keep the
Equipment free and clear from any liens
or encumbrances of Lessee's creditors or
other persons (other than Permitted
Liens). At Lessor's request, Lessee shall
provide Lessor from each owner or
mortgagee of any premises in which any Item
of Equipment is located a written
waiver of any rights of such owner or
mortgagee in and to the Equipment or any
part or item thereof, in form and substance
reasonably acceptable to Lessor.
Lessee agrees that the Equipment shall
always remain and be deemed personal and
moveable property; Lessee shall not enter
into any agreement or take any action
inconsistent with the foregoing. Under no
circumstances shall Lessee remove or
permit removal of any Equipment from the
Installation Site shown on the
Equipment Schedule therefor unless (a)
Lessee shall give Lessor at least 20 days
prior written notice
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Exhibit 10.8a
thereof, and (b) Lessee, at Lessee's cost,
shall have provided Lessor with
appropriate Uniform Commercial Code
financing statements and other documents
requested by Lessor to maintain perfection
of its interest in the Equipment and
the applicable Equipment Schedule. Under no
circumstances shall any Equipment be
removed to a location which is not within
the continental United States or in
which the Uniform Commercial Code is not in
effect.
(c) Lessor at a time mutually agreed upon
by the parties, and at its own risk,
shall have the right to inspect the
Equipment which is the subject of this Lease
for the purpose of ensuring compliance by
Lessee with its obligations under this
Lease. Such inspection right shall be
subject to Lessee's standard security
procedures and shall occur during normal
business hours.
12. EQUIPMENT MAINTENANCE. Lessee shall
enter into, and will maintain in effect,
where applicable and if available,
manufacturer's standard maintenance contract
or any other service agreement reasonably
satisfactory to Lessor. Lessee may
comply with the requirements of this
section through a program of
self-maintenance. Any maintenance
arrangement entered into by Lessee pursuant to
this Section 12 shall provide for the
maintenance of the Equipment in good
condition and working order and repairs and
replacement of parts thereof.
13. LOSS OR DAMAGE. Lessee shall bear the
entire risk of loss or damage to the
Equipment or caused by the Equipment, from
the Commencement Date until the
Lessor takes possession of the Equipment
after the Expiration Date or earlier
termination of this Lease.
In the event any Item of Equipment is
damaged to a material extent while Lessee
bears the risk of loss, Lessee shall
promptly notify Lessor and shall determine
within 10 days of the date of such notice
whether such Item of Equipment can be
repaired. If the Item of Equipment can be
repaired, Lessee shall at its expense
repair such Item to its condition
immediately prior to the damage.
In the event any Item of Equipment shall be
lost, stolen, destroyed, damaged
beyond repair, or rendered permanently
unfit or unavailable for use for any
reason whatsoever (any such occurrence
being referred to as a "Casualty
Occurrence"), Lessee shall promptly notify
Lessor. Lessee shall then terminate
this Lease in respect to the Item of
Equipment by paying to Lessor on any Basic
Rent Date occurring not more than 90 days
after such Casualty Occurrence an
amount equal to the Casualty Value (as
determined in the Equipment Schedule)
applicable to such Item of Equipment on the
Basic Rent Date immediately
preceding the Basic Rent Date upon which
such payment is made. After the payment
of such Casualty Value and all Rent which
becomes due and payable on or before
the Basic Rent Date immediately preceding
the date on which Casualty Value is
paid with respect to such Casualty
Occurrence, the Lessee's obligation to pay
further Basic Rent for such item of
Equipment shall cease, but the Lessee's
obligation to pay all other sums, if any,
for such Item of Equipment shall
remain unchanged.
Following payment of the Casualty Value and
Basic Rent for an Item of Equipment
in accordance with the provisions of the
preceding paragraph, Lessee may dispose
of such item of Equipment as soon as it is
able to do so for the best price
obtainable. Any such disposition shall be
on an "as is,
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Exhibit 10.8a
where is" basis without representation or
warranty, express or implied save
those warranties which Lessee wishes to
give. For each Item of Equipment so
disposed, Lessee may, after paying Lessor
the amounts specified in the preceding
paragraph and other amounts required to be
paid by Lessee pursuant to this Lease
with respect to such Item of Equipment,
retain all of such sale proceeds.
The proceeds of insurance (if any) covering
an Item of Equipment to which a
Casualty Occurrence has occurred shall be
paid to and retained by Lessor to the
extent that Lessor has not previously
received all Casualty Value and other
payments required to be made by Lessee
pursuant to this Lease.
14. INSURANCE.
(a) Lessee will insure for the
following risks with insurers of recognized
responsibility: (i) All risk of loss and
physical damage (including earthquake
insurance) to the Equipment in amounts not
less than the greater of the fair
market replacement value or the aggregate
Casualty Value of all Equipment from
time to time and shall be subject to a
deductible up to $250,000 per occurrence
(up to $2,000,000 deductible for earthquake
insurance); (ii) comprehensive
public liability and property damage
insurance with respect to the condition,
possession, maintenance, operation and use
of the Equipment, in an amount not
less than $2,000,000 for each occurrence
and shall be subject to a deductible up
to $250,000 per occurrence, provided that
Lessee maintains the same insurance
deductible levels for all of its other
equipment located in the same state the
Equipment is located.
(b) Lessee shall deliver to Lessor and any
Assignee(s) a valid certificate of
insurance for each such insurance policy
upon the execution thereof and a
certificate of insurance for each renewal
policy not less than 30 days prior to
the expiration of the original policy or
any renewal policy. Such insurance
shall (i) include as additional parties
insured and loss payees Lessor and any
Assignee(s) of whom Lessee has notice, (ii)
provide that such insurance shall
not be materially changed or cancelled
without at least 30 days notice to Lessor
and such Assignees, and (iii) provide that
such policy shall not be invalidated
by any negligence of, or breach of warranty
by, Lessee. Upon the request of
Lessor, Lessee shall provide any additional
data related to the insurance as
Lessor reasonably requests. Failure to have
in force a policy of insurance as
required in section 14(a) shall be deemed
an immediate Event of Default without
notice to Lessee.
15. INDEMNITY. Except as otherwise provided
in this Section 15, Lessee will
protect, indemnify, save and hold harmless
Lessor from and against all
liabilities, claims, damages, penalties,
causes of action, costs, and expenses,
imposed upon or in
