Exhibit 10.2
Master HSBC Bank Canada 3013012(06-1999)
Equipment Leasing Division Lease
Lease 3rd Floor-885 West Georgia Street Number 999927AB
Vancouver, British Columbia, V6C 3E9 --------
Lessor HSBC Bank Canada
Lessee NORTH AMERICAN EQUIPMENT LTD.
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Address #2, 53016-Hwy, 60, Spruce Grove, Alberta, T7X 3G7
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1. LEASE. Lessor leases to Lessee and Lessee leases from Lessor the collateral
described in the Schedule(s) annexed hereto together with all parts,
accessories and equipment, now or hereafter attached to or forming a part
thereof and Lessee grants a security interest in all proceeds therefrom
including all types and kinds of personal property including, without
limitation, trade-ins, accounts, building materials, chattel paper,
contracts, contract rights, documents of title, rental payments, insurance
payments, fixtures, instruments, money, inventory, leases, securities,
equipment and any other goods or intangibles received as a result of the
said goods, chattels and movable property being sold, dealt with or
otherwise disposed of (the foregoing collateral and proceeds being herein
called the "Collateral"). Each schedule shall constitute a separate lease
of the collateral described therein from Lessor to Lessee on the terms,
covenants and conditions set forth herein and in each Schedule.
2. RENT.
(a) The rent described in each Schedule shall be payable, at the times
specified in such Schedule, to Lessor at 3rd floor - 885 West Georgia
Street, Vancouver, British Columbia, V6C 3E9 or such other place as
Lessor may, in writing, designate. Any overdue payment of rent or any
other sum due hereunder shall bear interest from the due date to the
date of payment at the rate of the Prime Rate plus 3.0% per annum
calculated and compounded monthly.
(b) Lessee shall not be entitled to any abatement, compensation, reduction
of or set-off against any rental payments due, including, but not
limited to, abatements, compensations, reductions, counterclaims or
set-offs due or alleged to be due to Lessee from Lessor, or by reason
of any past, present, or future claims of Lessee against Lessor under
this lease or otherwise; nor shall this lease terminate, or the
respective obligations of Lessor or Lessee be otherwise affected by
reason of defect in, or damage to, or loss of possession, or loss of
use of or destruction of the Collateral from whatever cause, the
prohibition or the restriction of Lessee's use of the Collateral, the
interference with such use by any private person or entity, or for any
other cause, whether similar or dissimilar to the foregoing, any
present or future law to the contrary notwithstanding; it being the
intention of the parties hereto that the rental amounts due pursuant
to each Schedule and other amounts payable by Lessee hereunder shall
continue to be payable in all events in the manner and at the times
provided in each Schedule unless the obligation to pay the same shall
be terminated pursuant to the express provisions of this lease or any
Schedule hereto.
3. TERM. Notwithstanding the date of delivery of the Collateral specified in
each Schedule, the term of this lease shall, with respect to the Collateral
described in each Schedule, commence at the date and continue for the term
specified in such Schedule.
4. USE. Lessee shall not, without prior written consent of Lessor, change the
location of the Collateral from that specified in the Schedule nor change
the use of the Collateral to any use which could in any way result in a
change of capital cost allowance class from that specified in the Schedule.
The Collateral shall be used by the Lessee for commercial, industrial,
professional or handicraft purposes only. The Lessee shall not affix
the Collateral to real or immovable property nor to any goods, chattels, or
movable property not otherwise leased hereunder without the prior written
consent of the Lessor.
5. ORDER, DELIVERY, INSTALLATION. Order, delivery and installation of the
Collateral shall be entirely at the Lessee's risk and expense and shall be
arranged by the Lessor on behalf of and as agent for the Lessee in a manner
and upon terms and conditions according to the Lessee's written
instructions and, to the extent such instructions are not provided ,
according to the Lessor's sole discretion but still at the Lessee's risk
and expense. The Lessee hereby indemnifies and covenants to save harmless
the Lessor from and against all claims and liabilities howsoever arising
out of or in connection with such order, delivery and installation
including but not limited to delays in or refusal to accept delivery.
6. TITLE. The Lessor shall at all times have and retain whatever title to the
Collateral is acquired by the Lessor from the seller or manufacturer of the
Collateral. The Lessee shall have no right, title or interest in the
Collateral other than the right of possession and use in accordance with
the terms hereof and the right conferred by paragraph 15 hereof. The
Lessee acknowledges that the Collateral is and shall remain personal or
movable property.
7. WARRANTIES. Lessee has selected the Collateral and the seller thereof.
Lessee acknowledges that the Lessor has made no representation or warranty
with respect to the Collateral, its condition, design, durability,
operation, suitability or fitness for the use intended by the Lessee, its
freedom from liens and encumbrances, the Lessor's good title thereto, or as
to any other matter or thing whatsoever and all warranties whether express
or implied are, to the extent permitted by law, hereby excluded. Lessee
shall unconditionally and without set-off or compensation pay the rent
stipulated in each Schedule even if the Collateral does not operate as
intended by the Lessee, or at all, or as represented by the manufacturer or
the seller or the Collateral operates or fails to operate or performs in a
manner that could give rise to a fundamental breach of contract or is
unacceptable for any other reason whatsoever. Lessor shall not be liable to
the Lessee for any loss, cost, damage or expense of any kind or nature
caused directly or indirectly by the Collateral or the use, ownership or
maintenance thereof or for any loss of business or other damages whatsoever
and howsoever caused. Lessor hereby assigns to Lessee for the term hereof
only all assignable rights under any warranty given to the Lessor by the
seller or manufacturer of the Collateral, and at Lessee's expense, agrees
to co-operate reasonably with Lessee in the enforcement of any such
warranties.
8. REPAIRS. The Collateral shall be at the risk of the Lessee who shall
maintain, repair, overhaul, service and keep the Collateral in a good and
substantial manner and shall maintain the Collateral in a condition
equivalent to its condition at the commencement of this lease, fair wear
and tear only excepted and in a fully operative condition in conformity
with any recommendations for maintenance or otherwise which may from time
to time be made by any manufacturer or seller of the Collateral and in
conformity with all applicable laws, orders, rules, regulations and
directives of any government departments, boards or authorities. In the
event of loss, damage or destruction to or of the Collateral, Lessee shall
immediately give notice to the Lessor of such loss, damage or destruction
and Lessee shall at the Lessor's option forthwith repair or replace the
Collateral with similar equipment of equivalent value. All parts,
mechanisms and devices added to the Collateral whether by way of repair,
alteration, addition or improvement shall immediately become property of
Lessor and part of the Collateral for all purposes hereof.
9. INSURANCE. Lessee shall obtain, and maintain for the entire term of this
lease, at its own expense, property damage and liability insurance and
insurance against loss or damage to the Collateral including without
limitation, loss by fire, (including extended coverage) theft, collision
and such other risks of loss as are customarily covered by insurance on the
type of Collateral leased hereunder and by prudent operators of businesses
similar to that in which Lessee is engaged, in such amounts, in such form
and with such insurers as shall be satisfactory to Lessor. The amount of
insurance covering damage to or loss of the Collateral shall not be less
than the greater of the full replacement value of the Collateral or the
installments of rent then remaining unpaid hereunder. Each insurance policy
will name Lessee and Lessor as insureds, will name Lessor as loss payee
thereof, and shall contain a clause requiring the insurer to give to Lessor
at least 30 days prior written notice of any alteration in the terms of
such policy or 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
shall not comply with the requirements hereof. Lessee further agrees to
give Lessor prompt notice of any damage to or loss of the Collateral or any
part thereof. Lessee will at its expense make all proofs of loss and take
all other steps necessary to recover insurance benefits, unless advised in
writing by Lessor that Lessor desires so to do, at Lessee's expense.
Proceeds of insurance will be disbursed by Lessor against satisfactory
invoices for repair or replacement of Collateral, provided this lease not
then be in default. Performance by Lessee under this paragraph will not
affect or release Lessee's obligations and liabilities herein elsewhere
provided.
10. LESSEE'S COVENANTS. The Lessee covenants with the Lessor:
(a) that the Lessor or its agents shall have the right at all reasonable
times to fully inspect the Collateral and any parts thereof, or any
documents relating thereto, to determine the condition of the
Collateral, and to further determine whether or not the Lessee is
performing according to the covenants and conditions herein contained
or for any other purpose;
(b) to operate, use and maintain the Collateral at all times and to
maintain all records, logs and other materials in conformity with all
the applicable laws, orders, rules, regulations and directives of
governmental departments, boards or authorities, and in conformity
with any limitations or restrictions of performance or any published
instructions and specifications which may from time to time be
recommended by the manufacturers or sellers of the Collateral;
(c) not to use or operate the Collateral or permit it to be used or
operated illegally or contrary to any applicable laws, regulations,
orders, rules or directives of any power or government or agency
thereof having jurisdiction, or contrary to any terms of any insurance
policy in force in connection with the Collateral or in any way other
than in a careful and prudent manner and to indemnify and hold the
Lessor harmless from and against any and all actions, claims, demands,
prosecutions, administrative proceedings and any similar assertions or
threats in any way arising out of the custody, use, or operation of
the Collateral during the term of this lease, and to assume liability
and pay for any and all transgressions, defaults, fines, penalties or
forfeitures incurred, suffered or assessed against the Lessor or the
Lessee during the term of the lease together with all legal fees,
costs and expenses incidental to the foregoing to the complete
exoneration of the Lessor;
(d) to cause the Collateral to be operated only by competent and qualified
operators;
(e) to keep the Collateral free and clear of all seizures, forfeitures,
liens, claims, privileges, debts, taxes, charges, pledges,
encumbrances or adverse claims of any nature whatsoever;
(f) to pay, when due, all license fees and other fees and assessments
necessary for the securing of licenses, or other similar permits for
the operation of the Collateral and, further, to pay, when due, and/or
indemnify the Lessor from all taxes, fees, assessments or other levies
now and hereafter imposed by any provincial, federal or local
government upon the Collateral, or upon the delivery, purchase,
leasing, use, ownership, operation, possession, sale or return
thereof, whether assessed to the Lessor or to the Lessee; provided
that upon payment of such fees, assessments, taxes or levies, the
Lessee will immediately deliver the receipts for such payments to the
Lessor, and that if the Lessor pays (which it may, but is not obliged
to do) any sum or sums which is an obligation of the Lessee under this
lease, then the amount of such payments shall be forthwith payable by
the Lessee to the Lessor and if not so paid shall bear interest from
the date such payment is due at the Prime Rate plus 3% per annum
calculated and compounded monthly;
(g) to furnish at its own cost and expense all fuel, oils, lubricants and
other material necessary for the operation and maintenance of the
Collateral;
(h) to indemnify and save the Lessor harmless from and against all costs,
claims, demands, expenses, liabilities, awards, actions and causes of
action for loss or damage or injury (including death) of persons or
property or of any other nature and kind whatsoever arising from this
lease or in any way relating to the use, operation or ownership of the
Collateral during the term of this lease and whether caused by
Lessee's negligence or otherwise including without limitation, the
manufacture, selection, purchase, character, safety, condition,
delivery, refusal by the Lessee to accept delivery, possession,
operation, sale, storage or return of the Collateral; and that the
Lessor shall not be responsible to the Lessee for any loss of use of
the Collateral or any part thereof during the term of the lease
whatever may be the cause of such loss of use;
(i) to place such insignia, plates or other identification on the
Collateral or any part thereof showing Lessor's title thereto as
Lessor may from time to time request at Lessee's expense and if
placed, the Lessee shall not remove, conceal or alter the same;
(j) that the Lessee will not without the prior written consent of the
Lessor, sublet or otherwise relinquish possession (except for required
or scheduled maintenance or as otherwise permitted pursuant to this
lease) of the Collateral or any part thereof, or assign any of its
rights hereunder;
(k) to execute all such further documents and do all such further acts and
things as the Lessor may reasonably require for the purpose of
registering this lease at any registries or offices of governmental
departments, boards or authorities, domestic or foreign, so as to
evidence and/or protect the interest of the Lessor in the Collateral
and this lease;
(l) not to claim or attempt to claim capital cost allowance in respect of
the Collateral;
(m) to pay any and all reasonable costs of the Lessor (including legal
fees and disbursements on a solicitor and own client basis) in:
(i) considering and granting any waivers and consents required to be
given under this lease; and
(ii) any action or consideration required by the Lessor relating to
any option granted herein; and
(iii) any action or consideration required in respect of any insurance
claim;
(iv) inspecting the Collateral, investigating title to the
Collateral, negotiating and preparing all documentation in
connection with this lease, registering or perfecting this lease
or the Lessor's interests herein at all offices of public record
and all renewals and amendments of the same, taking, recovering
and keeping possession of the Collateral, and any other
proceedings taken in connection with or to enforce the
provisions of this lease.
(n) that the Lessee will not change its name or enter into any
amalgamation agreement, merger or other corporate proceedings whereby
its name shall change without providing the Lessor with at least 30
days' prior written notice of any such change of name;
(o) to deliver to the Lessor within 120 days after the end of each of its
fiscal years the consolidated balance sheet and income statement of
Lessee for such year.
11. RETURN OF COLLATERAL. Upon termination of this lease, the Lessee shall, at
its own expense and in a prudent manner, immediately return the Collateral
free of all liens, encumbrances and adverse claims of every nature to the
Lessor at such location as the Lessor shall designate and in the same
condition as at the commencement of this lease, fair wear and tear
excepted. Provided that the Lessor may, by notice given to the Lessee on or
prior to the termination of this lease, require the Lessee at its expense
to dispose of the Collateral upon termination in such manner as the Lessor
may reasonably request.
12. DEFAULT. The occurrence or happening of any one or more of the following
events shall constitute an event of default:
(a) the Lessee shall fail to make any rent payment or other payments
required hereunder when due and such failure shall continue unremedied
for a period of 20 days after written notice by Lessor; or
(b) the Lessee removes the Collateral from its place of location stated on
the Schedule without the Lessor's prior written consent; or
(c) the Lessee parts with possession of the Collateral; or
(d) the Lessee purports to sell, assign, transfer, sublet, pledge,
hypothecate or otherwise suffer a lien, encumbrance or other adverse
claim of any kind upon or against any interest in this lease or the
Collateral without the Lessor's prior written consent; or
(e) the Collateral is put to abnormal use likely to result in accelerated
depreciation; or
(f) the Lessee shall fail to perform or observe any covenant, condition or
agreement to be performed or observed by it hereunder and such failure
shall continue unremedied for a period of 20 days after written notice
thereof by Lessor; or
(g) any representation or warranty made by Lessee herein or in any
document or certificate furnished Lessor in connection herewith or
pursuant hereto shall prove to be incorrect at any time in any
material respect; or
(h) the Lessee or any Indemnifier shall become insolvent or bankrupt or
make an assignment for the benefit of creditors or consent to the
appointment of a trustee or receiver; or a trustee or a receiver shall
be appointed for Lessee or any Indemnifier or for a substantial part
of any of their property without consent and shall not be dismissed
within a period of 30 days; or bankruptcy, reorganization or
insolvency proceedings shall be instituted by or against Lessee or any
Indemnifier and if instituted shall not be dismissed within a period
of 30 days; or
(i) if the Collateral or any material part thereof is seized under legal
process, confiscated, sequestered or attached or if a distress is
levied thereon; or
(j) if Lessee or any Indemnifier is a corporation and
(i) the control or beneficial ownership thereof changes from that
which existed at the date of execution of this lease;
(ii) any special resolution is passed or other proceedings taken
regarding the wind-up of the corporation;
(iii) it ceases to carry on the business presently conducted by it; or
(k) the Lessee or any Indemnifier shall suffer the loss or suspension of
any licences, permits, or other operating authorities required for
the present operation of its business or any part of it; or
(l) the Lessee defaults under any other agreement to which Lessee and
Lessor are parties or any Indemnifier defaults under any other
agreement to which any Indemnifier and the Lessor are parties; or
(m) if the Lessor in good faith believes and has commercially reasonable
grounds to believe itself insecure or that the prospect of payment or
performance by the Lessee hereunder is about to be impaired or that
the Collateral is or is about to be placed in jeopardy.
For greater certainty, it is understood and agreed that if any such default
shall occur in respect of any Schedule hereunder, such default shall at the
option of the Lessor be deemed to be a default under any or all other Schedules
hereunder.
13. REMEDIES ON DEFAULT. Upon the occurrence of an event of default the Lessor
may;
(a) take possession of the Collateral and for that purpose enter any
premises where the Collateral is located whether or not the Collateral
is affixed to any such premises, and sell, lease or otherwise dispose
of the Collateral by public or private means and upon such terms and
consideration as the Lessor may in its sole discretion accept. Without
limiting the generality of the foregoing, the Lessor shall have the
right to dispose of the Collateral where the payment for such is
deferred provided that the Lessee will not be entitled to be credited
with the proceeds of any such disposition until the monies therefor
are actually received. The Lessee hereby waives any damages or claim
to damages arising from any retaking of possession under the terms of
this lease; or
(b) in the name of and as the irrevocably appointed agent and attorney for
Lessee and without terminating or being deemed to have terminated this
lease take possession of the Collateral and proceed to lease the
Collateral to any other person, firm or corporation on such terms and
conditions, for such rental and for such period of time as Lessor may
deem fit and receive such rental and hold the same and apply the same
against any monies expressed to be payable from time to time by Lessee
hereunder; or
(c) terminate this lease and by written notice to Lessee require Lessee to
forthwith pay to Lessor on the date specified in such notice, as a
genuine pre-estimate of liquidated damages for loss of a bargain and
not as a penalty the present worth of the aggregate of all unpaid
amounts due hereunder as rental or otherwise to the expiration of the
term of the lease (as if the lease had not been terminated) calculated
by discounting such amounts at 5% per annum compounded monthly less
the net amount received by Lessor on any sale, lease or other
disposition of the Collateral after deducting all costs and expenses
including legal fees and disbursements on a solicitor and own
client basis.
No one or more of the remedies referred to herein is intended to be
exclusive, but each shall be cumulative and in addition to any other
remedies referred to herein or otherwise available to the Lessor at
law or in equity, and in particular pursuant to the Personal Property
Security Act of any Province or Territory in Canada in force or to
come into force from time to time as the same may be proclaimed in
force, amended or replaced by similar legislation from time to time.
If upon any disposition of the Collateral under the provisions of this
lease or under the provisions of any other remedies so available to
the Lessor there shall be any surplus, such surplus shall be the sole
and absolute property of the Lessor.
14. WAIVER/SEVERABILITY. Any provision of this lease which is unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such prohibition without invalidating the remaining provisions
hereof and any such prohibition in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction. Lessee,
if a corporation, agrees that The Limitation of Civil Rights Act of the
Province of Saskatchewan, or any provision thereof, shall have no
application to this lease or any agreement or instrument renewing or
extending or collateral to this lease and the Lessee acknowledges that
seizure or repossession of the Collateral shall not by implication of law
extinguish the Lessee's indebtedness under this lease or other collateral
security.
15. OPTION TO PURCHASE. Provided the Lessee shall not be in default under any
obligation on its part hereunder, the Lessor hereby grants to the Lessee an
option to purchase the Lessor's interest in the Collateral herein for the
purchase price and at the time set forth in the Schedule or Schedules
attached hereto. The option granted herein shall be exercised by the Lessee
giving the Lessor written notice of its intention to exercise the option at
least 30 days prior to the time set forth in the Schedule. The time set
forth in the Schedule shall be the time for the conclusion of the sale, and
on that date the Lessee, having exercised such option, shall pay the
purchase price to the Lessor and the Lessor shall transfer its interest in
the Collateral to the Lessee whereupon this lease shall cease with respect
to such Collateral. The Lessee shall pay any and all Provincial or Federal
taxes, licence or registration fees or other fees, costs or charges payable
in respect of the Collateral and in connection with any said sale and
purchase. The bill of sale or sale agreement from the Lessor to the Lessee
shall contain no warranties on the part of the Lessor either express or
implied, except that the Lessor shall warrant that it has done no act or
created any security interest in the Collateral which would adversely
affect the title thereto.
16. INDEMNITIES SURVIVE. The indemnities provided by the Lessee to the Lessor
under this lease, and in particular those under paragraphs 5 and 10 shall
survive and continue in full force and effect after termination of this
lease, in whole or in part, whether by effluxion of time or otherwise, or
the release or discharge from this lease of any Collateral, or the sale or
disposition of the Collateral or the release or discharge of the Lessee to
pay any rental payments, or as to any act, matter or thing which shall have
been done or have occurred or arisen prior to such termination, release or
discharge.
17. ENTIRE AGREEMENT. This lease together with each schedule and any purchase
authority, purchase order, delivery and/or installation receipt and
indemnity given with this lease constitutes the entire agreement between
the parties.
18. NON CANCELLABLE LEASE. This lease cannot be cancelled or terminated except
as expressly provided herein.
19. PURCHASE MONEY SECURITY INTEREST AND PROCEEDS. This lease grants to the
Lessor:
(a) a Purchase Money Security Interest in the Collateral unless this lease
shall constitute a sale and leaseback of the Collateral; and
(b) a Security Interest in Proceeds of the Collateral which are all
present and after acquired personal property, fixtures and crops,
within the meaning of the Personal Property Security Act of any
Province or Territory in Canada in force or to come into force from
time to time as the same may be proclaimed in force, amended or
replaced by similar legislation from time to time.
20. COPY OF AGREEMENT. The Lessee hereby acknowledges receiving a copy of this
lease and waives all rights to receive from the Lessor a copy of any
financing statement, financing statement (transition), financing change
statement or verification statement filed at any time in respect of this
lease.
21. FURTHER ASSURANCES. The Lessee shall forthwith and from time to time
execute all documents and do all acts and things which in the opinion of
the Lessor are necessary or desirable to provide continuing rights and
priorities in the Collateral, to provide a security interest, a purchase
money security interest, and a security interest in proceeds of the
Collateral as the case may be.
22. PPSA WORDS AND EXPRESSIONS. Words and expressions used herein that have
been defined in the Personal Property Security Act of any Province or
Territory of Canada in force or to come into force from time to time as the
same may be amended or replaced by similar legislation from time to time
shall be interpreted in accordance with their respective meanings given in
any such Act unless otherwise defined herein or unless the context
otherwise requires.
23. INDEMNIFIER. When used in this lease, "Indemnifier" means any individual or
corporation which provides any guaranty or indemnity agreement of any kind
to the Lessor to secure the obligations of the Lessee to the Lessor.
24. GOVERNING INSTRUMENT. In the event of any conflict between any provision in
this lease and any provision in any Schedule hereto, the provision of such
Schedule shall prevail.
25. QUEBEC. Where this lease is governed by the laws of Quebec, this lease
shall be construed as a contract of leasing, governed by articles 1842 to
1850 of the Civil Code of Quebec, and
(a) for greater certainty, the word "lease" as used herein and in any
Schedules or forms related shall be read as "contract of leasing" or
"leasing", as the context requires;
(b) the security interests granted in sections 1 and 19(b) hereof shall be
in the nature of a moveable hypothec for that sum disclosed as the
total in item 1 of the Schedule(s) Annexed, with interest at the rate
of 24% per annum from the date hereof.
26. MISCELLANEOUS.
(a) The parties agree that time is of the essence hereof and that no
waiver by Lessor of any default nor any compromise or extension of
payment granted by Lessor shall constitute a waiver of any other
default by the Lessee or shall be a waiver of any other right of
Lessor.
(b) This lease may be amended but only in writing signed by the parties
hereto.
(c) The captions in this lease are for convenience only and shall not
define or limit any of the terms hereof.
(d) This lease shall be binding upon and enure to the benefit of the
parties hereto, their permitted heirs, executors, administrators,
successors and assigns.
(e) No one or more of the remedies referred to in this lease shall be
exclusive, but each shall be cumulative and additional to any other
remedy or remedies referred to herein or available to the Lessor at
law or in equity.
(f) "Prime Rate" means the floating annual rate of interest established
and recorded by HSBC Bank Canada from time to time as a reference rate
for purposes of determining rates of interest it will charge on loans
denominated in Canadian dollars.
(g) Where there shall be more than one Lessee, they shall be jointly and
severally bound to the fulfilment of their obligations hereunder.
(h) If the context so requires, words importing number shall be deemed to
include a greater or lesser number, words importing gender shall be
deemed to include the other gender or the body corporate and words
importing the body corporate shall be deemed to include either gender.
(i) The Lessor and the Lessee confirm that they have expressly required
that this lease and all other schedules, purchase orders, notices and
documents relating thereto be drafted in English. Le Locateur et le
Locataire confirment qu'ils ont expressement exige que la Convention
de Bail d'Equipement Principals et tous les annexes, bons de commande,
avis et documents y afferents soient rediges en anglais.
Executed this 12 day of February, 2003.
By execution hereof, the signer hereby
certifies that he has read this lease,
and that he is duly authorized to
execute this lease on behalf of
Lessee.
Lessee NORTH AMERICAN EQUIPMENT LTD. C/S Lessor HSBC Bank Canada
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JOHN LANDRY
ACCOUNT
MANAGER,
By /s/ Secretary By /s/ LEASING
-------------------- ------------ -------------------- -----------
Authorized Signatory Title Authorized Signatory Title
G.N.LARKE
Regional
Leasing
/s/ CEO /s/ Manager
-------------------- ------------ -------------------- -----------
Authorized Signatory Title Authorized Signatory Title
ADDENDUM "A" to Master Equipment Lease, Lease Number 999927AB, dated Feb. 12,
2003 between HSBC Bank Canada as "Lessor", and North American Equipment Ltd., as
"Lessee".
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Listed below are amendments and clarifications to referenced paragraphs in the
Master Equipment Lease:
PARAGRAPH
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2 (a) and
10 (f): The applicable interest rate shall be the three month LIBOR rate
plus 200 basis points calculated and compounded monthly.
4 and 10 (j): (a) The Lessee is permitted to sublet and relinquish possession
of any of the Collateral to related companies, provided
that:
(i) the Collateral is not removed from the Ft. McMurray
area, Alberta; and
(ii) the Lessee has obtained written confirmation from its
insurers that such sublease or relinquishment is
permitted under its insurance policy; and
(iii) HSBC Bank Canada will continue to look solely to
Lessee for the payment and performance of its
liabilities and obligations under the Offer To Lease
and Lease Schedules.
(b) The Lessee can claim capital cost allowance in respect of
the Collateral under form T2145 "Election in Respect of the
Leasing of Property", in conjunction with the Lessor.
8. Any tires added to the Collateral shall remain the property of
the Lessee and shall not form part of the Collateral for the
purposes of the Lease.
11. The last sentence in this paragraph shall be deleted.
12. It shall not be a default for the Lessee to sublet or relinquish
possession of any of the Collateral to related companies;
provided the Lessee is not in default of its covenants in
paragraphs 4 and 10(j).
15. The proviso at the beginning of this paragraph shall be changed
to read as follows:
"Provided the Lessee shall not be in default under any
payment obligation on its part hereunder or under any other
document granted to HSBC Bank Canada.
17. The Lease is subject and subordinate to a letter agreement
entitled "Offer To Lease" dated January 29, 2003 and made between
the Lessor, the Lessee and Deere-Hitachi Construction Machinery
Corporation as Residual Guarantor.
LESSOR: LESSEE:
HSBC BANK CANADA NORTH AMERICAN EQUIPMENT LTD.
Leasing Division
/s/ JOHN LANDRY
ACCOUNT MANAGER, LEASING /s/
- -------------------------------------- --------------------------------------
/s/ G:N: LARKE
Regional Leasing Manager /s/
- -------------------------------------- --------------------------------------
THIS AGREEMENT is made as of the 18 day of February, 2003
BETWEEN:
DEERE-HITACHI CONSTRUCTION MACHINERY
CORPORATION (hereinafter called "Purchaser")
- and -
HSBC BANK CANADA, a Canadian chartered bank with an office at 3rd
Floor, 885 West Georgia Street, Vancouver, British Columbia V6C 3E9
(hereinafter called "HSBC")
WHEREAS:
A. North American Equipment Ltd. (the "Lessee") wishes to lease five (5)
Euclid-Hitachi EH5000 Haul Trucks (the "Collateral") from HSBC pursuant to an
Offer to Lease dated January 29, 2003 from HSBC to the Lessee (the "Offer to
Lease"), pursuant to which HSBC and the Lessee entered into a master lease
agreement (the "Lease") and Lease Schedules.
B. Pursuant to the Offer to Lease, the Purchaser has agreed with HSBC to
purchase the Collateral from HSBC at the times and on the terms and conditions
set forth therein.
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of HSBC
purchasing the Collateral and entering into the Offer to Lease and the Lease and
other good and valuable consideration, the receipt and sufficiency whereof is
hereby acknowledged, the parties hereto agree as follows:
1. All capitalized terms utilized but not otherwise defined herein shall
have the meanings ascribed thereto in the Offer to Lease.
2. The Purchaser covenants and agrees with HSBC with respect to each
Lease Schedule to purchase from HSBC:
(a) on the Termination Date, the Vehicle(s) described in the corresponding
Lease Schedule(s) terminated by the Lessee pursuant to Section 10.1 of
the Offer to Lease at a purchase price equal to the acquisition cost
of such Vehicle(s) as described in the terminated Lease Schedule(s)
multiplied by 70.2515%, plus all taxes, including GST and PST thereon;
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(b) on the last day of the Initial Term, the Vehicle(s) described in the
corresponding Lease Schedule(s) not renewed for the First Renewal Term
and in respect of which the Lessee has not exercised its option to
purchase pursuant to Section 9.1 of the Offer to Lease at a purchase
price equal to the acquisition cost of such Vehicle(s) as described in
the applicable Lease Scbedule(s) multiplied by 60%, plus all taxes,
including GST and PST thereon;
(c) on the last day of the First Renewal Term, the Vehicle(s) described in
the corresponding Lease Schedule(s) not renewed for the Second Renewal
Term and in respect of which the Lessee has not exercised its option
to purchase pursuant to Section 9.1 of the Offer to Lease at a
purchase price equal to the acquisition cost of such Vehicle(s) as
described in the applicable Lease Schedule(s) multiplied by 40%, plus
all taxes, including GST and PST thereon;
(d) on the last day of the Second Renewal Term, the Vehicle(s) described
in the corresponding Lease Schedule(s) and in respect of which the
Lessee has not exercised its option to purchase pursuant to Section
9.1 of the Offer to Lease at a purchase price equal to the acquisition
cost of such Vehicle(s) as described in the applicable Lease
Schedule(s) multiplied by 20%, plus all taxes, including GST and PST
thereon.
3. Upon the occurrence of an event described under Section 2 hereof, the
Purchaser agrees to accept delivery of the applicable Vehicle(s) on
the Termination Date or on the last day of the Initial Term, the First
Renewal Term or the Second Renewal Term, as the case may be, at the
location specified in the Offer to Lease on an "as-is" basis. The
Purchaser further agrees to accept the Collateral without tires.
4. The Purchaser acknowledges and agrees that the Lessee may enter into
one or more Lease Schedules with respect to the Collateral and the
obligations of the Purchaser hereunder shall apply to each such Lease
Schedule. The liabilities and obligations of the Purchaser hereunder
are continuing obligations, and shall not be discharged by the
purchase of part of the Collateral.
5. The purchase and sale provided for herein shall be completed on the
Termination Date or on the last day of the Initial Term, the First
Renewal Term or the Second Renewal Term, as the case may be (each, a
"Closing Date").
- 3 -
6. On the Closing Date, HSBC shall deliver to the Purchaser a Bill of
Sale for the subject Collateral which Bill of Sale shall contain no
warranties on the part of HSBC either express or implied except that
HSBC shall warrant that it has done no act or created any security
interest in the subject Collateral which would adversely affect the
title thereto, that HSBC has good title to the Collateral subject to
the rights of the Lessee under the Lease and that the interest of HSBC
in the Collateral has been validly perfected in accordance with
applicable law. Without limiting the foregoing, the Collateral shall
be purchased on an "as is" basis. In addition, HSBC shall assign to
the Purchaser, to the extent they are assignable, any warranties
relating to the Collateral then in effect. The Purchaser shall
immediately upon delivery of such documents, provide the aforesaid
purchase price to HSBC by way of cash, bank draft or certified cheque.
7. HSBC shall not be responsible for delivering the subject Collateral to
the Purchaser on the Closing Date, however HSBC shall direct the
Lessee pursuant to the Lease to return the Collateral FOB to the
Lessee's worksite in the Fort McMurray Area, Alberta and shall
otherwise assign to the Purchaser any and all other rights and
benefits it may have pursuant to the Lease so as to facilitate the
Purchaser's taking possession of the Collateral from the Lessee
following completion of the purchase and sale as provided for herein.
8. Possession and risk for the Collateral shall pass to the Purchaser
immediately upon the closing of the purchase and sale provided for
herein.
9. The Purchaser shall be responsible for the payment of all provincial
and federal sales tax, goods and service tax, licence or registration
fees or any other fees, costs or charges payable in respect of the
Collateral and/or in connection with the sale and purchase of the same
or consequent upon the aforesaid sale and purchase occurring, all at
the time and in the manner specified in any applicable statutes or
regulations, and shall provide proof of compliance with the same to
HSBC forthwith upon demand by HSBC.
10. If any of the Collateral shall be damaged or lost such that there is
payment made to HSBC in respect of such damage or loss then:
(a) if such payment or any part thereof is applied against replacement of
damaged or lost Collateral, such replaced Collateral shall be subject
to this Agreement in all respects;
- 4 -
(b) if such payment is taken by HSBC and by agreement of HSBC and the
Lessee, the Lease shall be modified to reflect the fact that such
Collateral no longer forms part of the Lease, then this Agreement
shall nonetheless continue to apply to the Collateral remaining under
the Lease, with the purchase price being adjusted on a pro rata basis.
11. The obligations of the Purchaser are absolute and unconditional and
will not be released or discharged by:
(a) any extensions of time, indulgences or modifications which HSBC may
extend or make with the Lessee in respect of the performance of any
obligations of the Lessee under any provisions of the Lease;
(b) any waiver by or failure of HSBC to enforce any of the terms,
covenants, conditions and provisions of the Lease;
(c) any assignment of the Lease by the Lessee or any trustee, receiver or
liquidator;
(d) any consent which HSBC may give to any such assignment;
(e) any assignment or transfer or other disposition by HSBC of any of its
rights under the Lease, and without limiting the generality of the
foregoing it is hereby agreed that HSBC may assign, transfer or
otherwise dispose of any such rights without the prior consent of the
Purchaser and in such event any assignee, transferee or successor in
interest shall have the same rights and remedies as if originally
named herein in the place of HSBC;
(f) any inability of HSBC to enforce any terms, covenants, conditions and
provisions of the Lease against the Lessee other than the obligation
of the Lessee to surrender possession of the Collateral on the Closing
Date;
(g) the acceptance of additional security from the Lessee and regardless
of the release or discharge of the Lessee by HSBC or by others or by
operation of any law;
(h) any amendment, modification or change of the Lease whether or not the
Purchaser has been notified of the same (except with respect to the
return conditions set forth in the Addendum which HSBC shall agree not
to modify without the Purchaser's prior written consent);
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(i) a discharge of the Lessee from any of its obligations under the Lease
by way of applicable statutes relating to bankruptcy or insolvency or
the like.
12. This Agreement is not assignable by the Purchaser.
13. Time shall be of the essence of this Agreement.
14. All terms, agreements and conditions contained herein shall extend to
and be binding upon the parties hereto and their respective successors
and permitted assigns.
15. If the context so requires, words importing gender shall be deemed to
be the other gender or the body corporate and vice versa and all legal
rights and obligations hereunder shall be determined in accordance
with the laws of the Province of Alberta.
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be executed
in the presence of their officers duly authorized in that regard as of the day
and year first above written.
DEERE-HITACHI CONSTRUCTION MACHINERY CORPORATION
by its authorized signatory(ies):
/s/ - President
- ----------------------------------------
Name & Title:
/s/ - Chief Financial Officer
- ----------------------------------------
Name & Title:
HSBC BANK CANADA
/s/ G.N. LARKE
Regional Leasing Manager
- ----------------------------------------
Authorized Signatory
/s/ JOHN LANDRY
ACCOUNT MANAGER, LEASING
- ----------------------------------------
Authorised Signatory