Tim Scaletta, d/b/a “Modern Day Music” (herein after red to as MDM), as Lessor, rents the Instrument designated on this agreement (or an instrument received through the Exchange Option) to the named Lessee. As used in this agreement, “Instrument” refers to the musical instrument or equipment, or both, provided pursuant to this agreement.

The initial term for which the Lessee is obligated is four months, beginning on the day after the Date Received.

Following the initial trial period, the Lessee may: a) continue to rent the instrument by the month at the rate stated above, until the total payments equal the Cash Price of the instrument, at which point the Lessee will then own the instrument: or b) return the instrument in good repair, without further obligation except any outstanding amounts which may by due to MDM, or c? return the instrument in good repair, and use the acquired rental credit to purchase a “step-up” instrument or similar type (see paragraph 9).

Ownership of the Instrument.   Subject the purchase provisions of paragraph 4.b.:

a. Customer acknowledges and agrees that the Instrument is and at all times will remain the sole and exclusive property of MDM.

b. Customer promises and agrees not to modify the Instrument in any way, or to sell or trade the Instrument to any third party, or to remove the Instrument from the state of Minnesota.

c. Upon any termination of the Rental Term, Customer promises and agrees to return the instrument promptly, and in good condition, to MDM.

Instrument Exchange and Rental Credit.

a. Instrument Exchange.  During the Rental Term and subject to availability, MDM will, upon the Customer's request, exchange the Instrument for another instrument of comparable type and value (hereinafter referred to as "the Replacement Instrument"). Upon such exchange, the customer agrees to execute a new agreement concerning the Replacement Instrument, or to execute a modification or addendum to this agreement that reflects the exchange and any additional rental fees or sales tax.  Upon such an exchange, the Customer will be offered Damage Insurance concerning the Replacement Instrument if the Customer declined Damage Insurance in the first instance.

b. Rental Credit. During the term of this agreement, and for a period of one month after the agreement expires, MDM will allow a credit, in the amount of 100% of all Rental Fees (which do not include amounts paid for Damage Insurance, sales tax, or any late fees) toward the Customer's purchase of the Instrument or of an instrument of comparable type, size, and value, at the then-current retail price offered for the instrument.  The Customer may apply the Rental Credit toward up to a maximum of 50% of the then-current retail price of the purchased instrument.  The Rental Credit must be used within thirty (30) days after the Rental Term expires, or within thirty (30) days after a termination of this Agreement, whichever occurs sooner.

Maintenance and Repair of the Instrument.

a. Routine Maintenance. Upon the Customer's request, MDM will take reasonable steps to keep the Instrument in good playing condition. In return, the Customer agrees that routine maintenance or adjustments to the Instruments will be performed exclusively by MDM.  The cost of routine maintenance and adjustments is included in the Rental Fees under this agreement.

b. Routine maintenance includes (for stringed instruments) such things as re-gluing open seams or loose fingerboards, adjusting sound posts and bridges, re-hairing bows, fingerboard dressings, peg adjustments, and any similar maintenance of a routine nature.  Routine maintenance does not cover replacement of strings on stringed instruments.

c. Instrument Repair.  Should the customer decline the Damage Insurance option, Customer acknowledges and agrees that the Customer will be responsible for all costs to repair the Instrument if it is damaged, whether intentionally, negligently, or accidentally.  The cost of any repairs is in addition to the Contract Price.

d. Intentional Damage to the Instrument.  The Customer acknowledges and agrees that any damage determined by MDM to be the result of an intentional act will not be covered by Damage Insurance; in that event, the Customer will be responsible for the cost to repair or replace the Instrument.

Loss or Theft of the Instrument.  If the Instrument is lost or stolen during the Rental Term, the Customer is responsible for paying to MDM the Purchase Price that is set forth in paragraph 2 of this agreement.  If there is a police report listing the instrument as a stolen item in theft, then the value of the instrument would be covered by the Damage Insurance (if purchased).

8. Renewal.  Unless cancelled, all the terms and conditions of this agreement will renew, automatically, at the end of the Rental Term, for an equal period of time.  Renewal payments that are more than 30 days overdue will be assessed a $5 late fee.

9. Default.   The Customer will be in default under this agreement if:  (a) the Customer permits or causes maintenance or repairs to be performed on the Instrument by any person or entity other than MDM; (b) the Customer fails or refuses to return the Instrument upon a termination, cancellation, or expiration of this agreement; (c) the Instrument is damaged as a result of an intentional or negligent act or omission, or if any person entrusted with the Instrument fails to properly care for the Instrument; (d) the Customer fails to make timely payment of Rental Fees; (e) the Customer otherwise fails to perform under the terms and conditions of this agreement.  Upon Customer's failure or refusal to return the Instrument, MDM may, at its option, report the property as stolen.  Rentals that are more than 60 days overdue will be reported to collections.

10. Liquidated Damages.  The parties acknowledge and agree that damage or loss caused by Customer's default may be difficult to ascertain and not readily susceptible to calculation.  Therefore, the parties agree that in the event of Customer's default, MDM may recover, as a reasonable approximation of its damage or loss, liquidated damages in an amount equal to two times the Purchase Price set forth in paragraph 2 of this agreement.

11. Acceptance; Cancellation.  The Customer's execution of this agreement and acceptance of the Instrument constitutes the Customer’s acceptance of all terms and conditions of this agreement.  The Customer may cancel this agreement at any time by (a) paying all Rental Fees due as of the date of cancellation, and (b) returning to MDM the Instrument, its case, and any accessories or equipment provided with the Instrument to the Customer, and (c) paying the cost to repair any damage to the Instrument.  Upon the return of the Instrument, MDM will evaluate the condition of the Instrument and notify the Customer of any repair costs.  This agreement will be regarded as cancelled upon MDM's written release provided to the Customer.  No refunds are given for rental payments made prior to cancellation.  MDM does not prorate rental charges.

12. Miscellaneous.

a. Legal Agreement; Applicable Law; Severability and Integration.  The parties acknowledge this writing to express the parties' entire agreement, and no verbal agreements or representations have been made that are omitted from this writing.  The parties understand and agree that this is a binding, legal contract and not a mere recital, and that its terms will be governed by the laws of the state of Minnesota.  If any term or clause of this agreement should be found unlawful, the parties agree that such a finding will not affect any other terms of the agreement, which will remain in full force and effect.

b. Other.  Sales tax amounts stated in the agreement will increase or decrease in accordance with any local, state, city, or federal taxation changes.  Customer acknowledges receipt of a true copy of this agreement at the time of delivery of the Instrument, and authorizes MDM to make any necessary credit inquiries in connection with this agreement and to respond to inquiries about its credit experience with the Customer.