EX-10.39
FIRST AMENDMENT TO LEASE
This Agreement is entered into as of November 9, 1992, by and between
TORREY SORRENTO INC., a California corporation (hereinafter called "Landlord"),
and IDEC PHARMACEUTICALS CORPORATION, a California corporation (hereinafter
called "Tenant"), with reference to the following facts:
A. Prior hereto Landlord and Tenant entered into that certain
Lease dated July 9, 1992, for the premises located at 11011 Torreyana Road, San
Diego, California (the "Lease").
B. Landlord and Tenant now desire to amend the Lease on the terms
set forth herein.
C. All capitalized terms not defined herein shall have the same
meaning as set forth in the Lease.
NOW, THEREFORE, the parties hereto agree as follows:
1. A new Section 2.1.10 is hereby added to the Lease as
follows:
"2.1.10 Landlord's Mortgagee: The term "Landlord's
Mortgagee" shall mean the beneficiaries from time to time of
the first deed of trust encumbering the Demised Premises dated
November 25, 1992, in favor of four construction industry
labor-management pension trust funds. The agent for said
beneficiaries is Seidler Realty Advisors, who shall act as the
agent for the Landlord's Mortgagee. The term "Landlord's
Mortgagee" also includes said agent. By written notice from
all of said beneficiaries to Landlord and Tenant, said agent
may be changed to another party, in which event said new agent
shall thereafter act for the Landlord's Mortgagee. The address
for notice to Landlord's Mortgagee is:
Seidler Realty Advisors
4275 Executive Square, Suite 325
La Jolla, CA 92037
Attn: Daniel J. Ryan"
2. The Lease is hereby amended by adding thereto the
following new Section 2.1.11:
"2.1.11 Landlord's Lender: The term "Landlord's
Lender" shall include Landlord's Mortgagee and any other
lender at any time which is the beneficiary of a first deed of
trust encumbering the Demised Premises."
3. The Lease is hereby amended by adding thereto the
following new Paragraph 3.4:
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"3.4 Landlord and Tenant acknowledge that
Landlord's Mortgagee is a group of four construction industry
labor-management pension trust funds, and that, pursuant to
the terms of the loan from Landlord's Mortgagee, union labor
is to be used for constructing or rebuilding the improvements
to be constructed on the Demised Premises pursuant to the
terms of Exhibit "B" attached hereto. Such construction shall
be subject to the terms of the Commitment Letter from
Landlord's Mortgagee to Landlord dated October 8, 1992. Such
obligation to use union labor shall expire upon the extension
of the Maturity Date of the loan from Landlord's Mortgagee as
set forth in paragraph 1 of the promissory note evidencing the
same which the parties anticipate will occur no later than
December 31, 1993. Landlord and Tenant acknowledge that
neither Landlord nor Landlord's Mortgagee shall be responsible
for any additional costs arising from such use of union
labor."
4. The second sentence of Section 4.2 of the Lease is
hereby amended and restated as follows:
"The terms "substantially complete(d)" and "substantial
completion" shall mean the earlier of (i) issuance of a
temporary certificate of occupancy by the City of San Diego or
(ii) the date the Project Architect (as defined in Section 1.1
of the Work Letter) has certified that Landlord's Work is
substantially complete and that Tenant can physically occupy
the space, subject to the punch-list items as described in
Section 7.2 of the Work Letter, and the Demised Premises are
in clean and operating condition, subject to punch-list items
that may still need to be corrected and subject to items which
constitute Tenant's Work."
5. Section 4.2.3 of the Lease is hereby amended by
adding at the end of the first line of such section the words "by Landlord's
contractor."
6. Sections 4.1 and 4.2.3 of the Lease are hereby
amended by eliminating Landlord's and Tenant's termination rights and by adding
thereto the following Section 4.2.4:
"Any other provision of this Lease to the contrary
notwithstanding, but without limiting Landlord's liabilities
or responsibilities under the Lease in any way whatsoever,
Tenant shall, subject to Force Majeure Delays and
Landlord-Caused Delays, fully occupy the entire Demised
Premises, conduct business therefrom and commence paying the
entire Initial Base Rent on or before December 31, 1993.
Tenant shall cooperate with Landlord in taking all good faith
steps necessary to allow Landlord to timely complete
Landlord's Work as
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required by Landlord's Mortgagee. Without limiting the
foregoing, Tenant shall provide to Landlord, Tenant's Plans
for the Landlord's work in a timely manner to allow Landlord
to complete the pilot plant by December 31, 1993. Tenant shall
not take any action which shall cause Landlord to be in
default under the loan from Landlord's Mortgagee."
7. Paragraph 5.2 of the Lease is hereby amended by
adding thereto at the end thereof the following provision:
"In addition to any other obligation of Tenant
hereunder, in the event that Tenant shall be the proximate
cause of a default by Landlord under the loan from Landlord's
Mortgagee and Landlord's Mortgagee shall require Landlord to
thereafter deposit monthly installments of real property taxes
and insurance premiums, Tenant shall timely make such deposits
with Lender."
8. Section 4 of the Lease is hereby amended by adding
thereto the following new Section 4.6:
"Any provision of this Lease to the contrary
notwithstanding, Tenant shall commence paying Basic Annual
Rent in the amount of $120,000 per month commencing May 25,
1993. Tenant shall further commence paying the full payment of
Basic Annual Rent on the earlier of (a) the Term Commencement
Date, (b) sixty three (63) days from May 25, 1993, plus the
period of any Landlord-Caused Delays or Force Majeure Delays,
or (c) December 31, 1993."
9. The second sentence of Section 5.3 is hereby amended
and restated in its entirety as follows:
"Basic Annual Rent and Additional Rent shall together be
denominated "Rent." Rent shall be paid to Landlord, without
abatement, deduction or offset, (excepting only for the
limited circumstances as specified in Section 16.1 for
Landlord's maintenance, in Section 20.6 for destruction of a
portion of the Demised Premises and/or in connection with the
terms upon which Tenant provides a $3,200,000.00 loan for a
portion of the financing for the project costs) in lawful
money of the United States of America at the office of
Landlord as set forth in Section 2.1.8 herein or to such other
person or at such other place as Landlord may from time to
time designate in writing. In the event the term of this Lease
commences or ends on a day other than the first day of a
calendar month, then the Rent for such fraction of a month
shall be prorated for such period on the basis of
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a thirty (30) day month and shall be paid at the then current
rate for such fractional month."
10. Section 5.3 of the Lease is hereby amended by adding
at the end thereof the following provision:
"Tenant shall also be entitled to a credit against Basic
Annual Rent for the difference between (i) any Basic Annual
Rent or Additional Rent payable by Tenant with respect to the
Demised Premises for any period between the date Tenant is
required to pay the same pursuant to the terms of Section 4.6
of this Lease and the date Tenant would have been required to
pay the same pursuant to the other terms of this Lease
(exclusive of Section 4.6), and (ii) any proceeds received by
Tenant for reimbursement therefor from the loan from
Landlord's Mortgagee that would otherwise be payable to
Landlord from the balance of any contingency or interest
reserve line items and Landlord's share of any penalties
payable by the general contractor to Borrower pursuant to the
terms of the general contract for the construction to be
performed pursuant to the terms of this Lease, which such sums
shall be payable to Tenant to the extent necessary to satisfy
such obligations. Tenant shall be entitled to interest on any
Rent so incurred at the rate payable under the promissory note
given by Borrower to Tenant in the same manner as pertains to
Tenant's credit against Basic Annual Rent pursuant to Section
5.4 of this Lease. Tenant shall also be entitled to the rent
credit set forth in Paragraph 40.5 of this Lease, to the
extent applicable. Provided, however, any such monthly rent
credit shall be limited to the greater of (i) Forty Seven
Thousand Five Hundred Dollars ($47,500.00), or (ii) the
difference between (a) the monthly installment of Basic Annual
Rent payable by Tenant and (b) the monthly debt service
payment which Landlord is obligated to pay on the loan from
Landlord's Mortgagee, with any uncredited portions continuing
to accrue with interest as otherwise provided in this Lease.
Notwithstanding the foregoing, during any period during which
Landlord's Mortgagee continues to have a first deed of trust
or is the owner through a foreclosure or deed in lieu thereof,
then in no event shall the amount of any rent credit cause the
monthly installment of Basic Annual Rent to be less than One
Hundred Forty Five Thousand Dollars ($145,500.00)."
11. The third sentence of Section 5.4 of the Lease is
hereby amended by adding at the end thereof the phrase "but no later than ninety
(90) days after Tenant's quarterly and fiscal year end."
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12. The next to last sentence of Section 5.4 is hereby
amended and restated in its entirety as follows:
"This Security Deposit shall be in cash; excepting, however,
Tenant shall have the option after the Term Commencement Date
to substitute an irrevocable bank letter of credit, in a form
and content and from a bank pre-approved in writing by
Landlord and Landlord's Mortgagee."
13. Section 5.4 of the Lease is hereby amended by adding
at the end thereof the following provision:
"To the extent that Landlord's Lender forecloses under its
loan to Landlord or otherwise obtains title to the Demised
Premises and Tenant is not given credit for the Security
Deposit as a result thereof, Tenant shall be entitled to
credit against the Rent due for the last month of this Lease
the amount of such Security Deposit."
14. Section 7.3 of the Lease is hereby amended by adding
a new sentence thereto after the first two sentences thereof, as follows:
"Upon the written request of Landlord, Tenant shall furnish to
Landlord written evidence that all such property taxes and
insurance premiums required in the first instance to be paid
by Tenant have been paid."
15. Section 11.1 of the Lease is hereby amended by
revising the first line thereof to state as follows:
"If Tenant fails to fully vacate all or any part ...."
16. Section 12.2 of the Lease is hereby amended by adding
at the beginning thereof the clause "Notwithstanding any provision of Section
7.2 to the contrary, ..."
17. Section 15.5 of the Lease is hereby amended by
providing that a copy of the notice to be provided to the Landlord therein shall
also be provided to Landlord's Mortgagee.
18. The last sentence of Section 16.2 of the Lease is
hereby amended and restated in its entirety as follows:
"Tenant shall, upon the expiration or sooner termination of
the term hereof, surrender the Demised Premises to Landlord in
the same good, quality condition as when received, ordinary
wear and tear excepted, and damage by fire, other peril or
condemnation which is to be repaired by Landlord pursuant to
Articles 20 and 21 also excepted."
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19. The third to last line of Section 17.3 on Page 26 of
the Lease is hereby amended by adding after the word "clarify" the phrase "to
the reasonable satisfaction of such lender."
20. Section 18.4 of the Lease is hereby amended by adding
in the first line thereof after the word "Landlord" the words "and Landlord's
Mortgagee."
21. Section 19.1 of the Lease is hereby amended by adding
",automobile liability," in the seventh line on Page 28 of the Lease after the
words "materials risks."
22. Section 19.3 of the Lease is hereby amended by adding
at the end of the first sentence thereof the phrase "and Landlord's Lender to
the extent that such lender has notified Tenant in writing of such request."
23. Section 19.3 of the Lease is further amended by
providing that the policyholder rating set forth in the second sentence of such
section shall be "A-" and the financial category set forth in the second
sentence shall be "Class X."
24. Section 19.5 of the Lease is hereby amended and
restated in its entirety as follows:
"19.5 If any policy of insurance is to name Landlord
or Landlord's Lender as additional insured, Tenant shall, upon
written request of Landlord or such lender, also designate and
furnish certificates evidencing Landlord and such lender as an
additional insured to (i) any lender to Landlord holding a
security interest in the Building or, and/or (ii) the Landlord
under any lease wherein Landlord is or shall become a tenant
under a ground lease for the Land rather than that of fee
owner, and/or (iii) Landlord's property manager, construction
manager, agents and representatives."
25. Section 32.1 of the Lease is hereby amended by adding
thereto at the end thereof the phrase "or sue to compel specific performance
hereunder."
26. Section 33.2 of the Lease is hereby amended and
restated in its entirety as follows:
"33.2 Notwithstanding the foregoing, Tenant shall
execute and deliver within thirty (30) says or such shorter
period as is reasonable under the circumstances after written
demand such further instrument or instruments evidencing such
subordination of this Lease to any such mortgages, deeds of
trust or leases in which Landlord is tenant as may be required
reasonably by Landlord's Lender. However, if any such
mortgagee,
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beneficiary or landlord under a lease wherein Landlord is
tenant so elects, this Lease shall be deemed prior to any such
lease, mortgage or deed of trust upon or including the Demised
Premises, regardless of date, and Tenant shall execute a
statement in writing to such effect at Landlord's request."
27. Section 33.3 of the Lease is hereby amended by adding
at the end thereof the following sentence:
"Additionally, at the request of said purchaser or transferee,
Tenant and the purchaser or transferee shall sign a new lease
on the same terms and conditions set forth in this Lease
(except for as modified by any subordination agreement
hereafter executed if such subordination agreement so
requires) but showing the purchaser as the landlord."
28. Section 34.2 of the Lease is hereby amended and
restated in its entirety as follows:
"34.2 The voluntary or other surrender of this Lease
by Tenant shall not work a merger, unless Landlord and
Landlord's Lender consent, and shall, at the option of
Landlord and Landlord's Lender, operate as an assignment to it
of any or all subleases or subtenancies."
29. The Lease is hereby amended by adding thereto the
following new Section 34.4:
"34.4 In the event Tenant acquires fee ownership of
the Demised Premises, that acquisition will not result in a
merger of the leasehold interest and the fee interest, but
rather, at the option of Landlord's Lender, the Lease and the
Landlord's Lender's interests in the Lease shall remain in
effect. Landlord and Tenant shall execute such additional
documents as may be necessary to effectuate this waiver."
30. Section 35.1 of the Lease is hereby amended by adding
thereto at the end of the first sentence thereof the words "and approved by
Landlord's Mortgagee."
31. Section 37.1 of the Lease is hereby amended by adding
thereto in the tenth line thereof after the close of the parenthetical phrase
the following phrase:
"...excluding, however, any Hazardous Materials which were
placed on the Demised Premises by Tenant or Tenant's
Invitees...."
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32. Section 37.1.2 of the Lease is hereby amended by
adding the following provision at the end thereof:
"Landlord may disclose such materials on a confidential basis
to Landlord's Mortgagee."
33. Section 37.5.1 of the Lease is hereby amended by
adding after the word "Landlord" in the second line thereof the phrase "and
Landlord's Lender."
34. Section 39.2.1 of the Lease is hereby amended by
revising the fifth line thereof on Page 58 to state as follows:
"...$10,000,000.00, which new loan proceeds are to cover a
portion of the Landlord's ...."
35. The last two sentences in Section 39.2.1 of the Lease
are amended and restated as follows:
"The new loan shall enable Tenant to use the remaining loan
proceeds to complete the Landlord's Work in the event of a
material default by Landlord under the Work Letter if Tenant
is entitled to complete the same under the terms of this
Lease. Additionally if the new lender requires a completion
bond, Tenant shall be an additional beneficiary of the
completion bond."
36. The Lease is hereby amended by adding thereto the
following Section 40:
"40. Completion by Tenant.
40.1. Lender Requirement. Landlord's
Mortgagee under the construction/permanent financing for the
New Loan referenced in Section 39.2 above is allowing Tenant
to complete construction of the Landlord's Work to the
Demised Premises as permitted by Section 4.1.2 of Exhibit "B"
to this Lease in the event of the failure by Landlord to do
so. In recognition thereof, Landlord and Tenant have agreed to
the provisions set forth in this Section 40. The provisions
set forth below shall be applicable if, and only if, (i)
Landlord defaults on its obligations to complete construction
of the Landlord's Work, and (ii) Tenant exercises its right to
complete the Landlord's Work, and (iii) Tenant has not
materially defaulted on its obligations to provide the funds
to pay for the costs of the Landlord's Work, and (iv) there is
no other default by Tenant which is a proximate cause for
Landlord's failure to complete construction of the Landlord's
Work, in which event the provisions set forth below in this
Section 40 shall become applicable. Once these provisions
become
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applicable, these provisions shall prevail over any
inconsistent provisions contained elsewhere in this Lease
(including Exhibit B to this Lease).
40.2. Costs and Damages. Subject to the
provisions set forth below, notwithstanding anything to the
contrary in the Lease (including, without limitation, Sections
22.10, 18.3 and 18.4 thereof), Landlord shall indemnify Tenant
and its partners, directors, officers, agents and employees
against and save them harmless from all demands, claims,
damages, causes of action or judgments and all reasonable
expenses incurred in investigating or resisting the same
(including reasonable professional fees, including without
limitation, fees for attorneys, architects, engineers, and
environmental consultants and any costs or damages incurred
relative to a transition from Landlord to Tenant for
performing the Landlord's Work) arising from or out of
Tenant's performing the Landlord's Work. Tenant shall be
entitled to interest at the rate of Bank of America's
"reference rate" plus 3% on any amounts expended by Tenant as
provided herein.
40.3. Contractor's Delay Damages.
Pursuant to Section 6.3.7 of Exhibit B to this Lease (the Work
Letter), the delay damages payable by Landlord's Contractor
are to be shared between Landlord and Tenant. Landlord hereby
agrees that its share of said delay damages payable by
Landlord's Contractor shall initially be paid to Tenant, in
addition to Tenant's share to compensate Tenant for Tenant's
costs and damages under Section 40.2 above; provided, however,
to the extent that Landlord's share of said delay damages
exceeds Tenant's costs and damages as specified in Section
40.2 above, then Tenant shall pay over to Landlord the excess
portion of Landlord's share of said delay damages which exceed
Tenant's costs and damages pursuant to Section 40.2 above.
40.4. Delay Days. Any delays in
completing the Landlord's Work which result from Tenant taking
over from Landlord the responsibilities to perform Landlord's
Work shall be treated as Landlord-Caused Delays, pursuant to
Section 6.1 of Exhibit B (Work Letter), notwithstanding any
other contrary provisions. Notwithstanding the foregoing, the
time period within which Landlord must deliver the Demised
Premises to Tenant as set forth in Section 4.2.3 of the Lease
shall be extended by any such delay.
40.5. Rental Credit. To the extent that
Tenant's costs and damages pursuant to Section 40.2
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above exceed Landlord's share of the delay damages from
Landlord's Contractor (as specified in Section 40.3 above and
after crediting Tenant as provided in Section 5.3), then
Tenant shall be entitled to pursue all available remedies
against Landlord to collect such excess costs and damages
(together with interest on such sums at the rate of Bank of
America's "reference rate" plus 3% per annum), including,
without limitation, the right to make a credit offset against
the next rent payment(s) owing on this Lease to the extent of
such sums owing to Tenant. Prior to exercising such offset
right, Tenant shall first attempt to satisfy Landlord's
obligation to compensate Tenant under this Section 40 through
the sums to be received pursuant to Section 40.3 and any
remaining loan proceeds available from the New Loan."
37. The second sentence of Section 1.1.1 of Exhibit "B"
to the Lease is hereby amended and restated as follows:
"If the Project Architect does not perform satisfactorily,
Tenant reserves the right to replace McGraw Baldwin Architects
with another qualified architectural firm mutually approved by
both Tenant and Landlord and Landlord's Mortgagee, which
approval shall not be withheld unreasonably."
38. The fourth and fifth sentences of Section 1.5.1 of
Exhibit "B" to the Lease are hereby amended and restated in their entirety as
follows:
"All work shall be in accordance with all City, County, State
and Federal ordinances, rules and regulations relating
thereto. Any approval given by Landlord or Landlord's
Mortgagee shall not constitute a representation or warranty by
Landlord or Landlord's Mortgagee that the approved item
complies with applicable building codes or governmental
regulations, or that the item is suitable for the intended
use, or that the item is in compliance with the Improvement
Plans."
39. The second sentence of Section 1.6.3 of Exhibit "B"
to the Lease is hereby amended by adding thereto at the end thereof the phrase
"in accordance with applicable law."
40. The last sentence of Section 1.7.9 of Exhibit'"B" to
the Lease is hereby amended by adding thereto at the end thereof the following:
"provided, however, the insurance limit, the deductible
amounts, and the insurance carrier size shall not be less than
as specified in Section 19 of the Lease."
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41. The third line of Section 1.8 of Exhibit "B" to the
Lease is hereby amended by adding after the word "Landlord" the phrase "and
Landlord's Mortgagee."
42. The second line of Section 1.8.1 of Exhibit "B" to
the Lease is hereby amended by adding after the word "Landlord" the phrase "and
Landlord's Mortgagee."
43. The seventh line of Section 3.1 of Exhibit "B" to the
Lease is hereby amended and restated as follows:
"... City, County, State and Federal ordinances, rules and
regulations relating ..."
44. Section 3.1 of Exhibit "B" to the Lease is further
amended by adding at the end thereof the phrase "comparable to the insurance as
specified in Section 1.7.9 above."
45. Section 4.1.2 of Exhibit "B" to the Lease is hereby
amended by adding thereto at the end thereof the following sentence:
"Pursuant to the terms of the Loan from Landlord's Mortgagee,
and as specified in Section 3.4 of the Lease, Landlord and
Tenant acknowledge that union labor is to be used for
constructing the improvements within the criteria set forth in
Section 3.4 of the Lease."
46. Paragraph 2 to Schedule 4 to Exhibit "B" to the Lease
is hereby amended by adding thereto at the end thereof the following provision:
"Tenant shall keep the construction validation
current throughout the term of the Lease, and provide to
Landlord all supporting documentation for the ongoing
construction validation. Tenant shall not allow the
construction validation of the pilot plant to lapse at any
time during the Lease Term."
47. Paragraph 2 of Exhibit "D" to the Lease is hereby
amended by adding thereto at the end thereof the following sentence:
"Tenant shall be entitled to a credit against the termination
fee payable pursuant to this Paragraph for all unreimbursed
amounts due Tenant pursuant to the provisions of Paragraphs
5.3 and 40 of the Lease as well as for all amounts then
outstanding under the promissory note from Landlord to Tenant
dated
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November 25, 1992, in the amount of $3,200,000.00, but only
to the extent of any excess of such termination fee over the
then unpaid balance of the loan from Landlord's Mortgagee."
IN WITNESS WHEREOF, the parties hereto have executed this agreement as
of the date first set forth above.
TORREY SORRENTO INC.,
a California corporation
By: /s/ [ILLEGIBLE]
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IDEC PHARMACEUTICALS CORPORATION,
a California corporation
BY: /s/ Phillip Schneider
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Vice President
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