Exhibit 10.1

 
LEASE SCHEDULE NO. 001
TO
MASTER LEASE AGREEMENT NO. PFE0019
 
This Lease Schedule No. 001 dated August 15, 2013 (the "Schedule") between
PARADIGM COMMERCIAL CAPITAL GROUP CORP (the "Lessor") and COATES INTERNATIONAL,
LTD. (the "Lessee") incorporates by reference the terms and conditions of Master
Lease Agreement No. PFE0019 dated August 15, 2013 (the "Master Lease"), the
Property invoice ("Property" Description) and the Schedule A ("Stipulated Loss
Schedule"), and constitutes a separate lease between Lessor and Lessee and is
referred to herein as the "Lease". Lessor shall have the right to replace this
Schedule with multiple Schedules for the purpose of segregating the Property
into separate Lease Schedules. All capitalized terms used herein but not defined
herein shall have the same meanings ascribed to them in the Master Lease.
 
SECTION 1           PROPERTY: (Refer to attached Exhibit A - Property) and all
other Property purchased or paid for by Lessor and any and all attachments,
accessions, additions, enhancements, and replacements thereto.
 
SECTION 2           PROPERTY LOCATION: 2100 Highway 34, Wall Township, NJ 07719
 
SECTION 3           BASE PERIOD: Twenty-four (24) months with the first payment
starting October 1, 2013 and all following payments due on the 1" of each month
thereafter. The payment due October 1, 2013 will include an interim payment for
the time reflecting the fund date August 16, 2013 to August 31, 2013 and first
lease payment at regular rate.
 
SECTION 4           TOTAL PROPERTY COST: $150,000.00
 
SECTION 5a         MONTHLY PAYMENT: $7,875.00, plus applicable sales/use tax
(based on Lease Rate Factor of 0.0525)
 
SECTION 5b        INTERIM PAYMENT: $3,810.50, plus applicable sales/use tax
(based on Lease Rate Factor of 0.0525)
 
SECTION 6          RENTAL FREQUENCY: Monthly in advance.
 
SECTION 7          RESIDUAL: Six (6) months extension payments. A partial
residual advance of 10% is required. An early buy-out option to purchase the
equipment is available upon the end of the base period. Refer to the Master
Lease Agreement for details.
 
SECTION 8          PAYMENT BY ELECTRONIC TRANSFER: Lessee authorizes Lessor or
its assigns to electronically transfer all rental payments and other monies due
under this Schedule from Lessee's account maintained with its financial
institution, and Lessee agrees to execute and deliver a written "Authorization
for Electronic Transfer" form to Lessor to affect such transfers. Failure or
refusal of Lessee to authorize such transfers or failure of Lessor or its
assigns to receive such payments by electronic transfer shall constitute an
additional Event of Default under Section 18 of the Master Lease. Upon the
occurrence of the Event of Default specified above, Lessor shall be entitled to
exercise its rights and remedies under the Lease.
 
SECTION 9          REPRESENTATION OF LESSEE: Lessor and Lessee agree that this
Schedule is a "Finance Lease" as defined by the Uniform Commercial Code Article
2A, in that (i) Lessee has selected the Property in its sole discretion, (ii)
Lessor has acquired the Property solely for the purpose of leasing such Property
under this Schedule, and (iii) Lessee has received a copy of the contract
evidencing Lessor's purchase of the Property.
 

LESSOR:   LESSEE:               PARADIGM COMMERCIAL CAPITAL GROUP CORP COATES
INTERNATIONAL LTD.             BY: /s/ Thomas Karren   BY:
/s/ George J. Coates
              TITLE: Operations Manager   TITLE:
President and Chief Executive Officer
 

 
 
 

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PARADIGM COMMERCIAL CAPITAL GROUP CORP
1246 W. Flint Meadow Dr. Suite 104
Kaysville, Utah 84037
 
MASTER LEASE AGREEMENT NO. PFE0019
 
THIS MASTER LEASE AGREEMENT is made on August 15, 2013, between PARADIGM
COMMERCIAL CAPITAL GROUP CORP with its principal office located at 1246 W. Flint
Meadow Dr, Suite 104, Kaysville, Utah 84037, and its assign(s) (the 'Lessor')
and COATES INTERNATIONAL, LTD. a corporation organized in the state of Delaware,
with its principal office located at 2100 Highway 34, Wall Township, NJ 07719
(the 'Lessee").
 
SECTION 1. LEASE:
 
Lessor agrees to lease to Lessee, and Lessee agrees to lease from Lessor the
Property described in any Schedule executed and delivered by Lessor and Lessee
in connection with this Master Lease Agreement. Each Schedule shall incorporate
by reference the terms and conditions of this Master Lease Agreement, and
together with the Acceptance and Delivery Certificate and Master Progress
Payment Agreement. If applicable, shall constitute a separate Lease.
 
SECTION 2. TERM OF LEASE:
 
The term of any Lease, as to all Property designated on the applicable Schedule,
shall commence on the Date of Acceptance for such Property, and shall continue
for a Base Period ending that number of months from the Lease Commencement Date
as specified in the Schedule. Thereafter, Lessee shall have those options as
provided in Section 20n of this Master Lease Agreement.
 
SECTION 3. RENT AND PAYMENT:
 
Lessee shall pay as rent for use of the Property, aggregate rentals equal to the
sum of all the Monthly Rentals and other payments due under the Lease for the
entire Base Period. The Monthly Rental shall begin on the Date of Acceptance and
shall be due and payable by Lessee in advance on the first day of each month
throughout the Base Period. If the Date of Acceptance does not fall on the first
day of a calendar quarter, then the first rental payment shall be calculated by
multiplying the number of days from and including the Date of Acceptance to the
Lease Commencement Date by a daily rental equal to one-thirtieth (1/30) of the
Monthly Rental, and shall be due and payable on the Date of Acceptance. Lessee
shall pay to Lessor, or its assigns, all rentals as due when due, without notice
or demand, to Lessor's address set forth above, or as otherwise directed in
writing by Lessor, or its assigns. LESSEE SHALL NOT ABATE, SET OFF OR DEDUCT ANY
AMOUNT OR DAMAGES FROM OR REDUCE ANY MONTHLY RENTAL OR OTHER PAYMENT DUE FOR ANY
REASON. THIS LEASE IS NON-CANCELABLE FOR THE ENTIRE TERM OF THE BASE PERIOD AND
ANY RENEWAL PERIODS.
 
If any rental or other payment due under any Lease shall be unpaid ten (10) days
after its due date, Lessee will pay on demand, as a late charge, but not as
interest, the greater of twenty-five dollars ($25.00) or ten percent (10%) of
any such unpaid amount but in no event to exceed maximum lawful charges.
 
SECTION 4. TAXES AND FEES:
 
Lessee shall promptly pay to Lessor, and agrees to indemnify and hold Lessor
harmless from all taxes, fees, assessments and charges paid, payable or required
to be collected by Lessor (together with any penalties, fines or interest
thereon), which are levied or based on the Monthly Rental or other payment due
under the Lease, or on the delivery, acquisition, possession, use, operation,
lease, rental, sale, purchase, control or value of the Property, including
without limitation, registration and license fees and assessments, recycling
fees, state and local privilege or excise taxes, documentary stamp taxes or
assessments, sales and use taxes, personal and other property taxes, and taxes
or charges based on gross revenue, but excluding taxes based on Lessor's net
income, (collectively 'taxes", whether the same be assessed to Lessor or Lessee.
Lessee also agrees to pay to Lessor all servicing and administrative costs
associated with processing and paying various fees and taxes. Lessor shall file
all required reports and returns with all applicable governmental agencies
relating to the taxes concerning the Property.
 
SECTION 5. NET LEASE:
 
This is a fully net, non-cancelable lease contract which may not be terminated
for any reason except as otherwise specifically provided herein. Lessee has no
right of prepayment unless agreed to in writing by Lessor. Lessor and Lessee
agree that any Lease is a "Finance Lease" as defined by the Uniform Commercial
Code Article 2A. Lessee shall be responsible for and shall indemnify Lessor
against, all costs, expenses and claims of every nature whatsoever arising out
of or in connection with or related to the Lease or the Property.
 
Lessee acknowledges and agrees that its obligations to pay all Monthly Rentals
and other amounts due and owing and perform its obligations hereunder shall be
primary, absolute, unconditional, independent and irrevocable and shall not be
subject to or affected by (i) any circumstance whatsoever, including, without
limitation, any setoff, counterclaim, recoupment, abatement, suspension,
reduction, rescission, defense or other right otherwise available to Lessee;
(ii) any defect in the title, merchantability, condition, design, operation or
fitness for use of, or any damage to, removal, abandonment, requisition, taking
condemnation or loss or theft or destruction of, the Property, or any
interference, interruption, restriction, curtailment or cessation in or
prohibition of the use or possession thereof by the Lessee or any other person
for any reason whatsoever; or (iii) failure on the part of the manufacturer or
the shipper of the Property to deliver the Property or any part thereof to
Lessee. Lessor is not responsible to install, test, repair, service, or maintain
any Property.
 
SECTION 6. CONDITIONS PRECEDENT:
 
Lessor's obligations under each Schedule, including its obligation to purchase
and lease any Property to be leased thereunder, are conditioned upon Lessor's
receipt of, in form or substance satisfactory to Lessor, and Lessor's
determination that all of the following are satisfactory: (i) evidence as to due
compliance with the insurance provisions hereof; (ii) Uniform Commercial Code
financing statements and all other filings and recordings as required by Lessor;
(iii) lien searches in the jurisdiction of Lessee's organization and in each
jurisdiction in which the Property and/or Lessee's chief executive office are
located; (iv) incumbency and signature of the officers of Lessee authorized to
execute such documents; (v) resolutions of Lessee's Board of Directors and/or
Members duly authorizing the leasing, or sale and leaseback, as the case may be,
of the Property hereunder and the execution, delivery and performance of the
Lease; (vi) if requested by Lessor, certificates of good standing from the
jurisdiction of Lessee's organization, and (vii) if requested by Lessor, a copy
of Lessee's organizational documents and evidence of Lessee's organizational
number.
 
SECTION 7. MAINTENANCE AND REPAIRS: RETURN OF PROPERTY:
 
a.     During the continuance of each Lease, Lessee shall, at its own expense,
enter into and maintain in force a contract with the manufacturer or other
qualified maintenance organization reasonably satisfactory to Lessor for
maintenance of each item of Property that requires such a contract. Such
contract as to each item shall commence upon the earlier of the Certificate
date, if applicable, or the Date of Acceptance. Upon request Lessee shall
furnish Lessor with a copy of such contract.
 
b.    During the continuance of each Lease. Lessee shall, at its own cost and
expense, and in accordance with all manufacturer maintenance specifications,
(i) keep the Property in good repair, condition, operating order and appearance.
(ii) make all necessary adjustments repairs and replacements, (iii) not use or
permit the Property to be used for any purpose for which, In the opinion of the
manufacturer, the Property is not designed or reasonably suitable, and (iv)
furnish all required parts, mechanisms, devices, maintenance and servicing, so
as to keep each item of Property and any part in good repair and operating order
(ordinary wear and tear excepted) in the same condition and appearance as when
delivered to the Lessee. Such parts, mechanisms and devices shall Immediately
become a part of the Property for all purposes hereunder and title thereto shall
vest in Lessor. If the manufacturer does not provide maintenance specifications,
Lessee shall perform all maintenance in accordance with industry standards for
like property.

 
 
 

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c.     Lessee shall immediately notify Lessor in writing of all details
concerning any damage or loss to the Property, including without limitation, any
damage or loss arising from the alleged or apparent improper manufacture,
functioning or operation of the Property.
 
d.     Lessee shall pay all shipping and delivery charges and other expenses
incurred in connection with the Property. Upon default, or at the expiration or
earlier termination of any Lease, Lessee shall, at its own expense, assemble,
prepare for shipment and promptly return the Property to Lessor at the location
within the continental United States designated by Lessor.Upon such return, the
Property shall be in the same operating order, repair, condition and appearance
as on the Date of Acceptance, except for reasonable wear and tear from proper
use thereof, and shall include all engineering changes theretofore prescribed by
the manufacturer. Lessee shall provide maintenance certificates or qualification
letters and/or arrange for and pay all costs which are necessary for the
manufacturer to accept the Property under contract maintenance at its then
standard rates ("recertification"). The term of the Lease shall continue upon
the same terms and conditions until such recertification has been obtained.
 
e.     With regard to Software, at the expiration or earlier termination of any
Lease, or upon demand by Lessor upon the occurrence of an Event of Default
(hereinafter defined) under the Lease, Lessee shall (i) destroy all copies or
duplicates of the Software which were not returned to Lessor; (ii) delete from
its systems all Software then installed; (iii) cease using the Software
altogether or; iv) disable the computers, computer systems or other equipment
which run and/or operate and or are controlled by the Software. Upon its receipt
from Lessee, Lessor shall be responsible to return the Software to the
owner/vendor/licensor so that Lessee shall not be in breath of any software
license.
 
SECTION 8. USE: ALTERATIONS AND ATTACHMENTS:
 
a.     Lessee shall at all times keep the Property in its sole possession and
control. The Property shall not be moved from the location stated in the
Schedule without the prior written consent of Lessor, which consent shall not be
unreasonably withheld.
 
b.     The Property is leased solely for commercial or business purposes.
 
c.     After Lessee receives and inspects any Property and is satisfied that the
Property is acceptable, Lessee shall execute and deliver to Lessor an Acceptance
and Delivery Certificate in form provided by Lessor; provided, however, that
Lessee's failure to execute and deliver an Acceptance and Delivery  Certificate
for any Property shall not affect the validity and enforceability of the Lease
with respect to the Property. If Lessee has executed and delivered a Master
Progress Payment Agreement, Lessor may, in its sole discretion, at any time by
written notice to Lessee, declare all prior Certificates executed in connection
with the Master Progress Payment Agreement to be and constitute the Acceptance
and Delivery Certificate for all purposes under the Lease, and the Date of
Acceptance of the Lease shall be the date determined by Lessor in its sole
discretion which shall not be earlier than the date of the last Certificate.
 
d.    The Property is and shall remain personal property during the term of the
Lease notwithstanding that any portion thereof may in any manner become affixed,
attached to or located on real property or any building or improvement thereon.
Lessee shall not affix or attach, or permit any of the Property to become
affixed or attached to any real property in any manner which would change its
nature from that of personal property to real property. Lessee shall not permit
the Property to become an accession to other goods or a fixture to or part of
any real property. Lessee will obtain and deliver to Lessor a lien waiver In a
form satisfactory to Lessor, from all persons not a party hereto who might claim
an interest, lien or other claim in the Property.
 
e.    Lessee shall comply with all applicable laws, regulations, requirements,
rules and orders, all manufacturer's instructions and warranty requirements, and
with the conditions and requirements of all policies of insurance with respect
to the Property and the Lease.
 
f.     Lessee may not make alterations or attachments to the Property without
first obtaining the written consent of Lessor. Any such alterations or
attachments shall be made at Lessee's expense and shall not interfere with the
normal and satisfactory operation or maintenance of the Property. The
manufacturer may incorporate engineering changes or make temporary alterations
to the Property upon request of Lessee. Unless Lessor shall otherwise agree in
writing, all such alterations and attachments shall be and become the property
of Lessor upon their attachment to the Property or, at the option of Lessor,
shall be removed by Lessee at the termination of the Lease and the Property
restored at Lessee's expense to its original condition, reasonable wear and tear
only excepted.
 
g.     Lessee shall enforce that the Property be installed, used, operated and,
at the termination of the Lease, if applicable, removed at Lessee's expense (i)
in accordance with any applicable manufacturer's manuals or instructions; (ii)
by competent and duly qualified personnel only; and (iii) in accordance with
applicable governmental regulations.
 
h.    In the event the Property includes Software, the following shall apply:
(i) Lessee shall possess and use the Software in accordance with the terms and
conditions of any license agreement entered into with the owner/vendor/licensor
of such Software ("license") (at Lessor's request, Lessee shall provide a
complete copy of the License to Lessor) and shall not breach the License; (ii)
Lessee agrees that Lessor has an interest in the License and Software due to its
payment of the price thereof and is an assignee or third-party beneficiary of
the License; (iii) as due consideration for Lessor's payment of the price of the
License and Software and for providing the Software to Lessee at a lease rate
(as opposed to a debt rate), Lessee agrees that Lessor is leasing (and not
financing) the Software to Lessee; (iv) except for the original price paid by
Lessor, Lessee shall, at its own expense, pay promptly when due all servicing
fees, maintenance fees, update and upgrade costs, modification costs, and all
other costs and expenses relating to the License and Software and maintain the
License in effect during the term of the Lease; and (v) the Software shall be
deemed Property for all purposes under the Lease.
 
SECTION 9. OWNERSHIP AND INSPECTION:
 
a.    The Property shall at all times be the property of Lessor or its assigns,
and Lessee shall have no right, title or interest therein except as to the use
thereof subject to the terms and conditions of the Lease. For purposes of the
foregoing, Lessee transfers to Lessor all of Lessee's right, title and interest
(including all ownership interest) In and to the Property free and clear of all
liens, security interests and encumbrances. Lessor may affix (or require Lessee
to affix) tags, decals or plates to the Property indicating Lessor's ownership,
and Lessee shag not permit their removal or concealment. Lessee shall not permit
the name of any person or entity other than Lessor or its assigns to be placed
on the Property as a designation that might be interpreted as a claim of
ownership or security interest.
 
b.    Lessor, its assigns and their agents shall have free access to the
Property at all reasonable times during normal business hours for the purpose of
inspecting the Property and for any other purpose contemplated in the Lease.
Lessee shall pay any and all costs uncured by Lessor in connection with any
inspection performed by Lessor and/or its assigns.
 

 
 
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c.    LESSEE SHALL KEEP THE PROPERTY AND LESSEE'S INTEREST UNDER ANY LEASE FREE
AND CLEAR OF ALL LIENS AND ENCUMBRANCES, EXCEPT THOSE PERMITTED IN WRITING BY
LESSOR OR ITS ASSIGNS.
 
SECTION 10. DISCLAIMER OF WARRANTIES:
 
a.     WITHOUT WAIVING ANY CLAIM THE LESSEE MAY HAVE AGAINST ANY MANUFACTURER,
LESSEE ACKNOWLEDGES AND AGREES THAT i) LESSOR IS NOT A SELLER, SUPPLIER OR THE
MANUFACTURER OF THE PROPERTY (AS SUCH TERMS ARE DEFINED OR USED, AS THE CASE MAY
BE, IN THE UNIFORM COMMERCIAL CODE) OR DEALER, NOR A SELLERS OR A DEALER'S AGENT
THEREIN, ii) THE PROPERTY IS OF A SIZE, DESIGN, CAPACITY AND MANUFACTURE
SELECTED BY AND ACCEPTABLE TO THE LESSEE, iii) THE LESSEE HAS EXAMINED AND IS
SATISFIED THAT EVERY ITEM OF PROPERTY IS SUITABLE FOR ITS PURPOSE, iv) THE
LESSEE ACCEPTS THE PROPERTY AND EACH PART THEREOF "AS IS" AND "WHERE IS", v) THE
LESSOR HAS NOT MADE AND DOES NOT MAKE, AND HEREBY DISCLAIMS LIABILITY FOR, AND
LESSEE HEREBY WAIVES ALL. RIGHTS AGAINST LESSOR RELATING TO, ANY AND ALL
WARRANTIES, REPRESENTATIONS OR OBLIGATIONS WHATSOEVER, EXPRESS OR IMPLIED,
ARISING BY APPLICABLE LAW OR OTHERWISE, RELATING TO THE PROPERTY, OR ANY PART
THEREOF, INCLUDING, WITHOUT LIMITATION, ANY AND ALL WARRANTIES, REPRESENTATIONS
OR OBLIGATIONS AS TO: (1) THE DESCRIPTION, CONDITION, DESIGN, QUALITY OR
PERFORMANCE OF THE PROPERTY OR QUALITY OR CAPACITY OF MATERIALS OR WORKMANSHIP
IN THE PROPERTY; (2) ITS MERCHANTABILITY OR FITNESS OR SUITABILITY FOR A
PARTICULAR PURPOSE WHETHER OR NOT DISCLOSED TO LESSOR; (3) THE ABSENCE OF LATENT
OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE (4) THE ABSENCE OF ANY
INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT OR THE LIKE; AND (5) THE
ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT. It is agreed that all
such risks incident to the matters described in this Section 10a, as between the
Lessor and the Lessee are to be borne by the Lessee. If the Property or Software
is not properly installed, does not function as represented or warranted by
original owner/seller/supplier/licensor, or Is unsatisfactory for any reason,
Lessee shall make any claim on account thereof solely against original
owner/seller/supplier/licensor and shall nevertheless pay all sums payable under
the Lease, Lessee hereby waiving the right to make any such claims against
Lessor. Lessor shall not be liable to Lessee for any loss, damage or expense of
any kind or nature caused, directly or indirectly, by the Property or the use,
possession or maintenance thereof, or the repair, service or adjustment thereof,
or by any delay or failure to provide any such maintenance, repair, service or
adjustment, or by any interruption of service or loss of use thereof (including
without limitation, Lessee's use of or right to use any Software) or for any
loss of business howsoever caused.
 
b.   NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THE LEASE, LESSOR
SHALL NOT, UNDER ANY CIRCUMSTANCES, BE LIABLE TO LESSEE OR ANY THIRD PARTY, FOR
CONSEQUENTIAL, INCIDENTAL, SPECIAL OR EXEMPLARY DAMAGES ARISING OUT OF OR
RELATED TO THE TRANSACTION CONTEMPLATED HEREUNDER, WHETHER IN AN ACTION BASED ON
CONTRACT, TORT (INCLUDING NEGLIGENCE OR STRICT LIABILITY) OR ANY OTHER LEGAL
THEORY, INCLUDING WITHOUT LIMITATION, LOSS OF ANTICIPATED PROFITS, OR BENEFITS
OF USE OR LOSS OF BUSINESS, EVEN IF LESSOR IS APPRISED OF THE LIKEHOOD OF SUCH
DAMAGES OCCURRING.
 
        IT IS EXPRESSLY UNDERSTOOD AND AGREED THAT EACH AND EVERY PROVISION OF
ANY LEASE WHICH PROVIDES FOR A LIMITATION OF LIABILITY, DISCLAIMER OF WARRANTIES
OR EXCLUSION OF DAMAGES, IS INTENDED BY THE PARTIES TO BE SEVERABLE FROM ANY
OTHER PROVISION AND IS A SEPARABLE AND INDEPENDENT ELEMENT OF RISK ALLOCATION
AND IS INTENDED TO BE ENFORCED AS SUCH.
 
 
c.    Lessor assigns to Lessee all assignable warranties on the Property,
including without limitation any warranties described in Lessor's purchase
contract, which assignment shall be effective only (i) during the Base Period
and any renewal period thereof; and (ii) so long as no Event of Default exists.
 
SECTION 11. ASSIGNMENT BY LESSOR:
 
Lessor may assign or transfer its rights and interests in the Lease and/or the
Property to another party ("Lessor's Assignee") either outright or as security
for loans (collectively the "Underwriting"). Upon notice of any such assignment
and instructions from Lessor, Lessee shall pay its Monthly Rental and other
payments and perform its other obligations under the Lease to the Lessor's
Assignee (or to another party designated by Lessor's Assignee). Upon any such
sale or assignment, LESSEE'S OBLIGATIONS TO LESSOR'S ASSIGNEE UNDER THE ASSIGNED
LEASE SHALL BE ABSOLUTE AND UNCONDITIONAL AND LESSEE WILL NOT ASSERT AGAINST
LESSOR'S ASSIGNEE ANY CLAIM, DEFENSE, OFFSET OR COUNTERCLAIM WHICH LESSEE MIGHT
HAVE AGAINST LESSOR. Lessee waives and will not assert against any assignee of
Lessor any claims, defenses, or set-offs which Lessee could assert against
Lessor. Lessor's Assignee shall have all of the rights but none of the
obligations of Lessor under the assigned Lease, and after such assignment Lessor
shall continue to be responsible for all of Lessor's obligations under the
Lease.
 
Upon any such assignment, Lessee agrees to promptly execute or otherwise
authenticate and deliver to Lessor estoppel certificates, acknowledgements of
assignment, records and other documents requested by Lessor which acknowledge
the assignment, affirmation of provisions of the Lease which may be required to
effect the Underwriting. Lessee authorizes Lessor's assigns to file UCC-1
financing statements or precautionary filings as Lessor or its assigns deem
necessary. Lessor's assigns are authorized to take any measures necessary to
protect their interest in the Property, including placing a lien on titled
vehicles.
 
Only one executed counterpart of any Schedule shall be marked "Original"; any
other executed counterparts shall be marked "Duplicate Original" or
"Counterpart". No security interest in any Schedule may be created or perfected
through the transfer or possession or control, as applicable, of any counterpart
other than the document or record, as applicable, marked "Original".
 
SECTION 12. ASSIGNMENT BY LESSEE:
 
LESSEE MAY NOT ASSIGN ANY LEASE OR ANY OF ITS RIGHTS HEREUNDER OR SUBLEASE THE
PROPERTY WITHOUT THE PRIOR WRITTEN CONSENT OF LESSOR. NO PERMITTED ASSIGNMENT OR
SUBLEASE SHALL RELIEVE LESSEE OF ANY OF ITS OBLIGATIONS HEREUNDER.
 
Subject to the terms of this Lease, this Lease and each Schedule inure to the
benefit of, and are binding upon, the successors and assigns of Lessee, and,
without limiting the foregoing, shall bind all persons who become bound as a
"new debtor" (as defined in the Uniform Commercial Code) to this Lease and any
Schedule.
 
SECTION 13. LESSEE'S REPRESENTATIONS AND WARRANTIES:
 
Lessee represents and warrants as follows:
 
a.    If Lessee is a corporation, that it is duly organized end validly existing
in good standing under the laws of the jurisdiction of its incorporation, that
it is duly qualified to do business in each jurisdiction where any Property is,
or is to be located, and has full corporate power and authority to hold property
under lease and to enter into and perform its obligations under any Lease; that
the execution, delivery and performance by Lessee of any Lease has been duly
authorized by all necessary corporate action on the part of Lessee, and is not
inconsistent with its articles of incorporation or by-laws or other governing
instruments;

 
 
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b.     (i) Lessee's state of organization is the state fisted in the
introductory paragraph of this Lease; (ii) Lessee's principal office is located
in the state listed in the introductory paragraph of this Lease; (iii) Lessee is
the legal entity or organization indicated in the introductory paragraph of this
Lease, which organization is duly organized, validly existing and in good
standing under the laws of the state listed in the introductory paragraph of
this Lease; and (iv) Lessee's full and exact legal name is the same as fisted in
the introductory paragraph of this Lease;
 
c.     The execution, delivery and performance by Lessee of any Lease does not
violate any law or governmental rule, regulation, or order applicable to Lessee,
does not and will not contravene any provision of constitute a default under, or
result in the creation of any lien on or in any property or assets of the
Lessee, pursuant to any indenture, mortgage, contract, or other instrument to
which it is bound and, upon execution and delivery of each Lease, will
constitute a legal, valid and binding agreement of Lessee, enforceable in
accordance with its terms;
 
d.     If Lessee is a partnership, that it is duly organized by written
partnership agreement and validly existing in accordance with the laws of the
jurisdiction of its organization, that it is duly qualified to do business in
each jurisdiction where the Property is, or is to be located, and has full power
and authority to hold property under lease and to enter into and perform its
obligations under any Lease; that the execution, delivery and performance by
Lessee of any Lease has been duly authorized by all necessary action on the part
of the Lessee, and is not inconsistent with its partnership agreement or other
governing instruments. Upon request. Lessee will deliver to Lessor certified
copies of its partnership agreement and other governing instruments and original
certificate of partners and other instruments deemed necessary or desirable by
Lessor. To the extent required by applicable law. Lessee has filed and published
its fictitious business name certificate;
 
e.     No action, including any permits or consents, in respect of or by any
state, federal or other governmental authority or agency is required with
respect to the execution, delivery and performance by Lessee of any Lease, and;
 
f.     There are no actions, suits or proceedings pending or, to the knowledge
of the Lessee, threatened against or affecting the Lessee in any court or before
any governmental commission, board or authority which, if adversely determined,
will have a material adverse effect on the ability of the Lessee to perform its
obligations under any Lease.
 
SECTION 14. RISK OF LOSS ON LESSEE:
 
From the earlier of the date the supplier ships the Property to Lessee or the
date Lessor confirms Lessee's purchase order or contract to supplier until the
date the Property is returned to Lessor as provided in the Lease, Lessee hereby
assumes and shall bear all risk of loss for theft, damage, non-delivery or
destruction to the Property (hereafter, such loss, damage. non-delivery or
destruction to the Property shall be referred to as the "Casualty"), howsoever
caused. NO SUCH CASUALTY SHALL IMPAIR ANY OBLIGATION OF LESSEE UNDER THIS LEASE
WHICH OBLIGATION, INCLUDING TIMELY RENTAL PAYMENTS, SHALL CONTINUE IN FULL FORCE
AND EFFECT.
 
SECTION 15. LESSEE'S WAIVERS:
 
To the extent permitted by applicable law, Lessee hereby waives any and all
rights and remedies conferred upon a Lessee by §§ 70A-2A-508 through 70A-2A-522
of the Utah Uniform Commercial Code, including but not limited to Lessee's
rights to: (i) cancel the Lease; (ii) repudiate the Lease; (iii) reject the
Property; (iv) revoke acceptance of the Property; (v) recover damages from
Lessor for any breathes of warranty or for any other reason; (vi) claim, grant
or permit a security interest in the Property In Lessee's possession or control
for any reason; (vii) deduct all or any part of any claimed damages resulting
from Lessor's default. If any, under the Lease; (viii) cover by making any
purchase or lease of or contract to purchase or lease property in substitution
for the Property due from Lessor; (ix) recover any general, special, incidental
or consequential damages, for any reason whatsoever; and (x) commence legal
action against Lessor for specific performance, replevin, detinue,
sequestration, claim and delivery or the like for any Property identified in the
Lease. To the extent permitted by applicable law, Lessee also hereby waives any
rights now or hereafter conferred by statute or otherwise which may require
Lessor to sell, lease or otherwise use any Property in mitigation of Lessors
Damages as set forth in Section 19 hereof or which may otherwise limit or modify
any of Lessor's rights or remedies in that section.
 
SECTION 16. INDEMNIFICATION:
 
Lessee shall indemnify and hold Lessor harmless from and against any and all
claims, (including without lmitation negligence, tort and strict liability),
damages, judgments, suits and legal proceedings, and any and all costs and
expenses in connection therewith (including attorney fees incurred by Lessor
either in enforcing this indemnity or in defending against such claims), arising
out of or in any manner connected with or resulting from the Lease or the
Property, including, without limitation the manufacture, purchase, financing,
ownership, rejection, non-delivery, transportation, delivery, possession, use,
operation, maintenance, condition, lease, return, storage or disposition
thereof; including without limitation (i) claims for injury to or death of
persons and for damage to property; (ii) claims relating to latent or other
defects in the Property whether or not discoverable by Lessor; (iii) claims
relating to patent, copyright, or trademark infringement; and (iv) claims for
wrongful, negligent or improper act or misuse by Lessor. Lessee agrees to give
Lessor prompt notice of any such claim or liability. For purposes of this
paragraph and any Lease, the term "Lessor" shall include Lessor, its successors
and assigns, shareholders, members, owners, partners, directors, officers,
representatives and agents, and the provisions of this paragraph shall survive
expiration of any Lease with respect to events occurring prior thereto.
 
Upon request of Lessor, Lessee shall assume the defense of all demands, claims,
or actions, suits and all proceedings against Lessor for which indemnity is
provided and shall allow Lessor to participate in the defense thereof. Lessor
shall be subrogated to all rights of Lessee for any matter which Lessor has
assumed obligation hereunder, and may settle any such demand, claim, or action
without Lessee's prior consent, and without prejudice to Lessor's right to
indemnification hereunder.
 
SECTION 17. INSURANCE:
 
Lessee shall obtain and maintain for the entire time the Lease is in effect, at
its own expense (as primary insurance for Lessor and Lessee). property damage
and liability insurance and insurance against loss or damage to the Property
including without limitation loss by fire (Including so-called extended
coverage), theft, collision and such other risks of loss as are customarily
insured against on the type of Property leased under any lease and by businesses
in which Lessee is engaged, in such amounts, in such form and with such insurers
as shall be satisfactory to Lessor, provided, however, that the amount of
insurance against loss or damage to the Property shall be equal to or greater
than the full replacement value or the Stipulated Loss Value (as defined herein)
of such items of Property. Stipulated Loss Value means the product of the
Property cost (as designated on the related Schedule) and the applicable
percentage factor set forth on the Stipulated Loss Schedule attached to the
Schedule ("Stipulated Loss Value"). Each insurance policy will name Lessee as
insured and Lessor and Its assignees as additional insureds and loss payees
thereof, shall contain cross-liability endorsements and shall contain a clause
requiring the insurer to give Lessor and its assignees at least thirty (30) days
prior written notice of any material alteration in the terms of such policy or
of the cancellation thereof. Lessee shall furnish to Lessor a certificate of
insurance or other evidence satisfactory to Lessor that such insurance coverage
is in effect; provided, however, that Lessor shall be under no duty either to
ascertain the existence of or to examine such insurance policy or to advise
Lessee in the event such insurance coverage shah not comply with the
requirements hereof. All Insurance covering loss or damage to the Property shall
contain a breach of warranty clause satisfactory to Lessor.
 
In the event of a Casualty to the Property (or any part thereof) and
irrespective of payment from any insurance coverage maintained by Lessee, but
applying full credit thereof, Lessee shall at the option of Lessor, (i) place
the Property in good repair, condition and working order; or (ii) replace the
Property (or any part thereof) with like property of equal or greater value, in
good repair, condition and working order and transfer clear title to such
replacement property to Lessor whereupon such replacement property shall be
deemed the Property for all purposes under the Lease; or (iii) pay to Lessor the
total rent due and owing at the time of such payment plus an amount calculated
by Lessor which is equal to the Stipulated Loss Value (defined in the Stipulated
Loss Schedule) specified in the Stipulated Loss Schedule attached to the
Schedule.
 

 
 
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Lessee shall notify Lessor within ten (10) days of the actual date of the
Casualty; Lessor will notify Lessee of Its election of either option (i), (ii),
or (iii), as set forth above, within five (5) days of receipt of Lessee's
notice. Lessee will then fully perform the repair, replacement or payment (as
elected by Lessor) within sixty (60) days of the date of the Casualty.
 
SECTION 18. DEFAULT:
 
An "Event of Default" shall occur under any Lease it
 
a.     Lessee fails to pay any Monthly Rental or other payment required under
the Lease when the same becomes due and payable and such failure continues for
ten (10) days after its due date;
 
b.    Lessee fails to promptly execute or otherwise authenticate and deliver to
Lessor or its assigns any document or record, as applicable, required under the
terms of this Master Lease Agreement;
 
c.     Lessee attempts to or does, remove, sell, assign, transfer, encumber,
sublet or part with possession of any one or more items of the Property or any
interest under any Lease, except as expressly permitted herein, or permits a
judgment or other claim to become a lien upon any or all of Lessee's assets or
upon the Property;
 
d.    Lessee permits any item of Property to become subject to any levy,
seizure, attachment, assignment or execution; or Lessee abandons any item of
Property;
 
e.     Lessee fails to immediately (within ten (10) days) notify Lessor of any
loss, damage, or destruction to the Property or fails to timely repair, replace,
or make payment as required in Sections 7 and 17, herein;
 
f.     Lessee or any guarantor, shall (i) be adjudicated insolvent or bankrupt,
or cease, be unable, or admit its inability, to pay its debts as they mature, or
make a general assignment for the benefit of creditors or enter into any
composition or arrangement with creditors; (ii) apply for or consent to the
appointment of a receiver, trustee or liquidator of it or of a substantial part
of its property, or authorize such application or consent, or proceedings
seeking such appointment shall be instituted against it without such
authorization, consent or application and shall continue undismissed for a
period of slaty (60) days; (iii) authorize or file a voluntary petition in
bankruptcy or apply for or consent to the application of any bankruptcy,
reorganization in bankruptcy, arrangement, readjustment of debt, insolvency,
dissolution, moratorium or other similar law of any jurisdiction, or authorize
such application or consent or proceedings to such end shall be instituted
against it without such authorization, application or consent and such
proceeding instituted against it shall continue undismissed for a period of
sixty (60) days;
 
g.     Lessee is in default under any Lease or agreement executed with Lessor;
or Lessee falls to sign or otherwise authenticate and deliver to Lessor any
document or record requested by Lessor in connection with any Lease executed
with Lessor; or Lessee falls to do anything whatsoever determined by Lessor to
be necessary or desirable to effectuate the transaction contemplated by any
Lease executed with Lessor, or Lessee fails to protect Lessor's rights and
interests in any Lease and the Property; or Lessee fails to provide financial
statements to Lessor as provided in Section 20k hereof; or Lessee is in default
of any obligation or any agreement with any person or entity other than Lessor
which obligation or agreement arises independently of any Lease;
 
h.    Lessee or any guarantor, breaches any of its representations and
warranties made under any Lease, or if any such representations or warranties
shall be false or misleading in any material respect;
 
i.     Lessee or any guarantor, fails to observe or perform any of its covenants
and obligations required to be observed or performed under the Lease and such
failure continues uncured for ten (10) days after occurrence thereof, except
that the ten (10) day cure period shall not apply and an Event of Default shall
occur immediately upon Lessee's failure to maintain insurance;
 
j.      Lessee or any guarantor, shall suffer a material adverse change in its
financial condition after the date hereof as determined by Lessor in its sole
discretion, or there shall occur a substantial change in ownership of the
outstanding stock of Lessee or a substantial change in control of its board of
directors and/or members;
 
k.     Lessor in good faith believes the Property to be in danger of misuse,
abuse or confiscation or to be in any other way threatened, or believes in good
faith for any other reason that the prospect of payment or performance has
become impaired, or if Lessee takes any action, makes any representation, or
fails to do anything requested by Lessor, at any time before or after the
execution of this Master Lease Agreement, the result of which causes Lessor, in
good faith, to believe that the prospect of Lessee's payment or performance
under the Lease is impaired, or otherwise causes Lessor to feel insecure in
funding or continuing to fund the Lease or any Schedule;
 
l.      Lessee shall have terminated or changed its corporate existence,
consolidated with, merged into, or conveyed or leased substantially all of its
assets to any person or entity, unless: (i) such person or entity executes and
delivers to Lessor an agreement satisfactory in form and substance to Lessor, in
its sole discretion, containing such person's or entity's effective assumption,
and its agreement to pay, perform, comply with and otherwise be liable for, in a
due and punctual manner, all of Lessee's obligations having previously arisen,
or then or thereafter arising, under the Lease, together with any and all
documents, agreements, instruments, certificates, opinions and filings requested
by Lessor; (ii) Lessor is satisfied as to the creditworthiness of such person's
or entity's conformance to other standard criteria then used by Lessor for such
purposes; and (iii) Lessee has provided no less than thirty (30) days prior
written notice of such occurrence to Lessor or its assigns;
 
m.    Lessee breaches any License, maintenance or other agreement for Software
or falls to pay when due all servicing fees, maintenance fees, update and
upgrade costs, modification costs, and all other costs and expenses relating to
the License and Software and fails to maintain the License in effect during the
term of the Lease.
 
SECTION 19. REMEDIES:
 
Upon the occurrence of any Event of Default and at any time thereafter, Lessor
may with or without giving notice to Lessee and with or without canceling the
Lease, do any one or more of the following
 
a.     enforce this Master Lease Agreement according to its terms;
 
b.     require additional collateral to secure the Lease;
 
c.     upon notice to Lessee, cancel this Master Lease Agreement and any or all
Schedules executed pursuant thereto;
  
d.    advance funds on Lessee's behalf to cure the Event of Default, whereupon
Lessee shall immediately reimburse Lessor therefore, together with late charges
accrued thereon;
 
e.     upon notice to Lessee, refuse to fund any Schedule(s) pursuant to the
Lease;
 
f.      declare any Lease or Leases immediately due and payable;
 
g.     refuse to deliver the Property to Lessee;
 
h.     declare immediately due and payable all amounts due or to become due
hereunder for the full term of the Lease (including any renewal period or
purchase options which Lessee has contracted to pay);
 
i.      in its sole discretion, sell, re-lease or otherwise dispose of any or
all of the Property covered under any Schedule, whether or not in Lessor's
possession, in a commercially reasonable manner at public or private sale with
notice to Lessee (the parties agreeing that ten (10) days' prior written notice
shall constitute adequate notice of such sale), and apply the net proceeds of
any such disposition, after deducting all costs incurred by Lessor in connection
with such default, to the obligations of Lessee hereunder and under such
Schedule, or proposed to retain any or all of the Property in full or partial
satisfaction, as the case may be, with Lessee remaining liable for any
deficiency. The sale, release, or other disposition may, at Lessor's sole
option, be conducted at Lessee's premises. Lessor may at its sole discretion
recover from Lessee liquidated damages for the loss of a bargain and not as a
penalty an amount equal to Lessor's Damages;

 
 
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j.      without notice to Lessee, repossess, disable or demand Lessee to disable
the Property wherever found, with or without legal process, and for this purpose
Lessor and/or its agents or assigns may enter upon any premises of or under the
control or jurisdiction of Lessee or any agent of Lessee, without liability for
suit, action or other proceeding by Lessee (any damages occasioned by such
repossession or disablement being hereby expressly waived by Lessee) and remove
or disable the Property therefrom; Lessee further agrees on demand, to assemble
the Property and make it available to Lessor at a place to be designated by
Lessor;
 
k.     exercise any other right or remedy which may be available to it under the
Uniform Commercial Code or any other applicable taw;
 
l.      if Lessee breaches any of its obligations under Section 7e of this
Master Lease Agreement with regard to Software, Lessee shall be liable to Lessor
for additional damages in an amount equal to the original price paid by Lessor
for the Software, and in addition, at Lessor's option, Lessor shall be entitled
to injunctive relief;
 
m.    if Lessor determines, in its sole discretion, not to take possession of
the Property. Lessor shall continue to be the owner of the Property and may, but
is not obligated to, dispose of the Property by sale or otherwise, all of which
determinations may be made by Lessor in its sole discretion and for its own
account;
 
n.     a cancellation hereunder shall occur only upon notice by Lessor and only
as to such items of Property as Lessor specifically elects to cancel and this
Lease shall continue in full force and effect as to the remaining items, if any;
 
o.     with or without terminating the Lease, and without waiving its right
herein to repossess, recover, or sell the Property, recover the Stipulated Loss
Value of the Property together with all accrued but unpaid late charges,
interest, taxes, penalties, and any and all other sums due end owing under the
Schedule as of the rent payment date immediately preceding the date of default;
 
p.    With respect to any exercise by Lessor of its right to recover and/or
dispose of any Property securing Lessee's obligations under any Schedule, Lessee
acknowledges and agrees as follows: (i) Lessor shall have no obligation, subject
to the requirements of commercial reasonableness, to clean-up or otherwise
prepare the Property for disposition; (ii) Lessor may comply with any applicable
State or Federal law requirements in connection with any disposition of the
Property, and any actions taken in connection therewith shall not be deemed to
have adversely affected the commercial reasonableness of any disposition of such
Property; (iii) Lessor may specifically disclaim any warranties of title or the
like with respect to the disposition of the Property; (iv) if Lessor purchases
any of the Property, Lessor may pay for the same by crediting some or all of
Lessee's obligations hereunder or under any Schedule; and (v) no right or remedy
referred to in this Section is intended to be exclusive, but each shall be
cumulative and shall be in addition to any other remedy referred to above or
otherwise available at law or in equity, and may be exercised concurrently or
separately from time to time;
 
q.     (i) by notice to Lessee, declare any license agreement with respect to
Software terminated, in which event the right and license of Lessee to use the
Software shall immediately terminate, and Lessee shall thereupon cease all use
of the Software and return all copies thereof to Lessor or original licensor;
(ii) have access to and disable, or demand Lessee to disable the Software by any
means deemed necessary by Lessor, including but not limited to disabling the
computers, computer systems or other equipment which run and/or operate and/or
are controlled by the Software, for which purposes Lessee hereby expressly
consents to such access and disablement, promises to take no action that would
prevent or interfere with Lessor's ability to perform such access and
disablement, and waives and releases any and all claims that it has or might
otherwise have for any and all losses, damages, expenses, or other detriment
that it might suffer as a result of such access and disablement; and (iii)
Lessee agrees that the detriment which Lessor will suffer as a result of a
breach by Lessee of the obligations contained in the Lease cannot be adequately
compensated by monetary damages, and therefore Lessor shall be entitled to
injunctive and other equitable relief to enforce the provisions of this Section
19q. LESSEE AGREES THAT LESSOR SHALL HAVE NO DUTY TO MITIGATE LESSOR'S DAMAGES
UNDER ANY LEASE BY TAKING LEGAL ACTION TO RECOVER THE SOFTWARE FROM LESSEE OR
ANY THIRD PARTY, OR TO DISPOSE OF THE SOFTWARE BY SALE, RE-LEASE OR OTHERWISE.
 
Lessor may exercise any and all rights and remedies available at law or in
equity. Including those available under the Uniform Commercial Code. The rights
and remedies afforded Lessor hereunder shall not be deemed to be exclusive, but
shall be in addition to any rights or remedies provided by taw. Lessor's failure
promptly to enforce any right or remedy hereunder shall not operate as a waiver
of such right or remedy, and Lessor's waiver of any default shall not constitute
a waiver of any subsequent or other default. Lessor may accept late payments or
partial payments of amounts due under the Lease and may delay enforcing any of
Lessor's rights or remedies hereunder without losing or waiving any of Lessor's
rights or remedies under the Lease.
 
In connection with Lessor's exercise of any or all of the above-listed remedies,
Lessor shall be entitled to recover all costs and expenses incurred by Lessor in
the repossession, recovery, storage, repair, sale, re-lease or other disposition
of the Property, or the termination or disabling of Software, including without
limitation, reasonable attorney fees and costs incurred in connection therewith
or otherwise resulting or arising from Lessee's default, and any indemnity if
then determinable, plus interest on all of the above until paid (before and
after judgment) at the lesser of the rate of eighteen percent (18%) per annum or
the highest rate permitted by law.
 
SECTION 20. ADDITIONAL PROVISIONS:
 
a.     Security interest. The parties acknowledge and agree that this is a "true
lease" and title to the leased Property (or Lessee's interest in the Property if
the Property is Software) is vested in the Lessor. In the event a court of
competent jurisdiction or other governing authority shall determine that the
Lease is not a "true lease" or is a lease intended as security or that Lessor
(or its assigns) does not hold legal title to or is not the owner of the
Property, the following shall apply:
 
         I     Effective the execution date of the Lease, Lessee, as
debtor,grants a security interest to Lessor, as secured party, in the Property
(or Lessee's interest in the Property if the Property is Software), including
but not limited to equipment and other personal property, general intangibles,
Software and Lessee's license rights and other rights to use the Software, and
accessions thereto, and any refunds, rebates, remittances, and all rights and
services related thereto, and proceeds of any of the foregoing, to secure all
duties and obligations of Lessee under any Lease or other agreement with Lessor.
The Lease shall be deemed to be a security agreement with Lessee having granted
to Lessor a security interest in the Property, and the Property shall secure all
duties and obligations of Lessee under any Lease or other agreement with Lessor.
With regard to any security interest created hereunder in any of the Property,
Lessee consents and agrees that Lessor shall have all of the rights, privileges
and remedies of a secured party under the Utah Uniform Commercial Code and all
the rights of a lien holder on a titled vehicle under Utah state law.
 
         II    Lessee authorizes Lessor to file financing statements and any
records describing the Property and to take any and all actions necessary to
perfect Lessor's interest in the Property. Lessee agrees to execute any further
documents, and to take any further actions, reasonably requested by Lessor to
evidence or perfect the security interest granted under this subpart of the
Lease, to maintain the first priority of the security interests, or to
effectuate the rights granted to Lessor under this subpart of Lease.
 

 
 
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b.     Entire Agreement. Each Schedule shall incorporate the terms and
conditions of this Master Lease Agreement and, together with the Acceptance and
Delivery Certificate and Master Progress Payment Agreement (and Certificates
thereunder), if applicable, and any amendments to any of the foregoing
documents, shall supersede all prior communications, representations,
agreements, and understandings, including but not limited to offer letters,
proposal letters, comfort letters, commitment letters and the like, and
constitute the entire understanding and agreement between the Lessor and Lessee
with regard to the subject matter hereof and thereof, and there is no
understanding or agreement, oral or written, which is not set forth herein or
therein. In the event of conflict between the provisions of this Master Lease
Agreement and any Schedule, the provisions of the Schedule shall govern.
 
c.     Time is of the Essence. Time is of the essence with respect to any Lease.
 
d.     Captions. Captions and section headings are inserted for reference and
convenience only and in no way define, Limit or describe the scope of this
agreement or intent of any provision.
 
e.     Governing Law. THIS LEASE (AS DEFINED IN SECTION 22 HEREIN) SHALL IN ALL
RESPECTS BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF UTAH, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THE
PARTIES AGREE TO SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE STATE OF UTAH; ANY
SUIT OR OTHER PROCEEDING BROUGHT BY EITHER PARTY TO ENFORCE OR CONSTRUE THIS
LEASE (AS DEFINED IN SECTION 22 HEREIN), OR TO DETERMINE MATTERS RELATING TO THE
PROPERTY OR THE RELATIONSHIP BETWEEN THE PARTIES HERETO SHALL BE BROUGHT ONLY IN
THE STATE OR FEDERAL COURTS IN THE STATE OF UTAH. THIS LEASE WAS EXECUTED IN THE
STATE OF UTAH (BY THE LESSOR HAVING COUNTERSIGNED IT IN UTAH) AND IS TO BE
PERFORMED IN THE STATE OF UTAH (BY REASON OF ONE OR MORE PAYMENTS REQUIRED TO BE
MADE TO LESSOR IN UTAH).
 
f.      Waiver of Trial by Jury. Lessor and Lessee hereby waive the right to
trial by jury of any matters arising out of the Lease or Property or the conduct
of the relationship between Lessor and Lessee.
 
g.    Severability. Should any term or provision of this Agreement be declared
invalid, illegal, void or unenforceable, all remaining terms and provisions
hereof will remain in full force and effect and will in no way be invalidated or
affected thereby.
 
h.     Binding Effect: Survivability. The provisions of each Lease shall inure
to the benefit of and shall bind Lessor and Lessee and their respective
permitted successors and assigns. All representations, warranties, covenants and
indemnities of Lessee made or agreed to in the Lease or in any certificates
delivered in connection therewith shall survive the expiration, termination or
cancellation of the Lease for any reason.
 
i.      Waiver. A waiver by either Party of any term or condition of this
agreement in any instance shall not be deemed or construed to be a waiver of
such term or condition for the future, or any subsequent breach thereof.
 
j.      Limitations. No paragraph, clause or phrase of this agreement shell
limit, infringe, deny, negate, refuse or render void any other paragraph, clause
or phrase of this agreement.
 
k.     Financial Statements. Lessee, and any guarantor, shall provide to Lessor
a copy of its annual audited financial statements within ninety (90) days after
its fiscal year end, and a copy of its quarterly unaudited financial statements
within forty-five (45) days after the end of each fiscal quarter.
 
l.      Acceptance and Delivery Certificate. If Lessee fails to sign and deliver
an Acceptance and Delivery Certificate, then except as otherwise provided in
Section 8c hereof, the Date of Acceptance shall be a date determined by Lessor
which shall be no sooner than the date Lessee receives substantially all of the
Property.
 
m.    Covenant of Quiet Possession. Lessor agrees that so long as no Event of
Default has occurred and is continuing, Lessee shall be entitled to quietly
possess the Property subject to and in accordance with the terms and conditions
of this Master Lease Agreement.
 
n.     Lessee's Options at Maturity of Base Period. At the maturity of the Base
Period of any Lease, Lessee shall, provided to Lessor $1.00, after all payments,
taxes and fees due under the lease have been paid, for the purchase of the
equipment securing the Lease.
 
o.     Notices. Notices or demands required to be given herein shall be in
writing and addressed to the other party at the address herein or such other
address provided by written notice hereunder and shall be effective (i) upon the
next business day if sent by guaranteed overnight express service; (ii) on the
same day if personally delivered; or (iii) three days after mailing if sent by
certified or registered U.S. mail, postage prepaid.
 
p.    Further Assurances: Financing Statements. Lessee will cooperate with
Lessor in protecting Lessor's interests in the Property, the Lease and the
amounts due under the Lease, including, without limitation, the execution (or
other authentication), and delivery of Uniform Commercial Code statements,
records and filings, patent and copyright registration documents with respect to
proprietary Software (if applicable), and other documents requested by Lessor.
Lessee will promptly execute, or otherwise authenticate, and deliver to Lessor
such further documents, instruments, assurances and other records, and take such
further action as Lessor may reasonably request in order to cony out the intent
and purpose of this Lease and to establish and protect the rights and remedies
created or intended to be created in favor of Lessor under this Lease. Lessee
hereby authorizes Lessor to file UCC-1 financing statements, fixture filings,
real property waivers, and all other filings and recordings, as may be deemed
necessary by Lessor. Lessee hereby authorizes and/or ratifies the filing of any
UCC-1 financing statements by Lessor before or after the execution of this
Lease. Lessee shall pay all costs of filing any financing amendment,
continuation and termination statements with respect to the Property and Lease,
including without limitation, any intangibles tax, documentary stamp tax or
other similar taxes or charges relating thereto and all costs of UCC or other
lien searches and of obtaining and filing any full or partial third-party
releases deemed necessary or advisable by Lessor. Lessee will do whatever may be
necessary or advisable to have a statement of the interest of Lessor in the
Property noted on any certificate of title relating to the Property and will
deposit said certificate with Lessor. Lessee will execute, or otherwise
authenticate, and deliver to Lessor such other documents, records and written
assurances and take such further action as Lessor may request to more fully
carry out the implementation, effectuation, confirmation and perfection of the
Lease and any rights of Lessor thereunder. Lessee grants to Lessor a security
interest in all deposits and other property transferred or pledged to Lessor to
secure the payment and performance of all of Lessee's obligations under the
Lease. Lessor is authorized to take any measures necessary to protect its
interest in the Property.
 
        In the event the Property is in the possession of a third party, Lessee
will join with Lessor in notifying the third party of Lessor's interest in the
Property and obtaining art acknowledgment from the third party that the third
party is holding the Property for the benefit of Lessor.
 
q.     Lessor's Right to Perform for Lessee. If Lessee fails to perform or
comply with any of its agreements contained herein, Lessor may perform or comply
with such agreements and the amount of arty payments and expenses of Lessor
incurred in connection with such performance or compliance (including attorney
fees), together with interest thereon at the lesser of the rate of eighteen
percent (18%) per annum, or the highest rate permitted by law shall be deemed
additional rent payable by Lessee upon demand.
 

 
 
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r.      Counterparts; Chattel Paper. This Lease may be executed in any number of
counterparts and by different parties hereto or thereto on separate
counterparts, each of which, when so executed or otherwise authenticated and
delivered, shall be an original, but all such counterparts shall together
consist of but one and the same instrument; provided, however, that to the
extent that this Lease and/or the Schedule(s) would constitute chattel paper, as
such term is defined in the Uniform Commercial Code as in effect in any
applicable jurisdiction, no security interest herein or therein may be created
or perfected through the transfer or possession of this Lease in and of itself
without the transfer or possession or control, as applicable, of the original
counterpart of such Schedule(s) identified as the document or record (as
applicable) marked "Original", and all other counterparts shall be marked
"Duplicate Original" or "Counterpart".
 
s.     Joint and Several Liability. In the event two or more parties execute
this Master Lease Agreement as Lessee, each party shall be jointly and severally
liable for all Lessee representations, warranties, and obligations (including
without limitation, payment obligations) under this Master Lease Agreement or
under any Schedule or other document executed in connection herewith. Any and
all representations, agreements, or actions by one Lessee shall be binding on
all other Lessees.
 
t.      Legal Fees and Other Costs. Lessee shall reimburse Lessor for all legal
fees and additional charges, costs and expenses incurred by Lessor: (i) in
review or preparation of any changes or amendments required by Lessee to
Lessor's standard Lease documentation; (ii) in defending or protecting its
interest in the Property; (iii) in the execution, delivery, administration,
amendment and enforcement of the Lease or the collection of any rent or other
payments due under the Lease, or the preparation of any amendments or settlement
agreements prepared in connection with the Lease; and (iv) in any lawsuit or
other legal or arbitration/mediation proceeding to which the Lease gives rise,
including without limitation, actions in tort. Lessee shall pay applicable legal
fees at the rate of $250.00 per hour. Lessee shall pay a documentation fee
calculated at .10% of the total cost of property with a minimum of $250.00 and a
maximum of $3,000.00 for each Schedule.
 
u.     Amendment and Modification. The Lease may not be amended or modified
except by a written amendment executed by a duly authorized representative of
each party, but no such amendment or modification needs further consideration to
be binding. Notwithstanding the foregoing. Lessee authorizes Lessor to amend any
Schedule to identify more accurately the Property (including, without
limitation, supplying serial numbers or other identifying data), and such
amendment shall be binding on Lessor and Lessee unless Lessee objects thereto in
writing within ten (10) days after receiving notice of the amendment from
Lessor.
 
v.     Unauthorized Distribution of lease Documents Prohibited. Lessee agrees
that it will not, through any of its actions or omissions, cause any document or
any portion of any document, associated with any Lease to be delivered,
distributed, or otherwise fall into the possession of anyone not employed by
Lessee on a full time basis, without the written consent of Lessor. Lessee
further acknowledges that any such unauthorized delivery or distribution could
cause Lessor to suffer irreparable economic harm.
 
w.    Change in Lessee's Name, Address and Jurisdiction. Lessee shall not change
its name, chief executive office address, or jurisdiction of organization from
that set forth above, unless it shall have given Lessor or its assigns no less
than thirty (30) days prior written notice.
 
SECTION 21. POWER OF ATTORNEY:
 
LESSEE HEREBY AUTHORIZES AND APPOINTS LESSOR AND LESSOR'S AGENTS AND ASSIGNS AS
LESSEE'S ATTORNEY-IN-FACT TO EXECUTE ACKNOWLEDGEMENT LETTERS AND OTHER DOCUMENTS
REQUIRED TO BE EXECUTED BY LESSEE TO EFFECT ANY UNDERWRITING OR PERFECT ANY
SECURITY INTEREST WITH REGARD TO A SCHEDULE.
 
 
SECTION 22. DEFINITIONS:
 
All capitalized terms not defined herein are defined in the Schedule.
 
a.    "Acceptance and Delivery Certificate" means, any acceptance and delivery
certificate, executed by the Lessee in connection with a Schedule, a Master
Progress Payment Agreement, if any, and this Master Lease Agreement whereby the
Lessee acknowledges that the items of Property to be leased have been delivered,
received, installed, examined and tested and determined by Lessee to be
satisfactory.
 
b.   "Base Period" means, the period of any Lease referred to as such on the
related Schedule under this Master Lease Agreement.
 
c.    "Certificate" means, an Acceptance and Delivery and Approval for Progress
Payment Certificate executed by the Lessee in connection with a Schedule, a
Master Progress Payment Agreement and this Master Lease Agreement.
 
d.   "Date of Acceptance" means, except as otherwise provided in Section 8c of
this Master Lease Agreement, the date Lessee accepts the Property designated on
any Schedule, as set forth in any Acceptance and Delivery Certificate executed
by the Lessee in form provided by Lessor.
 
e.    "Lease Commencement Date" means, as to the Property designated on any
Schedule, where the Date of Acceptance for such Schedule falls on the first day
of a calendar quarter, that date, and in any other case, the first day of the
calendar quarter following the calendar quarter in which such Date of Acceptance
falls.
 
f.    "Lease" means, a Schedule incorporating the terms of this Master Lease
Agreement, together with the related Master Progress Payment Agreement, if any,
Stipulated Loss Schedule, Acceptance and Delivery Certificate, UCC financing
statements and all other supporting documentation related thereto.
 
g.    "'Lessor's Damages" means, the Stipulated Loss Value together with costs,
expenses, attorney's fees, interest, and any determinable indemnity owed by
Lessee to Lessor.
 
h.    "Master Progress Payment Agreement" means, an agreement under which (i)
Lessee accepts items of Property by signing a Certificate, (ii) Lessor agrees to
purchase said items or Property, and (iii) Lessee agrees to pay service charges,
all prior to the Date of Acceptance of the Schedule.
 
i.     "Monthly Rental' means, the monthly rental, together with sales tax and
other amounts, if applicable, referred to as such on the related Schedule under
this Master Lease Agreement.
 
j.    "Property" means, equipment and other property, together with all related
software whether embedded therein or otherwise, with all attachments,
replacements, parts, substitutions, additions, repairs, accessions and
accessories, incorporated therein and/or affixed thereto described in any Lease
Schedule to be executed and delivered by Lessor and Lessee in connection with
this Master Lease Agreement.
 
k.    "Schedule" means, any Lease Schedule to be executed and delivered by
Lessor and Lessee under this Master Lease Agreement, which Schedule states the
terms and other information associated with the Schedule and describes the
leased Property.
 
l.     "Software" means, any computer program and supporting data, including all
documentation, later versions. updates, upgrades and modifications, provided
and/or described in any Lease Schedule to be executed and delivered by Lessor
and Lessee in connection with this Master Lease Agreement.
 
m.     "Stipulated Loss Schedule" means, Schedule of Stipulated Loss Values
relating to a specific Schedule under this Master Lease Agreement.

 
 
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IN WITNESS WHEREOF, Lessor and Lessee have executed this Master Lease Agreement
on the month, day and year first above written.
 

LESSOR:   LESSEE:               PARADIGM COMMERCIAL CAPITAL GROUP CORP COATES
INTERNATIONAL LTD.             BY: /s/ Thomas Karren   BY:
/s/ George J. Coates
              TITLE:    Operations Manager   TITLE:  
President and Chief Executive Officer
                    [stamp1.jpg]

 
 
Page 9 of 9 

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