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                                                                    EXHIBIT 10.1

                         EXECUTIVE EMPLOYMENT AGREEMENT

     EXECUTIVE EMPLOYMENT AGREEMENT, effective March 18, 2002, by and between
SPORT-HALEY, INC., a Colorado corporation (the "Company") and KEVIN M. TOMLINSON
(the "Executive").

     WHEREAS, the Company has, prior to the date of this Agreement, employed the
Executive as the Company's Chief Operating Officer and Executive Vice President
- Operations; and

     WHEREAS, the Company desires to continue to employ the Executive on a
full-time basis, and the Executive desires to be so employed by the Company, in
accordance with the terms of this Agreement.

     NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the parties agree as follows:

                                    ARTICLE I

                         EMPLOYMENT DUTIES AND BENEFITS

     SECTION 1.1 EMPLOYMENT. The Company hereby employs the Executive in the
position described on Schedule 1 hereto as an executive officer of the Company.
The Executive accepts such employment and agrees to perform the duties and
responsibilities assigned to him pursuant to this Agreement. Effective March 18,
2002, the Executive shall cease functioning as the Company's Chief Operating
Officer and Executive Vice President-Operations and the Executive's prior
Executive Employment Agreement, dated January 1, 1997, shall be replaced and
superseded entirely by this Agreement.

     SECTION 1.2 DUTIES AND RESPONSIBILITIES. The Executive shall hold the
position with the Company which is specified on Schedule 1, which is attached
hereto and incorporated herein by reference. The Executive is employed pursuant
to the terms of this Agreement and agrees to devote full-time to the business of
the Company. The Executive shall perform the duties set forth on Schedule 1
while employed as an executive officer, and such further duties as may be
determined and assigned to him from time-to-time by the Board of Directors of
the Company.

     SECTION 1.3 WORKING FACILITIES. The Executive shall be furnished with
facilities and services suitable to the position and adequate for the
performance of the Executive's duties under this Agreement. The Executive's
duties shall be rendered at the Company's offices, or at such

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other place or places as the Executive may designate with the Company's
approval, which shall not be unreasonably withheld.

     SECTION 1.4 VACATIONS. The Executive shall be entitled each year to a
reasonable vacation of not less than four weeks in accordance with the
established practices of the Company now or hereafter in effect for executive
personnel, during which time the Executive's compensation shall be paid in full.
Should the Company from time-to-time require the Executive to perform job duties
during vacation periods, the Executive shall be entitled to compensatory
vacation time at a mutually agreeable time.

     SECTION 1.5 EXPENSES. The Executive is authorized to incur reasonable
expenses for promoting the domestic and international business of the Company in
all respects, including expenses for entertainment, travel and similar items.
The Company will reimburse the Executive for all such expenses upon the
presentation by the Executive, from time-to-time, of an itemized account of such
expenditures. To facilitate entertainment in an environment in which the
Company's products are displayed, the Company will maintain a membership at a
golf or country club chosen by the Executive and will pay monthly dues and
expenses of entertainment at such club.

                                   ARTICLE II

                                  COMPENSATION

     SECTION 2.1 BASE SALARY. The Company shall pay to the Executive a base
salary of not less than the amount specified on Schedule 1, subject to annual
review of such base salary. The base salary may be raised by action of the
Compensation Committee of the Board of Directors, and such raises shall
thereafter be included in the Executive's base salary as defined for purposes of
this Agreement and the Company's bonus plan.

     SECTION 2.2 BONUS AND BONUS PLAN PARTICIPATION. The Executive shall be
entitled to receive a bonus at such time or times as may be determined by the
Board of Directors of the Company. The Executive shall also be entitled to
receive bonuses of up to 50% of the Executive's base salary in accordance with
the provisions of the Company-wide bonus plan as in effect from time to time.

     SECTION 2.3 AUTOMOBILE. The Company shall furnish, at the Company's
expense, the Executive an automobile for the Executive's use during the term of
this Agreement.

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                                   ARTICLE III

                       TERM OF EMPLOYMENT AND TERMINATION

     SECTION 3.1 TERM. This Agreement shall be for a term which is specified on
Schedule 1, commencing on its effective date, subject, however, to termination
during such period as provided in this Article. Provided that the Executive is
in compliance with all of his obligations hereunder, the term of the Executive's
employment shall be extended automatically for one additional year at the end of
each year of the term or extended term of this Agreement on the same terms and
conditions as contained in this Agreement, unless either the Company or the
Executive shall, at least 90 days prior to the expiration of the initial term or
of any renewal term, give written notice of the intention not to renew this
Agreement. If the Company gives such written notice of non-renewal, the
provisions of Section 3.6 shall apply; if the Executive gives such written
notice of non-renewal, the provisions of Section 3.2 shall apply. Automatic
renewals shall be effective in subsequent years on the same day of the same
month as the original effective day and month of this Agreement.

     SECTION 3.2 TERMINATION BY THE EXECUTIVE WITHOUT CAUSE. The Executive,
without cause, may terminate this Agreement upon 90 days' written notice to the
Company. In such event, the Executive shall not be required to thereafter render
the services required under this Agreement. Compensation for vacation time not
taken by Executive shall be paid to the Executive at the date of termination.

     SECTION 3.3 TERMINATION BY THE COMPANY WITH CAUSE. The Company may
terminate the Executive, at any time, upon ten days' written notice and
opportunity for Executive to remedy any non-compliance with the terms of this
Agreement (if such non-compliance is capable of being remedied; if not, the
Company's notice of termination shall be effective immediately), by reason of
fraud or gross negligence of the Executive. In such event, the Board of
Directors shall provide in writing to the Executive an opinion of the Board of
Directors, signed by each member voting in favor of termination of the
Executive, which shall specify with particularity the basis for such termination
by reason of fraud or gross negligence. Upon the date of such termination, the
Company's obligation to pay compensation shall terminate.

     SECTION 3.4 TERMINATION BY THE EXECUTIVE WITH CAUSE. The Executive may
terminate his employment with the Company at any time, upon five days' written
notice and opportunity for the

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Company to remedy any non-compliance, by reason of (i) the Company's material
failure to perform its duties pursuant to this Agreement, or (ii) any material
diminishment in the duties and responsibilities, working facilities, or benefits
(including, those benefits described in Articles I and II and medical, health,
dental, vision, life and death benefits, to the extent materially diminished
below that provided to other executive officers) as described in Articles I and
II of this Agreement. The Executive shall be entitled to the severance
compensation and other benefits described in Section 3.6 below in the event of
termination of this Agreement pursuant to this Section 3.4.

     SECTION 3.5 TERMINATION UPON DEATH OF EXECUTIVE. In addition to any other
provision relating to termination, this Agreement shall terminate upon the
Executive's death. In such event, the severance compensation as set forth in
Section 3.6 of this Agreement (paid as if there was a non-negotiated change in
control of the Company) and compensation for vacation time not taken by
Executive shall be paid to the Executive's estate.

     SECTION 3.6 SEVERANCE COMPENSATION AND CONTINUATION OF BENEFITS. In the
event (i) the Executive shall terminate this Agreement pursuant to Section 3.4
of this Agreement, (ii) the Company shall terminate this Agreement for reasons
other than those specified in Section 3.3 of this Agreement, or (iii) of a
change in control of the Company, as defined below, then, in any of such events,
the Executive shall be entitled to receive the following:

     (a)  The Executive shall receive severance compensation for a term of 36
months from the date of termination or change in control equal to his salary and
incentive or bonus payments, if any, as shall have been paid to the Executive
during the most recent 12-month period concluded prior to the date of
termination or change in control. Such severance compensation shall be paid
monthly during such 36 month period. In the event that the severance payments
provided for in this Section 3.6 shall be made in connection with a change of
control of the Company, and if the total amount of the change of control
compensation were to exceed three times the Executive's base compensation (the
average annual taxable compensation of the Executive for the five years
preceding the year in which the change of control occurs), the Company and the
Executive may agree to reduce the lump sum compensation to be received by
Executive in order to avoid the imposition of the golden parachute tax as
provided in the Tax Reform Act of 1984, as amended by the Tax Reform Act of
1986. Notwithstanding any provisions to the contrary herein, in the event of a
non-negotiated change in control of the Company, the severance compensation to
be paid to the Executive shall be paid by the Company in a lump sum within 30
days of the non-negotiated

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change in control. Notwithstanding any provisions to the contrary herein, in the
event of a negotiated change of control, Executive shall not be entitled to the
severance benefits provided for in this Section 3.6 if, after the change of
control has occurred, Executive continues to serve in the position set forth in
Schedule 1 and this Agreement remains in effect or Executive is able to
negotiate a satisfactory new employment agreement with the Company.

     (b)  The term "change of control" is defined for purposes of this Agreement
as a (i) change in ownership in one or a series of transactions of 50% or more
of the outstanding shares of the Company, (ii) merger, consolidation,
reorganization or liquidation of the Company, or (iii) a change in control of
the type that would be required to be reported in response to Item 6(e) of
Schedule 14A promulgated under the Securities Exchange Act of 1934, as amended
("Exchange Act") whether or not the Company is then subject to such reporting
requirement; provided that, without limitation, such a change of control shall
be deemed to have occurred if (A) any 'person' (as such term is used in Sections
13(d) and 14(d) of the Exchange Act), other than a trustee or fiduciary holding
securities under an employee benefit plan of the Company and other than a person
who is a director of the Company on the date hereof, is or becomes the
'beneficial owner' (as defined in Rule 13d-3 under the Exchange Act) directly or
indirectly, of securities of the Company representing 30% or more of the
Company's combined voting power of the Company's then outstanding securities,
(B) at any time following the execution of this Agreement, a majority of the
Board of Directors is not comprised of (i) individuals who on the date of this
Agreement were members of the Board plus (ii) any new directors whose nomination
for election by the Board or the Company's Stockholders was approved by the vote
of two-thirds of the directors then in office who either were directors or whose
nomination was previously so approved. Notwithstanding any provisions to the
contrary herein, a change of control shall not mean any transaction or series of
transactions wherein the Company repurchases its own securities or a "going
private" transaction by the Company or its affiliates, within the meaning of
Rule 13e-3 promulgated under the Exchange Act.

     The term "non-negotiated change of control," shall mean a change of
control, as defined above, which is not negotiated or approved by at least two
thirds of the board of directors of the Company prior to the change of control
event.

     (c)  Notwithstanding anything contained in this Agreement to the contrary,
in the event that any payment, within the meaning of Section 280G(b)(2) of the
Internal Revenue Code of

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1986, as amended (the "Code"), or distribution to or for the benefit of the
Executive, whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise in connection with, or arising out of,
his employment with the Company (a "Payment" or "Payments"), would be subject to
the excise tax imposed by Section 4999 of the Code or any interest or penalties
are incurred by the Executive with respect to such excise tax (such excise tax,
interest and penalties collectively referred to as the "Excise Tax"), then the
Executive shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by the Executive of all such
taxes (including any interest or penalties imposed with respect to such taxes,
including any Excise Tax imposed upon the Gross-Up Payment) that is equal to the
Excise Tax imposed upon the Payments; provided, that the Executive shall not be
entitled to receive any additional payment relating to any interest or penalties
attributable to any action or commission by the Executive in bad faith.

     (d)  An initial determination shall be made by an accounting firm mutually
agreeable to the Company and the Executive and, if not agreed to within ten days
after the date of termination, an independent accounting firm selected by the
Executive (the "Accounting Firm") as to whether a Gross-Up Payment is required
pursuant to this Section 3.6 and the amount of such Gross-Up Payment. To permit
the Accounting Firm to make the initial determination, the Company shall furnish
the Accounting Firm with all information reasonably required for such firm to
complete such determination as soon as practicable after the date of
termination, but in any event not more than twenty-five (25) days thereafter.
All fees, costs and expenses (including, but not limited to, the cost of
retaining experts) of the Accounting Firm shall be borne by the Company and the
Company shall pay such fees, costs and expenses as they become due. The
Accounting Firm shall provide detailed supporting calculations, reasonably
acceptable both to the Company and the Executive within thirty (30) days of the
date of termination, if applicable, or such other time as requested by the
Company or by the Executive (provided the Executive reasonably believes that any
of the Payments may be subject to the Excise Tax). The Gross-Up Payment, if any,
as determined pursuant to this Section 3.6 shall be paid by the Company to the
Executive within five (5) business days of the receipt of the Accounting Firm's
determination. If the Accounting Firm determines that no Excise Tax is payable
by the Executive with respect to a Payment or Payments, it shall furnish the
Executive with an opinion reasonably satisfactory to the Executive that no
Excise Tax will be imposed with respect to any such Payment or Payments. Any
such initial

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determination by the Accounting Firm of the Gross-Up Payment shall be binding
upon the Company and the Executive subject to the application of Section 3.6(e).

     (e)  As a result of the uncertainty in the application of Sections 4999 and
280G of the Code, it is possible that a Gross-Up Payment (or a portion thereof)
will be paid which should not have been paid (an "Overpayment") or a Gross-Up
Payment or a portion thereof which should have been paid will not have been paid
(an "Underpayment"). An Underpayment shall be deemed to have occurred upon a
"Final Determination" (as hereinafter defined) that the tax liability of the
Executive (whether in respect of the then current taxable year of the Executive
or in respect of any prior taxable year of the Executive) will be increased by
reason of the imposition of the Excise Tax on a Payment or Payments with respect
to which the Company has failed to make a sufficient Gross-Up Payment. An
Overpayment shall be deemed to have occurred upon a "Final Determination" (as
hereinafter defined) that the Excise Tax shall not be imposed (or shall be
reduced) upon a Payment or Payments with respect to which the Executive had
previously received a Gross-Up Payment. A Final Determination shall be deemed to
have occurred when (i) in the case of an Overpayment, the Executive has received
from the applicable government tax liability authority a refund of taxed or
other reduction in his tax liability imposed as a result of a Payment or, in the
case of an Underpayment, the Executive receives notice from a competent
governmental taxing authority that his tax liability imposed as a result of a
Payment will be increased, and (ii) in the case of an Overpayment or an
Underpayment, upon either (x) the date a determination is made by, or an
agreement is entered into with, the applicable governmental taxing authority
which finally and conclusively binds the Executive and such taxing authority, or
in the event that a claim is brought before a court of competent jurisdiction,
the date upon which a final determination has been made by such court and either
all appeals have been taken and finally resolved or the time for all appeals
have been taken and finally resolved or the time for all appeals has expired, or
(y) the statute of limitations with respect to the Executive's applicable tax
return has expired. If an Underpayment occurs, the Executive shall promptly
notify the Company and the Company shall promptly pay to the Executive an
additional Gross-Up Payment equal to the amount of the Underpayment plus an
interest and penalties imposed on the Underpayment (other than interest and
penalties attributable to any action or omission by the Executive in bad faith).
If an Overpayment occurs, the amount of the Overpayment shall be treated as a
loan by the Company to the Executive and Executive shall, within ten (10)
business days of the occurrence of

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such Overpayment, pay the Company the amount of the Overpayment, with interest
computed in the same manner as for an Underpayment.

     (f)  Notwithstanding anything contained in this Agreement to the contrary,
in the event it is determined that an Excise Tax will be imposed on any Payment
or Payments, the Company shall pay to the applicable governmental taxing
authorities as Excise Tax withholding, the amount of the Excise Tax that the
Company has actually withheld from the Payment or Payments.

     (g)  In the event the Executive is required to hire counsel to negotiate on
his behalf in connection with his termination or a change in control of the
Company, or in order to enforce the rights and obligations as provided herein,
the Company shall reimburse to the Executive all reasonable attorney's fees
which may be expended by the Executive in seeking to enforce the terms hereof.
Such reimbursement shall be paid by the Company every 30 days after the
Executive provides to the Company copies of invoices from the Executive's
counsel, which may be redacted as necessary to preserve applicable
attorney-client confidentiality.

     (h)  So long as the Executive is receiving severance compensation pursuant
to this Section 3.6 of this Agreement, the Executive shall be entitled to
continue to participate, at the Company's cost, in all existing benefit plans
provided to the Company's executive Executives at the time of the Executive's
termination or resignation. Such plans shall include, but are not limited to,
then-existing medical, health, dental, vision, disability, life insurance and
death benefit plans. If the terms of such plans expressly prohibit the Executive
from continuing as a participant in such plans following the date of resignation
or termination, the Company will provide the Executive with benefits equivalent
to, or exceeding, those offered by the then-existing benefit plans offered to
the Company's executive Executives, all at the Company's cost, for the duration
of the Executive's right to severance compensation hereunder.

     (i)  Any compensation to be paid to the Executive under the foregoing
provisions of this Section 3.6 shall be subject to the Executive complying with
the non-compete provisions of Section 4.1(c) below. In the event the Executive
does not so comply, the Company shall be released from any obligations to the
Executive under this Section 3.6.

     SECTION 3.7 OPTIONS. Any options granted to the Executive to purchase stock
of the Company shall become fully vested on the date of termination of this
Agreement except if termination is for the reasons specified in Section 3.3 of
this Agreement. This provision shall serve as a contractual modification of any
option grants or agreements between the Executive and the

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Company, whether such grants or agreements shall pre-date or postdate this
Agreement, and is hereby incorporated by reference into each such option grant
or agreement.

                                   ARTICLE IV

                         CONFIDENTIALITY AND COMPETITION

     SECTION 4.1 FURTHER OBLIGATIONS OF THE EXECUTIVE DURING AND AFTER
EMPLOYMENT.

     (a)  The Executive agrees that during the term of his employment under this
Agreement, he will engage in no other business activities which are or may be
competitive with, or which might place him in a competing position to that of,
the Company or any subsidiary of the Company.

     (b)  The Executive realizes that during the course of his employment, the
Executive will have produced and/or have access to confidential business plans,
information, business opportunity records, notebooks, data, formula,
specifications, trade secrets, customer lists, account lists and inventions of
the Company and its affiliates. Therefore, during or subsequent to his
employment by the Company, or by an affiliate, the Executive agrees to hold in
confidence and not to directly or indirectly disclose or use or copy or make
lists of any such information, except to the extent authorized by the Company in
writing. All records, files, business plans, documents, equipment and the like,
or copies thereof, relating to Company's business, or the business of an
affiliated company, which the Executive shall prepare, or use, or come into
contact with, shall remain the sole property of the Company, or of an affiliated
company, and shall not be removed from the Company's or the affiliated company's
premises without its written consent, and shall be promptly returned to the
Company upon termination or resignation of employment with the Company or its
affiliated companies.

     (c)  Because of his employment by the Company, Executive will have access
to trade secrets and confidential information about the Company, its business
plans, its business accounts, its business opportunities, its expansion plans
into other geographic areas and its methods of doing business. Executive agrees
that for a period of one (1) year after termination or resignation of his
employment, he will not, directly or indirectly, compete with the Company or its
affiliates in the business of designing, marketing or contracting for the
manufacture of men's and women's golf apparel and outerwear within the United
States. This non-compete agreement shall be void

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and of no further force or effect in the event the Company fails to pay the
Executive amounts required under Section 3.6 hereof.

     (d)  In the event a court of competent jurisdiction finds any provision of
this Section 4.1 to be so overly broad as to be unenforceable, then such
provision shall be reduced in scope by the court, but only to the extent deemed
necessary by the court to render the provision reasonable and enforceable, it
being the Executive's intention to provide the Company with the broadest
protection possible against harmful competition.

                                    ARTICLE V

                             DISABILITY AND ILLNESS

     SECTION 5.1 DISABILITY AND SALARY CONTINUATION. If the Executive becomes
totally disabled during the term of this Agreement, his full salary shall be
continued for 360 days from the date of the disabling injury or onset of the
disability illness. For purposes of this Agreement, the terms "totally disabled"
and "total disability" shall mean disability as defined in any total disability
insurance policy or policies, if any, in effect with respect to the Executive.
If no insurance policy is in effect, "total disability" shall mean a medically
determinable physical or mental condition which in the opinion of two
independent physicians renders the Executive unable to perform substantially all
of the duties required pursuant to this Agreement. Total disability shall be
deemed to have occurred on the date of the disabling injury or onset of the
disabling illness, as determined by the two independent physicians.

     SECTION 5.2 ILLNESS. If the Executive is unable to perform the services
required under this Agreement by reason of illness or physical injury not
amounting to total disability, as defined in this Article, the compensation
otherwise payable to the Executive under this Agreement shall be continued in
full for the remaining term or renewed term of this Agreement.

                                   ARTICLE VI

                                 GENERAL MATTERS

     SECTION 6.1 GOVERNING LAW. This Agreement shall be governed by the laws of
the State of Colorado and shall be construed in accordance therewith.

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     SECTION 6.2 NO WAIVER. No provision of this Agreement may be waived except
by an agreement in writing signed by the waiving party. A waiver of any term or
provision shall not be construed as a waiver of any other term or provision.

     SECTION 6.3 AMENDMENT. This Agreement may be amended, altered or revoked at
any time, in whole or in part, by filing with this Agreement a written
instrument setting forth such changes, signed by each of the parties.

     SECTION 6.4 BENEFIT. This Agreement shall be binding upon the Executive and
the Company, and shall not be assignable by the Company without the Executive's
written consent. This Agreement shall remain binding on the Company after the
occurrence of a change of control, as defined above.

     SECTION 6.5 CONSTRUCTION. Throughout this Agreement the singular shall
include the plural, and the plural shall income the singular, and the masculine
and neuter shall include the feminine, wherever the context so requires.

     SECTION 6.6 TEXT TO CONTROL. The headings of articles and sections are
included solely for convenience of reference. If any conflict between any
heading and the text of this Agreement exists, the text shall control.

     SECTION 6.7 SEVERABILITY. If any provision of this Agreement is declared by
any court of competent jurisdiction to be invalid for any reason, such
invalidity shall not affect the remaining provisions. On the contrary, such
remaining provisions shall be fully severable, and this Agreement shall be
construed and enforced as if such invalid provisions had not been included in
the Agreement.

     SECTION 6.8 AUTHORITY. The officer executing this Agreement on behalf of
the Company has been empowered and directed to do so by the Board of Directors
of the Company.

     SECTION 6.9 EFFECTIVE DATE. The effective date of this Agreement shall be
March 18, 2002.

                                        SPORT-HALEY, INC.

                                        By: /s/ Mark Stevenson
                                           -------------------------------------
                                               Mark Stevenson, Authorized Member
                                               of the Compensation Committee

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                                        EXECUTIVE:

                                        /s/ Kevin M. Tomlinson
                                        ----------------------------------------
                                        Kevin M. Tomlinson

                                      -12-
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                                SPORT-HALEY, INC.

                         EXECUTIVE EMPLOYMENT AGREEMENT

                                   SCHEDULE 1

                             DUTIES AND COMPENSATION

Executive:         Kevin M. Tomlinson

Position:          Chief Executive Officer

Base Salary:       $160,000 per year, payable bi-weekly

Bonus:             As determined by the Compensation Committee of the Board of
                   Directors and in accordance with Company-wide bonus plan

Term:              March 18, 2005, subject to automatic one (1) year extensions
                   described in Section 3.1 of the Executive Employment
                   Agreement

Duties and
Responsibilities:  Supervision and coordination of all operations of the
                   Company; supervision  of all other  executive and operating
                   officers of the Company.

APPROVED:

THE COMPANY:                                     EXECUTIVE:

By: /s/ Mark J. Stevenson                         /s/ Kevin M. Tomlinson
   ---------------------------------------       -------------------------------
   Mark J. Stevenson, Authorized Member          Kevin M. Tomlinson
   of the Compensation Committee

Date: April 15, 2002                             Date: April 16, 2002

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Exhibit 10.31    
  

 
 

MASTER LEASE AGREEMENT
  (Quasi)
  dated as of March 4, 2002 ("Agreement")    

        THIS AGREEMENT is between General Electric Capital Corporation (together with its
successors and assigns, if any, "Lessor") and GUITAR CENTER, INC.
("Lessee"). Lessor has an office at 2400 E. Katella Avenue Suite 800, Anaheim, CA 92806. Lessee is a corporation organized and existing under the laws
of the state of Delaware. Lessee's mailing address and chief place of business is 5795 Lindero Canyon Road, Westlake Village, CA 91362. This Agreement contains the general terms that apply to the
leasing of Equipment from Lessor to Lessee. Additional terms that apply to the Equipment (term, rent, options, etc.) shall be contained on a schedule
("Schedule"). 

1.    LEASING:  

        (a)  Lessor
agrees to lease to Lessee, and Lessee agrees to lease from Lessor, the equipment and other property ("Equipment")
described in any Schedule signed by both parties. 

        (b)  Lessor
shall purchase Equipment from the manufacturer or supplier ("Supplier") and lease it to Lessee if on or before the
Last Delivery Date (specified in the Schedule) Lessor receives (i) a Schedule for the Equipment, (ii) evidence of insurance which complies with the requirements of Section 8, and
(iii) such other documents as Lessor may reasonably request. Each of the documents required above must be in form and substance reasonably satisfactory to Lessor. Lessor hereby appoints Lessee
its
agent for inspection and acceptance of the Equipment from the Supplier. Once the Schedule is signed by Lessee, the Lessee may not cancel the Schedule. 

2.    TERM, RENT AND PAYMENT:  

        (a)  The
rent payable for the Equipment and Lessee's right to use the Equipment shall begin on the earlier of (i) the date when the Lessee signs the Schedule and
accepts the Equipment or (ii) when Lessee has accepted the Equipment under a Certificate of Acceptance ("Lease Commencement Date"). The term of
this Agreement shall be the period specified in the applicable Schedule. The word "term" shall include all basic and any renewal terms. 

        (b)  Lessee
shall pay rent to Lessor at its address stated above, except as otherwise directed by Lessor. Rent payments shall be in the amount set forth in, and due as stated
in the applicable Schedule. If any Advance Rent (as stated in the Schedule) is payable, it shall be due when the Lessee signs the Schedule. Advance Rent shall be applied to the first rent payment and
the balance, if any, to the final rent payment(s) under such Schedule. In no event shall any Advance Rent or any other rent payments be refunded to Lessee. If rent is not paid within ten
(10) days of its due date, Lessee agrees to pay a late charge of two cents ($.02) per dollar on, and in addition to, the amount of such rent but not exceeding the lawful maximum, if any. 

        (c)  Lessor
shall not disturb Lessee's quiet enjoyment of the Equipment during the term of the Agreement unless a default has occurred and is continuing under this Agreement. 

3.    TAXES:  

        (a)  If
permitted by law, Lessee shall report and pay promptly all taxes, fees and assessments due, imposed, assessed or levied against any Equipment (or purchase, ownership,
delivery, leasing, possession, use or operation thereof), this Agreement (or any rents or receipts hereunder), any Schedule, Lessor or Lessee by any governmental entity or taxing authority during or
related to the term 

1

 

of this Agreement, including, without limitation, all license and registration fees, and all sales, use, personal property, excise, gross receipts, franchise, stamp or other taxes, imposts, duties
and charges, together with any penalties, fines or interest thereon (collectively "Taxes"). Lessee shall have no liability for taxes imposed by the
United States of America or any State or political subdivision thereof
which are on or measured by the net income of Lessor. Lessee shall promptly reimburse Lessor (on an after tax basis) for any Taxes described in the first sentence of this Section 3(a) and
charged to or assessed against Lessor. Lessee shall send Lessor a copy of each report or return and evidence of Lessees payment of Taxes upon request. 

        (b)  Lessee's
obligations, and Lessor's rights and privileges, contained in this Section 3 shall survive the expiration or other termination of this Agreement. 

4.    REPORTS:  

        (a)  If
any tax or other lien shall attach to any Equipment, Lessee will notify Lessor in writing, within ten (10) days after Lessee becomes aware of the tax or lien.
The notice shall include the full particulars of the tax or lien and the location of such Equipment on the date of the notice. 

        (b)  Lessee
will deliver to Lessor Lessee's complete consolidated financial statements, certified by a recognized firm of certified public accountants, within ninety
(90) days of the close of each fiscal year of Lessee. If Lessor requests, Lessee will deliver to Lessor copies of Lessee's quarterly financial report certified on behalf of Lessee by the chief
financial officer of Lessee, within ninety (90) days of the close of each fiscal quarter of Lessee; provided, however, that for so long as Lessee files periodic reports with the Securities and
Exchange Commission, the corresponding quarterly or annual report filed with the Securities and Exchange Commission shall satisfy the foregoing requirement. If Lessor requests, Lessee will deliver to
Lessor all Forms 10-K and 10Q, if any, filed with the Securities and Exchange Commission within thirty (30) days after the date on which they are filed. 

        (c)  Lessor
may inspect any Equipment during normal business hours after giving Lessee reasonable prior written notice. 

        (d)  Lessee
will keep the Equipment at the Equipment Location (specified in the applicable Schedule) and will give Lessor prior written notice of any relocation of Equipment.
If Lessor requests, Lessee will promptly notify Lessor in writing of the location of any Equipment. 

        (e)  If
any Equipment is lost or damaged (where the estimated repair costs would exceed the greater of ten percent (10%) of the original Equipment cost or ten thousand and
00/100 dollars ($10,000)), or is otherwise involved in an accident causing personal injury or property damage, Lessee will promptly and fully report the event to Lessor in writing. 

        (f)    Lessee
will furnish a certificate of an authorized officer of Lessee stating, in his capacity as an officer of Lessee, that he has reviewed the activities of Lessee and
that, to the best of his knowledge, there exists no default or event which with notice or lapse of time (or both) would become such a default within thirty (30) days after any request by
Lessor. 

        (g)  Lessee
will promptly notify Lessor of any change in Lessee's state of incorporation or organization. 

5.    DELIVERY, USE AND OPERATION:  

        (a)  All
Equipment shall be shipped directly from the Supplier to Lessee. 

        (b)  Lessee
agrees that the Equipment will be used by Lessee solely in the conduct of its business and in a manner complying with all applicable laws, regulations and
insurance policies, and Lessee shall not discontinue use of the Equipment if such discontinuance causes the Equipment not to be maintained in accordance with Section 6. 

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        (c)  Lessee
will not move any equipment from the location specified on the Schedule, without the prior written consent of Lessor, which shall not be unreasonably withheld or
delayed. 

        (d)  Lessee
will keep the Equipment free and clear of all liens and encumbrances other than those which result from acts of Lessor. 

        (e)  Lessor
shall not disturb Lessees quiet enjoyment of the Equipment during the term of the Agreement unless a default has occurred and is continuing under this Agreement. 

6.    MAINTENANCE:  

        (a)  Lessee
will, at its sole expense, maintain each unit of Equipment in good operating order and repair, normal wear and tear excepted. The Lessee shall also maintain the
Equipment in accordance with manufacturers recommendations. Lessee shall make all alterations or modifications required to comply with any applicable law, rule or regulation during the term of this
Agreement. If Lessor requests, Lessee shall affix plates, tags or other identifying labels showing ownership thereof by Lessee and Lessor's security interest therein. The tags or labels shall be
placed in a prominent position on each unit of Equipment. 

        (b)  Lessee
will not attach or install anything on the Equipment that will impair the originally intended function or use of such Equipment without the prior written consent
of Lessor. All additions, parts, supplies, accessories, and equipment ("Additions") furnished or attached to any Equipment that are not readily
removable shall become subject to the lien of Lessor. All Additions shall be made only in compliance with applicable law. Lessee will not attach or install any Equipment to or in any other personal or
real property without the prior written consent of Lessor, except where the attachment or installation of the Equipment to other personal or real property is considered part of the Equipment's
original intended use. 

7.    STIPULATED LOSS VALUE:  

        (a)  If
for any reason any unit of Equipment becomes worn out, lost, stolen, destroyed, irreparably damaged or unusable ("Casualty
Occurrences") Lessee shall promptly and fully notify Lessor in writing. Lessee shall pay Lessor the sum of (i) the Stipulated Loss Value (see Schedule) of the affected
unit determined as of the rent payment date prior to the Casualty Occurrence; and (ii) all rent and other amounts which are then due under this Agreement on the Payment Date (defined below) for
the affected unit. The Payment Date shall be the next rent payment date after the Casualty Occurrence. Upon payment of all sums due hereunder, the term of this lease as to such unit shall terminate. 

        (b)  Upon
payment of all sums due under this Section 7 and satisfaction of all other obligations of Lessee to Lessor, then provided there exists no default hereunder,
(i) Lessor shall, upon the written request of Lessee, convey all of Lessor's rights and interest in the Equipment which is the subject of such Casualty Occurrence, to Lessee, ON AN
AS-IS, WHERE-IS BASIS WITHOUT RECOURSE OR ANY WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, WRITTEN OR ORAL, WITH RESPECT TO THE EQUIPMENT OR ANY COMPONENT THEREOF,
INCLUDING, WITHOUT LIMITATION, ANY WARRANTY AS TO DESIGN, COMPLIANCE WITH SPECIFICATIONS, QUALITY OF MATERIALS OR WORKMANSHIP, MERCHANTABILITY, FITNESS FOR ANY PURPOSE, USE OR OPERATION, SAFETY,
PATENT, TRADEMARK OR COPYRIGHT INFRINGEMENT, OR TITLE, AND SUBJECT TO THE RIGHTS OF ANY INSURER THEREOF, and (ii) Lessee shall be subrogated to all claims of Lessor, if any, against third
parties, for damage or loss to such Equipment. 

3

 

8.    INSURANCE:  

        (a)  Lessee
shall bear the entire risk of any loss, theft, damage to, or destruction of, any unit of Equipment from any cause whatsoever from the time the Equipment is
shipped to Lessee. 

        (b)  Lessee
agrees, at its own expense, to keep all Equipment insured for such amounts and against such hazards as Lessor may reasonably require. All such policies shall be
with companies, and on terms, reasonably satisfactory to Lessor. The insurance shall include coverage for damage to or loss of the Equipment, liability for personal injuries, death or property damage.
Lessor shall be named as additional insured with a loss payable clause in favor of Lessor, as its interest may appear, irrespective of any breach of warranty or other act or omission of Lessee. The
insurance shall provide for liability coverage in an amount equal to at least ONE MILLION U.S. DOLLARS ($1,000,000.00) total liability per occurrence, unless otherwise stated in any Schedule. The
casualty/property damage coverage shall be in an amount equal to the higher of the Stipulated Loss value or the full replacement cost of the Equipment. No insurance shall be subject to any
co-insurance clause. The insurance policies shall provide that the insurance may not be altered or canceled by the insurer until after thirty (30) days written notice to Lessor.
Lessee agrees to deliver to Lessor evidence of insurance reasonably satisfactory to Lessor. 

        (c)  Lessee
hereby appoints Lessor as Lessee's attorney-in-fact to make proof of loss and claim for insurance, and to make adjustments with insurers
and to receive payment of and execute or endorse all documents, checks or drafts in connection with insurance payments. Lessor shall not act as Lessee's attorney-in-fact unless
Lessee is in default under this Agreement and such default is continuing. Lessee shall pay any reasonable expenses of Lessor in adjusting or collecting insurance. Lessee will not make adjustments with
insurers except with respect to claims for damage to any unit of Equipment where the repair costs are less than the lesser of ten percent (10%) of the original Equipment cost or ten thousand and
00/100 dollars ($10,000). Lessor may, at its option, apply proceeds of insurance, in whole or in part, to (i) repair or replace Equipment or any portion thereof, or (ii) satisfy any
obligation of Lessee to Lessor under this Agreement. 

9.    RETURN OF EQUIPMENT:  

        (a)  At
the expiration or termination of this Agreement or any Schedule, in the event that Lessee does not exercise its purchase option, Lessee shall perform any testing and
repairs required to place the
units of Equipment in the same condition and appearance as when received by Lessee (reasonable wear and tear excepted) and in good working order for the original intended purpose of the Equipment. If
required the units of Equipment shall be deinstalled, disassembled and crated by an authorized manufacturer's representative or such other service person as is reasonably satisfactory to Lessor.
Lessee shall remove installed markings that are not necessary for the operation, maintenance or repair of the Equipment. All Equipment will be cleaned, cosmetically acceptable, and in such condition
as to be immediately installed into use in a similar environment for which the Equipment was originally intended to be used. All waste material and fluid must be removed from the Equipment and
disposed of in accordance with then current waste disposal laws. Lessee shall return the units of Equipment to a location within the continental United States as Lessor shall direct. Lessee shall
obtain and pay for a policy of transit insurance for the redelivery period in an amount equal to the replacement value of the Equipment. The transit insurance must name Lessor as the loss payee. The
Lessee shall pay for all costs to comply with this section (a). 

        (b)  From
and after the expiration or termination of this Agreement or any Schedule without the Lessee exercising its purchase option,, Lessee's rent payment obligation and
all other obligations under this Agreement shall continue from month to month notwithstanding any expiration or termination of the lease term until Lessee has fully complied with the requirements of
Section 9(a) above; provided, 

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however, that during any such period Lessor may terminate the Lessee's right to use the Equipment upon ten (10) days notice to Lessee. 

        (c)  Lessee
shall provide to Lessor a detailed inventory of all components of the Equipment including model and serial numbers. Lessee shall also provide an
up-to-date copy of all other documentation pertaining to the Equipment. All service manuals, blue prints, process flow diagrams, operating manuals, inventory and maintenance
records shall be given to Lessor at least ninety (90) days and not more than one hundred twenty (120) days prior to lease termination, subject to the right of Lessee to retain copies for
its files. 

        (d)  Lessee
shall make the Equipment available for on-site operational inspections by potential purchasers at least one hundred twenty (120) days prior to
and continuing up to lease termination. Lessor shall provide Lessee with reasonable notice prior to any inspection, which shall be scheduled so as not to unreasonably interfere with Lessee's
operations to any material extent. Lessee shall provide personnel, power and other requirements necessary to demonstrate electrical, hydraulic and mechanical systems for each item of Equipment. 

10.  DEFAULT AND REMEDIES:  

        (a)  Lessor
may in writing declare this Agreement in default if: (i) Lessee breaches its obligation to pay rent or any other sum when due and fails to cure the breach
within ten (10) days; (ii) Lessee breaches any of its insurance obligations under Section 8; (iii) Lessee breaches any of its other obligations and fails to cure that
breach within thirty (30) days after written notice from Lessor; (iv) any other representation or warranty made by Lessee in connection with this Agreement shall be false or misleading
in any material respect and Lessee fails to cure that breach within ten (10) days after written notice from Lessor; (v) Lessee or any guarantor or other obligor for the Lessee's
obligations hereunder ("Guarantor") becomes insolvent or ceases to do business as a going concern; (vi) any Equipment is illegally used;
(vii) if Lessee or any Guarantor is a natural person, any death or incompetency of Lessee or such Guarantor; or (viii) a petition is filed by or against Lessee or any Guarantor under any
bankruptcy or insolvency laws and in the event of an involuntary petition, the petition is not dismissed within forty-five (45) days of the filing date; and such default is
continuing on the date of declaration. The default declaration shall apply to all Schedules unless specifically accepted by Lessor. 

        (b)  After
a default declaration pursuant to Section 10(a), at the request of Lessor, Lessee shall comply with the provisions of Section 9(a). Lessee hereby
authorizes Lessor to peacefully enter any premises where any Equipment may be and take possession of the Equipment. Lessee shall immediately pay to Lessor without further demand as liquidated damages
for loss of a bargain and not as a penalty, the Stipulated Loss Value of the Equipment (calculated as of the rent payment date prior to the declaration of default), and all rents and other sums then
due under this Agreement and all Schedules. Lessor may terminate this Agreement as to any or all of the Equipment. A termination shall occur only upon written notice by Lessor to Lessee and only as to
the units of Equipment specified in any such notice. Lessor may, but shall not be required to, sell Equipment at private or public sale, in bulk or in parcels, with or without notice, and without
having the Equipment present at the place of sale. Lessor may also, but shall not be required to, lease, otherwise dispose of or keep idle all or part of the Equipment. Lessor may use Lessee's
premises for a reasonable period of time for any or all of the purposes stated above without liability for rent, costs, damages or otherwise. The proceeds of sale, lease or other disposition, if any,
shall be applied in the following order of priorities: (i) to pay all of Lessor's costs, charges and expenses reasonably incurred in taking, removing, holding, repairing and selling, leasing or
otherwise disposing of Equipment; then, (ii) to the extent not previously paid by Lessee, to pay Lessor all sums due from Lessee under this Agreement; then (iii) to reimburse to Lessee
any sums previously paid by Lessee as liquidated damages; and then (iv) to Lessee, if there exists any surplus. Lessee shall immediately pay any deficiency in (i) and (ii) above. 

5

 

        (c)  The
foregoing remedies are cumulative, and any or all thereof may be exercised instead of or in addition to each other or any remedies at law, in equity, or under
statute. Lessee waives notice of sale or other disposition (and the time and place thereof), and the manner and place of any advertising. Lessee shall pay Lessor's actual attorney's fees incurred in
connection with the enforcement, assertion, defense or preservation of Lessor's rights and remedies under this Agreement, or if prohibited by law, such lesser sum as may be permitted. Waiver of any
default shall not be a waiver of any other or subsequent default. 

        (d)  Any
default under the terms of this or any other agreement between Lessor and Lessee may be declared by Lessor a default under this and any such other agreement,
provided however that such
default under any such other agreement is equal to or greater than Three Hundred Thousand dollars and 00/100 cents ($300,000.00). 

11. ASSIGNMENT: LESSEE SHALL NOT SELL, TRANSFER, ASSIGN, ENCUMBER OR SUBLET ANY EQUIPMENT OR THE INTEREST OF LESSEE IN THE EQUIPMENT WITHOUT THE PRIOR
WRITTEN CONSENT OF LESSOR, WHICH SHALL NOT BE UNREASONABLY WITHHELD OR DELAYED. Lessor may, without the consent of Lessee, assign this Agreement, any Schedule or the right to enter into a Schedule.
Lessee agrees that if Lessee receives written notice of an assignment from Lessor, Lessee will pay all rent and all other amounts payable under any assigned Schedule to such assignee or as instructed
by Lessor. Lessee also agrees to confirm in writing receipt of the notice of assignment as may be reasonably requested by assignee. Lessee hereby waives and agrees not to assert against any such
assignee any defense, set-off, recoupment claim or counterclaim which Lessee has or may at any time have against Lessor for any reason whatsoever. 

12. NET LEASE: Lessee is unconditionally obligated to pay all rent and other amounts due for the entire lease term no matter what happens, even if the
Equipment is damaged or destroyed, if it is defective or if Lessee no longer can use it. Lessee is not entitled to reduce or set-off against rent or other amounts due to Lessor or to
anyone to whom Lessor assigns this Agreement or any Schedule whether Lessees claim arises out of this Agreement, any Schedule, any statement by Lessor, Lessor's liability or any manufacturers
liability, strict liability, negligence or otherwise. 

13.  INDEMNIFICATION:  

        (a)  Lessee
hereby agrees to indemnify Lessor, its agents, employees, successors and assigns (on an after tax basis) from and against any and all losses, damages, penalties,
injuries, claims, actions and suits, including legal expenses, of whatsoever kind and nature arising out of or relating to the Equipment or this Agreement, except to the extent the losses, damages,
penalties, injuries, claims, actions, suits or expenses result from Lessor's gross negligence or willful misconduct ("Claims"). This indemnity shall
include, but is not limited to, Lessor's strict liability in tort and Claims, arising out of (i) the selection, manufacture, purchase, acceptance or rejection of Equipment, the ownership of
Equipment during the term of this Agreement, and the delivery, lease, possession, maintenance, uses, condition, return or operation of Equipment (including, without limitation, latent and other
defects, whether or not discoverable by Lessor or Lessee and any claim for patent, trademark or copyright infringement or environmental damage) or (ii) the condition of Equipment sold or
disposed of after use by Lessee, any sublessee or employees of Lessee. Lessee shall, upon request, defend any actions based on, or arising out of, any of the foregoing. 

        (b)  All
of Lessor's rights, privileges and indemnities contained in this Section 13 shall survive the expiration or other termination of this Agreement. The rights,
privileges and indemnities contained herein are expressly made for the benefit of, and shall be enforceable by Lessor, its successors and assigns. 

14. DISCLAIMER: LESSEE ACKNOWLEDGES THAT IT HAS SELECTED THE EQUIPMENT WITHOUT ANY ASSISTANCE FROM LESSOR, ITS AGENTS OR EMPLOYEES. LESSOR DOES  

6

 

 NOT MAKE, HAS NOT MADE, NOR SHALL BE DEEMED TO MAKE OR HAVE MADE, ANY WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, WRITTEN OR ORAL, WITH RESPECT TO THE EQUIPMENT LEASED UNDER THIS AGREEMENT
OR ANY COMPONENT THEREOF, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY AS TO DESIGN, COMPLIANCE WITH SPECIFICATIONS, QUALITY OF MATERIALS OR WORKMANSHIP, MERCHANTABILITY, FITNESS FOR ANY PURPOSE, USE
OR OPERATION, SAFETY, PATENT, TRADEMARK OR COPYRIGHT INFRINGEMENT, OR TITLE. All such risks, as between Lessor and Lessee, are to be borne by Lessee. Without limiting the
foregoing, Lessor shall have no responsibility or liability to Lessee or any other person with respect to any of the following: (i) any liability, loss or damage caused or alleged to be caused
directly or indirectly by any Equipment, any inadequacy thereof, any deficiency or defect (latent or otherwise) of the Equipment, or any other circumstance in connection with the Equipment;
(ii) the use, operation or performance of any Equipment or any risks relating to it; (iii) any interruption of service, loss of business or anticipated profits or consequential damages;
or (iv) the delivery, operation, servicing, maintenance, repair, improvement or replacement of any Equipment. If, and so long as, no default exists under this Agreement and is continuing,
Lessee shall be, and hereby is, authorized during the term of this Agreement to assert and enforce, whatever claims and rights Lessor may have against any Supplier of the Equipment at Lessee's sole
cost and expense, in the name of and for the account of Lessor and/or Lessee, as their interests may appear. 

15. REPRESENTATIONS AND WARRANTIES OF LESSEE: Lessee makes each of the following representations and warranties to Lessor on the date hereof and on the
date of execution of each Schedule: 

        (a)  Lessee
has adequate power and capacity to enter into, and perform under, this Agreement and all related documents (together, the  "Documents"). Lessee is duly qualified to do business wherever necessary to
carry on its present business and operations, including the jurisdiction(s)
where the Equipment is or is to be located. 

        (b)  The
Documents have been duly authorized, executed and delivered by Lessee and constitute valid, legal and binding agreements, enforceable in accordance with their terms,
except to the extent that the enforcement of remedies may be limited under applicable bankruptcy and insolvency laws. 

        (c)  No
approval, consent or withholding of objections is required from any governmental authority or entity with respect to the entry into or performance by Lessee of the
Documents except such as have already been obtained. 

        (d)  The
entry into and performance by Lessee of the Documents will not: (i) violate any judgment, order, law or regulation applicable to Lessee or any provision of
Lessee's Certificate of Incorporation or bylaws; or (ii) result in any breach of, constitute a default under or result in the creation of any lien, charge, security interest or other
encumbrance upon any Equipment pursuant to any indenture, mortgage, deed of trust, bank loan or credit agreement or other instrument (other than this Agreement) to which Lessee is a party. 

        (e)  There
are no suits or proceedings pending or threatened in court or before any commission, board or other administrative agency against or affecting Lessee, which if
decided against Lessee will have a material adverse effect on the ability of Lessee to fulfill its obligations under this Agreement. 

        (f)    The
Equipment accepted under any Certificate of Acceptance is and will remain tangible personal property to the extent that it constitutes tangible personal property. 

        (g)  Each
financial statement delivered to Lessor has been prepared in accordance with generally accepted accounting principles consistently applied (except as otherwise
disclosed therein). Since the date of the most recent financial statement, there has been no material adverse change. 

7

 

        (h)  Lessee's
exact legal name is as set forth in the first sentence of this Agreement and Lessee is and will be at all times validly existing and in good standing under the
laws of the State of its incorporation (specified in the first sentence of this Agreement). 

        (i)    The
Equipment will at all times be used for commercial or business purposes. 

16.  OWNERSHIP FOR TAX PURPOSES, GRANT OF SECURITY INTEREST; USURY SAVINGS:  

        (a)  For
income tax purposes, the parties hereto agree that it is their mutual intention that Lessee shall be considered the owner of the Equipment. Accordingly, Lessor
agrees (i) to treat Lessee as the owner of the Equipment on its federal income tax return, (ii) not to take actions or positions inconsistent with such treatment on or with respect to
its federal income tax return, and (iii) not to claim any tax benefits available to an owner of the Equipment on or with respect to its federal income tax return. The foregoing undertakings by
Lessor shall not be violated by Lessor's taking a tax position inconsistent with the foregoing sentence to the extent such a position is required by law or is taken through
inadvertence so long as such inadvertent tax position is reversed by Lessor promptly upon its discovery. Lessor shall in no event be liable to Lessee if Lessee fails to secure any of the tax benefits
available to the owner of the Equipment. 

        (b)  Lessee
hereby grants to Lessor a first security interest in the Equipment, together with all additions, attachments, accessions, accessories and accessions thereto
whether or not furnished by the Supplier of the Equipment and any and all substitutions, replacements or exchanges therefor, and any and all insurance and/or other proceeds of the property in and
against which a security interest is granted hereunder. Notwithstanding anything to the contrary contained elsewhere in this Agreement, to the extent that Lessor asserts a purchase money security
interest in any items of Equipment ("PMSI Equipment"): (i) the PMSI Equipment shall secure only those sums which have been advanced by Lessor for
the purchase of the PMSI Equipment, or the acquisition of rights therein, or the use thereof (the "PMSI Indebtedness"), and (ii) no other
Equipment or other assets of Lessee shall secure the PMSI Indebtedness. 

        (c)  It
is the intention of the parties hereto to comply with any applicable usury laws to the extent that any Schedule is determined to be subject to such laws; accordingly,
it is agreed that, notwithstanding any provision to the contrary in any Schedule or this Agreement, in no event shall any Schedule require the payment or permit the collection of interest in excess of
the maximum amount permitted by applicable law. If any such excess interest is contracted for, charged or received under any Schedule or this Agreement, or in the event that all of the principal
balance shall be prepaid, so that under any of such circumstances the amount of interest contracted for, charged or received under any Schedule or this Agreement shall exceed the maximum amount of
interest permitted by applicable law, then in such event (i) the provisions of this paragraph shall govern and control, (ii) neither Lessee nor any other person or entity now or
hereafter liable for the payment hereof shall be obligated to pay the amount of such interest to the extent that it is in excess of the maximum amount of interest permitted by applicable law,
(iii) any such excess which may have been collected shall be either applied as a credit against the then unpaid principal balance or refunded to Lessee, at the option of the Lessor, and
(iv) the effective rate of interest shall be automatically reduced to the maximum lawful contract rate allowed under applicable law as now or hereafter construed by the courts having
jurisdiction thereof. It is further agreed that without limitation of the foregoing, all calculations of the rate of interest contracted for, charged or received under any Schedule or this Agreement
which are made for the purpose of determining whether such rate exceeds the maximum lawful contract rate, shall be made, to the extent permitted by applicable law, by amortizing, prorating, allocating
and spreading in equal parts during the period of the full stated term of the indebtedness evidenced hereby, all interest at any time contracted for, charged or received from Lessee or otherwise by
Lessor in connection with such indebtedness; provided, however, that if any applicable state law is amended or the law of the United States of America preempts any applicable state law, so that it
becomes lawful for Lessor to receive a 

8

 

greater interest per annum rate than is presently allowed, the Lessee agrees that, on the effective date of such amendment or preemption, as the case may be, the lawful maximum hereunder shall be
increased to the maximum interest per annum rate allowed by the amended state law or the law of the United States of America. 

17.  EARLY TERMINATION:  

        (a)  On
or after the First Termination Date (specified in the applicable Schedule), Lessee may, so long as no default exists hereunder and is continuing, terminate this
Agreement as to all (but not less than all) of the Equipment on such Schedule as of a rent payment date ("Termination Date"). Lessee must give Lessor at
least ninety (90) days prior written notice of the termination. 

        (b)  Lessee
shall, and Lessor may, solicit cash bids for the Equipment on an AS IS, WHERE IS BASIS without recourse to or
warranty from Lessor, express or implied ("AS IS BASIS"). Prior to the Termination Date, Lessee shall (i) certify to Lessor any bids received by
Lessee and (ii) pay to Lessor (A) the Termination Value (calculated as of the rent due on the Termination Date) for the Equipment, and (B) all rent and other sums due and unpaid
as of the Termination Date. 

        (c)  If
all amounts due hereunder have been paid on the Termination Date, Lessor shall (i) sell the Equipment on an AS IS
BASIS for cash to the highest bidder and (ii) refund the proceeds of such sale (net of any related expenses) to Lessee up to the amount of the Termination Value. If such
sale is not consummated, no termination shall occur and Lessor shall refund the Termination Value (less any expenses incurred by Lessor) to Lessee. 

        (d)  Notwithstanding
the foregoing, Lessor may elect by written notice, at any time prior to the Termination Date, not to sell the Equipment. In that event, on the
Termination Date Lessee shall (i) return the Equipment (in accordance with Section 9) and (ii) pay to Lessor all amounts required under Section 17(b) less the amount of the
highest bid certified by Lessee to Lessor. 

18.  EARLY PURCHASE OPTION:  

        (a)  Lessee
may purchase on an AS IS BASIS all (but not less than all) of the Equipment on any Schedule on any Rent Payment Date after the First Termination Date specified in
the applicable Schedule but prior to the last Rent Payment Date of such Schedule (the "Early Purchase Date"), for a price equal to (i) the
Termination Value (calculated as of the Early Purchase Date) for the Equipment, and (ii) all rent and other sums due and unpaid as of the Early Purchase Date (the "Early
Option Price"), plus all applicable sales taxes. Lessee must notify Lessor of its intent to purchase the Equipment in writing at least thirty (30) days, but not more
than two hundred seventy (270) days, prior to the Early Purchase Date. If Lessee is in default or if the Schedule or this Agreement has already been terminated, Lessee may not purchase the
Equipment. (The purchase option granted by this subsection shall be referred to herein as the "Early Purchase Option"). 

        (b)  If
Lessee exercises its Early Purchase Option, then on the Early Purchase Date, Lessee shall pay to Lessor any rent and other sums due and unpaid on the Early Purchase
Date and Lessee shall pay the Early Option Price, plus all applicable sales taxes, to Lessor in cash. 

19. END OF LEASE PURCHASE OPTION: Lessee may, at lease expiration, purchase all (but not less than all) of the Equipment on any Schedule on an AS IS
BASIS for cash equal to the amount indicated on such Schedule (the "Option Payment"), plus all applicable sales taxes. The Option Payment, plus all
applicable sales taxes, shall be due and payable in immediately available funds on the expiration date of such Schedule. Lessee must notify Lessor of its intent to purchase the Equipment in writing at
least one hundred eighty (180) days prior to the expiration date of the Schedule. If Lessee is in default, or if the Schedule or this Agreement has already been terminated, Lessee may not
purchase the Equipment. 

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20.  MISCELLANEOUS:  

        (a)  LESSEE
AND LESSOR UNCONDITIONALLY WAIVE THEIR RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, ANY OF THE RELATED
DOCUMENTS, ANY DEALINGS BETWEEN LESSEE AND LESSOR RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION OR ANY RELATED TRANSACTIONS, AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED BETWEEN LESSEE AND
LESSOR. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT. THIS WAIVER IS IRREVOCABLE. THIS WAIVER MAY NOT BE MODIFIED EITHER ORALLY OR
IN WRITING. THE WAIVER ALSO SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT, ANY RELATED DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING
TO THIS TRANSACTION OR ANY RELATED TRANSACTION. THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

        (b)  Any
cancellation or termination by Lessor of this Agreement, any Schedule, supplement or amendment hereto, or the lease of any Equipment hereunder shall not release
Lessee from any then outstanding obligations to Lessor hereunder. All Equipment shall at all times remain personal property even though it may be attached to real property. The Equipment shall not
become part of any other property by reason of any installation in, or attachment to, other real or personal property. 

        (c)  Time
is of the essence of this Agreement. Lessor's failure at any time to require strict performance by Lessee of any of the provisions hereof shall not waive or
diminish Lessor's right at any other time to demand strict compliance with this Agreement. Lessee agrees, upon Lessor's request, to execute, or otherwise authenticate, any document, record or
instrument necessary or expedient for filing, recording or perfecting the interest of Lessor or to carry out the intent of this Agreement. In addition, Lessee hereby authorizes Lessor to file a
financing statement and amendments thereto describing the Equipment described in any and all Schedules now and hereafter executed pursuant hereto and adding any other collateral described therein and
containing any other information required by the applicable Uniform Commercial Code and not inconsistent with this Agreement or any Schedule. Lessee irrevocably grants to Lessor the power to sign
Lessee's name and generally to act on behalf of Lessee to execute and file financing statements and other documents pertaining to any or all of the Equipment. All notices required to be given
hereunder shall be deemed adequately given if sent by registered or certified mail to the addressee at its address stated herein, or at such other place as such addressee may have specified in
writing. This Agreement and any Schedule and Annexes thereto constitute the entire agreement of the parties with respect to the subject matter hereof. NO VARIATION OR MODIFICATION OF THIS AGREEMENT OR
ANY WAIVER OF ANY OF ITS PROVISIONS OR CONDITIONS, SHALL BE VALID UNLESS IN WRITING AND SIGNED BY AN AUTHORIZED REPRESENTATIVE OF THE PARTIES HERETO. 

        (d)  If
Lessee does not comply with any provision of this Agreement, Lessor shall have the right, but shall not be obligated, to effect such compliance, in whole or in part.
All reasonable amounts spent and obligations incurred or assumed by Lessor in effecting such compliance shall constitute additional rent due to Lessor. Lessee shall pay the additional rent within five
days after the date Lessor sends notice to Lessee requesting payment. Lessor's effecting such compliance shall not be a waiver of Lessee's default. 

        (e)  Any
rent or other amount not paid to Lessor when due shall bear interest, from the due date until paid, at the lesser of twelve percent
(12%) per annum or the maximum rate allowed by law. Any provisions in this Agreement and any Schedule that are in conflict with any statute, law or applicable rule shall be
deemed omitted, modified or altered to conform thereto. 

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        (f)    THIS
AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE
STATE OF CONNECTICUT (WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES OF SUCH STATE), INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, REGARDLESS OF THE LOCATION OF THE EQUIPMENT. 

        (g)  Any
cancellation or termination by Lessor, pursuant to the provisions of this Agreement, any Schedule, supplement or amendment hereto, of the lease of any Equipment
hereunder, shall not release Lessee from any then outstanding obligations to Lessor hereunder. 

        (h)  To
the extent that any Schedule would constitute chattel paper, as such term is defined in the Uniform Commercial Code as in effect in any applicable jurisdiction, no
security interest therein may be created through the transfer or possession of this Agreement in and of itself without the transfer or possession of the original of a Schedule executed pursuant to
this Agreement and incorporating this Agreement by reference; and no security interest in this Agreement and a Schedule may be created by the transfer or possession of any counterpart of the Schedule
other than the original thereof, which shall be identified as the document marked Original and all other counterparts shall be marked Duplicate. 

        IN WITNESS WHEREOF, Lessee and Lessor have caused this Agreement to be executed by their duly authorized representatives as of the date
first above written. 

	LESSOR:	 	LESSEE:
	
General Electric Corporation	
 	
GUITAR CENTER, INC.
	

By:	
 	

 Name:

Title:	
 	

By:	
 	

 Name: Bruce L. Ross

Title: Executive Vice President, Chief Financial Officer

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QuickLinks

Exhibit 10.31

MASTER LEASE AGREEMENT (Quasi) dated as of March 4, 2002 ( "Agreement" )

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00038-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00038-of-00352.parquet"}]]