EXHIBIT 10.15
MASTER EQUIPMENT LEASE NO. 0033
Under this Master Equipment Lease No. 0033 (the "Lease"), dated as of September
3, 1996, PHOENIX LEASING INCORPORATED, a California corporation ("Lessor"),
hereby leases to KOSAN BIOSCIENCES, INC., a California corporation ("Lessee"),
and Lessee hereby leases from Lessor, the equipment (herein called "Equipment")
which is described on the schedule attached hereto or any subsequently-executed
schedule entered into by Lessor and Lessee and which incorporates this Lease by
reference. Any such schedules shall hereinafter individually be referred to as a
"Schedule" and collectively be referred to as the "Schedules." Lessor hereby
leases the Equipment to Lessee upon the following terms and conditions:
1. TERM OF AGREEMENT. The term of this Lease begins on the date set
forth above and shall continue thereafter and be in effect so long as and at any
time any Schedule entered into pursuant to this Lease is in effect. The Initial
Term and rent payable with respect to each leased item of Equipment shall be as
set forth in and as stated in the respective Schedule(s). The terms of each
Schedule hereto are subject to all conditions and provisions of this Lease as it
may at any time be amended. Each Schedule shall constitute a separate and
independent lease and contractual obligation of Lessee and shall incorporate the
terms and conditions of this Master Equipment Lease and any additional
provisions contained in such Schedule. In the event of a conflict between the
terms and conditions of this Lease and any additional provisions of such
Schedule, the additional provisions of such Schedule shall prevail with respect
to such Schedule only.
2. NON-CANCELLABLE LEASE. This Lease and any Schedule cannot be
cancelled or terminated except as expressly provided herein. This Lease
(including all Schedules to this Lease) constitutes a net lease and Lessee
agrees that its obligations to pay all rent and other sums payable hereunder
(and under any Schedule) and the rights of Lessor and assignee in and to such
rent and other sums, are absolute and unconditional and are not subject to any
abatement, reduction, setoff, defense, counterclaim or recoupment due or alleged
to be due to, or by reason of, any past, present or future claims which Lessee
may have against Lessor, any assignee, the manufacturer or seller of the
Equipment, or against any person for any reason whatsoever.
3. LESSOR COMMITMENT. So long as no Event of Default or event which
with the giving of notice or passage of time, or both, could become an Event
of Default has occurred or is continuing, Lessor agrees to lease to Lessee
the groups of Equipment described on each Schedule, subject to the following
conditions: (i) that in no event shall Lessor be obligated to lease Equipment
to Lessee hereunder where the aggregate purchase price of all Equipment
leased to Lessee hereunder would exceed One Million Dollars ($1,000,000)
("Commitment"); (ii) the amount of Equipment purchased by Lessor at any one
time shall be at least equal to Twenty-five Thousand Dollars ($25,000) except
for a final advance which may be less than Twenty-five Thousand Dollars
($25,000); (iii) Lessor shall not be obligated to purchase Equipment
hereunder after June 30, 1998; (iv) all Lease documentation required by
Lessor has been executed by Lessee or provided by Lessee no later than
September 30, 1996; (v) the equipment described on the Schedule is acceptable
to Lessor; (vi) with respect to each funding, Lessee has provided to Lessor
each of the closing documents and other items described in Exhibit A hereto
(which documents shall be in form and substance acceptable to Lessor) and
which list may be modified for each subsequent funding; (vii) there is no
material adverse change in Lessee's condition, financial or otherwise, as
determined by Lessor, and Lessee so certifies, from (yy) the date of the most
recent financial statements delivered by Lessee to Lessor prior to execution
of this Lease, to (zz) the date of the proposed lease of the Equipment;
(viii) at the time of all fundings, Lessee is performing according to its
business plan
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referred to as "Detailed Budget Report, July through December 1996 dated
6/30/96, and Balance Sheet Projections for July through December, 1996, dated
June 30, 1996; Balance Sheet Projections for July through December 1996 to be
provided by Lessee in a monthly format, and Income Statement and Balance Sheet
Projections for years 1997 and 1998 to be provided by Lessee in a monthly
format," all as may be amended from time to time, in form and substance
acceptable to Lessor (collectively, "Business Plan") which Business Plan is
viable only through June 30, 1998; (ix) Lessor or its agent has inspected and
placed identification labels on the Equipment; (x) Lessee shall offer to Lessor,
on an exclusive basis, all lease transactions for equipment contemplated by
Lessee until expiration of all Schedules; however if Lessor declines to finance
any such transaction or Lessee and Lessor cannot agree upon terms, then Lessee
shall be free to seek such financing from any other third party; and (xi) Lessor
has received in form and substance acceptable to Lessor: (a) Lessee's interim
financial statements signed by a financial officer of Lessee; (b) evidence of
Lessee's Two Million One Hundred Thirty-Four Thousand Five Hundred Thirty-Nine
Dollars ($2,134,539) cash position as of June 30, 1996; and (c) Lessee's
corporate resolution authorizing the transaction set forth herein.
4. NO WARRANTIES BY LESSOR. (a) Lessee has selected both (i) the
Equipment and (ii) the suppliers (herein called "Vendor") from whom Lessor is to
purchase the Equipment. LESSOR MAKES NO WARRANTY EXPRESS OR IMPLIED AS TO ANY
MATTER WHATSOEVER, INCLUDING THE CONDITION OF THE EQUIPMENT, ITS MERCHANTABILITY
OR ITS FITNESS FOR ANY PARTICULAR PURPOSE, AND AS TO LESSOR, LESSEE LEASES THE
EQUIPMENT "AS IS" AND WITH ALL FAULTS. (b) If the Equipment is not properly
installed, does not operate as represented or warranted by Vendor or is
unsatisfactory for any reason, Lessee shall make any claim on account thereof
solely against Vendor and shall, nevertheless, pay Lessor all rent payable under
this Lease, Lessee hereby waiving any such claims as against Lessor. Lessor
hereby agrees to assign to Lessee solely for the purpose of making and
prosecuting any said claim, to the extent assignable, all of the rights which
Lessor has against Vendor for breach of warranty or other representation
respecting the Equipment. Lessor shall have no responsibility for delay or
failure to fill the order. (c) Lessee understands and agrees that neither the
Vendor nor any salesman or other agent of the Vendor is an agent of Lessor. No
salesman or agent of Vendor is authorized to waive or alter any term or
condition of this Lease, and no representations as to the Equipment or any other
matter by the Vendor shall in any way affect Lessee's duty to pay the rent and
perform its other obligations as set forth in this Lease. (d) Lessee hereby
requests Lessor to purchase Equipment from Vendor and to lease Equipment to
Lessee on the terms and conditions of the Lease set forth herein. (e) Lessee
hereby authorizes Lessor to insert in this Lease and each Schedule hereto the
serial numbers and other identification data of the Equipment when determined by
Lessor.
5. LESSEE'S REPRESENTATIONS AND WARRANTIES. Lessee represents and
warrants that (a) it is a corporation in good standing under the laws of the
state of its incorporation, and duly qualified to do business, and will remain
duly qualified during the term of this Lease, in each state where the Equipment
will be located, as specified on each Schedule hereto; (b) it has full authority
to execute and deliver this Lease and perform the terms hereof, and this Lease
has been duly authorized and constitutes valid and binding obligations of Lessee
enforceable in accordance with its terms; (c) this Lease will not contravene any
law, regulation or judgment affecting Lessee or result in any breach of any
agreement or other instrument binding on Lessee; (d) no consent of Lessee's
shareholders or holder of any indebtedness, or filing with, or approval of, any
governmental agency or commission, is a condition to the performance of the
terms hereof; (e) there is no action or proceeding pending or threatened against
Lessee before any court or administrative agency which might have a materially
adverse effect on the business, financial condition or operations of Lessee; (f)
no deed of trust, mortgage or third party interest arising
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through Lessee will attach to the Equipment or the Lease; (g) the Equipment will
remain at all times under applicable law, removable personal property, free and
clear of any lien or encumbrance in favor of Lessee or any other person,
notwithstanding the manner in which the Equipment may be attached to any real
property; (h) all credit, financial and any other information submitted to
Lessor herewith or any other time is true and correct; and (i) Lessee has
provided, or will provide if requested, Lessee's tax identification number.
6. EQUIPMENT ORDERING. Lessee shall be responsible for all packing,
rigging, transportation and installation charges for the Equipment and Lessor
may separately invoice Lessee for such charges. Lessee has selected the
Equipment itself and shall arrange for delivery of Equipment so that it can be
accepted in accordance with Section 7 hereof. Lessee hereby agrees to indemnify
and hold Lessor harmless from any claims, liabilities, costs and expenses,
including reasonable attorneys' fees, incurred by Lessor arising out of any
purchase orders or assignments executed by Lessor with respect to any Equipment
or services relating thereto.
7. LESSEE ACCEPTANCE. Lessee shall return to Lessor the signed and
dated Acceptance Notice attached to each Schedule hereto (a) acknowledging the
Equipment has been received, installed and is ready for use and (b) accepting it
as satisfactory in all respects for the purposes of this Lease. Lessor is
authorized to fill in the Rent Start Date on each Schedule in accordance with
the foregoing.
8. LOCATION; INSPECTION; LABELS. Equipment shall be delivered to and
shall not be removed from the Equipment "Location" shown on each Schedule
without Lessor's prior written consent, which "Location" shall in all events be
within the Untied States. Lessor shall have the right to inspect Equipment at
any reasonable time. Lessee shall be responsible for all labor, material and
freight charges incurred in connection with any removal or relocation of such
Equipment which is requested by the Lessee and consented to by Lessor, as well
as for any charges due to the installation or moving of the Equipment. The
rental payments shall continue during any period in which the Equipment is in
transit during a relocation. Lessor or its agent shall ▇▇▇▇ and label Equipment,
which labels shall state Equipment is owned by Lessor, and Lessee shall keep
such labels on the Equipment as labeled by Lessor or its agent.
9. EQUIPMENT MAINTENANCE. (a) GENERAL. Lessee will locate or base
each item of Equipment where designated in an Acceptance Notice and will
reasonably permit Lessor to inspect such item of Equipment and its
maintenance records. Lessee will at its sole expense comply with all
applicable laws, rules, regulations, requirements and orders with respect to
the use, maintenance, repair, condition, storage and operation of each item of
Equipment. Except as required herein, Lessee will not make any addition or
improvement to any item of Equipment that is not readily removable without
causing material damage to any item or impairing its original value or
utility. Any addition or improvement that is so required or cannot be so
removed will immediately become the property of Lessor. (b) SERVICE AND
REPAIR. With respect to computer equipment, other than personal computers,
Lessee has entered into, and will maintain in effect, Vendor's standard
maintenance contract or another contract satisfactory to Lessor for a period
equal to the term of each Schedule and extensions thereto which provides for
the maintenance of the Equipment and repairs and replacement parts thereof in
good condition and working order, all in accordance with the terms of such
maintenance contract. Lessee shall have the Equipment certified for the
Vendor's standard maintenance agreement prior to delivery to Lessor upon
expiration of this Lease. With respect to any other Equipment, Lessee will,
at its sole expense, maintain and service, and repair any damage to, each
item of Equipment in a manner consistent with prudent industry practice and
Lessee's own practice so that such item of Equipment is at all times (i) in
the same condition as when delivered to Lessee,
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except for ordinary wear and tear, (ii) in good operating order for the function
intended by its manufacturer's warranties and recommendations.
10. LOSS OR DAMAGE. Lessee assumes the entire risk of loss to the
Equipment through use, operation or otherwise. Lessee hereby indemnifies and
holds harmless Lessor from and against all claims, loss of rental payments,
costs, damages, and expenses relating to or resulting from any loss, damage
or destruction of the Equipment, any such occurrence being hereinafter called
a "Casualty Occurrence." On the first rental payment date following such
Casualty Occurrence, or, if there is no such rental payment date, thirty (30)
days after such Casualty Occurrence, Lessee shall (i) repair the Equipment,
returning it to good operating condition or (ii) replace the Equipment with
identical equipment in good condition and repair, the title to which shall
vest in Lessor and which thereafter shall be subject to the terms of this
Lease; or (iii) pay to Lessor (a) any unpaid accrued amounts relating to such
Equipment due Lessor under this Lease up to the date of the Casualty
Occurrence, and (b) a sum equal to the Casualty Value as set forth in the
Casualty Value table attached to each Schedule hereto for such Equipment.
Upon the making of such payment, the term of this Lease as to each unit of
Equipment with respect to which the Casualty Value was paid shall terminate.
11. GENERAL INDEMNITY. Lessee will protect, indemnify and save harmless
Lessor from and against all liabilities, obligations, claims, damages,
penalties, causes of action, costs and expenses, imposed upon or incurred by or
asserted against Lessor or any assignee of Lessor by Lessee or any third party
by reason of the occurrence or existence (or alleged occurrence or existence) of
any act or event relating to or caused by the Equipment, including but not
limited to, consequential or special damages of any kind, or any failure on the
part of Lessee to perform or comply with any of the terms of this Lease. In the
event that any action, suit or proceeding is brought against Lessor by reason of
any such occurrence, Lessee, upon request of Lessor, will at Lessee's expense
resist and defend such action, suit or proceeding or cause the same to be
resisted and defended by counsel designated and approved by Lessor. Lessee's
obligations under this Section 11 shall survive the expiration of this Lease
with respect to acts or events occurring or alleged to have occurred prior to
the return of the Equipment to Lessor at the end of the Lease term.
12. INSURANCE. Lessee at its expense shall keep the Equipment insured
for the entire term and any extensions of this Lease against all risks for at
least the replacement value of such Equipment and shall provide for a loss
payable endorsement to Lessor or any assignee of Lessor. Lessee shall maintain
comprehensive general public liability insurance with respect to loss or damage
for personal injury, death or property damage in an amount not less than
$2,000,000 per occurrence, naming Lessor or any assignee of Lessor as additional
insured. Such insurance shall contain insurer's agreement to give thirty (30)
days written notice to Lessor before cancellation or material change of any
policy of insurance. Lessee will provide Lessor and any assignee of Lessor with
a certificate of insurance from the insurer evidencing Lessor's or such
assignee's interest in the policy of insurance. Such insurance shall cover any
Casualty Occurrence to any unit of Equipment. Notwithstanding anything in
Section 10 or this Section 12 to the contrary, this Lease and Lessee's
obligations hereunder and under each Schedule shall remain in full force and
effect with respect to any unit of Equipment which is not subject to a Casualty
Occurrence. If Lessee fails to provide or maintain insurance as required herein,
Lessor shall have the right, but shall not be obligated to obtain such
insurance. In that event, Lessee shall pay to Lessor the cost thereof.
13. TAXES. Lessee agrees to reimburse Lessor for, (or pay directly if
instructed by Lessor), and agrees to indemnify and hold Lessor harmless from,
all fees (including,
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but not limited to, license, documentation, recording and registration fees),
and all sales, use, gross receipts, personal property, occupational, value
added or other taxes, levies, imposts, duties, assessments, charges, or
withholdings of any nature whatsoever, together with any penalties, fines,
additions to tax, or interest thereon (all of the foregoing being hereafter
referred to as "Impositions") except same as may be attributable to Lessor's
income, arising at any time prior to or during the term of this Lease, or
upon termination or early termination of this Lease and levied or imposed
upon Lessor directly or otherwise by any Federal, state or local government
in the United States or by any foreign country or foreign or international
taxing authority upon or with respect to (i) the Equipment, (ii) the
exportation, importation, registration, purchase, ownership, delivery,
leasing, possession, use, operation, storage, maintenance, repair, return,
sale, transfer of title, or other disposition thereof, (iii) the rentals,
receipts, or earnings arising from the Equipment, or any disposition of the
rights to such rentals, receipts, or earnings, (iv) any payment pursuant to
this Lease, and (v) this Lease or the transaction or any part thereof.
Lessee's obligations under this Section 13 shall survive the expiration of
this Lease with respect to acts or events occurring or alleged to have
occurred prior to the return of the Equipment to Lessor at the end of the
Lease term.
14. PAYMENT BY LESSOR. If Lessee shall fail to make any payment or
perform any act required hereunder, then Lessor may, but shall not be required
to, after such notice to Lessee as is reasonable under the circumstances, make
such payment or perform such act with the same effect as if made or performed by
Lessee. Lessee will upon demand reimburse Lessor for all sums paid and all costs
and expenses incurred in connection with the performance of any such act.
15. SURRENDER OF EQUIPMENT. Upon termination or expiration of this
Lease, with respect to each group of Equipment, Lessee will forthwith surrender
the Equipment to Lessor delivered in as good order and condition as originally
delivered, reasonable wear and tear excepted. Lessor may, at its sole option,
arrange for removal and transportation of the Equipment provided that Lessee's
obligations under Sections 10, 11 and 12 shall not be released. Lessee shall
bear all expenses of delivering (which include, but are not limited to, the
de-installation, insurance, packaging and transportation of) the Equipment to
Lessor's location or other location within the United States as Lessor may
request. In the event Lessee fails to deliver the Equipment as directed above,
all obligations of Lessee under this Lease, including rental payments, shall
remain in full force and effect until Lessee delivers the Equipment to Lessor.
16. ASSIGNMENT. WITHOUT LESSOR'S PRIOR WRITTEN CONSENT, SUCH CONSENT
NOT TO BE UNREASONABLY WITHHELD, LESSEE SHALL NOT (a) ASSIGN, TRANSFER, PLEDGE,
HYPOTHECATE OR OTHERWISE DISPOSE OF THIS LEASE, EQUIPMENT, OR ANY INTEREST
THEREIN, OR (b) SUBLET OR LEND EQUIPMENT OR PERMIT IT TO BE USED BY ANYONE OTHER
THAN LESSEE OR LESSEE'S EMPLOYEES. LESSOR MAY ASSIGN THIS LEASE OR GRANT A
SECURITY INTEREST IN ANY OR ALL EQUIPMENT, OR BOTH, IN WHOLE OR IN PART TO ONE
OR MORE ASSIGNEES OR SECURED PARTIES WITHOUT NOTICE TO LESSEE. If Lessee is
given notice of such assignment it agrees to acknowledge receipt thereof in
writing and Lessee shall execute such additional documentation as Lessor's
assignee shall require. Each such assignee and/or secured party shall have all
of the rights, but none of the obligations, of Lessor under this Lease, unless
such assignee or secured party expressly agrees to assume such obligations in
writing. Lessee shall not assert against any assignee and/or secured party any
defense, counterclaim or offset that Lessee may have against Lessor.
Notwithstanding any such assignment, and providing no Event of Default has
occurred and is continuing, Lessor, or its assignees, secured parties, or their
agents or assigns, shall not interfere with Lessee's right to quietly enjoy use
of Equipment subject to the terms and conditions of this Lease. Subject to the
foregoing, this Lease inures to the benefit of and is binding upon the
successors and
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assignees of the parties hereto. Lessee acknowledges that any such assignment by
Lessor will not materially change Lessee's duties or obligations under the Lease
or increase any burden of risk on Lessee.
17. DEFAULT. (a) EVENT OF DEFAULT. Any of the following events or
conditions shall constitute an "Event of Default" hereunder: (i) Lessee's
failure to pay any monies due to Lessor hereunder or under any Schedule beyond
the fifth (5th) day after the same is due; (ii) Lessee's failure to comply with
its obligations under Section l2 or Section 16; (iii) Lessee's failure to comply
with or perform any term, covenant, condition, warranty or representation of
this Lease or any Schedule hereto or under any other agreement between Lessee
and Lessor or under any lease of real property covering the location of
Equipment if such failure to comply or perform is not cured by Lessee within
thirty (30) days of receipt of notice thereof; (iv) seizure of the Equipment
under legal process; (v) the filing by or against Lessee of a petition for
reorganization or liquidation under the Bankruptcy Code or any amendment thereto
or under any other insolvency law providing for the relief of debtors; (vi) the
voluntary or involuntary making of an assignment of a substantial portion of its
assets by Lessee, or any guarantor ("Guarantor") under any guaranty executed in
connection with this Lease ("Guaranty"), for the benefit of its creditors, the
appointment of a receiver or trustee for Lessee or any Guarantor for any of
Lessee's or Guarantor's assets, the institution by or against Lessee or any
Guarantor of any formal or informal proceeding for dissolution, liquidation,
settlement of claims against or winding up of the affairs of Lessee or any
Guarantor, PROVIDED that in the case of all such involuntary proceedings, same
are not dismissed within sixty (60) days after commencement; or (vii) the making
by Lessee or any Guarantor of a transfer of all or a material portion of
Lessee's or Guarantor's assets or inventory not in the ordinary course of
business.
(b) REMEDIES. If any Event of Default shall have occurred:
(i) Lessor may proceed by appropriate court action or actions either at
law or in equity to enforce performance by Lessee, of the applicable covenants
of this Lease, or to recover damages therefor; or
(ii) Lessee will, without demand, on the next rent payment date
following the Event of Default, pay to Lessor as liquidated damages which the
parties agree are fair and reasonable under the circumstances existing at the
time this Lease is entered into, and not as a penalty, an amount equal to the
Casualty Value of the Equipment set forth in Exhibit C together with any rent or
other amounts past due and owing by Lessee hereunder; and
(iii) Lessor may, without notice to or demand upon Lessee;
(a) Take possession of the Equipment and lease or sell the
same or any portion thereof, for such period, amount, and to such entity as
Lessor shall elect. The proceeds of such lease or sale will be applied by Lessor
(A) first, to pay all costs and expenses, including reasonable legal fees and
disbursements, incurred by Lessor as a result of the default and the exercise of
its remedies with respect thereto, (B) second, to pay Lessor an amount equal to
any unpaid rent or other amounts past due and payable plus the Casualty Value,
to the extent not previously paid by Lessee, and (C) third, to reimburse Lessee
for the Casualty Value to the extent previously paid. Any surplus remaining
thereafter will be retained by Lessor.
(b) Take possession of the Equipment and hold and
keep idle the same or any portion thereof.
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Lessee agrees to pay all internal and out-of-pocket costs of
Lessor related to the exercise of its remedies, including direct costs of its
in-house counsel and out-of-pocket legal fees and expenses. At Lessor's request,
Lessee shall assemble the Equipment and make it available to Lessor at such
location as Lessor may designate. Lessee valves any right it may have to redeem
the Equipment.
Repossession of any or all Equipment shall not terminate this
Lease or any Schedule unless Lessor notifies Lessee in writing. Any amount
required to be paid under this Section shall be increased by a service charge at
the rate of 2.0% per month, or the highest rate of interest permitted by
applicable law, whichever is less, accruing from the date the Casualty Value or
other amounts are payable hereunder until such amounts are paid.
None of the above remedies is intended to be exclusive, but each
is cumulative and in addition to any other remedy available to Lessor, and all
may be enforced separately or concurrently.
18. LATE PAYMENTS. Lessee shall pay to Lender an amount equal to the
greater of 10% per month of all amounts owed Lessor by Lessee which are not paid
when due or $100, but in no event an amount greater than the highest rate
permitted by applicable law. If such funds have not been received by Lessor at
Lessor's place of business or by Lessor's designated agent by the date such
funds are due under this Lease, Lessor shall ▇▇▇▇ Lessee for such charges.
Lessee acknowledges that invoices for rentals due hereunder are sent by Lessor
for Lessee's convenience only. Lessee's non-receipt of an invoice will not
relieve Lessee of its obligation to make rent payments hereunder.
19. LESSOR'S EXPENSE. Lessee shall pay Lessor all costs and expenses
including reasonable attorney's fees and the fees of the collection agencies,
incurred by Lessor in enforcing any of the terms, conditions or provisions
hereof.
20. OWNERSHIP; PERSONAL PROPERTY. The Equipment shall be and remain
personal property of Lessor, and Lessee shall have no right, title or interest
therein or thereto except as expressly set forth in this Lease, notwithstanding
the manner in which it may be attached or affixed to real property, and upon
termination or expiration of the Lease term, Lessee shall have the duty and
Lessor shall have the right to remove the Equipment from the premises where the
same be located whether or not affixed or attached to the real property or any
building, at the cost and expense of Lessee.
21. ALTERATIONS; ATTACHMENTS. No alterations or attachments shall be
made to the Equipment without Lessor's prior written consent, which shall not be
given for changes that will affect the reliability and utility of the Equipment
or which cannot be removed without damage to the Equipment, or which in any way
affect the value of the Equipment for purposes of resale or re-lease.
22. FINANCING STATEMENT. Lessee will execute financing statements
pursuant to the Uniform Commercial Code. Lessee authorizes Lessor to file
financing statements signed only by Lessor (where such authorization is
permitted by law) at all places where Lessor deems necessary.
23. MISCELLANEOUS. (a) Lessee shall provide Lessor with such corporate
resolutions, financial statements and other documents as Lessor shall request
from time to time. (b) Lessee represents that the Equipment is being leased
hereunder for business purposes. (c) Time is of the essence with respect to this
Lease. (d) Lessee shall keep
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its books and records in accordance with generally accepted accounting
principles and practices consistently applied and shall deliver to Lessor its
annual audited financial statements, unaudited monthly financial statements to
include any financial information given to Lessee's Board of Directors, and
signed by an officer off Lessee and such other unaudited financial statements as
may be reasonably requested by Lessor. (e) Any action by Lessee against Lessor
for any default by Lessor under this Lease, including breach of warranty or
indemnity, shall be commenced within one (1) year after any such cause of action
accrues.
24. NOTICES. All notices hereunder shall be in writing, by registered
mail, or reliable messenger or delivery service and shall be directed, as the
case may be, to Lessor at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: Asset Management and to Lessee at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇.
25. ENTIRE AGREEMENT. Lessee acknowledges that Lessee has read this
Lease, understands it and agrees to be bound by its terms, and further agrees
that it and each Schedule constitute the entire agreement between Lessor and
Lessee with respect to the subject matter hereof and supersedes all previous
agreements, promises, or representations. The terms and conditions hereof shall
prevail notwithstanding any variance with the terms of any purchase order
submitted by the Lessee with respect to any Equipment covered hereby.
26. AMENDMENT. This Lease may not be changed, altered or modified
except by an instrument in writing signed by an officer of the Lessor and the
Lessee.
27. WAIVER. Any failure of Lessor to require strict performance by
Lessee or any waiver by Lessor of any provision herein shall not be construed as
a consent or waiver of any other breach of the same or any other provision.
28. SEVERABILITY. If any provision of this Lease is held invalid, such
invalidity shall not affect any other provisions hereof.
29. JURISDICTION AND WAIVER OF JURY TRIAL. This Lease shall be governed
by and construed under the laws of the State of California. It is agreed that
exclusive jurisdiction and venue for any legal action between the parties
arising out of this Lease shall be in the Superior Court for Marin County,
California, or, in cases where Federal diversity jurisdiction is available, in
the United States District Court for the Northern District of California.
LESSEE, TO THE EXTENT IT MAY LAWFULLY DO SO, HEREBY WAIVES ITS RIGHT TO TRIAL BY
JURY IN ANY ACTION BROUGHT ON 0R WITH RESPECT TO THIS LEASE, ANY SCHEDULE, OR
ANY AGREEMENT EXECUTED IN CONNECTION HEREWITH.
30. NATURE 0F TRANSACTION. Lessor makes no representation whatsoever,
express or implied, concerning the legal character of the transaction evidenced
hereby, for tax or any other purpose.
31. SECURITY INTEREST. (a) One executed copy of the Lease will be
marked "Original" and all other counterparts will be duplicates. To the extent,
if any, that this Lease constitutes chattel paper (as such term is defined in
the Uniform Commercial Code as in effect in any applicable jurisdiction) no
security interest in the lease may be created in any documents other than the
"Original" (b) There shall be only one original of each Schedule and it shall be
marked "Original," and all other counterparts will be duplicates. To the extent,
if any, that any Schedule(s) to this Lease constitutes chattel paper (or as such
term is defined in the Uniform Commercial Code as in effect in any
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applicable jurisdiction) no security interest in any Schedule(s) may be created
in any documents other than the "Original."
32. SUSPENSION OF OBLIGATIONS. The obligations of Lessor hereunder will
be suspended to the extent that it is hindered or prevented from complying
therewith because of labor disturbances, including but not limited to strikes
and lockouts, acts of God, fires, storms, accidents, failure of the manufacture
to deliver any item of Equipment, governmental regulations or interference, or
any cause whatsoever non within the sole and exclusive control of Lessor.
33. SOFTWARE. For the term of this Lease, and so long as no Event of
Default has occurred and is continuing, Lessor hereby assigns to Lessee all of
Lessor's rights under any License Agreement executed by Lessor in connection
with the Equipment (except for any right of Lessor to be reimbursed for the
License Fee). Lessee agrees to be bound by the provisions of any such License
Agreement and to perform all obligations of Lessor (except Lessor's payment
obligations) thereunder. Lessee acknowledges that all of Lessee's obligations
under the Lease with respect to the Equipment will apply equally to the
software, including but not limited to Lessee's obligation to pay rent to
Lessor.
34. COMMITMENT FEE. Lessee has paid to Lessor a commitment fee ("Fee")
of Ten Thousand Dollars ($10,000). The Fee shall be applied by Lessor first to
reimburse Lessor for all out-of-pocket UCC search costs, inspections and
appraisal fees incurred by Lessor, and then proportionally to the first month's
rent for each Schedule here under in the proportion that the purchase price of
the Equipment leased pursuant to the Schedule bears to Lessor's entire
commitment. However, the portion of the Fee which is not applied to rental shall
be non-refundable except if Lessor defaults in its obligations pursuant to
Section 3.
35. FINANCE LEASE. The parties agree that this lease is a "Finance
Lease" as defined by section 10-103(a)(7) of the California Commercial Code
(Cal.Com.C.). Lessee acknowledges either (a) that Lessee has reviewed and
approved any written Supply Contract (as defined by Cal.Com.C. Section
10-103(a)(25)) covering Equipment purchased from the "Supplier" (as defined by
Cal.Com.C. Section 10-103(a)(24)) thereof for lease to Lessee or (b) that Lessor
has informed or advised Lessee, in writing, either previously or by this Lease
of the following: (i) the identity of the Supplier; (ii) that the Lessee may
have rights under the Supply Contract; and (iii) that the Lessee may contact the
Supplier for a description of any such rights Lessee may have under the Supply
Contract. Lessee hereby waives any rights and remedies Lessee may have under
Cal.Com.C. Sections 10-508 through 522.
36. ADJUSTMENT OF INITIAL LEASE RATE FACTOR. For any Schedule funded,
from July 1,1997 through June 30, 1998 (each a "Rate Adjustment Schedule")
Lessor and Lessee agree that the initial lease rate factor of 2.58% ("the
Initial Lease Eats Factor"), will be adjusted based on the Funding Treasury Note
Rate, as defined below. Lessor and Lessee agree that for each twenty (20) basis
points that the Funding Treasury Note Rate, is greater than 5.56%, the Initial
Lease Rate Factor for the applicable Adjusted Rate Schedule shall be adjusted as
sat forth in the table on Exhibit B hereto and shall remain constant for that
Adjusted Rate Schedule. Lessor and Lessee agree that in no event shall the
Initial Lease Rate Factor be adjusted to be lass than 2.58% for any Adjusted
Rate Schedule.
The term "Funding Treasury Note Rate" shall mean the average of
the yields to maturity of all "Govt. Bonds & Notes" as set forth in the "Ask
Yld." column of the Wall Street Journal, Western Edition, "Treasury Bonds, Notes
& Bills" report published on the
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date which is 15 business days prior to the funding date for each Adjusted Rate
Schedule under this Lease, having a maturity three years from the month in which
the funding date for any such Adjusted Rate Schedule occurs. If there is no such
government bond/note having such maturity three years from the month in which
the funding date for any such Adjusted Rate Schedule occurs, the Funding
Treasury Note Rate shall be the average of such yields to maturity of any such
government bonds/notes so listed in the gall Street Journal having a maturity in
the succeeding month which is closest to three years from the month in which the
funding date occurs.
37. PURCHASE OR RENEWAL REQUIREMENT FOR ALL SCHEDULES TO MASTER
EQUIPMENT LEASE. At the expiration of the Initial Term for Schedule No. 1, and
notwithstanding anything to the contrary in the Lease, upon 90 days prior
written notice to Lessor, Lessee shall purchase AS-IS, WHERE-IS all, but not
less than all, of the Equipment covered under all Schedules to this Lease at the
expiration of the Initial Term for each such Schedule for an amount equal to
twenty percent (20%) of the Equipment's original purchase price, whereupon
Lessor shall issue to Lessee a ▇▇▇▇ of Sale for the Equipment transferring it to
Lessee without any representation or warranty whatsoever.
In the event Lessee does not provide 90 days prior written notice as specified
above, Lessee shall be deemed to have selected No. 1 above for all Schedules to
the Lease.
Lessee shall be responsible for all applicable taxes in connection with any
purchase of Equipment by Lessee.
IN WITNESS WHEREOF, the parties hereto have executed this Lease.
PHOENIX LEASING INCORPORATED KOSAN BIOSCIENCES INC.
By: /s/ [ILLEGIBLE] By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------- ------------------------
Title: V.P. Title: CFO-OPTS. MGR.
-------------------- ---------------------
Headquarters Location:
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
County of San Mateo
Exhibit A - Closing Memorandum
Exhibit B - Rate Adjustment Table
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Exhibit A
to MASTER EQUIPMENT LEASE
Dated September 3, 1996
CLOSING MEMORANDUM
1.* Duly executed Master Equipment Lease marked "Original."
2. Duly executed Schedule marked "Original."
3. Duly executed Certificate of Acceptance. [EXECUTE UPON ACCEPTANCE OF
EQUIPMENT]
4. Insurance Certificates.
5.* Resolutions of Lessee's Board of Directors, including an incumbency
certificate.
6.* Copy of Lessee's articles of incorporation including all
amendments, certified by the Secretary of Lessee as being true and
complete and in full force and effect.
7.* Certificate from the Secretary of State of Lessee's state of
incorporation, from the state in which Lessee's chief executive
office is located, if different, and from each state where Lessee is
qualified to do business, stating Lessee is in good standing or is
authorized to transact business, as the case may be, dated not more
than thirty days prior to the first purchase of Equipment.
8. Real Property Waiver.**
9. UCC Financing Statements.
10. ▇▇▇▇ of Sale (for Sale-Leaseback Equipment).
11. UCC search.
12.* Payment of Commitment Fee.
13. Equipment List, in form and substance satisfactory to Lessor.
14. Lessee's most recent financial statements.
15. Certificate of Chief Financial Officer stating that no event of
default has occurred, there is no adverse change in the financial
condition of Lessee and that the Equipment is free of any
encumbrances.
16.* California Civil Code Section 3440 Filing and Published Notice.
17. See Section 3 of Master Equipment Lease for additional preconditions
to closing.
* First Schedule Only.
** Required if any Equipment is a fixture, i.e., attached to real
property, or located in certain states.
EXHIBIT B TO MASTER EQUIPMENT LEASE NO. 0033
FUNDING TREASURY NOTE RATE INITIAL LEASE RATE FACTOR
-------------------------- -------------------------
6.560% 2.58%
6.760% 2.59%
6.960% 2.60%
7.160% 2.61%
7.360% 2.62%
7.560% 2.63%
7.760% 2.64%
7.960% 2.65%
8.160% 2.66%
8.360% 2.67%
8.560% 2.68%
8.760% 2.69%
8.960% 2.70%
9.160% 2.71%
9.360% 2.72%
9.560% 2.73%
9.760% 2.74%
9.960% 2.75%
10.160% 2.76%
10.360% 2.77%
10.560% 2.78%
10.760% 2.79%
10.960% 2.80%
11.160% 2.81%
11.360% 2.82%
11.560% 2.83%
11.760% 2.84%
11.960% 2.85%
12.160% 2.86%
12.360% 2.87%
12.560% 2.88%
12.760% 2.89%
12.960% 2.90%
13.160% 2.91%
13.360% 2.92%
plus .01% increase in the Initial lease Rate Factor for every
additional 20 basis point increase in Funding Treasury Note
Rate.
Lessor' s Lessee's
Iitials Iitials /s/ [INITIALS]
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