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Exhibit 10.3    
    


AMENDMENT NO. 1

TO

LEASE SCHEDULE NO. 001

TO

MASTER LEASE AGREEMENT NO. AFI0230  


        Reference is made to Lease Schedule No. 001 dated December 17, 2001 (the "Schedule") to Master Lease Agreement No. AFI0230 dated December 17,
2001 (the "Master Lease"), by and between APPLIED FINANCIAL, INC. (the "Lessor") and AMPHASTAR
PHARMACEUTICALS, INC. (the "Lessee"). The Schedule as it incorporates the terms and conditions of the Master Lease is referred to herein as the "Lease". Pursuant to the
Lease, Lessor has agreed to purchase and lease to Lessee property specified in the Lease. All capitalized terms used herein but not defined herein shall have the same meanings ascribed to them in the
Lease. 


        The
Schedule as originally signed was based upon a Total Cost Not to Exceed $2,165,000.00. The revised Total Cost as of the date hereof for the items of Property listed on the attached
Exhibit A is $567,791.00. Based upon the decreased Property cost and a more specific description and location of the Property, the Schedule is hereby amended retroactive to December 17,
2001 by deleting Sections 1, 2, 5, 6, 7, 8 and 9 of the Schedule and replacing them with the following: 



	Section 1.	 	Property: Fully automatic filling & closing machine Model No. 5071/Serial No. 51950
	

Section 2.	
 	

Property Location: 11570 6th Street, Rancho Cucamonga, CA 91730
	

Section 5.	
 	

Monthly Rental: $15,001.04, plus applicable sales tax
	

Section 6.	
 	

Deposit: $7,500.52 applied to the last Monthly Rental
	

Section 7.	
 	

Total Cost: $567,791.00
	

Section 8.	
 	

Lease Rate Factor: .02642 (Progress Funding Service Charges accrued through March 29, 2002, shall be calculated using the Lease Rate Factor of .02500.)
	

Section 9.	
 	

Shall be deleted in its entirety.





        All
other terms and conditions of the Lease shall continue in full force and effect without change. 


Dated:
April 4, 2002 



	LESSOR:	 	LESSEE:
	
APPLIED FINANCIAL, INC.	
 	

AMPHASTAR PHARMACEUTICALS, INC.
	

BY:	
 	

/s/
	
 	

BY:	
 	

/s/  EVA WEN      

	

TITLE:	
 	

Assistant Vice President
	
 	

TITLE:	
 	

Corporate Controller










EXHIBIT B

CASUALTY LOSS SCHEDULE

DATED APRIL 4, 2002

TO

LEASE SCHEDULE NO. 001

DATED DECEMBER 17, 2001, AS AMENDED

TO

MASTER LEASE AGREEMENT NO. AFI0230  


        Upon execution below by the Lessee and Lessor, this Casualty Loss Schedule shall replace and supersede the original Casualty Loss Schedule previously executed,
which shall from and after the date hereof become null and void. 


        The
Casualty Loss Value for each item of Property shall be determined by multiplying the original cost to Lessor of such item by the casualty loss percentage indicated below which
corresponds to the month of the Lease after the Commencement Date in which the last Monthly Rental payment was made. The dollar amount shown below represents the Casualty Loss Value which would apply
if all of the Property were lost or destroyed. 



	AFTER

PAYMENT

NUMBER
	 	TOTAL

CASUALTY

LOSS

VALUE
	 	CASUALTY

LOSS

PERCENTAGE
	 	AFTER

PAYMENT

NUMBER
	 	TOTAL

CASUALTY

LOSS

VALUE
	 	CASUALTY

LOSS

PERCENTAGE

	0	 	$738,128	 	130.00%	 	25	 	$475,308	 	83.71%
	1	 	$731,718	 	128.87%	 	26	 	$462,797	 	81.51%
	2	 	$721,463	 	127.06%	 	27	 	$450,220	 	79.29%
	3	 	$711,143	 	125.25%	 	28	 	$437,577	 	77.07%
	4	 	$700,755	 	123.42%	 	29	 	$427,194	 	75.24%
	5	 	$690,300	 	121.58%	 	30	 	$414,253	 	72.96%
	6	 	$686,762	 	120.95%	 	31	 	$401,249	 	70.67%
	7	 	$675,930	 	119.05%	 	32	 	$388,182	 	68.37%
	8	 	$665,032	 	117.13%	 	33	 	$375,052	 	66.05%
	9	 	$654,068	 	115.20%	 	34	 	$361,859	 	63.73%
	10	 	$643,038	 	113.25%	 	35	 	$348,603	 	61.40%
	11	 	$631,941	 	111.30%	 	36	 	$335,282	 	59.05%
	12	 	$620,776	 	109.33%	 	37	 	$321,897	 	56.69%
	13	 	$609,543	 	107.35%	 	38	 	$308,448	 	54.32%
	14	 	$603,445	 	106.28%	 	39	 	$295,816	 	52.10%
	15	 	$591,856	 	104.24%	 	40	 	$282,118	 	49.69%
	16	 	$580,201	 	102.19%	 	41	 	$268,359	 	47.26%
	17	 	$568,481	 	100.12%	 	42	 	$254,540	 	44.83%
	18	 	$556,694	 	98.05%	 	43	 	$240,660	 	42.39%
	19	 	$544,841	 	95.96%	 	44	 	$227,058	 	39.99%
	20	 	$532,920	 	93.86%	 	45	 	$212,962	 	37.51%
	21	 	$524,707	 	92.41%	 	46	 	$198,811	 	35.01%
	22	 	$512,454	 	90.25%	 	47	 	$184,602	 	32.51%
	23	 	$500,137	 	88.08%	 	48	 	$170,337	 	30.00%
	24	 	$487,755	 	85.90%	 	and thereafter	 	 	 	 





	LESSOR:	 	LESSEE:
	
APPLIED FINANCIAL, INC.	
 	

AMPHASTAR PHARMACEUTICALS, INC.
	

BY:	
 	

/s/
	
 	

BY:	
 	

/s/  EVA WEN      

	

TITLE:	
 	

Assistant Vice President
	
 	

TITLE:	
 	

Corporate Controller










ACCEPTANCE CERTIFICATE

TO

LEASE SCHEDULE NO. 001, AS AMENDED

TO

MASTER LEASE AGREEMENT NO. AFI0230  


        Reference is made to Lease Schedule No. 001 dated December 17, 2001, as amended by Amendment No. 1 dated April 4, 2002 (collectively,
the "Schedule") to Master Lease Agreement No. AFI0230 dated December 17, 2001 (the "Master Lease"), between APPLIED FINANCIAL, INC. (the
"Lessor"), and AMPHASTAR PHARMACEUTICALS, INC. (the "Lessee"). 


	1.
	Condition
of the Property: 



The
Lessee certifies that all items of Property described in Paragraph 4 have been delivered to the location indicated in Paragraph 2, have been examined, tested, and determined by
Lessee to be ready for use, and are hereby accepted as items of Property for all purposes under the Lease, all on the date indicated in Paragraph 3. 



	2.
	Location
of Property: 11570 6th Street Rancho Cucamonga, CA 91730



	3.
	Acceptance
Date: March 29, 2002



	4.
	Description
of Property: Fully automatic filling & closing machine Model No. 507l/Serial No. 51950 






	 
	 	 
	 	 

	LESSEE:	 	 
	
AMPHASTAR PHARMACEUTICALS, INC.
	

BY:	
 	

/s/  EVA WEN      
	
 	

 
	

TITLE:	
 	

Corporate Controller
	
 	

 










Amphastar Pharmaceuticals, Inc.

Equipment Lease—Applied Financial Inc. Amortization Schedule

As of March 29, 2002  



	Principal:	 	$	567,791.00	 	Due on 29th of each month
	Interest rate:	 	 	12.176	%	Annual Interest Rate
	 	 	 	0.02642	 	Lease Rate Factor





	Date
 
	 	Paid

Date
	 	Beginning

Balance
	 	Principal
	 	Interest
	 	Ttl

Monthly

Payment
	 	Ending

Balance

	Mar-02	 	 	 	567,791.00	 	—	 	—	 	—	 	$	567,791.00
	Apr-02	 	 	 	567,791.00	 	9,239.85	 	5,761.19	 	15,001.04	 	 	558,551.15
	May-02	 	 	 	558,551.15	 	9,333.61	 	5,667.43	 	15,001.04	 	 	549,217.54
	Jun-02	 	 	 	549,217.54	 	9,428.31	 	5,572.73	 	15,001.04	 	 	539,789.23
	Jul-02	 	 	 	539,789.23	 	9,523.98	 	5,477.06	 	15,001.04	 	 	530,265.25
	Aug-02	 	 	 	530,265.25	 	9,620.62	 	5,380.42	 	15,001.04	 	 	520,644.63
	Sep-02	 	 	 	520,644.63	 	9,718.23	 	5,282.81	 	15,001.04	 	 	510,926.40
	Oct-02	 	 	 	510,926.40	 	9,816.84	 	5,184.20	 	15,001.04	 	 	501,109.56
	Nov-02	 	 	 	501,109.56	 	9,916.45	 	5,084.59	 	15,001.04	 	 	491,193.11
	Dec-02	 	 	 	491,193.11	 	10,017.07	 	4,983.97	 	15,001.04	 	 	481,176.04
	 	 	 	 	 	 	
	 	
	 	
	 	 	 
	 	 	 	 	 	 	86,614.96	 	48,394.40	 	135,009.36	 	 	 
	 	 	 	 	 	 	
	 	
	 	
	 	 	 
	

Jan-03	
 	

 	
 	

481,176.04	
 	

10,118.71	
 	

4,882.33	
 	

15,001.04	
 	
 	

471,057.34
	Feb-03	 	 	 	471,057.34	 	10,221.38	 	4,779.66	 	15,001.04	 	 	460,835.96
	Mar-03	 	 	 	460,835.96	 	10,325.09	 	4,675.95	 	15,001.04	 	 	450,510.87
	Apr-03	 	 	 	450,510.87	 	10,429.86	 	4,571.18	 	15,001.04	 	 	440,081.01
	May-03	 	 	 	440,081.01	 	10,535.68	 	4,465.36	 	15,001.04	 	 	429,545.33
	Jun-03	 	 	 	429,545.33	 	10,642.59	 	4,358.45	 	15,001.04	 	 	418,902.74
	Jul-03	 	 	 	418,902.74	 	10,750.57	 	4,250.47	 	15,001.04	 	 	408,152.17
	Aug-03	 	 	 	408,152.17	 	10,859.66	 	4,141.38	 	15,001.04	 	 	397,292.51
	Sep-03	 	 	 	397,292.51	 	10,969.85	 	4,031.19	 	15,001.04	 	 	386,322.66
	Oct-03	 	 	 	386,322.66	 	11,081.15	 	3,919.89	 	15,001.04	 	 	375,241.51
	Nov-03	 	 	 	375,241.51	 	11,193.59	 	3,807.45	 	15,001.04	 	 	364,047.92
	Dec-03	 	 	 	364,047.92	 	11,307.17	 	3,693.87	 	15,001.04	 	 	352,740.76
	 	 	 	 	 	 	
	 	
	 	
	 	 	 
	 	 	 	 	 	 	128,435.29	 	51,577.19	 	180,012.48	 	 	 
	 	 	 	 	 	 	
	 	
	 	
	 	 	 
	

Jan-04	
 	

 	
 	

352,740.76	
 	

11,421.90	
 	

3,579.14	
 	

15,001.04	
 	
 	

341,318.86
	Feb-04	 	 	 	341,318.86	 	11,537.79	 	3,463.25	 	15,001.04	 	 	329,781.07
	Mar-04	 	 	 	329,781.07	 	11,654.86	 	3,346.18	 	15,001.04	 	 	318,126.21
	Apr-04	 	 	 	318,126.21	 	11,773.12	 	3,227.92	 	15,001.04	 	 	306,353.09
	May-04	 	 	 	306,353.09	 	11,892.58	 	3,108.46	 	15,001.04	 	 	294,460.51
	Jun-04	 	 	 	294,460.51	 	12,013.25	 	2,987.79	 	15,001.04	 	 	282,447.26
	Jul-04	 	 	 	282,447.26	 	12,135.14	 	2,865.90	 	15,001.04	 	 	270,312.12
	Aug-04	 	 	 	270,312.12	 	12,258.27	 	2,742.77	 	15,001.04	 	 	258,053.85
	Sep-04	 	 	 	258,053.85	 	12,382.65	 	2,618.39	 	15,001.04	 	 	245,671.19
	Oct-04	 	 	 	245,671.19	 	12,508.30	 	2,492.74	 	15,001.04	 	 	233,162.90
	Nov-04	 	 	 	233,162.90	 	12,635.21	 	2,365.83	 	15,001.04	 	 	220,527.68
	Dec-04	 	 	 	220,527.68	 	12,763.42	 	2,237.62	 	15,001.04	 	 	207,764.26
	 	 	 	 	 	 	
	 	
	 	
	 	 	 
	 	 	 	 	 	 	144,976.49	 	35,035.99	 	180,012.48	 	 	 
	 	 	 	 	 	 	
	 	
	 	
	 	 	 










Amphastar Pharmaceuticals, Inc.

Equipment Lease—Applied Financial Inc. Amortization Schedule

As of March 29, 2002  



	Principal:	 	$	567,791.00	 	Due on 29th of each month
	Interest rate:	 	 	12.176	%	Annual Interest Rate
	 	 	 	0.02642	 	Lease Rate Factor





	Date
 
	 	Paid

Date
	 	Beginning

Balance
	 	Principal
	 	Interest
	 	Ttl

Monthly

Payment
	 	Ending

Balance

	Jan-05	 	 	 	207,764.26	 	12,892.93	 	2,108.11	 	15,001.04	 	194,871.34
	Feb-05	 	 	 	194,871.34	 	13,023.75	 	1,977.29	 	15,001.04	 	181,847.59
	Mar-05	 	 	 	181,847.59	 	13,155.89	 	1,845.15	 	15,001.04	 	168,691.70
	Apr-05	 	 	 	168,691.70	 	13,289.38	 	1,711.66	 	15,001.04	 	155,402.32
	May-05	 	 	 	155,402.32	 	13,424.22	 	1,576.82	 	15,001.04	 	141,978.09
	Jun-05	 	 	 	141,978.09	 	13,560.44	 	1,440.60	 	15,001.04	 	128,417.66
	Jul-05	 	 	 	128,417.66	 	13,698.03	 	1,303.01	 	15,001.04	 	114,719.63
	Aug-05	 	 	 	114,719.63	 	13,837.02	 	1,164.02	 	15,001.04	 	100,882.61
	Sep-05	 	 	 	100,882.61	 	13,977.42	 	1,023.62	 	15,001.04	 	86,905.19
	Oct-05	 	 	 	86,905.19	 	14,119.24	 	881.80	 	15,001.04	 	72,785.95
	Nov-05	 	 	 	72,785.95	 	14,262.51	 	738.53	 	15,001.04	 	58,523.45
	Dec-05	 	 	 	58,523.45	 	14,407.22	 	593.82	 	15,001.04	 	44,116.22
	 	 	 	 	 	 	
	 	
	 	
	 	 
	 	 	 	 	 	 	163,648.04	 	16,364.44	 	180,012.48	 	 
	 	 	 	 	 	 	
	 	
	 	
	 	 
	

Jan-06	
 	

 	
 	

44,116.22	
 	

14,553.41	
 	

447.63	
 	

15,001.04	
 	

29,562.82
	Feb-06	 	 	 	29,562.82	 	14,701.08	 	299.96	 	15,001.04	 	14,861.74
	Mar-06	 	 	 	14,861.74	 	14,861.74	 	135.72	 	14,997.46	 	0.00
	 	 	 	 	 	 	
	 	
	 	
	 	 
	 	 	 	 	 	 	44,116.22	 	883.31	 	15,001.04	 	 
	 	 	 	 	 	 	
	 	
	 	
	 	 
	

 	
 	

 	
 	
TOTAL	
 	

567,791.00	
 	

152,255.34	
 	

690,047.84	
 	

 
	 	 	 	 	 	 	
	 	
	 	
	 	 










APPLIED FINANCIAL, INC.
  6975 Union Park Center, Suite 200

Midvale, Utah 84047 


MASTER LEASE AGREEMENT NO. AFI0230  


        This Master Lease Agreement is made December 17, 2001, between APPLIED FINANCIAL, INC., with its
principal office at 6975 Union Park Center, Suite 200, Midvale, UT 84047 (the "Lessor") and AMPHASTAR PHARMACEUTICALS, INC. with its
principal office at 11570 6th Avenue, Rancho Cucamonga, CA 91730 (the "Lessee"). 


	1.
	LEASE:




        Lessor
agrees to lease to Lessee, and Lessee agrees to lease from Lessor, the property (together with all attachments, replacements, parts, substitutions, additions, repairs, accessions
and accessories, incorporated therein and/or affixed thereto) (collectively, the "Property") described in any Lease Schedule ("Schedule") executed and delivered by Lessor and Lessee in connection with
this Master Lease Agreement. Each Schedule shall incorporate by reference the terms and conditions of this Master Lease Agreement, and together with the Acceptance Certificate (as defined herein) and
Master Progress Funding Agreement, if applicable, shall constitute a separate "Lease". In the event of conflict between the provisions of this Master Lease Agreement and any Schedule, the provisions
of the Schedule shall govern. 


	2.
	ADDITIONAL
DEFINITIONS: 



        (a)   Except
as otherwise provided in Section 6(a) hereof, "Acceptance Date" means, as to the Property designated on any Schedule, the date Lessee accepts the Property
as set forth in any acceptance certificate signed by the Lessee which is acceptable to Lessor (the "Acceptance Certificate"). If Lessee fails to sign and deliver an Acceptance Certificate, then except
as otherwise provided in Section 6(a) hereof, the Acceptance Date shall be a date determined by Lessor which shall be no sooner than the date Lessee receives substantially all of the Property. 


        (b)   "Commencement
Date" means, as to the Property designated on any Schedule, where the Acceptance Date for such Schedule falls on the first day of a calendar quarter, that
date, and, in any other case, the first day of the calendar quarter following the calendar quarter in which such Acceptance Date falls. 


	3.
	TERM
OF LEASE: 



        The
term of any Lease, as to all Property designated on the applicable Schedule, shall commence on the Acceptance Date for such Property, and shall continue for an "Initial Period"
ending that number of months from the Commencement Date as specified in the Schedule. Thereafter, Lessee shall have options to purchase or return the Property or to extend the Lease, all as provided
in Section 18(m) of this Agreement. 


	4.
	RENT
AND PAYMENT: 



        Lessee
shall pay as rent for use of the Property, aggregate rentals equal to the sum of all the Monthly Rentals (defined in the Schedule) and other payments due under the Lease for the
entire Initial Period. The Monthly Rental shall begin on the Acceptance Date and shall be due and payable by Lessee in advance on the first day of each month throughout the Initial Period. If the
Acceptance Date does not fall on the first day of a calendar quarter, then the first rental payment shall be calculated by multiplying the number of days from and including the Acceptance Date to the
Commencement Date by a daily rental equal to one-thirtieth (1/30) of the Monthly Rental, and shall be due and payable on the Acceptance Date. Lessee shall pay all rentals to
Lessor, or its assigns, at Lessor's address set forth above (or as otherwise directed in writing by Lessor, or its assigns), without notice or demand. LESSEE SHALL NOT ABATE,
SET OFF OR DEDUCT ANY AMOUNT OR DAMAGES FROM OR REDUCE ANY MONTHLY RENTAL OR OTHER PAYMENT DUE FOR ANY REASON. THIS LEASE IS NON-CANCELABLE FOR THE ENTIRE TERM OF THE INITIAL PERIOD AND
ANY EXTENSION PERIODS.







 

        If
any rental or other payment due under any Lease shall be unpaid for 10 days after its due date, Lessee will pay on demand, as a late charge, but not as interest, the greater of
twenty-five dollars ($25) or five percent (5%) of any such unpaid amount but in no event to exceed maximum lawful charges. If late charges are assessed by a lending institution due to any
late payment by Lessee, Lessee agrees to pay such late charges or to reimburse Lessor for their payment. 


	5.
	TAXES:




        Lessee
shall pay to Lessor when due all taxes, fees, assessments and charges paid, payable or required to be collected by Lessor, however designated, which are levied or based on the
Monthly Rental or other payment due under the Lease, or on the possession, use, operation, lease, rental, sale, purchase, control or value of the Property, including without limitation, registration
and license fees and assessments, state and local privilege or excise taxes, documentary stamp taxes or assessments, sales and use taxes, personal and other property taxes, and taxes or charges based
on gross revenue, but excluding taxes based on Lessor's net income (collectively, "taxes"). Lessor shall invoice Lessee for all taxes in advance of their payment due date, and Lessee shall promptly
remit to Lessor all taxes upon receipt of an invoice from Lessor. Lessee shall pay all penalties and interest resulting from its failure to timely remit all taxes to Lessor when invoiced by Lessor.
Lessor shall file all required sales and use tax and personal property tax returns and reports concerning the Property with all applicable governmental agencies. 


	6.
	USE;
ALTERATIONS AND ATTACHMENTS: 



        (a)   After
Lessee receives and inspects any Property and is satisfied that the Property is satisfactory, Lessee shall execute and deliver to Lessor an Acceptance Certificate
in form provided by Lessor; provided, however, that Lessee's failure to execute and deliver an Acceptance Certificate for any Property shall not affect the validity and enforceability of the Lease
with respect to the Property. If Lessee has signed and delivered a Master Progress Funding Agreement, Lessor may, in its sole discretion, at any time by written notice to Lessee, declare all prior
Authorizations signed in connection with the Master Progress Funding Agreement to be and constitute the "Acceptance Certificate" for all purposes under the Lease, and the Acceptance Date of the Lease
shall be the date determined by Lessor in its sole discretion which shall not be earlier than the date of the last Authorization. 


        (b)   Lessee
shall at all times keep the Property in its sole possession and control. The Property shall not be moved from the location stated in the Schedule without the
prior written consent of Lessor. 


        (c)   Lessee
shall cause the Property to be installed, used, operated and, at the termination of the Lease, removed (i) in accordance with any applicable manufacturer's
manuals or instructions; (ii) by competent and duly qualified personnel only; and (iii) in accordance with applicable governmental regulations. 


        (d)   Lessee
may not make alterations or attachments to property that will detrimentally affect the Property's value, without first obtaining the written consent of Lessor.
Any such alterations or attachments shall be made at Lessee's expense and shall not interfere with the normal and satisfactory operation or maintenance of the Property. The manufacturer may
incorporate engineering changes or make temporary alterations to the Property upon request of Lessee. Unless Lessor shall otherwise agree in writing, all such alterations and attachments shall be and
become the property of Lessor upon their attachment to the Property or, at the option of Lessee, shall be removed by Lessee at the termination of the Lease as to such Property and the Property
restored at Lessee's expense to its original condition, reasonable wear and tear only excepted. 


        (e)   The
Property is and shall remain personal property during the term of the Lease notwithstanding that any portion thereof may in any manner become affixed, attached to or
located on real property or any building or improvement thereon. Lessee shall not permit the Property to become 


2







 



an
accession to other goods or a fixture to or part of any real property. Lessee will obtain and deliver to Lessor a waiver of liens, in form satisfactory to Lessor, from all persons not a party
hereto who might secure an interest, lien or other claim in the Property. 


        (f)    In
the event the Property includes software (which Lessee agrees shall include all documentation, later versions, updates, upgrades, and modifications) (herein
"Software"), the following shall apply: (i) Lessee shall possess and use the Software in accordance with the terms and conditions of any license agreement ("License") entered into with the
owner/vendor of such Software and shall not breach the License (at Lessor's request, Lessee shall provide a complete copy of the License to Lessor); (ii) Lessee agrees that Lessor has an
interest in the License and Software due to its payment of the price thereof and is an assignee or third-party beneficiary of the License; (iii) as due consideration for Lessor's payment of the
price of the License and Software and for providing the Software to Lessee at a lease rate (as opposed to a debt rate), Lessee agrees that Lessor is leasing (and not financing) the Software to Lessee;
(iv) except for the original price paid by Lessor, Lessee shall, at its own expense, pay promptly when due all servicing fees, maintenance fees, update and upgrade costs, modification costs,
and all other costs and expenses relating to the License and Software and maintain the License in effect during the term of the Lease; and (v) the Software shall be deemed Property for all
purposes under the Lease. 


        (g)   Lessee
shall comply with all applicable laws, regulations, requirements, rules and orders, all manufacturer's instructions and warranty requirements, and with the
conditions and requirements of all policies of insurance with respect to the Property and the Lease. 


        (h)   The
Property is leased solely for commercial or business purposes. 


	7.
	MAINTENANCE
AND REPAIRS; RETURN OF PROPERTY: 



        (a)   During
the continuance of each Lease, Lessee shall, at its own expense, and in accordance with all manufacturer maintenance specifications, (i) keep the Property
in good repair, condition and working order; (ii) make all necessary adjustments, repairs and replacements; (iii) furnish all required parts, mechanisms, devices and servicing; and
(iv) not use or permit the Property to be used for any purpose for which, in the opinion of the manufacturer, the Property is not designed or reasonably suitable. Such parts, mechanisms and
devices shall immediately become a part of the Property for all purposes hereunder and title thereto shall vest in Lessor. If the manufacturer does not provide maintenance specifications, Lessee shall
perform all maintenance in accordance with industry standards for like Property. 


        (b)   During
the continuance of each Lease, Lessee shall, at its own expense, either (i) enter into and maintain in force a contract with the manufacturer or other
qualified maintenance organization reasonably satisfactory to Lessor for maintenance of each item of Property that reasonably requires such a contract, or (ii) self-maintain the
items of Property in accordance with the manufacturer's standard maintenance agreement. Such contract as to each item shall commence upon the Acceptance Date. Lessee shall furnish Lessor with a copy
of such contract or provide to Lessor satisfactory evidence of self-maintenance, in Lessor's sole discretion, upon demand. 


        (c)   Lessee
shall pay all shipping and delivery charges and other expenses incurred in connection with the Property. Upon default, or at the expiration or earlier termination
of any Lease, Lessee shall, at its own expense, assemble, prepare for shipment and promptly return the Property to Lessor at the location within the Continental United States designated by Lessor.
Upon such return, the Property shall be in the same operating order, repair, condition and appearance as on the Acceptance Date, except for reasonable wear and tear from proper use thereof, and shall
include all engineering changes theretofore prescribed by the manufacturer. Lessee shall provide maintenance certificates or qualification letters and/or arrange for and pay all costs which are
necessary for the manufacturer to accept the Property under contract maintenance at its then standard rates ("recertification"). The term 


3







 



of
the Lease shall continue upon the same terms and conditions until such recertification has been obtained. With regard to Software, at the expiration or earlier termination of any Lease, or upon
demand by Lessor upon the occurrence of an Event of Default under the Lease, Lessee shall (i) delete from its systems all Software then installed, (ii) destroy all copies or duplicates
of the Software which were not returned to Lessor, and (iii) cease using the Software altogether. Upon its receipt from Lessee, Lessor shall be responsible to return the Software to the
owner/vendor/licensor so that Lessee shall not be in breach of any software license. 


	8.
	OWNERSHIP
AND INSPECTION: 



        (a)   The
Property shall at all times be the property of Lessor or its assigns, and Lessee shall have no right, title or interest therein except as to the use thereof subject
to the terms and conditions of the Lease. For purposes of the foregoing, Lessee transfers to Lessor all of Lessee's right, title and interest (including all ownership interest) in and to the Property
free and clear of all liens, security interests and encumbrances. Lessor may affix (or require Lessee to affix) tags, decals or plates to the Property indicating Lessor's ownership, and Lessee shall
not permit their removal or concealment. Lessee shall not permit the name of any person or entity other than Lessor or its assigns to be placed on the Property as a designation that might be
interpreted as a claim of ownership or security interest. 



        (b)   LESSEE SHALL KEEP THE PROPERTY AND LESSEE'S INTEREST UNDER ANY LEASE FREE AND CLEAR OF ALL LIENS AND ENCUMBRANCES, EXCEPT THOSE PERMITTED IN
WRITING BY LESSOR OR ITS ASSIGNS.


        (c)   Lessor,
its assigns and their agents shall have free access to the Property at all reasonable times during normal business hours for the purpose of inspecting the
Property and for any other purpose contemplated in the Lease. 


        (d)   Lessee
shall immediately notify Lessor in writing of all details concerning any damage or loss to the Property, including without limitation, any damage or loss arising
from the alleged or apparent improper manufacture, functioning or operation of the Property. 


	9.
	WARRANTIES:




        (a)   Lessee
acknowledges that Lessor is not the manufacturer of the Property nor the manufacturer's agent nor a dealer therein. The Property is of a size, design, capacity,
description and manufacture selected by the Lessee. Lessee is satisfied that the Property is suitable and fit for its purposes. LESSEE AGREES THAT LESSOR HAS NOT MADE AND DOES NOT MAKE ANY WARRANTY OR
REPRESENTATION WHATSOEVER, EXPRESS OR IMPLIED, AS TO THE PROPERTY, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OR REPRESENTATION AS TO: (i) THE DESCRIPTION, CONDITION, DESIGN, QUALITY OR
PERFORMANCE OF THE PROPERTY OR QUALITY OR CAPACITY OF MATERIALS OR WORKMANSHIP IN THE PROPERTY; (ii) ITS MERCHANTABILITY OR FITNESS OR SUITABILITY FOR A PARTICULAR PURPOSE WHETHER OR NOT
DISCLOSED TO LESSOR; AND (iii) DELIVERY OF THE PROPERTY FREE OF THE RIGHTFUL CLAIM OF ANY PERSON BY WAY OF INFRINGEMENT OR THE LIKE. LESSOR EXPRESSLY DISCLAIMS ALL SUCH WARRANTIES. If the
Software is not properly installed, does not function as represented or warranted by original licensor, or is unsatisfactory for any reason, Lessee shall make any claim on account thereof solely
against original Licensor and shall nevertheless pay all sums payable under the Lease, Lessee hereby waiving the right to make any such claims against Lessor. Lessor shall not be Liable to Lessee for
any loss, damage or expense of any kind or nature caused, directly or indirectly, by the Property or the use, possession or maintenance thereof, or the repair, service or adjustment thereof, or by any
delay or failure to provide any such maintenance, repair, service or adjustment, or by any interruption of service or loss of use thereof (including without Limitation, Lessee's use of or right to use
any Software) or for any Loss of business howsoever caused. 


4







 



        (b)   NOTWITHSTANDING
ANYTHING TO THE CONTRARY CONTAINED IN THE LEASE, LESSOR SHALL NOT, UNDER ANY CIRCUMSTANCES, BE LIABLE TO LESSEE OR ANY THIRD PARTY, FOR CONSEQUENTIAL,
INCIDENTAL, SPECIAL OR EXEMPLARY DAMAGES ARISING OUT OF OR RELATED TO THE TRANSACTION CONTEMPLATED HEREUNDER, WHETHER IN AN ACTION BASED ON CONTRACT, TORT (INCLUDING NEGLIGENCE OR STRICT LIABILITY) OR
ANY OTHER LEGAL THEORY, INCLUDING WITHOUT LIMITATION, LOSS OF ANTICIPATED PROFITS, OR BENEFITS OF USE OR LOSS OF BUSINESS, EVEN IF LESSOR IS APPRISED OF THE LIKELIHOOD OF SUCH DAMAGES OCCURRING. 


        IT
IS EXPRESSLY UNDERSTOOD AND AGREED THAT EACH AND EVERY PROVISION OF ANY LEASE WHICH PROVIDES FOR A LIMITATION OF LIABILITY, DISCLAIMER OF WARRANTIES OR EXCLUSION OF DAMAGES, IS
INTENDED BY THE PARTIES TO BE SEVERABLE FROM ANY OTHER PROVISION AND IS A SEPARABLE AND INDEPENDENT ELEMENT OF RISK ALLOCATION AND IS INTENDED TO BE ENFORCED AS SUCH. 



        (c)   Lessor
assigns to Lessee all assignable warranties on the Property, including without limitation any warranties described in Lessor's purchase contract, which assignment
shall be effective only (i) during the Initial Period and any extensions thereof, and (ii) so long as no Event of Default exists. 


	10.
	NET
LEASE; LESSEE'S OBLIGATIONS ABSOLUTE AND UNCONDITIONAL: 



        This
Agreement is a "net lease" and, as between Lessor and Lessee, Lessee shall be responsible for and shall indemnify Lessor against, all costs, expenses and claims of every nature
whatsoever arising out of or in connection with or related to the Lease or the Property. 



        Lessee
agrees that its obligation to pay Monthly Rental and other obligations under the Lease shall be irrevocable, independent, absolute and unconditional and shall not be subject to
any abatement, reduction, recoupment, defense, offset or counterclaim otherwise available to Lessee; nor, except as otherwise expressly provided herein or as agreed to by Lessor in writing, shall this
Agreement terminate for any reason whatsoever prior to the end of the Initial Period. 


	11.
	ASSIGNMENT
BY LESSOR: 



        Lessor
may assign or transfer its rights and interests in the Lease and Property to another party ("Lessor's Assignee") either outright or as security for loans (collectively, the
"Underwriting"). Upon notice of any such assignment and instructions from Lessor, Lessee shall pay its Monthly Rental and other payments and perform its other obligations under the Lease to the
Lessor's Assignee (or to another party designated by Lessor's Assignee). Lessor's Assignee shall not alter or change any of the terms and conditions of this Lease. Upon any such sale or assignment,  LESSEE'S OBLIGATIONS TO
LESSOR'S ASSIGNEE UNDER THE ASSIGNED SCHEDULE SHALL BE ABSOLUTE AND UNCONDITIONAL AND LESSEE WILL NOT ASSERT AGAINST LESSOR'S ASSIGNEE ANY CLAIM,
DEFENSE, OFFSET OR COUNTERCLAIM WHICH LESSEE MIGHT HAVE AGAINST LESSOR. Lessor's Assignee shall have all of the rights but none of the obligations of Lessor under the assigned
Lease, and after such assignment Lessor shall continue to be responsible for all of Lessor's obligations under the Lease. 



        Upon
any such assignment, Lessee agrees to promptly execute and deliver to Lessor: (i) estoppel certificates, acknowledgments of assignment and other documents requested by Lessor
which acknowledge the assignment, affirm provisions of the Lease, or which may be required to effect the Underwriting, and (ii) UCC-l financing statements or precautionary filings
as requested. 


        Only
one executed counterpart of any Schedule shall be marked "Original"; any other executed counterparts shall be marked "Duplicate Original" or "Counterpart". No security interest in
any 


5







 



Schedule
may be created through the transfer and possession of any counterpart other than the "Original". 


	12.
	RISK
OF LOSS ON LESSEE: 



        From
the earlier of the date the supplier ships the Property to Lessee or the date Lessor confirms Lessee's purchase order or contract to supplier until the date the Property is returned
to Lessor as provided in the Lease, Lessee hereby assumes and shall bear all risk of loss for theft, damage or destruction to the Property, howsoever caused. NO SUCH LOSS OR DAMAGE SHALL IMPAIR ANY
OBLIGATION OF LESSEE UNDER THIS LEASE WHICH SHALL CONTINUE IN FULL FORCE AND EFFECT. 


        In
the event of damage or loss to the Property (or any part thereof) and irrespective of payment from any insurance coverage maintained by Lessee, but applying full credit therefore,
Lessee shall at the option of Lessor, (a) place the Property in good repair, condition and working order; or (b) replace the Property (or any part thereof) with like property of equal or
greater value, in good repair, condition and working order and transfer clear title to such replacement property to Lessor whereupon such replacement property shall be deemed the Property for all
purposes under the Lease; or (c) pay to Lessor the total rent due and owing at the time of such payment plus an amount calculated by Lessor which is equal to the Casualty Loss Value specified
in the Casualty Loss Schedule attached to the applicable Schedule. 


	13.
	INSURANCE:






        Lessee
shall obtain and maintain for the entire term of this Lease, at its own expense (as primary insurance for Lessor and Lessee), property damage and liability insurance and insurance
against loss or damage to the Property including without limitation loss by fire (including so-called extended coverage), theft, collision and such other risks of loss as are customarily
insured against on the type of Property leased under any Lease and by businesses in which Lessee is engaged, in such amounts, in such form and with such insurers as shall be satisfactory to Lessor;
provided, however, that the amount of insurance against loss or damage to the Property shall be equal to or greater than the Casualty Loss Value of such items of Property as specified in the Casualty
Loss Schedule attached to the Schedule. Each insurance policy will name Lessee as insured and Lessor and its assignees as additional insureds and loss payees thereof as their interests may appear,
shall contain cross-liability endorsements and shall contain a clause requiring the insurer to give Lessor and its assignees at least thirty (30) days prior written notice of any material
alteration in the terms of such policy or of the cancellation thereof. Lessee shall furnish to Lessor a certificate of insurance or other evidence satisfactory to Lessor that such insurance coverage
is in effect; provided, however, that Lessor shall be under no duty either to ascertain the existence of or to examine such insurance policy or to advise Lessee in the event such insurance coverage
shall not comply with the requirements hereof. All insurance covering loss or damage to the Property shall contain a breach of warranty clause satisfactory to Lessor. 


	14.
	INDEMNIFICATION:




        Except
for the gross negligence or willful misconduct of Lessor, Lessee shall indemnify and hold Lessor harmless from and against any and all claims, (including without limitation
negligence, tort and strict liability), damages, judgments, suits and legal proceedings, and any and all costs and expenses in connection therewith (including reasonable attorney's fees incurred by
Lessor either in enforcing this indemnity or in defending against such claims), arising out of or in any manner connected with or resulting from the Lease or the Property, including, without
limitation the manufacture, purchase, financing, ownership, rejection, non-delivery, transportation, delivery, possession, use, operation, maintenance, condition, lease, return, storage or
disposition thereof; including without limitation (a) claims for injury to or death of persons and for damage to property; (b) claims relating to patent, copyright, or trademark
infringement, and (c) claims relating to latent or other defects in the Property 


6







 



whether
or not discoverable by Lessor and Lessee agrees to give Lessor prompt notice of any such claim or liability. For purposes of this paragraph and any Lease, the term "Lessor" shall include
Lessor, its successors and assigns, shareholders, directors, officers, representatives and agents, and the provisions of this paragraph shall survive expiration of any Lease with respect to events
occurring prior thereto. 


        Upon
request of Lessor, Lessee shall assume the defense of all demands, claims, or actions, suits and all proceedings against Lessor for which indemnity is provided and shall allow
Lessor to participate in
the defense thereof. Lessor shall be subrogated to all rights of Lessee for any matter which Lessor has assumed obligation hereunder, and may settle any such demand, claim, or action without Lessee's
prior consent, and without prejudice to Lessor's right to indemnification hereunder. 


	15.
	EVENTS
OF DEFAULT: 



        An
"Event of Default" shall occur under any Lease if Lessee: 



        (a)   fails
to pay any Monthly Rental or other payment required under the Lease when the same becomes due and payable and such failure continues for fifteen (15) days
after written notice is provided to Lessee; 


        (b)   attempts
to or does, remove, sell, assign, transfer, encumber, sublet or part with possession of anyone or more items of the Property or any interest under any Lease,
except as expressly permitted herein, or permits a judgment or other claim to become a lien upon any or all of Lessee's assets or upon the Property; 


        (c)   permits
any item of Property to become subject to any levy, seizure, attachment, assignment or execution; or Lessee abandons any item of Property; 


        (d)   or
any guarantor, fails to observe or perform any of its covenants and obligations required to be observed or performed under the Lease and such failure continues
uncured for thirty (30) days after occurrence thereof, except that the thirty (30) day cure period shall not apply and an Event of Default shall occur immediately upon Lessee's failure
to maintain insurance; 


        (e)   or
any guarantor, breaches any of its representations and warranties made under any Lease, or if any such representations or warranties shall be false or misleading in
any material respect; 


        (f)    or
any guarantor, shall (i) be adjudicated insolvent or a bankrupt, or cease, be unable, or admit in writing its inability, to pay its debts as they mature, or
make a general assignment for the benefit of creditors or enter into any composition or arrangement with creditors; (ii) apply for or consent to the appointment of a receiver, trustee or
liquidator of it or of a substantial part of its property, or authorize such application or consent, or proceedings seeking such appointment shall be instituted against it without such authorization,
consent or application and shall continue undismissed for a period of sixty (60) days; (iii) authorize or file a voluntary petition in bankruptcy or apply for or consent to the
application of any bankruptcy, reorganization in bankruptcy, arrangement, readjustment of debt,
insolvency, dissolution, moratorium or other similar law of any jurisdiction, or authorize such application or consent; or proceedings to such end shall be instituted against it without such
authorization, application or consent and such proceeding instituted against it shall continue undismissed for a period of sixty (60) days; 



        (g)   or
any guarantor, shall suffer a material adverse change in its financial condition after the date hereof as reasonably determined by Lessor in its reasonable
discretion, or there shall occur a substantial change in ownership of the outstanding stock of Lessee or a substantial change in control of its board of directors; 



7







 




        (h)   shall
be in default under any other Schedule or agreement executed with Lessor; or shall fail to sign and deliver to Lessor any document requested by Lessor in
connection with any Lease or shall fail to do any thing determined by Lessor to be necessary or desirable to effectuate the transaction contemplated by the Lease or to protect Lessor's rights and
interests in the Lease and Property; or shall fail to provide financial statements to Lessor as provided in Section 18(g) hereof, or if Lessee is in default of any agreement with any party
other than Lessor; 


        (i)    breach
by Lessee of any license or other agreement for Software; 


        (j)    failure
of Lessee to promptly execute and deliver to Lessor any document required under Section 11 of this Agreement. 



	16.
	REMEDIES: 



        Upon
the occurrence of any Event of Default and at any time thereafter, Lessor may, with prior notice to Lessee and with or without canceling the Lease, do anyone or more of the
following: 



        (a)   enforce
this Agreement according to its terms; 


        (b)   advance
funds on Lessee's behalf to cure the Event of Default, whereupon Lessee shall immediately reimburse Lessor therefore, together with late charges accrued thereon; 


        (c)   refuse
to deliver the Property to Lessee; 


        (d)   upon
notice to Lessee, cancel this Master Lease Agreement and any or all Schedules executed pursuant thereto; 


        (e)   if
Lessor determines, in its sole discretion, not to take possession of the Property, Lessor shall continue to be the owner of the Property and may, but is not obligated
to, dispose of the Property by sale or otherwise, all of which determinations may be made by Lessor in its sole discretion and for its own account; 


        (f)    declare
immediately due and payable all amounts due or to become due hereunder for the full term of the Lease (including any renewal or purchase options which Lessee has
contracted to pay); 


        (g)   with
or without terminating the Lease, recover the Casualty Loss Value of the Property as of the rent payment date immediately preceding the date of default together
with all costs and expenses incurred by Lessor in the repossession, recovery, storage, repair, sale, re-lease or other disposition of the Property, including without limitation, reasonable
attorneys' fees and costs incurred in connection therewith or otherwise resulting or arising from Lessee's default, and any indemnity if then determinable, plus interest on all of the above until paid
(before and after judgment) at the lesser of the rate of eighteen percent (18%) (collectively, Lessor's damages); 



        (h)   without
notice to Lessee, repossess the Property wherever found, with or without legal process, and for this purpose Lessor and/or its agents or assigns may enter upon
any premises of or under the control or jurisdiction of Lessee or any agent of Lessee, without liability for suit, action or other proceeding by Lessee (any damages occasioned by such repossession
being hereby expressly waived by Lessee) and remove the Property therefrom; Lessee further agrees on demand, to assemble the Property and make it available to Lessor at a place to be designated by
Lessor; 


        (i)    in
its sole discretion, re-lease or sell any or all of the Property at a public or private sale on such terms and notice as Lessor shall deem reasonable
(such sale may, at Lessor's sole option, be conducted at Lessee's premises), and recover from Lessee liquidated damages for the loss of a bargain and not as a penalty an amount equal to the Lessor's
Damages; 


        (j)    if
Lessee breaches any of its obligations under Section 7(c) of this Agreement with regard to Software, Lessee shall be liable to Lessor for additional damages in
an amount equal to the 



8







 




original
price paid by Lessor for the Software, and in addition, at Lessor's option, Lessor shall be entitled to injunctive relief; 



        (k)   exercise
any other right or remedy which may be available to it under the Uniform Commercial Code or any other applicable law; 


        (l)    a
cancellation hereunder shall occur only upon notice by Lessor and only as to such items of Property as Lessor specifically elects to cancel and this Lease shall
continue in full force and effect as to the remaining items, if any; 


        (m)  (i) by
notice to Lessee, declare any license agreement with respect to Software terminated, in which event the right and license of Lessee to use the Software
shall immediately terminate, and Lessee shall thereupon cease all use of the Software and return all copies thereof to Lessor or original licensor; (ii) have access to and disable the Software
by any means deemed necessary by Lessor, for which purposes Lessee hereby expressly consents to such access and disablement, promises to take no action that would prevent or interfere with Lessor's
ability to perform such access and disablement, and waives and releases any and all claims that it has or might otherwise have for any and all losses, damages, expenses, or other detriment that it
might suffer as a result of such access and disablement; and (i ii) Lessee agrees that the detriment which Lessor will suffer as a result of a breach by Lessee of the obligations contained in
the Lease cannot be adequately compensated by monetary damages, and therefore Lessor shall be entitled to injunctive and other equitable relief to enforce the provisions of this
paragraph 16(m). LESSEE AGREES THAT LESSOR SHALL HAVE NO DUTY TO MITIGATE LESSOR'S DAMAGES UNDER ANY LEASE BY TAKING LEGAL ACTION TO RECOVER THE SOFTWARE FROM LESSEE OR ANY THIRD PARTY, OR TO
DISPOSE OF THE SOFTWARE BY SALE, RE-LEASE OR OTHERWISE. 




        In
the event Lessor in good faith believes the Property to be in danger of misuse, abuse or confiscation or to be in any other way threatened; or believes in good faith that the Property
is no longer sufficient or has declined or may decline in value; or believes in good faith for any other reason that the prospect of payment or performance has become impaired, Lessor shall have the
right, in its sole discretion, to either require additional collateral or declare the entire indebtedness under any Lease immediately due and payable. 



        Lessor
may exercise any and all rights and remedies available at law or in equity, including those available under the Uniform Commercial Code. The rights and remedies afforded Lessor
hereunder shall not be deemed to be exclusive, but shall be in addition to any rights or remedies provided by law. Lessor's failure promptly to enforce any right or remedy hereunder shall not operate
as a waiver of
such right or remedy, and Lessor's waiver of any default shall not constitute a waiver of any subsequent or other default. Lessor may accept late payments or partial payments of amounts due under the
Lease and may delay enforcing any of Lessor's rights or remedies hereunder without losing or waiving any of Lessor's rights or remedies under the Lease. 


	17.
	LESSEE'S
REPRESENTATIONS AND WARRANTIES: 



        Lessee
represents and warrants as follows: 



        (a)   If
Lessee is a corporation, duly organized and validly existing in good standing under the laws of the jurisdiction of its incorporation, duly qualified to do business
in each jurisdiction where any Property is, or is to be located, and has full corporate power and authority to hold property under lease and to enter into and perform its obligations under any Lease;
the execution, delivery and performance by Lessee of any Lease has been duly authorized by all necessary corporate action on the part of Lessee, and is not inconsistent with its Articles of
Incorporation or By-Laws or other governing instruments; 



9







 

        (b)   If
Lessee is a partnership, duly organized by written partnership agreement and validly existing in accordance with the laws of the jurisdiction of its organization,
duly qualified to do business in each jurisdiction where the Property is, or is to be located, and has full power and authority to hold property under lease and to enter into and perform its
obligations under any Lease; the execution, delivery and performance by Lessee of any Lease has been duly authorized by all necessary action on the part of the Lessee, and is not inconsistent with its
partnership agreement or other governing instruments. Upon request, Lessee will deliver to Lessor certified copies of its partnership agreement and other governing instruments and original certificate
of partners and other instruments deemed necessary or desirable by Lessor. To the extent required by applicable law, Lessee has filed and published its fictitious business name certificate; 


        (c)   The
execution, delivery and performance by Lessee of any Lease does not violate any law or governmental rule, regulation, or order applicable to Lessee, does not and
will not contravene any provision, or constitute a default under any indenture, mortgage, contract, or other instrument to which it is bound and, upon execution and delivery of each Lease, will
constitute a legal, valid and binding agreement of Lessee, enforceable in accordance with its terms; 


        (d)   No
action, including any permits or consents, in respect of or by any state, federal or other governmental authority or agency is required with respect to the execution,
delivery and performance by Lessee of any Lease; 


        (e)   All
computer hardware and software that is utilized by Lessee in the operation of its businesses is "Year 2000 Compliant" in that it is capable of accepting, processing
and printing date data between and within the twentieth and twenty-first centuries, and neither the performance nor functionality of any computer hardware or software is affected by dates prior to,
during, or after the Year 2000. Upon request, Lessee shall provide written assurances to Lessor that its hardware and software are "Year 2000 Compliant". 



	18.
	GENERAL:




        (a)    Entire Agreement.    Each Schedule shall incorporate the terms and conditions of this Master Lease Agreement
and, together with the Acceptance Certificate (as defined herein) and Master Progress Funding Agreement (and Authorizations thereunder), if applicable, and any amendments to any of the foregoing
documents, shall supersede all prior agreements and constitute the entire understanding and agreement between the Lessor and Lessee with regard to the subject matter hereof and thereof, and there is
no understanding or agreement, oral or written, which is not set forth herein or therein. 


        (b)    Time Is of the Essence; Provisions Severable.    Time is of the essence with respect to any Lease. The
provisions contained in any agreement shall be deemed to be independent and severable. The invalidity or partial invalidity of anyone provision or portion of the Lease under the laws of any
jurisdiction shall not affect the validity or enforceability of any other provisions of the Lease. The captions and headings set forth herein are for convenience of reference only and shall not define
or limit any of the terms hereof. 


        (c)    Notices.    Notices or demands required to be given hereunder shall be in writing and addressed to the other
party at the address herein or such other address provided by written notice hereunder and shall be effective (i) upon the next business day if sent by guaranteed overnight express service
(such as Federal Express); (ii) on the same day if personally delivered; or (iii) three days after mailing if sent by certified or registered U.S. mail, postage prepaid. 


10









   
        (d)    Governing Law; Waiver of Trial by Jury.    THIS LEASE SHALL IN ALL RESPECTS BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF UTAH, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. LESSEE AGREES TO SUBMIT TO THE JURISDICTION OF THE STATE AND/OR FEDERAL COURTS IN THE
STATE OF UTAH IN ALL MATTERS RELATING TO THE LEASE, THE PROPERTY AND THE CONDUCT OF THE RELATIONSHIP BETWEEN LESSOR AND LESSEE. THIS LEASE WAS EXECUTED IN THE STATE OF UTAH (BY THE LESSOR HAVING
COUNTERSIGNED IT IN UTAH) AND IS TO BE PERFORMED IN THE STATE OF UTAH (BY REASON OF ONE OR MORE PAYMENTS REQUIRED TO BE MADE TO LESSOR IN UTAH). LESSOR AND LESSEE HEREBY WAIVE THE RIGHT TO TRIAL BY
JURY OF ANY MATTERS ARISING OUT OF THE LEASE OR PROPERTY OR THE CONDUCT OF THE RELATIONSHIP BETWEEN LESSOR AND LESSEE. 


        (e)    Binding Effect; Survivability.    The provisions of each Lease shall inure to the benefit of and shall bind
Lessor and Lessee and their respective permitted successors and assigns. All representations, warranties, covenants and indemnities of Lessee made or agreed to in the Lease or in any certificates
delivered in connection therewith shall survive the expiration, termination or cancellation of the Lease for any reason. 



        (f)    Further Assurances; Financing Statements.    Lessee will cooperate with Lessor in protecting Lessor's interests
in the Property, the Lease and the amounts due under the Lease, including, without limitation, the execution and delivery of Uniform Commercial Code statements and filings, patent and copyright
registration documents with respect to proprietary Software (if applicable), and other documents requested by Lessor. Lessee shall pay all costs of filing any financing, continuation or termination
statements with respect to the Property and Lease, including without limitation, any intangibles tax, documentary stamp tax or other similar taxes or charges relating thereto and all costs of UCC or
other lien searches and of obtaining and filing any full or partial third-party releases deemed necessary or advisable by Lessor. Lessee will do whatever may be necessary or advisable to have a
statement of the interest of Lessor in the Property noted on any certificate of title relating to the Property and will deposit said certificate with Lessor. Lessee will execute and deliver to Lessor
such other documents and written assurances and take such further action as Lessor may request to more fully carry out the implementation, effectuation, confirmation and perfection of the Lease and
any rights of Lessor thereunder. Lessee grants to Lessor a security interest in all deposits and other property transferred or pledged to Lessor to secure the payment and performance of all of
Lessee's obligations under the Lease. 


        (g)    Financial Statements.    Lessee, and any guarantor, shall provide to Lessor a copy of its annual audited
financial statements within one hundred fifty (150) days after its fiscal year end, and a copy of its quarterly unaudited financial statements within forty-five (45) days
after the end of each fiscal quarter. 


        (h)    Security Interest.    In the event a court of competent jurisdiction or other governing authority shall
determine that the Lease is not a "true lease" or is a lease intended as security or that Lessor (or its assigns) does not hold legal title to or is not the owner of the Property, then the Lease shall
be deemed to be a security agreement with Lessee, as debtor, having granted to Lessor, as secured party, a security interest in the Property effective the date of the Lease, and the Property shall
secure all duties and obligations of Lessee under any Lease or other agreement with Lessor. As security for the performance by Lessee of its duties and obligations under any Lease, Lessee hereby
grants to Lessor a security interest in all of Lessee's rights under any license agreement related to any Software, including, without limitation, all of its rights with respect to the Software. With
regard to any security interest created hereunder in any of the Property, Lessee consents and agrees that Lessor shall have all of the rights, privileges and remedies of a secured party under the Utah
Uniform Commercial Code. 


11







 



        (i)    Change in Lessee's Name or Address.    Lessee shall not change its name or address from that set forth above,
unless it shall have given Lessor or its assigns no less than thirty (30) days prior written notice. 



        (j)    Covenant of Quiet Possession.    Lessor agrees that so long as no Event of Default has occurred and is
continuing, Lessee shall be entitled to quietly possess the Property subject to and in accordance with the terms and conditions of this Agreement. 


        (k)    Lessor's Right to Perform for Lessee.    If Lessee fails to perform or comply with any of its agreements
contained herein, Lessor may perform or comply with such agreements and the amount of any payments and expenses of Lessor incurred in connection with such performance or compliance (including
attorneys' fees), together with interest thereon at the lesser of the rate of eighteen percent (18%) per annum. 


        (l)    Attorneys' Fees.    Lessee shall reimburse Lessor for all charges, costs, expenses and attorneys' fees incurred
by Lessor (a) in defending or protecting its interest in the Property; (b) in the execution, delivery, administration, amendment and enforcement of the Lease or the collection of any
rent or other payments due under the Lease; and (c) in any lawsuit or other legal or arbitration/mediation proceeding to which the Lease gives rise, including without limitation, actions in
tort. 


        (m)    Lessee's Options at End of Initial Period.    At the end of the Initial Period of any Lease, Lessee shall,
provided at least one-hundred-eighty (180) days prior written notice is received by Lessor from Lessee via certified mail, do one of the following: (1) purchase the Property
for a price to be determined by Lessor and Lessee, (2) extend the Lease for twelve (12) additional months at the rate specified on the respective Schedule, or (3) return the
Property to Lessor at Lessee's expense to a destination within the Continental United States specified by Lessor and terminate the Schedule;
provided, however, that for option (3) to apply, all accrued but unpaid late charges, interest, taxes, penalties, and any and all other sums due and owing under the Schedule must first be paid
in full, the provisions of Sections 6(c) and (d) and 7(c) hereof must be specifically complied with, and Lessee must enter into a new Schedule with Lessor to lease Property which replaces the
Property listed on the old Schedule. With respect to options (1) and (3), each party shall have the right in its absolute and sole discretion to accept or reject any terms of purchase or of any
new Schedule, as applicable. In the event Lessor and Lessee have not agreed to either option (I) or (3) by the end of the Initial Period or if Lessee fails to give written notice of its
option via certified mail at least one-hundred-eighty (180) days prior to the termination of the Initial Period, then option (2) shall apply at the end of the Initial Period.
At the end of the extension period provided for in option (2) above, the Lease shall continue in effect at the rate specified in the respective Schedule for successive periods of six
(6) months each subject to termination at the end of any such successive six-month renewal period by either Lessor or Lessee giving to the other party at least ninety
(90) days prior written notice of termination. 


        (n)    Amendment and Modification.    The Lease may not be amended or modified except by a writing signed by a duly
authorized representative of each party, but no such amendment or modification needs further consideration to be binding. Notwithstanding the foregoing, Lessee authorizes Lessor to amend any Schedule
to identify more accurately the Property (including, without limitation, supplying serial numbers or other identifying data), and such amendment shall be binding on Lessor and Lessee unless Lessee
objects thereto within 10 days after receiving notice of the amendment from Lessor. 


        (o)    Joint and Several Liability.    In the event two or more parties execute the Agreement as Lessee, each party
shall be jointly and severally liable for all Lessee representations, warranties, and obligations (including without limitation, payment obligations) under this Agreement or under any Schedule or
other document executed in connection herewith. 


12







 



        (p)    Failure to Obtain Non-recourse Underwriting.    If for any reason due to market conditions or
otherwise, Lessor IS unable within a reasonable time through its reasonable efforts to obtain non-recourse Underwriting for its purchase of Property under any Schedule, Lessor may require
Lessee to repurchase the Property subject to such Schedule for an amount equal to all amounts paid by Lessor for the Property, plus interest thereon at twelve percent (12%) per annum and any other
related costs paid by Lessor (collectively, the "Repurchase Amount"). Lessee shall pay the Repurchase Amount to Lessor within ten (10) days of written demand made by Lessor, which written
demand shall contain an enumeration of the separate costs comprising the Repurchase Amount. Failure of Lessee to pay the Repurchase Amount within ten (10) days of written demand shall
constitute an additional Event of Default under this Agreement. 


	19.
	WAIVERS:




        To
the extent permitted by applicable law, Lessee hereby waives any and all rights and remedies conferred upon a Lessee by Sections 2A-508 through 2A-522 of the
Uniform Commercial Code, including but not limited to Lessee's rights to: (i) cancel the Lease; (ii) repudiate the Lease; (iii) reject the Property; (iv) revoke acceptance
of the Property; (v) recover damages from Lessor for any breaches of warranty or for any other reason; (vi) claim, grant or permit a security interest in the Property in Lessee's
possession or control for any reason; (vii) deduct all or any part of any claimed damages resulting from Lessor's default, if any, under the Lease; (viii) "cover" by making any purchase
or lease of or contract to purchase or lease Property in substitution for those due from Lessor; (ix) recover any general, special, incidental or consequential damages, for any reason
whatsoever; and (x) commence legal action against Lessor for specific performance, replevin, detinue, sequestration, claim and deliver or the like for any Property identified in the Lease. To
the extent permitted by applicable law, Lessee also hereby waives any rights now or hereafter conferred by statute or otherwise which may require Lessor to sell, lease or otherwise use any Property in
mitigation of Lessor's damages as set forth in Section 16 hereof or which may otherwise limit or modify any of Lessor's rights or remedies in that section. 


        No
waiver or modification by Lessor of any of the terms and conditions hereof shall be effective unless in writing signed by an officer of Lessor. 


	20.
	ASSIGNMENT
BY LESSEE: 



        LESSEE MAY NOT ASSIGN THIS AGREEMENT OR ANY OF ITS RIGHTS HEREUNDER OR SUBLEASE THE PROPERTY WITHOUT THE PRIOR WRITTEN CONSENT OF LESSOR. NO PERMITTED ASSIGNMENT
OR SUBLEASE SHALL RELIEVE LESSEE OF ANY OF ITS OBLIGATIONS HEREUNDER.



        BY
INITIALING THIS SECTION, LESSEE ACKNOWLEDGES THAT IT HAS READ THE ABOVE PARAGRAPHS UNDER SECTIONS 18, 19 AND 20, AND FULLY UNDERSTANDS THEIR CONTENT AND AGREES TO THEIR PROVISIONS. 


Initialed            EW            


	21.
	POWER
OF ATTORNEY. 





        LESSEE
HEREBY AUTHORIZES AND APPOINTS LESSOR AND LESSOR'S AGENTS AND ASSIGNS AS LESSEE'S ATTORNEY-IN-FACT TO (A) COMPLETE, EXECUTE, FILE AND AMEND ON
LESSEE'S BEHALF UCC FINANCING STATEMENTS, PRECAUTIONARY OR OTHERWISE, IN CONNECTION WITH THE PROPERTY AND LEASE AND TO CONFORM THE DESCRIPTION OF THE PROPERTY (INCLUDING SERIAL NUMBERS) IN ANY SUCH
FINANCING STATEMENTS OR OTHER DOCUMENTATION, AND (B) EXECUTE ACKNOWLEDGEMENT LETTERS AND OTHER DOCUMENTS REQUIRED TO BE 


13







 


EXECUTED
BY LESSEE TO EFFECT ANY UNDERWRITING WITH REGARD TO A SCHEDULE. 


        IN
WITNESS WHEREOF, Lessor and Lessee have executed this Agreement on the month, day and year first above written. 



	LESSOR:	 	LESSEE:
	
APPLIED FINANCIAL, INC.	
 	

AMPHASTAR PHARMACEUTICALS, INC.
	

BY:	
 	

/s/  KAY PAUE      
	
 	

BY:	
 	

/s/  EVA WEN      

	

TITLE:	
 	

Assistant Vice President
	
 	

TITLE:	
 	

Corporate Controller

	

 	
 	

 	
 	

 	
 	

 
	The within instrument is a true and exact copy of the original held in the files of Applied Financial, Inc.	 	 	 	 
	
APPLIED FINANCIAL, INC.	
 	

 	
 	

 
	

 	
 	

 	
 	

 	
 	

 
	BY:	 	/s/  M. CALDWELL      
	 	 	 	 
	

ITS:	
 	

AVP
	
 	

 	
 	

 
	

DATE:	
 	

5-30-02
	
 	

 	
 	

 




14







MASTER PROGRESS FUNDING AGREEMENT  


        Reference is made to Master Lease Agreement No. AFI0230 dated December 17, 2001, ("Master Lease") between AMPHASTAR
PHARMACEUTICALS, INC. ("Lessee") and APPLIED FINANCIAL, INC. ("Lessor"). Lessee and Lessor have agreed to enter
into one or more Lease Schedules to the Master Lease (each Lease Schedule together with the Master Lease is referred to herein collectively as the "Lease" and is incorporated herein and made a part of
this Agreement by this reference) pursuant to which Lessor will lease to Lessee certain items of Property listed on said Lease (the "Property"). All capitalized terms used
herein but not defined herein shall have the meanings ascribed to them in the Lease. 


        With
regard to each Lease executed and delivered by Lessee, Lessee may request Lessor to purchase and pay for certain items of Property to be leased thereunder prior to the commencement
of such Lease. Provided Lessee completes, executes and delivers to Lessor a Partial Acceptance and Authorization for Progress Payment ("Authorization") in form acceptable to Lessor, and such
Authorization is consistent with all terms and conditions of this Agreement and the Lease, and Lessee is not in default of this Agreement or the Lease, Lessor agrees to make payments against the
purchase price for such items of Property as directed by the Authorization. All such payments made by Lessor shall be referred to herein as "Progress Payment(s)". 


        Upon
Lessor's payment of any Progress Payment hereunder, title to the items of Property paid by such Progress Payment shall vest in Lessor, and Lessee hereby sells and assigns its
purchase orders and contracts and all of its right, title and interest to such items of Property to Lessor. From the date risk of loss passes from each vendor as to items of Property paid for by
Lessor hereunder, Lessee shall bear all risk of loss, and Lessee shall assume and be responsible for all of Lessee's obligations with respect to such items of Property as specified in the Lease. 


        Lessee
agrees that in consideration of each Progress Payment made by Lessor pursuant to this Agreement, Lessee shall pay to Lessor a daily pro-rata interim "service charge"
calculated by multiplying the "Lease Rate Factor" specified in the applicab1e Lease times the amount of such Progress Payment divided by 30. The daily service charges shall accumulate and be payable
monthly in arrears on the last day of each such month. The daily service charges shall begin on the date Lessee authorizes Lessor to disburse the Progress Payment and shall continue until all items of
Property specified in the Lease are installed, tested and are finally accepted by Lessee as evidenced by Lessee's execution and delivery of the final "Acceptance Certificate" required under the Lease.
If any service charge due under this Agreement shall be unpaid after its due date, Lessor shall be entitled to collect late charges from Lessee pursuant to Paragraph 2 of Section 4 of
the Master Lease. 


        Lessee
agrees that (a) if it breaches any of its obligations under this Agreement or the Lease, or (b) if any Lease for which Progress Payments have been made is not fully
executed and delivered and the Property is not accepted under such Lease within three (3) months after the first Progress Payment is made for items of Property covered by such Lease, or
(c) if there is a material adverse change in the creditworthiness or financial condition of Lessee as determined by Lessor in its sole discretion, or (d) if there is a material adverse
change in market conditions which effects Lessor's ability to secure non-recourse underwriting for the Lease, then Lessor may do one or more of the following (i) cease disbursing
Progress Payments, (ii) collect all service charges due under this Agreement and all amounts due under the Lease, (iii) without requiring Lessee to execute an Acceptance Certificate,
begin the Lease for those items of Property paid under any Progress Payment, (iv) require Lessee to reimburse Lessor for all Progress Payments made, together with all unpaid daily service
charges, and (v) exercise any rights or remedies under the Lease and at law or in equity. The occurrence of any of the events specified in (a) through (d) above shall constitute
an Event of Default under the Lease. Lessee shall reimburse Lessor for all of its collection and enforcement costs (including attorneys' fees). In the case of (iii) above, Lessee hereby grants
Lessor Power of Attorney to execute said Acceptance Certificate on Lessee's behalf for which the "Acceptance Date", as more fully defined in Section 2 of the Master Lease, shall be the date the
last Progress Payment was made by Lessor. In the case of (iv) above, upon 










receipt
of all amounts, charges, and reimbursements required, Lessor will convey its rights and interests in such Property to Lessee and reassign to Lessee all purchase orders and contracts for such
Property. 


Dated:
December 17, 2001 



	LESSOR:	 	LESSEE:
	
APPLIED FINANCIAL, INC.	
 	

AMPHASTAR PHARMACEUTICALS, INC.
	

BY:	
 	

/s/  KAY PAUE      
	
 	

BY:	
 	

/s/  EVA WEN      

	

TITLE:	
 	

Assistant Vice President
	
 	

TITLE:	
 	

Corporate Controller

	

 	
 	

 	
 	

 	
 	

 
	The within instrument is a true and exact copy of the original held in the files of Applied Financial, Inc.	 	 	 	 
	
APPLIED FINANCIAL, INC.	
 	

 	
 	

 
	

 	
 	

 	
 	

 	
 	

 
	BY:	 	/s/  M. CALDWELL      
	 	 	 	 
	

ITS:	
 	

AVP
	
 	

 	
 	

 
	

DATE:	
 	

5-30-02
	
 	

 	
 	

 













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Exhibit 10.3