Exhibit 10.3
EXHIBIT A
MASTER LEASE AGREEMENT
MASTER LEASE AGREEMENT ("Master Agreement") made as of November 30, 1998,
between VARILEASE CORPORATION, a Michigan corporation, having its chief
executive offices at 00000 Xxxxxxx Xxxx Xxxx, Xxxxxxxxxx Xxxxx, XX 00000
("Lessor") and PHARMAPRINT INC., a Delaware corporation having its chief
executive offices at 0 Xxxx Xxxxx, Xxxxx 0000, Xxxxxx, XX 00000 ("Lessee").
1. LEASE
On the terms and conditions of this Master Agreement, Lessor shall lease to
Lessee, and Lessee shall hire from Lessor, the items of personal property
described in the Schedule(s) (collectively the "Equipment", and individually an
"Item") which shall incorporate this Master Agreement. Each Schedule shall
constitute a separate and independent lease and contractual obligation of
Lessee. The term "Lease" shall refer to an individual Schedule which
incorporates this Master Agreement. In the event of a conflict between this
Master Agreement and any Schedule, the language of the Schedule shall prevail.
The Lease shall be effective upon execution by Lessor at its offices.
2. TERM
(a) The term of the Lease shall be comprised of a Delivery Term,
Installation Term and Base Term. The Delivery Term for each Item shall
commence on the date the Item is delivered to Lessee and shall end on
the Installation Date. The Installation Term shall commence on the
Installation Date and terminate on the first day of the month following
the Installation Date for the last Item to be installed (the "Base Term
Commencement Date"). The Base Term of the Lease shall begin on the Base
Term Commencement Date, and may, subject to Subsection 2(b), terminate
on the last day of the last month of the Base Term. The date of
installation (the "Installation Date") for any Item shall be the
earlier of either (i) the date on which the entity responsible for
installing such Item certifies that the Item is installed and placed in
good working order, or (ii) if Lessee has caused a delay in the
installation of an Item, seven days from the date the Item is delivered
to the equipment location specified in the Schedule, or (iii) if Lessee
is to install the Item, the seventh day after delivery. In the event
the Equipment is already installed at the equipment location of Lessee
and has been previously paid for by Lessee, the Installation Date shall
be the date on which the Lessor pays Lessee for the Equipment.
(b) A Lease may be terminated as of the last day of the last month of the
Base Term by written notice given by either Lessor or Lessee not less
than six (6) months prior to the date of termination of the Base Term.
If the Lease is not so terminated at the end of the Base Term, the Base
Term shall be automatically extended for successive six (6) month
periods until such six (6) month notice is given. The Base Monthly
Rental, as hereinafter defined, shall continue to be due and payable by
Lessee until the Equipment is redelivered to Lessor upon the
termination of the Base Term or any extension term, and throughout any
such extension term(s). No notice of termination may be revoked without
the written consent of the other party.
3. RENTAL
(a) The rental amount payable to Lessor by Lessee for the Equipment will be
as set forth on the Schedule ("Base Monthly Rental"). As rent for
Equipment, Lessee shall pay Lessor in immediately available funds and
in advance on the Base Term Commencement Date and on the first business
day of each month during the Base Term of the Lease the Base Monthly
Rental, per month, and (ii) on the Installation Date an amount equal to
1/30th of the Base Monthly Rental for each Item times the number of
days which will elapse from the Installation Date of such Item to the
Base Term Commencement Date of the Lease. Each remittance from Lessee
to Lessor shall contain information as to the Lease for which payment
is made.
(b) For any payment of rent or other amount due under a Lease which is past
due for more than five (5) days, interest shall accrue at the rate of
2% per month, from the date such payment was due until payment is
received by Lessor, or if such rate shall exceed the maximum rate of
interest allowed by law, then at such maximum rate.
4. TAXES
Lessee shall reimburse Lessor for (or pay directly, but only if instructed by
Lessor) all taxes, fees, and assessments that may be imposed by any taxing
authority on the Equipment, on its purchase, ownership, delivery, possession,
operation, rental, return to Lessor or its purchase by Lessee (collectively,
Taxes); provided, however, that Lessee shall not be liable for any such Taxes
(whether imposed by the United States of America or by any other domestic or
foreign taxing authority) imposed on or measured by Lessor's net income or tax
preference items. Lessee's obligation includes, but is not limited to, the
obligation to pay all license and registration fees and all sales, use, personal
property, recordation and other taxes and governmental charges, together with
any penalties, fines and interest thereon, that may be imposed during the Base
Term of the applicable Schedule. Lessor shall report and file any and all Taxes
and shall invoice Lessee for same. Lessee shall promptly reimburse Lessor for
all Taxes and hold Lessor harmless with respect to any non-payment
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thereof.
5. NET LEASE
The Lease is a net lease, it being the intention of the parties that all costs,
expenses and liabilities associated with the Equipment or its lease shall be
borne by Lessee. Lessee's agreement to pay all obligations under the Lease,
including but not limited to Base Monthly Rental, is absolute and unconditional
and such agreement is for the benefit of Lessor and its Assignees). Lessee's
obligations shall not be subject to any abatement, deferment, reduction, setoff,
defense, counterclaim or recoupment for any reason whatsoever. Except as may be
otherwise expressly provided in the Lease, it shall not terminate, nor shall the
obligations of Lessee be affected by reason of any defect in or damage to, or
any loss or destruction of, or obsolescence of, the Equipment or any Item from
any cause whatsoever, or the interference with its use by any private person,
corporation or governmental authority, or as a result of any war, riot,
insurrection or an Act of God. It is the express intention of Lessor and Lessee
that all rent and other sums payable by Lessee under the Lease shall be, and
continue to be, payable in all events throughout the term of the Lease. The
Lease shall be binding upon the Lessee, its successors and permitted assigns and
shall inure to the benefit of Lessor and its Assignee(s).
6. INSTALLATION, RETURN AND USE OF EQUIPMENT
(a) Upon delivery of the Equipment to Lessee, Lessee shall pay all
transportation, installation, rigging, packing and insurance charges
with respect to the Equipment. In the case of a sale and leaseback
transaction, Lessee shall, upon the request of Lessor, certify the date
the Equipment was first put into use. Lessee will provide the required
electric current and a suitable place of installation for the Equipment
with all appropriate facilities as specified by the manufacturer. No
cards, tapes, disks, data cells or other input/output and storage media
may be used by Lessee to operate any Item unless it meets the
specifications of the manufacturer. Lessee agrees that it will not
install, or permit the installation of the Equipment without Lessor's
consent, which consent shall not be unreasonably withheld or delayed.
(b) Lessee shall, at all times during the term of the Lease, be entitled to
unlimited use of the Equipment. Lessee will at all times keep the
Equipment in its sole possession and control; provided Lessee shall be
permitted to place the Equipment in the manufacturing facilities of
third the parties with the consent of Lessor which consent shall not be
unreasonably withheld or delayed. The Equipment shall not be moved from
the location stated in the Schedule without the prior written consent
of Lessor, which consent shall not be unreasonably withheld or delayed,
and in no event shall the Equipment be moved outside the continental,
contiguous United States. Lessee will comply with all laws,
regulations, and ordinances, and all applicable requirements of the
manufacturer of the Equipment which apply to the physical possession,
use, operation, condition, and maintenance of the Equipment. Lessee
agrees to obtain all permits and licenses necessary for the operation
of the Equipment.
(c) Lessee shall not without the prior written consent of Lessor, affix or
install any accessory, feature, equipment or device to the Equipment or
make any improvement, upgrade, modification, alteration or addition to
the Equipment the cost of which is in excess of $50,000.00 (any such
accessory, feature, equipment, device or improvement, upgrade,
modification, alteration or addition affixed or installed is an
"Improvement"). Title to all Improvements shall, without further act,
upon the making, affixing or installation of such Improvement, vest
solely in Lessor, except such Improvements as may be readily removed
without causing material damage to the Equipment and without in any way
affecting or impairing the originally intended function, value or use
of the Equipment. Removal of the Improvement shall be performed by the
manufacturer or other party acceptable to the Lessor, at the sole
expense of Lessee. Provided the Equipment is returned to Lessor in the
condition required by the Lease, including, but not limited to coverage
under the manufacturer's standard maintenance contract, title to the
Improvement shall vest in the Lessee upon removal. Any Improvement not
removed from the Equipment prior to return shall at Lessor's option
remain the property of Lessor and shall be certified for maintenance by
the manufacturer, at Lessee's expense.
Lessee shall notify Lessor in writing no less than 30 days prior to the
desired installation date of the type of Improvement Lessee desires to
obtain. Lessor may, at any time within 10 days after receipt of the
notice offer to provide the Improvement to Lessee upon terms and
conditions to be mutually agreed upon. Lessee shall notify Lessor of
any third party offers and shall lease the Improvement from Lessor if
Lessor meets the terms of the third party offer.
If Lessee leases an Improvement from Lessor, such lease shall be under
a separate Schedule, the Improvement shall not be placed in service by
Lessee prior to acquisition by Lessor, and Lessee shall execute and
deliver any document necessary to vest title to such Improvement in
Lessor.
During the term of the Lease term and any renewal term, Lessee shall
cause all Improvements to be maintained, at Lessee's expense, in
accordance with the requirements of Section 7. Unless otherwise agreed
to by Lessor, upon the expiration or earlier termination of the term of
the Lease, any Improvement shall be de-installed and removed from the
Equipment by the manufacturer or other party acceptable to Lessor, at
Lessee's expense. If the Improvement is removed, the Equipment shall be
restored to its unmodified condition and shall be certified for
maintenance by the manufacturer, at Lessee's expense.
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In the event an Improvement is provided to Lessee by a party other than
Lessor, Lessee shall cause such party to execute and deliver to Lessor
such documents as shall be reasonably required by Lessor to protect the
interests of Lessor and any Assignee in the Equipment, this Master
Agreement and any Schedule.
(d) Lessee shall, at the termination of the Lease, at its expense,
de-install, pack and return the Equipment to Lessor at such location
within the continental United States as shall be designated by Lessor
in the same operating order, repair, condition and appearance as of the
Installation Date, reasonable wear and tear excepted, with all current
engineering changes prescribed by the manufacturer of the Equipment or
a maintenance contractor approved by Lessor (the "Maintenance
Organization") incorporated in the Equipment. Until the return of the
Equipment to Lessor, Lessee shall be obligated to pay the Base Monthly
Rental and all other sums due under the Lease. Upon redelivery to
Lessor, Lessee shall arrange and pay for such repairs (if any) as are
necessary for the manufacturer of the Equipment to accept the Equipment
under a maintenance contract at its then standard rates.
7. MAINTENANCE AND REPAIRS
Lessee shall, during the term of the Lease, maintain in full force and effect a
contract with the manufacturer of the Equipment or Maintenance Organization
covering at least prime shift maintenance of the Equipment. Lessee upon request
shall furnish Lessor with a copy of such maintenance contract as amended or
supplemented. During the term of the Lease, Lessee shall, at its expense, keep
the Equipment in good working order, repair, appearance and condition and make
all necessary adjustments, repairs and replacements, all of which shall become
the property of Lessor. Lessee shall not use or permit the use of the Equipment
for any purpose for which, in the opinion of the manufacturer of the Equipment
or Maintenance Organization, the Equipment is not designed or intended.
8. OWNERSHIP, LIENS AND INSPECTIONS
(a) Lessee shall keep the Equipment free from any marking or labeling which
might be interpreted as a claim of ownership by Lessee or any party
other than Lessor and its Assignee(s), and shall aux and maintain tags,
decals or plates furnished by Lessor on the Equipment indicating
ownership and title to the Equipment in Lessor or its Assignee(s). Upon
reasonable notice to Lessee, Lessor or its agents shall have access to
the Equipment and Lessee's books and records with respect to the Lease
and the Equipment at reasonable times for the purpose of inspection and
for any other purposes contemplated by the Lease, subject to the
reasonable security requirements of Lessee.
(b) Lessee shall execute and deliver such instruments, including Uniform
Commercial Code financing statements, as are required to be filed to
evidence the interest of Lessor and its Assignee(s) in the Equipment or
the Lease. Lessee has no interest in the Equipment except as expressly
set forth in the Lease, and that interest is a lease-hold interest.
Lessor and Lessee agree, and Lessee represents for the benefit of
Lessor and its Assignees) that the Lease is intended to be a "finance
lease" and not a "lease intended as security " as those terms are used
in the Uniform Commercial Code; and that the Lease is intended to be a
"true lease" as the term is commonly used under the Internal Revenue
Code of 1986, as amended.
(c) LESSEE SHALL NOT TAKE ANY ACTION WHICH WILL CAUSE THE LEASE, THE
EQUIPMENT AND ANY IMPROVEMENTS TO BE SUBJECT TO LIENS AND ENCUMBRANCES
OF WHATSOEVER KIND (EXCEPT THOSE CREATED BY LESSOR) AND LESSEE SHALL
NOT ASSIGN THE LEASE OR ANY OF ITS RIGHTS UNDER THE LEASE OR SUBLEASE
ANY OF THE EQUIPMENT OR GRANT ANY RIGHTS TO THE EQUIPMENT WITHOUT THE
PRIOR WRITTEN CONSENT OF LESSOR. No permitted assignment or sublease
shall relieve Lessee of any of its obligations under the Lease and
Lessee agrees to pay all costs and expenses Lessor may incur in
connection with such sublease or assignment. Lessee grants to Lessor
the right of first refusal on any sublease or other grant of Lessee's
rights to the Equipment. Notwithstanding the foregoing or anything in
this Master Agreement to the contrary, Lessee may assign its rights
hereunder by operation of law (e.g. change of control) so long as the
assignee is, in Lessor's reasonable judgment, of a creditworthiness
equal to or greater than Lessee.
9. DISCLAIMER OF WARRANTIES
(a) LESSOR LEASES THE EQUIPMENT "AS IS," AND BEING NEITHER THE MANUFACTURER
OF THE EQUIPMENT NOR THE AGENT OF EITHER THE MANUFACTURER OR SELLER,
LESSOR DISCLAIMS ANY REPRESENTATION OR WARRANTY OF ANY KIND, EXPRESS OR
IMPLIED, WITH RESPECT TO THE CONDITION OR PERFORMANCE OF THE EQUIPMENT,
ITS MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR WITH RESPECT
TO PATENT INFRINGEMENTS OR THE LIKE. LESSOR SHALL HAVE NO LIABILITY TO
LESSEE FOR ANY CLAIM, LOSS OR DAMAGE OF ANY KIND OR NATURE WHATSOEVER,
NOR SHALL THERE BE ANY ABATEMENT OF RENTAL FOR ANY REASON INCLUDING
CLAIMS ARISING OUT OF OR IN CONNECTION WITH (i) THE DEFICIENCY OR
INADEQUACY OF THE EQUIPMENT FOR ANY PURPOSE, WHETHER OR NOT KNOWN OR
DISCLOSED TO LESSOR, (ii) ANY DEFICIENCY OR DEFECT IN THE EQUIPMENT,
(iii) THE USE OR PERFORMANCE OF THE EQUIPMENT, OR (iv) ANY LOSS OF
BUSINESS OR OTHER CONSEQUENTIAL LOSS OR
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DAMAGE, WHETHER OR NOT RESULTING FROM ANY OF THE FOREGOING.
(b) For the term of the Lease, Lessor assigns to Lessee (to the extent
possible), and Lessee may have the benefit of, any and all
manufacturer's warranties, service agreements and patent indemnities,
if any, with respect to the Equipment; provided, however, that Lessee's
sole remedy for the breach of any such warranty, indemnification or
service agreement shall be against the manufacturer of the Equipment
and not against Lessor, nor shall any such breach have any effect
whatsoever on the rights and obligations of Lessor or Lessee with
respect to the Lease.
(c) NO REPRESENTATIONS OR WARRANTIES OF THE MANUFACTURER OR DISTRIBUTOR OF
THE EQUIPMENT, OR ANY OTHER THIRD PARTY, CAN BIND LESSOR, AND LESSEE
ACKNOWLEDGES AND AGREES THAT LESSOR SHALL HAVE NO OBLIGATIONS WITH
RESPECT TO THE EQUIPMENT EXCEPT AS SPECIFICALLY SET FORTH HEREIN OR
OTHER DOCUMENT EXECUTED BY LESSOR.
10. ASSIGNMENT
(a) Lessee acknowledges and understands that Lessor may assign to a
successor, financing lender and/or purchaser (the "Assignee"), all or
any part of the Lessor's right, title and interest in and to the Lease
and the Equipment and Lessee hereby consents to such assignments). In
the event Lessor transfers or assigns, or retransfers or reassigns, to
an Assignee all or part of Lessor's interest in the Lease, the
Equipment or any sums payable under the Lease, whether as collateral
security for loans or advances made or to be made to Lessor by such
Assignee or otherwise, Lessee covenants that, upon receipt of notice of
any such transfer or assignment and instructions from Lessor,
(i) Lessee shall, if so instructed, pay and perform its obligations
under the Lease to the Assignee (or to any other party designated
by Assignee), and shall not assign the Lease or any of its rights
under the Lease or permit the Lease to be amended, modified, or
terminated without the prior written consent of Assignee; and
(ii) Lessee's obligations under the Lease with respect to Assignee
shall be absolute and unconditional and not be subject to any
abatement, reduction, recoupment, defense, offset or counterclaim
for any reason, alleged or proven, including, but not limited to,
defect in the Equipment, the condition, design, operation or
fitness for use of the Equipment or any loss or destruction or
obsolescence of the Equipment or any part, the prohibition of or
other restrictions against Lessee's use of the Equipment, the
interference with such use by any person or entity, any failure
by Lessor to perform any of its obligations contained in the
Lease, any insolvency or bankruptcy of Lessor, or for any other
cause; and
(iii) Lessee shall, upon request of Lessor, submit documents and
certificates as may be reasonably required by Assignee to secure
and complete such transfer or assignment, including but not
limited to the documents set forth in Section 15(c) of this
Master Agreement.
(iv) Lessee shall deliver to Assignee copies of any notices which are
required under the Lease to be sent to Lessor, and
(v) Lessee shall, if requested, restate to Assignee the
representations, warranties and covenants contained in the Lease
(upon which Lessee acknowledges Assignee may rely) and shall make
such other representations, warranties and covenants to Assignee
as may be reasonably required to give effect to the assignment.
(b) Lessor shall not make an assignment or transfer to any Assignee who
shall not agree that, so long as Lessee is not in default under the
Lease, such Assignee shall take no action to interfere with Lessee's
quiet enjoyment and use of the Equipment in accordance with the terms
of the Lease. No such assignment or conveyance shall relieve Lessor of
its obligations under the Lease and Lessee agrees it shall not look to
any Assignee to perform any of Lessor>s obligations under the Lease. No
such assignment shall increase Lessee's obligations nor decrease
Lessee's rights hereunder.
11. QUIET ENJOYMENT
Lessor covenants that so long as Lessee is not in default under a Lease, Lessor
shall take no action to interfere with Lessee's possession and use of the
Equipment subject to and in accordance with the provisions of the Lease.
12. INDEMNIFICATION
Except for the sole and gross negligence or willful misconduct of Lessor or
Assignee, Lessee shall and does agree to indemnity, protect defend, save and
keep harmless Lessor and its Assignee(s) from and against any and all
liabilities, obligations, losses, damages, penalties, claims, actions, suits,
costs, or expenses of any kind and nature whatsoever, including but not limited
to reasonable attorneys fees, including without limitation reasonable attorneys
fees in connection with the enforcement of this indemnification, which may be
imposed upon, incurred by or asserted against Lessor or its Assignee(s) in any
way relating to or arising out of the Lease, the
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manufacture, ownership, lease, possession, use, condition, operation, or
accident in connection with the Equipment (including, without limitation, those
claims based on latent and other defects, whether or not discoverable, or claims
based on strict liability, or any claim for patent, trademark or copyright
infringement). Lessor's rights arising from this Section shall survive the
expiration or other termination of the Lease. Nothing in this Section shall
limit or waive any right of Lessee to proceed against the manufacturer of the
Equipment.
13. RISK OF LOSS
(a) Lessee assumes and shall bear the entire risk of loss and damage,
whether or not insured against, of the Equipment from any and every
cause whatsoever as of the date the Equipment is delivered to Lessee.
(b) In the event of loss or damage of any kind to any Item, Lessee shall
use all reasonable efforts to place the Item in good repair, condition
and working order to the reasonable satisfaction of Lessor within
ninety (90) days of such loss or damage, unless the manufacturer of the
Equipment determines that such Item has been irreparably damaged, in
which case Lessee shall, within ten (10) days of the manufacturer's
determination of irreparable loss, make its election to either pay
Lessor the Stipulated Loss Value (as set forth in Attachment A to this
Master Agreement) for the irreparably damaged Item or replace the
irreparably damaged Item, all as provided in this Section. To the
extent that the Item is damaged but not irreparably damaged and if
Lessee is entitled, pursuant to the insurance coverage, to obtain
proceeds from such insurance for the repair of the Item, Lessee
(provided no Event of Default has occurred under the Lease) may arrange
for the disbursement of such proceeds to the manufacturer or other
entity approved by Lessor to perform the repairs to pay the cost of
repair. However, Lessee's obligation to timely repair the damaged Item
is not contingent upon receipt of such insurance proceeds.
(c) In the event that Lessee elects to pay Lessor the Stipulated Loss Value
for the irreparably damaged Item, Lessee shall (i) pay such amount
(computed as of the first day of the month following the determination
of the irreparable damage by the manufacturer) to Lessor on the first
day of the month following the election by Lessee as provided in (b)
above, (ii) pay all Base Monthly Rental for the Item up to the date
that the Stipulated Loss Value is paid to Lessor, and (iii) arrange
with the applicable insurance company (with the consent of Lessor) for
the disposition of the irreparably damaged Item. If not all the
Equipment is irreparably damaged, the Value for Calculation of
Stipulated Loss Value ("Value") as set forth on the Schedule for the
irreparably damaged Item shall be multiplied by the applicable
percentage set forth in Attachment A to compute the Stipulated Loss
Value for such irreparably damaged Item, and the Base Monthly Rental
for the undamaged Equipment remaining due (after payment of the
Stipulated Loss Value for the irreparably damaged Item) shall be that
amount resulting from multiplying the original Base Monthly Rental by
the ratio of the Value of the undamaged Equipment divided by the Value
for all the Equipment prior to the damage.
(d) If Lessee elects to replace the irreparably damaged Item, Lessee shall
continue all payments under the Lease without interruption, as if no
such damage, loss or destruction had occurred, and shall replace such
irreparably damaged Item, paying all such costs, associated with the
replacement, and Lessee shall be entitled to insurance proceeds up to
the amount expended by Lessee in effecting the replacement. Lessee
shall within twenty (20) days following the date of determination of
irreparable damage by the manufacturer, effect the replacement by
replacing the irreparably damaged Item with a "Replacement Item" so
that Lessor has good, marketable and unencumbered title to such
Replacement Item. The Replacement Item shall have a fair market value
equal to or greater than the Item replaced, and anticipated to have a
fair market value at the expiration of the Base Term equal to the fair
market value that the replaced Item would have had at the end of the
Base Term, and be the same manufacture, model and type and of at least
equal capacity to the Item for which the replacement is being made.
Upon delivery, such Replacement Item shall become subject to all of the
terms and conditions of the Lease. Lessee shall execute all instruments
or documents necessary to effect the foregoing.
(e) For purposes of this Lease, the term "fair market value" shall mean the
price of the Equipment delivered and installed at Lessee's location
that would be obtained in an arm's-length transaction between an
informed and willing buyer-lessee under no compulsion to buy or lease
and an informed and willing seller-lessor under no compulsion to sell
or lease. If Lessor and Lessee are unable to agree upon fair market
value, such value shall be determined, at Lessee's expense, in
accordance with the foregoing definition, by three independent
appraisers, one to be appointed by Lessee, one to be appointed by
Lessor and the third to be appointed by the first two.
14. INSURANCE
During the term of the Lease, Lessee, at its own expense, shall maintain in
regard to the Equipment all risk insurance (in an amount not less than the
Stipulated Loss Value as identified on Attachment A) and comprehensive public
liability insurance in amounts and with carriers reasonably satisfactory to
Lessor. Any such insurance shall name Lessor and the Assignee(s) as additional
insured and, as for the all risk insurance, loss payees as their interests may
appear. All such insurance shall provide that it may not be terminated, canceled
or altered without at least thirty (30) days' prior written notice to Lessor and
its Assignee(s). Coverage afforded to Lessor shall not be rescinded, impaired,
or invalidated by any act or neglect of Lessee. Lessee agrees to supply to
Lessor, upon request, evidence of such insurance. Unless Lessee is in default,
Lessee shall be entitled to any surplus of insurance proceeds after the
Equipment is repaired as required hereunder.
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15. REPRESENTATIONS AND WARRANTIES OF LESSEE; FINANCIAL STATEMENTS
(a) Lessee represents and warrants to Lessor and its Assignees) (i) that
the execution, delivery and performance of this Master Agreement and
the Lease was duly authorized and that upon execution of this Master
Agreement and the Lease by Lessee and Lessor, the Master Agreement and
the Lease will be in full force and effect and constitute a valid legal
and binding obligation of Lessee, and enforceable against Lessee in
accordance with their respective terms; (ii) the Equipment is
accurately described in the Lease and all documents of Lessee relating
to the Lease; (iii) that Lessee is in good standing in the jurisdiction
of its incorporation and in any jurisdiction in which any of the
Equipment is located; (iv) that no consent or approval of, giving of
notice to, registration with, or taking of any other action in respect
of, any state, federal or other government authority or agency is
required with respect to the execution, delivery and performance by the
Lessee of this Master Agreement or the Lease or, if any such approval,
notice, registration or action is required, it has been obtained; (v)
that the entering into and performance of this Master Agreement and the
Lease will not violate any judgment, order, law or regulation
applicable to Lessee or any provision of Lessee's Articles of
Incorporation or Bylaws or result in any breach of, or constitute a
default under, or result in the creation of any lien, charge, security
interest or other encumbrance upon any assets of Lessee or upon the
Equipment pursuant to any instrument to which Lessee is a party or by
which it or its property may be bound; (vi) there are no actions, suits
or proceedings pending, or to the knowledge of Lessee, threatened,
before any court or administrative agency, arbitrator or governmental
body which will, if determined adversely to Lessee, materially
adversely affect its ability to perform its obligations under the Lease
or any related agreement to which it is a party, (vii) that aside from
the Master Agreement and the Lease there are no additional agreements
between Lessee and Lessor relating to the Equipment, and (viii) that
any and all financial statements and other information with respect to
Lessee supplied to Lessor at the time of execution of the Lease and any
amendment, are true and complete in all material respects. The
foregoing representations and warranties shall survive the execution
and delivery of the Lease and any amendments hereto and shall upon the
written request of Lessor, be made to Lessor's Assignee(s).
(b) Prior to and during the term of the Lease, Lessee will furnish Lessor
with Lessee's audited financial statements as filed with the SEC. If
Lessee is a subsidiary of another company, Lessee shall supply such
company's financial statements and guarantees as are reasonably
acceptable to Lessor. Lessor's obligations to perform under any Lease
is subject to the condition that the financial statements furnished to
Lessor by Lessee present the financial condition and results of
operations of Lessee and its affiliated corporations, if any, and any
guarantor of Lessee's obligations under any Lease, as of the date of
such financial statements. Lessee shall also provide Lessor with such
other statements concerning the Lease and the condition of the
Equipment as Lessor may from time to time request.
(c) Upon Lessor's request, Lessee shall, with respect to each Lease,
deliver to Lessor (i) a certificate of a secretarial officer of Lessee
certifying the bylaws, resolutions (specific or general) or corporate
action authorizing the transactions contemplated in the Lease; (ii) an
incumbency certificate certifying that the person signing this Master
Agreement and the Lease holds the office the person purports to hold
and has authority to sign on behalf of Lessee; (iii) an opinion of
Lessee's counsel with respect to the representations in Section 15(a)
(i), (iii), (iv) and (v), with appropriate qualifications and
limitationsa; (iv) an agreement with Lessor's Assignee with regard to
any assignment as referred to in Section 10; (v) the purchase documents
if Lessee has sold or assigned its interest in the Equipment to Lessor,
(vi) an insurance certificate evidencing the insurance provided by
Lessee pursuant to Section 14; and (vii) an Installation Certificate
duly executed by Lessee. Failure by Lessee to deliver any of these
documents when due shall operate, at Lessor's option, to continue the
Installation Term for the Lease thus delaying the Base Term
Commencement Date, or to increase the Base Monthly Rental to recover
costs incurred by Lessor consequent to the delay or the termination of
the Lease as provided in Section 16.
16. DEFAULT, REMEDIES
(a) The following shall be deemed "Events of Default" under the Lease:
(1) Lessee fails to pay any installment of rent or other charge or
amount due under the Lease within ten (10) days after notice
that such payment is overdue; or
(2) Except as expressly permitted in the Lease, Lessee attempts to
remove, sell encumber, assign or sublease or fails to insure
any of the Equipment, or fails, within ten (10) days written
notice, to deliver any documents required from Lessee under
the Lease; or
(3) Any representation or warranty made by Lessee or Lessee's
guarantor in the Lease or any document supplied in connection
with the Lease or any financial statement is misleading or
materially inaccurate; or
(4) Lessee fails to observe or perform any of the other
obligations required to be observed by Lessee under the Lease
within thirty (30) days of Lessee's first knowledge of such
failure; or
6
(5) Lessee or Lessee's guarantor ceases doing business as a going
concern; makes an assignment for the benefit of creditors;
admits in writing its inability to pay its debts as they
become due; files a voluntary petition in bankruptcy; is
adjudicated a bankrupt or an insolvent; files a petition
seeking for itself any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar
arrangement under any present or future statute, law or
regulation or files an answer admitting or fails to deny the
material allegations of a petition filed against it in any
such proceeding; consents to or acquiesces in the appointment
of a trustee, receiver, or liquidator for it or of all or any
substantial part of its assets or properties, or if it or its
trustee, receiver, liquidator or shareholders shall take any
action to effect its dissolution or liquidation; or
(6) If within sixty (60) days after the commencement of any
proceedings against Lessee or Lessee's guarantor seeking
reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any present
or future statute, law or regulation, such proceedings shall
not have been dismissed, or if within thirty (30) days after
the appointment (with or without Lessee's or Lessee's
guarantor's consent) of any trustee, receiver or liquidator of
it or all of or any substantial part of its respective assets
and properties, such appointment shall not be vacated.
(b) Upon the happening of any Event of Default, Lessor may declare the
Lessee to be in default. Lessee authorizes Lessor at any time
thereafter, with or without terminating the Lease, to enter any
premises where the Equipment may be and take possession of the
Equipment. Lessee shall, upon such declaration of default, without
further demand, immediately pay Lessor an amount which is equal to (i)
any unpaid amount due on or before Lessor declared the Lease to be in
default, plus (ii) as liquidated damages for loss of a bargain and not
as a penalty, an amount equal to the Stipulated Loss Value for the
Equipment computed as of the date the last Base Monthly Rental payment
was due prior to the date Lessor declared the Lease to be in default,
together with interest, as provided herein, plus (iii) all attorney and
court costs incurred by Lessor relating to the enforcement of its
rights under the Lease. After an Event of Default, at the request of
Lessor and to the extent requested by Lessor, Lessee shall immediately
comply with the provisions of Section 6(d) and Lessor may sell the
Equipment at private or public sale, in bulk or in parcels, with or
without notice, without having the Equipment present at the place of
sale; or Lessor may lease, otherwise dispose of or keep idle all or
part of the Equipment, subject, however, to its obligation to mitigate
damages. The proceeds of sale, lease or other disposition, if any, of
the Equipment shall be applied: (1) to all Lessor's costs, charges and
expenses incurred in taking, removing, holding, repairing and selling,
leasing or otherwise disposing of the Equipment including attorney
fees; then (2) to the extent not previously paid by Lessee, to pay
Lessor the Stipulated Loss Value for the Equipment and all other sums
owed by Lessee under the Lease, including any unpaid rent which accrued
to the date Lessor declared the Lease to be in default and indemnities
then remaining unpaid under the Lease; then (3) to reimburse to Lessee
Stipulated Loss Value previously paid by Lessee as liquidated damages;
and (4) any surplus shall be retained by Lessor. Lessee shall pay any
deficiency in (1) and (2) immediately. The exercise of any of the
foregoing remedies by Lessor shall not constitute a termination of the
Lease unless Lessor so notifies Lessee in writing. Lessor may also
proceed by appropriate court action, either at law or in equity to
enforce performance by Lessee of the applicable covenants of the Lease
or to recover damages for the breach of the Lease.
(c) The waiver by Lessor of any breach of any obligation of Lessee shall
not be deemed a waiver of any future breach of the same or any other
obligation. The subsequent acceptance of rental payments under the
Lease by Lessor shall not be deemed a waiver of any such prior existing
breach at the time of acceptance of such rental payments. The rights
afforded Lessor under Section 16 shall be cumulative and concurrent and
shall be in addition to every other right or remedy provided for the
Lease or now or later existing in law (including as appropriate all the
rights of a secured party or lessor under the Uniform Commercial Code)
or in equity and Lessor's exercise or attempted exercise of such rights
or remedies shall not preclude the simultaneous or later exercise of
any or all other rights or remedies.
(d) In the event Lessee shall fail to perform any of its obligations under
the Lease, then Lessor may perform the same, but shall not be obligated
to do so, at the cost and expense of Lessee. In any such event, Lessee
shall promptly reimburse Lessor for any such costs and expenses
incurred by Lessor.
17. LESSOR'S TAX BENEFITS
Lessee acknowledges that Lessor shall be entitled to claim all tax benefits,
credits and deductions related to the Equipment for federal income tax purposes
including, without limitation: (i) deductions on Lessor's cost of the Equipment
for each of its tax years during the term of the Lease under any method of
depreciation or other cost recovery formula permitted by the Internal Revenue
Code of 1986, as amended (hereinafter called the "Code"), and (ii) interest
deductions as permitted by the Code on the aggregate interest paid to any
Assignee (hereinafter collectively "Lessor's Tax Benefits"). Lessee agrees to
take no action inconsistent (including the voluntary substitution of Equipment)
with the foregoing or which would result in the loss, disallowance, recapture or
unavailability to Lessor of Lessor's Tax Benefits. Lessee hereby indemnifies
Lessor and its Assignee(s) from and against (a) any loss, disallowance,
unavailability or recapture of Lessor's Tax Benefits resulting from any action
or failure to act of Lessee, including replacement of the Equipment, plus (b)
all interest, penalties, costs, (including attorney fees), or additions to tax
resulting from such loss, disallowance, unavailability or recapture.
7
18. GENERAL
(a) The Lease shall be deemed to have been made and delivered in the State
of Michigan and shall be governed in all respects by the laws of such
State. THE PARTIES HERETO AGREE THAT IN THE EVENT OF AN ALLEGED BREACH
OF THIS AGREEMENT OR ANY DOCUMENTS RELATING THERETO BY EITHER PARTY, OR
ANY CONTROVERSIES ARISE BETWEEN THE PARTIES RELATING TO THIS AGREEMENT
OR ANY DOCUMENTS RELATING THERETO, AND SUCH BREACHES OR CONTROVERSIES
ARE BROUGHT BEFORE ANY COURT, SUCH CONTROVERSIES SHALL BE TRIED BY A
JUDGE ALONE. THE PARTES, HAVING HAD THE OPPORTUNITY TO CONSULT WITH
INDEPENDENT COUNSEL OF THEIR OWN CHOOSING, HEREBY KNOWINGLY AND
VOLUNTARILY WAIVE THEIR RIGHTS TO A TRIAL BY JURY IN ANY MATTER
RELATING TO THIS AGREEMENT OR ANY DOCUMENTS RELATED THERETO.
(b) The Master Agreement and the Lease constitute the entire and only
agreement between Lessee and Lessor with respect to the lease of the
Equipment, and the parties have only those rights and have incurred
only those obligations as specifically set forth herein. The covenants,
conditions, terms and provisions may not be waived or modified orally
and shall supersede all previous proposals, both oral and written,
negotiations, representations, commitments or agreements between the
parties. The Lease may not be amended or discharged except by a
subsequent written agreement entered into by duly authorized
representatives of Lessor and Lessee.
(c) All notices, consents or requests desired or required to be given under
the Lease shall be in writing and shall be delivered in person or sent
by certified mail, return, receipt requested, or by courier service to
the address of the other party set forth in the introduction of the
Master Agreement or to such other address as such party shall have
designated by proper notice.
(d) Each Schedule shall be executed in three counterparts, consecutively
numbered. To the extent, if any, that a Schedule constitutes chattel
paper (as such term is defined in the Uniform Commercial Code) no
security interest in the Schedule may be created through the transfer
or possession of any counterpart other than Counterpart No. 1. The
Master Agreement, in the form of a photocopy, is Exhibit A to the
Schedule and is not chattel paper by itself.
(e) Section headings are for convenience only and shall not be construed as
part of the Lease.
(f) It is expressly understood that all of the Equipment shall be and
remain personal property, notwithstanding the manner in which the same
may be attached or affixed to realty, and, upon Lessor's request,
Lessee shall secure from its mortgagee, landlord or owner of the
premises a waiver in form and substance reasonably satisfactory to
Lessor.
(g) Lessor may upon written notice to Lessee advise Lessee that certain
Items supplied to Lessee are leased to Lessor and supplied to Lessee
under the Lease as a sublease. Lessee agrees to execute and deliver
such acknowledgements and assignments in connection with such a Lease
as are reasonably required. If, at any time during the term of the
Lease, Lessor's right to lease the Equipment expires, Lessor may remove
the Equipment from Lessee's premises and shall promptly provide
identical substitute Equipment. All expenses of such substitution,
including de-installation, installation and transportation expenses,
shall be borne by Lessor.
(h) Prior to the delivery of any Item, the obligations of Lessor hereunder
shall be suspended to the extent that it is hindered or prevented from
complying therewith because of: labor disturbances, including strikes
and lockouts; acts of God; fires; storms; accidents; failure to deliver
any Item; governmental regulations or interferences or any cause
whatsoever not within the sole control of Lessor.
(i) Any provision of the Master Agreement or any Schedule prohibited by or
unlawful or unenforceable under any applicable law of any jurisdiction
shall be ineffective as to such jurisdiction without invalidating the
remaining provisions of the Master Agreement and such Schedule.
(j) Although this Lease is the standard form used by Lessor to lease
hardware equipment to Lessee, both Lessor and Lessee acknowledge that,
with respect to any software which may be included as Equipment
("Software"), this Lease is a financing agreement whereby that portion
of Lessee's Base Monthly Rental payment obligation applicable to any
Software represents license fees which are being paid by Lessee in
consideration for payment by Lessor to the software vendor ("Vendor")
of the total license fee relating to any such Software. Neither Lessor
nor Lessee have or were granted any ownership or other proprietary
rights in the Software, and neither party purports to transfer any such
rights to the other hereunder. Lessee has only those rights in the
Software which were granted to Lessee pursuant to the software license
agreement entered into directly between Vendor and Lessee ("License").
The terms of this Lease are applicable only as between Lessor (and any
Assignee) and Lessee. The terms of the License are applicable only as
between Lessee and Vendor, and Lessor does not assume and is not liable
for any obligations under any of the provisions of the License.
Lessee's Base Monthly Rental payment obligation is
8
absolute and unconditional in all respects regardless of any problem
Lessee may have with the Software, any dispute Lessee may have with the
Vendor, any inability of Lessee to use the Software, or the exercise by
Vendor of any remedies it may have pursuant to the License.
Notwithstanding anything herein to the contrary, this Section 18(j)
shall not apply to any Schedule which does not include any software.
(k) The parties agree that this is a "Finance Lease" as defined by section
2A-103(g) of the Uniform Commercial Code ("UCC"). Lessee acknowledges
either (a) that Lessee has reviewed and approved any written Supply
Contract (as defined by UCC 2-A- 103(y)) covering the Equipment
purchased from the Supplier (as defined by UCC 2A-103(x)) thereof for
lease to Lessee or (b) that Lessor has informed or advised Lessee, in
writing, either previously or by Master Agreement Lease of the
following: (i) the identity of the Supplier, (ii) that the Lessee may
have rights under the Supply Contract; and (iii) that the Lessee may
contact the Supplier for a description of any such rights Lessee may
have under the Supply Contract.
(1) The parties acknowledge that serial numbers for one or more Items may
be unavailable prior to execution of the applicable Schedule. In the
event a Schedule fails to indicate a serial number for one or more
Items, Lessee expressly consents to Lessor's unilateral amendment of
the applicable Schedule to insert accurate serial numbers therein.
The parties have executed this Master Lease Agreement as of the date written
above.
LESSOR: LESSEE:
VARILEASE CORPORATION PHARMAPRINT
By:/s/ Xxxx X. Xxxxxx By: /s/ Xxxxxxx X. Trad
---------------------- -------------------------
Name: Xxxx X. Xxxxxx Name: Xxxxxxx X. Trad
-------------------- -----------------------
By: Senior Vice President Title: Senior Vice President
---------------------- ----------------------
If there are no Additional Provisions to this Master Lease Agreement, check here
X . If there are Additional Provisions describe here:
9
Page 1 of 3
SCHEDULE NO. 01
dated December 19, 1998
incorporating by reference
Master Agreement dated November 30, 1998
between VARILEASE CORPORATION, as Lessor,
and PHARMAPRINT INC., as Lessee.
LESSEE AGREES TO LEASE THE DESCRIBED EQUIPMENT FROM LESSOR, AND LESSOR BY
ACCEPTANCE OF THIS LEASE, AGREES TO LEASE THE EQUIPMENT TO LESSEE ON THE TERMS
AND CONDITIONS SET FORTH IN THIS SCHEDULE AND THE MASTER AGREEMENT, WHICH IS
INCORPORATED HEREIN BY REFERENCE.
1. EQUIPMENT DESCRIPTION:
Value for
Calculation
Model/ of Stip.
QTY MFGR FEATURE DESCRIPTION LOSS VALUE
2 Bosch GKF 2000 Capsule Filler $ 974,760.00
1 Bosch KKE 2000 Check Weigher (Size Parts) $ 15,950.00
1 Bosch KKE 2000 Check Weigher (Size Parts) N/C
2 Bosch KKE 2000 Capsule Weigher $ 539,800.00
1 Bosch KKE 2000 Capsule Weigher N/C
TOTAL $1,530,510.00
2. BASE MONTHLY RENTAL: $36,992.43
3. EQUIPMENT LOCATION: IPC, Inc.
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
4. EQUIPMENT RETURN LOCATION: To Be Advised
5. EXPECTED DELIVERY DATE: Installed
6. BASE TERM: 48 months
7. RIDERS: If there are no Riders, please check here: X . If there are Riders,
attach and describe here:
8. SPECIAL TERMS:
1. EARLY TERMINATION OPTION. Provided no Event of Default or event
which with the giving of notice or lapse of time, or both, would constitute an
Event of Default has occurred and is continuing, and provided Lessee has given
Lessor at least 180 days prior written notice ("Notice"), Lessee shall have the
option to terminate this Schedule, with respect to all, but not less than all,
the Equipment, on the last day of the twenty-fourth month of the Base Term of
the Lease ("Termination Date"). On or before the Termination Date, Lessee shall
return the Terminated Items to Lessor and pay to Lessor an amount equal to
45.075% of the Original Cost of the Equipment.
Lessor /s/ G.P.M. Lessee /s/ P.G.T.
----------- ----------
THIS IS COUNTERPART NO. OF 3 SERIALLY NUMBERED COUNTERPARTS. TO THE EXTENT THAT
THIS DOCUMENT CONSTITUTES CHATTEL PAPER UNDER THE UNIFORM COMMERCIAL CODE, NO
SECURITY INTEREST IN THIS DOCUMENT MAY BE CREATED THROUGH THE TRANSFER AND
POSSESSION OF ANY COUNTERPART OTHER THAN COUNTERPART NO. 1.
Page 2 of 3
2. RENEWAL OPTION. Provided no Event of Default or event which with
the giving of notice or lapse of time, or both, would constitute an Event of
Default has occurred and is continuing, Lessee shall have the option to
extend the term of the Lease, for an additional term of either twelve (12) or
twenty-four (24) months, as to all, but not less than all, of the Equipment
at the end of the Base Term or any prior renewal term subject to the
following terms and conditions: (i) Lessee must notify Lessor of its exercise
of the option at least 180 days prior to the expiration of the Base Term;
(ii) all of the terms and conditions of the Lease, other than the Base
Monthly Rental, which shall be the then Fair Rental Value of the Equipment at
the commencement of such renewal term, shall remain the same. For purposes of
this Renewal Option, the "Fair Rental Value" is defined as the value upon
which a willing lessor and a willing lessee would agree, for the term
involved, each respectively under no compulsion to lease. Fair Rental Value
shall be determined by agreement of Lessor and Lessee, or, if they are unable
to agree, Fair Rental Value shall be determined by an independent appraiser
selected by Lessor and satisfactory to Lessee. The cost of such appraisal
shall be borne equally by Lessor and Lessee.
3. PURCHASE OPTION. Provided no Event of Default or event which with
the giving of notice or lapse of time, or both, would constitute an Event of
Default has occurred and is continuing, and provided Lessee has given Lessor
at least 180 days written notice prior to the expiration of the Base Term or
any extension, Lessee shall have the option at the end of such Base Term or
any extension to purchase all, but not less than all, of the Equipment for an
amount equal to the then Fair Market Value of the Equipment. For purposes of
this Purchase Option, "Fair Market Value" shall be defined as the purchase
price of the Equipment (delivered and installed at Lessee's location) that
would be obtained in an arm's length transaction between a willing seller and
a willing purchaser, neither under a compulsion to buy or sell. In the event
Lessor and Lessee cannot agree upon the Fair Market Value, then such amount
shall be determined by an independent appraiser selected by Lessor but
satisfactory to Lessee. The cost of such appraisal shall be borne equally by
Lessor and Lessee. Upon receipt of the Fair Market Value, plus any taxes,
Lessor shall execute and deliver to Lessee a xxxx of sale without
representation or warranty except that the Equipment is free and clear of any
liens, claims or encumbrances created by Lessor.
4. LETTER OF CREDIT. Lessee hereby agrees, should it fail to achieve
the credit targets outlined below ("Targets"), to arrange for a
non-cancelable Letter of Credit ("LOC") to be issued in favor of Lessor or
its assigns by a financial institution acceptable to Lessor, in an amount
equal to 25% of the sum of all remaining unpaid rentals under the Lease.
Failure to provide this LOC if the Targets are not met shall be deemed an
immediate Event of Default hereunder. The form of the LOC must be acceptable
to Lessor in its sole discretion. The Targets are as follows (capitalized
terms herein shall have the same meaning as set forth in Lessee's Quarterly
Financial Statements):
1. Lessee Earnings before deducting Interest, Taxes,
Depreciation, Amortization and Rent, for the three (3)
month period ending June 30, 1999 shall be equal to or
greater than 100% of the Lessee's Fixed Charges, including
lease rentals.
2. For the entire Base Term, the sum of Lessee's Cash and
Cash Equivalent Assets shall equal or exceed the greater of
Lessee's Accounts Payable or the Lessee's Operating Deficit
for the prior six (6) months.
Lessor /s/ G.P.M. Lessee /s/ P.G.T.
----------- ----------
THIS IS COUNTERPART NO. OF 3 SERIALLY NUMBERED COUNTERPARTS. TO THE EXTENT THAT
THIS DOCUMENT CONSTITUTES CHATTEL PAPER UNDER THE UNIFORM COMMERCIAL CODE, NO
SECURITY INTEREST IN THIS DOCUMENT MAY BE CREATED THROUGH THE TRANSFER AND
POSSESSION OF ANY COUNTERPART OTHER THAN COUNTERPART NO. 1.
Page 3 of 3
9. LESSEE ADDRESS FOR NOTICES (if different than Master Agreement):
Notwithstanding anything herein or in the Master Agreement to the contrary,
Lessee acknowledges and agrees, that Lessor shall be entitled to claim for
federal income tax purposes, without limitation, all benefits, credits and
deductions related to the Equipment.
The undersigned Lessee acknowledges that this Schedule authorizes the Lessor
or its agents or assignee(s) to sign and execute on its behalf any and all
necessary documents to make public this lease transaction. The parties intend
this transaction to be a true lease, but if any court or tribunal, having
power to bind the parties, should conclude that all or part of this Schedule
is not a true lease but is in the nature of a sale, consignment, or other
transaction, the parties intend and the Lessee hereby grants a continuing
security interest in the Equipment from the date of this Schedule to secure
the payment of all Lessee's indebtedness to Lessor. In the event serial
numbers for Items are unavailable upon execution hereof, Lessee authorizes
Lessor to amend this Schedule by inserting correct serial numbers with
respect to those Items.
THIS SCHEDULE TOGETHER WITH EXHIBIT A AND ANY ADDITIONAL PROVISION(S)
REFERRED TO IN ITEM 7 CONSTITUTE THE ENTIRE AGREEMENT BETWEEN THE LESSOR AND
LESSEE AS TO THE LEASE AND THE EQUIPMENT. LESSEE ACKNOWLEDGES THAT ON OR
BEFORE LESSEE'S SIGNING OF THIS SCHEDULE IT RECEIVED A COPY OF THE CONTRACT
EVIDENCING LESSOR'S ACQUISITION OF THE EQUIPMENT.
LESSOR: LESSEE:
VARILEASE CORPORATION PHARMAPRINT INC.
By: /s/ XXXX X. XXXXXX By: /s/ XXXXXXX X. TRAD
--------------------------------- -------------------------------
Name: XXXX X. XXXXXX Name: XXXXXXX X. TRAD
--------------------------------- -------------------------------
Title: SENIOR VICE PRESIDENT Title: SENIOR VICE PRESIDENT
--------------------------------- -------------------------------
THIS IS COUNTERPART NO. OF 3 SERIALLY NUMBERED COUNTERPARTS. TO THE EXTENT THAT
THIS DOCUMENT CONSTITUTES CHATTEL PAPER UNDER THE UNIFORM COMMERCIAL CODE, NO
SECURITY INTEREST IN THIS DOCUMENT MAY BE CREATED THROUGH THE TRANSFER AND
POSSESSION OF ANY COUNTERPART OTHER THAN COUNTERPART NO. 1.
Page 1 of 3
SCHEDULE NO. 02
dated December 19, 1998
incorporating by reference
Master Agreement dated November 30, 1998
between VARILEASE CORPORATION, as Lessor, and
PHARMAPRINT INC., as Lessee.
LESSEE AGREES TO LEASE THE DESCRIBED EQUIPMENT FROM LESSOR, AND LESSOR BY
ACCEPTANCE OF THIS LEASE, AGREES TO LEASE THE EQUIPMENT TO LESSEE ON THE TERMS
AND CONDITIONS SET FORTH IN THIS SCHEDULE AND THE MASTER AGREEMENT, WHICH IS
INCORPORATED HEREIN BY REFERENCE.
1. EQUIPMENT DESCRIPTION:
VALUE
FOR
CALCULATION
MODEL/ OF STIP.
QTY MFGR FEATURE DESCRIPTION LOSS VALUE
1 Bosch GKF 2000 Capsule Filler $487,380.00
2. BASE MONTHLY RENTAL: $11,779.97
3. EQUIPMENT LOCATION: IPC, Inc.
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
4. EQUIPMENT RETURN LOCATION: To Be Advised
5. EXPECTED DELIVERY DATE: December 31, 1998
6. BASE TERM: 48 months
7. RIDERS: If there are no Riders, please check here: X . If there are
Riders: attach and describe here:
8. SPECIAL TERMS:
l. EARLY TERMINATION OPTION. Provided no Event of Default or event
which with the giving of notice or lapse of time, or both, would constitute an
Event of Default has occurred and is continuing, and provided Lessee has given
Lessor at least 180 days prior written notice ("Notice"), Lessee shall have the
option to terminate this Schedule, with respect to all, but not less than all,
the Equipment, on the last day of the twenty-fourth month of the Base Term of
the Lease ("Termination Date"). On or before the Termination Date, Lessee shall
return the Terminated Items to Lessor and pay to Lessor an amount equal to
45.075% of the Original Cost of the Equipment.
Lessor /s/ not legible Lessee /s/ not legible
--------------------------- ---------------------------
THIS IS COUNTERPART NO. 3 OF 3 SERIALLY NUMBERED COUNTERPARTS. TO THE
EXTENT THAT THIS DOCUMENT CONSTITUTES CHATTEL PAPER UNDER THE UNIFORM
COMMERCIAL CODE, NO SECURITY INTEREST IN THIS DOCUMENT MAY BE CREATED
THROUGH THE TRANSFER AND POSSESSION OF ANY COUNTERPART OTHER THAN
COUNTERPART NO. 1.
Page 2 of 3
2. RENEWAL OPTION. Provided no Event of Default or event which with the
giving of notice or lapse of time, or both, would constitute an Event of Default
has occurred and is continuing, Lessee shall have the option to extend the term
of the Lease, for an additional term of either twelve (12) or twenty-four (24)
months, as to all, but not less than all, of the Equipment at the end of the
Base Term or any prior renewal term subject to the following terms and
conditions: (i) Lessee must notify Lessor of its exercise of the option at least
180 days prior to the expiration of the Base Term; (ii) all of the terms and
conditions of the Lease, other than the Base Monthly Rental, which shall be the
then Fair Rental Value of the Equipment at the commencement of such renewal
term, shall remain the same. For purposes of this Renewal Option, the "Fair
Rental Value" is defined as the value upon which a willing lessor and a willing
lessee would agree, for the term involved, each respectively under no compulsion
to lease. Fair Rental Value shall be determined by agreement of Lessor and
Lessee, or, if they are unable to agree, Fair Rental Value shall be determined
by an independent appraiser selected by Lessor and satisfactory to Lessee. The
cost of such appraisal shall be borne equally by Lessor and Lessee.
3. PURCHASE OPTION. Provided no Event of Default or event which with
the giving of notice or lapse of time, or both, would constitute an Event of
Default has occurred and is continuing, and provided Lessee has given Lessor at
least 180 days written notice prior to the expiration of the Base Term or any
extension, Lessee shall have the option at the end of such Base Term or any
extension to purchase all, but not less than all, of the Equipment for an amount
equal to the then Fair Market Value of the Equipment. For purposes of this
Purchase Option, "Fair Market Value" shall be defined as the purchase price of
the Equipment (delivered and installed at Lessee's location) that would be
obtained in an arm's length transaction between a willing seller and a willing
purchaser, neither under a compulsion to buy or sell. In the event Lessor and
Lessee cannot agree upon the Fair Market Value, then such amount shall be
determined by an independent appraiser selected by Lessor but satisfactory to
Lessee. The cost of such appraisal shall be borne equally by Lessor and Lessee.
Upon receipt of the Fair Market Value, plus any taxes, Lessor shall execute and
deliver to Lessee a xxxx of sale without representation or warranty except that
the Equipment is free and clear of any liens, claims or encumbrances created by
Lessor.
4. LETTER OF CREDIT. Lessee hereby agrees, should it fail to achieve
the credit targets outlined below ("Targets"), to arrange for a non-cancelable
Letter of Credit ("LOC") to be issued in favor of Lessor or its assigns by a
financial institution acceptable to Lessor, in an amount equal to 25% of the sum
of all remaining unpaid rentals under the Lease. Failure to provide this LOC if
the Targets are not met shall be deemed an immediate Event of Default hereunder.
The form of the LOC must be acceptable to Lessor in its sole discretion. The
Targets are as follows (capitalized terms herein shall have the same meaning as
set forth in Lessee's Quarterly Financial Statements):
1. Lessee Earnings before deducting Interest, Taxes, Depreciation
and amortization, for the three (3) month period ending June 30,
1999 shall be equal to or greater than 100% of the Lessee's
Fixed Charges, Including lease rentals.
2. For the entire Base Term, the sum of Lessee's Cash as Equivalent
Assets shall equal or exceed the greater of Lessee's Accounts
Payable or the Lessee's r ting Deficit for the prior six (6)
months.
Lessor /s/ not legible Lessee /s/ not legible
--------------------------- ---------------------------
THIS IS COUNTERPART NO. 3 OF 3 SERIALLY NUMBERED COUNTERPARTS. TO THE EXTENT
THAT THIS DOCUMENT CONSTITUTES CHATTEL PAPER UNDER THE UNIFORM COMMERCIAL CODE,
NO SECURITY INTEREST IN THIS DOCUMENT MAY BE CREATED THROUGH THE TRANSFER AND
POSSESSION OF ANY COUNTERPART OTHER THAN COUNTERPART NO. 1.
Page 3 of 3
9. LESSEE ADDRESS FOR NOTICES (if different than Master Agreement):
Notwithstanding anything herein or in the Master Agreement to the contrary,
Lessee acknowledges and agrees, that Lessor shall be entitled to claim for
federal income tax purposes, without limitation, all benefits, credits and
deductions related to the Equipment.
The undersigned Lessee acknowledges that this Schedule authorizes the Lessor or
its agents or assignee(s) to sign and execute on its behalf any and all
necessary documents to make public this lease transaction. The parties intend
this transaction to be a true lease, but if any court or tribunal, having power
to bind the parties, should conclude that all or part of this Schedule is not a
true lease but is in the nature of a sale, consignment, or other transaction,
the parties intend and the Lessee hereby grants a continuing security interest
in the Equipment from the date of this Schedule to secure the payment of all
Lessee's indebtedness to Lessor. In the event serial numbers for Items are
unavailable upon execution hereof, Lessee authorizes Lessor to amend this
Schedule by inserting correct serial numbers with respect to those Items.
THIS SCHEDULE TOGETHER WITH EXHIBIT A AND ANY ADDITIONAL PROVISION(S) REFERRED
TO IN ITEM 7 CONSTITUTE THE ENTIRE AGREEMENT BETWEEN THE LESSOR AND LESSEE AS TO
THE LEASE AND THE EQUIPMENT. LESSEE ACKNOWLEDGES THAT ON OR BEFORE LESSEE'S
SIGNING OF THIS SCHEDULE IT RECEIVED A COPY OF THE CONTRACT EVIDENCING LESSOR'S
ACQUISITION OF THE EQUIPMENT.
LESSOR: LESSEE
VARILEASE CORPORATION PHARMAPRINT INC.
By:/s/ Xxxx X. Xxxxxx By: /s/ Xxxxxxx X. Trad
-------------------- -------------------------
Name: Xxxx X. Xxxxxx Name: Xxxxxxx X. Trad
------------------ ------------------------
Title: Senior Vice President Title: Senior Vice President
---------------------- ----------------------
THIS IS COUNTERPART NO. 3 OF 3 SERIALLY NUMBERED COUNTERPARTS. TO THE EXTENT
THAT THIS DOCUMENT CONSTITUTES CHATTEL PAPER UNDER THE UNIFORM COMMERCIAL CODE,
NO SECURITY INTEREST IN THIS DOCUMENT MAY BE CREATED THROUGH THE TRANSFER AND
POSSESSION OF ANY COUNTERPART OTHER THAN COUNTERPART NO. 1.
INSTALLATION CERTIFICATE
FOR SCHEDULE NO. 02
dated December 19, 1998
incorporating by reference
Master Agreement dated November 30, 1998
between VARILEASE CORPORATION, as Lessor,
and PHARMAPRINT INC., as Lessee.
Lessee hereby certifies (i) that the Items of Equipment described below have
been delivered to the specified Equipment Location, and inspected by Lessee and
have been found to be in good order as of the Installation Date, and (ii) that
the quantity, description, and serial numbers as indicated below are true and
correct.
MODEL/ SERIAL
QTY MFGR FEATURE DESCRIPTION NUMBER
1 Bosch GKF 2000 Capsule Filler
Installation Date:
-------------------------
Equipment Location: IPC, Inc.
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Lessee hereby represents and warrants to Lessor that on the Installation Date:
(1) The representations and warranties of Lessee contained in the
Master Agreement and the Schedule are true and correct in all
material respects as though made as of the Installation Date.
(2) No Event of Default as defined in the Master Agreement has
occurred and is continuing as of the Installation Date.
(3) There are in full force and effect such insurance policies with
resect to the Equipment as are required pursuant to the Master
Agreement.
(4) Lessee's agreement to pay all obligations under the Lease,
including but not limited to Base Monthly Rental, is absolute
and unconditional and shall not be subject to any abatement,
deferment, reduction, setoff, defense, counterclaim or
recoupment for any reason whatsoever.
LESSEE: PHARMAPRINT INC.
By: /s/ Xxxxxxx X. Trad
-------------------------
Name: Xxxxxxx X. Trad
-----------------------
Title: Senior Vice President
----------------------
THIS IS COUNTERPART NO. 3 OF 3 SERIALLY NUMBERED COUNTERPARTS. TO THE EXTENT
THAT THIS DOCUMENT CONSTITUTES CHATTEL PAPER UNDER THE UNIFORM COMMERCIAL CODE,
NO SECURITY INTEREST IN THIS DOCUMENT MAY BE CREATED THROUGH THE TRANSFER AND
POSSESSION OF ANY COUNTERPART OTHER THAN COUNTERPART NO. 1.
