Master Lease Agreement

 

 

                             Master Lease Agreement

 

Lessor:    SPAR Marketing Services, Inc.     Lessee:   SPAR Canada Company

 

Address:   580 White Plains Road             Address: 1100 Shephard Avenue West,

          Tarrytown, NY 10591                         Suite 360

                                                    Toronto, ON   M3K2B3

 

 

                          TERMS AND CONDITIONS OF LEASE

 

The undersigned   Lessee hereby requests Lessor to purchase the personal property

described in any Equipment Schedule   hereunder (herein called   "Equipment") from

the   supplier(s)   listed in any   Equipment   Schedule   hereunder   (herein   called

"Vendor"   and/or   "Manufacturer",   as applicable)   and to lease the Equipment to

Lessee on the terms and conditions of the lease set forth below.

 

Lessor   hereby   leases to Lessee,   and Lessee   hereby   leases from   Lessor,   the

Equipment,   all upon the terms and   provisions and subject to the conditions set

forth in this Master Lease Agreement (as the same may be supplemented, modified,

amended,   restated or replaced from time to time in the manner provided   herein,

this "Lease").

 

In   consideration   of   the   foregoing,    the   mutual   covenants   and   agreements

hereinafter set forth,   and other good and valuable   consideration   (the receipt

and adequacy of which is hereby acknowledged by the parties), the parties hereto

hereby agree as follows:

 

1.        NO WARRANTIES BY LESSOR. Lessee has selected the Equipment and may have

         entered into certain   purchase,   licensing,   or maintenance   agreements

         with   the   Vendor   and/or   Manufacturer    (herein   referred   to   as   an

         "Acquisition Agreement") covering the Equipment as further described in

         Paragraph   25   hereof.   If   Lessee   has   entered   into any   Acquisition

         Agreement,    each   agreement   shall   provide   for   certain   rights   and

         obligations   of the party   thereto with respect to the   Equipment,   and

         Lessee   shall   perform   all   of   the   obligations   set   forth   in   each

          Acquisition   Agreement as if this Lease did not exist.   LESSOR MAKES NO

         WARRANTY,   EXPRESS OR IMPLIED,   AS TO ANY MATTER WHATSOEVER,   INCLUDING

         THE CONDITION OF THE EQUIPMENT,   ITS   MERCHANTABILITY   OR ITS FITNESSES

         FOR ANY   PARTICULAR   PURPOSE,   AND,   AS TO   LESSOR,   LESSEE   LEASES THE

         EQUIPMENT   "AS IS" AND "WHERE IS".   LESSOR SHALL HAVE NO LIABILITY   FOR

         ANY LOSS,   DAMAGE OR EXPENSE OF ANY KIND WHATSOEVER   RELATING   THERETO,

         INCLUDING   (WITHOUT   LIMITATION) ANY SPECIAL,   INDIRECT,   INCIDENTAL OR

         CONSQUENTIAL DAMAGES OF ANY CHARACTER.

 

2.        CLAIMS   AGAINST   VENDOR   AND/OR   MANUFACTURER.   If the Equipment is not

         properly   installed,   does not operate as   represented   or warranted by

         Vendor and/or Manufacturer, or is unsatisfactory for any reason, Lessee

         shall make any claim on account   thereof   solely   against Vendor and/or

         Manufacturer pursuant to the Acquisition Agreement,   if any, and shall,

          nevertheless,   pay   Lessor   all rent   payable   under   this   Lease.   All

         warranties from Vendor and/or   Manufacturer are, to the extent they are

         assignable,   hereby   assigned   to Lessee   for the term of this Lease or

         until an Event of Default occurs   hereunder,   for Lessee's   exercise at

         Lessee's   expense.   Lessee may   directly   inquire   with   Vendor   and/or

         Manufacturer   to receive an accurate   and   complete   statement   of such

         warranties, including any disclaimers or limitations of such warranties

         or of any remedies with respect thereto.

 

3.        VENDOR NOT AN AGENT. Lessee understands and agrees that neither Vendor,

         nor any sales   representative   or other agent of Vendor, is an agent of

         Lessor. Sales representatives or agents of Vendor, and persons that are

         not   employed   by   Lessor   (including    brokers   and   agents)   are   not

         authorized   to waive or alter any term or condition of this Lease,   and

          no   representation as to the Equipment or any other matter by Vendor or

         any other person that is not employed by Lessor   (including   brokers or

         agents)   shall   in any way   affect   Lessee's   duty to pay the   rent and

         perform its other obligations as set forth in this Lease.

 

4.        NON-CANCELLABLE   LEASE.   This Lease and any Equipment   Schedule   hereto

         cannot be cancelled or terminated except as expressly   provided herein.

         Lessee   agrees   that its   obligation   to pay all rent   and   other   sums

         payable   hereunder   and the   rights   of   Lessor 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,   any   Manufacturer   or

         Vendor, or against any person for any reason whatsoever.

 

5.        ORDERING EQUIPMENT.   Lessee shall arrange for delivery of the Equipment

         so that it can be accepted in accordance with Paragraph 6 hereof within

         90 days after the date on which Lessor accepts   Lessee's offer to enter

         into this Lease with respect to any Equipment Schedule or by such other

         date as may be set forth in

 

 

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         an   Equipment   Schedule   or   Approval   Letter   issued   by Lessor as the

         Approval   Expiration Date. Unless otherwise   specified on the Equipment

         Schedule, Lessee shall be responsible for all transportation,   packing,

         installation,    testing   and   other   charges   in   connection   with   the

         delivery,    installation   and   use   of   the   Equipment.   Lessee   hereby

         authorizes   Lessor to insert in any   Equipment   Schedule   hereunder the

         serial   numbers   and   other    identification   data   of   Equipment   when

         determined by Lessor.

 

6.        ACCEPTANCE.   Lessee   acknowledges   that for   purposes of   receiving   or

         accepting   the   Equipment   from   Vendor,   Lessee is acting on   Lessor's

         behalf.    Upon   delivery   of   the   Equipment   to   Lessee   and   Lessee's

         inspection thereof, Lessee shall furnish Lessor a written statement (a)

         acknowledging receipt of the Equipment in good condition and repair and

         (b)   accepting it as   satisfactory   in all respects for the purposes of

         this Lease (the   "Certificate   of   Acceptance").   Unless   otherwise set

          forth in the applicable Equipment Schedule,   the first day of the month

         following   receipt   and   acceptance   of   the   Equipment   covered   by an

         Equipment   Schedule   shall   be the   Rent   Commencement   Date   therefor.

         However,   should   Lessee   have a previous   lease with   Lessor   which is

         active at the time of acceptance   of the Equipment   under the Equipment

         Schedule and said lease and the current   Equipment   Schedule   hereunder

         shall have the same   invoice   address then the Rent   Commencement   Date

         shall   occur   in the   month   immediately   following   acceptance   of the

         Equipment on the rent payment due date established with Lessee for said

         previous active lease. Lessor is authorized to fill in on any Equipment

         Schedule   hereunder the Rent   Commencement   Date in accordance with the

         foregoing.

 

7.        TERMINATION   BY   LESSOR.   If,   by the   Approval   Expiration   Date,   the

         Equipment described in any Equipment Schedule has not been delivered to

         Lessee and accepted by Lessee as provided in Paragraph 6 hereof,   or if

         other   conditions of Lessor's   Approval   Letter,   if any, have not been

         met,   then   Lessor may,   at its   option,   terminate   this Lease and its

         obligations   hereunder with respect to such   Equipment   Schedule at any

         time   after   the   expiration   of such 90 days   or any   date   after   the

         Approval   Expiration   Date,   as   applicable.   Lessor   shall give Lessee

         written   notice whether or not it elects to exercise such option within

         10 days after   Lessor's   receipt of Lessee's   written   request for such

         notice.

 

8.        TERM.   The term of this Lease shall be comprised of an Interim Term and

         an   Initial   Term.   The   Interim   Term shall   commence   on the date the

         Certificate of Acceptance is executed by Lessee (the "Acceptance Date")

         and terminate on the Rent   Commencement   Date. The Initial Term of this

         Lease shall begin on the Rent Commencement Date, and shall terminate on

         the later of (i) the last day of the last month of the Initial Term (as

         that Term is set forth in the applicable   Equipment Schedule hereto) or

         (ii) the date Lessee fulfills all Lessee's obligations hereunder.

 

9.        RENTAL. The rental amount payable to Lessor by Lessee for the Equipment

         will be set forth in the Equipment Schedule(s) ("Rental Amount). As the

         first   rent   payment   for the   Equipment,   Lessee   shall pay   Lessor in

         immediately   available funds on the Rent   Commencement Date the sum of,

         (i) the Rental   Amount,   and (ii)   Interim   Rent in an amount   equal to

         1/3Oth of the Rental Amount times the number of days from and including

         the Acceptance Date through but excluding the Rent   Commencement   Date,

         and   subsequent   rent   payments   shall   be due on the   same day of each

         calendar period as indicated on the Equipment   Schedule for the balance

         of the Initial Term.   Rent payments   shall be due whether or not Lessee

         has received any notice that such   payments are due. All rent   payments

         shall be paid to Lessor at its address set forth above or as   otherwise

         directed by Lessor in writing.

 

10.       RENEWAL If no default   shall have   occurred and be   continuing,   Lessee

         shall be entitled to renew this Lease with respect to all, but not less

         than all,   of the   Equipment   covered by an   Equipment   Schedule   for a

         minimum 12 month   period at an amount   equal to the fair market   rental

         value thereof,   in use and   operational,   in the condition   required by

         this Lease,   payable on a periodic   basis, as mutually agreed by Lessor

         and Lessee ("Renewal   Rent).   Lessee must give Lessor written notice of

         its intention to exercise said option, which notice must be received by

         Lessor at least 90 days   before   expiration   of the Initial   Term.   The

         first installment of the Renewal Rent shall be due at expiration of the

         Initial   Term of this   Lease.   Should   Lessee   fail to comply   with the

         provisions   described   above covering   renewal,   upon expiration of the

         Initial Term,   the term of this Lease shall be   automatically   extended

         for a term of 3   months.   Thereafter,   the term of this   Lease   will be

         extended for subsequent full month periods,   on a month to month basis,

         until Lessee has given at least 90 days written notice terminating this

         Lease.   Such   termination   will   take   effect   upon   completion   of all

         Lessee's   obligations   under   this   Lease   (including   payment   of   all

         periodic rental payments due during such 90 day period,   as provided in

         Paragraph 9 of this   Lease).   At any time after the   expiration   of the

         Initial   Term,   if this Lease has been   automatically   extended   as set

         forth herein,   Lessor   reserves the right to terminate this Lease by 30

         days written notice to Lessee.

 

11.       LOCATION;   INSPECTION;   LABELS. The Equipment shall be delivered to and

         shall not be removed   without   Lessor's prior written   consent from the

         "Equipment   Location" shown on the related   Equipment   Schedule,   or if

         none is specified,   Lessee's billing address shown above.   Lessor shall

         have the right to inspect the   Equipment   at any   reasonable   time.   If

         Lessor   supplies Lessee with labels stating that the Equipment is owned

         by   Lessor,   Lessee   shall   affix   such   labels   to and keep   them in a

         prominent place on the Equipment.

 

 

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12.       REPAIRS; USE; ALTERATIONS.   Lessee, at its own cost and expense,   shall

         keep the   Equipment   in good   repair   and   working   order,   in the same

         condition   as when   delivered   to   Lessee,   reasonable   wear   and   tear

         excepted,   and   in   accordance   with   the   manufacturer's    recommended

         specifications;   shall use the Equipment lawfully;   shall not alter the

         Equipment   without   Lessor's   prior   written   consent,   shall   use   the

         Equipment in compliance   with any existing   Manufacturer's   service and

         warranty   requirements   and any   insurance   policies   applicable to the

         Equipment and shall furnish all parts and servicing   required therefor.

         All parts, repairs, additions, alterations and attachments placed on or

          incorporated   into the Equipment which cannot be removed without damage

         to the   Equipment   shall   immediately   become part of the Equipment and

         shall be the   property of the Lessor.   Lessee will obtain and   maintain

         all permits,   licenses and registrations   necessary to lawfully operate

         the facility   where the Equipment is located.   Lessee shall comply with

         all applicable   environ- mental and industrial   hygiene laws, rules and

         regulations   (including   but not limited to federal,   state,   and local

         environmental   protection,   occupational,   health and safety or similar

         laws, ordinances and restrictions). Lessee shall, not later than 5 days

         after the occurrence, provide Lessor with copies of any report required

         to be filed with governmental agencies regulating environmental claims.

         Lessee   shall   immediately   notify   Lessor in writing of any   existing,

         pending or threatened   investigation,   inquiry,   claim or action by any

         governmental   authority in connection   with any law, rule or regulation

         relating to industrial   hygiene or environmental   conditions that could

         affect the Equipment.

 

13.       MAINTENANCE.   If the   Equipment   is such that   Lessee   is not   normally

         capable of maintaining it, Lessee, at its expense, shall enter into and

         maintain in full force and effect   throughout   the Initial Term and any

         renewal   term,   Vendor   and/or    Manufacturer's    standard   maintenance

         contract,   and shall   comply with all its   obligations   thereunder.   An

         alternate source of maintenance may be used with Lessor's prior written

         consent.   Such   consent   shall be granted   if, in   Lessor's   reasonable

         opinion,   the Equipment   will be   maintained in an equivalent   state of

         good repair, condition and working order.

 

14.       SURRENDER.   Provided that Lessee does not exercise the purchase   option

         as set forth in Paragraph 27 hereof, upon the expiration of the Initial

         Term,   or any renewal   term,   or upon demand by Lessor made pursuant to

         Paragraph 21 of this Lease,   Lessee, at its expense,   shall return all,

         but not less than all, of the   Equipment by delivering it to such place

         or on board such carrier,   packed for shipping,   as Lessor may specify.

         Lessee agrees that the Equipment,   when returned,   shall be in the same

         condition   as when   delivered   to   Lessee,   reasonable   wear   and   tear

         excepted,   and in a condition   which will permit   Lessor to be eligible

         for Manufacturer's   standard maintenance contract without incurring any

         expense   to repair or   rehabilitate   such   Equipment.   Lessee   shall be

         liable for reasonable and necessary   expenses to place the Equipment in

         such   condition.   Lessee shall remain   liable for the   condition of the

         Equipment   until   it   is   received   and   accepted   at   the   destination

         designated by Lessor as set forth above.   If any items of Equipment are

         missing or damaged when returned,   such occurrence   shall be treated as

         an event of Loss or Damage   with   respect   to such   missing   or damaged

         items and shall be   subject   to the terms   specified   in   Paragraph   15

         below.   Lessee shall   provide   Lessor with a Letter of   Maintainability

         from the   Manufacturer of the Equipment,   which letter shall state that

         the   Equipment   will   be   eligible   for   the   Manufacturer's    standard

         maintenance contract when sold or leased to a third party. Lessee shall

         give Lessor prior written   notice that it is returning the Equipment as

         provided above,   and such notice must be received by Lessor at least 90

         days   prior to such   return.   Should   Lessee   fail to   comply   with the

         provisions   described above covering surrender,   upon expiration of the

         Initial Term,   the term of this Lease shall be   automatically   extended

         for a term of 3   months.   Thereafter,   the term of this   Lease   will be

         extended for subsequent full month periods,   on a month to month basis,

         until Lessee has given at least 90 days written notice terminating this

         Lease.   Such   termination   will   take   effect   upon   completion   of all

         Lessee's   obligations   under   this   Lease   (including   payment   of   all

         periodic rental payments due during such 90 day period,   as provided in

         Paragraph 9 of this   Lease).   At any time after the   expiration   of the

         Initial   Term,   if this Lease has been   automatically   extended   as set

         forth herein.   Lessor   reserves the right to terminate this Lease by 30

         days written notice to Lessee.

 

15.       LOSS OR   DAMAGE.   Lessee   shall bear the   entire   risk of loss,   theft,

         destruction   of or damage to the Equipment or any item thereof   (herein

         "Loss or Damage")   from any cause   whatsoever.   No Loss or Damage shall

         relieve Lessee of the obligation to pay rent or of any other obligation

         under this Lease. In the event of Loss or Damage, Lessee, at the option

         of Lessor;   shall: (a) place the same in good condition and repair; (b)

         replace   the same   with   like   equipment   acceptable   to Lessor in good

         condition and repair with clear title thereto in Lessor;   or (c) pay to

         Lessor the total of the following amounts: (i) the total rent and other

          amounts due and owing at the time of such payment,   plus (ii) an amount

         calculated   by Lessor which is the present value at 5% per annum simple

         interest   discount of all rent and other amounts payable by Lessee with

         respect to said item from date of such payment to date of expiration of

         its Initial Term, plus (iii) the "reversionary value" of the Equipment,

         which shall be   determined by Lessor as the total cost of the Equipment

         less 60% of the total rent (net of sales/use taxes, if any) required to

         be paid pursuant to Paragraph 9. Upon Lessor's receipt of such payment,

         Lessee and/or Lessee's   insurer shall be entitled to Lessor's   interest

         in said item, for salvage purposes, in its then condition and location,

         "as-is ", without any warranty, express or implied.

 

 

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16.       INSURANCE.   Lessee   shall   provide,   maintain   and pay for (a) all risk

         property   insurance   against   the   loss or theft   of or   damage   to the

         Equipment,   for the full replacement value thereof,   naming Lessor as a

         loss payee,   and (b)   commercial   general   liability   insurance (and if

         Lessee is a doctor;   hospital or other   health care   provider,   medical

          malpractice   insurance).   All such   policies   shall   name   Lessor as an

         additional   insured and shall have   combined   single   limits in amounts

         acceptable to Lessor.   All such insurance policies shall be endorsed to

         be primary and   non-contributory   to any policies maintained by Lessor.

         In   addition   Lessee   shall cause   Lessor to be named as an   additional

         insured on any excess or umbrella policies   purchased by Lessee. A copy

         of   each   paid-up   policy   evidencing   such   insurance    (appropriately

         authenticated by the insurer) or a certificate of the insurer providing

         such coverage   proving that such   policies have been issued,   providing

         the coverage   required   hereunder shall be delivered to Lessor prior to

         the   Rent   Commencement   Date.   All   insurance   shall   be   placed   with

         companies   satisfactory   to Lessor   and   shall   contain   the   insurer's

         agreement to give 30 days written notice to Lessor before   cancellation

         or any material change of any policy of insurance.

 

17.       TAXES.   Lessee shall   reimburse to Lessor (or pay directly if, but only

         if,   instructed   by Lessor)   all charges   and taxes   (local,   State and

          federal) which may now or hereafter be imposed or levied upon the sale,

         purchase,   ownership,   leasing,   possession   or use   of the   Equipment;

         excluding,   however; all income taxes levied on (a) any rental payments

         made to Lessor hereunder;   (b) any payment made to Lessor in connection

         with Loss or Damage to the Equipment under Paragraph 15 hereof,   or (c)

         any payment made to Lessor in connection with Lessee's   exercise of its

         purchase option under Paragraph 27 hereof.

 

18.       LESSOR'S   PAYMENT.    If   Lessee   fails   to   provide   or   maintain   said

         insurance,   to pay said taxes,   charges and fees,   or to discharge   any

         levies, liens and encumbrances created by Lessee, Lessor shall have the

         right, but shall not be obligated,   to obtain such insurance,   pay such

         taxes,   charges   and fees,   or effect   such   discharge.   In that event,

         Lessee   shall   remit to   Lessor   the cost   thereof   with the next   rent

          payment.

 

19.       INDEMNITY. (a) General Indemnity. Lessee shall indemnify Lessor against

         and hold Lessor   harmless   from any and all claims,   actions,   damages,

         costs,   expenses   including   reasonable   attorneys' fees,   obligations,

         liabilities   and   liens   (including   any of the   foregoing   arising   or

         imposed   under   the    doctrines   of   "strict    liability"   or   "product

         liability"   and   including   without   limitation   the cost of any fines,

         remedial action, damage to the environment and cleanup and the fees and

         costs of   consultants   and   experts),   arising out of the   manufacture,

         purchase, lease, ownership, possession, operation, condition, return or

         use of the Equipment, or by operation of law, excluding however, any of

         the foregoing resulting from the gross negligence or willful misconduct

         of Lessor.   Lessee   agrees   that upon   written   notice by Lessor of the

         assertion of such a claim,   action,   damage,   obligation,   liability or

         lien, Lessee shall assume full   responsibility for the defense thereof.

         Lessee's choice of counsel shall be mutually   acceptable to both Lessee

         and Lessor.   This   indemnity also extends to any   environmental   claims

         arising   out of or   relating   to prior acts or   omissions   of any party

         whatsoever.   The provisions of this paragraph shall survive termination

         of   this   Lease   with   respect   to   events    occurring   prior   to   such

         termination.

 

         (b)       Tax   Indemnity.   Lessee   acknowledges   that   Lessor   shall   be

                  entitled to all tax benefits of ownership   with respect to the

                  Equipment (the "Tax Benefits"),   including but not limited to,

                  (i) the   accelerated   cost recovery   deductions   determined in

                  accordance with Section 168(b)(1) of the Internal Revenue Code

                  of 1986 for the   Equipment   based on the original   cost of the

                  Equipment   to   Lessor   (ii)   deductions   for   interest   on any

                  indebtedness   incurred by Lessor to finance the   Equipment and

                  (iii)   sourcing   of income   and   losses   attributable   to this

                  Lease,   to the   United   States.   Lessee   represents   that   the

                  Equipment   shall   be   depreciable   for   Federal   tax   purposes

                  utilizing   the   MACRS   Recovery   Period   as set   forth   in the

                   Equipment   Schedule,   with such depreciation   commencing as of

                  the date of Equipment acceptance by Lessee as set forth on the

                  Certificate   of   Acceptance.   Lessee   agrees to take no action

                  inconsistent   with the   foregoing   or any action   which   would

                  result in the loss,   disallowance or   unavailability to Lessor

                  of   all   or   any   part   of the   Tax   Benefits.   Lessee   hereby

                  indemnifies and holds harmless Lessor and its assigns from and

                  against   (i)   the   loss,    disallowance,    unavailability    or

                  recapture   of all or any   part of the Tax   Benefits   resulting

                  from any   action,   statement,   misrepresentation   or breach of

                  warranty   or   covenant   by   Lessee   of any   nature   whatsoever

                  including    but    not    limited    to    the    breach    of    any

                  representations,   warranties   or   covenants   contained in this

                  paragraph,   plus   (ii)   all   interest,    penalties,   fines   or

                  additions   to tax   resulting   from   such   loss,   disallowance,

                  unavailability or recapture,   plus (iii) all taxes required to

                  be paid by Lessor upon receipt of the   indemnity   set forth in

                  this   paragraph.   Any   payments   made by Lessee   to   reimburse

                  Lessor for lost Tax Benefits   shall be   calculated   (i) on the

                   assumption   that   Lessor is   subject   to the   maximum   Federal

                  Corporate   Income   Tax with   respect to each year and that all

                  Tax Benefits are currently   utilized,   and (ii) without regard

                  to whether   Lessor or any members of a   consolidated   group of

                  which   Lessor is also a member is then subject to any increase

                  in tax as a   result   of the   loss   of Tax   Benefits.   For   the

                  purposes   of this   paragraph,   "Lessor"   includes   for all tax

                  purposes the consolidated   taxpayer group of which Lessor is a

                  part.

 

 

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         (c)       Payment.   The amounts   payable   pursuant to this   Paragraph 19

                   shall be   payable   upon   demand of   Lessor,   accompanied   by a

                  statement   describing in reasonable detail such claim, action,

                  damage, cost, expense, fee, obligation, liability, lien or tax

                  and setting   forth the   computation   of the amount so payable,

                  which computation shall be binding and conclusive upon Lessee,

                  absent   manifest   error.   The   indemnities   and assumptions of

                  liabilities   and   obligations   contained in this   Paragraph 19

                  shall   continue in full force and effect   notwithstanding   the

                  expiration or other termination of this Lease.

 

20.       DELINQUENT PAYMENTS.   (a) Service Charge. Since it would be impractical

         or extremely   difficult to fix Lessor's   actual   damages for collecting

         and   accounting for a late payment,   if any payment to Lessor   required

         herein (including,   but not limited to, rental,   renewal, ta