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EXHIBIT 10.6
SUBLEASE
This sublease (this "Sublease"), dated March 11, 1996, for reference
purposes only, is entered into by and between Neurocrine Biosciences, Inc., a
California corporation, ("Sublandlord") and Immusol, Inc., a California
corporation ("Subtenant"), as a Sublease under that certain Office Lease for
Torrey Pines Business and Science Center dated as of June 1, 1993 by and
between Sublandlord, as tenant and Hartford Accident and Indemnity Company
("Hartford"), as landlord, as amended by that certain First Lease Amendment
dated July 8, 1993, by and between Sublandlord and Hartford, as further amended
by that Second Lease Amendment dated June 30, 1995 by and between Talcott
Realty I Limited Partnership, successor-in-interest to Hartford ("Master
Landlord") and Sublandlord, as further amended by that certain Letter Agreement
dated December 20 1995 by and between Master Landlord and Sublandlord, as
further amended by that certain Third Lease Amendment of even date herewith by
and between Sublandlord and Master Landlord (as amended, the "Master Lease").
Recitals
This Sublease is made with reference to the following facts and with
the following intentions:
A. Pursuant to the Master Lease, Master Landlord leases to
Sublandlord certain premises consisting of approximately forty-seven thousand
five hundred ninety-one (47,591) square feet (the "Master Premises") in that
certain building (the "Building") located in the state of California, city of
San Diego and commonly known as 3050 Science Park Road in that certain office
park commonly known as Torrey Pines Business and Science Center. A true,
complete and correct copy of the Master Lease, which includes all exhibits,
addenda, and amendments thereto, is attached hereto as Exhibit "A".
B. Sublandlord now desires to sublease a portion of the Master
Premises to Subtenant, and Subtenant desires to sublease a portion of the
Master Premises from Sublandlord, on the terms and conditions set forth in this
Sublease.
NOW, THEREFORE, for good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
1. Subleased Premises:
A. Subleased Premises: Sublandlord hereby subleases to
Subtenant, and Subtenant subleases from Sublandlord, approximately nineteen
thousand three hundred forty-five (19,345) square feet of space in the
approximate location and configuration as shown on that floor plan (the "Floor
Plan") attached hereto as Exhibit "B" (the "Subleased Premises"). The parties
hereto acknowledge that as of the date hereof, the Subleased Premises is not
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completely separate from the portion of the Master Premises that will be
occupied by Sublandlord and accordingly, Sublandlord will construct a demising
wall separating the two spaces. Upon completion of the construction of such
wall, Sublandlord's architect shall determine the actual number of square feet
within the Subleased Premises using the same methodology as was used to
determine the square footage of the Master Premises and Subleased Premises as
set forth above. If the actual square footage of the Subleased Premises
differs from nineteen thousand three hundred forty-five (19,345) square feet,
then the parties shall enter into an amendment of this Sublease which amendment
shall reflect the true square footage of the Subleased Premises as determined
by Sublandlord's architect and any adjustment to Base Rent and Subtenant's
Proportionate Share resulting therefrom based upon a rental rate of Two Dollars
and Eight Cents ($2.08) per month per square foot of space in the Subleased
Premises.
B. Common Areas: Sublandlord hereby grants Subtenant,
to the extent of Sublandlord's rights under the Master Lease, the non-exclusive
right to use for Subtenant's intended purposes the entrance foyer, lobby,
stairways, elevators, shipping and receiving areas of, in and about the
Building, and outside areas of the Building.
C. Possession of Subleased Premises: Sublandlord has
not made and does not make any representations or warranties regarding the
quality or condition of the Subleased Premises or any improvements located
therein except as otherwise expressly provided herein. Sublandlord shall
deliver the Subleased Premises to Subtenant in good condition and repair and
with the building systems serving the Subleased Premises in good working order.
Notwithstanding the foregoing to the contrary, Sublandlord's obligation to
deliver the Subleased Premises in good condition and repair shall not apply to
any space that shall have been occupied by Subtenant on the date immediately
preceding the Commencement Date. At the expiration or sooner termination of
this Sublease, all improvements, additions, alterations and fixtures installed
in the Subleased Premises, other than Subtenant's trade fixtures shall be
surrendered to Sublandlord or, at Sublandlord's option, removed from the
Premises in accordance with paragraph 8 of the Master Lease as incorporated
into this Sublease.
D. Parking: Subject to the rights of Master Landlord
under Paragraph 28 of the General Terms, Covenants and Conditions of the Master
Lease, Subtenant shall have the right to the non-exclusive use with
Sublandlord, Master Landlord and other tenants in the Building and the
neighboring building located at 3040 Science Park Road, Subtenant's
Proportionate Share (as hereafter defined) of uncovered parking spaces and
Subtenant's Proportionate Share of underground parking spaces located in the
parking facility which are allocated to Sublandlord under the Master Lease as
shown on the Land and Building Plan attached to the Master Lease as Attachment
3.
2. Term: The term of this Sublease (the "Sublease Term") shall
commence on the Hybritech Space Commencement Date (as that term is defined in
the Third Lease Amendment) (the "Commencement Date") and shall expire on the
fifth (5th) anniversary of the
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Commencement Date, unless this Sublease is sooner terminated pursuant to its
terms or the Master Lease is sooner terminated pursuant to its terms. On the
Commencement Date, Sublandlord shall deliver possession to Subtenant of that
portion of the Subleased Premises not occupied by Subtenant immediately prior
to the Commencement Date, in the condition required by this Sublease. Upon
determination of the Commencement Date, the parties hereto shall execute a
written acknowledgement setting forth the Commencement Date and expiration date
of this Sublease.
3. Rent:
A. Base Monthly Rent: Commencing on the Commencement
Date and on the first (1st) day of each calendar month thereafter during the
remainder of the Sublease Term Subtenant shall pay to Sublandlord Forty
Thousand Two Hundred Thirty-Seven Dollars and Sixty Cents ($40,2.37.60) ("Base
Rent"). If the Commencement Date occurs on a day other then the first day of a
calendar month, then Base Rent and Additional Rent (hereinafter defined) for
the partial months at the beginning and end of the Sublease Term shall be
prorated on the basis of a thirty (30) day month.
B. CPI Adjustment: The Base Rent payable by Subtenant
shall be increased on each anniversary of the Commencement Date hereof (each,
an "Adjustment Date") by multiplying the initial Base Rent by a fraction, the
numerator of which is the CPI (as defined in the Third Lease Amendment)
published immediately prior to the Adjustment Date in question, and the
denominator of which is the CPI published immediately prior to the Commencement
Date hereof. In no event will the increase in Base Rent in any one year be
less than three percent (3%) of the Base Rent payable before the Adjustment
Date in question, nor more than six percent (6%) of the Base Rent payable
before the Adjustment Date in question.
C. Additional Rent: Commencing on the Commencement Date
and continuing throughout the Sublease Term Subtenant shall pay to Sublandlord
"Subtenant's Proportionate Share" (defined below) of Total Expenses (as that
term is defined in the "Expense Escalation" attachment to the Master Lease,
including, without limitation, Real Estate Taxes and Operating Expenses as
defined in said attachment) charged to Sublandlord under the Master Lease. The
term Subtenant's Proportionate Share" shall mean that amount (expressed as a
percentage) equal to the number of square feet included in the Subleased
Premises divided by the number of square feet in the Master Premises.
Accordingly, Subtenant's Proportionate Share as of the Commencement Date shall
mean forty percent (40.65%) (19,345/47,591). The payments of Additional Rent
required of Subtenant pursuant to this Subparagraph D shall be made within the
same time periods as are established by the Master Lease for the comparable
obligation of Sublandlord to make such payments to Master Landlord. All
amounts in addition to the Base Rent required to be paid by Subtenant under
this Sublease shall be deemed to be Additional Rent.
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4. Security Deposit:
A. As security for the performance by Subtenant of all
of the terms and conditions of this Sublease upon execution hereof, Subtenant
shall deliver to Sublandlord a standby, irrevocable letter of credit for the
benefit of Sublandlord in an initial amount equal to Two Hundred Forty-One
Thousand Four Hundred Twenty-Five Dollars and Sixty Cents ($241,425.60) (which
letter of credit, and any other letter of credit required to be delivered by
Subtenant pursuant to this paragraph is referred to herein as a "Letter of
Credit") and in the form attached hereto as Exhibit C. Each Letter of Credit
shall be issued by a United States commercial bank reasonably acceptable to
Sublandlord, shall provide for partial payments, shall be freely transferable
by the beneficiary, and shall otherwise be in form and substance reasonably
acceptable to Sublandlord. If Subtenant fails to pay rent or other charges due
hereunder or otherwise defaults with respect to any provision of this Sublease,
then Sublandlord may draw upon the Letter of Credit (and any other Letters of
Credit given hereunder) for the payment of any rent or other charge in default
including, without limitation, damages allocable to the unexpired term of the
Sublease in the event the Sublease is terminated, for the payment of any other
sum which Sublandlord has become obligated to pay by reason of Subtenant's
default, and for any other amount necessary to compensate Sublandlord for any
loss or damage which Sublandlord has suffered thereby. Each Letter of Credit
shall be payable at sight upon presentation of a signed statement by a duly
appointed representative of the beneficiary certifying that: "An event of
default (as that term is defined in paragraph 22 of that certain Office Lease
for Torrey Pines Business and Science Center dated as of June 1, 1993 by and
between Neurocrine Biosciences, Inc., as tenant, and Hartford Accident and
Indemnity Company, as landlord as thereafter amended, which paragraph 22 was
incorporated by reference into that certain Sublease dated March 11, 1996
between Neurocrine Biosciences, Inc. and Immusol, Inc. (the "Sublease")) by the
"Subtenant" has occurred under the Sublease." Subtenant shall renew each and
every Letter of Credit required to be given hereunder on or before the day that
is thirty (30) days prior to the day that each such Letter of Credit expires.
If Subtenant fails to so renew each such Letter of Credit, such failure shall
be deemed to be an event of default by Subtenant hereunder and Sublandlord may
draw on each and every such Letter of Credit provided by Subtenant in
accordance herewith in the sum of any theretofore undrawn amounts. If
Sublandlord draws upon any Letter of Credit required to be given hereunder in
accordance with the terms hereof, Subtenant shall immediately, upon demand,
purchase and deliver to Sublandlord an additional Letter of Credit in an amount
equal to the amount so drawn by Sublandlord. Subtenant's failure to do so
shall be deemed to be an event of default under this Sublease. Within sixty
(60) days following the expiration of this Sublease, and provided Subtenant is
not in default of this Sublease, Sublandlord shall return all Letters of Credit
given hereunder.
B. Within thirty (30) days following the end of each
fiscal quarter of Subtenant, Subtenant shall deliver to Sublandlord a copy of
Subtenant's financial statements certified by Subtenant's chief financial
officer as true, correct and complete (including balance sheet, income
statement and statement of cash flows). If at any time Subtenant's cash and
cash
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equivalent balance (which balance shall include marketable securities valued at
market value) is less that One Million Five Hundred Thousand Dollars
($1,500,000), Sublandlord shall have the right to require Subtenant to and,
Subtenant shall, within five (5) days of Sublandlord's written request, purchase
an additional Letter of Credit or provide other security acceptable to
Sublandlord in the amount equal to six (6) months' Base Rent which, as of the
date hereof, would be Two Hundred Forty-One Thousand Four Hundred Twenty-Five
Dollars and Sixty Cents ($241,425.60), so that Sublandlord shall hold, in the
aggregate, twelve months' Base Rent, which, as of the date hereof, would be Four
Hundred Eighty-Two Thousand Eight Hundred Fifty-One Dollars and Twenty Cents
($482,851.20), as security for the performance of Subtenant's obligations under
this Sublease (the "Additional Deposit") to be held pursuant to subparagraph 4.A
above. If Sublandlord's architect determines that the square footage of the
Subleased Premises does not equal nineteen thousand three hundred forty-five
(19,345) square feet in accordance with the terms of subparagraph 1.A hereof,
then the amount of the Additional Deposit shall be adjusted so that the amount
of the initial Letter of Credit given hereunder plus the Additional Deposit
equals twelve (12) months' Base Rent. If Subtenant is required to post the
Additional Deposit and if at any time thereafter, Subtenant's cash and cash
equivalent balance increases such that such balance equals or exceeds One
Million Five Hundred Thousand Dollars ($1,500,000) for one hundred eighty (180)
consecutive days as evidenced by financial statements certified by Subtenant's
chief financial officer as true, correct and complete, then unless an uncured
default or event of default by Subtenant then exists under this Sublease,
Sublandlord shall return to Subtenant the Additional Deposit.
5. Relationship to Master Lease: This Sublease is and shall
remain at all times subject and subordinate to the Master Lease and any
amendment, modification or alteration thereto subject to the terms and
conditions of paragraph 14 hereof. Upon any termination of the Master Lease
pursuant to the terms of the Master Lease, this Sublease shall also terminate.
6. Incorporated Master Lease Terms: Except to the extent
expressly provided to the contrary in this Sublease, each of the following
provisions of the Master Lease is incorporated into this Sublease as if fully
set forth herein and (i) each reference therein to "Landlord" shall be deemed
to refer to Sublandlord under this Sublease who shall perform the obligations
of the "Landlord" set forth in said paragraph contained in the Master Lease to
the extent fairly allocable to the Subleased Premises, (ii) each reference
therein to "Tenant" shall be deemed to refer to Subtenant under this Sublease
who shall perform the obligations of the "Tenant" set forth in said paragraph
in the Master Lease to the extent fairly allowable to the Subleased Premises,
(iii) each reference therein to the "Term" or "Lease Term" shall be deemed to
refer to the Sublease Term (iv) each reference therein to the "Premises" shall
be deemed to refer to the "Subleased Premises", and (v) each reference therein
to this "Lease" shall be deemed to refer to this "Sublease". The Additional
Terms which supplement and are generally incorporated into the Master Lease
shall not be incorporated into this Sublease unless specifically referenced
herein.
A. Office Lease
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(1) The following Subparagraphs in Paragraph II
entitled "Summary of Terms" of the Master Lease: II.C ("Land"); II.H ("Lease
Year"); II.R ("Normal Business Hours"); II.S ("State"); II.W ("Permitted
Use"), except that the phrase "or any other use permitted under the SR Zoning
(see Attachment 11)" shall be deleted; and II.X ("Tenant's Representatives").
(2) The following Subparagraphs in Paragraph III
entitled "Attachments" of the Master Lease: Subparagraphs 1 ("General Terms,
Covenants and Conditions") as amended herein; 2 ("Plan showing the Premises")
as amended herein; 3 ("Land and Building Plan"); 4 ("Rules and Regulations");
and 9 ("Additional Terms") and 11 ("SR Zoning"); provided however, that the
provisions of such Attachments shall only be incorporated to the extent they
are specifically incorporated by Subparagraphs 6.B or 6.C of this Sublease.
B. General Terms, Covenants and Conditions
(1) Paragraph 2 entitled "Rent"; provided however
that the reference to the "Building Manager" shall be replaced with
"Sublandlord".
(2) Paragraph 3 entitled "Late Payments".
(3) Paragraph 4 entitled "Use of the Premises".
(4) Paragraph 5 entitled "Rules and Regulations"
as modified by the corresponding paragraph in the Additional Terms of the
Master Lease (the "Additional Terms"), except that Landlord shall mean and
refer to both Sublandlord and Master Landlord.
(5) Paragraph 6 entitled "Services" as modified
by corresponding paragraph 6(e) in the Additional Terms; provided however,
that,
(a) The references to Landlord in
Subparagraphs 6(a) and 6(b) shall mean and refer to Master Landlord;
(b) The first and third reference to
Landlord in Subparagraph 6(c) shall mean and refer to Master Landlord and the
second, forth, fifth, sixth and seventh reference to Landlord in said
Subparagraph 6(c) shall mean and refer to both Master Landlord and Sublandlord;
(c) The first and third reference to
Landlord in Subparagraph 6(d) shall mean and refer to both Master Landlord and
Sublandlord;
(d) The second reference to Landlord in
paragraph 6(e) of the Additional Terms shall mean and refer to Master Landlord.
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(6) Paragraph 7 entitled "Repairs and
Maintenance" as modified by the corresponding paragraph of the Additional
Terms; provided however that Master Landlord, and not Sublandlord, shall be
responsible for those repairs within the scope of Landlord's repairs and
Sublandlord shall use reasonable efforts to enforce Master Landlord's
obligations.
(7) Subparagraph 8 entitled "Alterations";
provided however, that Landlord shall mean and refer to both Sublandlord and
Master Landlord.
(8) Paragraph 9 entitled "Insurance"; provided
however, that the first four references to Landlord shall mean and refer to
both Master Landlord and Sublandlord,
(9) Paragraph 10 entitled "Indemnification";
provided however, that
(a) The first two (2) sentences thereof
shall not be incorporated herein; and
(b) The waivers and releases made
therein for the benefit of "Landlord" shall run for the benefit of both Master
Landlord and Sublandlord.
(10) Paragraph 11 entitled "Observance of Laws" as
modified by the corresponding paragraph in the Additional Terms; provided
however, that
(a) Landlord shall mean and refer to
Master Landlord; and
(b) Sublandlord shall use reasonable
efforts to enforce Master Landlord's obligations under said Paragraph 11 of the
Master Lease.
(11) Paragraph 12 entitled "Surrender of Premises"
as modified by the corresponding paragraph in the Additional Terms.
(12) Paragraph 13 entitled "Holding Over" as
modified by the corresponding paragraph in the Additional Terms; provided
however,
(a) The words "(as such date may be
extended pursuant to Section II)" in the Additional Terms shall be deleted; and
(b) The reference to Landlord in the
Additional Terms shall mean and refer to either Master Landlord or Sublandlord.
(13) Paragraph 15 entitled "Condemnation" as
modified by the corresponding paragraphs in the Additional Terms; provided
however, that the first four references to Landlord in Subparagraph 15(a) shall
mean and refer to either Master Landlord
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or Sublandlord and the references to Landlord in Subparagraph (b) shall mean
and refer to Master Landlord.
(14) Paragraph 17 entitled "Subordination" as
modified by the corresponding paragraph in the Additional Terms, provided,
however, that the references to Landlord shall mean and refer to either Master
Landlord or Sublandlord.
(15) Paragraph 18 entitled "Estoppel Certificate",
provided however, that Master Landlord and Subtenant, in addition to
Sublandlord, shall have the rights afforded "Landlord" in said Paragraph 18
(16) Paragraph 19 entitled "Transfer of Landlord's
Interest" as modified by the corresponding paragraph in the Additional Terms.
(17) Paragraph 20 entitled "Quiet Enjoyment".
(18) Paragraph 21 entitled "Rights Reserved to the
Landlord" as modified by the corresponding paragraph in the Additional Terms;
provided however that Master Landlord shall benefit from the rights afforded
Landlord in said Paragraph 21.
(19) Paragraph 22 entitled "Default" as modified
by the corresponding paragraph in the Additional Terms; provided however, that
the reference to "10" shall be changed to "5" and the references to "30" shall
be changed to "15".
(20) Paragraph 23 entitled "Remedies".
(21) Paragraph 25 entitled "Bankruptcy".
(22) Paragraph 26 entitled "Force Majeure".
(23) [Intentionally omitted.].
(24) [Intentionally omitted.)
(25) Paragraph 30 entitled "Brokerage Fees";
provided however, that
(a) The word "Broker" shall be deleted
and replaced with Business Real Estate; and
(b) The second sentence thereof shall be
deleted in its entirety and replaced with the following: "Sublandlord and
Subtenant shall indemnify and defend the other for, from and against any
claims, expenses, liabilities and losses (including reasonable attorneys' fees)
resulting from any compensation, or charges claimed by or owning to any other
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party in connection with this Lease by reason of any act of the indemnifying
party, provided however, that Sublandlord shall pay to Business Real Estate and
CB Commercial pursuant to a separate agreement all brokerage commissions that
may be due such parties arising out of this Sublease.
(26) Paragraph 31 entitled "Notices"; provided
however, that
(a) Sublandlord's Mailing Address shall be: 3050 Science
Park Road, San Diego, California 92121; and
(b) Subtenant's Mailing Address shall be: 3050 Science
Park Road, San Diego, California 92121.
(27) Paragraph 32 entitled "Miscellaneous" as
modified by the corresponding paragraph in the Additional Terms and subject to
the prohibition on assignment and subletting in this Sublease.
C. Rules and Regulations: Paragraphs 1 through 21 of the
Rules and Regulation as modified by corresponding paragraphs 4, 6 and 21 of the
Additional Terms; provided however, that the references to Landlord in
Paragraph 1 through 20 shall mean and refer to both Master Landlord and
Sublandlord and the references to Landlord in Paragraph 21 shall mean and refer
to Master Landlord.
D. Third Lease Amendment: The following paragraphs of
the Third Lease Amendment are hereby incorporated into this Sublease: Paragraph
4 (provided however, that all references to "Landlord" shall mean and refer to
Master Landlord only), and paragraph 10.
7. Maintenance Responsibilities of Sublandlord, Master Landlord
and Subtenant:
A. Sublandlord and Master Landlord. The parties
acknowledge that Paragraphs 1, 6 and 7 of the General Terms, Covenants and
Conditions to the Master Lease obligate Master Landlord to provide certain
levels of maintenance, repair and replacement and Building services ("Master
Landlord's Repair and Services Obligations"), and Sublandlord and Subtenant
agree as follows with respect to this subject:
(1) Sublandlord shall use reasonable efforts to
enforce Master Landlord's Repair and Services Obligations. Subtenant shall
reimburse Sublandlord for Subtenant's Proportionate Share of all amounts
Sublandlord is required to pay pursuant to Paragraph 6(b) and 6(c) ("Utilities
and Services Charges"); provided however, that if Sublandlord, in its
reasonable discretion, determines that Subtenant's Proportionate Share of
Utilities and Service Charges does not equitably reflect Sublandlord's and
Subtenant's actual usage of such utilities and services, then the amount that
Subtenant shall be obligated to pay
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pursuant to this subparagraph 7.A(l) shall be equitably adjusted based on
Subtenant's and Sublandlord's actual usage of such utilities and services
(2) Sublandlord shall have no maintenance or
repair obligations with respect to the Subleased Premises except for its
obligation to use reasonable efforts to enforce the obligations of Master
Landlord's Repair and Services Obligations. Subtenant hereby expressly waives
the provisions of subsection 1 of Section 1932 and Sections 1941 and 1942 of
the Civil Code of California and all rights to make repairs at the expense of
Sublandlord as provided in Section 1942 of said Civil Code.
B. Subtenant. Without limiting Subtenant's repair and
maintenance obligations pursuant to the incorporation of Paragraph 7 of the
Master Lease, Subtenant, at Subtenant's sole cost, shall repair, maintain, and
replace the heating, ventilating and air conditioning system serving the
Subleased Premises to the extent not the responsibility of Master Landlord
under the Master Lease.
8. Damage and Related Termination Rights: The parties
acknowledge that Paragraph 14 entitled "Damage" of the General Terms, Covenants
and Conditions to the Master Lease governs the rights of Master Landlord and
Sublandlord concerning damage to the Master Premises by fire or other peril,
and Sublandlord and Subtenant agree as follows with respect to this subject as
it relates to the Subleased Premises.
A. Sublandlord shall use reasonable efforts to enforce
the obligations of Master Landlord under said paragraph 14. Except to the
extent of its obligations stated in the immediate preceding sentence,
Sublandlord shall not be obligated to restore the Subleased Premises following
any damage caused by fire or other peril, and shall not be liable for any
failure by Master Landlord to perform its obligations under the Master Lease.
B. In the event of any damage to the Subleased Premises
caused by fire or other peril which does not result in a termination of the
Sublease, Subtenant shall forthwith, at Subtenant's sole expense, replace or
fully repair Trade Fixtures installed by Subtenant and existing at the time of
such damage or destruction to the extent still required by Subtenant for its
business operations in the Subleased Premises.
C. The parties acknowledge that Master Landlord has the
right to terminate the Master Lease in certain circumstances pursuant to
Subparagraph 14(b) in the Master Lease. In the event Master Landlord exercises
any such right of termination during the Sublease Term, the Sublease shall
terminate on the date the Master Lease terminates.
D. The parties acknowledge that Sublandlord has the
right to terminate the Master Lease in certain circumstances pursuant to
Subparagraph 14(c) of the Master Lease. If Sublandlord becomes entitled to
terminate the Master Lease pursuant to said Subparagraph 14(c), then it may do
so in its sole discretion, without the consent of Subtenant and if it so
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elects to terminate the Master Lease then the Sublease shall terminate on the
date the Master Lease terminates. Notwithstanding the foregoing to the
contrary, Sublandlord shall not have the right to terminate the Master Lease
pursuant to said paragraph 14(c) if (i) there is no damage to any space
occupied by Sublandlord under the Master Lease and (ii) any repair and/or
restoration work to the Building and/or Office Park would not, in Sublandlord's
reasonable opinion, materially adversely affect the operation of Sublandlord's
business.
E. If this Sublease or the Master Lease has not been
terminated and Master Landlord does not substantially complete the repair or
restoration of the Subleased Premises within one hundred eighty (180) days
after the date of the casualty, and if such failure has a material, adverse
effect on Subtenant's business in the Subleased Premises, Subtenant may
(provided such failure is not due to any fault of Subtenant or Subtenant's
Representatives) terminate this Sublease by notice to Sublandlord given within
five (5) business days after the end of the 180-day period. Termination shall
be effective thirty (30) days after such notice is given unless Master Landlord
shall substantially complete the repair or restoration within the 30-day
period, in which case Subtenant's notice of termination shall be deemed
withdrawn.
F. If Sublandlord's rent under the Master Lease is
abated in connection with damage and destruction under such Paragraph 14,
Subtenant's Base Rent under this Sublease shall be equitably abated if and only
if Sublandlord's abatement of rent is attributable to loss of use of all or any
material part of the Subleased Premises. The parties acknowledge that
subparagraph 14(b) of the Master Lease provides "Rent" under the Master Lease
will be abated from the date of the damage to the date the damage is repaired
except that if repairs are delayed in any way by the "Tenant" under the Master
Lease, then the damage shall be deemed repaired on the date that it would have
been repaired but for such delay. Accordingly, (i) if delay caused by
Sublandlord results in the acceleration of the obligation to pay "Rent" under
the Master Lease then, notwithstanding anything to the contrary in this
subparagraph 8.F, Subtenant shall be entitled to that amount of rental
abatement that Subtenant would have been entitled to hereunder but for the
delay caused by Sublandlord; and (ii) if delay caused by Subtenant results in
the acceleration of the obligation to pay "Rent" under the Master Lease then
Subtenant shall pay to Sublandlord, as Additional Rent, the difference between
the amount of "Rent" payable by Sublandlord under the Master Lease allocable
to that period of time that "Rent" is not abated as a result of delay caused by
Subtenant and all payments of Base Rent and Additional Rent received by
Sublandlord allocable to such period of time.
G. This Paragraph 8 is intended to provide the only
remedies available to Tenant for damage caused by casualty and, therefore, to
the extent permitted by Law, Tenant waives the provisions of any Laws (defined
in the Master Lease), which would provide alternative or additional remedies in
the event of such damage.
9. Indemnity:
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A. Subtenant's Indemnity: Subtenant shall indemnify,
defend, protect, and hold Sublandlord harmless from and against all claims,
demands, costs, liabilities, losses, attorneys' fees and damages which may be
brought or made against Sublandlord or which Sublandlord may pay or incur by
reason of (i) a breach of this Sublease by Subtenant, (ii) any act or omission
of Subtenant or Subtenant's Representatives relating to the Subleased Premises
(iii) the negligence or willful misconduct of Subtenant or Subtenant's
Representatives, or (iv) any occurrence during the Sublease Term arising out of
Subtenant's use or occupancy of the Building, but only in each case to the
extent that such Claims are not caused by the negligence or willful misconduct
of Sublandlord or Sublandlord's employees, agents, contractors or invitees.
The terms and conditions of this subparagraph 9.A shall survive the expiration
or earlier termination of this Sublease.
B. Sublandlord's Indemnity: Sublandlord shall
indemnify, defend, protect, and hold Subtenant harmless from and against all
claims, demands, costs, liabilities, losses, attorneys' fees and damages which
may be brought or made against Subtenant or which Subtenant may pay or incur by
reason of (i) a breach of this Sublease or the Master Lease by Sublandlord
(except to the extent that any breach of the Master Lease is caused by
Subtenant's breach of this Sublease), (ii) any act or omission of Sublandlord
or Sublandlord's Representatives relating to the Building, (iii) the negligence
or willful misconduct of Sublandlord or Sublandlord's Representatives, or (iv)
any occurrence during the Sublease Term arising out of Sublandlord's use or
occupancy of the Building, but only in each case to the extent that such Claims
are not the responsibility of Subtenant under this Sublease. The parties
acknowledge that Subtenant is not Sublandlord's representative. The terms and
conditions of this subparagraph 9.B shall survive the expiration or earlier
termination of this Sublease.
10. Assignment and Subletting: Neither this Sublease, nor any
interest hereunder may be assigned, subleased, mortgaged, pledged or encumbered
by Subtenant, nor may the Subleased Premises be used by any other party,
directly or indirectly, by operation of law or otherwise (a "Transfer"),
without the prior written consent of Sublandlord, which consent shall not be
unreasonably, withheld or delayed, and except in strict compliance with the
terms and conditions of the Master Lease. A consent to one Transfer shall not
be deemed to be a consent to any subsequent Transfer. Any Transfer without
such consent shall be void and shall constitute an immediate default (not
subject to notice or cure) under this Sublease. As a condition to granting its
consent to any Transfer, Sublandlord may require that Subtenant pay to
Sublandlord, as additional rent, all Excess Rents received by Subtenant. As
used herein, the term "Excess Rents" shall mean all rents and other
consideration payable by transferees to Subtenant in connection with the
Transfer (including any sums paid for the sale, rental or use of Subtenant's
property in excess of the then market value of Subtenant's property), less the
cost incurred by Subtenant after such Transfer in performing its obligations
under this Sublease and less the reasonable expenses actually paid by Subtenant
in connection with the Transfer. Sublandlord's waiver or consent to any
Transfer shall be ineffective unless set forth in writing, and Subtenant shall
not be relieved or released from any of their obligations under this Sublease,
unless such waiver or consent expressly so provides.
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11. Tenant Improvements: If Subtenant elects to construct any
improvements or alterations in the Subleased Premises ("Tenant Improvements"),
then the following shall apply:
A. Such construction shall be done in accordance with
the following:
(1) Subtenant shall deliver to Sublandlord and
Master Landlord Subtenant's proposed plans and specifications for the Subleased
Premises (the "Plans") as prepared by an architect ("Architect") approved by
Sublandlord and Master Landlord. Sublandlord's approval shall not be
unreasonably withheld or delayed. Sublandlord shall either approve or
disapprove the Plans. If Sublandlord disapproves the Plans then Sublandlord
and Subtenant shall use good faith efforts to cooperate to attempt to reach
agreement on the Plans. Sublandlord may disapprove the Plans if Sublandlord
shall reasonably determine that the Plans: (a) do not provide for a finish
consistent with finishes for comparable tenants in comparable buildings in the
area in which the Building is located; (b) would subject Sublandlord, Master
Landlord, the Building or the Subleased Premises to any liability, violation,
fine, penalty, or forfeiture or any additional cost or expense to either
Sublandlord or Master Landlord (other than as expressly provided below); (c)
would adversely affect the character or nature of the Building as a building
containing bioscience companies and wet labs; (d) would provide for or require
any installation or work which is unlawful, would create an unsound or
dangerous condition, or would require any change to the structure of the
exterior of the Premises or the Building; or (e) would materially and
adversely interfere with the use and enjoyment of any other space in the
Building. Additionally, Sublandlord may disapprove the Plans (or any other
matter requiring Sublandlord's consent or approval) and it shall be deemed
reasonable for Sublandlord to do so, if Master Landlord, for whatever reason,
disapproves the Plans (or such other matter). Any review or approval by
Sublandlord of the Plans is solely for Sublandlord's benefit, and without any
representation or warranty whatsoever to Subtenant with respect to the
adequacy, correctness or efficiency thereof or otherwise. Wherever in this
paragraph 11, Master Landlord's consent is required to any matter, Sublandlord
shall use diligent good faith efforts to obtain Master Landlord's consent in an
expeditious manner.
(2) The Plans may subsequently be modified by
Subtenant with Sublandlord's and Master Landlord's approval as set forth above.
The Plans shall be prepared at Subtenant's sole cost and expense, except as
expressly provided below.
(3) All Tenant Improvements shall be furnished
and installed by a reputable contractor, licensed in California to be selected
by Subtenant, but subject to Sublandlord's and Master Landlord's approval,
which approval shall not be unreasonably withheld ("Subtenant's Contractor")
upon the following terms and conditions:
(a) The work shall be performed and
completed by Subtenant's Contractor in a good and workmanlike manner at
Subtenant's sole cost and expense (except as otherwise expressly provided
below) and in accordance with: (a) the Plans, (b) all requirements (including
laws and regulations) of any governmental authority having jurisdiction
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and (c) such requirements and upon such conditions for performing the work as
Sublandlord and Master Landlord may reasonably impose. No fee shall be payable
to Sublandlord or Master Landlord in connection with the Tenant Improvements or
Office Improvements.
(b) No improvements shall be installed in any portion of
the Subleased Premises unless and until:
(i) Sublandlord and Master Landlord
have approved the Plans;
(ii) Subtenant has submitted to
Sublandlord and Master Landlord certificates of insurance (in addition to that
required by Section 9 of the Master Lease) evidencing that Subtenant's
Contractor has in full force and effect insurance coverage in types and amounts
and with insurers reasonably approved by Sublandlord and Master Landlord (and
which insurance Subtenant shall cause to be maintained during the period any
construction is being performed in the Subleased Premises) in accordance with
the following: (1) worker's compensation insurance covering each worker employed
at the jobsite in the performance of the contract statutory requirement, (2)
comprehensive personal injury and property damage liability insurance
(excluding motor vehicles) covering operations arising out of the performance
of the contract at the jobsite $1,000,000 combined single limit, (3)
comprehensive automobile personal injury and property damage liability
insurance covering all vehicles involved in the work, whether owned, rented or
otherwise $250,000-500,000 combined single limit, and (4) aggregate products
and completed operations insurance $1,000,000. The insurance required hereby
shall be written for not less than any limit required by law or as stated
above, whichever is greater. Sublandlord and Master Landlord shall be
additionally insured on the above-mentioned insurance policies and be provided
30 days prior written notice in the event of cancellation or modification
thereof, provided, however, that such insurance policies shall not be canceled
nor coverages thereunder reduced by Subtenant's Contractor without the written
consent of Sublandlord and Master Landlord. Such insurance policies shall
cover claims and damages arising out of the work, whether caused directly or
indirectly by Subtenant's Contractor, its employees, agents or subcontractors;
(iii) Subtenant has obtained all
permits and approvals necessary for the construction of the work and submitted
copies thereof to Sublandlord and Master Landlord; and
(iv) Subtenant shall use its best
efforts to obtain in Subtenant's agreement with Subtenant's Contractor an
indemnification of Sublandlord and Master Landlord substantially the same as
provided in subparagraph 11.A(4) hereof
(4) Subtenant shall indemnify Sublandlord and
Master Landlord and save them harmless from all claims, damages, losses,
liabilities and expenses (including
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reasonable attorneys' fees) arising out of the Tenant Improvements or any act or
emission of Subtenant, Subtenant's Contractor or Subtenant's Representatives in
performing the work.
B. Sublandlord hereby grants to Subtenant an allowance
(the "Allowance") of Two Hundred Nine Thousand One Hundred Ten Dollars
($209,110) which may be used to construct the Tenant Improvements and applied
toward the Cost of the Work (hereinafter defined). The "Cost of the Work" shall
mean the following: (i) all amounts due to all contractors and subcontractors
engaged by Subtenant to construct or install the Tenant Improvements or to
provide supplies or materials with respect to such work, (ii) the cost of all
building permits, governmental approvals, and construction taxes; (iii)
engineering, architectural, space planning and other consultant fees; and (iv)
the cost of all utilities consumed on the Premises in connection with the
construction of the Tenant Improvements. Notwithstanding anything to the
contrary in this Sublease, the Cost of the Work shall not include, and
Sublandlord shall not be obligated to make the Allowance available for, any
portion of the Tenant Improvements work (but excluding the Office Improvements
work) not completed on or before two hundred ten (210) days following the
Commencement Date.
C. In addition to the Allowance, Sublandlord hereby
grants to Subtenant an allowance (the "Office Improvements Allowance") of
Twenty-Five Thousand Dollars ($25,000) which may only be used to construct
standard office improvements (the "Office Improvements") in the Subleased
Premises. The Office Improvements Allowance may only be applied toward the
Cost of the Work. As used herein, the term "Tenant Improvements" shall include
the Office Improvements. Sublandlord shall have the right to approve the
Office Improvements and the location thereof, which approval shall not be
unreasonably withheld or delayed. The parties hereto agree that it shall be
reasonable for Sublandlord to withhold its consent to the Office Improvements
if the design of the Office Improvements in inconsistent with Sublandlord's
anticipated use of the area to be improved. Subtenant shall have the right to
request disbursement of the Office Improvements Allowance whether or not
Subtenant shall have drawn upon the Allowance. Subtenant shall not be required
to reimburse Sublandlord for any portion of the Office Improvements Allowance
except as otherwise provided in subparagraph 12.A(2) hereof.
D. So long as no default by Subtenant under this
Sublease exists and is continuing, Sublandlord shall disburse the Allowance
and/or the Office Improvements Allowance, as applicable, within 30 days after
receipt from Subtenant of copies of the invoices for which payment is requested
together with: (i) Subtenant's certification that each invoice is true and
complete, that the full amount shown thereon is due and owing to the party
requesting payment, that Subtenant has not received nor shall it receive any
rebate, setoff or other similar consideration from the party to whom the
payment is due (other than payments to a parent, subsidiary or affiliate of
Subtenant which are not in excess of market value) and that the total amount
shown on the invoices submitted to Sublandlord represents the total amount due
and owing Subtenant under either subparagraph 11.B, with respect to the
Allowance and/or subparagraph 11.D, with respect to the Office Improvements
Allowance, (ii) lien waivers for
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all the Tenant Improvement work for which reimbursement is being sought, and
Subtenant's certification that the lien waivers represent all such work and
(iii) Subtenant's certification and the certification of Architect and
Subtenant's Contractor that the work is substantially completed in a good and
workmanlike manner, subject to normal punchlist items, and has been accepted by
Subtenant. If Sublandlord fails to disburse the Allowance or the Office
Improvements Allowance, as applicable, in accordance with this subparagraph
11.C and if such failure continues for ten (10) days after Sublandlord shall
have received written notice from Subtenant of such failure, then, without
limiting any other remedies available to Subtenant, Subtenant shall have the
right to offset the amount due and payable to Subtenant against Subtenant's
obligation to pay Base Rent under this Sublease.
E. If Sublandlord disburses all or part of the Allowance
(which Allowance, or portion thereof, as disbursed, shall be referred to herein
as "Sublandlord's TI Contribution"), then commencing on the first day of the
full calendar month next following the date that the Allowance is disbursed,
Base Rent shall be increased by that amount which, if paid in equal monthly
installments of principal and interest over the then balance of the Sublease
Term, would be sufficient to amortize Sublandlord's TI Contribution with
interest at twelve percent (12%).
12. Options to Terminate:
A. Subtenant shall have the option to terminate this
Sublease ("Subtenant's Termination Option") at any time following the second
(2nd) anniversary of the Commencement Date subject to the following terms and
conditions:
(1) Subtenant shall not have the right to
terminate this Sublease at any time that Subtenant shall have received a notice
of default under this Sublease and, where the default described in such notice
is capable of being cured, such default remains uncured.
(2) Subtenant shall give to Sublandlord written
notice of exercise of Subtenant's Termination Option which notice shall state
the date on which Subtenant desires such termination to be effective (the
"Termination Date"). In no event shall the Termination Date occur sooner than
that date which is one hundred eighty (180) days following the date that
Sublandlord receives Subtenant's notice.
(3) Subtenant shall pay to Sublandlord in cash,
with Subtenant's notice of termination, a fee (the "Termination Fee") equal to
the unamortized balance as of the Termination Date of Sublandlord's TI
Contribution and any amounts paid by Sublandlord to pay for the Office
Improvements ("Sublandlord's Office Improvements Contribution") and brokerage
commissions on account of this Sublease to CB Commercial and Business Real
Estate ("Sublandlord's Commission Contribution"). The unauthorized balance of
Sublandlord's TI Contribution shall be calculated by assuming that (i)
Sublandlord's TI Contribution is repaid and reduced during the lease term by
the payments by Subtenant of the incremental increase
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in rent described in subparagraph 11.E hereof, (ii) the unamortized balance of
Sublandlord's TI Contribution bears interest at the rate of twelve percent
(12%) per annum, and (iii) payments of such rent increase are applied first to
repay interest and then to reduce the unamortized balance of Sublandlord's TI
Contribution. The unamortized balance of Sublandlord's Office Improvements
Contribution shall be calculated by assuming that such Contribution is
amortized without interest on a straight-line basis over the period commencing
on the date that such Contribution is paid to Subtenant and ending on the date
that this Sublease would have expired if Subtenant's Termination Option had not
been exercised. The unamortized balance of Sublandlord's Commission
Contribution shall be calculated by assuming that such Contribution is
amortized without interest on a straight-line basis over the five (5) year
Sublease Term.
(4) Provided notice is given and the Termination
Fee paid within the time period specified above, the Sublease shall terminate
on the Termination Date.
B. Sublandlord shall have the option to terminate this
Lease ("Sublandlord's Termination Option") at any time following the fourth
(4th) anniversary of the Commencement Date of this Sublease subject to the
following terms and conditions:
(1) Sublandlord shall give to Subtenant written
notice of exercise of Sublandlord's Termination Option which notice shall state
the date on which Sublandlord desires such termination to be effective
("Sublandlord's Termination Date"). In no event shall Sublandlord's
Termination Date occur sooner than that date which is two hundred seventy (270)
days following the date that Subtenant receives Sublandlord's notice.
(2) Provided notice is given within the time
period specified above, this Sublease shall terminate on Sublandlord's
Termination Date.
13. Conditions Precedent: The obligations of Sublandlord and
Subtenant under this Sublease are conditioned upon the following: (i) the
receipt by Sublandlord on or before thirty (30) days following the date that
this Sublease is executed and delivered by Sublandlord and Subtenant (the
"Effective Date") of a fully executed Third Lease Amendment in form
satisfactory to Sublandlord and (ii) the receipt by Sublandlord on or before
thirty (30) days following the Effective Date of Master Landlord's written
consent to this Sublease in form satisfactory to Sublandlord and Subtenant.
The parties acknowledge that Hybritech Corporation ("Hybritech"), the currently
leases the Subleased Premises from Master Landlord and Subtenant subleases the
Subleased Premises from Hybritech. Hybritech has advised Master Landlord that
Hybritech intends to remove certain items of improvement from the Subleased
Premises upon the expiration of the term of its lease. Master Landlord
believes that such items are leasehold improvements and may not be removed from
the Subleased Premises with Master Landlord's consent. Sublandlord and
Subtenant desire that such items be surrendered by Hybritech with the Subleased
Premises since such items are and will be used by Sublandlord and Subtenant.
Sublandlord has requested Master Landlord to add a provision to the Third Lease
Amendment
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which, in effect, would require Master Landlord to replace, at its cost, any of
such items removed by Hybritech. As of the Effective Date, Master Landlord has
not agreed to such request. Accordingly, Sublandlord and Subtenant agree that
Sublandlord shall have the right to reject a Third Lease Amendment as
unsatisfactory and, to deem the condition stated above with respect to the
Third Lease Amendment unsatisfied, if such Amendment does not contain language
requiring Master Landlord to replace, at its cost, such items of improvement or
does not otherwise address any other concerns of Sublandlord in Sublandlord's
sole opinion such as, by way of example only, the commencement of the term of
the Third Lease Amendment.
14. Sublandlord's Representations: Sublandlord represents and
warrants that (i) the document attached as Exhibit A to this Sublease is a
true, correct and complete copy of the Master Lease and represents the entire
agreement between Sublandlord and Master Landlord with respect to the lease of
the Master Premises; (ii) there is no default under the Master Lease by either
Master Landlord or Sublandlord, or both, and, to the best knowledge of
Sublandlord, there is no condition which, with the passage of time or the
giving of notice, or both, would constitute a default by either Master Landlord
or Sublandlord, or both; (iii) Sublandlord has not assigned, encumbered or
otherwise transferred any interest of the "Tenant" under the Master Lease; and
(iv) the Commencement Date of the Master Lease was January 1, 1994 and the
scheduled Termination Date (as that term is defined in the Third Lease
Amendment) of the Master Lease is the later of June 30, 2006 or the last day of
the one hundred twentieth (120th) full calendar month after the Commencement
Date. Sublandlord shall have the right to make any amendment, modification or
alteration to the Master Lease so long as any such amendment, modification or
alteration does not change the rights or obligations of Subtenant hereunder.
Sublandlord shall deliver to Subtenant copies of all notices received from
Master Landlord which would affect the Sublease or the rights and obligations of
Subtenant.
15. Obligation to Enforce: Sublandlord shall use reasonable
efforts to enforce the obligations of Master Landlord under the Master Lease
and such efforts shall include, without limitation: (i) upon Subtenant's
written request, immediately notifying Master Landlord of any nonperformance
under the Master Lease and requesting that Master Landlord perform its
obligations thereunder; and (ii) after the time by which Master Landlord must
cure a breach has expired, cooperating with Subtenant to institute legal
proceedings, in the name of Sublandlord, with legal counsel selected by
Subtenant and approved by Sublandlord, to enforce obligations required to be
performed by Master Landlord under the Master Lease (including executing such
documents as may be reasonably required by such legal counsel). Sublandlord
and Subtenant shall be entitled to jointly control the conduct of the
litigation; provided, however, that in the conduct of any litigation brought
against Master Landlord to enforce its obligations under the Master Lease for
the benefit of Subtenant, both Sublandlord and Subtenant shall have an
obligation to act in a commercially reasonable manner and with the goal of
employing the strategy which is designed to ensure that Master Landlord will
fully perform its obligations under the Master Lease, and no action may be
taken which may materially and adversely affect the other party's rights or
obligations under the Master Lease or Sublease without such other party's
consent, including settlement. All costs incurred in
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connection with any enforcement action undertaken by Sublandlord at the request
of Subtenant shall be equitably apportioned between Sublandlord and Subtenant
without waiver of any right to collect reimbursement for such cost from Master
Landlord.
16. Hazardous Materials:
A. Any handling, transportation, storage, treatment,
disposal or use of Hazardous Materials by Subtenant and Subtenant's employees,
agents, contractors, invitees and subtenants (collectively, "Agents") shall
strictly comply with all applicable Environmental Laws.
B. Subtenant shall indemnify, defend (with counsel
reasonably acceptable to Sublandlord), protect and hold harmless Sublandlord
from and against any and all liabilities, losses, claims, damages, penalties,
attorneys' fees, experts' fees, court costs, remediation costs, investigation
costs, and other expenses (collectively, "Claims") which result from or arise
out of the use, storage, treatment, transportation, release, or disposal of
Hazardous Materials on or about the Office Park by Subtenant or Subtenant's
Agents.
C. Sublandlord shall indemnify, defend (with counsel
reasonably acceptable to Sublandlord), protect and hold harmless Subtenant from
and against any and all Claims which result from or arise out of the use,
storage, treatment, transportation, release, or disposal of hazardous Materials
on or about the Office Park by Sublandlord or Sublandlord's Agents.
As used herein the term "Hazardous Material" shall mean any material or
substance that is now or hereafter prohibited or regulated by any statute, law,
rule, regulation or ordinance or that is now or hereafter designated by any
governmental authority to be radioactive, toxic, hazardous or otherwise a danger
to health, reproduction or the environment.
As used herein "Environmental Laws" shall mean all local, state, or
federal laws, statutes, ordinances, rules, regulations, judgments, injunctions,
stipulations, decrees, orders, permits, approvals, treaties, or protocols now or
hereafter enacted, issued or promulgated by any governmental authority which
relate to any Hazardous Material or the use, handling, transportation,
production, disposal, discharge, release, emission, sale, or storage of, or the
exposure of any person to, a Hazardous Material.
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IN WITNESS WHEREOF, the parties have executed this Sublease with the
intent to be legally bound thereby.
SUBTENANT: SUBLANDLORD:
IMMUSOL, INC. NEUROCRINE BIOSCIENCES, INC.
a a Delaware corporation
-------------------------------------
By: /s/ Tsvi Goldenberg By: /s/ [illegible]
------------------------------------ ------------------------------------
Print Name: Tsvi Goldenberg Print Name Paul W. [illegible]
---------------------------- -----------------------------
Its: Chairman & CEO Its: S.V.P. & CFO
----------------------------------- -----------------------------------
Date: 3/29/96 Date: 3/29/96
---------------------------------- ----------------------------------
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EXHIBIT A
MASTER LEASE
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EXHIBIT B
FLOOR PLAN
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EXHIBIT C
FORM OF LETTER OF CREDIT
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