<PAGE>
Lease Management Services, Inc.
2500 Sand Hill Road, Suite 101
Menlo Park, CA 94025
Telephone (415) 854-9450 Fax (415) 854-9457
April 25, 1997
Ms. Julie C. Neumann
Director, Finance & Administration
ACACIA Biosciences, Inc.
4136 Lakeside Drive
Richmond, CA 94806
Dear Julie:
We are pleased to present our lease proposal to ACACIA Biosciences, Inc.
LESSEE: ACACIA Biosciences, Inc.
LESSOR: Lease Management Services, Inc.
EQUIPMENT: A master lease line of $1 500,000 to finance equipment as per
the attached list. All equipment is subject to Lessor's final
approval.
LEASE TERM: Forty-two (42) months.
RENTAL FACTOR: 2.654% of equipment cost payable monthly in advance for each
lease schedule.
The yield in this transaction be adjusted relative to any
increase in comparable term US Treasury maturities. The payment
factor for each schedule will be set at the time it is
documented arid will be fixed for the term. The payment factors
above is based on the average of the Federal Reserve's 3-year
and 5-year treasuries (6.71%) for the week ending 4/10/97.
LEASE TYPE: Net lease - insurance, personal property taxes and maintenance
paid by Lessee.
END OF LEASE: At the end of the lease term, equipment will be purchased for
12% of original, aggregate equipment cost; OR, subject to
satisfactory credit review, the term may be extended 12 months
at the lease rate factor of 1.05% after which Lessee will own
the equipment.
<PAGE>
LESSEE MAY CHOOSE ONE OF THE FOLLOWING COLLATERAL OPTIONS
(1). DEPOSIT A deposit equal to 15% of equipment cost shall be payable upon
execution of each schedule.
Interest on deposits shall be credited to Borrower at the rate
of 5.0% annually. Interest will be accrued and paid with the
return of the security deposit.
All deposits and accrued interest will be returned to Borrower
at achievement of the earlier of:
A) At such time as Borrower's unrestricted cash balance,
less debt, is at least $20,000,000; OR,
B) In the event of an acquisition, if a credit-worthy
acquirer executes an assignment or guarantee acceptable
to Lender OR,
C) After 6/30/98, with the signing of two or more corporate
partnerships that include up-front license or access
fees, equity, or other non-refundable cash of at least
$6,000,000 plus annual R&D payments or similar
equivalent to 40% or more of Lessee's Board-approved
cash burn for calendar years 1998, 1999. and 2000; OR,
D) On a schedule-by-schedule basis, after receipt of 32
prompt rent payments.
(2) WARRANT In consideration for this financing, Lessee shall grant to
Lessor a warrant to purchase Lessee's Preferred Series "A
stock. The warrant shares will be for 4% of equipment cost
at the price of $1.00, share (i.e. 60,000 shares). The
warrant may be exercised by cash or net issue and will
include standard anti-dilution provisions. The exercise
period shall end 72 months from the date of issue.
(3) COVENANT No additional collateral will be required except in the event
Lessee's unrestricted cash, excluding debt, falls below the
appropriate benchmark, below. In that event, Lessee will
provide to Lessor a cash security deposit equivalent to 20%
of original equipment cost, but in no event to exceed the
remaining gross lease receivable.
PRE-IP0 BENCHMARK: Unrestricted cash, excluding debt, must be
the greater of $2,500,000 or 8 month's cash needs ["6 months'
cash needs" will be defined as Lessee's cash burn for the 3
months just completed multiplied by a factor of 2.5].
-2-
<PAGE>
POST-IPO BENCHMARK: Unrestricted cash, excluding debt, must be
the greater of $8,000,000 or 9 month's cash needs ["9 months'
cash needs" will be defined as Lessee's cash burn for the
quarter just completed multiplied by a factor of 3.3].
This cash will be released when Lessee's unrestricted cash
position, excluding debt, recovers and is greater than the
above benchmark for at least one quarter and continues to
remain greater.
Verification of achievement of benchmarks is to be acceptable
to Lessor. Return of deposits prior to end of term is
contingent upon receipt of all payments and financials to date
as agreed, no default under any financial obligation, and no
material adverse change in Lessee's financial condition or
management.
CONTINGENCIES: 1) Standard documentation satisfactory to Lessee and
Lessor.
2) Releases against this lease credit line are contingent
upon Lessee providing evidence of no material adverse
change or threatened material adverse in Lessee's
financial condition, management status, corporate
partnership or regulatory issues. This credit line,
unless extended in writing, expires 12/31/98.
3) Throughout the lease term, Lessee shall provide monthly
financials within 30 days of each month-end, and
annually, an audited statement. All such financial
statements to be prepared using generally accepted
accounting principles.
4) Complete equipment specifications to be provided to
Lessor before each takedown.
All equipment to be located at Lessee's Richmond,
California, headquarters.
Custom equipment; software; upgrades to equipment to
which Lessor does not have clear title or first
security interest; disposables; "SOFT COSTS" SUCH AS
SALES TAX, FREIGHT. PLUMBING WIRING, LABOR OR
INSTALLATION; AND LEASEHOLD OR TENANT IMPROVEMENTS IN
EXCESS OF $150,000 are excluded from this line.
5) Subject to final approval by Lessor's Credit Committee.
6) This is a statement of mutual intent and not an
agreement to Lease. The terms set forth above are not
therefore binding until a lease
-3-
<PAGE>
agreement is executed between Lessor and Lessee for
specific items of equipment.
COMMITMENT
FEE: $15,000.00 commitment fee. This fee shall be fully credited,
pro-rata, to rentals due. All or a portion of said fee will be
forfeited if this transaction is approved by Lessor and not
executed by Lessee as called for in this proposal. The entire
fee will be returned to Lessee promptly in the event Lessor
fails to approve this transaction.
If the terms of this proposal meet with your approval, please sign and return
with your commitment fee, and we will proceed. Unless previously accepted, this
proposal will expire 5/10/97.
We're very pleased to help finance your equipment needs and promise to give you
the best service in the industry.
Sincerely, Collateral Option Chosen
------------------------
Deposit
---
/s/ Stephanie Wagner Warrant x
---
Covenant
---
Stephanie K. Wagner ACCEPTED: ACACIA Biosciences, Inc.
Vice President Marketing BY: /s/ Julie C. Neumann
---------------------------------
TITLE: Director, Finance & Admin
------------------------------
DATE: April 30, 1997
-------------------------------
-4-
