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DOMINION VENTURES MASTER LEASE AGREEMENT
LESSOR/AGENT: LESSEE:
Dominion Ventures, Inc. BioStar, Inc.
44 Montgomery Street, Suite 4200 6655 Lookout Road
San Francisco, CA 94104 Boulder, CO 80301
MASTER LEASE LINE: INITIAL TERM: RENT FACTOR:
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$750,000.00 36 Months Computer Equipment 3.259%
48 Months Test & Lab Equipment & Furniture 2.504%
ADVANCE RENTAL SECURITY DEPOSIT
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$19,535.00 $0.00
EFFECTIVE DATE: FUNDING EXPIRATION DATE:
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November 2, 1992 December 15, 1993
The Master Lease Line, specified above, shall remain open until fully
funded or until the Funding Expiration Date noted above whichever occurs first.
The Term "Equipment" means the items of personal property that are listed on
the Equipment Schedule Agreements (the "Schedules") attached or from time to
time added to this Lease, together with all replacement parts, additions and
accessories incorporated thereto. Schedules, each of which shall have a total
cost of not less than ten thousand dollars ($10,000.00), may be added to this
Lease not more frequently than once per month and in any event only with the
prior approval of Lessor. Equipment is to be limited to the types of equipment
described in Exhibit A attached hereto and with the exception of Equipment
Schedule 1A, the original use shall not commence with Lessee more than sixty
(60) days prior to the date of this Lease. No item of Equipment shall have a
unit cost of less than one thousand dollars ($1,000.00) or be subject to an
invoice of less than five thousand dollars ($5,000.00). Lessee acknowledges
that Lessor must specifically segregate funds for this Master Lease Line.
Advance Rental paid under this Lease is nonrefundable for any reason; but, for
each item of Equipment shall be credited to the last complete calendar month's
rent for such item, subject to the conditions of Paragraph 6. If, as of the
Funding Expiration Date, the aggregate Cost to Lessor of all Equipment is more
than five percent (5%) less than the Master Lease Line, Lessee agrees to pay
Lessor, no later than five (5) business days thereafter, two percent (2%) of
the unexpended amount as compensation for expenses.
See attached Schedules for detailed Equipment descriptions and
effective dates.
This Lease and the Schedules attached hereto are subject to the terms
and conditions set forth above and on subsequent pages which are made part
hereof.
1. TRUE LEASE. Lessor leases to Lessee, and Lessee hires and takes from
Lessor, the Equipment. It is the intent of both Lessor and Lessee that this
agreement be a true lease and not a lease intended as security or a conditional
sales agreement. Lessor and Lessee also agree to treat this Lease as a true
lease for income tax purposes.
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2. EQUIPMENT AND LIABILITY. Lessee shall select the type and quantity of
each item of Equipment designated in the appropriate Schedule. Lessee shall
defer to Lessor's ability to obtain discount pricing from suppliers of
equipment, and any discounts and rebates resulting from the purchase of
Equipment shall be remitted to Lessor. Lessee shall order each item from the
respective supplier and, in reliance thereon and subject to its prior approval,
Lessor shall be deemed to have ordered and acquired such Equipment from such
supplier. At Lessor's request, Lessee shall formally assign the purchase order
for such Equipment to Lessor. LESSEE ACKNOWLEDGES THAT LESSOR IS NOT THE
MANUFACTURER, RETAILER OR DISTRIBUTOR OF THE EQUIPMENT, THAT SAID ENTITIES ARE
NOT AGENTS OF LESSOR, THAT LESSEE RENTS THE EQUIPMENT "AS IS", AND THAT LESSOR
HAS ACCEPTED NO RESPONSIBILITY FOR THE TRANSPORTATION, INSTALLATION OR REQUIRED
LICENSING NECESSARY FOR THE TRANSFER, INSTALLATION OR USE OF THE EQUIPMENT.
Lessor shall not be liable for specific performance of this Lease nor for
damages if for any reason a supplier declines, delays or fails to fill any
order. Lessee agrees to accept the Equipment and authorizes Lessor to add the
serial number of the Equipment to this Lease. Lessor shall not be liable to
Lessee for any loss, damage or expense of any kind or nature caused directly or
indirectly by the Equipment, its use or maintenance; nor for any delay or
failure to provide any of the Equipment; nor for any interruption of service or
loss of use of the Equipment; nor for any loss of business or damages whatsoever
and howsoever caused.
3. WARRANTIES. LESSEE HAS NOT RELIED UPON AND ACKNOWLEDGES THAT LESSOR
HAS MADE NO REPRESENTATION OR WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, WITH
RESPECT TO THE EQUIPMENT, INCLUDING WITHOUT LIMITATION ITS CONDITION,
MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE. NO DEFECT OR UNFITNESS
OF THE EQUIPMENT NOR OTHER CLAIM REGARDING CONDITION OR USE OF THE EQUIPMENT
SHALL RELIEVE LESSEE OF THE OBLIGATION TO PAY RENT OR ANY OTHER OBLIGATION UNDER
THIS LEASE. Lessor authorizes Lessee to enforce in its own name all warranties,
agreements or representations, if any, which may be made by any supplier to
Lessee or Lessor.
4. TERM. All obligations under this Lease, except regular rental
payments, shall commence immediately upon the Effective Date specified on the
first page of this Agreement (the "Effective Date") and shall continue until
full performance of every provision of this Lease, and each Schedule and
Addendum (the "Lease Term"). All obligations under each Schedule shall commence
upon Lessee's execution of Lessor's Certificate of Inspection and Acceptance
(the "Acceptance Certificate") for the Equipment specified on such Schedule and
shall terminate at the end of the Initial Term (The "Noncancellable Term"). The
"Initial Term", as set forth on page 1 of this Lease, shall begin on the first
day of the calendar quarter following the date of the Acceptance Certificate.
This Lease is irrevocable for its full term and until Lessee has performed all
of its obligations hereunder.
5. RENTAL PAYMENTS. Lessee shall pay to Lessor, as rental for Equipment
during each month of the Noncancellable Term of any Schedule, an amount equal to
the Rent Factor set forth on page one of this Lease multiplied by the total Cost
(as defined below in paragraph 7) of the Equipment to Lessor, which amount shall
be due and payable in advance on the first day of each calendar month during the
Noncancellable Term. If the date of the Acceptance Certificate of any Schedule
shall be other than the first day of the calendar quarter, Lessee shall make
rental
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payments ("Interim Rent") equal to one-thirtieth of the monthly rental set
forth on the Schedule for each day from and including the date of the
Acceptance Certificate for such Schedule, through and including the last day of
the calendar quarter prior to the beginning of the Initial Term. Such Interim
Rent shall be due and payable on the first day of the calendar month following
the month for which such payment is assessed. In addition to any other
remedies that Lessor may have under this Lease, if Lessee fails to pay any rent
or other amount herein provided within five (5) business days after the same is
due, Lessee shall pay to Lessor a late charge of three percent (3%) of such
amount plus interest from the due date until the date of payment, calculated at
the rate of one and five tenths percent (1.5%) per month, or at the highest
rate permitted by applicable law, whichever is less, to compensate Lessor for
additional bookkeeping and collection expense. All rents, late charges and
other amounts for which Lessee is liable shall be paid to Lessor at its address
as set forth above or as otherwise directed by Lessor. Lessor's right to
receive rental payments, as well as all other rights of Lessor to payment
hereunder, shall not be subject to any defense, set off, counterclaim or
recoupment which may arise out of any breach on the part of Lessor, or by
reason of any other liability Lessor may owe Lessee.
6. ADVANCE RENTAL. Upon execution of this Lease, Lessee shall pay to
Lessor an Advance Rental in an amount equal to the Rent Factor multiplied by the
Master Lease Line (plus applicable taxes) less the commitment deposit of
$5,000.00 previously paid by Lessee to Lessor. A pro rata portion of the
Advance Rental shall be credited to the last complete calendar month's rent for
each item of Equipment. Lessee grants Lessor a security interest in the Advance
Rental to secure all of Lessee's obligations hereunder. If the Master Lease
Line has not been fully expended by the Funding Expiration Date, Lessor shall
retain the uncredited balance of the Advance Rental as compensation for
expenses. Lessor shall have the right, but not the obligation, to apply the
Advance Rental to cure any default of Lessee, in which event Lessee shall
promptly restore the Advance Rental account to its proper balance.
7. ADJUSTMENTS FOR ACTUAL COST. As used herein, "Cost" means the cost to
Lessor of purchasing the Equipment including any sales taxes and other charges
paid by Lessor and net of any discounts and rebates remitted to Lessor. The
Advance Rental is based upon the Master Lease Line, which is an estimate. If at
any time the actual aggregate Cost of all Equipment exceeds the Master Lease
Line, the Advance Rental shall be increased proportionately. Lessee shall pay
any additional sums for Advance Rental due under this Lease within five (5)
business days after receiving notice from Lessor. If any Schedule of Equipment
causes the actual aggregate Cost of all Equipment to exceed the Master Lease
Line by more than ten percent (10%), Lessor may terminate said Schedule within
fifteen (15) days after receiving invoices for such excess cost and upon request
shall promptly be reimbursed by Lessee for such excess cost. If the actual
aggregate Cost of all Equipment, together with any additional equipment proposed
to be added to the Lease, would exceed the Master Lease Line by more than ten
percent (10%), Lessor may refuse to add such equipment to this Lease and shall
so notify Lessee.
8. TITLE. All Equipment shall remain personal property, and the title
thereto shall remain exclusively in Lessor, notwithstanding the manner in which
it may be attached to realty. Lessee agrees, upon the request of Lessor at any
time during the Lease Term, to affix or permit Lessor to affix, in a permanent
place on the Equipment, labels supplied by Lessor identifying the
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Equipment as property of Lessor, and shall not alter or remove any such label
from any item of Equipment. Lessee shall keep the Equipment free from any and
all liens and encumbrances except those created by Lessor. Lessee shall give
Lessor immediate notice of any judicial process or encumbrance affecting the
Equipment and shall indemnify and save Lessor harmless from any loss or damage
caused thereby, including court costs, attorney fees and expenses.
9. FILING. Lessee shall execute or cause to be executed, at Lessee's
sole expense, such supplemental instruments, financing statements and landlord's
waivers as Lessor deems necessary or advisable and shall cooperate to defend the
title of Lessor by filing or otherwise. Lessee authorizes Lessor to record in
any state, this Lease and any financing statements, security agreements and
landlord's waivers with respect to the Equipment or any collateral provided by
Lessee to Lessor. Lessee agrees to give Lessor thirty (30) days written notice
of any change in Lessee's name or place of business. Lessee agrees to give
written notice to Lessor as soon as Lessee has knowledge of any change of
ownership of the real property upon which or within which the Equipment is
located.
10. TAXES. Lessee shall pay in a timely fashion and shall indemnify and
hold Lessor harmless against all federal, state and local taxes, assessments,
license and registration fees, and other governmental charges of any kind,
including those levied on motor vehicles or trailers, and any interest or
penalties thereon, which may be levied, directly or indirectly, against the
Equipment or with respect to its ordering, purchasing, delivery, ownership,
possession, use, leasing, documentation, and return or other disposition
thereof, regardless of whether such taxes and fees are levied against Lessor or
Lessee. Lessee shall have the right to contest any material tax, fee or charge
with the applicable authorities provided that Lessee shall indemnify Lessor
against any loss or damage which Lessor may incur as a result of such contest.
Such taxes and fees to be paid by Lessee shall include, without limitation,
property, sales, rent, franchise, gross receipts, lease, and use taxes, and any
other tax measured by gross rental payments, but shall not include net income or
franchise taxes payable by Lessor on its receipt of rental payments hereunder.
Personal Property Taxes shall be reasonably estimated by Lessor and billed to
Lessee as of the date of assessment each year. Upon receipt by Lessor of the
final personal property tax assessment and invoice, Lessor shall invoice or
credit Lessee, as applicable, for any differences of such final assessment and
Lessor's original estimate. Lessor shall have the right, but not the
obligation, to pay any such taxes or fees regardless of whether levied against
Lessor or Lessee. Any and all sales taxes levied against Lessor's purchase of
Equipment shall be added to the total Cost of such Equipment as specified on the
Schedule under which such equipment is added to this Lease. With the exception
of taxes and fees which are added to the total Cost of Equipment hereunder,
Lessee shall reimburse Lessor within ten business (10) days after receipt of
invoice from Lessor specifying the amount of, and reason for, any payment by
Lessor of amounts for which Lessee is liable under this Paragraph 10. Lessee
shall timely prepare and file all reports and returns which are required to be
made with respect to such taxes and/or fees, and all such reports shall show
Lessor as owner of the Equipment.
11. ASSIGNMENTS AND SUBLEASES. Lessee shall not assign this Lease or
Lessee's rights hereunder, or sublease any Equipment, without the prior written
consent of Lessor. Lessor and Lessee agree that any purchase of all or
substantially all of Lessee's Assets, any merger or consolidation into or with
Lessee regardless of whether Lessee is the surviving entity or any entity
acquiring more than twenty percent (20%) of Lessee shall be deemed to be an
assignment
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provided however, that no such consent shall be required in the event the
surviving or acquiring entity shall have a net worth in excess of that of
Lessee and such acquiring entity shall execute an assignment or guaranty (as
appropriate) of Lease, acceptable to Lessor, acknowledging and assuming the
obligations hereunder, prior to giving effect to the transaction. Lessor shall
have the right, in its sole discretion, to assign this Lease or any part
hereof, provided that any such assignment shall not materially increase
Lessee's obligations hereunder. In particular, Lessee acknowledges that it is
Lessor's intention to assign this Lease to one or more limited partnerships
with which Lessor is affiliated, that upon any such assignment the sole
liability for performance of Lessor's obligations hereunder shall fall upon
such assignee, and that the limited partners of such assignee shall have no
personal liability for the performance or observance of this Lease. Following
any assignment by Lessor, the term "Lessor", as used herein, shall include
and/or refer to Lessor's assignee, and the Equipment covered by such assignment
shall be deemed to be used by Lessee under a lease agreement between Lessee and
such assignee, the terms and conditions of which shall be the terms and
conditions of this Lease; provided, however, that any such lease agreement
shall cover only the Equipment so assigned. Subject to the foregoing, this
Lease inures to the benefit of, and is binding upon, the heirs, legatees,
representatives, successors and assigns of Lessee and Lessor.
12. POSSESSION. Lessor covenants that, to the best of its knowledge, it
is the lawful owner of the Equipment and that, conditioned upon Lessee's
performance of each of its obligations under this Lease, Lessee's use of the
Equipment shall not be interrupted by Lessor, except as provided in Paragraph
15.
13. USE AND INDEMNITY. Lessee shall use the Equipment in Lessee's
business. Lessee agrees not to allow the Equipment to be used by other than its
employees, consultants and agents. Lessee acknowledges that the Equipment is
leased for commercial purposes and not for personal use. Lessee agrees to
indemnify and hold Lessor, and Lessor's agents, servants, successors and
assigns, harmless against any and all claims, actions, liabilities and expenses
of any nature, including court costs and attorney fees, arising in connection
with the manufacture, purchase, delivery, installation, operation, use,
ownership, maintenance, storage, relocation, and return of the Equipment, except
to the extent any such claims, actions, liabilities and expenses result from the
gross negligence or willful misconduct of Lessor. The foregoing indemnity shall
continue in full force and effect notwithstanding the termination of this Lease,
whether by expiration of time, operation of law or otherwise.
14. LOCATION. Lessee shall keep the Equipment within the continental
United States and at its place of business as specified above or on the
Schedules. Lessee shall not permit any Equipment to be moved to a new location
without the prior written consent of Lessor.
15. RIGHT OF INSPECTION. Lessor and its agents shall have the right, at
any time during normal business hours, to inspect and photograph the Equipment,
to review all maintenance records related to the Equipment and, during the last
ninety (90) days of the rental term of each respective Schedule provided that
Lessee has not given notice of its intent to purchase the Equipment pursuant to
Paragraph 17 below, to demonstrate the Equipment specified thereon to
prospective purchasers; provided, however, Lessor shall give five days notice to
Lessee of any such demonstration.
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16. MAINTENANCE. Lessee shall exercise due and proper care in the use,
repair and servicing of the Equipment. Lessee shall, at its own expense, make
all repairs and replacements required to maintain the Equipment in good working
condition in accordance with manufacturers' specifications and Lessor's
requirements, and shall pay all other operating expenses relating to the
Equipment. Lessee shall have the right, upon ten (10) days prior written notice
to Lessor, to make any alterations, additions or improvements which do not
render the Equipment in such a condition that it cannot, prior to the expiration
or other termination of this Lease, be restored to its original condition,
reasonable wear and tear alone excepted; provided that no such alteration,
addition or improvement shall be made by Lessee if as a result thereof any
warranties made by the supplier of the Equipment would be canceled or
terminated. If Lessee does not exercise its option to purchase the Equipment as
specified in Paragraph 17, or if Lessee should become in default of any of its
obligations hereunder, Lessee shall restore the Equipment to its original
condition, reasonable wear and tear alone excepted, prior to the expiration or
other termination of each respective Schedule. All replacement parts and
additions incorporated to the Equipment shall become the property of Lessor;
provided, however, that Lessor shall transfer to Lessee title to any
alterations, additions and improvements which were made by Lessee at its own
expense to (i) each item of Equipment which Lessee has restored to its original
condition as specified in this Paragraph 16, and (ii) each item of Equipment
purchased by Lessee pursuant to the provisions of Paragraph 17. Lessee agrees
to maintain and provide upon request of Lessor all internal maintenance reports
relating to the Equipment.
17. PURCHASE OPTION. Upon written notice to Lessor not less than 90 days
prior to the expiration of this Lease, if Lessee has fulfilled all of its
obligations hereunder, Lessee shall have the right to purchase all, but not less
than all, of the Equipment, on a Schedule by Schedule basis, for Fair Market
Value (as defined below) as such term is adopted and recognized by the American
Society of Appraisers (plus applicable taxes). Should Lessor and Lessee fail to
agree upon the fair market value purchase price of the Equipment, said price
shall be determined by an independent appraiser, and the cost shall be borne
equally by both Lessor and Lessee. Notwithstanding the date on which Lessee
exercises this option, Lessee shall acquire no rights of title to any Equipment,
nor shall any Equipment be transferred to Lessee, until the expiration of the
rental term for the Schedule on which such Equipment is specified. Lessee shall
remain liable for all rental payments and other obligations until the expiration
of the Lease Term. Any Equipment sold by Lessor shall be sold "as is", "where
is", and with no warranties, express or implied, including without limitation
implied warranties of merchantability and fitness for any particular purpose.
"Fair Market Value" is defined as the estimated amount at which the property
might be expected to exchange between a willing buyer and a willing seller,
neither being under compulsion, each having reasonable knowledge of all relevant
facts, and with equity to both.
18. RETURN OF EQUIPMENT. Upon 90 days written notice to Lessor,
in the event Lessee has not exercised its Purchase Option as specified in
Paragraph 17, after such notification and upon the expiration or termination of
this Lease, Lessee shall, at Lessee's sole expense, properly pack and return
the Equipment, insured, unencumbered and in the same condition as when received
by Lessee, reasonable wear and tear alone excepted, by such carriers as Lessor
shall approve and to such place as designated by Lessor. Should Lessee fail to
return the Equipment as directed above, all obligations of Lessee under this
Lease, including rental payments, shall remain in full force and effect during
the holdover period.
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19. FINANCIAL STATEMENTS.
(a) Lessee shall provide to Lessor the financial statements
specified in this subparagraph 19(a), prepared in accordance with generally
accepted accounting principles, consistently applied (the "Financial
Statements"); provided, however, that after the effective date of any initial
registration statement covering a public offering of Lessee's securities, the
term "Financial Statements" shall be deemed to refer only to those statements
required by the Securities and Exchange Commission, to be provided no less
frequently than quarterly.
(i) As soon as practicable (and in any event within thirty
(30) days after the end of each month), a reasonably detailed balance sheet as
of the end of such month and the related statements of income or loss, cash flow
and capital structure of the Lessee during such month (including the
commencement of any material litigation by or against Lessee), certified by
Lessee's Chief Executive Officer or Chief Financial Officer fairly to present
the data reflected therein.
(ii) As soon as practicable (and in any event within one
hundred and twenty (120) days after the end of each fiscal year, audited balance
sheets as of the end of such year (consolidated if applicable), and related
statements of income or loss, retained earnings or deficit, cash flows and
capital structure of Lessee for such year, setting forth in comparative form the
corresponding figures for the preceding fiscal year, and accompanied by an audit
report and opinion of the independent certified public accountants of recognized
national standing selected by Lessee.
(b) Lessee shall promptly furnish to Lessor any additional
information (including but not limited to tax returns, income statements,
balance sheets, and names of principal creditors) as Lessor reasonably believes
necessary to evaluate Lessee's continuing financial obligations (the "Additional
Information").
(c) Lessor agrees to preserve the confidentiality of all information
provided to it hereunder by Lessee regarding the Lessee and its business which
Lessee designates in writing as confidential and which is otherwise not
generally known.
20. TAX INDEMNIFICATION. Lessee acknowledges that this Lease has been
entered into on the basis that Lessor or Lessor's designee intends to claim such
depreciation, interest deductions and other tax benefits as are provided to an
owner of Equipment under the Internal Revenue Code of 1986, as amended (the
"Code") (the "Tax Benefits"). If Lessor or Lessor's designee shall not have the
right to claim or there shall be disallowed or recaptured with respect to Lessor
or Lessor's designee, all or any portion of the Tax Benefits as a result of an
act or failure to act by Lessee in contravention with any of the terms and
conditions of the Lease, Lessee shall promptly pay to Lessor or Lessor's
designee, an amount which, on an after-tax basis, will compensate Lessor or
Lessor's designee for the value of the lost Tax Benefits. The Tax Benefits shall
be deemed to have been disallowed or recaptured upon the payment by Lessor to
the Internal Revenue Service or state taxing authority of the tax increase
resulting from such lost Tax Benefits. Provided Lessee has reimbursed Lessor
for the payment to the Internal Revenue Service or taxing authority for the
increase resulting from such loss of Tax Benefits, Lessee shall have the right
to contest any disallow or recapture of Tax Benefits with the
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appropriate taxing authority. Lessor or Lessor's designee shall be deemed not
to have the right to claim the Tax Benefits if, in the opinion of Lessor's
independent tax counsel, reasonably acceptable to Lessee, there is no
reasonable basis for claiming the Tax Benefits.
21. NO REPRESENTATION. Lessor assumes no liability as to the treatment by
Lessee of this Lease, the Equipment or the rental payments for financial
statement or tax purposes.
22. RISK OF LOSS. Lessee assumes the entire risk of loss, theft and
damage of the Equipment from any cause whatsoever, and no such event shall
relieve Lessee of any obligation under this Lease. Lessee shall notify Lessor
in writing within ten (10) days after any such event. Lessee agrees that Lessor
shall have the following remedies upon each occurrence of the following events:
(a) In the case of damage of any kind whatsoever to any item of
Equipment (unless such item is damaged beyond repair), Lessee shall, at Lessee's
sole expense and with Lessor's reasonable consent, (i) restore such Equipment to
its original condition, reasonable wear and tear alone excepted, or (ii) replace
it with like equipment of the same or later model in good condition. Upon
Lessee's replacement of any Equipment as specified in this subparagraph
22(a)(ii), Lessor shall transfer title to such replaced Equipment to Lessee.
(b) If any item of Equipment is determined by Lessor to be damaged
beyond repair, or if Lessor has reasonable cause to believe that any item of
Equipment is stolen or lost and such item is not returned to its proper location
within thirty (30) days after notice thereof to Lessee, Lessee shall, with
Lessor's reasonable consent, immediately pay to Lessor: (i) the amount required
to replace such item with like equipment of the same or later model in good
condition, in which case Lessor shall replace such item, and rental payments
shall continue throughout the Lease Term without any interruption, or (ii) the
aggregate unpaid rent due for the balance of the rental term for the items of
Equipment involved, discounted to present value at the then current Treasury
Bill rate, the then estimated fair market value of the items of Equipment
involved, calculated as of the expiration of the Lease Term (the "Residual
Value"), discounted to present value at the then current Treasury Bill rate; any
tax payments or indemnification for which Lessee is liable under Paragraphs 10
and 20; and any other amounts for which Lessee is liable under this Lease;
provided, however, the option specified in subparagraph 22(b)(i) shall not be
available in the event of Lessee's default. Upon payment under subparagraph
22(b)(ii), this Lease shall terminate with respect to the items paid for, and
Lessee shall become entitled to such items "as is" and "where is" without any
warranty, express or implied.
(c) Any proceeds paid to Lessor from the Personal Property Insurance
specified in subparagraph 23 (a) (i) (B) shall be applied to Lessee's
obligations under this Paragraph 22.
23. INSURANCE.
(a) Lessee shall, at its own expense, maintain the following types
of insurance, with companies acceptable to Lessor, until such time as Lessee has
returned the Equipment as specified in Paragraph 18:
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(i) Personal Property Insurance on all property owned by
Lessee (including but not limited to all of the Equipment), in an agreed amount
based upon the following:
(A) Standard Special Form Property Insurance,
including boiler and machinery insurance, and flood insurance if any Equipment
is located in an identified "flood hazard area," in which flood insurance has
been made available pursuant to the National Flood Insurance Act of 1968;
(B) The amount of such insurance shall be not less
than the greater of the fair market value or the full undepreciated replacement
value of the Equipment. The Amount of such insurance allocable to loss or
damage or personal property shall not have a deductible in excess of five
thousand dollars ($5,000.00) per occurrence.
(C) Such insurance shall contain an endorsement in
which Lessor is named as Loss Payee with respect to the Equipment, and shall set
aside the amount stated in subparagraph 23(a)(i)(B) for the sole benefit of, and
payable directly to, Lessor.
(ii) Business interruption insurance in an amount at all times
equal to the loss of profit plus necessary continuing expenses for the six
months following the date of calculation. In the event of any interruption of
Lessee's business, the amount payable to Lessor shall be equal to not less than
the actual loss of rental payments suffered by Lessor as the result of such
interruption, and shall be payable to Lessor within thirty (30) days from the
date of loss, and on a month-to-month basis thereafter, until Lessee's business
is returned to a fully operational state, plus ninety (90) days.
(iii) Commercial General Liability Insurance covering bodily
injury (including death) and property damage, naming Lessor, its directors,
officers, agents and employees as an Additional Insured on all policies, and
providing total limits in amounts as are at the time carried by entities engaged
in the same or similar business and which are similarly situated, but in no
event less than two million dollars ($2,000,000.00) for combined single limit
occurrence. All such policies shall cover any injury or damage occasioned by,
or occurring upon, Lessee's premises, products, operations and, at Lessor's
option, explosion, collapse and underground hazards. All such policies shall
contain contractual liability coverage including all liability assumed under
this agreement, and a cross liability clause providing that such insurance
shall, except with respect to the limits of liability, apply separately to each
insured.
(b) All insurance specified in this Paragraph 23 shall be primary
over any insurance carried by Lessor, and in no event shall any insurance
carried by Lessor be called upon to contribute to any loss relating to or
arising out of this Lease. All insurance shall be in effect, and shall be
evidenced by policies and/or endorsements delivered to Lessor no later than
twenty (20) days after the date upon which Lessee executes this Lease.
Notwithstanding anything to the contrary contained in this Lease, Lessor shall
have no obligation to purchase any Equipment until all policies are in place.
All such policies shall provide for at least thirty (30) days prior written
notice to Lessor in the event of any cancellation, non-renewal or material
change in coverage, and Lessor shall receive a copy of any and all endorsements
or other documentation relating to such policies.
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(c) Should Lessee, at any time during the Lease Term, be without
sufficient insurance, as determined by Lessor in accordance with the provisions
of this Paragraph 23, Lessee appoints Lessor as its agent to obtain such
coverage, and promises to pay to Lessor the entire cost of such coverage.
24. DEFAULT. Time is of the essence of this Lease and each of its
provisions. Lessee shall be in default immediately upon the occurrence of any
of the following events:
(a) Nonpayment, by the due date specified herein, of any rental or
other payment required of Lessee under the terms of this Lease, and such
nonpayment shall continue for a period of five (5) business days;
(b) Noncompliance with any or all of the provisions of Paragraph 23,
and such noncompliance shall continue for a period of five (5) days after notice
thereof is given to Lessee;
(c) If Lessee has made a misstatement or false statement of, or
omitted to state, a material fact in connection with the execution, performance
or nonperformance of this Lease or any Schedule, or if any representation or
warranty of Lessee in this Lease or the Acceptance Certificate for any item of
Equipment is inaccurate or false;
(d) If Lessee, except as permitted in Paragraph 11 above, without
Lessor's prior written consent shall have attempted to remove, part possession
with, sell transfer, encumber, assign or sublet the Equipment or Lessee's
interest under this Lease; or if Lessee shall have attempted to convert any
interest of Lessor arising under this Lease or any purchase order, or resulting
from the purchase of Equipment;
(e) If Lessee shall encumber, without Lessor's prior written
consent, other than for valid business purposes during the normal course of
business with respect to license agreements or similar agreements, sell,
transfer or assign, except as permitted in Paragraph 11 above, Lessee's rights,
title and interest in all patents, patent applications, invention disclosures,
copyrights, copyright applications, trademarks (including service marks),
trademark registrations, trade names, computer software and hardware, microcode
and source code, trade secrets, know-how and processes owned by Lessee
(hereinafter referred to as "Intellectual Property");
(f) If any of Lessee's credit or financial information submitted to
Lessor prior or subsequent to execution of this Lease (including but not limited
to due diligence materials, Financial Statements and Additional Information)
contains any misstatement or false statement of a material fact, or fails to
state therein any material fact necessary to make the statements made, in light
of the circumstances under which they were made, not misleading;
(g) The inability of Lessee to pay debts when due, or the insolvency
of Lessee or the commission by Lessee of any act of bankruptcy as defined in the
Federal Bankruptcy Act as amended;
(h) If any single finally adjudicated judgement for payment of money
damages in excess of twenty- five thousand dollars ($25,000.00), or aggregate
judgments for
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payment of money damages in excess of fifty thousand dollars ($50,000.00),
shall be rendered against Lessee and shall remain undischarged for a period of
sixty (60) days, during which period execution shall not effectively stayed;
(i) If any substantial part of Lessee's property shall remain
subjected to any levy, seizure, involuntary assignment, attachment, application
or sale for or by any creditor or governmental agency;
(j) If any single indebtedness of Lessee exceeding the sum of
twenty-five thousand dollars ($25,000.00), or aggregate indebtedness exceeding
the sum of fifty thousand dollars ($50,000.00), under any other lease or
contract for the borrowing of money or on account of the deferred purchase price
of property shall be accelerated, or subject to acceleration upon the giving of
notice, passage of time or both as a result of a default by Lessee;
(k) If an order, judgement or decree shall be entered by any court
having jurisdiction for (i) relief in respect of Lessee in an involuntary case
under any applicable bankruptcy, insolvency or other similar law (as now or
hereafter in effect), (ii) appointing of receiver, liquidator, assignee,
trustee, custodian, sequestrator (or similar official) for Lessee or for any
substantial part of its property, or sequestering any substantial part of the
property of Lessee, or (iii) liquidating of Lessee's affairs, and any such
order, judgement or decree shall remain in force undismissed, unstayed or
unvacated for a period of sixty (60) days after the date of entry thereof; or if
Lessee shall seek relief of any kind under any such law or consent to any of the
foregoing; or
(l) Nonperformance of any of Lessee's obligations other than those
described in this Paragraph 24, and such nonperformance shall continue for a
period of 15) days after notice thereof is given to Lessee.
25. REMEDIES. In the event of any default by Lessee and while such
default is continuing, or upon termination prior to the expiration of this
Lease, Lessor or its agent shall have the right, without demand or prior notice,
in Lessor's sole discretion, to exercise any one or more of the following
remedies in addition to any other remedies available to Lessor under applicable
law:
(a) To declare the entire amount of rent hereunder during the
remainder of the Lease Term immediately due and payable;
(b) To enforce Lessee's performance or recover damages for Lessee's
default as specified in Paragraph 26;
(c) To take possession of any or all items of Equipment and, in
Lessor's sole discretion, with or without any court order or other process of
law. This Lease shall terminate if all defaults on the part of Lessee are not
cured within five (5) days after such taking of possession; however, such taking
of possession and termination of this Lease shall not relieve Lessee of its
obligations to pay rent and other amounts due hereunder. Lessee waives any and
all damages occasioned by such taking of possession.
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(d) To pursue any and all remedies available at law by reason of
Lessee's default.
26. DAMAGES. Lessor's damages, in the event of default by Lessee, shall
include without limitation: (i) the unpaid balance of rent and all other amounts
due and to become due hereunder, discounted to present value at then current
Treasury Bill rate, (ii) the Residual Value (as defined in Paragraph 22),
discounted to present value at the then current Treasury Bill rate,, (iii)
indemnification for any Loss of Tax Benefits under Paragraph 20, (iv) costs of
repossession and repairs and lease or sale to a third party, plus (v) all other
expenses including court cost and attorney fees. Lessor's obligation to
mitigate said damages shall be limited as follows:
(a) Lessor shall make best efforts to mitigate its damages by
re-leasing the Equipment to a third party, and any rentals received in
consideration for such third party's use of said Equipment during any period of
the Lease Term shall be applied only to that portion of Lessor's damages
resulting from loss of rentals that Lessor would have received from Lessee
during the same period had Lessee not become in default. Amounts received from
such third party shall be applied in mitigation of Lessor's damages only to the
extent such amounts are payable in connection with such third party's periodic
rental obligations as specified in the preceding sentence; in no event shall any
other amount received from such third party, including without limitation as a
security deposit or as an advance on periodic rental obligations, be applied in
mitigation of Lessor's damages hereunder.
(b) Lessor shall have no obligation to sell any of the Equipment;
however, any amounts received from a sale to a third party shall be applied to
Lessor's damages as specified in this paragraph 26.
27. CHOICE OF LAW. THIS LEASE SHALL BE DEEMED TO HAVE BEEN MADE AND
ACCEPTED AND PERFORMED IN THE COUNTY OF SAN FRANCISCO, IN THE STATE OF
CALIFORNIA, WHERE THE LESSOR'S PRINCIPAL PLACE OF BUSINESS IS LOCATED. THIS
LEASE AND ALL TRANSACTIONS HEREUNDER, AND ALL RIGHTS AND LIABILITIES OF THE
PARTIES HERETO, SHALL BE DETERMINED AND GOVERNED AS TO THE VALIDITY,
INTERPRETATION, ENFORCEMENT AND EFFECT BY THE LAWS OF THE STATE OF CALIFORNIA.
THE LESSEE HEREBY CONSENTS, IN ALL ACTIONS AND PROCEEDINGS ARISING DIRECTLY OR
INDIRECTLY FROM THIS LEASE, TO THE EXCLUSIVE JURISDICTION OF THE FEDERAL
DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA OR ANY STATE COURT
LOCATED WITHIN SAN FRANCISCO COUNTY IN THE STATE OF CALIFORNIA.
28. MISCELLANEOUS.
(a) If more than one Lessee is named in or added to this Lease, the
liability of each shall be joint and several.
(b) The rent shall not abate by reason of termination of Lessee's
right of possession and/or the taking of possession by Lessor, or for any other
reason.
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(c) All notices related hereto shall be mailed to Lessor or Lessee
at its respective address as specified on page one of this Lease, or at such
other address as either party may designate upon ten days written notice to the
other party.
(d) Paragraph titles are solely for convenience and are not an aid
in the interpretation of this Lease.
(e) A representative of Lessor shall have the right to meet with
Lessee's Chief Executive Officer and Chief Financial Officer once per quarter
throughout the lease term, to discuss the operating performance and financial
condition of the Company.
29. RIGHT OF FIRST OFFER. During the lease term, Lessee shall provide
Lessor with all requests for additional debt financing prior to the time that
such requests are provided to other financing sources. Should Lessor and Lessee
fail to agree within ten (10) days on the terms and conditions of such
financing, then Lessee may accept a funding source other than Lessor.
30. LESSOR'S PERFORMANCE OF LESSEE'S OBLIGATIONS. If Lessee shall fail
duly and promptly to perform any of its obligations under this Lease, Lessor
may, at its option and at any time, perform the same without waiving any default
on the part of Lessee, or any of Lessor's rights. Lessee shall reimburse
Lessor, within five (5) days after notice thereof is given to Lessee, for all
expenses and liabilities incurred by Lessor in the performance of Lessee's
obligations.
31. NONWAIVER. Lessor's failure at any time to require strict performance
by Lessee shall not constitute waiver of, or diminish, Lessor's right to demand
strict compliance with any provision of this Lease. Waiver by Lessor of any
default shall not constitute waiver of any other default. Lessor's rights are
cumulative and not alternative.
32. SURVIVAL OF OBLIGATIONS. All agreements, covenants, representations
and warranties of Lessee contained in this Lease or in the Schedules or other
documents delivered pursuant hereto or in connection herewith shall survive the
execution and delivery, and the expiration or other termination of this Lease.
33. SEVERABILITY. If any provision or remedy herein provided is
determined invalid under applicable law, such provision shall be inapplicable
and deemed omitted; but the remaining provisions, including remaining default
remedies, shall be given effect in accordance with their manifest intent.
34. WARRANTS. As an inducement to Lessor to enter into the Lease,
Lessee grants to Lessor the right to purchase, at a price per share set forth
in the Warrant (as hereinafter defined), 60,750 shares of Lessee's Series B
Preferred Stock, pursuant to a definitive Warrant dated as of November ___,
1992 attached hereto as Exhibit B (the "Warrant"). If, for any reason, the
total cost to Lessor under the Lease should exceed the Master Lease Line, as
specified on page 1 of the Lease, Lessor shall have the right to purchase from
Lessee, at the price per share specified in the preceding sentence, an
additional number of shares obtained by dividing (i) the product of (A) the
amount by which the total Cost to Lessor exceeds the Master Lease Line
multiplied by (B) the number of shares specified in the preceding sentence, by
(ii) the Master Lease Line.
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35. UPGRADES, ADDITIONS AND ATTACHMENTS. Any added memory, upgrades,
additions and attachments to Equipment previously placed under this Lease shall,
upon approval by Lessor, be included on a Schedule, with a Noncancellable Term
that is co-terminus with the Equipment to which such added memory, upgrade,
addition or attachment is being attached.
36. ENTIRE AGREEMENT. This instrument constitutes the entire agreement
between the parties and may not be modified except in writing executed by Lessor
and Lessee. No supplier or agent of Lessor is authorized to bind Lessor or to
waiver or modify any term of this Lease.
The undersigned representative of Lessee affirms that he or she has read and
understood this Lease and is duly authorized to execute this Lease on behalf of
Lessee and that, if Lessee is a corporation, this Lease is entered into with
consent of Lessee's Board of Directors and stockholders if so required.
In witness whereof, the parties hereto execute this noncancellable Lease as
of the effective date.
LESSEE: LESSOR:
BIOSTAR, INC. DOMINION VENTURES, INC.
By: /s/ Teresa W. Ayers By:
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