EXHIBIT 4.7
EQUIPMENT LEASE AGREEMENT
THIS is a lease agreement between ▇▇▇▇▇▇▇▇▇▇.▇▇▇ Inc. (hereinafter called the
"Lessee") and Custom Trends Inc. (hereinafter called the "Lessor") made June
30, 2004 (hereinafter called the "Lease"). By signing this Lease, Lessee and
Lessor agree that Lessor shall lease to Lessee the equipment described as
follows together with all attachments and accessories thereon, if any, on the
terms and conditions set out in this Lease:
Description Serial Number
▇▇▇▇▇ Single Head Embroidery Machine 321250
▇▇▇▇▇ Single Head Embroidery Machine ▇▇▇▇▇ 320944
Single Head Embroidery Machine 320934
Operating System for ▇▇▇▇▇ 8301492
Dell Computer System H54KT21
Permaboss Model TEM-705 3812
PowerConverter 2594-1299
Brother Industrial Sewing Machine M0579686
Cansew Industrial Waist Band Machine 5673005
Union Special Serger 954259
Castman BB-125 Blade Machine F58218
Industrial Steamer 8817-R
(hereinafter called the "equipment")
1. LEASE TERM
This Lease commences on July 1, 2004 and terminates on June 30, 2009
(hereinafter called the "Term").
2. DELIVERY AND RECEIPT
Lessee acknowledges receiving and examining the equipment and further
acknowledges that the equipment is in good operating order and condition and
accepts the equipment for all purposes of this Lease.
3. RENT PAYMENT SCHEDULE
Lessee shall pay Lessor monthly basic rent payments of ($1700) Dollars inclusive
of all applicable Goods & Services tax on the 1st day of each and every month
during the Term commencing on the 1st day of July, 2004 and ending on the 1st
day of June, 2009.
4. LATE CHARGES AND NSF CHARGES
If any monthly basic rent payment is not paid within ten (10) days after it is
due, Lessee agrees to pay Lessor when billed by Lessor a late charge of Two (2%)
Percent of the amount which is past due or Twenty ($20.00) Dollars, whichever is
greater, or such lesser amount as set by any applicable laws. Lessee further
agrees to pay Lessor when billed by Lessor a service charge of Fifteen ($15.00)
Dollars for any electronic funds transfer debit or cheque which is returned
unpaid for any reason, including but not limited to nonsufficent funds.
5. INSURANCE
At all times during the Term, Lessee must at Lessee's expense obtain and
maintain the following minimum Insurance coverages:
a) public liability for bodily injury or death or damage to the property
of others for One Million ($1,000,000.00) Dollars per claim regardless
of the number of claims from anyone accident; and
b) comprehensive fire and theft for the equipment's actual value (payable
in cash) with a maximum deductible of Five Hundred ($500.00) Dollars.
Lessee further agrees that such coverages must be maintained throughout the Term
through a carrier acceptable to Lessor, which is licensed in the Province of
Alberta. Appropriate evidence of such coverage must be provided to Lessor by
Lessee and such coverages must name Lessor as an "additional insured" and "loss
payee" and provide the Lessor with at least ten (10) days advance notice of any
cancellation of coverage.
6. OFFICIAL FEES AND TAXES
Lessee agrees to pay when due all fees and charges for transfer of title,
registration, licensing, testing and inspecting the equipment that any
governmental authority requires during the Term. Except for Goods and Services
tax, Lessee agrees to pay when due all taxes including but not limited to
personal property, use, excise, value-added and transfer taxes imposed by any
governmental authority when due whether those taxes are assessed during the Term
or after the Term. Lessee further agrees Lessor has the right acting in Lessor's
sole discretion but not the obligation to pay any or all such fees and charges
on behalf of Lessee and that Lessee will forward immediate payment to Lessor
when billed by Lessor for such amounts.
7. USE OF EQUIPMENT
Unless the prior written consent of the Lessor is first obtained, which prior
written consent may be arbitrarily withheld by Lessor, the Lessee shall operate
or use the equipment in a careful manner and shall comply with all laws relating
to its possession, use or maintenance at the only the following addresses:
#14,1935 - 30th Avenue NE ▇▇▇▇ - ▇▇▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ TIY 6Cl
▇▇▇ ▇▇▇
8. WARRANTIES
LESSEE ACKNOWLEDGES THAT LESSEE IS LEASING THE EQUIPMENT "AS IS" AND THAT LESSOR
MAKES NO WARRANTIES, EXPRESS OR IMPLIED, REGARDING THE EQUIPMENT AND
SPECIFICALLY DISCLAIMS TO THE EXTENT PERMITTED BY LA W ANY WARRANTIES IMPLIED BY
LA W, INCLUDING WITHOUT LIMITATION ANY WARRANTIES OF MERCHANTABILITY AND FITNESS
FOR ANY PARTICULAR PURPOSE, OR ANY SIMILAR WARRANTIES, WHICH MAY BE IMPLIED BY
STATUTE, OR FOR ANY OTHER REASON. However, to the extent the equipment is still
subject to a manufacturer's equipment warranty, Lessor assigns to Lessee all
rights and remedies under that warranty to the extent they are assignable.
9. EQUIPMENT MAINTENANCE
Lessee agrees to maintain and repair the equipment and to keep it in good
working order and condition in accordance with any manufacturer's maintenance
recommendation. All expenses incurred in maintaining and repairing the equipment
throughout the Term will be Lessee's responsibility. Lessor maintains the right
to inspect the equipment at any reasonable time with due notice to Lessee to
ensure the good working condition and appearance of the equipment and, if
necessary, to undertake to have repairs and/or maintenance completed if Lessor
acting in Lessor's sole discretion deems it necessary to ensure the equipment
has an acceptable appearance and is in good working order and condition. Lessor
will ▇▇▇▇ Lessee for the cost of such repairs and Lessee agrees to pay for such
maintenance and/or repairs and applicable taxes upon receipt of such ▇▇▇▇ from
Lessor. Lessee also agrees to comply with any manufacturer's request in any
recall campaign so as to keep the manufacturer's warranty in effect. Lessee also
agrees not to alter, mark, remove or install attachments and accessories in or
on the equipment without Lessor's prior written consent, which prior written
consent may be arbitrarily withheld by Lessor. All costs incurred in restoring
the equipment to good working condition and appearance will be Lessee's
responsibility.
10. LESSEE'S END OF LEASE LIABILITY
Lessee must return the equipment to a place specified by Lessor on or before
June 30, 2009. Upon the termination of this Lease, Lessee's payment liability to
Lessor will be the sum of:
a) any monthly basic rent payments due and unpaid and any other amounts
or charges due to Lessor under the terms of this Lease;
b) the cost of any repairs necessary to put the equipment in good
operating order and appearance as required by this Lease; and
c) any official fees and taxes imposed in connection with the termination
of this Lease or otherwise.
11. EARLY TERMINATION LIABILITY
At any time after Lessee signs this Lease, Lessor may terminate this Lease if
the Lease is in default in accordance with paragraph 12 of this Lease or if the
conditions set out in paragraph 14 of this Lease occur.
12. DEFAULT
Lessee will be in default under this Lease if:
a) Lessee does not make a basic rent payment when it is due;
b) Lessee fails to comply with any conditions in this Lease;
c) a proceeding in bankruptcy, receivership or insolvency is started by
Lessee or against Lessee or Lessee's property;
d) Lessee fails to comply with the insurance requirements of this Lease;
e) Lessee does not repair or maintain the equipment as this Lease
requires;
f) Lessee transfers, subleases, rents or assigns this Lease, the
equipment or Lessee's right to use the equipment;
g) the equipment is lost, stolen, destroyed or determined by Lessor
acting in Lessor's sale discretion to be unsuitable for use or
operation; or
h) Lessee breaches any other agreements in this Lease and such breaches
significantly impairs the prospect of payment, performance or
realization of Lessor's interest in the equipment.
In the event of default, Lessee acknowledges that the Lessor may do any or all
of the following without giving Lessee any notice thereof other than any notice
which may be required by any applicable law:
a) take any reasonable measures designed to either correct the default or
to save Lessor from loss, in which case Lessee will pay Lessor upon
request for the cost and expenses incurred;
b) terminate this Lease and Lessee's rights to possess and use or operate
the equipment; c) take possession of the equipment by any method or
manner permitted by law; and d) pursue any other remedy permitted by
law.
Lessee also agrees to pay Lessor for all collections and legal costs, including
reasonable legal fees and disbursements and other charges on a solicitor and his
own client basis, Lessor incurs in respect of this Lease and the equipment to
the extent permitted by law.
13. EQUIPMENT RETURN
Lessee will return the equipment at the termination of this Lease in good
working condition and with an acceptable appearance, except for reasonable wear
and tear, to any reasonable address Lessor directs. Lessee will be liable for
and agrees to pay Lessor for any excessive wear and tear or damage to the
equipment as determined by Lessor acting in Lessor's sale discretion in addition
to all other amounts owed by Lessee to Lessor in connection with this Lease.
14. DAMAGE OR LOSS TO THE EQUIPMENT
Lessee agrees that Lessee is liable for any damage, risk of loss or destruction
of the equipment during the Term or until Lessee returns the equipment to
Lessor. If the equipment is damaged or destroyed in an accident or other
occurrence, is confiscated by a governmental agency or is stolen, Lessee is to
notify Lessor and Lessee's insurance company immediately of any such occurrence,
event or accident. If the equipment is damaged and in a condition which Lessor
acting in Lessor's sole discretion believes is beyond reasonable repair, this
Lease will be terminated immediately. If the equipment is damaged and this Lease
is not terminated, Lessee will have the necessary repairs made promptly at
Lessee's expense and Lessee will continue to perform Lessee's obligations under
this Lease. Lessee acknowledges that Lessor is under no obligation to provide a
replacement equipment for any reason at any time during the Term.
15. FINES, LIENS AND ENCUMBRANCES
Lessee agrees to keep the equipment free of all fines, liens and encumbrances.
If Lessee does not promptly pay any fines or remove any liens or encumbrances at
Lessee's expense, Lessor has the right acting in Lessor's sole discretion but
not the obligation to pay any fines or remove any liens or encumbrances on
behalf of Lessee and that Lessee will forward immediate payment to Lessor when
billed by Lessor for such amounts.
16. OWNERSHIP
Lessee and Lessor specifically agree that this Agreement is a true lease and not
a purchase agreement. Lessee agrees that this Lease is a true lease for tax,
personal property security and credit legislation and that Lessor is and remains
the owner of the equipment and retains all benefits of ownership, subject to
paragraph 20 of this Lease.
17. ASSIGNMENT
Lessee agrees not to transfer, rent or assign this Lease, the equipment or
Lessee's right to use the equipment under this Lease. Lessor may transfer or
assign this Lease, the equipment or Lessee's right to use the equipment under
this Lease.
18. INDEMNITY AGREEMENT
Lessee agrees to hold Lessor and anyone to whom this Lease is assigned or
transferred harmless and indemnify against any or all liability, loss, damage,
claims, injuries, demands and expenses (including legal fees and disbursements
and other charges) arising out of the use, maintenance, ownership, operation and
condition of the equipment during the Term. Lessee agrees to pay Lessor for any
such loss or damage to the equipment during this Term and shall pay Lessor all
such amounts promptly upon request from Lessor. Lessee also agrees that Lessee's
obligations under this paragraph shall survive termination of this Lease and
repossession and sale of the equipment. Without restricting the generality of
the above, this indemnity includes any claim against Lessor because of an
alleged defect in the equipment brought under the doctrine of strict liability.
19. SECURITY INTEREST
Lessee gives Lessor a security interest in the proceeds or cancellation, refund
or other rights Lessee may have under any insurance contracts Lessee purchases
with respect to this Lease or the equipment.
20. OPTION TO PURCHASE
Lessee shall have the option to purchase the equipment at the termination of
this Lease on an "as is, where is" basis, excluding all representations,
warranties or conditions, expressed or implied, regarding the equipment,
provided the Lease is not in default pursuant to paragraph 12 of this Lease.
This option to purchase may be exercised by the Lessee only if the Lessee
advises the Lessor of its intent to purchase the equipment at least thirty (30)
days prior to the termination of this Lease. The purchase price for the
equipment will be ($100) dollars. The Lessee will also be responsible for any
official fees, taxes, costs and expenses incurred in connection with the
purchase of the equipment by the Lessee and sale of the equipment by the Lessor.
/s/ /s/
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▇▇▇▇▇▇▇▇▇▇.▇▇▇ Inc. Custom Trends Inc.