Designates portions of this document have been omitted pursuant to a request for confidential treatment filed separately with the Commission] WHEAT BRAN STABILIZATION EQUIPMENT LEASE
EXHIBIT
10.26
[*Designates
portions of this document have been omitted pursuant to a request for
confidential treatment filed separately with the
Commission]
WHEAT
BRAN STABILIZATION
EQUIPMENT
LEASE
This
Wheat Bran Stabilization Equipment Lease (“Lease”)
is made
and entered into as of January 24, 2008 between PT
Panganmas Inti
Nusantara,
an
Indonesian company (“PIN”),
and
NutraCea, a California corporation (“NutraCea”)
on the
following terms and conditions:
RECITALS
A. NutraCea
is currently completing the development of certain technology and related
equipment for the stabilization of wheat bran to increase the effective yield
of
wheat flour produced from the wheat flour milling process.
B. PIN
is
currently developing a wheat flour mill (the “Facility”)
to be
located at Kuala Tanjung, Medan, North Sumatra, Indonesia (the “Location”).
C. It
is the
intention of both NutraCea and PIN that NutraCea lease to PIN and PIN lease
from
NutraCea wheat stabilization equipment developed by NutraCea for use at PIN’s
Facility at the Location if the equipment is satisfactory to PIN.
D. The
shareholders of PIN consist of an affiliate of NutraCea and Fortune Finance
Overseas Ltd.
AGREEMENT
1. Lease
of Equipment; Location; Installation.
1.1 Commercial
Viability; Lease Election.
NutraCea agrees to provide to PIN all such information that PIN shall reasonably
request during the development and testing of the Equipment regarding the
performance, operation and production capabilities of the Equipment. At any
time
prior to the shipment of the Equipment for installation at the Facility
(“Effective
Date”,
PIN
shall elect whether or not to lease the Equipment. PIN may elect not to lease
the Equipment for any reason in its sole discretion. If PIN elects not to lease
the Equipment, this Lease shall terminate at such time as NutraCea is notified
of the election not to lease. NutraCea agrees that PIN shall not be obligated
to
lease the Equipment if Fortune Finance Overseas Ltd., or any director of PIN
appointed by Fortune Finance Overseas Ltd., objects to the use of the Equipment
at the Facility. In the event that PIN accepts the Equipment, the provisions
of
this Lease shall apply to the Equipment.
1
1.2 Lease. In
the
event that PIN accepts the Equipment, on the Effective Date, NutraCea hereby
leases to PIN and PIN hereby leases from NutraCea the Equipment specified in
Section 2 on the terms and conditions set forth herein. The Equipment shall
be
installed, maintained, and operated by NutraCea at the Location, and may not
be
moved or modified by PIN or by NutraCea from the Location. All costs and
expenses related to the installation, maintenance, and operation of the
Equipment at the Facility shall be borne by PIN.
1.3 Installation.
The
Equipment will be installed at the Facility such time as (i) NutraCea has
completed the development of the Equipment and the related technology, and
(ii)
the construction of the Facility has been sufficiently completed to accommodate
the installation of the Equipment.
2. Equipment;
No Transfer of Ownership.
2.1. Equipment.
The
“Equipment”
subject
to this Lease consists of the equipment, including various components thereof,
being developed by Nutracea and required for producing stabilized wheat bran
(“SWB”)
and
for increasing the yield of wheat flour produced by the milling process. A
list
of the Equipment to be leased as of the Effective Date (as defined in Section
3)
shall be listed on Exhibit A
attached
hereto. With the written consent of PIN, in order to improve the performance
or
reliability of the Equipment, NutraCea may, from time to time, and at the
expense of PIN, replace one or more components of the equipment listed on
Exhibit A, or may supplement the equipment listed on Exhibit A with additional
components or machinery. All new equipment hereafter installed to improve the
Equipment or the operation of PIN’s wheat stabilization operations at the
Facility shall also be leased to PIN and shall after such installation become
“Equipment” for the purposes of this Lease. Exhibit A shall be amended from time
to time to reflect any additions or deletions of equipment under this Section
2.
2.2. Ownership.
PIN
acknowledges and agrees that NutraCea will retain legal title in and to the
Equipment and all proprietary rights and intellectual property manifested or
disclosed therein and shall control access to and use of the Equipment, and
that, except for its rights under this Lease, PIN will have no right, title
or
interest in or to the Equipment or the proprietary rights and intellectual
property manifested or disclosed therein.
3. Term.
The
term of this Lease shall be for [*] commencing on the Effective Date. In the
event that at the end of the foregoing [*] term (i) the Facility is fully
operational, and (ii) the Equipment is still located at the Facility and is
still being used in the operations of the Facility, the [*] term of this Lease
shall automatically be extended for an additional [*] term. The term of this
Lease may be extended with the mutual agreement of the parties.
4. Rent.
4.1. Single
Payment.
PIN
hereby agrees that the rental payment of the Equipment listed on Exhibit A
for
the full [*] term of this Lease shall be the actual cost incurred by NutraCea
for manufacturing the Equipment and for installing the Equipment at the Facility
(the “Rent”).
The
entire amount of the Rent shall be payable [*], due and payable within [*]
following the Effective Date.
2
4.2. Additional
Equipment.
Any
additional Equipment leased under Section 2.1 after the Equipment has been
installed shall also be leased for a [*] lease payment equal to NutraCea’s [*].
Any such additional rental payment shall be payable within [*] after the
installation of the new equipment.
4.2. U.S.
Dollars.
All
payments under this Lease shall be paid in U.S. Dollars to NutraCea at
NutraCea’s address set forth below or at such other address as NutraCea may
designate.
5. Net
Lease.
This
Lease shall be a “net lease,” it being understood that NutraCea shall receive
the Rent free and clear of any taxes, liens, charges or expenses of any nature
whatsoever in connection with the ownership, maintenance, and operation of
the
Equipment pursuant hereto. In addition to the Rent payable pursuant hereto,
PIN
shall pay all insurance premiums, operating charges, and any other charges,
costs and expenses that may arise during the term of this Lease arising from
the
operation of the Equipment at the Facility. Upon any failure of PIN to pay
any
of the foregoing taxes and other expenses that materially and adversely affects
NutraCea’s (i) title to the Equipment (including without limitation NutraCea’s
ownership or protection of its proprietary rights or intellectual property
rights), or (ii) ability to have such Equipment returned to NutraCea in
accordance with this Lease, NutraCea shall have the same rights and remedies
as
otherwise provided in this Lease for the failure of PIN to pay Rent. The
foregoing shall not limit any other rights of NutraCea hereunder, including
without limitation the rights of NutraCea under Sections 11 and 12.
6. Equipment
Installation and Maintenance.
6.1. Installation.
NutraCea shall properly install, [*], the Equipment at the Facility being
developed and constructed by PIN in Kuala Tanjung, Medan, North Sumatra,
Indonesia (the “Location”).
PIN
shall
provide sufficient space and access to NutraCea personnel as necessary or useful
for the proper installation of the Equipment at the Location.
PIN
shall
arrange, at PIN’s expense and with the reasonable cooperation of NutraCea, make
such utilities available at the Location to enable the Equipment to be installed
adjacent to the Facility and to thereafter to be operated in accordance with
the
specifications of the Equipment. PIN agrees to take all action necessary to
provide NutraCea and its agents with unrestricted access to the Facility, the
Location and the Equipment for the purpose of installing, maintaining, and
operating the Equipment (including any additions to the Equipment subsequently
installed under Section 2.1).
6.2. Maintenance
and Repairs.
The
parties hereto agree and acknowledge that the failure of the Equipment to
operate in the manner represented in Exhibit A will materially and adversely
affect PIN’s operations. Accordingly, NutraCea agrees to service and maintain
the Equipment on an ongoing basis in a manner that will enable the Equipment
to
operate at the maximum capacity specified on Exhibit A during the term of this
Agreement. In order to maintain and repair the Equipment, the parties hereby
agree as follows:
(a) NutraCea
further agrees that it will initiate repairs of the Equipment within [*] after
receiving notification from PIN of a need to repair the Equipment or to correct
any deficiencies in the operation of the Equipment. NutraCea agrees to use
its
commercially reasonable and good faith efforts to promptly make any required
repairs.
3
(b) In
order
to enable the Equipment to be maintained and promptly repaired, NutraCea agrees
to either provide [*] at the Location who is trained to operate, maintain or
repair the Equipment, or, at PIN’s election, to train one or more of PIN’s
employees in the proper maintenance and repair of the Equipment. The cost of
the
foregoing maintenance employees shall be borne by [*].
(c) PIN
agrees to provide NutraCea’s employees with reasonable access to the Equipment
during all business hours and will provide any other
assistance reasonably required by NutraCea to provide such maintenance and
repair services. PIN
further
agrees to use its best efforts to ensure that the
Equipment will not be accessible by any persons not specifically authorized
by
Nutracea without the express prior consent of NutraCea.
(d) NutraCea
or its agents may, from time to time, make reasonable modifications and/or
improvements to the Equipment in order to improve the efficiency or
cost-effectiveness of cleaning, sanitizing, operating, maintaining or repairing
the Equipment. NutraCea, or at its sole election, PIN, will provide the
personnel
to properly clean and operate the Equipment.
(e) In
order
to enable the Equipment and the Location to be maintained and repaired, PIN
shall keep all such spare parts as Nutracea reasonably requests at a secure
place at the Location. In addition, PIN shall promptly replace all spare parts
that are used for repairs.
(f) NutraCea
agrees that it will provide all of the foregoing services at a price to PIN
[*].
In addition, all spare parts necessary to repair or maintain the Equipment
shall
be purchased or produced by [*]; PIN will be billed for all such spare parts
at
the amount [*] for such parts, or at [*], if applicable.
7. No
Use
of other Stabilization Equipment or Technologies.
As of
the Effective Date, PIN agrees not to use any other wheat bran stabilization
technologies or equipment for the purposes of producing SWB other than the
Equipment. PIN agrees from and after such date that all SWB produced at the
Location by PIN shall be produced with the Equipment.
8. Taxes.
PIN
shall pay any taxes, assessments, fees, and charges arising or related to the
presence, use, or operation of the Equipment at the Location, whether assessed
against NutraCea or PIN, during the term of this Lease.
9. Possession.
PIN
assumes full responsibility for the safekeeping of the Equipment and access
to
the Equipment during the term. PIN shall not misuse, sublet, transfer, or
otherwise dispose of the Equipment or any portion thereof.
4
10. [*].
11. Indemnity
and Insurance.
11.1. Indemnity.
PIN
shall defend, indemnify and save NutraCea harmless from any and all claims
brought by or on behalf of any third party relating to PIN’s use of the
Equipment, including but not limited to strict product liability and negligent
acts or omissions of PIN or any of its agents. Notwithstanding the foregoing,
PIN will not be required to indemnify and hold NutraCea harmless for any claims
made against NutraCea relating to the ownership of the Equipment, claims
alleging infringement of the Equipment on such third party’s rights, or claims
arising primarily from any improper acts by NutraCea or its agents. NutraCea
shall indemnify and save PIN harmless from any and all third party claims made
against PIN (i) relating to the ownership of, or title to, the Equipment, or
(ii) alleging infringement of the Equipment on such third party’s rights,
except
(iii) to
the extent arising primarily from any improper acts by PIN that are not acts
of
NutraCea or its employees.
11.2. Insurance.
PIN
shall keep the Equipment and PIN’s operations insured as reasonably appropriate
by an insurance company or companies authorized to do business in the Location.
If PIN shall fail to procure and maintain such insurance, NutraCea may, but
shall not be required to, procure and maintain the same at PIN’s expense.
12. Confidentiality.
12.1. Definition.
“Confidential
Information”
means
any information or compilation of information which is disclosed by one party
hereto (“Disclosing
Party”)
to
another party (“Receiving
Party”)
hereunder, which is proprietary to the Disclosing Party and which relates to
technical specifications of the Equipment, the design, functionality and
operations of the Equipment, trade secrets and information contained in or
relating to product designs, manufacturing methods, processes, techniques,
tooling, and maintenance procedures. Information shall be treated as
Confidential Information irrespective of its source and all information which
the Disclosing Party identifies as being “confidential” or “trade secret” shall
be presumed to be Confidential Information. Notwithstanding the above, the
term
Confidential Information shall not include information:
(a) which
was
in the public domain at the time of disclosure by the Disclosing Party to the
Receiving Party;
(b) which
is
published or otherwise comes into the public domain after its disclosure to
the
Receiving Party through no violation of this Lease, by the Receiving
Party;
(c) which
is
disclosed to the Receiving Party by a third party not under an obligation of
confidence;
(d) which
is
already known by the Receiving Party at the time of its disclosure to the
Receiving Party by the Disclosing Party as evidenced by written documentation
of
the Receiving Party existing prior to such disclosure;
5
(e) which
is
independently developed by the Receiving Party through persons who have not
had,
either directly or indirectly, access to or knowledge of the Confidential
Information of the Disclosing Party, as evidenced by written documentation
of
the Receiving Party; or
(f) which
is
required to be disclosed by any law or governmental regulation or produced
under
order of a court of competent jurisdiction; provided, however, that the
Receiving Party provide the Disclosing Party written notice of such request
or
order and Disclosing Party is provided with an opportunity to attempt to limit
such disclosure.
12.2. Nondisclosure.
During
the term of this Lease and at all times thereafter, the Receiving Party agrees
to hold in strictest confidence and to never disclose, furnish, communicate,
make accessible to any person or use in any way for the Receiving Party’s own or
another’s benefit any Confidential Information or permit the same to be used in
competition with the Disclosing Party. The Receiving Party agrees to use prudent
and reasonable means to protect the Confidential Information.
12.3. Injunctive
Relief.
In the
event of any breach of this Section 12, the parties agree that the non-breaching
party will suffer irreparable harm for which money damages would be an
inadequate remedy. Accordingly, the non-breaching party shall be entitled to
seek injunctive relief, in addition to any other available remedies at law
or in
equity.
13. Default;
Effect of Termination.
13.1. Default.
Upon an
Event of Default, this Lease shall terminate and all rights of PIN to the
Equipment shall immediately terminate. Upon an Event Default NutraCea shall
be
entitled to all remedies provided by law including the right to take possession
of the Equipment, to retain all Rent previously paid, and to convey or lease
the
Equipment or portions thereof for such periods, at such rentals, and to such
persons as NutraCea shall elect, and to recover from PIN all damages and other
recovery permitted under applicable law. An “Event
of Default”
shall
mean, and be limited to, any of the following events:
(a) The
failure of PIN to pay the Rent within 30 days following the Effective Date;
(b) A
default
by PIN in the performance of any of the material terms and conditions of this
Lease that either is not capable
of being cured or is not cured within 30 days after notice thereof is provided
in writing to PIN, and
if such
a default either materially and adversely affects NutraCea’s (x) legal title to
the Equipment, (y) proprietary rights or intellectual property rights, or (z)
ability to repossess the Equipment upon the expiration of this Lease. Except
as
set forth above, any other breach of this Lease shall not result in the return
of the Equipment to NutraCea or the termination of this Lease, and shall only
entitle NutraCea to seek monetary damages or injunctive relief.
13.2 Effect
of Termination. Upon
expiration of the [*] or the termination of this Lease following and Event
of
Default, PIN will return to NutraCea, and/or will provide evidence satisfactory
to NutraCea of the destruction of all information or records evidencing or
embodying any confidential information or intellectual proprietary rights of
NutraCea, or with respect to the Equipment, and all copies, extracts, summaries
and abstracts thereof, and thereafter will not use or disclose any such
information or records for its own benefit or to the detriment of
NutraCea.
6
13.3. Removal
of Equipment; Equipment Recapture Payment. Upon
expiration of the Lease term or the termination of this Lease following an
Event
of Default, NutraCea may, [*], remove the Equipment from the Location, and
shall
repair any material damage to such premises as a result of such removal. In
addition, if the Equipment is removed during the [*] following the Effective
Date, upon the removal of the Equipment from the Facility by NutraCea, NutraCea
shall pay PIN an amount equal to (i) [*]. NutraCea shall not have to pay any
amounts to PIN for the Equipment after the [*] of the Effective Date. The term
“Equipment Cost” means the sum of the Rent plus all up-front lease payments PIN
has paid under Section 4 for additional equipment installed at the
Location.
13.4. Survival
of Covenants. The
obligations of the parties under Sections 8, 9, 11, 12 and 13 shall survive
any
expiration or termination of the Lease.
14. Miscellaneous.
14.1. Assignment.
Subject
to the limitations set forth in Section 14, this Lease may be assigned only
with
the prior written consent of NutraCea.
14.2. Notices.
All
notices required hereunder shall be sent by certified mail return receipt
requested, express courier with a nationally recognized courier service or
by
telex confirmed by such certified mail, to the party to be notified at its
following address or at such other address as shall have been specified in
written notice from the party to be notified.
|
If
to NutraCea:
|
NutraCea
0000
Xxxxx 00xx
Xxxxxx,
Xxxxx 000
Xxxxxxx,
XX 00000
Attn:
Xxxx Xxxxx
With
a
copy to:
Xxxxxxxxx
Genshlea Chediak Law Corporation
000
Xxxxxxx Xxxx, Xxxxx 0000
Xxxxxxxxxx,
XX 00000
Attn:
Xxxxx Xxxxxxx
If
to
PIN:
PT
Panganmas Inti Nusantara
00
Xxxxxxxxx Xxxx,
Xxxxxxxxx
Xxxxx #00-00,
Xxxxxxxxx
000000
Attn:
_____________
7
With
a
copy to:
TroyGould
0000
Xxxxxxx Xxxx Xxxx, 00xx Xxxxx
Xxx
Xxxxxxx, Xxxxxxxxxx 00000
Attn:
Xxxxxx Xxxxx
14.3. Entire
Agreement.
The
foregoing (including the exhibits referenced herein) is the parties’ entire
agreement, superseding all prior oral or written agreements and understandings
with respect to the subject matter hereof. The terms set forth herein shall
be
severable and the failure of any distinct part will not void the
remainder.
14.4. Modification
and Amendment.
This
Lease may be modified or amended only in writing and signed by both parties.
14.5. Survival.
The
provisions of this Lease that by their terms or context are intended to survive
termination of this Lease, shall so survive the termination of this
Lease.
14.6. Governing
Law.
The
parties agree that this Lease shall be governed by the laws of the State of
California. PIN and NutraCea expressly agree that any action at law or in equity
arising under this Lease shall be filed only in the Courts of the State of
California in a county of competent jurisdiction or the United States District
Court in a California district of competent jurisdiction. The parties hereby
consent and submit to the personal jurisdiction of such courts for the purposes
of litigating any such action.
14.7. Recovery
of Legal Fees and Costs.
In the
event any litigation is brought by either party in connection with this Lease,
the prevailing party in such litigation shall be entitled to recover from the
other party all the costs, attorneys' fees and other expenses incurred by such
prevailing party in the litigation.
14.8. Counterparts.
This
Lease may be signed in one or more counterparts, each of which shall be deemed
an original, but all of which together shall constitute one and the same
Lease.
14.9. Binding
Agreement.
This
Lease shall be binding upon and inure to the benefit of each of the parties
hereto, and their respective legal successors and assigns.
14.10. Waiver.
Performance of any obligation required of a party hereunder may be waived only
by a written waiver signed by the other party, which waiver shall be effective
only with respect to the specific obligation described therein. The acceptance
of rent hereunder by NutraCea shall not be a waiver of any preceding breach
by
PIN that is not fully cured thereby.
8
14.11. Severability.
If one
or more provisions of this Lease are held to be unenforceable under applicable
law, such provision shall be excluded from this Lease and the balance of the
Lease shall be interpreted as if such provision were so excluded and shall
be
enforceable in accordance with its terms.
14.12. Publicity.
Neither
party shall the terms of this Lease or make any public announcement regarding
this Lease or the subject matter contained herein without the prior written
consent of the other party, except as may be required by applicable law, in
which event, the disclosing party shall endeavor to give the non-disclosing
party prompt notice in order to allow the non-disclosing party the opportunity
to seek a protective order.
Notwithstanding
any of the foregoing to the contrary, the terms and conditions of this Lease
may
be disclosed by a party to bona fide potential investors, acquirors or partners
of such party in the course of such person’s due diligence investigation of such
party, where such person has entered into a written non-disclosure agreement
with such party that includes terms no less restrictive than those included
herein.
14.13. No
Joint Venture or Partnership; No Reference to Agreement or
Relationship.
Nothing
in this Lease shall be construed to create a partnership or joint venture of
any
kind or for any purpose between the parties hereto, or to constitute either
party a special or general agent of the other, and neither party will act or
represent otherwise to any third party. Neither party shall refer to this Lease,
to the other party or the relationship between the parties in any communication
with any third party without the prior written consent of the other
party.
14.14. Disclaimer
of Warranties.
NOTWITHSTANDING
ANYTHING CONTAINED IN THIS LEASE, NEITHER PARTY MAKES ANY REPRESENTATIONS OR
WARRANTIES OF ANY KIND TO THE OTHER, WHETHER EXPRESS OR IMPLIED (INCLUDING
WITHOUT LIMITATION ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE), WITH RESPECT TO ANY ITEMS OR EQUIPMENT LEASED UNDER THIS
LEASE,
EXCEPT
AS EXPRESSLY PROVIDED HEREIN.
14.15. Limitation
of Liability.
Notwithstanding anything contained in this Lease, neither party shall be liable
to the other, whether in tort, in contract or otherwise, and whether directly
or
by way of indemnification, contribution or otherwise, for any incidental,
consequential, punitive or exemplary damages, (including without limitation
lost
profits or revenues or injury to business or business reputation), whether
of
the other party or of any third party, relating to or arising out of the subject
matter of this Lease.
[SIGNATURE
PAGE TO FOLLOW]
9
The
authorized representatives of the parties have executed this Lease as of the
date first set forth above.
| NutraCea: | PT Panganmas Inti Nusantara: | ||
| By: | By: | ||
|
|
|
||
| Title: | Title: | ||
|
|
|
[SIGNATURE
PAGE TO EQUIPMENT LEASE]
10
Exhibit
A
Equipment
Description
11
Exhibit
B
Location
12
