UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-15609
AGOURON PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
CALIFORNIA 33-0061928
(State or other jurisdiction of I.R.S. employer identification no.)
incorporation or organization)
10350 NORTH TORREY PINES ROAD, LA JOLLA, CALIFORNIA 92037-1020
(Address and zip code of principal executive offices)
(619) 622-3000
(Registrant's telephone number, including area code)
NONE
(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days:
Yes _X_ No ___
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date: Approximately
13,563,000 shares of the Company's Common Stock, no par value, were
outstanding as of January 8, 1997.
<PAGE>
AGOURON PHARMACEUTICALS, INC.
INDEX
Page No.
--------
Part I. Financial Information
Item 1. Financial Statements
Balance Sheet - 3
December 31, 1996 and June 30, 1996
Statement of Operations - Three and Six 4
Months Ended December 31, 1996 and 1995
Statement of Cash Flows- 5
Six Months Ended December 31, 1996 and 1995
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial 8
Condition and Results of Operations
Part II. Other Information
Item 1. Legal Proceedings 10
Item 2. Changes in Securities 10
Item 3. Defaults Upon Senior Securities 10
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 11
Signature 13
2
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
AGOURON PHARMACEUTICALS, INC.
BALANCE SHEET
(Dollars in thousands)
December 31, June 30,
1996 1996
------------ -----------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 16,827 $ 16,451
Short-term investments 92,071 74,424
Accounts receivable 6,151 2,966
Inventory 21,400 0
Other current assets 1,370 1,800
------------ -----------
Total current assets 137,819 95,641
Property and equipment, net of
accumulated depreciation and
amortization of $15,241 and $13,710 9,405 6,936
----------- ----------
$ 147,224 $ 102,577
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,895 $ 6,659
Accrued liabilities 4,951 4,327
Deferred revenue 9,085 13,788
Current portion of long-term debt 348 486
------------ -----------
Total current liabilities 18,279 25,260
------------ -----------
Long-term liabilities:
Long-term debt, less current portion 441 501
Accrued rent 1,183 1,233
----------- -----------
Total long-term liabilities 1,624 1,734
------------ -----------
Stockholders' equity:
Common stock, no par value, 75,000,000 shares
authorized, 13,558,840 and 10,731,687 shares
issued and outstanding 237,369 158,628
Accumulated deficit (110,048) (83,045)
----------- -----------
Total stockholders' equity 127,321 75,583
----------- -----------
$ 147,224 $ 102,577
=========== ===========
See accompanying notes to financial statements.
3
<PAGE>
AGOURON PHARMACEUTICALS, INC.
STATEMENT OF OPERATIONS
(Unaudited)
(Dollars in thousands, except per share amounts)
Three Months Ended Six Months Ended
------------------ ----------------
December 31, December 31,
------------------ ----------------
1996 1995 1996 1995
-------- ------- -------- --------
Revenues:
Contracts and licenses $ 15,109 $ 9,592 $ 32,623 $ 20,555
-------- ------- -------- --------
Operating expenses:
Research and development 23,302 14,188 52,936 26,716
Selling, general and
administrative 5,786 977 9,522 2,083
-------- ------- -------- --------
29,088 15,165 62,458 28,799
-------- ------- -------- --------
Operating loss (13,979) (5,573) (29,835) (8,244)
-------- ------- -------- --------
Other income and expenses:
Interest, net 1,729 1,556 3,444 1,847
Taxes (306) (115) (612) (258)
-------- ------- -------- --------
1,423 1,441 2,832 1,589
-------- ------- -------- --------
Net loss $(12,556) $(4,132) $(27,003) $(6,655)
======== ======= ======== ========
Net loss per common share $ (0.93) $ (0.40) $ (2.07) $ (0.73)
======== ======= ======== ========
Shares used in computing net
loss per common share 13,524 10,432 13,050 9,076
======== ======= ======== ========
See accompanying notes to financial statements.
4
<PAGE>
AGOURON PHARMACEUTICALS, INC.
STATEMENT OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
Six Months Ended
------------------------------
December 31,
------------------------------
1996 1995
------------ -------------
Cash flows from operating activities:
Cash received from contracts
and licenses $ 24,735 $ 31,990
Cash paid to suppliers, employees
and service providers (84,701) (24,039)
Interest received 3,524 1,994
Interest paid (80) (147)
------------ ------------
Net cash provided (used) by
operating activities (56,522) 9,798
------------ ------------
Cash flows from investing activities:
Net (increase) decrease
in short-term investments (17,647) (82,248)
Expenditures for property and equipment (3,937) (905)
------------ ------------
Net cash provided (used) by
investing activities (21,584) (83,153)
------------ ------------
Cash flows from financing activities:
Net proceeds from issuance of common stock 78,741 80,105
Principal payments under equipment leases (76) (218)
Increase (decrease) in long-term debt, net (183) (261)
------------ ------------
Net cash provided (used) by
financing activities 78,482 79,626
------------ ------------
Net increase (decrease) in cash and
cash equivalents 376 6,271
Cash and cash equivalents at
beginning of period 16,451 4,358
------------ ------------
Cash and cash equivalents at end of period $ 16,827 $ 10,629
============ ============
Reconciliation of net loss to net cash
provided (used) by operating activities:
Net loss $ (27,003) $ (6,655)
Depreciation and amortization 1,529 1,102
Net (increase) decrease in
accounts receivable (3,185) 130
Net (increase) decrease in inventory (21,400) 0
Net (increase) decrease in other
current assets 430 (48)
Net increase (decrease) in accounts
payable, accrued liabilities,
and accrued rent (2,190) 3,964
Net increase (decrease) in
deferred revenue (4,703) 11,305
------------ ------------
Net cash provided (used)
by operating activities $ (56,522) $ 9,798
============ ============
See accompanying notes to financial statements.
5
<PAGE>
AGOURON PHARMACEUTICALS, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. Nature of operations
Agouron Pharmaceuticals, Inc. is involved in the research and development
of novel synthetic drugs for the treatment of cancer, AIDS and other
serious diseases. The Company intends to commercialize any successfully
developed products through its own direct sales and marketing activities in
certain markets or, when appropriate, through manufacturing and marketing
relationships with other pharmaceutical companies.
2. Financial statements and estimates
The balance sheet as of December 31, 1996 and the statements of operations
and cash flows for the three-month and six-month periods ended December 31,
1996 and 1995 have been prepared by the Company and have not been audited.
Such financials, in the opinion of management, include all adjustments
(consisting only of normal, recurring accruals) necessary to present fairly
the financial position, results of operations and cash flows for all
periods presented. These financial statements should be read in
conjunction with the financial statements and notes thereto included in the
Company's June 30, 1996 Annual Report on Form 10-K. Certain June 30, 1996
and December 31, 1995 amounts have been reclassified to conform with the
current year presentation. Interim operating results are not necessarily
indicative of operating results for the full year.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities,
revenues and expenses and related disclosures as of the date of the
financial statements. Actual results could differ from such estimates.
At December 31, 1996, it has been assumed that the existing collaborations
with Japan Tobacco Inc. ("JT") and Hoffmann-La Roche Inc. and F. Hoffmann-
La Roche Ltd ("Roche") will continue in accordance with their agreement
terms. As such, approximately $9,034,000 of cash received from JT and
Roche has been classified as deferred contract revenue, is non-refundable
and is being recognized as revenue on a prospective basis as collaborative
program expenses are incurred. Should any of the underlying collaborations
be terminated in advance of their contract terms, any deferred contract
revenues related to such collaborations would immediately be recognized as
revenue by the Company.
In December 1996, the Company filed a New Drug Application ("NDA") with the
United States Food and Drug Administration ("FDA") for its anti-HIV drug,
VIRACEPT(R) (nelfinavir mesylate). In anticipation of the approval of such
NDA by the FDA, the Company is manufacturing commercial quantities of
VIRACEPT and has capitalized approximately $21,400,000 of work-in-process
inventory at December 31, 1996. If the FDA does not approve the NDA or it
becomes likely that the FDA will not approve the NDA, any capitalized
VIRACEPT inventory will be expensed.
6
<PAGE>
3. Short-term investments
Included in short-term investments at December 31, 1996 and June 30, 1996
is $1,360,000 and $1,156,000 of accrued interest receivable. Included in
short-term investments at December 31, 1996 is $3,400,000 which has been
pledged as collateral for certain commercial letters of credit or long-term
debt obligations. At December 31, 1996, the Company's short-term
investments are generally available for sale, are carried at amortized cost
which approximates market, consist principally of United States government
securities (64%) and corporate obligations (29%), and have average
maturities of less than one year.
Inventory
Inventory is stated at the lower of cost or market and, at December 31,
1996, consists of work-in-process at contract manufacturers.
5. Statement of cash flows
Non-cash financing activities were comprised of capital lease obligations
of $61,000 and $457,000 in the six-month periods ended December 31, 1996
and 1995.
Certain concentrations
A significant portion of the Company's research and development
expenditures are related to programs funded in whole or in part by JT and
Roche. The termination of such collaborative research and development
programs could result in the absence of any prospective funding for such
programs and the need to evaluate the level of future program spending, if
any.
7. Subsequent event
On January 17, 1997, pursuant to a binding letter of intent, the Company
and JT granted F. Hoffmann-La Roche Ltd ("Roche") exclusive marketing
rights for VIRACEPT in Europe and other countries outside North America,
Japan and Asia. For the marketing rights, Roche has paid to Agouron and JT
an initial license fee of $18,000,000 and will pay an additional
$22,000,000 when VIRACEPT is first approved in Europe. Roche will also pay
royalties based on Roche's sales of VIRACEPT or, under certain conditions,
on combined sales of VIRACEPT and INVIRASE, Roche's HIV protease inhibitor.
On January 24, 1997, the Company received its share of the initial license
fee, $9,000,000.
7
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
When used in this discussion, the words "believes", "anticipated" and
similar expressions are intended to identify forward-looking statements.
Such statements are subject to certain risks and uncertainties which could
cause actual results to differ materially from those projected. See
"Important Factors Regarding Forward-Looking Statements" attached as
Exhibit 99 to the Company's Annual Report on Form 10-K for the year ended
June 30, 1996 and incorporated herein by reference. Readers are cautioned
not to place undue reliance on these forward-looking statements which speak
only as of the date hereof. The Company undertakes no obligation to
publicly release the result of any revisions to these forward-looking
statements which may be made to reflect events or circumstances after the
date hereof or to reflect the occurrence of unanticipated events.
Financial Condition
The Company relies principally on equity financings and corporate
collaborations to fund its operations and capital expenditures. At
December 31, 1996, the Company had increased its net working capital
position by $49,159,000 over June 30, 1996 levels to $119,540,000. The
increase is due principally to the net proceeds of approximately
$77,347,000 from a public offering of common stock in July 1996, which
contributed, in part, to an $18,023,000 increase in cash, cash equivalents
and marketable securities, the purchase of $21,400,000 of inventory and
satisfying the cash requirements associated with the Company's year-to-date
net loss of $27,003,000. At December 31, 1996, the Company had cash, cash
equivalents and short-term investments of approximately $108,898,000. The
Company believes that its current capital resources and existing
contractual commitments are sufficient to maintain its current and planned
operations through fiscal 1998. This belief is based on current research
and clinical development plans, anticipated working capital requirements
associated with the planned commercial launch of VIRACEPT during fiscal
1997, anticipated VIRACEPT product contribution subsequent to its
commercial launch, the current regulatory environment, historical industry
experience in the development of therapeutic drugs and general economic
conditions. The Company believes that additional financing may be required
to meet the planned operating needs of fiscal 1999 if significant positive
cash flows are not generated from commercial activities. Such needs would
include the expenditure of substantial funds to continue research and
development activities, conduct existing and planned preclinical studies
and tests, conduct human clinical trials and to support a growing
commercial infrastructure including certain manufacturing, sales and
marketing capabilities. As a result, the Company anticipates pursuing
various financing alternatives such as collaborative arrangements and
additional public offerings or private placements of Company securities.
If such alternatives are not available, the Company may be required to
delay or eliminate expenditures for certain of its potential products under
development or to license third parties to commercialize products or
technologies that the Company would otherwise seek to develop or
commercialize itself.
8
<PAGE>
Results of Operations
The Company is engaged in the research and development of human
pharmaceuticals utilizing protein structure-based drug design. Such
research and development has been funded from the Company's equity-derived
working capital and through various collaborative arrangements. The
Company's net operating losses reflect primarily the result of its
independent research and continued increasing investment in clinical and
commercial development activities concentrated on the Company's lead
compounds in cancer and AIDS. As product sales may not begin prior to
fiscal 1998 and certain programs are expanding their preclinical, clinical,
and commercial development activities, it is anticipated that quarterly net
losses will continue into fiscal 1998.
The increases in the net losses for the three and six months ended December
31, 1996 compared to the year-earlier periods are due principally to the
Company's ongoing commitment to support significant clinical testing and
development activities to facilitate an approvable VIRACEPT NDA during
fiscal 1997, and to establish a commercial infrastructure to achieve a
timely commercial launch of VIRACEPT subsequent to the anticipated approval
of the NDA. These spending increases were only partially offset by
increased revenues from the JT collaboration and new revenues from the
Roche collaboration.
Contract revenues in the current three and six-month periods have increased
compared to the year-earlier periods due mainly to expanding clinical trial
activities on the anti-HIV collaboration with JT and the new (June 1996)
development collaboration with Roche.
Research and development expenses increased from the prior-year periods due
generally to increasing average research and development staff levels
(approximately 42% in the three and six month periods) and staff-related
expenditures, including occupancy, and significantly increased expenditures
for human clinical trial activities associated with the Company's leading
product development program, VIRACEPT.
The increase in selling, general and administrative expenses in the current
three and six-month periods is due chiefly to increasing average staff
levels (approximately 207% in the three month period and 171% in the six
month period) and staff related expenditures, certain premarketing costs
associated with the anticipated launch of VIRACEPT during fiscal 1997 and
other costs associated with a growing sales and marketing infrastructure.
Interest (net) has increased in the current-year periods due principally to
a higher average investment portfolio balance resulting from the previously
described public offering. Taxes have increased due to certain foreign
taxes paid in conjunction with the JT collaboration.
9
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings:
The Company is involved in certain legal or administrative proceedings
generally incidental to its normal business activities. While the outcome
of any such proceedings cannot be accurately predicted, the Company does
not believe the ultimate resolution of any such existing matters should
have a material adverse effect on its financial position or results of
operations.
Item 2. Changes in Securities:
On November 7, 1996, the Board of Directors of the Company adopted a
Stockholder Rights Plan. Under the terms of the Rights Plan, stockholders
of record as of November 21, 1996, received a dividend of one Preferred
Stock Purchase Right for each share of Common Stock held on that date. The
Rights will expire 10 years after issuance, and will be exercisable only if
a person or group becomes the beneficial owner of 15% or more of the Common
Stock (such person or group, a "15% holder") or commences a tender or
exchange offer which would result in the offeror beneficially owning 15% or
more of the Common Stock. Each Right will entitle stockholders to buy one
one-ten thousandth of a share of Series B Participating Preferred Stock of
the Company at an exercise price of $500.00 per share subject to certain
antidilution adjustments.
If a person or group accumulates 15% or more of the Common Stock, each
Right (other than Rights held by a 15% holder and certain related parties,
which will be voided) will be adjusted so that upon exercise the holder
will have the right to receive that number of shares of Common Stock (or in
certain circumstances, a combination of securities and/or assets) having a
value of twice the exercise price of the Right. In addition, if following
the public announcement of the existence of a 15% holder the Company is
involved in a merger or business combination or a sale of 50% or more of
the Company's assets or earning power, each Right (other than Rights held
by a 15% holder and certain related parties, which will be voided) will
represent the right to purchase, at the exercise price, common stock of the
acquiring entity having a value of twice the exercise price at the time.
The Board of Directors will also have the right, following the public
announcement of the existence of a 15% holder, to cause each Right (other
than rights held by the 15% holder) to be exchanged for one share of Common
Stock.
The Board of Directors is entitled to redeem the Rights at $0.001 per Right
at any time prior to the public announcement of the existence of a 15%
holder.
Item 3. Defaults Upon Senior Securities: None.
<PAGE>
Item 4. Submission of Matters to a Vote of Security Holders:
The Company held its Annual Meeting of Shareholders on November 7,
1996 and proxies for such meeting were solicited pursuant to Regulation
14A. There was no solicitation in opposition to management's nominees for
directors as listed in the proxy statement and all such nominees were
elected. The names of directors elected at the meeting are: John N.
Abelson, Patricia M. Cloherty, A. E. Cohen, Gary E. Friedman, Michael E.
Herman, Irving S. Johnson, Peter Johnson, Antonie T. Knoppers and Melvin I.
Simon. Each director received at least 12,132,574 votes in favor of their
election.
In addition, the shareholders voted on and approved two other
proposals as listed in the proxy statement and summarized below.
1. The shareholders approved the Company's 1996 Stock Option Plan. The
vote was 5,048,130 for, 2,780,424 against, 49,863 abstained and 4,352,669
not voted.
2. The shareholders ratified the selection of Price Waterhouse as
certified public accountants. The vote was 12,198,258 for, 14,305 against
and 18,523 abstained.
Item 5. Other Information:
On January 17, 1997, pursuant to a binding letter of intent, the Company
and JT granted F. Hoffmann-La Roche Ltd ("Roche") exclusive marketing
rights for VIRACEPT in Europe and other countries outside North America,
Japan and Asia. For the marketing rights, Roche has paid to Agouron and JT
an initial license fee of $18,000,000 and will pay an additional
$22,000,000 when VIRACEPT is first approved in Europe. Roche will also pay
royalties based on Roche's sales of VIRACEPT or, under certain conditions,
on combined sales of VIRACEPT and INVIRASE, Roche's HIV protease inhibitor.
On January 24, 1997, the Company received its share of the initial license
fee, $9,000,000.
10
<PAGE>
Item 6. Exhibits and Reports on Form 8-K:
Exhibits:
4.4** Rights Agreement dated November 7, 1996, as amended on November
27, 1996, between the Company. and Chase Mellon Shareholder Services,
L.L.C., which includes, as Exhibit A, the Certificate of Determination,
Preferences and Rights of Series B Participating Preferred Stock as filed
with the California Secretary of State on November 20, 1996.
10.63 Lease Amendment No. 3 dated October 16, 1996 between John Hancock
Life Insurance Company and the Company
10.64 Sublease between The Scripps Research Institute and the Company dated
November 4, 1996.
10.65 Premises Modification Agreement dated November 4, 1996 between
The Scripps Research Institute and the Company
10.66 Lease dated October 25, 1996 between Scripps Jack, Ltd. and the
Company
10.67 Form of 1990 Incentive Stock Option Agreement
10.68 Form of 1990 Non-Statutory Stock Option Agreement for
Employees/Officers/Directors
10.69 Form of 1990 Non-Statutory Stock Option Agreement for Consultants
10.70* 1996 Stock Option Plan
10.71( Form of 1996 Incentive Stock Option Agreement.
10.72( Form of 1996 Non-Statutory Stock Option Agreement for
Employees/Officers/Directors
10.73( Form of 1996 Stock Option Agreement for Consultants
10.74 Letter of Intent between F. Hoffmann-La Roche Ltd of Basel,
Switzerland, Japan Tobacco Inc., and the Company dated January 17, 1997.
(Confidential treatment has been requested for portions of this agreement
pursuant to an application dated January 27, 1997, as separately filed with
the Securities and Exchange Commission)
27 Financial Data Schedule. (Exhibit 27 is submitted as an exhibit
only in the electronic format of this Quarterly Report on Form 10-Q
submitted to the Securities and Exchange Commission)
27A Financial Data Schedule (amended) for fiscal year ended June 30,
1996
27B Financial Data Schedule (amended) for the quarter ended September
30,1996
b. Reports on Form 8-K:
A report on Form 8-K dated November 7, 1996 was filed on November 8,
1996. Such report related to the adoption by the Board of Directors of the
Company of a stockholder rights plan contemplating the issuance of rights
to purchase Series B Participating Preferred Stock to the Company's common
shareholders of record as of November 21, 1996.
* Incorporated by reference to Form S-8 dated November 26, 1996.
** Incorporated by reference to Form 8-A/A filed December 20, 1996,
File No. 001-12445.
11
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AGOURON PHARMACEUTICALS, INC.
Date: January 28, 1997 /s/ Steven S. Cowell
-------------------------------------------
Steven S. Cowell
Vice President, Finance and Chief Financial
Officer and Chief Accounting Officer
12
<PAGE>Normal4/5/96
EXHIBIT 10.63
LEASE AMENDMENT NO. 3
THIS LEASE AMENDMENT NO. 3, is made this 16th day of October, 1996, by
and between JOHN HANCOCK LIFE INSURANCE COMPANY, a Massachusetts Corporation
("Landlord"), successor in interest to KOLL HANCOCK TORREY PINES, a
California General Partnership, and AGOURON PHARMACEUTICALS, INC., a
California Corporation ("Tenant").
WHEREAS, by written lease dated December 8, 1992 Landlord leased to
Tenant 10,255 rentable square feet of office space ("Original Space")
located in Suite 100 of the office building known as TORREY PINES BUSINESS
AND RESEARCH PARK ("Building"), located at 10350 North Torrey Pines Road, La
Jolla, California, for a term of four (4) years, beginning on February 1,
1993, and ending on April 30, 1997;
WHEREAS, by written Lease Amendment No. 1, dated February 26, 1993,
Landlord leased an additional 3,774 rentable square feet on the plaza level
of the building to Tenant for a term commencing May 1, 1993 and terminating
April 30, 1997;
WHEREAS, by written Lease Amendment No. 2, dated February 17, 1994,
Landlord leased an additional 4,909 rentable square feet on the second floor
of the Building to Tenant for a term commencing May 1, 1994 and terminating
April 30, 1997. (The Lease, Lease Amendment No. 1, Lease Amendment No. 2
and Lease Amendment No. 3 are hereinafter referred to as "the Lease");
WHEREAS, Landlord and Tenant desire to extend the initial term of the
Lease and make certain other modifications to the Lease;
NOW, THEREFORE, in consideration of the above stated premises and of
the mutual promises and of the mutual promises and undertakings contained
herein, the parties hereto agree as follows:
1. The initial term of the Lease shall be extended two (2) years
and four (4) months from May 1, 1997 with a new lease termination date of
August 31, 1999.
2. Base Rent Schedule shall be payable as follows:
Period Total Monthly Base Rent
5/1/96 - 4/30-97 $32,055.78
5/1/97 - 5/31/97 $0.00
6/1/97 - 4/30/98 $32,972.00
5/1/98 - 4/30/99 $34,290.88
5/1/99 - 8/31/99 $35,662.51
3. Landlord will be responsible for calendar year 1997 ("Base
Year") Operating Costs. Tenant will be responsible for any increase in
Operating Costs above the 1997 calendar year Base Year. The Base Year shall
be calculated based upon a 100% leased Project.
4. There will be no parking fees for the Authorized Number of
Parking Spaces during the term of the Lease or any extension thereof.
5. Expansion - Tenant will have the First Right to Negotiate
(behind existing third party expansion rights) on any space in excess of
10,000 square feet that becomes available in the Project during Tenant's
lease term.
<PAGE>
6. Except as modified by this Lease Amendment No. 3, all other
terms, covenants and conditions contained in the Lease shall remain in full
force and effect. Initially capitalized terms not otherwise defined herein
and amendments shall have the same meaning as contained in the Lease.
IN WITNESS WHEREOF, the parties hereto have executed this LEASE
AMENDMENT NO. 3 as of the date first above written, the execution and
delivery thereof having been duly authorized.
LANDLORD:
JOHN HANCOCK LIFE INSURANCE COMPANY,
a Massachusetts Corporation
By: /s/ John M. Nagle
-----------------------------
John M. Nagle
Its: Senior Investment Officer
TENANT:
AGOURON PHARMACEUTICALS, INC.
A California Corporation
By: /s/ Glenn Zinser
-----------------------------
Glenn Zinser
Its: VP Operations
Date: 10/15/96
----------------------------
2
<PAGE>
EXHIBIT 10.64
SUBLEASE
1. PARTIES
This Sublease is entered into by and between THE SCRIPPS RESEARCH
INSTITUTE (hereinafter, "Sublessor") and AGOURON PHARMACEUTICALS, INC.
(hereinafter, "Sublessee"), as a Sublease under the Master Lease dated
January 26, 1994 entered into by THE REGENTS OF THE UNIVERSITY OF
CALIFORNIA as Landlord, and Sublessor under this Sublease as Tenant.
A copy of the Master Lease is attached hereto as Exhibit A and is
incorporated by reference herein. This Agreement shall be effective
("Effective Date") as of the later of November 1, 1996 or the date on
which TSRI delivers possession of any part of the Premises (as defined
below) to Agouron.
2. PROVISIONS CONSTITUTING SUBLEASE
A. Except as otherwise provided herein, this Sublease is subject to
all of the terms and conditions of the Master Lease set forth in
Exhibit A hereto, and Sublessee shall comply with the terms and
conditions in said Master Lease, to the extent said terms and
conditions are applicable to the Premises subleased pursuant to
this Sublease. Sublessee shall not commit or permit to be
committed on the Premises any act or omission which shall
violate any term or condition of the Master Lease.
B. Provided Sublessee is not in default hereunder, Sublessor agrees
not to exercise its early termination option as set forth in
paragraph 50 of the Master Lease.
C. No provision shall be construed to create any joint venture,
partnership, employer/employee, or agency relationship between
the parties to this Sublease agreement.
D. Except as otherwise provided herein, all of the terms and
conditions contained in the Master Lease (Exhibit A hereto) are
incorporated by reference as though fully set forth herein as
terms and conditions of this Sublease (with each reference
therein to Landlord and Tenant to be deemed to refer to
Sublessor and Sublessee) and, along with all of the following
Sections set out in this Sublease, shall be the complete terms
and conditions of this Sublease.
3. PREMISES
Sublessor leases to Sublessee and Sublessee hires from Sublessor the
following described Premises together with all improvements therein,
situated in the City of San Diego, County of San Diego, State of
California, located at 10280 North Torrey Pines Road, Suites 485A and
485B, and a storage room provided by the Landlord in the
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garage area (hereinafter, "Suite 485C"), totaling approximately 4550
rentable square feet (rsf), as outlined in the floor plan attached
hereto as Exhibit B and incorporated by reference herein.
4. TERM
A. The term of this Sublease shall be for a period of two (2) years
and five (5) months, commencing on November 1, 1996 and ending
at midnight on March 31, 1999, unless sooner terminated pursuant
to any provision hereof.
B. On the last day of the term hereof or on any sooner termination,
Sublessee shall surrender the Premises to Sublessor in the same
condition as when received, ordinary wear and tear excepted,
clean and free of debris and ready for immediate occupancy by a
new tenant.
C. In the event Sublessor is unable to deliver possession of the
Premises at the commencement of the term, Sublessor shall not be
liable for any damage caused thereby, nor shall this Sublease be
void or voidable. Sublessee shall not be liable for rent until
such time as Sublessor offers to deliver possession of the
Premises to Sublessee, but the term hereof shall not be extended
by such delay. Should Sublessor be unable to deliver possession
of any portion of the Premises by December 31, 1996, this
Sublease shall be voidable at the sole option of Sublessee. If
Sublessee, with Sublessor's consent, takes possession prior to
the commencement of the term, Sublessee shall do so subject to
all of the covenants and conditions hereof and shall pay rent
for the period ending with the commencement of the term at the
same rental as that prescribed for the first month of the term,
prorated at the rate of 1/30th thereof per day.
5. RENT AND OTHER CHARGES PAYABLE BY SUBLESSEE
Sublessee shall pay to sublessor as base rent ("Base Rent") for the
Premises in advance on the first day of each calendar month during the
remaining portion of the first calendar year of the term of this
Sublease (i.e., from November 1, 1996 through December 31, 1996)
without deduction, offset, prior notice or demand, in lawful money of
the United States, the sum of fourteen thousand, five hundred sixty
dollars ($14,560.00). The Base Rent shall be adjusted according to
the provisions, schedules and indices set forth in Paragraphs 4 and 7
of the Master Lease attached as Exhibit A hereto. Such adjustments to
the Sublessee's Base Rent shall be in a percentage equivalent to the
adjustments made to Sublessor's Base Rent under the Master Lease and
shall occur on the same date(s) that adjustments are made pursuant to
the Master Lease.
If the commencement date is not the first day of a calendar month, or
if the Sublease termination date is not the last day of a calendar
month, a prorated monthly installment shall be paid at the then
current rate for the fractional month during which the Sublease
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commences and/or terminates. Said Base Rent shall include operating
expenses, utilities, and janitorial service, except as otherwise
provided herein.
Receipt of $14,560.00 is hereby acknowledged for rental for the first
month. Receipt of an additional $14,560.00 as a non-interest-bearing
security deposit for performance under this Sublease is also
acknowledged. In the event Sublessee has performed all of the terms
and conditions of this Sublease throughout the term and has paid all
sums owing to Sublessor, upon Sublessee vacating the Premises, the
security deposit shall be returned to Sublessee.
6. USE
The Premises shall be used and occupied only for general office use
and for laboratories for scientific research, or any other use which
is reasonably comparable and for no other purpose. The Premises shall
not be used or occupied for any purpose inconsistent with San Diego
Municipal Code Section 101.0434, which applies to areas zoned for
scientific research.
Sublessee's business shall be established and conducted throughout the
term hereof in a first class manner. Sublessee shall not use the
Premises for, or carry on, or permit to be carried on, any offensive,
noisy or dangerous trade, business, manufacture, or occupation, nor
permit any auction sale to be held or conducted on or about the
Premises. Sublessee shall not do or suffer anything to be done upon
the Premises which will cause structural injury to the Premises or the
building of which the Premises forms a part. The Premises shall not
be overloaded and no machinery, apparatus or other appliance shall be
used or operated in or upon the Premises which will in any manner
injure, vibrate, or shake the Premises or the building of which it is
a part. No use shall be made of the Premises which will in any way
impair the efficient operation of the sprinkler system (if any) within
the building containing the Premises. Sublessee shall not leave the
Premises unoccupied or vacant during the term. No musical instrument
of any sort, or any noise making device, will be operated in or
allowed upon the Premises for the purpose of attracting trade or
otherwise. Sublessee shall not use or permit the use of the Premises
or any part thereof for any purpose which will increase the existing
rate of insurance upon the building in which the Premises are located,
or cause a cancellation or non-renewal of any policy covering the
building or any part thereof. If any action on the part of Sublessee
or use of the Premises by Sublessee shall cause, directly of
indirectly, any increase of Sublessor's insurance expense, said
additional expense shall be paid by Sublessee to Sublessor upon
written demand. No such payment by Sublessee shall limit Sublessor in
the exercise of any other rights or remedies, or constitute a waiver
of Sublessor's right to require Sublessee to discontinue such act or
use.
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7. HAZARDOUS MATERIALS
In addition to the provisions set forth in Paragraph 47 of the Master
Lease, Sublessee further agrees to the following provisions.
A. Sublessee shall indemnify Sublessor and Sublessor's affiliated
corporations, including TSRI, Scripps Health, Scripps Foundation
for Medicine and Science, and Scripps Institution of Medicine
and Science, and their respective trustees, officers, partners,
directors, shareholders, employees, contractors, agents,
successors, and assigns (collectively, "Sublessor's Persons")
and shall defend (with counsel previously approved by Sublessor
in writing, which approval shall not unreasonably be withheld)
and hold harmless Sublessor and Sublessor's Persons from and
against any and all claims, suits, court or administrative
proceedings, losses, costs, damages, liabilities, deficiencies,
fines, penalties, forfeitures, punitive damages or expenses
(including, without limitation, attorneys' fees), death of or
injury (including, without limitation, sickness or disease to
any person or tangible damage to any real or personal property
whatsoever, incurred by, arising out of, based upon or resulting
from (i) Sublessee's failure to perform or observe any of its
obligations or agreements under Paragraph 47 of the Master
Lease; (ii) the release, threatened release, generation,
discharge, storage, disposal or transportation of any Toxic
Material under, in or about, to or from the Premises occurring
or resulting from acts or omissions of Sublessee or Sublessee's
employees, agents, or invitees taking place on or after
Sublessee takes possession of the Premises (and not resulting
from any negligent or willful misconduct of Sublessor); or (iii)
the failure of Sublessee or its employees, agents or invitees to
comply with any environmental or hazardous substance laws. The
foregoing indemnification shall survive the expiration of the
Term or earlier termination of this Sublease.
B. As a material inducement to Sublessor to allow Sublessee to use
Toxic Materials in connection with its activities, Sublessee
agrees to deliver to Sublessor on November 1, 1996, November 1,
1997, November 1, 1998, and March 31, 1999 ("Disclosure Dates"),
a report disclosing to Sublessor the names and amounts of all
Toxic Materials which were stored, used, transported upon, or
disposed of on the Premises, or which Sublessee intends to
store, use or dispose of on the Premises, for the year prior to
and after each Disclosure Date. The matter to be identified in
the disclosure (the "Toxic Materials Report") shall be all
matter reasonably considered to be hazardous, toxic, infectious,
or radioactive, including all matter identified as Toxic
Materials or Hazardous Substances according to the Hazardous
Substance Laws referred to hereinabove. Said Toxic Materials
Report shall also list any and all governmental approvals or
permits required in connection with the presence of such Toxic
Materials on the Premises and a copy of the Hazardous Substances
business plan prepared pursuant to Health and Safety Code
Sections 25500, et seq. Sublessee shall deliver to Sublessor
true and correct copies of the following documents
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(hereinafter referred to as the "Documents"), relating to the
handling, storage, disposal and emission of Toxic Materials upon
written request: (i) permits; (ii) approvals; (iii) reports and
correspondence relating to the release of Toxic Materials; (iv)
storage and maintenance plans; (v) notice of violations of any
laws; (vi) plans relating to the installation of any storage
tanks to be installed in or under the Premises (provided, said
installation of tanks shall only be permitted after Sublessor
has given Sublessee its written consent to do so, which consent
may be withheld in Sublessor's sole discretion); and (vii) all
closure plans or any other documents required by any and all
federal, state and local governmental agencies and authorities
for any storage tanks installed in, on or under the Premises.
Sublessor acknowledges that it is not the intent of this Section
to prohibit Sublessee from carrying on its operations or to
unreasonably interfere with such operations. Sublessee may
carry on its operations according to the custom of the industry
so long as the use, presence and disposal of Hazardous Substance
is strictly and properly monitored according to all applicable
governmental requirements.
The aforementioned disclosures shall be hand-delivered, sent via
courier, or sent via overnight delivery and shall be addressed
to: Director, Environmental Health and Safety, The Scripps
Research Institute, 10550 North Torrey Pines Road, Mail Drop
BCC-078, La Jolla, CA 92037, phone: (619) 784-8240.
C. Notwithstanding the provisions of this Section, Sublessor shall
have the right to terminate this Sublease in the event that (i)
Sublessee uses the Premises for the generation, storage, use,
treatment or disposal of Toxic Materials in a manner prohibited
by applicable law and such use has a material adverse effect on
Sublessor or the Premises; (ii) Sublessee has been required by
any governmental authority to take remedial action in connection
with Toxic Materials contaminating the Premises if the
contamination resulted from Sublessee's action or use of the
Premises and such remedial action has a material adverse effect
on Sublessor or the Premises; or (iii) Sublessee is subject to
an enforcement order issued by any governmental authority in
connection with the use, disposal or storage of Toxic Materials
on the Premises and such enforcement order has a material
adverse effect on Sublessor or the Premises. Each of the
foregoing events shall be deemed to be a material default by
Sublessee under this Sublease.
D. Upon the expiration or upon any early termination of this
Sublease, Premises shall be returned by Sublessee to Sublessor
in good operating condition and free of Toxic Materials. At
that time, presuming there has been no release, discharge or
emission of Toxic Materials on the Premises during Sublessee's
occupancy thereof, Sublessee shall furnish to Sublessor, at
Sublessee's sole cost, the results of appropriate environmental
tests and studies as may be customary, reasonable, and in
accordance with all applicable requirements of governmental
entities and applicable environmental laws, so as to obtain
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assurance that the Premises are free from any Toxic Materials or
contamination in excess of legally permissible levels. If,
however, a release, discharge or emission of Toxic Materials has
occurred on the Premises during Sublessee's occupancy thereof,
Sublessee shall furnish to Sublessor, at Sublessee's sole cost,
a then-customary environmental audit or similar remediation plan
for the Premises, plus such additional tests and studies as may
be customary, reasonable or recommended by said audit, so as to
obtain a then-customary and reasonable verification that the
Premises are free from any Toxic Materials or contamination in
excess of legally permissible levels. If said tests or studies
indicate that there are any impermissible levels of Toxic
Materials on the Premises, then, to the extent such
impermissible levels of Toxic Materials were generated by
Sublessee, Sublessee shall pay for all costs necessary to clean
up and remedy said impermissible levels of Toxic Materials to
the extent such levels of Toxic Materials are not permitted by
applicable governmental laws or regulations. Sublessor shall
cooperate in good faith with Sublessee to approve a remediation
plan which mitigates the overall damages and costs. but if such
remediation plan involves a delay in completing the remediation,
then Sublessee shall agree to toll the statute of limitations
for the duration of said delay applicable to any claim against
Sublessee related to Sublessee's obligation to clean up Toxic
Materials. Provided, however, Sublessee shall have no duty with
respect to any such Toxic Materials which (i) were on the
Premises prior to the effective date, or (ii) were placed on the
Premises by means of spillage or seepage from a neighboring
property, or (iii) were generated by Sublessor.
E. Sublessee's obligations under this section and under Paragraph
47 of the Master Lease shall survive the termination of this
Sublease. During any period of time employed by Sublessee after
the termination of this Sublease to complete the removal from
the Premises of any such Toxic Materials, Sublessee shall
continue to pay the full Rent in accordance with this Sublease.
(Provided, however, to the extent that some or all of the
Premises continue to be used while the remediation work is being
conducted, then said rental income or value of the portion of
the Premises which are used shall be credited against the Rent
otherwise payable by Sublessee for the same premises and time
period.)
8. MISCELLANEOUS PROVISIONS
A. Parking: Sublessor shall provide Sublessee approximately
eighteen (18) parking spaces in the parking garage in accordance
with Paragraph 40 of the Master Lease (Exhibit A hereto).
B. Utility Usage: Sublessor and Sublessee intend to prorate the
cost of utility usage including air conditioning, heating and
electrical usage based on Sublessor being responsible for fifty-
five and five-tenths percent (55.5%) of such charges and
Sublessee being responsible for forty-four and five-tenths
percent (44.5%) of such charges. Should either party use
excessive utility
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services, then such party will be responsible for the cost of
the excess utility usage.
C. Telecommunications Room: Sublessor, upon reasonable notice to
Sublessee, will have access to the telecommunications room
located in the Premises leased to Sublessee as outlined on the
floor plan attached hereto as Exhibit B.
D. Warm Room: The parties hereto understand and acknowledge that
access to an incubation area or "warm room" is important to the
scientific research conducted by both parties. Since the
Premises contain a warm room to which both parties hereto desire
access, Sublessee agrees that, until a replacement solution (in
the form of additional warm room facilities) is identified,
Sublessor shall have unrestricted, exclusive access to the warm
room facilities contained within the leased Premises. In
consideration for said access, Sublessor agrees to reduce the
rent due to Sublessor from Sublessee by fifty percent (50%)
during the time Sublessor has access to the warm room facilities
within the leased Premises, until such time that a replacement
solution is in operation. Sublessor further agrees to use its
reasonable best efforts to make a replacement solution
available.
E. First Right to Negotiate: Sublessor will provide Sublessee with
a first right to negotiate to lease the remaining space occupied
by Sublessor if Sublessor vacates said space any time during the
term of the Sublease.
F. Storage Room: Sublessor and Sublessee agree to prorate the cost
of the storage room which provides deionized water and other
services, whereby Sublessee shall pay Sublessor a monthly
charge of $175.00/month with annual CPI adjustments, pursuant to
paragraph 49 of the Master Lease.
9. NOTICES
All notices or demands of any kind required or desired to be given by
Sublessor or Sublessee hereunder shall be in writing and shall be
deemed delivered forty-eight (48) hours after depositing the notice or
demand in the United States mail, certified or registered, postage
prepaid, addressed to the Sublessor or Sublessee, respectively, at the
addresses set forth after their signatures hereinbelow. All rent and
other payments due pursuant to this Sublease or the Master Lease shall
be made by Sublessee to Sublessor at the same address.
///
///
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IN WITNESS WHEREOF, the parties have executed this
Sublease by their duly authorized representatives as of the date set
forth above.
SUBLESSOR: SUBLESSEE:
THE SCRIPPS RESEARCH INSTITUTE AGOURON PHARMACEUTICALS, INC.
By: /S/ DONNA J. WESTON By: /S/ GLENN ZINSER
--------------------------- ---------------------------
Donna J. Weston
Title: Vice President and Title: VP, Operations
Chief Financial Officer
10550 N. Torrey Pines Road 10350 N. Torrey Pines Road
La Jolla, CA 92037 La Jolla, CA 92037
Dated: 11/4/96 Dated: 11/4/96
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EXHIBIT 10.65
AGREEMENT
This Premises Modification Agreement ("Agreement") is entered into by
and between THE SCRIPPS RESEARCH INSTITUTE, a California nonprofit public
benefit corporation located at 10550 North Torrey Pines Road, La Jolla,
California 92037 ("TSRI"), and AGOURON PHARMACEUTICALS, INC., a California
corporation located at 10350 N. Torrey Pines Road, La Jolla, California
92037 ("Agouron"), with respect to the facts set forth below. This
Agreement shall be effective ("Effective Date") as of the later of November
1, 1996 or the date on which TSRI delivers possession of any part of the
Premises (as defined below) to Agouron pursuant to that certain Sublease
Agreement (defined below).
RECITALS
1. TSRI is a party to that certain Lease dated January 26, 1994
pertaining to certain rentable space located at 10280 North
Torrey Pines Road (the "Premises"); one party to said Lease,
the Regents of the University of California, is identified
therein as Landlord, while TSRI is identified therein as
Tenant.
2. Pursuant to a Sublease Agreement dated November 4, 1996
between TSRI and Agouron, a copy of which is attached hereto
as Exhibit A and the terms of which are incorporated by
reference herein, TSRI has agreed to sublease a portion of the
Premises leased to TSRI, to Agouron.
3. Both TSRI and Agouron require access to temperature-controlled
facilities in order to carry out their scientific research and
thus wish to expand the available temperature-controlled
facilities on the Premises for such use. At present, one
temperature-controlled room is in use; a second temperature-
controlled room requires repair.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and
conditions set forth herein, TSRI and Agouron hereby agree as follows:
1. A second pre-existing temperature-controlled room shall be
repaired so that it functions as a warm-room; all costs
incurred in the repair of said second temperature-controlled
room shall be shared equally by the parties hereto. The
parties have agreed that TSRI shall pay the invoiced costs of
the repair of said second temperature-controlled room and
shall invoice Agouron for half of said
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costs. Agouron agrees to reimburse TSRI for said costs within
thirty (30) days of receiving an invoice for same. Agouron
further agrees that early termination of the Sublease
Agreement (Exhibit A hereto) shall not relieve Agouron of its
obligation to reimburse TSRI for Agouron's half of the
aforementioned costs. The parties hereto acknowledge that no
repair work shall commence until the consent of The Regents of
the University of California is received.
2. Once repair of the second temperature-controlled room is
completed and said room is ready for use, the parties hereto
agree that the second temperature-controlled room will be
available for exclusive use by TSRI, while the first
temperature-controlled room will be available for exclusive
use by Agouron, during the term of the Sublease Agreement
(Exhibit A hereto).
3. In addition to the repair of the second temperature-controlled
room, four (4) modular controlled environment chamber units
from Percival Scientific, Inc., the specifications of which
are set forth on Exhibit B hereto (hereinafter, "Percival
Units"), shall be purchased and installed on the Premises
within Sublessor's space. The parties hereto acknowledge that
no installation work shall commence until the consent of The
Regents of the University of California is received.
4. All costs relating to acquisition and installation of the
Percival Units, including, without limitation, payment for any
build-out costs relating to installation of the Units, shall
be shared equally by TSRI and Agouron. The parties have
agreed that TSRI shall pay the invoiced costs of acquisition,
installation, and build-out and shall invoice Agouron for half
of said costs. Agouron agrees to reimburse TSRI for said
costs within thirty (30) days of receiving an invoice for
same. Agouron further agrees that early termination of the
Sublease Agreement (Exhibit A hereto) shall not relieve
Agouron of its obligation to reimburse TSRI for Agouron's half
of the aforementioned costs. TSRI agrees to pay costs
associated with maintenance contracts for said Units and shall
hold title to said Units.
5. Agouron's total contributions herein as described in
Paragraphs 1 and 4 above, shall not exceed its one-half share
of all costs referenced in the purchase orders and work orders
(or contracts) attached hereto as Exhibit C and incorporated
by reference herein, plus 5% in the event of cost overruns
relating to said purchase orders and work orders, without the
written consent of Agouron.
6. Upon termination of the Sublease Agreement (Exhibit A hereto),
and presuming that all costs relating to the purchase and
installation of the Percival Units have been shared equally by
both parties hereto, that the purchase price of the Units has
been fully paid, and that no invoices or costs relating to
said Units remain outstanding or unpaid, disposition of the
Percival Units shall be handled as follows. TSRI and Agouron
may each keep two Percival Units for use or
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disposition as each party sees fit. Alternatively, either
TSRI or Agouron may reimburse the other party for its interest
in two Units at net book value using straight-line
depreciation over five (5) years, thereby keeping all four
Units for its own use or disposition.
7. All notices or demands of any kind required or desired to be
given by TSRI or Agouron hereunder shall be in writing and
shall be deemed delivered forty-eight (48) hours after
depositing the notice or demand in the United States mail,
certified or registered, postage prepaid, addressed to TSRI or
Agouron, respectively, at the addresses set forth after their
signatures hereinbelow.
8. This Agreement sets forth the entire agreement and
understanding between the parties as to the subject matter
hereof. There shall be no amendment or modifications to this
Agreement, except by a written document which is signed by
both parties.
9. The relationship between TSRI and Agouron is that of
independent contractors. TSRI and Agouron are not joint
venturers, partners, principal and agent, master and servant,
employer or employee, and have no other relationship other
than independent contracting parties. TSRI and Agouron shall
have no power to bind or obligate each other in any manner,
other than as is expressly set forth in this Agreement.
10. This Agreement shall be construed and enforced in accordance
with the laws of the State of California.
11. Should any one or more of the provisions of this Agreement be
held invalid or unenforceable by a court of competent
jurisdiction, it shall be considered severed from this
Agreement and shall not serve to invalidate the remaining
provisions thereof. The parties shall make a good faith
effort to replace any invalid or unenforceable provision with
a valid and enforceable one such that the objectives
contemplated by them when entering this Agreement may be
realized.
///
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IN WITNESS WHEREOF, the parties have executed this Agreement by their
duly authorized representatives as of the date set forth above.
TSRI: AGOURON:
THE SCRIPPS RESEARCH INSTITUTE AGOURON PHARMACEUTICALS, INC.
By: /s/ DONNA J. WESTON By: /s/ GLENN ZINSER
---------------------------- ---------------------------
Donna J. Weston Glenn Zinser
Title: Vice President and Title: VP, Operations
Chief Financial Officer
10550 N. Torrey Pines Road 10350 N. Torrey Pines Road
La Jolla, CA 92037 La Jolla, CA 92037
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EXHIBIT A
SUBLEASE
<PAGE>
EXHIBIT 10.66
STANDARD FORM LEASE
This Lease dated October 25, 1996 (this "Lease") is entered into by
and between Scripps Jack, Ltd., a California limited partnership
("Landlord") and Agouron Pharmaceuticals, Inc., a California
corporation ("Tenant").
ARTICLE I.
BASIC LEASE PROVISIONS
Each reference in this Lease to the "Basic Lease Provisions" shall
mean and refer to the following terms, the application of which shall be
governed by the provisions in the remaining Articles of this Lease:
1. Address of Landlord: Birtcher Property Services
27611 La Paz Road, Laguna Niguel, CA 92677
with a copy to Scripps Jack, Ltd., P.O.Box
614, Bloomington, Illinois, 61702, Attn:
Real Estate Services
2. Premises Address: 4245 Sorrento Valley Boulevard
San Diego, Ca 92121
3. Address of Tenant:
(a) Notices: 4245 Sorrento Valley Boulevard
San Diego, California, 92121
(b) Billing: Agouron Pharmaceuticals, Inc.
10350 North Torrey Pines Road
La Jolla, California, 92037-1020
4. Tenant's Trade Name: Agouron Pharmaceuticals, Inc.
5. Tenant's Contact: Glenn Zinser Telephone: (619) 622-3005
6. Premises Square Footage: Both the Premises and the Building
consist of approximately 22,843 square feet of gross building
area ("Square Feet of Gross Building Area"). The exact number of
Square Feet of Gross Building Area in the Premises and the
Building shall be determined as set forth in Section 2.1 below.
7. Commencement Date: See Section 3.2
8. Term: From the Commencement Date through December 31,2001
9. Initial Monthly Rent: The initial Monthly Rent payable by Tenant
to Landlord shall be One and 45/100 Dollars ($1.45) per square
foot per month of Square Feet of Gross Building Area within the
Premises, subject to adjustment pursuant to Exhibit E attached
hereto. Accordingly, the approximate amount of the initial
Monthly Rent shall be Thirty Three-Thousand One Hundred Twenty
Two and 35/100 Dollars ($33,122.35). In the event the Square
Feet of Gross Building Area in the Premises as determined in
accordance with Section 2.1 differs from the approximate amount
of Square Feet of Gross Building Area set forth in Item 6 of the
Basic Lease Provisions, Landlord and Tenant agree to promptly
execute an amendment to this Lease which revises the amounts
of Minimum Rent provided herein and in Exhibit E. Additionally,
to the extent that Tenant has overpaid Monthly Rent for the
period from the Commencement Date until the end of the month in
which the determination of the Rentable Square Feet of Floor Area
of the Premises pursuant to Section 2.1 is made, Landlord shall
immediately reimburse Tenant therefore. Similarly, to the extent
that Tenant has underpaid Landlord Monthly Rent for such period,
Tenant shall immediately pay Landlord such there shall be no
underpayment.
10. Security Deposit: $35,000.00
11. Permitted Uses: Biotech research and development and related
pharmaceutical operations, pursuant to approvals to be obtained
by Tenant from all relevant City, County and other required
governmental agencies and authorities.
12. Broker: Landlord's Broker - C.B. Commercial Real Estate Group,
Inc.
Tenant's Broker - Colliers Iliff Thorn
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13. Landlord's Architect: Carrier Design Group, Inc.
14. Guarantor: None
15. Vehicle Parking Spaces: Seventy (70)
16. Additional Insureds: Birtcher Property Services and Scripps
Jack, Ltd.
17. Tenant's Liability Insurance Limits: $10,000,000.00
18. Tenant's Share: 100%
Exhibits:
A Description of Premises
B Property Description
C Work Letter
D Commencement Date Memorandum
E Adjustments to Monthly Rent
F Rules and Regulations
G Environmental Questionnaire
+
Riders:
Rider No.1 to Lease
ARTICLE II
DEFINITIONS
2.1 Certain Definitions. The capitalized terms set forth
below, unless the context clearly requires otherwise, shall have the
following meanings in this Lease:
"Additional Rent" means any and all sums (whether or not
specifically called "Additional Rent" in this Lease) other than Monthly
Rent which Tenant is or becomes obligated to pay to Landlord under this
Lease. See also Rent.
"Alterations" means any alterations, decorations,
modifications, additions or improvements made in, on, about, under or
contiguous to the Building or the Premises after the Commencement Date
ncluding, but not limited to, lighting, HVAC and electrical fixtures,
pipes and conduits, transfer, storage and disposal facilities, partitions,
drapery, wall coverings, shelves, cabinetwork, carpeting and other floor
coverings, ceiling tiles, fixtures and carpentry installations.
"Applicable Laws" means the laws, rules, regulations,
ordinances, restrictions, and practices described in Section 5.2.
"Applicable Rate" means the greater of ten percent (10%) per
annum or five percent (5%) in excess of the discount rate of the Federal
Reserve Bank of San Francisco in effect on the twenty-fifth (25th) day of
the calendar month immediately prior to the event giving rise to the
Applicable Rate imposition; provided, however, the Applicable Rate shall in
no event exceed the maximum interest rate permitted to be charged by
applicable law.
"Broker" means the person or entity identified in Item 12 of
the Basic Lease Provisions.
"Building" means that certain building within which the
Premises are located.
"Casualty" is defined in Section 12.1.
"City" means the city in which the Premises are located.
"Commencement Date" means the commencement date of the Term,
described in Section 3.2.
"Common Area" means all areas and facilities within the Project
exclusive of the Premises and other portions of the Project leased (or to be
leased) exclusively to other tenants. The Common Area includes, but is not
limited to, parking areas, access and perimeter roads, sidewalk, landscaped
areas and similar areas and facilities. Tenant's use of the Common Area, and
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its rights and obligations with respect thereto, are more particularly
described in Article X.
"County" means the county in which the Premises are located.
"Event of Default" means the Tenant defaults described in
Section 15.1.
"Guarantor" means the person(s) or entity identified in Item
14 of the Basic Lease Provisions, if any.
"HVAC" means the heating, ventilating and air conditioning
system serving the Building.
"Hazardous Materials" is defined in Section 6.1.
"Landlord's Agents" means Landlord's authorized agents,
representatives, property managers (whether as agents or independent
contractors), consultants, contractors, partners, subsidiaries, affiliates,
directors, officers and employees, including without limitation the
Additional Insureds named in Item 16 of the Basic Lease Provisions.
"Landlord's Architect" means the architect or architectural
firm from time to time designated by Landlord to perform the function of
Landlord's Architect set forth in this Lease. Landlord's Architect
initially shall be the architect or architectural firm designated in Item 13
of the Basic Lease Provisions.
"Lease" means this instrument together with all exhibits,
amendments, addenda and riders attached hereto and made a part hereof.
"Monthly Rent" means the monthly rental which Tenant is to pay
to Landlord pursuant to Section 4.1, as the same may be adjusted from time
to time as set forth in this Lease. See also Rent.
"Mortgage" means any mortgage, deed of trust, or similar lien
on or covering the Project or any part thereof.
"Mortgagee" means any mortgagee of a mortgage, beneficiary of
a deed of trust or lender having a lien on or covering the Project or any
part thereof.
"Notice" means each and every notice, communication, request,
demand, reply or advice, or duplicate thereof, in this Lease provided or
permitted to be given, made or accepted by either party to any other party,
which shall be in writing and given in accordance with the provisions of
Section 21.6.
"Operating Expenses" means, collectively, Project Costs and
Real Property Taxes.
"Plans" means the final working drawings for the construction
of the Tenant Improvements to be prepared and approved as set forth in the
Work Letter.
"Outside Areas" means the areas outside the exterior walls of
the Building.
"Premises" means the premises shown in Exhibit A, and all
areas appurtenant thereto, if any, for the exclusive use of Tenant, as shown
in ExhibitA. The Premises are located within and constitute the Building
at the address set forth in Item 2 of the Basic Lease Provisions.
"Premises Square Footage" means the floor area of both the
Premises and the Building. Upon substantial completion of the Premises,
Landlord's architect or another appropriate professional shall certify the
total Square Feet of Gross Building Area in the Premises and the Building
based upon the BOMA Gross Building Area standard of measurement.
"Project" means that certain real property, and all
improvements thereon, including the Building and other buildings, if any,
located within the boundaries of such property, described in the Property
Description.
"Project Costs" is defined in Section 7.3.
"Property Description" means Exhibit B.
"Real Property Taxes" is defined in Section 7.4.
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"Rent" means Monthly Rent and Additional Rent, collectively.
"Rules and Regulations" means the rules and regulations
attached hereto as Exhibit F and any modifications thereto promulgated by
Landlord or Landlord's Agents from time to time.
"Security Deposit" means the amount set forth in Item 10 of
the Basic Lease Provisions, which shall be paid to Landlord by Tenant
pursuant to Section 4.6.
"Substantial Completion" and "substantially completed"
means the date on which the repair of the Premises following a Casualty,
have been fully completed except for minor details of construction,
mechanical adjustments or decoration which do not materially interfere with
Tenant's use and enjoyment of the Premises (items normally referred to as
"punch list" items).
"Tenant Delays" means any and all delays due to the fault of
the Tenant, but only to the extent caused by such default, including without
limitation Tenant's failure to deliver to Landlord prior to the Commencement
Date, executed copies of policies of insurance or certificates thereof as
required under Section 11.8.
"Tenant Improvements" means those certain improvements, if
any, to be constructed on the Premises as provided in Article XX and in the
Work Letter.
"Tenant's Agents" means Tenant's agents, representatives,
consultants, contractors, affiliates, subsidiaries, officers, directors,
employees, subtenants, guests and invitees.
"Tenant's Personal Property" means Tenant's removable trade
fixtures, furniture, equipment and other personal property located in or on
the Premises.
"Term" means the term of this Lease, as provided in Section
3.2.
"Unavoidable Delay" means any delays which are beyond a
party's reasonable control including, but not limited to, delays due to
inclement weather, strikes, acts of God, inability to obtain labor or
materials, inability to secure governmental approvals or permits,
governmental restrictions, civil commotion, fire, earthquake, explosion,
flood, hurricane, the elements, or the public enemy, action or interference
of governmental authorities or agents, war invasion, insurrection,
rebellion, riots, lockouts or any other cause whether similar or dissimilar
to the foregoing which is beyond a party's reasonable control; provided
however, that in no event shall any of the foregoing ever apply with respect
to the payment of any monetary obligation.
"Work Letter" means the work letter between Landlord and
Tenant regarding the construction of the Tenant Improvements, if any, in the
form of Exhibit C.
2.2 Other Definitions. Terms defined elsewhere in this Lease,
unless the context clearly requires otherwise, shall have the meaning as
there given.
ARTICLE III
PREMISES AND TERM
3.1 Lease of Premises. Subject to and upon the terms and
conditions set forth herein, Landlord hereby leases the Premises to Tenant,
and Tenant hereby leases the Premises from Landlord.
3.2 Terms and Commencement. Unless sooner terminated as
provided herein, the Term of this Lease shall be for that period of years
and months set forth in Item 8 of the Basic Lease Provisions, as the same may
be extended in accordance with any option or options to extend the Term
granted herein, and shall commence (the "Commencement Date") on the earlier
of (i) the later to occur of May 15,1997 or two-hundred ten (210) days after
Landlord delivers possession of the Premises to Tenant or (ii) the date that
Tenant is issued a certificate of occupancy or temporary certificate of
occupancy by the City of San Diego. When the actual Commencement Date has
occurred, Landlord and Tenant shall execute a Commencement Date Memorandum
in the form shown in Exhibit D.
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3.3 Early Entry. Tenant and its authorized agents, contractors,
subcontractors and employees shall be granted a license by Landlord to enter
upon the Premises, at Tenant's sole risk and expense, during ordinary
business hours prior to the Commencement Date, for the sole purpose of
installing Tenant's trade fixtures and equipment in the Premises; provided,
however, that (i) the provisions of this Lease, other than with respect to
the payment of Monthly Rent, shall apply during such early entry including,
but not limited to, the provisions of Article XI relating to Tenant's
indemnification of Landlord, (ii )prior to any such entry, Tenant shall pay
for and provide evidence of the insurance to be provided by Tenant pursuant
to the provisions of Article XI, (iii) Tenant shall pay all utility, service
and maintenance charges for the Premises attributable to Tenant's early
entry and use of the Premises as reasonably determined by Landlord, (iv)
Tenant shall not unreasonably interfere, delay or hinder Landlord, its
agents, contractors or subcontractors in the construction of the Tenant
Improvements in accordance with the provisions of this Lease, and (v) Tenant
shall not use the Premises for the storage of inventory or otherwise
commence the operation of business during the period of such early entry.
Upon Tenant's breach of any of the foregoing conditions, Landlord may, in
addition to exercising any of its other rights and remedies set forth
herein, revoke such license upon notice to Tenant. Early entry by Tenant in
accordance with this Section 3.3 shall not constitute occupancy of the
Premises for purposes of establishing the Commencement Date.
3.4 Delay in Possession. If for any reason Landlord cannot
deliver possession of the Premises to Tenant on or before the Commencement
Date, Landlord shall not be subject to any liability therefor, and such
failure shall not affect the validity of this Lease or the obligations of
Tenant hereunder, but in such case, Tenant shall not be obligated to pay
Monthly Rent or Additional Rent other than as provided in Section 3.3 and
Section 3.5 until the Commencement Date as defined in Section 3.2 above, has
occurred. If Landlord does not deliver possession of the Premises to Tenant
within ten (10) days following the full execution of the Lease by Landlord
and Tenant plus periods attributable to Tenant Delays or Unavoidable Delay,
Tenant may, at its option, by Notice to Landlord within ten (10) days
thereafter, terminate this Lease, in which event the parties shall be
discharged from all further obligations hereunder; provided, however, if
Tenant fails to give such notice to Landlord within such ten-day period,
Tenant shall no longer have the right to terminate this Lease under this
Section 3.4. Tenant understands that, notwithstanding anything to the
contrary contained herein, Landlord shall have no obligation to deliver
possession of the Premises to Tenant for so long as Tenant fails to deliver
to Landlord executed copies of policies of insurance or certificates thereof
as required under Section 11.8.
3.5 Tenant Delays. The Commencement Date shall not be delayed or
postponed due to Tenant Delays, and the Term, Tenant's obligations to pay
Rent and all of Tenant's other obligations under this Lease shall commence
upon the date which would have been the Commencement Date but for Tenant
Delays.
3.6 Condition of Premises. Landlord's sole construction
obligations, if any, regarding Tenant Improvements for the Premises are set
forth in Article XX and the Work Letter. The taking of possession or use of
the Premises by Tenant for any purpose other than as provided in Section 3.3
shall conclusively establish that Tenant has inspected the Premises and
accepts them as being in good and sanitary order, condition and repair,
except for latent structural structural defects and Landlord's maintenance
obligations set forth in Article IX.
3.7 No Representations. Tenant acknowledges that neither
Landlord nor any of Landlord's Agents has made any representations or
warranties as to the suitability or fitness of the Premises for the conduct
of Tenant's business including, but not limited to, any representations or
warranties regarding zoning or other land use matters, or for any other
purpose, and that neither Landlord nor any of Landlord's Agents has agreed
to undertake any alterations or additions or construct any Tenant
Improvements to the Premises except as expressly provided in this Lease.
Landlord is not aware of any restrictions that would adversely affect the
Permitted Uses contemplated in this Lease.
ARTICLE IV
RENT AND ADJUSTMENTS
4.1 Monthly Rent. From and after the Commencement Date, Tenant
shall pay to the Landlord, for each calendar month of the Term, the Monthly
Rent set forth in Item 9 of the Basic Lease Provisions, as the same may be
adjusted from time to time as provided in Section 4.2. Monthly Rent shall be
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due and payable to Landlord in lawful money of the United States, in
advance, on the first (1st) day of each calendar month of the Term, without
abatement, deduction, claim or offset, and without prior notice, invoice or
demand, at Landlord's address set forth in Item 1 of the Basic Lease
Provisions or at such place as Landlord may from time to time designate.
Tenant's payment of Monthly Rent for the first (1st) month of the Term shall
be delivered to Landlord concurrently with Tenant's execution of this Lease.
4.2 Adjustments. Monthly Rent shall be adjusted from time to time
as provided in ExhibitE.
4.3 Additional Rent. All Additional Rent shall be due and payable
to Landlord in lawful money of the United States, at Landlord's address set
forth in Item 1 of the Basic Lease Provisions or at such other place as
Landlord may from time to time designate, without abatement, deduction,
claim or offset, within ten (10) days of receipt of Landlord's invoice or
statement for same, or if this Lease provides another time for the payment
of certain items of Additional Rent, then at such other time.
4.4 Prorations. If the Commencement Date is not the first (1st)
day of a month, or if the expiration of the Term of this Lease is not the
last day of a month, a prorated installment of Monthly Rent based on a
thirty (30) day month shall be paid for the fractional month during which
the Term commences or terminates.
4.5 Late Payment Charges. Tenant acknowledges that late payment
by Tenant to Landlord of Rent under this Lease will cause Landlord to incur
costs not contemplated by this Lease, the exact amount of which is extremely
difficult or impracticable to determine. Such costs include, but are not
limited to, processing and accounting charges, late charges that may be
imposed on Landlord by the terms of any Mortgage, and late charges and
penalties that may be imposed due to late payment of Real Property Taxes.
Therefore, if any installment of Monthly Rent or any payment of Additional
Rent due from Tenant is not received by Landlord in good funds by the tenth
(10) calendar day from the applicable due date, Tenant shall pay to Landlord
an additional sum equal to the lesser of One Thousand Dollars ($1,000.00) or
three percent (3%) of the amount overdue as a late charge for every month or
portion thereof that such amount remains unpaid. The parties acknowledge
that this late charge presents a fair and reasonable estimate of the costs
that Landlord will incur by reason of the late payment by Tenant.
Acceptance of any late Rent and late charge therefor shall not prevent
Landlord from exercising any of the other rights and remedies available to
Landlord for any other Event of Default under this Lease. Notwithstanding
the foregoing (i) should any payment of Rent by personal check be rejected
for insufficient funds, Landlord shall have the right, upon notice to
Tenant, to require that all future payments by Tenant under this Lease be by
cashier's check acceptable to Landlord, and (ii)upon the third (3rd)
occurrence during the Term of Tenant's failure to timely pay Rent when due,
Landlord may, upon notice to Tenant, require that Monthly Rent for the
balance of the Term be made in quarterly installments, in advance, in an
amount equal to the sum of the Monthly Rent amounts payable during such
three (3) month period.
4.6 Security Deposit. Tenant has deposited with Landlord the sum
set forth in Item 10 of the Basic Lease Provisions as a Security Deposit for
the full and faithful performance of every provision of this Lease to be
performed by Tenant. Upon an uncured Event of Default, and whether or not
Landlord is informed of or has knowledged of the event of Default, the
Security Deposit shall be deemed to be automatically applied, without waiver
of any rights Landlord may have under this Lease or at law or in equity as a
result of an Event of Default, to the payment of any Rent not paid when due,
the repair of damage to the Premises or the payment of any other amount
which Landlord may spend or become obligated to spend by reason of an Event
of Default, to the full extent permitted by law. If any portion of the
Security Deposit is so applied, Tenant shall, within ten (10) days after
written demand therefor, deposit cash with Landlord in an amount sufficient
to restore the Security Deposit to its original amount. Landlord shall not
be required to keep the Security Deposit separate from its general funds.
The unused portion of the Security Deposit, if any, shall be returned to
Tenant within thirty (30) days of the expiration of this Lease or any
termination of this Lease not resulting from an Event of Default, so long as
Tenant has vacated the Premises in the manner required by this Lease and
paid all sums required to be paid under this Lease, provided however, that
Landlord may retain the Security Deposit until such time as any amounts of
Additional Rent due from Tenant have been determined and paid in full.
Tenant hereby waives the provisions of Section 1950.7(c) of the California
Civil Code and any present or future laws otherwise governing the return of
the Security Deposit to Tenant to the extent of reasonably anticipated
Additional Rent retained by Landlord pursuant to the previous sentence.
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ARTICLE V
USE
5.1 Tenant's Use. Tenant shall use the Premises solely for the
purposes set forth in Item 11 of the Basic Lease Provisions and shall use the
Premises for no other purpose. Tenant's use of the Premises shall be
subject to all of the terms and conditions of this Lease including, but not
limited to, all the provisions of this Article V. Tenant, at Tenant's sole
cost and expense, shall procure, maintain and make available for Landlord's
inspection throughout the Term, all governmental approvals, licenses and
permits required for the proper and lawful conduct of Tenant's permitted use
of the Premises. At Landlord's request, Tenant shall deliver copies of all
such approvals, licenses and permits to Landlord.
5.2 Compliance With Applicable Laws. Throughout the Term,
Tenant, at Tenant's sole cost and expense, shall comply with, and shall not
use the Premises, Building or Common Area, or suffer or permit anything to
be done in or about the same which will in any way conflict with, (i) any
and all present and future laws, statutes, zoning restrictions, ordinances,
orders, regulations, directions, rules and requirements of all governmental
or private authorities having jurisdiction over all or any part o the
Premises (including, but not limited to, state, municipal, county and
federal governments and their departments, bureaus, boards and officials)
pertaining to the use or occupancy of, or applicable to, the Premises or
privileges appurtenant to or in connection with the enjoyment of the
Premises, (ii)any and all applicable federal, state and local laws,
regulations or ordinances pertaining to air and water quality, Hazardous
Materials (as defined in Section 6.1), waste disposal, air emissions and
other environmental or health and safety matters, zoning, land use and
utility availability, which impose any duty upon Landlord or Tenant directly
or with respect to the use or occupation of the Project or any portion
thereof, (iii) the requirements of the Board of Fire Underwriters or other
similar body now or hereafter constituted relating to or affecting the
condition, use or occupancy of the Project or any portion thereof, (iv) any
covenants, conditions, easements or restrictions now or hereafter affecting
or encumbering the Project or any portion thereof, regardless of when they
become effective, (v) the Rules and Regulations, and (vi) good business
practices (collectively, (i) through (vi) above are hereinafter referred to
as "Applicable Laws"). Tenant shall not commit any waste of the Premises,
Building or Project, or any public or private nuisance or any other act or
thing which might or would disturb the quiet enjoyment of any other tenant
of Landlord or any occupant of nearby property. Tenant shall not place or
permit to be placed any loads upon the floors, walls or ceilings in excess
of the maximum designed load specified by Landlord or which might damage the
Premises or the Building, or place or permit to be placed any liquids in
levels in excess of applicable laws or regulations in the drainage systems,
and Tenant shall not dump or store, or permit to be dumped for stored, any
inventory, waste materials, refuse or other materials or allow any such
materials to remain outside the Building proper, except in designated
enclosed trash areas. Tenant shall not conduct or permit any auctions,
sheriff's sales or other like activities at the Project or any portion
thereof.
5.3 Restrictions. Tenant agrees that it will subordinate this
Lease to any other covenants, conditions and restrictions and any reciprocal
easement agreements or any similar agreements which Landlord may hereafter
record against the Premises and to any amendment or modification to any of
the existing Restrictions, provided that such subordination does not
unreasonably interfere with Tenant's use and enjoyment of the Premises,
adversely affect Tenant's rights, or increase the monetary or other
obligations of Tenant under this Lease.
5.4 Landlord's Right of Entry. Landlord and Landlord's Agents
shall have the right to enter the Premises at all reasonable times upon
reasonable notice to Tenant, except for emergencies in which case no notice
shall be required, to inspect the Premises, to take samples and conduct
environmental investigations, to post notices of nonresponsibility and
similar notices and signs indicating the availability of the Premises for
sale, to show the Premises to interested parties such as prospective lenders
and purchasers, to make necessary Alterations or maintenance and repairs, to
perform Tenant's obligations as permitted herein when Tenant has failed to
do so and, at any reasonable time after one hundred eighty (180) days prior
to the expiration of the Term, to place upon the Premises reasonable signs
indicating the availability of the Premises for lease and to show the
Premises to prospective tenants, all without being deemed to have caused an
eviction of Tenant and without any liability to Tenant or abatement of Rent.
The above rights are subject to reasonable security regulations of Tenant,
and in exercising its rights set forth herein, Landlord shall endeavor to
cause the least possible interference with Tenant's business. Landlord
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shall at all times have the right to retain a key which unlocks all of the
doors in the Premises, excluding Tenant's vaults and safes, and Landlord and
Landlord's Agents shall have the right to use any and all means which
Landlord may deem proper to open the doors in an emergency to obtain entry
to the Premises, and any entry to the Premises so obtained by Landlord or
Landlord's Agents shall not be deemed to be a forcible or unlawful entry
into, or a detainer of, the Premises, or an eviction of Tenant from the
Premises if conducted reasonably in accordance with the terms of this Lease.
ARTICLE VI
HAZARDOUS MATERIALS
6.1 Definition of Hazardous Materials. For purposes of this
Lease, the term "Hazardous Materials" includes (i) any "hazardous materials"
as defined in Section 25501(k) of the California Health and Safety Code
unless Tenant establishes, to the satisfaction of Landlord, that because of
the quantity, concentration, or physical or chemical characteristics, such
substance or matter does not pose a present or potential hazard to human
health and safety or to the environment, (ii) any other substance or matter
which results in liability to any person or entity from exposure to which
substance or matter under any statutory or common law theory, and (iii) any
substance or matter which is in excess of relevant and appropriate levels
set forth in any applicable federal, state or local law or regulation
pertaining to any hazardous or toxic substance, material or waste, or for
which any applicable federal, state or local agency orders or otherwise
requires removal, treatment or remediation.
6.2 Prohibition/Compliance. Tenant shall not cause or permit
any Hazardous Material (as hereinafter defined) to be brought upon, kept or
used in or about the Premises or the Project in violation of applicable law
by Tenant, its agents, employees, contractors or invitees. If Tenant
breaches the obligation stated in the preceding sentence, or if the presence
of Hazardous Materials results in unlawful contamination of the Premises,
the Building, the Project or any adjacent property or if unlawful
contamination of the Premises, the Building, the Project or any adjacent
property by Hazardous Material otherwise occurs during the term of this
Lease or any extension or renewal hereof or holding over hereunder, then
Tenant shall indemnify, defend and hold Landlord, its agents and contractors
harmless from any and all claims, judgments, damages penalties, fines,
costs, liabilities or losses (including without limitation diminution in
value of the Premises or any portion of the Project, damages for the loss or
restriction on use of rentable or usable space or of any amenity of the
Premises or Project, damages arising from any adverse impact on marketing of
space in the Premises or the Project, and sums paid in settlement of claims,
attorneys' fees, consultant fees and expert fees) which arise during or
after the Lease term as a result of such contamination. For the purpose of
this Section 6.2, unlawful contamination is Hazardous Material which
violates any applicable local, state or federal laws or any regulations or
standards promulgated thereunder, including requirements or standards
imposed by any governmental agency or by governmental order or court having
jurisdiction over the Project. This indemnification of Landlord by Tenant
includes, without limitation, costs incurred in connection with any
investigation of site conditions of any cleanup, remedial, removal, or
restoration work required by any federal, state or local governmental agency
or political subdivision because of Hazardous Material present in the air,
soil or ground water above on or under the Premises. Without limiting the
foregoing, if the presence of any Hazardous Material on the Premises, the
Building, the Project or any adjacent property, caused or permitted by
Tenant results in any unlawful contamination of the Premises, the Building,
the Project or any adjacent property, Tenant shall promptly take all actions
at its sole expense as are necessary to ensure the Premises, the Building,
the Project or any adjacent property meets all applicable local, state and
federal laws and any regulations or standards promulgated thereunder, in
effect now or in the future, including requirements by any governmental
agency or imposed by any governmental order or court having jurisdiction
over the project, provided that Landlord's approval of such action shall
first be obtained, which approval shall not unreasonably be withheld so long
as such actions would not potentially have any material adverse long-term or
short-term effect on the Premises, the Building or the Project.
6.3 Business. Landlord acknowledges that it is not the intent of
this Article 6 to prohibit Tenant from operating its business as described
in Item 11 of the Basic Lease Provisions above. Tenant may operate its
business according to the custom of the industry so long as the use or
presence of Hazardous Material is strictly and properly monitored according
to all applicable governmental requirements. As a material inducement to
Landlord to allow Tenant to use Hazardous Material in connection with its
business, Tenant agrees to deliver to Landlord prior to the Commencement
Date a list identifying each type of Hazardous Material to be present on
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the Premises and setting forth any and all governmental approvals or permits
required in connection with the presence of such Hazardous Material on the
Premises ("Hazardous Material List"). Tenant shall deliver to Landlord an
updated Hazardous Material List at least once a year. Tenant shall deliver
to Landlord true and correct copies of the following documents (hereinafter
referred to as the "Documents") relating to the handling, storage, disposal
and emission of Hazardous Material prior to the Commencement Date, or if
unavailable at the time, concurrent with the receipt from or submission to a
governmental agency: permits; approvals; reports and correspondence;
storage and management plans, notice of violations of any laws; plans
relating to the installation of any storage tanks to be installed in or
under the Project (provided, said installation of tanks shall only be
permitted after Landlord has given Tenant its written consent to do so,
which consent may be withheld in Landlord's sole and absolute discretion);
and all closure plans or any other documents required by any and all
federal, state and local governmental agencies and authorities for any
storage tanks installed in, on or under the Project for the closure of any
such tanks. Tenant is not required, however, to provide Landlord with any
portion(s) of the Documents containing information of a proprietary nature
which, in and of themselves, do not contain a reference to any Hazardous
Material or hazardous activities. It is not the intent of this Section to
provide Landlord with information which could be detrimental to Tenant's
business should such information become possessed by Tenant's competitors.
6.4 Termination of Lease. Notwithstanding the provisions of
Section 6.2 above, if Tenant or the proposed assignee or sublessee is
subject to an enforcement order issued by any governmental authority in
connection with the use, disposal or storage of a Hazardous Material at the
Project, Landlord shall have the right to terminate the Lease in Landlord's
sole and absolute discretion (with respect to any such matter involving
Tenant) and it shall not be unreasonable for Landlord to withhold its
consent to any proposed assignment or subletting (with respect to any such
matter involving a proposed assignee or sublessee).
6.5 Testing. At reasonable times, and from time to time, prior to
the expiration of the Term Landlord shall have the right at its own expense
to conduct appropriate investigations and tests of the Premises, Building
and Project to demonstrate that unlawful contamination has occurred as a
result of Tenant's use of the Premises. Tenant shall be responsible for the
cost of any investigations and tests which indicate that unlawful
contamination resulted from Tenant's use of the Premises. Tenant shall be
solely responsible for and shall defend, indemnify and hold the Landlord,
its agents and contractors harmless from an against any and all claims,
costs and liabilities including actual attorneys' fees and costs, arising
out of or in connection with any removal, clean up, restoration and
materials required hereunder to ensure the Premises and any other property
of whatever nature, meets all applicable local, state and federal laws and
any regulations or standards promulgated thereunder, in effect now or in the
future, including requirements by any governmental agency or imposed by any
governmental order or court having jurisdiction over the project. Tenant
shall pay for the cost of a third party prepared Phase I exit audit of the
Premises at the termination of the Leases plus the cost of any tests or
remediations reasonably recommended in said audit to bring any Tenant caused
contamination to meet all applicable local, state and federal laws and any
regulations or standards promulgated thereunder, in effect now or in the
future, including requirements by any governmental agency or imposed by any
governmental order or court having jurisdiction over the Project.
6.6 Tenant's Responsibility at Conclusion of Lease.
Promptly upon the expiration or sooner termination of this Lease, Tenant
shall certify to Landlord in writing that (i)Tenant has made a diligent
effort to determine whether any Hazardous Materials are on, under or about
the Premises as a result of any acts or omissions or Tenant or Tenant's
Agents and (ii)no such Hazardous Materials exist on, under or about the
Premises other than as specifically identified to Landlord by Tenant in
writing. In addition, Tenant shall provide Landlord with independent
verification (acceptable to Landlord) that (i) all permits, reports, closure
or decertification procedures, if applicable, have been secured or satisfied
by Tenant for its discontinuance of use of the Premises under this Lease and
(ii) the interior of the Premises is free of contamination by Hazardous
Materials. If Tenant or its independent verification discloses the
existence of Hazardous Materials on, under or about the Premises, or if
Landlord at any time discovers that Tenant or Tenant's Agents caused or
permitted the release of a Hazardous Material on, under, from or about the
Premises, Tenant shall, at Landlord's request, immediately prepare and
submit to Landlord within thirty (30) days after such request a
comprehensive plan, subject to Landlord's approval, specifying the actions
to be taken by Tenant to return the Premises to the condition existing prior
to the introduction of such Hazardous Materials. Upon Landlord's approval
of such cleanup plan, Tenant shall, at Tenant's sole cost and expense,
without limitation on any rights and remedies of Landlord under this Lease
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or at law or in equity, immediately implement such plan and proceed to clean
up such Hazardous Materials in accordance with all Applicable Laws and as
required by such plan and this Lease.
ARTICLE VII
OPERATING EXPENSES; TAXES; UTILITIES
7 1. Payment of Maintenance Expenses. Prior to the Commencement Date
and thereafter prior to the commencement of each of Landlord's fiscal years
during the Term, Landlord shall give Tenant a written estimate based on
generally accepted accounting principles of Maintenance Expenses (hereafter
defined) for the ensuing fiscal year or partial fiscal year as the case may
be. Tenant shall pay, as an item of Additional Rent such estimated amount in
equal monthly installments, in advance, on or before the first (1st) day of
each calendar month concurrent with its payment of Monthly Rent. If Landlord
has not furnished its written estimate by the time set forth above, Tenant
shall pay monthly installments of Maintenance Expenses at the rate
established for the prior fiscal year, if any; provided that when the new
estimate is delivered to Tenant, Tenant shall (provided it is given not less
than thirty (30) days prior written notice) at the next monthly payment date
pay Landlord any accrued deficiency based on the new estimate, or Landlord
shall credit any accrued overpayment based on such estimate toward Tenant's
next installment payment hereunder. Within a reasonable period of time
after the end of each fiscal year (in no event more than one hundred (120)
days after the end of each fiscal year unless sooner completed by Landlord)
Landlord shall furnish Tenant a statement showing in reasonable detail the
actual Maintenance Expenses incurred for the period in question. If Tenant's
estimated payments are less than the actual Maintenance Expenses as shown by
the applicable statement, Tenant shall pay the difference to Landlord within
thirty (30) days thereafter. If Tenant shall have overpaid Landlord,
Landlord shall credit such overpayment toward Tenant's next installment
payment hereunder or if in the last year of the Lease Term and at Tenant's
option, refund such overpayment within 30 days thereafter. When the final
determination is made of the actual Maintenance Expenses for the fiscal year
in which this Lease terminates, Tenant shall, even if this Lease has
terminated, pay to Landlord within thirty (30) days after notice the excess
of such actual Maintenance Expenses over the estimate of Maintenance
Expenses paid. Conversely, any overpayment shall be rebated by Landlord to
Tenant within 30 days. If Landlord shall determine at any time that the
estimate of Maintenance Expenses for the current fiscal year is or will
become inadequate to meet all such Maintenance Expenses for any reason,
Landlord shall immediately determine the approximate amount of such
inadequacy and issue a supplemental estimate based on generally accepted
accounting principles as to such Maintenance Expenses and Tenant shall pay
any increase as reflected by such supplemental estimate, provided it is
given not less than 20 days prior written notice. Landlord shall keep or
cause to be kept separate and complete books of accounting covering all
Maintenance Expenses, and shall preserve for at least twenty-four (24)
months after the close of each fiscal year all material documents evidencing
said Maintenance Expenses for that fiscal year. Tenant, at its sole cost and
expense, through any certified public accountant designated by it, or by
Tenant's or Tenant's parents financial analysis department, shall have the
right, during reasonable business hours and not more frequently than twice
during any fiscal year, to examine and/or audit the books and documents
mentioned above evidencing such costs and expenses for the previous fiscal
year. Any delay or failure by Landlord in delivering any estimate or
statement pursuant to this Section 7.1 shall not constitute a waiver of its
right to require Tenant to pay all Maintenance Expenses pursuant hereto,
unless such failure continues for a period in excess of twelve (12) months.
7.2 Definition of Maintenance Expenses. The term "Maintenance
Expenses" means all reasonable direct costs and expenses incurred by
Landlord or Landlord's Agents in connection with the operation, maintenance
and repair of the Outside Areas, including, but not limited to, the
following: actual costs and expenses incurred in connection with labor and
materials utilized in the performance of Landlord's maintenance and repair
obligations pursuant to Section 9.1; any and all assessments levied against
the Premises or the Common Area, water, electrical and other utility
services supplied directly to the Building and Common Area, removal of
trash, rubbish and other refuse from the Outside Areas and Common Area,
cleaning of and replacement of signs of the Outside Areas and Common Area,
including revamping and repairs made as reasonably required; repair,
operation and maintenance of the Common Area, including, but not limited to,
removal of any obstructions not reasonably required for the Common Area
uses, prohibition and removal of the sale or display of merchandise or the
storing of materials and/or equipment in the Common Area, and payment of all
electrical, water and other utility charges or fees for services furnished
to the Common Area and Outside Areas; obtaining and maintaining public
liability, property damage and other forms of insurance which Landlord may
or is required to maintain in connection with the Building and the Common
Area (including the payment of any deductibles thereunder); costs incurred
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in connection with Tenant's compliance of any laws or changes in laws
regarding Hazardous Materials; equipment and supplies; employment of such
personnel as Landlord may deem reasonably necessary, if any, to direct
parking and police the Common Area and facilities; the cost of any capital
improvements (other than tenant improvements for specific tenants)
specifically benefitting Tenant and made by or on behalf of Landlord to the
Outside Areas or Common Area to the extent of the amortized amount thereof
over the useful life of such capital improvements calculated at a market
cost of funds, all as reasonably determined by Landlord using generally
accepted accounting principles, for each such year of useful life during the
Term; depreciation amortized over the longest useful life permitted under
the Internal Revenue Code of machinery and equipment used in connection with
the maintenance and operation of the Outside Areas or the Common Area for
which a reasonable reserve has not been established as herein provided;
employment of personnel used in connection with any of the foregoing,
including, but not limited to, payment or provision for unemployment
insurance, workers' compensation insurance and other employee costs; the
actual cost of any Environmental consultant or other services used in
connection with Landlord's monitoring of the Project with respect to
Hazardous Materials (such costs shall not exceed $1,000.00 per calendar
year); the cost of any tax, insurance or other consultant utilized in
connection with the Project; and any other items reasonably necessary from
time to time to properly repair, replace, maintain and operate the Outside
Areas or the Common Area. If Landlord elects to perform any maintenance or
repair herein described in conjunction with properties other than the
Project, and if a common maintenance contractor is contracted with for such
purpose, the contract amount allocable to the Project, as reasonably
determined by Landlord, shall be added to and deemed a part of Maintenance
Expenses hereunder. Increases in Maintenance Expenses by reason of a
disproportionate impact by Tenant thereon (for example, and not by way of
limitation, increases in costs of trash collection because of Tenant's
excessive generation of trash or increases in costs of Outside Areas or
Common Area maintenance because of Tenant's unpermitted storage of inventory
or materials in the Outside Areas or Common Area), in Landlord's reasonable
judgment, may be billed by Landlord, as an item of Additional Rent, directly
to Tenant.
7.3 Payment of Real Property Taxes. Landlord shall pay, at Tenant's
expense and subject to reimbursement by Tenant as hereinafter set forth, all
Real Property Taxes (as hereinafter defined) levied against the Premises
during the Term and any Real Property Taxes which have accrued during the
Term. The amount of such payments by Landlord shall be based on tax bills
and notices received by Landlord pertaining to the Premises (and if Tenant
receives any such tax bills or notices, Tenant shall immediately forward
same to Landlord) and such payment shall be made before the last day such
Real Property Taxes are payable without penalty. Tenant shall reimburse to
Landlord, as an item of Additional Rent, the full amount of such Real
Property Taxes paid by Landlord within thirty (30) days after Landlord's
statement or invoice therefor, which statement or invoice shall be
accompanied by reasonable evidence of the amount of such Real Property
Taxes. Real Property Taxes shall not include any late charges, penalties or
interest attributable to Landlord's late payment (other than caused solely
by Tenant) or any charges, assessments or levies attributable to another
tenant or another tenant's improvements.
7.4 Definition of Real Property Taxes. The term "Real Property
Taxes" means any form of tax, assessment, charge, license, fee, rent tax,
levy, penalty (if a result of Tenant's delinquency), real property or other
tax (other than Landlord's net income, estate, succession, inheritance, or
franchise taxes), now or hereafter imposed with respect to the Project or
any part thereof (including any alterations), this Lease or any Rent payable
under this Lease by any authority having the direct or indirect power to
tax, or by any city, county, state or federal government or any improvement
district or other district or division thereof, whether such tax or any
portion thereof (i)is determined by the area of the Project or any part
thereof or the Rent payable under this Lease by Tenant including, but not
limited to, any gross income or excise tax levied by any of the foregoing
authorities with respect to receipt of the Rent due under this Lease, (ii)is
levied or assessed in lieu of, in substitution for, or in addition to,
existing or additional taxes with respect to the Project or any part thereof
whether or not now customary or within the contemplation of Landlord or
Tenant, or (iii)is based upon any legal or equitable interest of Landlord in
the Project or any part thereof.
7.5 Apportionment of Taxes. If the Project is assessed as part
of a larger parcel, then Landlord shall equitably apportion the Real
Property Taxes assessed against the real property, which includes the
Project and reasonably determine the amount of Real Property Taxes
attributable to the Project. If other buildings exist on the assessed
parcel, the Real Property Taxes apportioned to the Project shall be based
upon the ratio of the square footage of all buildings within the Project to
the square footage of all buildings on the assessed parcel, and the amount
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of Real Property Taxes so apportioned to the Project shall be included as
part of Operating Expenses. Landlord's reasonable determination of such
apportionment shall be conclusive.
7.6 Tax on Improvements; Permitted Contests. Tenant shall, at
Landlord's election, be directly responsible for and shall pay the full
amount of any increase in Real Property Taxes attributable to any and all
Tenant Improvements and any other improvements of any kind whatsoever placed
in, on or about the Premises for the benefit of, at the request of, or by
Tenant. Tenant may contest the amount or validity of any Real Property
Taxes by appropriate proceedings, provided that Tenant gives Landlord prior
Notice of any such contest and keeps Landlord advised as to all proceedings,
and provided further that Tenant shall continue to reimburse Landlord for
Landlord's payment of such Real Property Taxes unless such proceedings shall
operate to prevent or stay such payment and the collection of the tax so
contested. Landlord shall join in any such proceedings if any Applicable
Laws shall so require, provided that Tenant shall hold harmless, indemnify,
protect and defend Landlord from and against any liability, claim, demand,
cost or expense in connection therewith including, but not limited to,
actual attorneys' fees and costs reasonably incurred.
7.7 Utilities and Services. Tenant shall be responsible for and
shall pay promptly, directly to the appropriate supplier, all charges for
water, gas, electricity, heat, light, power, telephone, refuse pickup,
janitorial service, interior landscape maintenance and all other utilities,
materials and services furnished directly to Tenant or the Premises or used
by Tenant in, on or about the Premises during the Term, together with any
taxes thereon. If any utilities or services are not separately metered or
assessed to Tenant, Landlord shall make a reasonable determination of
Tenant's proportionate share of the cost of such utilities and services and
Tenant shall pay such amount to Landlord, as an item of Additional Rent,
within thirty (30) days after receipt of Landlord's statement or invoice
therefor. Alternatively, Landlord may elect to include such cost in the
definition of Project Costs, in which event Tenant shall pay Tenant's share
of such cost in the manner set forth in Section 7.1. Landlord may also
require Tenant to have any Specialized HVAC system separately metered to
Tenant, at Tenant's expense. Landlord shall not be liable in damages or
otherwise for any failure or interruption of any utility or other service
furnished to the Premises, unless the direct result of or directly caused by
Landlord's gross negligence. No such failure or interruption shall be
deemed an eviction or entitle Tenant to terminate this Lease or withhold or
abate any Rent due hereunder.
ARTICLE VIII
ALTERATIONS
8.1 Permitted Alterations. After the Commencement Date, Tenant
shall not make or permit any Alterations in, or about the Premises without
the prior written consent of Landlord (which consent shall not be
unreasonably withheld), except for the Work defined in the Workletter
attached hereto as Exhibit "C", and Alterations not exceeding Five Thousand
Dollars ($5,000.00) per occurrence. Notwithstanding the foregoing, without
the prior written consent of Landlord (which consent shall not be
unreasonably withheld, in no event shall any Alterations (i)affect the
exterior of the Building or the outside areas (or be visible from adjoining
sites), (ii)affect or penetrate any of the structural portions of the
Building including, but not limited to, the roof, (iii)require any change to
the basic floor plan of the Premises, any change to the structural or
mechanical components of the Premises, or any governmental approval or
permit as a prerequisite to the construction thereof, (iv) interfere in any
manner with the proper functioning of or Landlord's access to any
mechanical, electrical, plumbing or HVAC systems, facilities or equipment
located in or serving the Building, or (v)diminish the value of the
Premises. All Alterations shall be constructed pursuant to plans and
specifications previously provided to and, when applicable, approved in
writing by Landlord, shall be installed by a licensed contractor at Tenant's
sole expense in compliance with all Applicable Laws, and shall be
accomplished in a good and workmanlike manner conforming in quality and
design with the Premises existing as of the Commencement Date. No Hazardous
Materials including, but not limited to, asbestos or asbestos-containing
materials, shall be used by Tenant or Tenant's Agents in the construction of
any Alterations permitted hereunder. All Alterations made by Tenant shall be
and become the property of Landlord upon the installation thereof and shall
not be deemed Tenant's Personal Property; provided, however, that except for
the Work defined in the Workletter attached hereto as Exhibit "C", Landlord
may, at its option, require that Tenant, upon the termination of this Lease,
at Tenant's expense, remove any or all nonstructural Alterations, except
Alterations required by law, installed by or on behalf of Tenant and return
the Premises to its condition as of the Commencement Date of this Lease,
normal wear and tear excepted. Notwithstanding any other provisions of this
Lease, Tenant shall be solely responsible for the maintenance, repair and
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replacement of any and all Alterations made by or on behalf of Tenant
(including without limitation by Landlord on behalf of Tenant) to the
Premises.
8.2 Trade Fixtures. Tenant shall, at its own expense, provide,
install and maintain in good condition all of Tenant's Personal Property
required in the conduct of its business in the Premises.
8.3 Mechanic's Liens. Tenant shall give Landlord Notice of
Tenant's intention to perform any work on the Premises which might result in
any claim of lien at least twenty (20) days prior to the commencement of
such work to enable Landlord to post and record a notice of
nonresponsibility or other notice Landlord deems proper prior to the
commencement of any such work. Tenant shall not permit any mechanic's,
materialmen's or other liens to be filed against the property of which the
Premises are a part or against Tenant's leasehold interest in the Premises.
If Tenant fails to cause the release of record of any lien(s) filed against
the Premises or its leasehold estate therein by payment or posting of a
proper bond within ten (10) days from the date of the lien filing(s), then
Landlord may, at Tenant's expense, cause such lien(s) to be released by any
means Landlord deems proper including, but not limited to, payment of or
defense against the claim giving rise to the lien(s). All sums reasonably
disbursed, deposited or incurred by Landlord in connection with the release
of the lien(s) including, but not limited to, all costs, expenses and actual
attorneys' fees, shall be due and payable by Tenant to Landlord, as an item
of Additional Rent, on demand by Landlord, together with interest thereon at
the Applicable Rate from the date of such demand until paid by Tenant.
ARTICLE IX
MAINTENANCE AND REPAIR
9.1 Landlord's Maintenance of Outside Areas. Landlord shall,
subject to receiving Tenant's payment of Maintenance Expenses, and subject
to Section 9.2, Article XII and Article XIII, maintain in good condition and
repair the Outside Areas and every part thereof, including but not limited
to, landscaping (including replacement thereof), sprinkler systems,
walkways, parking areas, and approved signage. Such maintenance shall
include pest control, restriping of the parking areas and painting of the
exterior walls of the Building, as and when the same becomes necessary in
Landlord's sole discretion which shall not be unreasonable, maintenance and
repair of the foundations, exterior walls and the structural condition of
interior bearing walls. The cost of any maintenance and repairs on the part
of Landlord provided for in this Section 9.1 shall be amortized over the
longest useful life permitted under the Internal Revenue Code and shall be
considered part of Maintenance Expenses and paid by Tenant in the manner set
forth in Section 7.1, except that repairs which Landlord deems arise out of
any act or omission of Tenant or Tenant's Agents shall be made at the
expense of Tenant. Landlord's obligation to repair and maintain hereunder
shall be limited to the cost of effecting such repair and maintenance and in
no event shall Landlord be liable for any costs or expenses in excess of
said amounts, including but not limited to any consequential damages,
opportunity costs or lost profits incurred or suffered by Tenant. Landlord
shall be responsible at Landlord's sole cost and expense to repair any
damage to the Premises caused by Landlord's or Landlord's Agents'
negligence, willful acts or omissions or default.
9.2. Tenant's Maintenance and Repair Obligations. Except as
otherwise provided, Tenant shall at all times during the Term of this Lease,
at Tenant's sole cost and expense, clean, keep, maintain, repair and make
necessary improvements to, the Building and every part thereof and all
improvements therein or thereto, in good and sanitary order and condition to
the reasonable satisfaction of Landlord and in compliance with all
Applicable Laws. Tenant's repair and maintenance obligations herein shall
include, but are not limited to, all necessary maintenance and repairs to
all portions of the Building, and all exterior entrances, all glass,
windows, window casements, show window moldings, partitions, doors,
doorjambs, door closures, hardware, fixtures, electrical lighting and
outlets, plumbing fixtures, sewage facilities, interior walls, floors,
ceilings, skylights, fans and exhaust equipment, fire extinguisher equipment
and systems, the roof of the Building, all HVAC equipment, and all repairs
to Specialized HVAC (as hereinafter defined). As part of its maintenance
obligations hereunder, Tenant shall, at Landlord's request, provide Landlord
with copies of all maintenance schedules regarding the maintenance of the
Building, reports and notices prepared by, for, or on behalf of Tenant.
Landlord may impose reasonable restrictions and requirements with respect to
repairs by Tenant, which repairs shall be at least equal in quality to the
original work, and the provisions of Section 8.3 shall apply to all such
repairs. Tenant's obligation to repair includes the obligation to replace,
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as necessary, regardless of whether the benefit of such replacement extends
beyond the Term, subject, however, to the following: So long as:
1. Tenant is not in default;
2. Tenant submits reasonably satisfactory evidence of payment and
maintenance, including without limitation copies of all
invoices, receipts, maintenance records and the like; and
3. All systems, equipment and other items or things provided herein
or contemplated hereby are in good condition, working order and
otherwise in compliance with the terms of this Lease;
as soon as reasonably possible after the expiration of the Lease Term,
Landlord shall (partially) reimburse Tenant for the reasonable cost of a
replacement item pro rata based upon Landlord's reasonable determination of
that portion of the useful life of such item which will extend beyond the
Term, provided that, prior to making any expenditure for such replacement
item:
A. Tenant notifies Landlord in writing of Tenant's desire to
replace the item;
B. Tenant provides to Landlord adequate information concerning the
reasonable cost, anticipated useful life, type of item to be
used as a replacement (name, model number, etc.) and such other
information as Landlord shall reasonably request; and
C. Landlord consents to reimburse a portion of the cost of such
replacement item as provided herein.
Such consent pursuant to provision C shall not to be unreasonably withheld
or delayed, but shall only be required to be given after Landlord receives
from Tenant the written notice and other information contemplated by
provisions A and B above, which must actually be received by Landlord at
least five (5) business days prior to Tenant's proposed purchase of the
replacement item. Notwithstanding the fact that Landlord shall make its
determination as to whether or not a replacement item is eligible for
(partial) reimbursement pursuant to the foregoing provisions within five(5)
business days after actual receipt of the written notice and other
information contemplated by provisions A and B above, Landlord need not make
a determination as to or pay the actual amount of such (partial)
reimbursement until the expiration of the Term, Tenant's qualification for
the (partial) reimbursement pursuant to provisions 1,2 and 3 above and after
Landlord's inspection of the then current condition of the relevant
replacement item to be conducted immediately after the end of said Term,
Landlord's reasonable determination of the remaining useful life of the
replacement item.
Any special or above-standard heating, ventilating and air conditioning
installed by, on behalf of, or at the request of Tenant ("Specialized
HVAC"), shall be paid for and maintained by Tenant at Tenant's sole cost and
expense. Notwithstanding the foregoing, Landlord shall have the right, upon
Notice to Tenant, to undertake the responsibility for maintenance and repair
of automatic fire extinguisher equipment, such as sprinkler systems and
alarms, Specialized HVAC and other obligations of Tenant hereunder which
Landlord deems appropriate to undertake, in which event the cost thereof
shall be included as part of Maintenance Expenses and paid by Tenant in the
manner set forth in Section 7.1.
9.3 Waiver. Tenant hereby waives all rights provided for by the
provisions of Sections 1941 and 1942 of the California Civil Code and any
present or future laws regarding Tenant's right to make repairs at the
expense of Landlord or to terminate this Lease because of the condition of
the Premises.
9.4 Self-Help. If Tenant refuses or fails to repair and maintain
the Premises as required hereunder within ten (10) days from the date on
which Landlord makes a written demand on Tenant to effect such repair and
maintenance, Landlord may enter upon the Premises and make such repairs or
perform such maintenance without liability to Tenant for any loss or damage
that may accrue to Tenant or its merchandise, fixtures or other property or
to Tenant's business by reason thereof, unless due to the negligence or
willful misconduct of Landlord. All sums reasonably disbursed, deposited or
incurred by Landlord in connection with such repairs or maintenance, plus
percent (5%) for overhead, shall be due and payable by Tenant to Landlord,
as an item of Additional Rent, on demand by Landlord, together with interest
at the Applicable Rate on such aggregate amount from the date of such demand
until paid by Tenant.
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ARTICLE X
COMMON AREA AND PARKING
In the event that the Building becomes multi-tenanted, the following shall
apply.
10.1 Grant of Nonexclusive Common Area License and Right.
Landlord hereby grants to Tenant and its permitted subtenants, in common
with Landlord and all persons, firms and corporations conducting business in
the Project and their respective customers, guests, licenses, invitees,
subtenants, employees and agents, the nonexclusive license and right to use
the Common Area within the Project for vehicular parking, for pedestrian and
vehicular ingress, egress and travel, and for such other purposes and for
doing such other things as may be provided for, authorized and/or permitted
by the Restrictions, such nonexclusive license and right to be appurtenant
to Tenant's leasehold estate created by this Lease. The nonexclusive
license and rights granted pursuant to the provisions of this Article X shall
be subject to the provisions of the Restrictions, which pertaining any way
to the Common Area covered by such Restrictions, and the provisions of this
Lease.
10.2 Use of Common Area. Notwithstanding anything to the contrary
herein, Tenant and its successors, assigns, employees, agents and invitees
shall use the Common Area only for the purposes permitted hereby and by the
Restrictions and the Rules and Regulations. All uses permitted within the
Common Area shall be undertaken with reason and judgment so as not to
interfere with the primary use of the Common Area which is to provide
parking and vehicular and pedestrian access throughout the Common Area
within the Project and to adjacent public streets for the Landlord,
Landlord's Agents, its tenants, subtenants and all persons, firms and
corporations conducting business within the Project and their respective
customers, guests and licensees. In no event shall Tenant erect, install,
or place, or cause to be erected, installed, or placed any structure,
building, trailer, fence, wall, signs or other obstructions on the Common
Area except as otherwise permitted herein and in the Restrictions, and
Tenant shall not store or sell any merchandise, equipment or materials on
the Common Area.
10.3 Control of Common Area. Subject to provisions of the
Restrictions, all Common Area and all improvements located from time to time
within the Common Area shall at all times be subject to the exclusive
control and management of the Landlord. Landlord shall have the right to
construct, maintain and operate lighting facilities within the Common Area;
to police the Common Area from time to time; to change the area, level,
location and arrangement of the parking areas and other improvements within
the Common Area; to restrict parking by tenants, their officers, agents and
employees to employee parking areas; to enforce parking charges (by
operation of meters or otherwise); to close all or any portion of the Common
Area or improvements therein to such extent as may, in the opinion of
counsel for Landlord, be legally sufficient to prevent a dedication thereof
or the accrual of any rights to any person or to the public therein; to
close temporarily all or any portion of the Common Area and/or the
improvements thereon; to discourage noncustomer parking; and to do and
perform such other acts in and to said Common Area and improvements thereon
as, in the use of good business judgment, Landlord shall determine to be
advisable.
10.4 Maintenance of Common Area. Landlord shall operate and
maintain (or cause to be operated and maintained) the Common Area in a
first-class condition, in such manner as Landlord in its sole discretion
shall determine from time to time. Without limiting the scope of such
discretion, Landlord shall have the full right and authority to employee or
cause to be employed all personnel and to make or cause to be made all rules
and regulations pertaining to or necessary for the proper operation and
maintenance of the Common Area and the improvements located thereon. The
cost of such maintenance of the Common Area shall be included as part of
Project Costs. No part of the Common Area may be used for the storage of
any items, including without limitation, vehicles, materials, inventory and
equipment. All trash and other refuse shall be placed in designated
receptacles. No work of any kind including, but not limited to, painting,
drying, cleaning, repairing, manufacturing, assembling, cutting,
merchandising or displaying shall be permitted upon the Common Area.
10.5 Revocation of License. All Common Area and improvements
located thereon which Tenant is permitted to use and occupy pursuant to the
provisions of this Lease are to be used and occupied under a revocable
license and right, and if any such license be revoked, or if the amount of
such areas be diminished, Landlord shall not be subject to any liability nor
shall Tenant be entitled to compensation or diminution or abatement of Rent,
and such revocation or diminution of such areas shall not be deemed
constructive or actual eviction. It is understood and agreed that the
condemnation or other taking or appropriation by any public or quasi-public
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authority, or sale in lieu of condemnation, of all or any portion of the
Common Area shall not constitute a violation of Landlord's agreements
hereunder, and Tenant shall not be entitled to participate in or make any
claim for any award or other condemnation proceeds arising from any such
taking or appropriation of the Common Area. Notwithstanding the foregoing,
so long as no Event of Default has occurred and is continuing, Landlord
shall provide to Tenant the number of vehicle parking spaces set forth in
Item 15 of the Basic Lease Provisions throughout the Term (subject to the
rights of Landlord under this Article X).
10.6 Landlord's Reserved Rights. Landlord reserves the right to
install, use, maintain, repair, relocate and replace pipes, ducts, conduits,
wires and appurtenant meters and equipment included in the Premises or
outside the Premises, change the boundary lines of the Project and install,
use, maintain, repair, alter or relocate, expand and replace any Common
Area; provided, however, Landlord shall not unreasonably interfere with
Tenant's use of the Premises. Such rights of Landlord shall include, but
are not limited to, designating from time to time certain portions of the
Common Area as exclusively for the benefit of certain tenants in the
Project.
10.7 Parking. Tenant shall be entitled to the number of vehicle
parking spaces set forth in Item 15 of the Basic Lease Provisions, which
spaces shall be unreserved and unassigned, on those portions of the Common
Area designated by Landlord for parking. Tenant shall not use more parking
spaces than such number. All parking spaces shall be used only for parking
by vehicles no larger than full-size passenger automobiles pick-up trucks or
delivery trucks. Tenant shall not permit or allow any vehicles that belong
to or are controlled by Tenant or Tenant's employees, suppliers, shippers,
customers, or invitees to be loaded, unloaded, or parked in areas other than
those designated by Landlord for such activities. If Tenant permits or
allows any of the prohibited activities described above, then Landlord shall
have the right, without notice, in addition to such other rights and
remedies that Landlord may have, to remove or tow away the vehicle involved
and charge the cost to Tenant, which cost shall be immediately payable upon
demand by Landlord. Parking within the Common Area shall be limited to
striped parking stalls, and no parking shall be permitted in any driveways,
accessways or in any area which would prohibit or impede the free flow of
traffic within the Common Area. If Tenant parks vehicles overnight at the
Project, Tenant shall indemnify, defend and hold Landlord free and harmless
of, from and against any and all claims, demands, suits, damages, losses,
liabilities, costs, and/or expenses (including reasonable attorneys' fees)
arising out of, resulting from or incurred in connection with the overnight
parking of vehicles at the project. Vehicles which have been abandoned or
parking in violation of the terms hereof may be towed away at the owner's
expense.
ARTICLE XI
INDEMNITY AND INSURANCE
11.1 Indemnification. To the fullest extent permitted by law,
Tenant hereby agrees to defend (with attorneys reasonably acceptable to
Landlord), indemnify, protect and hold harmless Landlord and Landlord's
Agents and any successors to all or any portion of Landlord's interest in
the Premises and their directors, officers, partners, employees, authorized
agents, representatives, affiliates and Mortgagees, from and against any and
all damage, loss, claim, liability and expense including, but not limited
to, actual attorneys' fees and legal costs, incurred directly or indirectly
by reason of any claim, suit or judgment brought by or on behalf of (i) any
person or persons for damage, loss or expense due to, but not limited to,
bodily injury or property damage sustained by such person or persons which
arise out of, are occasioned by, or are in any way attributable to the use
or occupancy of the Premises or the acts or omissions of the Tenant or
Tenant's Agents in or about the Premises or the Project (including, but not
limited to, any Event of Default hereunder), or (ii) Tenant or Tenant's
Agents for damage, loss or expense due to, but not limited to, bodily injury
or property damage which arise out of, are occasioned by, or are in any way
attributable to the use of any of the Common Area, except to the extent
caused by the sole active negligence or willful misconduct of Landlord.
11.2. Property Insurance. Landlord shall obtain and keep in force
during the Term, (i) an "all risk" or "special causes of action" property
policy, including earthquake and flood, in the amount of the full
replacement cost covering the Premises, the Building and objects owned by
Landlord and normally covered under a "Boiler and Machinery" policy and any
Alterations made by or at the request of Tenant, and (ii) an "all risk" or
"special causes of action" policy of business interruption and/or loss of
income insurance covering a period of one (1) year, with loss payable to
Landlord to the extent of Monthly Rent and Additional Rent only. Tenant
shall within ten (10) days of receipt of Landlord's invoice or statement for
such insurance pay or reimburse Landlord the cost of same such insurance in
an amount not to exceed Six Thousand Dollars ($6,000.00) per year. Tenant
shall maintain and keep in force at its sole cost and expense insurance
covering its Personal Property.
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11.3 Liability/Miscellaneous Insurance. Tenant shall maintain
in full force and effect at all times during the Term (plus such earlier and
later periods as Tenant may be in occupancy of the Premises), at its sole
cost and expense, for the protection of Tenant, Landlord and Landlord's
Agents and Mortgagees, policies of insurance issued by a carrier or carriers
in accordance with Section 11.8 which afford the following coverages: (i)
statutory workers' compensation, (ii) employer's liability with minimum
limits of Five Hundred Thousand Dollars ($500,000), and (iii)
comprehensive/commercial general liability including, but not limited to,
blanket contractual liability (including the indemnity set forth in Section
11.1), fire and water legal liability, broad form property damage, personal
injury, completed operations, products liability, independent contractors,
and, if alcoholic beverages are served, or sold in the Premises,
comprehensive Host Liquor Liability Insurance, and owned, non-owned and
hired vehicles, of not less than the limits set forth in Item 17 of the Basic
Lease Provisions (or current limit carried, whichever is greater), naming
Landlord, the Mortgagees, and the Additional Insureds named in Item 16 of the
Basic Lease Provisions as additional insureds, and including a cross-
liability or severability interests indorsement.
11.4 Hazardous Materials. In the event Landlord consents to
Tenant's use, generation or storage of Hazardous Materials on, under or
about the Premises pursuant to Section 6.2, and if at any time Tenant's net
worth is less than Twenty-Five Million Dollars (25,000,000.00), Landlord
shall have the right to require Tenant, at Tenant's sole cost and expense,
to purchase insurance specified and approved by Landlord, with coverage of
no less than Five Million Dollars ($5,000,000), insuring (i) any Hazardous
Materials shall be removed from the Premises, (ii) the Premises shall be
restored to a clean, neat, attractive, healthy, safe and sanitary condition,
and (iii) any liability of Tenant, Landlord and Landlord's Agents arising
from such Hazardous Materials.
11.5 Deductibles; Blanket Coverage. Any policy of Property
Insurance required pursuant to this Lease containing a deductible exceeding
Five Thousand Dollars ($5,000) per occurrence must be approved in writing by
Landlord prior to the issuance of such policy, which approval shall not be
unreasonably withheld. Tenant shall be solely responsible for the payment
of any deductible. Any Property Insurance required of Tenant pursuant to
this Lease may be provided by means of a so-called "blanket policy", so long
as (i) the Premises are specifically covered (by rider, endorsement or
otherwise), (ii) the limits of the policy are applicable on a "per location"
basis to the Premises and provide for restoration of the aggregate limits,
and (iii) the policy otherwise complies with the provisions of this Lease.
11.6 Increased Coverage. In the event that Tenant exercises its
Option to Extend as defined in the Rider No. 1 to Lease attached hereto,
Tenant shall provide Landlord, at Tenant's expense, with such increased
amount of existing insurance, and such other insurance as Landlord or the
Mortgagees may reasonably require, in coverages and amounts comparable to
similar users and buildings in the general area.
11.7 Sufficiency of Coverage. Neither Landlord nor any of
Landlord's Agents makes any representation that the types of insurance and
limits specified to be carried by Tenant under this Lease are adequate to
protect Tenant. If Tenant believes that any such insurance coverage is
insufficient, Tenant shall provide, at its own expense, such additional
insurance as Tenant deems adequate. Nothing contained herein shall limit
Tenant's liability under this Lease, and Tenant's liability under any
provision of this Lease, including without limitation under any indemnity
provisions, shall not be limited to the amount of any insurance obtained.
11.8 Insurance Requirements. Tenant's insurance (i) shall be in
accordance with the above requirements and shall be carried with companies
that have a Best's policyholder's rating of not less than "A", (ii) shall
provide that such policies shall not be subject to cancellation except after
at least thirty (30) days prior written notice to Landlord, and (iii) shall
be primary, and any insurance carried by Landlord or Landlord's Agents shall
be noncontributing. Tenant's policy or policies, or duly executed
certificates for them shall be deposited with Landlord prior to the
Commencement Date. Prior to renewal of such policies a binder evidencing
continued coverage shall be deposited with Landlord, which binder shall be
replaced by a certificate of insurance within sixty (60) days. If Tenant
fails to procure and maintain the insurance required to be procured by
Tenant under this Lease, Landlord may, but shall not be required to, order
such insurance at Tenant's expense. All sums reasonably disbursed,
deposited or incurred by Landlord in connection therewith including, but not
limited to, all costs, expenses and actual attorneys' fees, shall be due and
payable by Tenant to Landlord, as an item of Additional Rent, on demand by
Landlord, together with interest thereon at the Applicable Rate from the
date of such demand until paid by Tenant. Notwithstanding the foregoing, if
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Landlord orders such insurance on Tenant's behalf, and Tenant did in fact
maintain such insurance without interruption as required in this Section
11.8, then Landlord shall bear the cost of the insurance that Landlord
ordered on Tenant's behalf.
11.10 Landlord's Disclaimer. Notwithstanding any other provisions
of this Lease, and to the fullest extent permitted by law, Landlord and
Landlord's Agents shall not be liable for any loss or damage to persons or
property resulting from theft, vandalism, fire, explosion, falling
materials, glass, tile or sheetrock, steam, gas, electricity, water or rain
which may leak from any part of the Premises, or from the pipes, appliances
or plumbing works therein or from the roof, street or subsurface or
whatsoever, unless caused by or due to the sole active negligence or willful
misconduct of Landlord. Tenant shall give prompt Notice to Landlord in case
of a casualty, accident or repair needed to the Premises.
11.10 Waiver of Subrogation. Landlord and Tenant each hereby waive
all rights of recovery against the other and against the officers,
employees, agents and representatives of the other, on account of loss by or
damage to any person or the waiving party's property or the property of
others under its control, to the extent that such loss or damage is insured
against under any fire and extended coverage insurance policy which either
may have or is required to have in force at the time of the loss or damage.
Landlord and Tenant shall each obtain from their respective insurers under
all policies of fire, theft, public liability, worker's compensation, and
other insurance maintained during the Term of this Lease covering the
Building, or any portion of it, or operations in it, a waiver of all rights
of subrogation that the insurer of one party might have against the other
party. Landlord and Tenant shall each indemnify the other against any loss
or expense, including reasonable attorney's fees, resulting from the failure
to obtain this waiver.
ARTICLE XII
DAMAGE OR DESTRUCTION
12.1 Landlord's Obligation to Rebuild. If the Premises are
damaged or destroyed by fire or other casualty (a "Casualty"), Tenant shall
promptly give notice thereof to Landlord, and Landlord shall thereafter
repair the Premises as set forth in Sections 12.4 and 12.5 unless Landlord
has the right to terminate this Lease as provided in Section 12.2 and
Landlord elects to so terminate or Tenant has the right to terminate this
Lease as provided in Section 12.3 and Tenant elects to so terminate.
12.2 Landlord's Right to Terminate. Landlord shall have the
right to terminate this Lease following a Casualty if any of the following
occurs: (i) insurance proceeds (together with any additional amounts Tenant
elects, at is option, to contribute) are not available to Landlord to pay
one hundred percent (100%) of the cost to fully repair the Premises,
excluding the deductible (for which Tenant shall pay Tenant's share of such
deductible; (ii) Landlord's Architect determines that the Premises cannot,
with reasonable diligence, be fully repaired by Landlord (or cannot be
safely repaired because of the presence of hazardous factors including, but
not limited to, Hazardous Materials, earthquake faults, radiation, chemical
waste and other similar dangers) within one hundred eighty (180) days after
the date of such Casualty; (iii) the Premises are destroyed or damaged during
the last twelve (12) months of the Term; or (iv) an Event of Default has
occurred and is continuing at the time of such Casualty and continues
unabated for thirty (30) days thereafter. If Landlord elects to terminate
this Lease following a Casualty pursuant to this Section 12.2, Landlord shall
give Tenant Notice of its election to terminate within thirty (30) days
after Landlord has knowledge of such Casualty, and this Lease shall
terminate fifteen (15) days after the date of such Notice.
12.3 Tenant's Right to Terminate. Subject to the latter terms
hereof, Tenant shall have the right to terminate this Lease following the
destruction of the Premises (or damage to the Premises so extensive as to
reasonably prevent Tenant's substantial use and enjoyment of the Premises)
if any of the following occurs: (i) the Premises cannot, with reasonable
diligence, be fully repaired by Landlord within two hundred (200) days after
the date of the damage or destruction, as determined by Landlord's
Architect; (ii) the Premises cannot safely be repaired because of the
presence of hazardous factors, including Hazardous Materials, earthquake
faults, radiation, chemical waste and other similar dangers; or (iii) the
damage or destruction occurs during the last twelve (12) months of the Term
and cannot, with reasonable diligence, be fully repaired by Landlord within
ninety (90) days after the date of the destruction or damage, as determined
by Landlord's Architect. Notwithstanding the foregoing, Tenant shall not
have the right to terminate under this Section 12.3 if (a) an Event of
default
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has occurred and is continuing at the time of such damage or destruction or
at the time of exercising the right to terminate, or (b) the damage or
destruction was caused, in whole or in part, by the act or omission of
Tenant's or Tenant's Agents. If Tenant elects to terminate this Lease
pursuant to this Section 12.3, Tenant shall give Landlord Notice of its
election to terminate within thirty (30) days after the date of such damage
or destruction, and this Lease shall terminate fifteen (15) days after the
date of such Notice.
12.4 Effect of Termination. If this Lease is terminated following
a Casualty pursuant to Section 12.2 or Section 12.3, Landlord shall, subject
to the rights of the Mortgagees, be entitled to receive and retain all the
insurance proceeds resulting from or attributable to such Casualty, except
for those proceeds payable under policies obtained by Tenant which
specifically insure Tenant's Personal Property. If neither party exercises
any such right to terminate this Lease, this Lease will continue in full
force and effect, and Landlord shall, promptly following the tenth (10th)
day after the date of such Casualty and receipt of the amounts set forth in
clause (i) of Section 12.2, commence the process of obtaining necessary
permits and approvals for the repair of the Premises, and shall commence
such repair and prosecute the same diligently to completion as soon
thereafter as is practicable. Tenant shall fully cooperate with Landlord in
removing Tenant's Personal Property and any debris from the Premises to
facilitate the making of such repairs.
12.5 Limited Obligation to Repair. Landlord's obligation,
should it elect or be obligated to repair the Premises following a Casualty,
shall be limited to the basic Building and Tenant Improvements and Tenant
shall, at its expense, replace or fully repair all Tenant's Personal
Property and any Alterations installed by Tenant existing at the time of
such Casualty. If the Premises are to be repaired in accordance with the
foregoing, Tenant shall make available to Landlord any portion of insurance
proceeds it receives which are allocable to the Tenant Improvements.
12.6 Abatement of Monthly Rent. During any period when a
mutually agreed upon third party architect reasonably determines that there
is substantial interference with Tenant's use of the Premises by reason of a
Casualty, Monthly Rent shall be temporarily abated in proportion to the
degree of such substantial interference, but only to the extent of any
business interruption or loss of income insurance proceeds received by
Landlord from Tenant's insurance described in Section 11.2. Such abatement
shall commence upon the date Tenant notifies Landlord of such Casualty and
shall end upon the Substantial Completion of the repair of the Premises
which Landlord undertakes or is obligated to undertake hereunder. Tenant
shall not be entitled to any compensation or damages from Landlord for loss
of the use of the Premises, Tenant's Personal Property or other damage or
any inconvenience occasioned by a Casualty or by the repair or restoration
of the Premises thereafter, including, but not limited to, any consequential
damages, opportunity costs or lost profits incurred or suffered by Tenant.
Tenant hereby waives the provisions of Section 1932(2) and Section 1933(4) of
the California Civil Code, and the provisions of any similar or successor
statues.
12.7 Landlord's Determination. The determination in good faith
by a mutually agreed upon third party architect of or relating to the
estimated cost of repair of any damage, replacement cost, the time period
required for repair or the interference with or suitability of the Premises
for Tenant's use or occupancy shall be conclusive for purposes of this
Article XII and Article XIII.
ARTICLE XIII
CONDEMNATION
13.1 Total Taking--Termination. If title to the Premises or so
much thereof is taken for any public or quasi-public use under any statute
or by right of eminent domain so that reconstruction of the Premises will
not result in the Premises being reasonably suitable for Tenant's continued
occupancy for the uses and purposes permitted by this Lease, this Lease
shall terminate as of the date possession of the Premises or part thereof is
so taken.
13.2 Partial Taking. If any part of the Premises is taken for any
public or quasi-public use under any statute or by right of eminent domain
and the remaining part is reasonably suitable for Tenant's continued
occupancy for the uses permitted by this Lease, this Lease shall, as to the
part so taken, terminate as of the date that possession of such part of the
Premises is taken and the Monthly Rent shall be reduced in the same
proportion than the floor area of the portion of the Premises so taken (less
any addition thereto by reason of any reconstruction) bears to the original
floor area of the Premises, as reasonably determined by Landlord or
Landlord's Architect. Landlord shall, at its own cost and expense, make all
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necessary repairs or alterations to the Premises so as to make the portion
of the Premises not taken a complete architectural unit. Such work shall
not, however, exceed the scope of the work done by Landlord in originally
constructing the Premises. If severance damages from the condemning
authority are not available to Landlord in sufficient amounts to permit such
restoration, Landlord may terminate this Lease upon Notice to Tenant.
Monthly Rent due and payable hereunder shall be temporarily abated during
such restoration period in proportion to the degree to which there is
substantial interference with Tenant's use of the Premises, as reasonably
determined by Landlord or Landlord's Architect. Each party hereby waives
the provisions of Section 1265.130 of the California Code of Civil Procedure
and any present or future law allowing either party to petition the Superior
Court to terminate this Lease in the event of a partial taking of the
Building or Premises.
13.3 No Apportionment of Award. Any award for any partial or
total taking shall be apportioned between the respective interests of
Landlord and Tenant in accordance with California law.
13.4 Temporary Taking. No temporary taking of the Premises (which
for purposes hereof shall mean a taking of all or any part of the Premises
for one hundred eighty (180) days or less) shall terminate this Lease or
give Tenant any right to any abatement of Rent. Any award made to Tenant by
reason for such temporary taking shall belong entirely to Tenant and
Landlord shall not be entitled to share therein. Each party agrees to
execute and deliver to the other all instruments that may be required to
effectuate the provisions of this Section 13.4.
13.5 Sale Under Threat of Condemnation. A sale made in good
faith to any authority having the power of eminent domain, either under
threat of condemnation or while condemnation proceedings are pending, shall
be deemed a taking under the power of eminent domain for all purposes of
this Article XIII.
ARTICLE XIV
ASSIGNMENT AND SUBLETTING
14.1 Prohibition. Tenant shall not directly or indirectly,
voluntarily or by operation of law, assign (which term shall include any
transfer, assignment, pledge, mortgage or hypothecation) this Lease, or any
right or interest hereunder, or sublet the Premises or any part thereof, or
allow any other person or entity to occupy or use all or any part of the
Premises without first obtaining the written consent of Landlord in each
instance, which consent shall not be unreasonably withheld. No assignment,
encumbrance, subletting, or other transfer in violation of the terms of this
Article XIV, whether voluntary or involuntary, by operation of law, under
legal process or proceedings, by receivership, in bankruptcy, or otherwise
shall be valid or effective and, at the option of Landlord, shall constitute
an Event of Default under this Lease. To the extent not prohibited by
provisions of the Bankruptcy Code of 1978, 11 U.S.C. Section 101 et seq. (the
"Bankruptcy Code"), Tenant on behalf of itself, creditors, administrators
and assigns waives the applicability of Sections 541(c) and 365(e) of the
Bankruptcy Code unless the proposed assignee of the trustee for the estate
of the bankrupt meets Landlord's standards for consent as set forth role.
Landlord has entered into this Lease with Tenant in order to obtain for the
benefit of the project the unique attraction of Tenant's name and business;
the foregoing prohibition on assignment or subletting is expressly agreed to
by Tenant in consideration of such fact. If this Lease is assigned to any
person or entity pursuant to the provisions of the Bankruptcy Code, any and
all monies or other considerations payable or otherwise to be delivered in
connection with such assignment shall be paid or delivered to Landlord,
shall be and remain the exclusive property of Landlord and shall not
constitute property of Tenant or the estate of Tenant within the meaning of
the Bankruptcy Code. Any and all monies or other considerations
constituting Landlord's property under the proceeding sentence not paid or
delivered to Landlord shall be held in trust for the benefit of Landlord and
be promptly paid or delivered to Landlord. Any person or entity to which
this Lease is assigned pursuant to the provisions of the Bankruptcy Code
shall be deemed without further act or deed to have assumed all of the
obligations arising under this Lease on and after the date of such
assignment. Any such assignee shall upon demand execute and earlier to
Landlord an instrument confirming such assumption.
14.2 Landlord's Consent. In the event Landlord consents to any
assignment or subletting, such consent shall not constitute a waiver of any
of the restrictions of this Article XIV and the same shall apply to each
successive assignment or subletting hereunder, if any. In no event shall
Landlord's consent to an assignment or subletting affect the continuing
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primary liability of Tenant (which, following assignment, shall be joint and
several with the assignee), or relieve Tenant of any of its obligations
hereunder without an express written release being given by Landlord. In
the event that Landlord shall consent to an assignment or subletting under
this Article XIV, such assignment or subletting shall not be effective until
the assignee or sublessee shall assume all of the obligations of this Lease
on the part of Tenant to be performed or observed and whereby the assignee
or sublessee shall agree that the provisions contained in this Lease shall,
notwithstanding such assignment or subletting, continue to be binding upon
it with respect to all future assignments and sublettings. Such assignment
or sublease agreement shall be duly executed and fully executed copy thereof
shall be delivered to Landlord, and Landlord may collect Monthly Rent and
Additional Rent due hereunder directly from the assignee or sublessee.
Collection of Monthly Rent and Additional Rent directly from an assignee or
sublessee shall not constitute a recognition of such assignee or sublessee
as the Tenant hereunder or a release of Tenant from the performance of all
of its obligations hereunder.
14.3 Information. Regardless of whether Landlord's consent is
required under this Article XIV, Tenant shall notify Landlord in writing of
Tenant's intent to assign this Lease or any right or interest hereunder, or
to sublease the Premises or any part thereof, and of the name of the
proposed assignee or sublessee, the nature of the proposed assignee's or
sublessee's business to be conducted on the Premises, the terms and
provisions of the proposed assignment or sublease, a copy of the proposed
assignment or sublease form, and such other information as Landlord may
reasonably request concerning the proposed assignee or sublessee including,
but not limited to, net worth, income statements and other financial
statements for a two-year period preceding Tenant's request for consent,
evidence of insurance complying with the requirements of Article XI, a
completed Environmental Questionnaire from the proposed assignee or
sublessee, and the fee described in Section 14.7.
14.4 Standard for Consent. Landlord shall, within thirty (30)
days of receipt of such Notice and all information requested by Landlord
concerning the proposed assignee or sublessee, elect to take one of the
following actions:
(a) consent to such proposed assignment or sublease;
(b) refuse to consent to such proposed assignment or sublease,
which refusal shall be on reasonable grounds; or
(c) if Tenant proposes to sublease all or part of the Premises
for the entire remaining Term, Landlord may, at its option exercised by
thirty (30) days Notice to Tenant, elect to recapture such portion of the
Premises as Tenant proposes to sublease and as of the thirtieth (30th) day
after Landlord so notifies Tenant of its election to recapture, this Lease
shall terminate as to the portion of the premises recaptured and the Monthly
Rent payable under this Lease shall be reduced in the same proportion that
the floor area of that portion of the Premises so recaptured bears to the
floor area of the Premises prior to such recapture.
Tenant agrees, by way of example and without limitation, that it shall
not be unreasonable for Landlord to withhold its consent to a proposed
assignment or subletting if any of the following situations exist or may
exist:
(i) Landlord determines that the proposed assignee's or
sublessee's use of the Premises conflicts with Article V or Article VI,
presents an unacceptable risk, as determined by Landlord, under Article VI
(and Landlord may require such assignee or sublessee to complete the
Environmental Questionnaire in the manner described in Section 6.5 prior to
making such determination), or conflicts with any other provision under this
Lease;
(ii) Landlord determines that the proposed assignee or
sublessee is not as financially responsible as Tenant as of the date of
Tenant's request for consent or as of the effective date of such assignment
or subletting;
(iii) Landlord determines that the proposed assignee or
sublessee lacks sufficient business reputation or experience to conduct on
the Premises a business of a type and quality equal to that conducted by
Tenant;
(iv) Landlord determines that the proposed assignment or
subletting would breach a covenant, condition or restriction in some other
lease, financing agreement or other agreement relating to the Project, the
Building, the Premises or this Lease;
(v) Landlord determines that the proposed assignee or
sublessee (a) has been required by any prior landlord, lender or
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governmental authority to take remedial action in connection with Hazardous
Materials contaminating a property if such contamination resulted from the
proposed assignee's or sublessee's actions or use of the property in
questions, or (b) is subject to any enforcement order issued by an
governmental authority in connection with the use, disposal or storage of a
Hazardous Material; or
(vi) An Event of Default has occurred and is continuing
at the time of Tenant's request for Landlord's consent, or as of the
effective date of such assignment or subletting.
Tenant acknowledges that if Tenant has any exterior sign rights
under this Lease, such rights are personal to Tenant and may not be assigned
or transferred to any assignee of this Lease or sublessee of the Premises
without Landlord's prior written consent, which consent may be withheld in
Landlord's sole and absolute discretion.
14.5 Bonus Value. Tenant agrees that fifty percent (50%) of any
amounts paid by the assignee or sublessee, however described, in excess of
(i) the monthly Rent payable by Tenant hereunder (or, in the case of sublease
of a portion of the Premises, in excess of the Monthly Rent reasonably
allocable to such portion), plus (ii) Tenant's direct out-of-pocket costs
which Tenant certifies to Landlord have been paid to provide occupancy-
related services to such assignee or sublessee of a nature commonly provided
by landlords of similar space, shall be the property of Landlord and such
amounts shall be payable directly to Landlord by the assignee or sublessee.
At Landlord's request, a written agreement shall be entered into by and
among Tenant, Landlord and the proposed assignee or sublessee confirming the
requirements of this Section 14.5.
14.6 Certain Transfers. The sale of all or substantially all of
Tenant's assets (other than bulk sales in the ordinary course of business),
or, if Tenant is a corporation, an unincorporated association, or a
partnership, the transfer, assignment or hypothecation of any stock or
interest in such corporation, association or partnership in the aggregate in
excess of fifty percent (50%) (except for publicly traded shares of stock
constituting a transfer of fifty percent (50%) or more in the aggregate, so
long as no change in the controlling interests of Tenant occurs as a result
thereof) shall be deemed an assignment within the meaning and provisions of
this Article XIV.
14.7 Landlord's Fee and Expenses. If Tenant requests Landlord's
consent to an assignment or subletting by Tenant under this Lease, Tenant
shall pay to Landlord a fee of Three Hundred Dollars ($300) and all of
Landlord's out-of-pocket expenses including, but not limited to, attorneys'
fees reasonably incurred related to such assignment or subletting by Tenant,
whether or not the assignment or subletting is approved.
14.8 Transfer of the Premises by Landlord. Upon any conveyance
of the Premises and assignment by Landlord of this Lease, Landlord shall and
is hereby entirely released from all liability under any and all of its
covenants and obligations contained in or derived from this Lease occurring
after the date of such conveyance and assignment, and Tenant agrees to
attorn to any entity purchasing or otherwise acquiring the Premises.
ARTICLE XV
DEFAULTS AND REMEDIES
15.1 Tenant's Default. At the option of Landlord, a default under
this Lease by Tenant shall exist if any of the following events shall occur
(each is called an "Event of Default"):
(a) Tenant fails to pay the Rent payable hereunder, as and
when due, for a period of three (3) days after Notice by Landlord; provided,
however, the Notice given hereunder shall be in lieu of, and not in addition
to, any notice required under Section 1161, et seq., of the California Code
of Civil Procedure;
(b) Tenant attempts to make or suffers to be made any
transfer, assignment or subletting, except as provided in Article XIV hereof;
(c) Any of Tenant's rights under this Lease are sold or
otherwise transferred by or under court order or legal process or otherwise
or if any of the actions described in Section 15.2 are taken by or against
Tenant or any Guarantor;
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(d) The Premises are used for any purpose other than as
permitted pursuant to Article V;
(e) Tenant vacates or abandons the Premises or fails to
continuously and uninterruptedly conduct its business in the Premises and
thereafter fails to pay rent:
(f) Any representation or warranty given by Tenant under or in
connection with this Lease proves to be materially false or misleading;
(g) Tenant fails to timely comply with the provisions of
Article VI ("Hazardous Materials"), ArticleXIV ("Assignment and Subletting"),
Article XVI ("Subordination; Estoppel Certificate; Financials"), Section 21.5
("Modifications for Mortgagees") or Section 21.19 ("Authority"); or
(h) Tenant fails to observe, keep, perform or cure within
thirty (30) days after Notice by Landlord any of the other terms, covenants,
agreements or conditions contained in this Lease or those set forth in any
other agreements or rules or regulations which Tenant is obligated to
observe or perform. In the event such default reasonably could not be cured
or corrected within such thirty (30) day period, but is reasonably
susceptible to cure or correction, then Tenant shall not be in default
hereunder if Tenant commences the cure or correction of such default within
such default within such thirty(30) day period and diligently prosecutes the
same to completion after commencing such cure or correction. The Notice
required by his subparagraph15.1(h) shall be in lieu of, and not in addition
to, any notice required under Section 1161, et seq., of the California Code
of Civil Procedure.
Notices given under this Section 15.1 shall specify the alleged default and
shall demand that Tenant perform the provisions of this Lease or pay the
Rent that is in arrears, as the case may be, within the applicable period of
time, or quit the Premises. No such Notice shall be deemed a forfeiture or
a termination of this Lease unless Landlord so elects in the Notice.
15.2 Bankruptcy or Insolvency. In no event shall this Lease be
assigned or assignable by operation of law and in no event shall this Lease
be an asset of Tenant in any receivership, bankruptcy, insolvency or
reorganization proceeding. In the event:
(a) A court makes or enters any decree or order adjudging
Tenant to be insolvent, or approving as properly filed by or against Tenant
a petition seeking reorganization or other arrangement of Tenant under any
provisions of the Bankruptcy Code or any applicable state law, or directing
the winding up or liquidation of Tenant and such decree or order shall have
continued for a period of thirty (30) days;
(b) Tenant makes or suffers any transfer which constitutes a
fraudulent or otherwise avoidable transfer under any provisions of the
Bankruptcy Code or any applicable state law;
(c) Tenant generally assigns its assets for the benefit of its
creditors; or
(d) The material part of the property of Tenant or any
property essential to Tenant's business or of Tenant's interest in this
Lease is sequestered, attached or executed upon, and Tenant fails to secure
a return or release of such property within thirty (30) days thereafter, or
prior to sale pursuant to such sequestration, attachment or levy, whichever
is earlier.
Then this Lease shall, at Landlord's election, immediately
terminate and be of no further force or effect whatsoever, without the
necessity for any further action by Landlord, except that Tenant shall not
be relieved of obligations which have accrued prior to the date of such
termination. Upon such termination, the provisions herein relating to the
expiration or earlier termination of this Lease shall control and Tenant
shall immediately surrender the Premises in the condition required by the
provisions of this Lease. Additionally, Landlord shall be entitled to all
relief, including recovery of damages from Tenant, which may from time to
time be permitted, or recoverable, under the Bankruptcy Code or any other
applicable state laws.
15.3 Landlord's Remedies. Upon the occurrence of an Event of
Default, then, in addition to and without waiving any other rights and
remedies available to Landlord at law or in equity or otherwise provided in
this Lease, Landlord may, at its option, cumulatively or in the alternative,
exercise the following remedies:
(a) Landlord may terminate Tenant's right to possession of the
Premises, in which case this Lease shall terminate and Tenant shall
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immediately surrender possession of the Premises to Landlord. No act by
Landlord other than giving Notice to Tenant of Landlord's election to
terminate Tenant's right to possession shall terminate this Lease. Acts of
maintenance, efforts to relet the Premises, or the appointment of a receiver
on Landlord's initiative to protect Landlord's interest under this Lease
shall not constitute a termination of Tenant's right to possession.
Termination shall terminate Tenant's right to possession of the Premises,
but shall not relieve Tenant of any obligation under this Lease which has
accrued prior to the date of such termination. Upon such termination,
Landlord shall have the right to re-enter the Premises, and remove all
persons and property, and Landlord shall also be entitled to recover from
Tenant:
(i) The worth of the time of award of the unpaid Monthly
Rent and Additional Rent which had been earned at the time of termination;
(ii) The worth at the time of award of the amount by
which the unpaid Monthly Rent and Additional Rent which would have been
earned after termination until the time of award exceeds the amount of such
rental loss that Tenant proves could have been reasonably avoided;
(iii) The worth at the time of award of the amount by
which the unpaid Monthly Rent and Additional Rent for the balance of the
Term after the time of award exceeds the amount of such rental loss that
Tenant proves could be reasonably avoided;
(iv) Any other amount necessary to compensate Landlord
for all the detriment proximately caused by Tenant's failure to perform its
obligations under this Lease or which in the ordinary course of things would
be likely to result from Tenant's default including, but not limited to, the
cost of recovering possession of the Premises, commissions and other
expenses of reletting, the cost of rectifying any damage to the Premises
occasioned by the act or omission of Tenant, reasonable attorneys' fees, and
any other reasonable costs; and
(v) At Landlord's election, all other amounts in
addition to or in lieu of the foregoing as may be permitted by law.
As used in subsections (1) and (ii) above, the "worth at the
time of award" shall be computed by discounting the amount at the discount
rate of the Federal Reserve Bank of San Francisco at the time of award plus
three percent (3%).
(b) Landlord may elect not to terminate Tenant's right to
possession of the Premises, in which event this Lease will continue in full
force and effect as long as Landlord does not terminate Tenant's right to
possession, and Landlord may continue to enforce all of its rights and
remedies under this Lease, including the right to collect all Rent as it
becomes due. In the event that Landlord elects to avail itself of the
remedy provided by this subparagraph 15.3(b), Landlord shall not
unreasonably withhold its consent to an assignment or subletting of the
Premises subject to the reasonable standards for Landlord's consent as are
contained in this Lease. In addition, in the event Tenant has entered into
a sublease which is valid under the terms of this Lease, Landlord may also,
at its option, cause Tenant to assign to Landlord the interest of Tenant
under said sublease including, but not limited to, Tenant's right to payment
of Rent as it becomes due. Landlord may elect to enter the Premises and
relet them, or any part of them, to third parties for Tenant's account.
Tenant shall be liable immediately to Landlord for all costs Landlord incurs
in reletting the Premises including, but not limited to, broker's
commissions, expenses of cleaning and remodeling the Premises required by
the reletting, attorneys' fees and like costs. Reletting can be for a
period shorter or longer than the remaining Term of this Lease and for the
entire Premises or any portion thereof. Tenant shall pay to Landlord the
Monthly Rent and Additional Rent due under this Lease on the dates the
Monthly Rent and such Additional Rent are due, less the Rent Landlord
actually collects from any reletting. Except as provided in the preceding
sentence, if Landlord relets the Premises or any portion thereof, such
reletting shall not relieve Tenant of any obligation hereunder.
Notwithstanding the above, no act by Landlord allowed by this subparagraph-
15.3(b) shall terminate this Lease unless Landlord notifies Tenant in
writing that Landlord elects to terminate this Lease.
15.4 No Surrender. Tenant waives any right of redemption or relief
from forfeiture under California Code of Civil Procedure, Sections 1174 and
1179, or under any other present or future law in the event Tenant is
evicted or Landlord or Landlord's Agents during the Term shall be deemed an
acceptance of a surrender of the Premises, and no agreement to accept a
surrender shall be valid unless in writing and signed by Landlord. No
employee of Landlord or of Landlord's Agent shall have any power to accept
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the keys to the Premises prior to the termination of this Lease, and the
delivery of the keys to any employee shall not operate as a termination of
this Lease or a surrender of the Premises.
15.5 Interest on Late Payments. Any Rent due under this Lease
that is not paid to Landlord within five (5) days of the date when due shall
commence to bear interest at the Applicable Rate until fully paid. Neither
the accrual nor the payment of interest shall cure any default by Tenant
under this Lease.
15.6 Attorneys' and Other Fees. All sums reasonably incurred by
Landlord in connection with an Event of Default or holding over of
possession by Tenant after the expiration or termination of this Lease
including, but not limited to, all reasonably costs, expenses and reasonable
accountants', appraisers', attorneys' and other professional fees, and any
collection agency or other collection charges, shall be due and payable by
Tenant to Landlord on demand, and shall bear interest at the Applicable Rate
from the date of such demand until paid by Tenant. In addition, in the
event that any action shall be instituted by either of the parties hereto
for the enforcement of any of its rights in and under this Lease, the party
in whose favor judgment shall be rendered shall be entitled to recover from
the other party all expenses reasonably incurred by the prevailing party in
such action, including actual costs and reasonable attorneys' fees.
15.7 Landlord's Default. Landlord shall not be deemed to be in
default in the performance of any obligation required to be performed by it
hereunder unless and until it has failed to perform such obligation within
thirty (30) days after receipt of Notice by Tenant to Landlord (and the
Mortgagees who have provided Tenant with notice) specifying the nature of
such default; provided, however, that if the nature of Landlord's obligation
is such that more than thirty (30) days are required for its performance,
then Landlord shall not be deemed to be in default if it shall commence such
performance within such thirty (30) day period and thereafter diligently
prosecutes the same to completion.
15.8 Limitation of Landlord's Liability. The obligations of
Landlord do not constitute the personal obligations of the individual
limited partners if a partnership or if a corporation the, trustees,
directors, officers or shareholders of Landlord or its constituent partners.
If Landlord shall fail to perform any covenant, term, or condition of this
Lease upon Landlord's part to be performed, Tenant shall be required to
deliver to Landlord Notice of the same. If, as a consequence of such
default, Tenant shall recover a money judgment against Landlord, such
judgment shall be satisfied only out of the proceeds of sale received upon
execution of such judgment and levied thereon against the right, title and
interest of Landlord in the Building and out of rent or other income from
such property receivable by Landlord or out of consideration received by
Landlord from the sale or other disposition of all or any part of Landlord's
right, title or interest in the Building, and no action for any deficiency
may be sought or obtained by Tenant.
15.9 Mortgagee Protection. Upon any default on the part of
Landlord, Tenant will give notice by registered or certified mail to any
Mortgagee who has provided Tenant with notice of its interest together with
an address for receiving notice, and shall offer such Mortgagee a reasonable
opportunity to cure the default (which in no event shall be less than sixty
(60) days, including time to obtain possession of the Premises by power of
sale or a judicial foreclosure, if such should prove necessary, to effect a
cure. Tenant agrees that each of the Mortgagees to whom this Lease has been
assigned by Landlord is an express third-party beneficiary hereof. Tenant
shall not make any prepayment of Monthly Rent more than one (1) month in
advance without the prior written consent of such Mortgagee. Tenant waives
any right under California Civil Code, Section 1950.7, or any other present
or future law to the collection of any deposit from such Mortgagee or any
purchaser at a foreclosure sale of such Mortgagee's interest unless such
Mortgagee or such purchaser shall have actually received and not refunded
the deposit. Tenant agrees to make all payments under this Lease to the
Mortgagee with the most senior encumbrance upon receiving a direction, in
writing, to pay said amounts to such Mortgagee. Tenant shall comply with
such written direction to pay without determining whether an event of
default exists under such Mortgagee's loan to Landlord.
15.10 Landlord's Right to Perform. If Tenant shall at any time
fail to make any payment or perform any other act on its part to be made or
performed under this Lease, Landlord may subject to Tenant's right to cure
following notice under this Lease (but shall not be obligated to), at
Tenant's expense, and without waiving or releasing Tenant from any
obligation of Tenant under this Lease, make such payment or perform such
other act to the extent Landlord may deem desirable, and in connection
therewith, pay expenses and employ counsel. All sums paid by Landlord and
all penalties, interest and costs including, but not limited to, collection
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costs and attorneys' fees reasonably incurred in connection therewith, shall
be due and payable by Tenant to Landlord, as an item of Additional Rent, on
demand by Landlord, together with interest thereon at the Applicable Rate
from the date of such demand until paid by Tenant.
15.11 Limitation of Actions Against Landlord. Any claim, demand
or right of any kind by Tenant which is based upon or arises in connection
with this Lease shall be barred unless Tenant commences an action thereon
within one (1) year of the date of discovery by Tenant of the act, omission,
event or default upon which the claim, demand or right arises, has occurred.
15.12 Waiver of Jury Trial. To the full extent permitted by law,
the parties hereby waives the right to trial by jury in any action,
proceeding or counterclaim brought by either party on any matter whatsoever
arising out of or in any way connected with this Lease, the relationship of
Landlord and Tenant, Tenant's use or occupancy of the Premises and/or any
claim of injury or damage.
ARTICLE XVI
SUBORDINATION; ESTOPPEL CERTIFICATE; FINANCIALS
16.1 Subordination, Attornment and Non-Disturbance. Without
the necessity of any additional document being executed by Tenant for the
purpose of effecting a subordination, and at the election of Landlord or any
Mortgagee or any ground lessor with respect to the land of which the
Premises are a part, this Lease shall be subject and subordinate at all
times to (1) all ground leases or underlying leases which may now exist or
hereafter be executed in any amount for which the Project, the Building,
ground leases or underlying leases, or Landlord's interest or estate in any
of said items is specified as security. Landlord or any such Mortgagee or
ground lessor shall have the right, at its election, to subordinate or cause
to be subordinated any such ground leases or underlying leases or any such
liens to this Lease. No subordination shall permit material interference
with Tenant's rights hereunder, and any ground lessor or Mortgagee shall
recognize Tenant and its permitted successors and assigns as the tenant of
the Premises and shall not disturb Tenant's right to quiet possession of the
Premises during the Term so long as no Event of Default has occurred and is
continuing under this Lease. If Landlord's interest in the Premises is
acquired by any ground lessor or Mortgagee, or in the event proceedings are
brought for the foreclosure of, or in the event of exercise of the power of
sale under, any Mortgage made by Landlord covering the Premises or any part
thereof, or in the event a conveyance in lieu of foreclosure is made for any
reason, Tenant shall, notwithstanding any subordination and upon the request
of such successor in interest to Landlord, attorn to and become the Tenant
of the successor in interest to Landlord and recognize such successor in
interest as the Landlord under this Lease. Although this Section 16.1 is
self-executing, Tenant covenants and agrees to execute and deliver, upon
demand by Landlord and in a commercially reasonable formor requested by
Landlord, or any Mortgagee or ground lessor, any additional documents
evidencing the priority or subordination of this Lease with respect to any
such ground leases or underlying leases or the lien of any such Mortgage, or
evidencing the attornment of Tenant to any successor in interest to Landlord
as herein provided. Tenant's failure to timely execute and deliver such
additional documents shall, at Landlord's option, constitute an event of
Default hereunder.
16.2 Estoppel Certificate. Tenant shall, within twenty (20) days
following written request by Landlord, execute and deliver to Landlord any
documents, including estoppel certificates, in a form reasonably required by
Landlord (i) certifying that this Lease is unmodified and in full force and
effect or, if modified, attaching a copy of such modification and certifying
that this Lease, as so modified, is in full force and effect and the date to
which the Rent and other charges are paid in advance, if any, (ii)
acknowledging that there are not, to Tenant's knowledge, any uncured
defaults on the part of the Landlord or stating the nature of any uncured
defaults, (iii) evidencing the status of this Lease as may be required by a
Mortgagee or a purchaser of the Premises, (iv)certifying the current Monthly
Rent among and the amount and form of Security Deposit on deposit with
Landlord, and (v) certifying to such other information as Landlord,
Landlord's Agents, Mortgagees and prospective purchasers may reasonably
request including, but not limited to, any requested information within the
requirements of this Lease including Article 6 regarding Hazardous
Materials. Tenant's failure to deliver an estoppel certificate within
twenty (20) days after delivery of Landlord's written request therefor shall
constitute an Event of Default hereunder.
16.3 Financial Information. Tenant shall deliver to Landlord,
prior to the execution of this Lease, and within ten (10) days following
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written request therefor by Landlord at any time during the Term, Tenant's
current financial statements, and Tenant's financial statements for the two
(2) years prior to the current fiscal financial statement's year, certified
to be true, accurate and complete by the chief financial officer of Tenant,
including a balance sheet and profit and loss statement for the most recent
prior year (collectively, the "Statements"), which Statement shall
accurately and completely reflect the financial condition of Tenant.
Landlord agrees that it will keep the Statements confidential, except that
Landlord shall have the right to deliver the same to any proposed purchaser
of the Premises, the Project or any portion thereof, and to the Mortgagees
of Landlord or such purchaser. Tenant acknowledges that Landlord is relying
on the Statements in its determination to enter into this Lease, and Tenant
represents to Landlord, which representation shall be deemed made on the
date of this Lease, that no material adverse change in the financial
condition of Tenant, as reflected in the Statements, has occurred since the
date Tenant delivered the Statements to Landlord. If any material change in
Tenant's financial condition, as reflected in the Statements, occurs prior
to the date of this Lease, or if Tenant fails to inform Landlord of any such
material change, Landlord shall have the right, in addition to any other
rights and remedies of Landlord, to terminate this Lease by notice to Tenant
given within fifteen (15) thirty (30) days after Landlord learns of such
material change.
ARTICLE XVII
SIGNS AND GRAPHICS
Landlord shall designate the location on the Premises for one (1)
exterior identification sign for Tenant. Tenant shall have no right to
maintain identification signs in any other location in, or about the
Premises (other than a sign on the entrance door) and shall not display or
erect any other signs, displays or other advertising materials that are
visible from the exterior of the Building. The size, design, color and
other physical aspects of the permitted sign shall be subject to Landlord's
written approval prior to installation, which approval shall not be
unreasonably withheld. The cost of all signs and graphics, including the
installation, maintenance and removal thereof, shall be at Tenant's sole
cost and expense. Landlord shall ensure that the existing monument sign is
blank and is in good condition and repair prior to Tenant's occupancy of the
Premises. If Tenant fails to maintain its signs, or if Tenant fails to
remove its name placard from the monument sign, upon termination of this
Lease and repair any damage caused by such removal (including, but not
limited to, repainting the affected area, if required by Landlord), Landlord
may do so at Tenant's expense. All sums reasonably disbursed, deposited or
incurred by Landlord in connection with such removal including, but not
limited to, all costs, expenses and actual attorneys' fees, shall be due and
payable by Tenant by Landlord on deemed by Landlord, together with interest
thereon at the Applicable Rate from the date of such demand until paid by
Tenant.
ARTICLE XVIII
QUIET ENJOYMENT
Landlord for itself and its successors in interest, covenants that
Tenant, upon performing the terms, conditions and covenants of this Lease,
shall have quiet and peaceful possession of the Premises as against nay
person claiming the same by, through or under Landlord.
ARTICLE XIX
SURRENDER; HOLDING OVER
19.1 Surrender of the Premises. Upon the expiration or earlier
termination of this Lease, Tenant shall surrender the Premises to Landlord
in its condition existing as of the completion of the Work defined in the
Workletter attached hereto as Exhibit "C", normal wear and tear and acts of
God excepted, in a clean and broom swept condition with all interior walls
in good repair,, the HVAC equipment, plumbing, electrical and other
mechanical installations in good operating order, all to the reasonable
satisfaction of Landlord. Tenant shall remove from the Premises all of
Tenant's Alterations which Landlord requires Tenant to remove pursuant to
Section 8.1 and all Tenant's Personal Property, and shall repair any damage
and perform any restoration work caused by such removal. If Tenant fails to
remove such Alterations and Tenant's Personal Property which Tenant is
authorized and obligated to remove pursuant to the above, and such failure
continues after the termination of this Lease, Landlord any retain such
property and all rights of Tenant with respect to it shall cease, or
Landlord may place all or any portion of such property in public storage for
Tenant's account. Tenant shall pay to Landlord, upon demand, the costs of
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removal of any such Alterations and Tenant's Personal Property and storage
and transportation costs of same, and the cost of repairing and restoring
the Premises, together with attorneys' fees and interest on said amounts at
the Applicable Rate from the date of expenditure by Landlord. If the
Premises are not so surrendered at the termination of this Lease, Tenant
hereby agrees to indemnify Landlord and Landlord's Agents against all loss
or liability resulting from any delay by Tenant in so surrendering the
Premises.
19.2 Holding Over. If Tenant remains in possession of all or any
part of the Premises after the expiration of the Term with the prior written
consent of Landlord, such possession shall constitute a month-to-month
tenancy only and shall not constitute a renewal or extension for any further
term. If Tenant remains in possession of all or any part of the Premises
after the expiration of the Term without the prior written consent of
Landlord, such possession shall constitute a tenancy at sufferance. In
either of such events, Monthly Rent shall be increased to an amount equal to
one hundred twenty-five percent (125%) of the Monthly Rent payable during
the last month of the Term, and any other sums due hereunder shall be
payable in the amounts and at the times specified in this Lease. Any such
tenancy shall be subject to every other term, condition, and covenant
contained in this Lease.
ARTICLE XX
CONSTRUCTION OF TENANT IMPROVEMENTS
The obligations of Landlord and Tenant, if any, with respect to the
Tenant Improvements, are set forth in the Work Letter attached as ExhibitC.
It is acknowledged and agreed that all Tenant Improvements under this Lease
are and shall be the property of Landlord from and after their installation,
Tenant's Personal Property excepted.
ARTICLE XXI
MISCELLANEOUS AND INTERPRETIVE PROVISIONS
21.1 Broker. Landlord and Tenant each warrant and represent to the
other that neither has had any dealings with any real estate broker, agent
or finder in connection with the negotiation of this Lease or the
introduction of the parties to this transaction, except for the Broker
(whose commission shall be paid by Landlord), and that it knows of no other
real estate broker, agent or finder who is or might be entitled to a
commission or fee in connection with this Lease. In the event of any
additional claims for brokers' or finders' fees with respect to this Lease,
Tenant shall indemnify, hold harmless, protect and defend Landlord from and
against such claims if they shall be based upon any statement or
representation or agreement made by Tenant, and Landlord shall indemnify,
hold harmless, protect and defend Tenant from and against such claims if
they shall be based upon any statement, representation or agreement made by
Landlord.
21.2 Examination of Lease. Submission of this Lease for
examination or signature by Tenant does not create a reservation of or
option to lease. This Lease shall become effective and binding only upon
full execution of this Lease by both Landlord and Tenant.
21.3 No Recording. Tenant shall not record this Lease or any
memorandum of this Lease without Landlord's prior written consent, but if
Landlord so requests, Tenant agrees to execute, have acknowledged and
deliver a memorandum of this Lease in recordable form which Landlord
thereafter may file for record.
21.4 Quitclaim. Upon any termination of this Lease Tenant shall, at
Landlord's request, execute, have acknowledged and deliver to Landlord an
instrument in writing releasing and quitclaiming to Landlord all right,
title and interest of Tenant in and to the Premises by reason of this Lease
or otherwise.
21.5 Modifications for Mortgagees. If in connection with
obtaining financing for the Premises or any portion thereof, Landlord's
Mortgagees shall request reasonable modifications to this Lease as a
condition to such financing, Tenant shall not unreasonably withhold, delay
or defer its consent thereto, provided such modifications do not adversely
affect Tenant's rights, unreasonably interfere with Tenant's use or
enjoyment of the Premises, or increase the monetary obligations of Tenant
hereunder. Tenant's failure to so consent shall constitute an Event of
Default under this Lease.
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21.6 Notice. Any Notice required or desired to be given under this
Lease shall be in writing and shall be addressed to the address of the party
to be served. The addresses of Landlord and Tenant are as set forth in
Items 1 and 3, respectively, of the Basic Lease Provisions, except that (a)
prior to the Commencement Date, the address for Notices to Tenant shall be
as set forth opposite Tenant's signature on this Lease, and (b) from and
after the Commencement Date, notwithstanding the addresses for Tenant set
forth in Item 3 of the Basic Lease Provisions, all Notices regarding the
operation and maintenance of the Project shall be delivered to Tenant at the
Premises. Each such Notice shall be deemed effective and given (a) upon
receipt, if personally delivered (which shall include delivery by courier or
overnight delivery service), (ii) upon being telephonically confirmed as
transmitted, if sent by telegram, telex or telecopy, (iii) two (2) business
days after deposit in the United States mail in orange County or in the
count in which the Premises are located, certified and postage prepaid,
properly addressed to the party to be served, or (iv) upon receipt if sent in
any other way. Any party hereto may from time to time, by Notice to the
other in accordance with this Section 21.6, designate a different address
than that set forth above for the purposes of Notice.
21.7 Captions. The captions and headings used in this Lease are for
the purpose of convenience only and shall not be construed to limit or
extend the meaning of any part of this Lease.
21.8 Executed Copy. Any fully executed copy of this Lease shall be
deemed an original for all purposes.
21.9 Time. Time is of the essence for the performance of each term,
condition and covenant of this Lease.
21.10 Severability. If any one or more of the provisions contained
herein shall for any reason be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality, or unenforceability shall not
affect any other provision of this Lease, but this Lease shall be construed
as if such invalid, illegal or unenforceable provision had not been
contained herein.
21.11 Survival. All covenants and indemnities set forth herein which
contemplate the payment of sums, or the performance by Tenant after the Term
or following an Event of Default, including specifically, not limited to,
the covenants and indemnities set forth in Section 5.3, Article VI, Article
VII, Section 8.1, Section 9.2, Section 11.1, Section 11.9, Article XV, and
Article XIX, and all representations and warranties of Tenant, shall survive
the expiration or sooner termination of this Lease.
21.12 Choice of Law. This Lease shall be construed and enforced in
accordance with the laws of the State of California. The language in all
parts of this Lease shall in all cases be construed as a whole according to
its fair meaning and not strictly for or against either Landlord or Tenant.
21.13 Gender; Singular, Plural. When the context of this Lease
requires, the neuter gender includes the masculine, the feminine, a
partnership or corporation or joint venture, the singular includes the
plural and the plural includes the singular.
21.14 Non-Agency. It is not the intention of Landlord or Tenant to
create hereby a relationship of master-servant or principal-agent, and under
no circumstance shall tenant herein be considered the agent of Landlord, it
being the sole purpose and intent of the parties hereto to create a
relationship of landlord and tenant.
21.15 Successors. The terms, covenants, conditions and agreements
contained in this Lease shall, subject to the provisions as to assignment,
subletting, and bankruptcy contained herein and any other provisions
restricting successors or assigns, apply to and bind the heirs, successors,
legal representatives and assigns of the parties hereto.
21.16 Waiver; Remedies Cumulative. The waiver by either party of
any term, covenant, agreement or condition herein contained shall not be
deemed to be a waiver of any subsequent breach of the same or any other
term, covenant, agreement or condition herein contained, nor shall any
custom or practice which may grow up between the parties in the
administration of this Lease be construed to waive or to lessen the right of
Landlord to insist upon the performance by Tenant in strict accordance with
all of the provisions of this Lease. The subsequent acceptance of Rent
hereunder by Landlord shall not be deemed to be a waiver of any proceeding
breach by Tenant of any provisions, covenant, agreement or condition of this
Lease, other than the failure of Tenant to pay the particular Rent payment
so accepted, regardless of Landlord's knowledge of such preceding breach at
the time of acceptance of such Rent payment. Landlord's acceptance of any
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check, letter of payment shall in no event be deemed an accord and
satisfaction, and Landlord shall accept the check, letter or payment without
prejudice to Landlord's right to recover the balance of the Rent or pursue
any other remedy available to it. The rights and remedies of either party
under this Lease shall be cumulative and in addition to any and all other
rights and remedies which either party has or may have.
21.17 Unavoidable Delay. Except for the monetary obligations of
Tenant under this Lease, neither party shall be chargeable with, liable for,
or responsible to the other for anything or in any amount for any
Unavoidable Delay and any Unavoidable Delay shall not be deemed a breach of
or default in the performance of this Lease, it being specifically agreed
that any time limit provision contained in this Lease (other than the
scheduled expiration of the Term) shall be extended for the same period of
time lost by Unavoidable Delay.
21.18 Entire Agreement. This Lease is the entire agreement between
the parties, and supersedes any prior agreements, representations,
negotiations or correspondence between the parties, except as expressed
herein. Except as otherwise provided herein, no subsequent change or
addition to this Lease shall be binding unless in writing and signed by the
parties hereto.
21.19 Authority. If Tenant is a corporation or a partnership, each
individual executing this Lease on behalf of the corporation or partnership,
as the case may be, represents and warrants that he is duly authorized to
execute and deliver this Lease on behalf of said entity in accordance with
its corporate bylaws, statement of partnership or certificate of limited
partnership, as the case may be, and that this Lease is binding upon said
entity in accordance with its terms. If Tenant is a corporation, Tenant
shall, if requested by Landlord, within thirty (30) days after execution of
this Lease and prior to entering into possession of the Premises, deliver to
Landlord a certified copy of a resolution of the Board of Directors of the
corporation or certificate of the Secretary of the corporation, authorizing,
ratifying or confirming the execution of this Lease. If Tenant is a
partnership, Tenant shall, if requested by Landlord, within thirty (30) days
after the execution of this Lease and prior to entering into possession of
the Premises, deliver to Landlord a certified copy of this partnership
agreement authorizing such execution.
21.20 Guaranty. All exhibits, amendments, riders and addenda
attached to this Lease are hereby incorporated into and made a part of this
Lease. In the event of variation or discrepancy, the duplicate original
hereof (including exhibits, amendments, riders and addenda, if any,
specified above) held by Landlord shall control. All references in this
Lease to Articles, Sections, Exhibits, Riders and clauses are made,
respectively, to Articles, Sections, Exhibits, Riders and clauses of this
Lease, unless otherwise specified.
21.22 Basic Lease Provisions. The Basic Lease Provisions at the
beginning of this Lease are intended to provide general information only.
In the event of any inconsistency between the Basic Lease Provisions and the
specific provisions of this Lease, the specific provisions of this Lease
shall prevail.
21.23 No Merger. The voluntary or other surrender of this Lease by
Tenant, or a mutual cancellation thereof, or a termination by Landlord,
shall not work a merger, and shall, at the option of Landlord, terminate all
or any existing subtenancies or may, at the option of Landlord, operate as
an assignment to Landlord of any or all such subtenancies.
21.24 Joint and Several Obligations. If more than one person or
entity is Tenant, the obligations imposed on each such person or entity
shall be joint and several.
21.25 No Light or Air Easement. Any diminution or shutting off of
light or air by any structure which may be erected on lands adjacent to the
Building shall in no way affect this Lease, abate Rent or otherwise impose
any liability on Landlord. This Lease does not confer any right with regard
to the subsurface below the ground level of the Building.
21.26 Security Measures. Tenant hereby acknowledges that Landlord
shall have no obligation whatsoever to provide guard service or other
security measures for the benefit of the Premises or the Project. Tenant
assumes all responsibility for the protection of Tenant, Tenant's Agents and
the property of Tenant and of Tenant's Agents from acts of third parties.
Nothing herein contained shall prevent Landlord, at Landlord's sole option,
from providing security protection for the Project or any part thereof, in
which event the cost thereof shall be included within the definition of
Project Costs and paid by Tenant in the manner set forth in Section 7.1.
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THIS LEASE is effective as of the date the last signatory necessary to
execute this Lease shall have executed this Lease.
"LANDLORD"
Birtcher Property Services as Manager for
Scripps Jack, Ltd., a California corporation
By: _________________s/s_____________
Name: _________________s/s_____________
Title: _________________s/s_____________
Date: _________________s/s_____________
By: _________________s/s_____________
Name: _________________s/s_____________
Title: _________________s/s_____________
Date: _________________s/s_____________
"TENANT"
Agouron Pharmaceuticals, Inc., a California
corporation
By: _________________s/s_____________
Name: _________________s/s_____________
Title: _________________s/s_____________
Date: _________________s/s_____________
By: _________________s/s_____________
Name: _________________s/s_____________
Title: _________________s/s_____________
Date: _________________s/s_____________
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EXHIBIT "A"
DESCRIPTION OF THE PREMISES
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EXHIBIT "B"
PROPERTY DESCRIPTION
The "Property" is that real property development known as Scripps-Sorrento
Building, located at 4245 Sorrento Valley Blvd., San Diego, California.
The Property is further described as that certain improved real property, a
diagram of which is attached as part of this exhibit, and which is described
more particularly as: Parcel 1 of Parcel Map #12377 in the City of San
Diego, County of San Diego, State of California, filed in the office of The
County Recorder of San Diego County on October 18, 1982.
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EXHIBIT "C"
WORK LETTER
THIS WORK LETTER AGREEMENT ("Workletter") is executed simultaneously with
that certain Lease dated October 17, 1996 between Scripps Jack, Ltd., a
California limited partnership, as Landlord, and Agouron Pharmaceuticals,
Inc., as Tenant relating to demised premises ("Premises"), which Premises
are more fully identified in the Lease. Capitalized terms used herein,
unless otherwise defined in this Workletter, shall have the respective
meanings assigned to them in the Lease.
For and in consideration of the agreement to lease the Premises and the
mutual covenants contained herein and in the Lease, Landlord and Tenant
hereby agree as follows:
1. Delivery of Premises. Landlord delivered the Premises to Tenant
pursuant to the Lease and Tenant accepted the Premises in its "as is"
condition, except for latent structural defects and Landlord's Construction
Obligations as defined herein.
2. Work. Tenant, at its sole cost and expense, shall perform or cause to
be performed the work (the "Work") in the Premises provided for in the Plans
(as defined in Paragraph 3 hereof) submitted to and approved by Landlord,
provided, however, that Tenant's work shall not include Tenant's furniture,
furnishings, equipment or other interior decor. Tenant's Work shall be
constructed in a good and workmanlike fashion, in accordance with the
requirements set forth herein and in compliance with all applicable laws,
ordinances, rules and other governmental requirements. Tenant shall
commence the construction of the Work promptly following completion of the
preconstruction activities provided for in Paragraph 3 below and shall
diligently proceed with all such construction. Tenant shall coordinate its
work so as to avoid interference with any work being performed by or on
behalf of Landlord and other tenants in the Project.
3. Preconstruction Activities.
(a) As soon as reasonably possible, but in no event later than
November 30, 1996, Tenant shall submit the following information and items
to Landlord:
(i) a detailed construction schedule containing the
major components of the Work and the time required for each, including the
scheduled commencement date of construction of the Work, milestone dates and
the estimated date of completion of construction;
(ii) an itemized statement of the estimated construction
cost, including permit, architectural and engineering fees;
(iii) the names and addresses of Tenant's contractor (and
the contractors' subcontractors) to be engaged by Tenant for the Work
(collectively "Tenant's Contractors"). Landlord has approved David Begent &
Co., Inc. as the contractor engaged by Tenant for the Work.
(iv) certificates of insurance as hereinafter described.
Tenant shall not permit Tenant's Contractors to commence work until the
required insurance has been obtained and certified copies of policies or
certificates have been delivered to Landlord;
(v) the Plans for the Work, which Plans shall be subject
to Landlord's approval in accordance with Paragraph 3(b) below.
Tenant will update such information and items by notice to Landlord of any
changes.
(b) As used herein, the term "Plans" shall mean the full and detailed
final architectural and engineering plans and specifications covering the
Work (including, without limitation, architectural, mechanical and
electrical working drawings for the Work). The Plans shall be subject to
the approval of all local governmental authorities requiring approval, if
any. Landlord has given its approval of preliminary architectural drawings
dated October 10, 1996 (SL-001; K-01a, -01b, -01c, -0d; K-02, 02a, -02b, -
02c, -02d; K-03a, -03b, -03c, 03d; k-04a) and the basis of design dated
October 29,1996 (collectively the "Design Plan"). It is the intention of
the parties that the Plans will reflect the design set forth in the Design
Plan, and that completed Plans which are consistent with the Design Plan
shall be deemed approved by the Landlord. If changes are required to the
Plans submitted by Tenant, (for example, if the Plans differ from the Design
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Plan) Tenant shall, within three (3) days thereafter, submit to Landlord for
its approval the proposed revised Plans as amended in accordance with the
changes so required. The Plans shall also be revised, and the Work shall be
changed, to incorporated any work required in the Premises by and local
governmental field inspector. Landlord's approval of the Plans shall in no
way be deemed to be acceptance or approval of any element therein contained
which is in violation of any applicable laws, ordinance, regulations or
other governmental requirements or a representation or warranty that the
Plans are adequate for any purpose. Landlord agrees that changes mandated
solely by governmental authorities shall be acceptable and shall not require
any further Landlord approval so long as such changes are implemented
without adversely altering the Building's structure and in a manner
reasonably acceptable to Landlord.
(c) No Work shall be undertaken or commenced by Tenant in the
Premises until:
(i) the Plans have been submitted to and approved by Landlord,
except that Tenant can begin demolition prior to final Plan approval;
(ii) all required insurance coverages have been obtained by
Tenant. (Failureof Landlord to receive evidence of such coverage upon
commencement of the Work shall not waive Tenant's obligations to obtain such
coverages.);
(iii) items required to be submitted to Landlord prior to
commencement of construction of the Work have been so submitted and have
been approved, where required;
(iv) Landlord has given written notice that the Work can
proceed.
4. Delay. In the event Tenant fails to deliver or deliver in sufficient
and accurate detail the information required under Paragraph 3 on or before
the respective dates specified in said Paragraph, or in the event Tenant,
for any reason, fails to complete the Work on or before the scheduled
Commencement Date of the term of the Lease, Tenant shall be responsible for
rent and all other obligations as set forth in the Lease from the
Commencement Date under the Lease, regardless of the degree of completion of
the Work on such date, and no such delay in completion of the Work shall
relieve Tenant of any of its obligations under said Lease.
6. Change Orders. All delays caused by Tenant-initiated change orders,
including, without limitation, any stoppage of work during the change order
review process, are solely the responsibility of Tenant and shall cause no
delay in the commencement of the Lease or the rental and other obligations
therein set forth.
7. Standards of Design and Construction and Conditions of
Tenant's Performance. All work done in or upon the Premises by Tenant
shall be done according to the standards set forth in this Paragraph 7,
except as the same may be modified in the Plans approved by or on behalf of
Landlord and Tenant.
(a) Tenant's Plans and all design and construction of the Work shall
comply with all applicable statutes, ordinances, regulations, laws, codes
and industry standards. Approval by Landlord of the Plans shall not
constitute a waiver of this requirement or assumption by Landlord of
responsibility for compliance. Where several sets of the foregoing laws,
codes and standards must be met, the strictest shall apply where not
prohibited by another law, code or standard.
(b) Tenant shall obtain, at its own cost and expense, all required
building permits and, when construction has been completed, shall obtain, at
its own cost and expense, an occupancy permit for the Premises, a copy of
which permit shall be delivered to Landlord.
(c) Tenant's Contractors shall be licensed contractors, possessing
good labor relations, capable of performing quality workmanship and working
in harmony with Landlord's contractors and subcontractors and with other
contractors and subcontractors in the Building. All work shall be
coordinated with any other construction or other work in the Building or
Project in order not to affect adversely construction work being performed
by or for Landlord, it being understood that, in the event of any conflict,
Landlord and its contractors and subcontractors shall have priority over
Tenant and Tenant's Contractors.
(d) Landlord shall have the right, but not the obligation, to perform
on behalf of and for the account of Tenant, subject to reimbursement by
Tenant, any work (i) which Landlord deems to be necessary on an emergency
basis, (ii) which pertains to structural components, building systems or the
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general utility systems for the Building, or (iii) which pertains to the
erection of temporary safety barricades or signs during construction.
(e) Tenant shall use only new, first-class materials in the Work,
except where explicitly shown otherwise in the Plans approved by Landlord
and Tenant. Tenant shall obtain warranties of at least one (1) year's
duration from the completion of the Work against defects in workmanship and
materials on all work performed and equipment installed in the Premises as
part of the Work.
(f) Tenant and Tenant's Contractors shall comply with all reasonable
rules and regulations existing from time to time at the Project.
Construction equipment and materials are to be kept within the Premises, and
delivery and loading of equipment and materials shall be done at such
locations and at such time as Landlord shall direct.
(g) Landlord shall have the right to order Tenant or any of Tenant's
Contractors who violate the requirements imposed on Tenant or Tenant's
Contractors in performing work to cease work and remove its equipment and
employees from the Building or Project. No such action by Landlord shall
delay the commencement of the Lease or the rental and other obligations
therein set forth.
(h) Tenant shall arrange and pay for removal of construction debris
and shall not place debris in the Building's or Project's waste containers.
(i) Tenant shall permit access to the Premises, and the Work shall be
subject to inspection, by Landlord and Landlord's architects, engineers,
contractors and other representatives at all times during the period in
which the Work is being constructed and installed and following completion
of the Work.
(j) Tenant shall proceed with its work expeditiously, continuously and
efficiently, and shall use its best efforts to complete the same as soon as
reasonably possible. Tenant shall notify Landlord upon completion of the
Work and shall furnish Landlord with such further documentation as may be
necessary under Paragraphs 9 below.
(k) Tenant shall furnish to Landlord "as-built" drawings of the Work
within thirty (30) days after completion of the Work.
(l) Tenant shall impose on and enforce all applicable terms of this
Workletter against Tenant's architect and Tenant's Contractors.
8. Insurance and Indemnification.
(a) In addition to any insurance which may be required under the
Lease, Tenant shall secure, pay for and maintain or cause Tenant's
Contractors to secure, pay for and maintain during the continuance of
construction and fixturing work within the Building or Premises, insurance
in the following minimum coverages and limits of liability:
(i) workers' compensation and employers' liability insurance
with limits of not less than $500,000.00, or such higher amounts as may be
required from time to time by any employee benefit acts or other statutes
applicable where the work is to be performed, and in any event sufficient to
protect Tenant's Contractors from liability under the aforementioned acts;
(ii) comprehensive or commercial general liability insurance
(including contractors' protective liability) in an amount not less than
$2,000,000.00 per occurrence, whether involving bodily injury liability (or
death resulting therefrom) or property damage liability or a combination
thereof with a minimum aggregate limit of not less than $10,000,000.00.
Such insurance shall provide for explosion and collapse, completed
operations coverage and broad form blanket contractual liability coverage
and shall insure Tenant's Contractors against any and all claims for bodily
injury, including death resulting therefrom, and damage to the property of
others and arising from its operations under the contracts whether such
operations are performed by Tenant's Contractors or by anyone directly or
indirectly employed by any of them;
(iii) comprehensive automobile liability insurance, including
the ownership, maintenance and operation of any automotive equipment, owned,
hired or nonowned, in an amount not less than $500,000.00 for each person in
one accident and $1,000,000.00 for injuries sustained by two or more persons
in any one accident, and property damage liability in an amount not less
than $1,000,000.00 for each accident. Such insurance shall insure Tenant's
Contractors against any and all claims for bodily injury, including death
resulting therefrom, and damage to the property of others arising from its
operations under the contracts, whether such operations are performed by
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Tenant's Contractors or by anyone directly or indirectly employed by any of
them;
(iv) "all risk" builder's risk insurance upon the entire Work
to the full insurable value thereof. This insurance shall include the
interests of Landlord and Tenant (and their respective contractors and
subcontractors of any tier to the extent of any insurable interest therein)
in the Work and shall insure against the perils of fire and extended
coverage and shall include "all risk" builder's risk insurance for physical
loss or damage including, without duplication of coverage, theft, vandalism
and malicious mischief. If portions of the Work are stored off the site of
the Building or in transit to said site are not covered under said "all
risk" builder's risk insurance, then Tenant shall effect and maintain
similar property insurance on such portions of the Work. Any loss insured
under said "all risk" builder's risk insurance is to be adjusted with
Landlord and Tenant and made payable to Landlord as trustee for the
insureds, as their interests may appear.
All policies (except the workers' compensation policy) shall be endorsed to
include as additional insured parties Landlord, the Mortgagees, and the
Additional Insureds named in Item 16 of the Basic Lease Provisions The
waiver of subrogation provisions contained in the Lease shall apply to all
insurance policies (except the workers' compensation policy) to be obtained
by Tenant pursuant to this Paragraph. The insurance policy endorsements
shall also provide that all additional insured parties shall be given thirty
(30) days' prior written notice of any cancellation or nonrenewal of
coverage (except that ten (10) days' notice shall be sufficient in the case
of cancellation for nonpayment of premium) and shall provide that the
insurance coverage afforded to the additional insured parties thereunder
shall be primary to any insurance carried independently by said additional
insured parties. Additionally, where applicable, each policy shall contain
a cross-liability and severability of interest clause.
(b) Without limitation of the indemnification provisions contained in
the Lease, to the fullest extent permitted by law Tenant agrees to
indemnify, protect, defend and hold harmless Landlord, Landlord's
contractors and Landlord's architects and their partners, directors,
officers, employees and agents, from and against all claims, liabilities,
losses, damages and expenses of whatever nature arising out of or in
connection with the Work or the entry of Tenant or Tenant's Contractors into
the Project, the Building and the Premises, including, without limitation,
mechanics' liens or the cost of any repairs to the Premises, Building or
Project necessitated by activities of Tenant or Tenant's Contractors and
bodily injury to persons or damage to the property of Tenant, its employees,
agents, invitees or licensees or others. It is understood and agreed that
the foregoing indemnity shall be in addition to the insurance requirements
set forth above and shall not be in discharge of or in substitution for same
or any other indemnity or insurance provision of the Lease.
9. Landlord's Contribution; Excess Amounts.
(a) Upon completion of the work, Tenant shall furnish Landlord with
final waivers of liens and contractors' affidavits, in such form as may be
required by Landlord, from all parties performing labor or supplying
materials or services in connection with the Work showing that all of said
parties have been compensated in full and waiving all liens in connection
with the Premises and Building. Tenant shall submit to Landlord a detailed
breakdown of Tenant's total construction costs, together with such evidence
of payment as is reasonably satisfactory to Landlord.
(b) Upon completion of the Work and Tenant's satisfaction of all
requirements set forth herein, Landlord shall make a dollar contribution in
the amount of Three Hundred Ninety Five Thousand Dollars
($395,000.00) ("Landlord's Contribution") for application to the extent
thereof to the cost of the Plans and the Work. If such costs of the Plans
and the Work and exceeds Landlord's Contribution, Tenant solely shall have
responsibility for the payment of such excess cost. If the cost of the
Plans, and the Work is less than Landlord's Contribution, Landlord shall be
entitled to retain such excess amount. Notwithstanding anything herein to
the contrary, Landlord may deduct from Landlord's Contribution any amounts
due to Landlord or its architects or engineers under this Workletter.
10. Miscellaneous.
(a) Except as expressly set forth herein or in the Lease, Landlord has
no agreement with Tenant and has no obligation to do any work with respect
to the Premises.
(b) If the Plans for the Work require the construction and
installation of more fire hose cabinets or telephone/electrical closets than
the number provided in the core of the Building in which the Premises are
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located, then Tenant agrees to pay all costs and expenses arising from the
construction and installation of such additional fire hose cabinets or
telephone/electrical closets.
(c) Time is of the essence under this Workletter.
(d) Any person signing this Workletter on behalf of Landlord and/or
Tenant warrants and represents he has authority to do so.
(e) If Tenant fails to make any payment relating to the Work as
required hereunder, Landlord, at its option, may complete the work pursuant
to the approved Plans and continue to hold Tenant liable for the costs
thereof and all other costs due to Landlord. Tenant's failure to pay any
amounts owed by Tenant hereunder when due or Tenant's failure to perform its
obligations hereunder shall also constitute a default under the Lease, and
Landlord shall have all the rights and remedies granted to Landlord under
the Lease for nonpayment of any amounts owed thereunder or failure by Tenant
to perform its obligations thereunder.
(f) Notices under this Workletter shall be given in the same manner as
under the Lease.
(g) The liability of Landlord hereunder or under any amendment hereto
or any instrument or document executed in connection herewith (including,
without limitation, the Lease) shall be limited to and enforceable solely
against Landlord's interest in the Building.
(h) The headings set forth herein are for convenience only.
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(i) This Workletter sets forth the entire agreement of Tenant and
Landlord regarding the Work. This Workletter may only be amended if in
writing and duly executed by both Landlord and Tenant.
IN WITNESS WHEREOF, this Workletter is executed as of the date and year
first written above.
"LANDLORD"
Birtcher Property Services as Manager for
Scripps Jack, Ltd., a California corporation
By:/s/ Michael S. Buzar
-----------------------------------------
Name:_ Michael S. Buzar _
Title: Senior Vice President
Date: 11/13/96
By:/s/ Lynda L. Bettini, CPM
-----------------------------------------
Name: Lynda L. Bettini, CPM
Title: Vice President
Date: 11/13/96
"TENANT"
Agouron Pharmaceuticals, Inc.,
a California corporation
By:/s/ Glenn Zinser
-----------------------------------------
Name: Glenn Zinser
Title: Vice President, OperationS
Date: November 8, 1996
By:/s/ Gary Friedman
-----------------------------------------
Name: Gary E. Friedman
Title: Vice President and General Counsel
Date: November 8, 1996
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EXHIBIT "D"
COMMENCEMENT DATE MEMORANDUM
TO: DATED:___________________________
"Tenant"
Re: Office Lease dated __________________, 19__ , by and between ______
_____________________, as Landlord, and ________________________________
,
as Tenant (the "Lease").
Please acknowledge that the Commencement Date of the Lease is _________
, 19__ and that the Expiration Date of the Lease is _______________, 19__.
Very truly yours,
By:______________s/s______________
Its:______________________________
"Landlord"
Tenant hereby confirms the information set forth above, and further
acknowledges that Landlord has fulfilled its obligations, if any, regarding
the construction of Tenant's initial leasehold improvements under the
above-referenced Lease.
By:______________s/s_____________
Its:_____________________________
Dated:______________________, 1996
"Tenant"
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EXHIBIT "E"
ADJUSTMENT TO MONTHLY RENT
Monthly Rent
per Square Foot
Of Gross
Period Building Area
May 15,1997 through and including December 31, 1997 $1.45
January 1, 1998 through and including December 31, 1998 $1.49
January 1, 1999 through and including December 31, 1999 $1.54
January 1, 2000 through and including December 31, 2000 $1.58
January 1, 2001 through and including December 31, 2001 $1.63
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EXHIBIT F
RULES AND REGULATIONS
This Exhibit sets forth the rules and regulations governing
Tenant's use of the Premises leased to Tenant pursuant to the terms,
covenants and conditions of the Lease to which this Exhibit is attached and
therein made part thereof. Unless otherwise defined, capitalized terms used
herein shall have the same meaning as set forth in the Lease. In the event
of any conflict or inconsistency between this Exhibit and the Lease, the
Lease shall control.
1. Tenant shall not place anything or allow anything to be
placed near the glass of any window, door, partition or wall which may
appear unsightly from outside the Premises.
2. The walls, walkways, sidewalks, entrance passages, courts
and vestibules shall not be obstructed or used for any purpose other than
ingress and egress of pedestrian travel to and from the Premises, and shall
not be used for loitering or gathering, or to display, store or place any
merchandise, equipment or devices, or for any other purpose. The walkways,
entrance passageways, courts, vestibules and roof are not for the use of the
general public and Landlord shall retain the right to control and prevent
access thereto by all persons whose presence in the judgment of Landlord
shall be prejudicial to the safety, character, reputation and interests of
the Building and its tenants, provided that nothing therein contained shall
be construed to prevent such access to persons with whom Tenant normally
deals in the ordinary course of Tenant's business unless such persons are
engaged in illegal activities.
3. No awning or other projection shall be attached to the
outside walls of the Building. No security bars or gates shall be installed
without the prior written consent of Landlord, which consent shall not be
unreasonably withheld. Neither the interior nor exterior of any windows
shall be coated or otherwise sunscreened without the express written consent
of Landlord, which consent shall not be unreasonably withheld.
4. Tenant shall not in any way deface any part of the
Premises or the Building. The expense of repairing any damage resulting
from a violation of this rule shall be borne by the Tenant.
5. The toilet rooms, urinals, wash bowls and other plumbing
apparatus shall not be used for any purpose other than that for which they
were constructed and no foreign substance or any kind whatsoever shall be
thrown therein. The expense for any breakage, stoppage or damage resulting
from the violation of this rule shall be borne by the Tenant.
6. The Premises shall not be used for manufacturing, offices
or the storage of merchandise except as the same me be incidental to the
permitted use of the Premises. No exterior storage shall be allowed at any
time without prior written approval of Landlord. The Premises shall not be
used for cooking or washing clothes without the prior written consent of
Landlord, or for lodging or sleeping or for any illegal purposes.
7. Tenant shall not make, or permit to be made, any unseemly
or disturbing noises or disturb or interfere with the neighboring building
or premises or those having business with them, whether by the use of any
musical instrument, radio, phonograph, machinery, or otherwise.
8. Tenant shall not use the name of the Building or the
Project in connection with or in promoting or advertising the business of
Tenant, except as Tenant's address, without the prior written consent of
Landlord. Landlord shall have the right to prohibit any advertisement by
Tenant which, in Landlord's reasonable opinion, tends to impair the
reputation of the Project or its desirability for its intended use, and upon
written notice from Landlord Tenant shall refrain from or discontinue such
advertising.
9. Canvassing, soliciting, peddling, parading, picketing,
demonstrating or otherwise engaging in any conduct that unreasonably impairs
the value or use of the Premises or the Project are prohibited and Tenant
shall cooperate to prevent the same.
10. All equipment of any electrical or mechanical nature shall
be placed by Tenant on the Premises, in settings approved by Landlord in
writing, in such a way as to best minimize, absorb and prevent any
vibration, noise or annoyance. No Equipment of any type shall be [placed on
the Premises which in Landlord's opinion exceeds the load limits of the
floor or otherwise threatens the soundness of the structure or improvements
of the Building.
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11. No aerial antenna shall be erected on the roof or exterior
of the Premises, or on the rounds, without in each instance the prior
written consent of Landlord. Any aerial antenna so installed by or on
behalf of Tenant without such written consent shall be subject to removal by
Landlord at any time without prior notice at the expense of Tenant, and
Tenant shall upon Landlord's demand pay a removal fee to Landlord of not
less than $200.00.
12. The entire Premises, including vestibules, entrances,
doors, fixtures, windows and plate glass, shall at all times be maintained
in a safe, neat and clean condition by Tenant. All trash, refuse and wastes
materials shall be regularly removed from the Premises by Tenant and placed
in the containers at the locations designated by Landlord for refuse
collection. All cardboard boxes must be "broken down" prior to being placed
in the trash containers. All Styrofoam chips must be bagged or otherwise
contained prior to placement in the trash containers, so as not to
constitute a nuisance. Pallets may not be disposed of in the trash
containers or enclosures. The burning of trash, refuse or waste materials
is prohibited.
13. Tenant shall use at Tenant's cost such pest extermination
contractor as Landlord may direct and at such intervals as Landlord and
Tenant determine necessary.
14. Tenant shall not change locks or install other locks on
doors of the Premises, without the prior written consent of Landlord. In
the event of loss of any keys furnished by Landlord for Tenant, Tenant shall
pay to Landlord the cost thereof.
15. No person shall enter or remain within the Project while
intoxicated or under the influence of liquor or drugs. Landlord shall have
the right to exclude or expel from the Project any person who, in the
absolute discretion of Landlord, is under the influence of liquor or drugs.
Tenant agrees to comply with all such Rules and Regulations.
Should Tenant not abide by these Rules and Regulations, Landlord may serve a
three (3) day notice to correct the deficiencies. If Tenant has not
corrected the deficiencies by the end of the notice period, Tenant will be
in default of the Lease, and Landlord and/or its designee shall have the
right, without further notice, to cure the violation at Tenant's expense.
Neither Landlord nor Landlord's Agents or any other person or
entity shall be responsible to Tenant or to any other person for the
ignorance or violation of these Rules and Regulations by any other tenant or
other person. Tenant shall be deemed to have read these Rules and
Regulations and to have agreed to abide by them as a condition precedent,
waivable only by Landlord, to Tenant's occupancy of the Premises.
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RIDER NO.1 TO LEASE
DATED October 25, 1996
BY AND BETWEEN
Scripps Jack, Ltd., a California limited partnership, AS LANDLORD
Agouron Pharmaceuticals, Inc., a California corporation, AS TENANT
This Rider, dated as of October 17, 1996, is attached to and made a part of
the above-described lease (the "Lease") between the above-named Landlord and
Tenant. Except as otherwise set forth in this Rider, all terms used in this
Rider shall have the same meaning as when used in the foregoing portion of
the Lease. To the extent of any inconsistencies between the foregoing
provisions of the Lease and the provisions of this Rider, the former are
hereby amended.
OPTION TO EXTEND
(a) Option. Tenant shall have the right to extend the Term of the
Lease for a period of sixty (60) months (the "Extension Period"), provided
that Tenant (i) is not in actual default under any provision of the Lease,
(ii) is occupying substantially all of the Premises, and (iii) has not
assigned or subleased any portion of the Premises, unless otherwise approved
by Landlord in other such assignment or sublease agreements.
(b) Exercise of Option. Tenant shall exercise its right to
extend the Lease Term only by delivering written notice to Landlord or
Tenant's desire to so extend the Lease Term no greater than 270 days nor
less than 180 days prior to the commencement of each Extension Period (the
"Extension Notice").
(c) New Lease Or Extension Amendment. Upon receipt of the
Extension Notice, Landlord shall prepare and deliver to Tenant an amendment
to this Lease (the "Extension Amendment") or, if Landlord is then utilizing
a form of lease different from this Lease, Landlord shall deliver to Tenant
a new lease (the "New Lease"). The Extension Amendment or New Lease shall
provide for a Monthly Rental equal to the fair market rental for the
Premises determined by Landlord according to the rental then being charges
for comparable space within the Sorrento Mesa area. Fair market rental as
used above shall include increases from the initial option rental which are
typically included in leases negotiated at that time.
(d) Objection to Landlord's Determination of Fair Market
Rental. If Tenant objects to Landlord's determination of the fair market
rental for the Premises, Landlord shall appoint a qualified Commercial Real
Estate profession with at least ten (10) years of experience to appraise the
Premises (the "Landlord's Appraisal") for the purpose of determining the
fair market rental. The Landlord's Appraisal shall be the fair market
rental for the purpose of determining the Monthly Rental during the
Extension Period. Tenant shall (i) within five (5) days after the receipt
of written notice of the Landlord's Appraisal employ and pay an MAI
appraiser to determine the fair market rental for the Premises (the
"Tenant's Appraisal"), and (ii) within twenty (20) days thereafter, submit
to Landlord, Tenant's Appraisal together with a written summary of the
methods used and data collected to make such determination. If Landlord's
Appraisal and Tenant's Appraisal differ by (i) less than ten percent (10%),
the greater of the two shall be the fair market rental for the Premises or
(ii) more than ten percent (10%), Landlord and Tenant shall promptly
instruct its appraiser to jointly appoint a third MAI appraiser to determine
the fair market rental for the Premises (the "Third Appraisal"). Landlord
and Tenant shall each pay one-half (1/2) of the expenses of the Third
Appraisal. The appraisal among the three (3) that is furthest from the
median of all of the appraisals shall be disregarded and the average of the
other two shall be the fair market rental for the Premises and binding upon
Landlord and Tenant. Until appraisal procedures are final, Landlord and
Tenant shall abide by the provisions of the Extension Amendment or New
Lease. Notwithstanding anything to the contrary herein, by giving written
notice to Landlord within five (5) days of determination of the fair market
rental by the appraiser(s), Tenant may withdraw the exercise of its option
and pay the Landlord's share of appraisal fees, in which case the Lease Term
shall terminate upon the Expiration Date.
(e) Time is of the Essence. Time shall be of the essence
regarding all the periods set forth above for the exercise of the option,
execution of the Extension Amendment or New Lease and the objection to the
determination of the fair market rental for the Premises. The failure of
Tenant to timely exercise the option as provided in paragraphs (b) and (c)
above shall cause this option to automatically cease and terminate, and, in
such event, this Lease shall terminate without extension. If Tenant or
Landlord fail to timely comply with the provisions of paragraph (d), the
Non-Complying Party shall be deemed to have accepted the fair market rental
as determined by the Complying Party.
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(f) It is understood and agreed that this option to extend is
personal to Agouron Pharmaceuticals, Inc., a California corporation, and is
not transferable; in the event of any assignment or subleasing of any or all
of the Premises, this option to extend shall be null and void.
"LANDLORD"
Birtcher Property Services as Manager for
Scripps Jack, Ltd., a California corporation
By:/s/ Michael S. Buzar
-----------------------------------------
Name:_ Michael S. Buzar _
Title: Senior Vice President
Date: 11/13/96
By:/s/ Lynda L. Bettini, CPM
-----------------------------------------
Name: Lynda L. Bettini, CPM
Title: Vice President
Date: 11/13/96
"TENANT"
Agouron Pharmaceuticals, Inc.,
a California corporation
By:/s/ Glenn Zinser
-----------------------------------------
Name: Glenn Zinser
Title: Vice President, OperationS
Date: November 8, 1996
By:/s/ Gary Friedman
-----------------------------------------
Name: Gary E. Friedman
Title: Vice President and General Counsel
Date: November 8, 1996
EXHIBIT 10.67
AGOURON PHARMACEUTICALS, INC.
(a California Corporation)
1990 INCENTIVE STOCK OPTION AGREEMENT
This Option Agreement is entered into between Agouron Pharmaceuticals,
Inc., a California corporation and the Optionee whose name appears on the
Notice of Grant of Stock Option to which this Agreement is an attachment.
1. Recitals.
1.01 The Board of Directors of the Company or its duly authorized
delegates authorized the granting of this Option to Optionee who is an
Employee of the Company or its Affiliates pursuant to the Agouron
Pharmaceuticals, Inc. 1990 Stock Option Plan.
1.02 This Option Agreement is intended to constitute an "incentive
stock option" within the meaning of Section 422 of Internal Revenue Code of
1986, as amended from time to time.
2. Definitions.
In addition to those words and phrases defined above and unless
otherwise required by the context in which they appear, words and phrases
having their initial letters capitalized shall have the following meanings:
2.01 Act. "Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
2.02 Affiliate. "Affiliate" shall mean any corporation defined as a
"parent corporation" or a "subsidiary corporation" by Code Section 424(e)
and (f), respectively.
2.03 Agreement. "Agreement" shall mean this 1990 Incentive Stock
Option Agreement (including any schedules, attachments, documents
incorporated by reference, or modifications agreed to in writing by the
Company and Optionee) which sets forth the Optionee's and the Company's
rights and obligations with respect to the Option granted Optionee by the
Board or its duly authorized delegates as described on the Notice of Grant.
2.04 Board. "Board" shall mean the Board of Directors of the
Company.
2.05 Code. "Code" shall mean the Internal Revenue Code of 1986, as
amended.
<PAGE>
2.06 Company. "Company" shall mean Agouron Pharmaceuticals, Inc., a
California corporation, and any successors or assigns.
2.07 Date of Grant. "Date of Grant" shall mean the Date of Grant
set forth on the Notice of Grant.
2.08 Disability. "Disability" or "Disabled" shall mean the condition
of being "disabled" within the meaning of Section 422(c)(6) of the Code or
any successor provision.
2.09 Employee. "Employee" shall mean any salaried employee of the
Company or its Affiliates, including those employees who are officers of the
Company or its Affiliates.
2.10 Expiration Date. "Expiration Date" shall mean the Expiration
Date set forth on the Notice of Grant.
2.11 Fair Market Value. "Fair Market Value" of Stock on a given
date shall mean an amount per share, as determined by the Board or its
delegates by applying any reasonable valuation method determined without
regard to any restriction other than a restriction which, by its terms, will
never lapse. Notwithstanding the preceding, if the Stock is traded upon an
established stock exchange or exchanges or quoted on the over-the-counter
market as reported by the National Association of Securities Dealers
Automated Quotation Systems ("NASDAQ") National Market System, then the "Fair
Market Value" of Stock on a given date per share shall be deemed to be the
average of the highest and lowest selling price per share of the Stock on the
principal stock exchange on which the Stock is then trading, or on the over-
the-counter market as reported by NASDAQ National Market System on such
date, or, if there was no trading of the Stock on that day, on the next
preceding day on which there was such a trade; if the Stock is not traded
upon an established stock exchange or quoted on the over-the-counter market
as reported by NASDAQ National Market System but is quoted on the NASDAQ or
a successor quotation system, the "Fair Market Value" of Stock on a given
date shall be deemed to be the mean between the closing representative "bid"
and "ask" prices per share of the Stock on such date as reported by the
NASDAQ or such quotation system, or, if there shall have been no trading of
the Stock on that day, on the next preceding day on which there was such
trading.
2.12 Notice of Grant of Stock Option. "Notice of Grant of Stock
Option" or "Notice of Grant" shall mean the Notice of Grant executed by the
Company and the Optionee to which this Agreement is an attachment.
2.13 Option. "Option" shall mean the right of Optionee to purchase
the number of shares of Stock set forth on the Notice of Grant in accordance
with the terms and conditions of this Agreement.
2.14 Optionee. "Optionee" shall mean the person whose name is set
forth on the Notice of Grant.
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2.15 Option Price. "Option Price" shall mean the price per share of
Stock to be paid by the Optionee upon exercise of the Option, which amount
is set forth on the Notice of Grant.
2.16 Option Stock. "Option Stock" shall mean the total number of
shares of Stock the Optionee shall be entitled to purchase pursuant to this
Agreement, which number of shares is set forth on the Notice of Grant.
2.17 Plan. "Plan" shall mean the 1990 Agouron Pharmaceuticals, Inc.
Stock Option Plan, as amended from time to time.
2.18 Reporting Person. "Reporting Person" shall mean an Optionee
who is required to file statements relating to his or her beneficial
ownership of Stock with the SEC pursuant to Section 16(a) of the Act.
2.19 Rule 16b-3. "Rule 16b-3" shall mean Rule 16b-3, as amended
from time to time, promulgated by the SEC under the Act, and any successor
thereto.
2.20 SEC. "SEC" shall mean the Securities and Exchange Commission.
2.21 Stock. "Stock" shall mean the no par common stock of the
Company.
2.22 Vesting. "Vesting" shall mean the date(s) when all or a
portion of the Option Stock becomes available for exercise.
2.23 Vesting Schedule. "Vesting Schedule" shall mean the Vesting
Schedule set forth on the Notice of Grant which indicates on what dates all
or a portion of the Option Stock becomes available for exercise.
3. Option.
3.01 Grant. The Company hereby grants to Optionee an Option to
purchase all or any part of the Option Stock on the terms and conditions set
forth in this Agreement. The Date of Grant shall be the Date of Grant set
forth on the Notice of Grant.
3.02 Purchase Price. The purchase price per share of Stock to be
paid upon the exercise of this Option shall be the Option Price set forth on
the Notice of Grant. This Option Price is deemed by the Board or its
delegatees to be not less than the Fair Market Value of the Stock on the
Date of Grant.
3.03 Restrictions on Transfer. This Option shall not be
transferable by Optionee, other than by will or the laws of descent and
distribution, and may be exercised during Optionee's lifetime only by
Optionee; provided, however, that this Option may be transferred to a trust
for the benefit of the Optionee or members of his immediate family, provided
that such transfer does not violate the requirements of Rule 16b-3 and Code
Section 422. Upon any attempt to sell, assign, encumber or otherwise
transfer this Option in violation of this Agreement,
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<PAGE>
or upon the levy of any attachment or similar process upon this Option, this
Option shall immediately become null and void.
3.04 Modifications of Rights. As set forth in Paragraph 6(l) of the
Plan, the Board may modify (including, lowering the Option Price or
converting this Option, which is an incentive stock option, into a non-
statutory stock option), extend or renew this Option (to the extent not
previously exercised), or accept the surrender of this Option (to the extent
not previously exercised) and authorize the granting of new Stock options in
substitution therefor; provided, however, that no modification of this
Option shall, without the consent of the Optionee, alter or impair any
existing rights or obligations of Optionee under this Option.
3.05 Changes in Company's Equity Structure; Recapitalization of
Company. Upon the occurrence of the capital and/or recapitalization
transactions described in Paragraph 6(j) of the Plan, this Option (to the
extent not previously exercised) shall be adjusted or modified as provided
in Paragraph 6(j) of the Plan. Notwithstanding any provision of this
Agreement, the Company reserves the right to:
(a) make or enter into any adjustments, reclassifications,
reorganizations or changes of its capital or business
structure;
(b) merge or consolidate with other entities; or
(c) dissolve, liquidate or sell, or transfer all or any part
of its business or assets.
3.06 Shareholder's Rights. Optionee shall have no rights as a
shareholder with respect to any shares Optionee is entitled to purchase
under this Option until the date of the issuance of a certificate for such
shares. No adjustment shall be made for dividends (ordinary or
extraordinary, whether in cash, securities or other property) or
distributions or other rights for which the record date is prior to the date
of issuance of such certificate, except as provided in this Agreement or in
the Plan.
4. Employment Conditions.
4.01 Employment Status. Optionee shall be considered to be in the
employment of the Company as long as Optionee remains an Employee of the
Company or its Affiliates. The Board exclusively shall determine:
(a) whether or when there has been a termination of
Optionee's employment;
(b) if there has been a failure to comply with Optionee's
covenant not to compete obligations; and
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<PAGE>
(c) the cause of such termination,
which determination shall be final.
4.02 Covenant Not to Compete. Unless otherwise permitted in
writing, Optionee, who is an Employee of the Company or its Affiliates, shall
devote his entire time, energy and skill to the service of the Company or its
Affiliates, subject to vacation, sick leave and other approved absences.
Failure of Optionee to comply with the covenant not to compete obligations
stated above within thirty (30) days of written notice of such failure shall
cause, on the thirtieth (30th) day after such written notice, the
cancellation of Optionee's right to purchase Option Stock (to the extent not
previously exercised) without further action by the Company.
4.03 Termination for Cause. Unless otherwise agreed to by the
Board, if Optionee's employment is terminated for cause, the right of
Optionee to purchase Option Stock shall only be exercisable by Optionee for a
period of thirty (30) days after the date of such termination.
5. Exercise.
5.01 Exercise Amounts. Subject to the earlier termination of the
right to exercise this Option as provided under this Agreement, including
Paragraphs 4.02 and 4.03 above, the Optionee shall be entitled to exercise
the amounts of Option Stock, in whole or in part, as set forth in the
Vesting Schedule on the Notice of Grant.
5.02 Additional Adjustments. Notwithstanding the terms of Paragraph
5.01 of this Agreement, the Board in its sole and exclusive discretion may
provide for conditions for the exercise of this Option and/or modify the
Vesting Schedule set forth on the Notice of Grant; provided, however, the
Board may only modify the conditions for the exercise of this Option and/or
modify the Vesting Schedule to provide for a more restrictive Vesting
Schedule with the consent of Optionee, if such modification alters or
impairs any existing rights or obligations of Optionee under this Option.
5.03 Cumulative Exercise Rights. If the Optionee does not exercise
in any one year period the full number of shares to which he is then
entitled to exercise, he may exercise those shares in any subsequent year
prior to the Expiration Date of this Option as set forth on the Notice of
Grant, or such later date subsequently approved by the Board or its
delegates.
5.04 Expiration of Exercise Rights. Subject to the provisions of
Paragraph 5.08, in no event shall this Option be exercisable after the
Expiration Date or such later date subsequently approved by the Board or its
delegates; provided, however, that this Option shall expire and not be
exercisable after the expiration of ten (10) years from the Date of Grant.
5.05 Fractional Shares. This Option shall not be exercisable with
respect to any fractional shares of the Stock.
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<PAGE>
5.06 Exercise Procedure. This Option shall be exercised by the
giving of written notice of exercise to the Company which specifies the
number of shares of Stock to be purchased, accompanied by payment (in
accordance with the terms of Paragraph 6(d) of the Plan) of the aggregate
Option Price for the shares of Stock being purchased, such payment to be
made in any combination of:
(a) United States cash currency;
(b) a cashier's or certified check to the order of the
Company;
(c) a personal check acceptable to the Company;
(d) to the extent permitted by the Board, shares of Stock
(including previously owned Stock or Stock issuable in
connection with the Option exercise), properly endorsed
to the Company, whose Fair Market Value on the date of
exercise equals the aggregate Option Price of the
Option being exercised; or
(e) to the extent agreed to by the Board, the Optionee's
entering into an agreement with the Company whereby a
portion of the Optionee's Options are terminated and
where the "built-in gain" on any Options which are
terminated as part of such agreement equals the
aggregate Option Price of the Option being exercised.
"Built-in gain" means the excess of the aggregate Fair
Market Value of any Stock otherwise issuable on
exercise of a terminated Option, over the aggregate
Option Price otherwise due the Company on such
exercise;
provided, however, that the form of payment which Optionee selects shall be
permissible under the Code Section 422. The Board (in accordance with the
terms of Paragraph 6(d) of the Plan) may provide such assistance to the
Optionee to facilitate the exercise of this Option as it deems appropriate;
provided, however, that the Board, as a prerequisite to providing such
assistance, may require satisfaction of any rules or conditions it deems
appropriate. Shares of Stock used to pay the Option Price shall be valued
at their Fair Market Value on the date of exercise. The Optionee's notice
of exercise shall also be accompanied by payment (in accordance with the
terms of Paragraph 6(p) of the Plan) of the amount of federal and state
income and employment taxes that the Company is required to collect from
Optionee because of the exercise of the Option.
5.07 Exercise During Life. Subject to the provisions of Paragraphs
4.02, 4.03, 5.04 and 5.08, during Optionee's lifetime, this Option shall be
exercisable only by Optionee either:
(a) while Optionee is employed by the Company or its
Affiliates;
(b) within three (3) months after the date on which
Optionee's employment terminates for reasons other than
"termination for cause" as provided in Paragraph 4.03
of this Agreement; or
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<PAGE>
(c) within one (1) year after the date on which the
Optionee's employment terminates due to a Disability;
provided, however, that in no event shall the period of exercise be extended
beyond the Expiration Date. Unless the Board or its delegates otherwise
agree, if Optionee is entitled to purchase shares of Stock after the
termination of Optionee's employment, the number of shares of Stock Optionee
may so purchase shall be limited to the number of shares of Stock Optionee
was entitled to purchase as of such date of termination.
5.08 Exercise After Death. If Optionee dies while employed by or
while serving as an officer or director of the Company or its Affiliates or
within a period of three (3) months after the date such employment, but
prior to the complete exercise of this Option, the Option may be exercised
within one (1) year from the date of Optionee's death, but:
(a) only by a personal representative of Optionee, or by
any person or persons who shall have acquired the
Option directly from the Optionee by bequest or
inheritance; and
(b) only to the extent that the Option was exercisable on
the date of death and had not previously been
exercised.
5.09 Consultancy to the Company or Service as a Corporate Officer
After Termination of Employment. If Optionee acts as a consultant or
corporate officer for the Company or its Affiliates after the termination of
his employment, then Optionee shall not be deemed to have terminated his
employment for the Company or its Affiliates for the purposes of Paragraphs
5.07 and 5.08 of this Agreement until he ceases to be a consultant or
corporate officer for the Company or its Affiliates, provided he does not
violate any covenant not to compete obligations contained in his employment
or consulting agreement with the Company or its Affiliates. Notwithstanding
Optionee not being deemed to have terminated his employment for the Company
or its Affiliates pursuant to the terms of the preceding sentence, this
Option, which is an incentive stock option, shall automatically convert into
a non-statutory stock option three (3) months after the date on which
Optionee actually terminates his or her employment with the Company or its
Affiliates (one (1) year if the Optionee is Disabled on the date of
termination).
5.10 Exercise of Option Prior to Vesting. The Board, in its sole
and exclusive discretion, may permit the Optionee to exercise this Option
prior to the date this Option is otherwise exercisable, provided the Stock
issued on such exercise is subject to repurchase rights which expire pro rata
as the Option would otherwise have become exercisable.
5.11 Non-Sequential Exercise Permitted. Subject to the exercise
limitations set forth herein, this Option shall be exercisable
notwithstanding the fact that there is an outstanding incentive stock option
or non-statutory stock option for the purchase of Stock of the Company which
was granted before this Option was granted, and no subsequently-granted
incentive stock option shall fail to be exercisable solely because this
Option remains outstanding.
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<PAGE>
5.12 Legends. Certificates for shares of Stock acquired upon
exercise of this Option may contain such legends and transfer restrictions
as the Company shall deem reasonably necessary or desirable to:
(a) assure the satisfaction of any liability that the
Company may or will have incurred for withholding of
any federal and state income and employment taxes;
(b) facilitate compliance by the Company with any federal
or state laws or regulations, including, without
limitation, legends restricting transfer of the Stock
until there has been compliance with federal and state
securities laws;
(c) assure notice of the Company's repurchase rights under
Paragraph 5.10 of this Agreement; or
(d) assure notice of such other restrictions as may be
imposed on the Stock under the terms of this Agreement.
6. Conflict Between Plan and Agreement.
This Agreement, including the Option and Optionee's rights hereunder,
is subject to and governed by the Plan. Any conflict between the terms and
provisions of this Agreement and the terms and provisions of the Plan shall
be governed by the terms and provisions of the Plan.
7. Investment Intent.
This Option is granted on the condition that Optionee's purchase of
Stock shall be for investment purposes for Optionee's own account and not
with a view to resale or distribution. The Company shall not, upon the
exercise of this Option, be required to issue or deliver shares of Stock or
certificates therefor if, in the opinion of counsel for the Company, such
issuance or delivery would be in violation of, or would not comply with, any
applicable state or federal securities law, regulation or rule.
8. Notices.
8.01 In Writing. All notices, demands, requests, declarations,
service of process, or other communications permitted or required under this
Agreement or applicable law shall be in writing.
8.02 Delivery. All such communications may be served personally or
may be sent by registered or certified mail, return receipt requested,
postage prepaid and addressed to either Optionee or the Company at the
addresses appearing at the top of the Notice of Grant, or at such other
address as either party shall have communicated to the other pursuant to
this Paragraph
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8.02. All such communications shall be deemed effectively
delivered upon personal service or three (3) days after deposit in the
United States Mail.
9. Miscellaneous.
9.01 Successors and Assigns. Except as otherwise provided in this
Agreement, this Agreement shall inure to the benefit of only the Company,
Optionee and their respective successors or assigns.
9.02 Status. Nothing contained in this Agreement shall be construed
as giving Optionee any right to be retained as an Employee, officer or
director of the Company.
9.03 Severability. If any provision or provisions of this Agreement
are adjudged to be, for any reason, unenforceable, illegal or void, the
remainder of the provisions shall remain in full force and effect.
9.04 Integration. This Agreement and the Notice of Grant to which
this Agreement is an attachment constitute the entire understanding of the
parties concerning this Option. Except as otherwise provided, any changes,
modifications, variations, or subordinations pertaining to this Agreement
and the Notice of Grant are invalid, unless stated in writing and executed
by the Company and Optionee.
9.05 Governing Law. This Agreement and the Option granted hereby
shall be governed by the laws of the State of California.
9.06 Attorneys' Fees. If either party brings an action or seeks to
enforce or interpret any of the terms or provisions of this Agreement, the
prevailing party shall be entitled to recover its reasonable attorneys' fees
and costs, in addition to any other remedy it may be awarded.
9.07 Counterparts. This Agreement may be executed in counterparts,
and the counterparts shall constitute the whole instrument.
9.08 Titles for Convenience; Gender; and Plurals. Titles of articles
and paragraph headings are for convenience only and shall not affect the
construction or interpretation of this Agreement, or any portion thereof.
Whenever required by the context hereof, the singular shall include the
plural, and vice versa; the masculine gender shall include the feminine and
neuter, and vice versa.
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EXHIBIT 10.68
AGOURON PHARMACEUTICALS, INC.
(a California Corporation)
1990 NON-STATUTORY STOCK OPTION AGREEMENT
FOR
EMPLOYEES, OFFICERS AND DIRECTORS
This Option Agreement is entered into between Agouron Pharmaceuticals,
Inc., a California corporation and the Optionee whose name appears on the
Notice of Grant of Stock Option to which this Agreement is an attachment.
1. Recitals.
1.01 The Board of Directors of the Company or its duly authorized
delegates authorized the granting of this Option to Optionee pursuant to the
Agouron Pharmaceuticals, Inc. 1990 Stock Option Plan.
1.02 This Option Agreement is intended to constitute a non-statutory
stock option, meaning an option which is not an "incentive stock option"
within the meaning of Section 422 of Internal Revenue Code of 1986, as
amended from time to time.
2. Definitions.
In addition to those words and phrases defined above and unless
otherwise required by the context in which they appear, words and phrases
having their initial letters capitalized shall have the following meanings:
2.01 Act. "Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
2.02 Affiliate. "Affiliate" shall mean any corporation defined as a
"parent corporation" or a "subsidiary corporation" by Code Section 424(e)
and (f), respectively.
2.03 Agreement. "Agreement" shall mean this 1990 Non-Statutory
Stock Option Agreement (including any schedules, attachments, documents
incorporated by reference, or modifications agreed to in writing by the
Company and Optionee) which sets forth the Optionee's and the Company's
rights and obligations with respect to the Option granted Optionee by the
Board or its duly authorized delegates as described on the Notice of Grant.
2.04 Board. "Board" shall mean the Board of Directors of the
Company.
<PAGE>
2.05 Code. "Code" shall mean the Internal Revenue Code of 1986, as
amended.
2.06 Company. "Company" shall mean Agouron Pharmaceuticals, Inc., a
California corporation, and any successors or assigns.
2.07 Date of Grant. "Date of Grant" shall mean the Date of Grant
set forth on the Notice of Grant.
2.08 Disability. "Disability" or "Disabled" shall mean the
condition of being "disabled" within the meaning of Section 422(c)(6) of the
Code or any successor provision.
2.09 Employee. "Employee" shall mean any salaried employee of the
Company or its Affiliates, including those employees who are officers of the
Company or its Affiliates.
2.10 Expiration Date. "Expiration Date" shall mean the Expiration
Date set forth on the Notice of Grant.
2.11 Fair Market Value. "Fair Market Value" of Stock on a given
date shall mean an amount per share, as determined by the Board or its
delegates by applying any reasonable valuation method determined without
regard to any restriction other than a restriction which, by its terms, will
never lapse. Notwithstanding the preceding, if the Stock is traded upon an
established stock exchange or exchanges or quoted on the over-the-counter
market as reported by the National Association of Securities Dealers
Automated Quotation Systems ("NASDAQ") National Market System, then the "Fair
Market Value" of Stock on a given date per share shall be deemed to be the
average of the highest and lowest selling price per share of the Stock on the
principal stock exchange on which the Stock is then trading or on the over-
the-counter market as reported by NASDAQ National Market System on such
date, or, if there was no trading of the Stock on that day, on the next
preceding day on which there was such a trade; if the Stock is not traded
upon an established stock exchange or quoted on the over-the-counter market
as reported by NASDAQ National Market System but is quoted on the NASDAQ or
a successor quotation system, the "Fair Market Value" of Stock on a given
date shall be deemed to be the mean between the closing representative "bid"
and "ask" prices per share of the Stock on such date as reported by the
NASDAQ or such quotation system, or, if there shall have been no trading of
the Stock on that day, on the next preceding day on which there was such
trading.
2.12 Notice of Grant of Stock Option. "Notice of Grant of Stock
Option" or "Notice of Grant" shall mean the Notice of Grant executed by the
Company and the Optionee to which this Agreement is an attachment.
2.13 Option. "Option" shall mean the right of Optionee to purchase
the number of shares of Stock set forth on the Notice of Grant in accordance
with the terms and conditions of this Agreement.
2.14 Optionee. "Optionee" shall mean the person whose name is set
forth on the Notice of Grant.
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2.15 Option Price. "Option Price" shall mean the price per share of
Stock to be paid by the Optionee upon exercise of the Option, which amount
is set forth on the Notice of Grant.
2.16 Option Stock. "Option Stock" shall mean the total number of
shares of Stock the Optionee shall be entitled to purchase pursuant to this
Agreement, which number of shares is set forth on the Notice of Grant.
2.17 Plan. "Plan" shall mean the 1990 Agouron Pharmaceuticals, Inc.
Stock Option Plan, as amended from time to time.
2.18 Reporting Person. "Reporting Person" shall mean an Optionee
who is required to file statements relating to his or her beneficial
ownership of Stock with the SEC pursuant to Section 16(a) of the Act.
2.19 Rule 16b-3. "Rule 16b-3" shall mean Rule 16b-3, as amended from
time to time, promulgated by the SEC under the Act, and any successor
thereto.
2.20 SEC. "SEC" shall mean the Securities and Exchange Commission.
2.21 Stock. "Stock" shall mean the no par common stock of the
Company.
2.22 Vesting. "Vesting" shall mean the date(s) when all or a portion
of the Option Stock becomes available for exercise.
2.23 Vesting Schedule. "Vesting Schedule" shall mean the Vesting
Schedule set forth on the Notice of Grant which indicates on what dates all
or a portion of the Option Stock becomes available for exercise.
3. Option.
3.01 Grant. The Company hereby grants to Optionee an Option to
purchase all or any part of the Option Stock on the terms and conditions set
forth in this Agreement. The Date of Grant shall be the Date of Grant set
forth on the Notice of Grant.
3.02 Purchase Price. The purchase price per share of Stock to be
paid upon the exercise of this Option shall be the Option Price set forth on
the Notice of Grant.
3.03 Restrictions on Transfer. This Option may be transferred to a
trust for the benefit of the Optionee or members of his immediate family.
Upon any attempt to sell, assign, encumber or otherwise transfer this Option
in violation of this Agreement, or upon the levy of any attachment or
similar process upon this Option, this Option shall immediately become null
and void.
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3.04 Modifications of Rights. As set forth in Paragraph 6(l) of the
Plan, the Board may modify (including, lowering the Option Price), extend or
renew this Option (to the extent not previously exercised), or accept the
surrender of this Option (to the extent not previously exercised) and
authorize the granting of a new Stock option in substitution therefor;
provided, however, that no modification of this Option shall, without the
consent of the Optionee, alter or impair any existing rights or obligations
of Optionee under this Option.
3.05 Changes in Company's Equity Structure; Recapitalization of
Company. Upon the occurrence of the capital and/or recapitalization
transactions described in Paragraph 6(j) of the Plan, this Option (to the
extent not previously exercised) shall be adjusted or modified as provided
in Paragraph 6(j) of the Plan. Notwithstanding any provision of this
Agreement, the Company reserves the right to:
(a) make or enter into any adjustments, reclassifications, reorganizations
or changes of its capital or business structure;
(b) merge or consolidate with other entities; or
(c) dissolve, liquidate or sell, or transfer all or any part of its
business or assets.
3.06 Shareholder's Rights. Optionee shall have no rights as a
shareholder with respect to any shares Optionee is entitled to purchase
under this Option until the date of the issuance of a stock certificate for
such shares. No adjustment shall be made for dividends (ordinary or
extraordinary, whether in cash, securities or other property) or
distributions or other rights for which the record date is prior to the date
of issuance of such certificate, except as provided in this Agreement or in
the Plan.
4. Employment Conditions.
4.01 Employment Status. Optionee shall be considered to be in the
employment of the Company as long as Optionee remains an Employee of the
Company or its Affiliates. The Board exclusively shall determine:
(a) whether or when there has been a termination of Optionee's employment
or term of corporate office;
(b) if there has been a failure to comply with Optionee's covenant not to
compete obligations; and
(c) the cause of such termination,
which determination shall be final.
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4.02 Covenant Not to Compete. Unless otherwise permitted in
writing, Optionee, who is an Employee of the Company or its Affiliates, shall
devote his entire time, energy and skill to the service of the Company or its
Affiliates, subject to vacation, sick leave and other approved absences.
Failure of Optionee to comply with the covenant not to compete obligations
stated above within thirty (30) days of written notice of such failure shall
cause, on the thirtieth (30th) day after such written notice, the
cancellation of Optionee's right to purchase Option Stock (to the extent not
previously exercised) without further action by the Company. The
restriction contained in this Paragraph 4.02 shall only apply to Employees,
and not to officers or directors who are not Employees or consultants for
the Company.
4.03 Termination for Cause. Unless otherwise agreed to by the
Board, if Optionee's employment or his position as an officer or director of
the Company or its Affiliates is terminated for cause, the right of Optionee
to purchase Option Stock shall only be exercisable for a period of thirty
(30) days after the date of such termination.
5. Exercise.
5.01 Exercise Amounts. Subject to the earlier termination of the
right to exercise this Option as provided under this Agreement, including
Paragraphs 4.02 and 4.03 above, the Optionee shall be entitled to exercise
the amounts of Option Stock, in whole or in part, as set forth in the
Vesting Schedule on the Notice of Grant.
5.02 Additional Adjustments. Notwithstanding the terms of Paragraph
5.01 of this Agreement, the Board in its sole and exclusive discretion may
provide for conditions for the exercise of this Option and/or modify the
Vesting Schedule set forth on the Notice of Grant; provided, however, the
Board may only modify the conditions for the exercise of this Option and/or
modify the Vesting Schedule to provide for a more restrictive Vesting
Schedule with the consent of Optionee, if such modification alters or
impairs any existing rights or obligations of Optionee under this Option.
5.03 Cumulative Exercise Rights. If the Optionee does not exercise
in any one year period the full number of shares to which he is then
entitled to exercise, he may exercise those shares in any subsequent year
prior to the Expiration Date of this Option as set forth on the Notice of
Grant, or such later date subsequently approved by the Board or its
delegates.
5.04 Expiration of Exercise Rights. Subject to the provisions of
Paragraph 5.08, in no event shall this Option be exercisable after the
Expiration Date or such later date subsequently approved by the Board or its
delegates.
5.05 Fractional Shares. This Option shall not be exercisable with
respect to any fractional shares of the Stock.
5.06 Exercise Procedure. This Option shall be exercised by the
giving of written notice of exercise to the Company which specifies the
number of shares of Stock to be purchased, accompanied by payment (in
accordance with the terms of Paragraph 6(d) of the
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Plan) of the aggregate Option Price for the shares of Stock being purchased,
such payment to be made in any combination of:
(a) United States cash currency;
(b) a cashier's or certified check to the order of the
Company;
(c) a personal check acceptable to the Company;
(d) to the extent permitted by the Board, shares of Stock
(including previously owned Stock or Stock issuable in
connection with the Option exercise), properly endorsed
to the Company, whose Fair Market Value on the date of
exercise equals the aggregate Option Price of the
Option being exercised; or
(e) to the extent agreed to by the Board, the Optionee's
entering into an agreement with the Company whereby a
portion of the Optionee's Options are terminated and
where the "built-in gain" on any Options which are
terminated as part of such agreement equals the
aggregate Option Price of the Option being exercised.
"Built-in gain" means the excess of the aggregate Fair
Market Value of any Stock otherwise issuable on
exercise of a terminated Option, over the aggregate
Option Price otherwise due the Company on such
exercise.
The Board (in accordance with the terms of Paragraph 6(d) of the Plan) may
provide such assistance to the Optionee to facilitate the exercise of this
Option as it deems appropriate; provided, however, that the Board, as a
prerequisite to providing such assistance, may require satisfaction of any
rules or conditions it deems appropriate. Shares of Stock used to pay the
Option Price shall be valued at their Fair Market Value on the date of
exercise. The Optionee's notice of exercise shall also be accompanied by
payment (in accordance with the terms of Paragraph 6(p) of the Plan) of the
amount of federal and state income and employment taxes that the Company is
required to collect from Optionee because of the exercise of the Option.
5.07 Exercise During Life. Subject to the provisions of Paragraphs
4.02, 4.03 and 5.08, during Optionee's lifetime, this Option shall be
exercisable only by Optionee either:
(a) while Optionee is employed by or serves as an officer
or director of the Company or its Affiliates;
(b) within three (3) months after the date on which
Optionee's employment or term of corporate office
terminates for reasons other than "termination for
cause" as provided in Paragraph 4.03 of this Agreement;
or
(c) within one (1) year after the date on which the
Optionee's employment or term of corporate office
terminates due to a Disability;
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provided, however, that in no event shall the period of exercise be extended
beyond the Expiration Date or such later date subsequently approved by the
Board or its delegates. Unless the Board or its delegates otherwise agree,
if Optionee is entitled to purchase shares of Stock after the termination of
Optionee's employment or termination of his corporate office, the number of
shares of Stock Optionee may so purchase shall be limited to the number of
shares of Stock Optionee was entitled to purchase as of such date of
termination.
5.08 Exercise After Death. If Optionee dies while employed by or
while serving as an officer or director of the Company or its Affiliates or
within a period of three (3) months after the date such employment or term
of corporate office terminates, but prior to the complete exercise of this
Option, the Option may be exercised within one (1) year from the date of
Optionee's death, but:
(a) only by a personal representative of Optionee, or by
any person or persons who shall have acquired the
Option directly from the Optionee by bequest or
inheritance; and
(b) only as to the number of shares of Stock that Optionee
was entitled to purchase under this Option on the date
of Optionee's death.
5.09 Consultancy to the Company After Termination of Employment or
Term of Corporate Office. If Optionee acts as a consultant for the Company
or its Affiliates after the termination of his employment or term of
corporate office, then Optionee shall not be deemed to have terminated his
employment or term of corporate office for the Company or its Affiliates for
the purposes of Paragraphs 5.07 and 5.08 of this Agreement until he ceases
to be a consultant for the Company or its Affiliates, provided he does not
violate any covenant not to compete obligations contained in his consulting
agreement with the Company or its Affiliates.
5.10 Exercise of Option Prior to Vesting. The Board, in its sole
and exclusive discretion, may permit the Optionee to exercise this Option
prior to the date this Option is otherwise exercisable, provided the Stock
issued on such exercise is subject to repurchase rights which expire pro rata
as the Option would otherwise have become exercisable.
5.11 Non-Sequential Exercise Permitted. Subject to the exercise
limitations set forth herein, this Option shall be exercisable
notwithstanding the fact that there is an outstanding incentive stock option
or non-statutory stock option for the purchase of Stock of the Company which
was granted before this Option was granted, and no subsequently-granted
incentive stock option shall fail to be exercisable solely because this
Option remains outstanding.
5.12 Legends. Certificates for shares of Stock acquired upon
exercise of this Option may contain such legends and transfer restrictions
as the Company shall deem reasonably necessary or desirable to:
(a) assure the satisfaction of any liability that the
Company may or will have incurred for withholding of
any federal and state income and employment taxes;
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(b) facilitate compliance by the Company with any federal
or state laws or regulations, including, without
limitation, legends restricting transfer of
the Stock until there has been compliance with federal
and state securities laws;
(c) assure notice of the Company's repurchase rights under
Paragraph 5.10 of this Agreement; or
(d) assure notice of such other restrictions as may be
imposed on the Stock under the terms of this Agreement.
6. Conflict Between Plan and Agreement.
This Agreement, including the Option and Optionee's rights hereunder,
is subject to and governed by the Plan. Any conflict between the terms and
provisions of this Agreement and the terms and provisions of the Plan shall
be governed by the terms and provisions of the Plan.
7. Investment Intent.
This Option is granted on the condition that Optionee's purchase of
Stock shall be for investment purposes for Optionee's own account and not
with a view to resale or distribution. The Company shall not, upon the
exercise of this Option, be required to issue or deliver shares of Stock or
certificates therefor if, in the opinion of counsel for the Company, such
issuance or delivery would be in violation of, or would not comply with, any
applicable state or federal securities law, regulation or rule.
8. Notices.
8.01 In Writing. All notices, demands, requests, declarations,
service of process, or other communications permitted or required under this
Agreement or applicable law shall be in writing.
8.02 Delivery. All such communications may be served personally or
may be sent by registered or certified mail, return receipt requested,
postage prepaid and addressed to either Optionee or the Company at the
addresses appearing at the top of the Notice of Grant, or at such other
address as either party shall have communicated to the other pursuant to
this Paragraph 8.02. All such communications shall be deemed effectively
delivered upon personal service or three (3) days after deposit in the
United States Mail.
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9. Miscellaneous.
9.01 Successors and Assigns. Except as otherwise provided in this
Agreement, this Agreement shall inure to the benefit of only the Company,
Optionee and their respective successors or assigns.
9.02 Status. Nothing contained in this Agreement shall be construed
as giving Optionee any right to be retained as an Employee, officer or
director of the Company.
9.03 Severability. If any provision or provisions of this Agreement
are adjudged to be, for any reason, unenforceable, illegal or void, the
remainder of the provisions shall remain in full force and effect.
9.04 Integration. This Agreement and the Notice of Grant to which
this Agreement is an attachment constitute the entire understanding of the
parties concerning this Option. Except as otherwise provided, any changes,
modifications, variations, or subordinations pertaining to this Agreement
and the Notice of Grant are invalid, unless stated in writing and executed
by the Company and Optionee.
9.05 Governing Law. This Agreement and the Option granted hereby
shall be governed by the laws of the State of California.
9.06 Attorneys' Fees. If either party brings an action or seeks to
enforce or interpret any of the terms or provisions of this Agreement, the
prevailing party shall be entitled to recover its reasonable attorneys' fees
and costs, in addition to any other remedy it may be awarded.
9.07 Counterparts. This Agreement may be executed in counterparts,
and the counterparts shall constitute the whole instrument.
9.08 Titles for Convenience; Gender; and Plurals. Titles of
articles and paragraph headings are for convenience only and shall not affect
the construction or interpretation of this Agreement, or any portion thereof.
Whenever required by the context hereof, the singular shall include the
plural, and vice versa; the masculine gender shall include the feminine and
neuter, and vice versa.
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EXHIBIT 10.69
AGOURON PHARMACEUTICALS, INC.
(a California Corporation)
1990 NON-STATUTORY STOCK OPTION AGREEMENT
FOR CONSULTANTS
This Option Agreement is entered into between Agouron Pharmaceuticals,
Inc., a California corporation and the Optionee whose name appears on the
Notice of Grant of Stock Option to which this Agreement is an attachment.
1. Recitals.
1.01 The Board of Directors of the Company or its duly authorized
delegates authorized the granting of this Option to Optionee who is a
Consultant to the Company or its Affiliates pursuant to the Agouron
Pharmaceuticals, Inc. 1990 Stock Option Plan.
1.02 This Option Agreement is intended to constitute a non-statutory
stock option, meaning an option which is not an "incentive stock option"
within the meaning of Section 422 of Internal Revenue Code of 1986, as
amended from time to time.
2. Definitions.
In addition to those words and phrases defined above and unless
otherwise required by the context in which they appear, words and phrases
having their initial letters capitalized shall have the following meanings:
2.01 Act. "Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
2.02 Affiliate. "Affiliate" shall mean any corporation defined as a
"parent corporation" or a "subsidiary corporation" by Code Section 424(e)
and (f), respectively.
2.03 Agreement. "Agreement" shall mean this 1990 Non-Statutory
Stock Option Agreement for Consultants (including any schedules, attachments,
documents incorporated by reference, or modifications agreed to in writing
by the Company and Optionee) which sets forth the Optionee's and the
Company's rights and obligations with respect to the Option granted Optionee
by the Board or its duly authorized delegates as described on the Notice of
Grant.
2.04 Board. "Board" shall mean the Board of Directors of the
Company.
<PAGE>
2.05 Code. "Code" shall mean the Internal Revenue Code of 1986, as
amended.
2.06 Company. "Company" shall mean Agouron Pharmaceuticals, Inc., a
California corporation, and any successors or assigns.
2.07 Consultant. "Consultant" shall mean any person who is placed on
the Corporation's Consultants List by the Board or its duly authorized delegates
and who agrees in writing to be included thereon.
2.08 Consultant's Agreement. "Consultant's Agreement" shall mean a
consulting agreement between Optionee and the Company and/or its Affiliates.
2.09 Date of Grant. "Date of Grant" shall mean the Date of Grant set
forth on the Notice of Grant.
2.10 Disability. "Disability" or "Disabled" shall mean the condition
of being "disabled" within the meaning of Section 422(c)(6) of the Code or any
successor provision.
2.11 Expiration Date. "Expiration Date" shall mean the Expiration
Date set forth on the Notice of Grant.
2.12 Fair Market Value. "Fair Market Value" of Stock on a given
date shall mean an amount per share, as determined by the Board or its
delegates by applying any reasonable valuation method determined without
regard to any restriction other than a restriction which, by its terms, will
never lapse. Notwithstanding the preceding, if the Stock is traded upon an
established stock exchange or exchanges or quoted on the over-the-counter
market as reported by the National Association of Securities Dealers
Automated Quotation Systems ("NASDAQ") National Market System, then the "Fair
Market Value" of Stock on a given date per share shall be deemed to be the
average of the highest and lowest selling price per share of the Stock on the
principal stock exchange on which the Stock is then trading or on the over-
the-counter market as reported by NASDAQ National Market System on such
date, or, if there was no trading of the Stock on that day, on the next
preceding day on which there was such a trade; if the Stock is not traded
upon an established stock exchange or quoted on the over-the-counter market
as reported by NASDAQ National Market System but is quoted on the NASDAQ or
a successor quotation system, the "Fair Market Value" of Stock on a given
date shall be deemed to be the mean between the closing representative "bid"
and "ask" prices per share of the Stock on such date as reported by the
NASDAQ or such quotation system, or, if there shall have been no trading of
the Stock on that day, on the next preceding day on which there was such
trading.
2.13 Notice of Grant of Stock Option. "Notice of Grant of Stock
Option" or "Notice of Grant" shall mean the Notice of Grant executed by the
Company and the Optionee to which this Agreement is an attachment.
2.14 Option. "Option" shall mean the right of Optionee to purchase
the number of shares of Stock set forth on the Notice of Grant in accordance
with the terms and conditions of this Agreement.
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2.15 Optionee. "Optionee" shall mean the person whose name is set
forth on the Notice of Grant.
2.16 Option Price. "Option Price" shall mean the price per share of
Stock to be paid by the Optionee upon exercise of the Option, which amount
is set forth on the Notice of Grant.
2.17 Option Stock. "Option Stock" shall mean the total number of
shares of Stock the Optionee shall be entitled to purchase pursuant to this
Agreement, which number of shares is set forth on the Notice of Grant.
2.18 Plan. "Plan" shall mean the 1990 Agouron Pharmaceuticals, Inc.
Stock Option Plan, as amended from time to time.
2.19 Reporting Person. "Reporting Person" shall mean an Optionee
who is required to file statements relating to his or her beneficial
ownership of Stock with the SEC pursuant to Section 16(a) of the Act.
2.20 Rule 16b-3. "Rule 16b-3" shall mean Rule 16b-3, as amended
from time to time, promulgated by the SEC under the Act, and any successor
thereto.
2.21 SEC. "SEC" shall mean the Securities and Exchange Commission.
2.22 Stock. "Stock" shall mean the no par common stock of the
Company.
2.23 Vesting. "Vesting" shall mean the date(s) when all or a
portion of the Option Stock becomes available for exercise.
2.24 Vesting Schedule. "Vesting Schedule" shall mean the Vesting
Schedule set forth on the Notice of Grant which indicates on what dates all
or a portion of the Option Stock becomes available for exercise.
3. Option.
3.01 Grant. The Company hereby grants to Optionee an Option to
purchase all or any part of the Option Stock on the terms and conditions set
forth in this Agreement. The Date of Grant shall be the Date of Grant set
forth on the Notice of Grant.
3.02 Purchase Price. The purchase price per share of Stock to be
paid upon the exercise of this Option shall be the Option Price set forth on
the Notice of Grant.
3.03 Restrictions on Transfer. This Option may be transferred to a
trust for the benefit of the Optionee or members of his immediate family.
Upon any attempt to sell, assign, encumber or otherwise transfer this Option
in violation of this Agreement, or upon the levy of
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any attachment or similar process upon this Option, this Option shall
immediately become null and void.
3.04 Modifications of Rights. As set forth in Paragraph 6(l) of the
Plan, the Board may modify (including, lowering the Option Price), extend or
renew this Option (to the extent not previously exercised), or accept the
surrender of this Option (to the extent not previously exercised) and
authorize the granting of a new Stock option in substitution therefor;
provided, however, that no modification of this Option shall, without the
consent of the Optionee, alter or impair any existing rights or obligations
of Optionee under this Option.
3.05 Changes in Company's Equity Structure; Recapitalization of
Company. Upon the occurrence of the capital and/or recapitalization
transactions described in Paragraph 6(j) of the Plan, this Option (to the
extent not previously exercised) shall be adjusted or modified as provided
in Paragraph 6(j) of the Plan. Notwithstanding any provision of this
Agreement, the Company reserves the right to:
(a) make or enter into any adjustments, reclassifications,
reorganizations or changes of its capital or business
structure;
(b) merge or consolidate with other entities; or
(c) dissolve, liquidate or sell, or transfer all or any
part of its business or assets.
3.06 Shareholder's Rights. Optionee shall have no rights as a
shareholder with respect to any shares Optionee is entitled to purchase
under this Option until the date of the issuance of a stock certificate for
such shares. No adjustment shall be made for dividends (ordinary or
extraordinary, whether in cash, securities or other property) or
distributions or other rights for which the record date is prior to the date
of issuance of such certificate, except as provided in this Agreement or in
the Plan.
4. Consultant Conditions.
4.01 Consultant's Agreement. Optionee shall be considered to be
engaged by the Company and its Affiliates until the date of termination of
Optionee's engagement under the terms of his Consultant's Agreement. The
Board, in accordance with the terms of Optionee's Consultant's Agreement
shall determine:
(a) whether or when there has been a termination of
Optionee's engagement by the Company and its Affiliates;
(b) if there has been a failure to comply with Optionee's
covenant not to compete obligations; and
(c) the cause of such termination,
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which determination shall be final.
4.02 Covenant Not to Compete. Failure of Optionee to comply with
the covenant not to compete obligations under the terms of his Consultant's
Agreement within thirty (30) days of written notice of such failure shall
cause, on the thirtieth (30th) day after such written notice, the
cancellation of Optionee's right to purchase Option Stock (to the extent not
previously exercised) without further action by the Company.
4.03 Termination for Cause. If Optionee's engagement under the
terms of his Consultant's Agreement is terminated for cause, the right of
Optionee to purchase Option Stock shall only be exercisable for a period of
thirty (30) days after the date of such termination.
5. Exercise.
5.01 Exercise Amounts. Subject to the earlier termination of the
right to exercise this Option as provided under this Agreement, including
Paragraphs 4.02 and 4.03 above, the Optionee shall be entitled to exercise
the amounts of Option Stock, in whole or in part, as set forth in the
Vesting Schedule on the Notice of Grant.
5.02 Additional Adjustments. Notwithstanding the terms of Paragraph
5.01 of this Agreement, the Board in its sole and exclusive discretion may
provide for conditions for the exercise of this Option and/or modify the
Vesting Schedule set forth on the Notice of Grant; provided, however, the
Board may only modify the conditions for the exercise of this Option and/or
modify the Vesting Schedule to provide for a more restrictive Vesting
Schedule with the consent of Optionee, if such modification alters or
impairs any existing rights or obligations of Optionee under this Option.
5.03 Cumulative Exercise Rights. If the Optionee does not exercise
in any one year period the full number of shares to which he is then
entitled to exercise, he may exercise those shares in any subsequent year
prior to the Expiration Date of this Option as set forth on the Notice of
Grant, or such later date subsequently approved by the Board or its
delegates.
5.04 Expiration of Exercise Rights. Subject to the provisions of
Paragraph 5.08, in no event shall this Option be exercisable after the
Expiration Date or such later date subsequently approved by the Board or its
delegates.
5.05 Fractional Shares. This Option shall not be exercisable with
respect to any fractional shares of the Stock.
5.06 Exercise Procedure. This Option shall be exercised by the
giving of written notice of exercise to the Company which specifies the
number of shares of Stock to be purchased, accompanied by payment (in
accordance with the terms of Paragraph 6(d) of the Plan) of the aggregate
Option Price for the shares of Stock being purchased, such payment to be
made in any combination of:
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(a) United States cash currency;
(b) a cashier's or certified check to the order of the
Company;
(c) a personal check acceptable to the Company;
(d) to the extent permitted by the Board, shares of Stock
(including previously owned Stock or Stock issuable in
connection with the Option exercise), properly endorsed
to the Company, whose Fair Market Value on the date of
exercise equals the aggregate Option Price of the Option
being exercised; or
(e) to the extent agreed to by the Board, the Optionee's
entering into an agreement with the Company whereby a
portion of the Optionee's Options are terminated and
where the "built-in gain" on any Options which are
terminated as part of such agreement equals the
aggregate Option Price of the Option being exercised.
"Built-in gain" means the excess of the aggregate Fair
Market Value of any Stock otherwise issuable on exercise
of a terminated Option, over the aggregate Option Price
otherwise due the Company on such exercise.
The Board (in accordance with the terms of Paragraph 6(d) of the Plan) may
provide such assistance to the Optionee to facilitate the exercise of this
Option as it deems appropriate; provided, however, that the Board, as a
prerequisite to providing such assistance, may require satisfaction of any
rules or conditions it deems appropriate. Shares of Stock used to pay the
Option Price shall be valued at their Fair Market Value on the date of
exercise. The Optionee's notice of exercise shall also be accompanied by
payment (in accordance with the terms of Paragraph 6(p) of the Plan) of the
amount of federal and state income and employment taxes that the Company is
required to collect from Optionee because of the exercise of the Option.
5.07 Exercise During Life. Subject to the provisions of Paragraphs
4.02, 4.03 and 5.08, during Optionee's lifetime, this Option shall be
exercisable only by Optionee either:
(a) while Optionee is engaged by the Company or its
Affiliates under the terms of his Consultant's
Agreement;
(b) within three (3) months after the date on which
Optionee's engagement terminates for reasons other than
"termination for cause" under the terms of his
Consultant's Agreement and as provided in Paragraph
4.03 of this Agreement; or
(c) within one (1) year after the date on which the
Optionee's engagement terminates due to a Disability
under the terms of his Consultant's Agreement;
6
<PAGE>
provided, however, that in no event shall the period of exercise be extended
beyond the Expiration Date or such later date subsequently approved by the
Board or its delegates. Unless the Board or its delegates otherwise agree,
if Optionee is entitled to purchase shares of Stock after the termination of
Optionee's engagement under his Consultant's Agreement, the number of shares
of Stock Optionee may so purchase shall be limited to the number of shares of
Stock Optionee was entitled to purchase as of such date of termination.
5.08 Exercise After Death. If Optionee dies while engaged by the
Company or its Affiliates under the terms of his Consultant's Agreement or
within a period of three (3) months after the date such engagement
terminates, but prior to the complete exercise of this Option, the Option may
be exercised within one (1) year from the date of Optionee's death, but:
(a) only by a personal representative of Optionee, or by any
person or persons who shall have acquired the Option
directly from the Optionee by bequest or inheritance;
and
(b) only as to the number of shares of Stock that Optionee
was entitled to purchase under this Option on the date
of Optionee's death.
5.09 Exercise of Option Prior to Vesting. The Board, in its sole
and exclusive discretion, may permit the Optionee to exercise this Option
prior to the date this Option is otherwise exercisable, provided the Stock
issued on such exercise is subject to repurchase rights which expire pro rata
as the Option would otherwise have become exercisable.
5.10 Non-Sequential Exercise Permitted. Subject to the exercise
limitations set forth herein, this Option shall be exercisable
notwithstanding the fact that there is an outstanding incentive stock option
or non-statutory stock option for the purchase of Stock of the Company which
was granted before this Option was granted, and no subsequently-granted
incentive stock option shall fail to be exercisable solely because this
Option remains outstanding.
5.11 Legends. Certificates for shares of Stock acquired upon
exercise of this Option may contain such legends and transfer restrictions as
the Company shall deem reasonably necessary or desirable to:
(a) assure the satisfaction of any liability that the
Company may or will have incurred for withholding of any
federal and state income and employment taxes;
(b) facilitate compliance by the Company with any federal or
state laws or regulations, including, without
limitation, legends restricting transfer of the Stock
until there has been compliance with federal and state
securities laws;
(c) assure notice of the Company's repurchase rights under
Paragraph 5.09 of this Agreement; or
7
<PAGE>
(d) assure notice of such other restrictions as may be
imposed on the Stock under the terms of this Agreement.
6. Conflict Between Plan and Agreement.
This Agreement, including the Option and Optionee's rights hereunder,
is subject to and governed by the Plan. Any conflict between the terms and
provisions of this Agreement and the terms and provisions of the Plan shall
be governed by the terms and provisions of the Plan.
7. Investment Intent.
This Option is granted on the condition that Optionee's purchase of
Stock shall be for investment purposes for Optionee's own account and not
with a view to resale or distribution. The Company shall not, upon the
exercise of this Option, be required to issue or deliver shares of Stock or
certificates therefor if, in the opinion of counsel for the Company, such
issuance or delivery would be in violation of, or would not comply with, any
applicable state or federal securities law, regulation or rule.
8. Notices.
8.01 In Writing. All notices, demands, requests, declarations,
service of process, or other communications permitted or required under this
Agreement or applicable law shall be in writing.
8.02 Delivery. All such communications may be served personally or
may be sent by registered or certified mail, return receipt requested,
postage prepaid and addressed to either Optionee or the Company at the
addresses appearing at the top of the Notice of Grant, or at such other
address as either party shall have communicated to the other pursuant to
this Paragraph 8.02. All such communications shall be deemed effectively
delivered upon personal service or three (3) days after deposit in the
United States Mail.
9. Miscellaneous.
9.01 Successors and Assigns. Except as otherwise provided in this
Agreement, this Agreement shall inure to the benefit of only the Company,
Optionee and their respective successors or assigns.
9.02 No Right to be a Consultant. Nothing contained in this
Agreement shall be construed as giving Optionee any right to be retained as a
consultant for the Company.
9.03 Severability. If any provision or provisions of this Agreement
are adjudged to be, for any reason, unenforceable, illegal or void, the
remainder of the provisions shall remain in full force and effect.
8
<PAGE>
9.04 Integration. This Agreement and the Notice of Grant to which
this Agreement is an attachment constitute the entire understanding of the
parties concerning this Option. Except as otherwise provided, any changes,
modifications, variations, or subordinations pertaining to this Agreement
and the Notice of Grant are invalid, unless stated in writing and executed
by the Company and Optionee.
9.05 Governing Law. This Agreement and the Option granted hereby
shall be governed by the laws of the State of California.
9.06 Attorneys' Fees. If either party brings an action or seeks to
enforce or interpret any of the terms or provisions of this Agreement, the
prevailing party shall be entitled to recover its reasonable attorneys' fees
and costs, in addition to any other remedy it may be awarded.
9.07 Counterparts. This Agreement may be executed in counterparts,
and the counterparts shall constitute the whole instrument.
9.08 Titles for Convenience; Gender; and Plurals. Titles of
articles and paragraph headings are for convenience only and shall not affect
the construction or interpretation of this Agreement, or any portion thereof.
Whenever required by the context hereof, the singular shall include the
plural, and vice versa; the masculine gender shall include the feminine and
neuter, and vice versa.
9.09 Consultants List. Consultant's execution of this Agreement
indicates his written agreement to be placed on the Company's Consultants
List.
9
<PAGE>
Exhibit 10.74
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS AGREEMENT
PURSUANT TO AN APPLICATION DATED JANUARY 27, 1997, AS SEPARATELY FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL PORTIONS ARE INDICATED
WITH AN ASTERISK ("*"), EXCEPTING THOSE ASTERISKS CONTAINED IN SCIENTIFIC
FORMULAS CONTAINED IN SECTION 2(A) OF EXHIBIT A.
LETTER OF INTENT
THIS LETTER OF INTENT is made on the 17th day of January 1997, by and
between Agouron Pharmaceuticals, Inc., a corporation duly organized and
existing under the laws of the state of California, having a principal place
of business at 10350 North Torrey Pines Road, La Jolla, California, United
States of America (hereinafter called "Agouron"), Japan Tobacco Inc., a
corporation duly organized and existing under the laws of Japan, having its
principal place of business at JT Building, 2-1, Toranomon 2-chome, Minato-
ku, Tokyo, Japan (hereinafter called "JT"), and F. Hoffmann-La Roche Ltd., a
corporation duly organized and existing under the laws of Switzerland,
having its principal place of business at CH-4002-Basel, Switzerland
(hereinafter called "Roche"). Agouron, JT and Roche are sometimes
hereinafter referred to as a party (collectively "parties") to this
Agreement.
Background
In December 1994, Agouron and JT entered into a Development and
License Agreement ("D&L Agreement") under which they have collaborated in
the development and commercialization of the chemical compound known as
"nelfinavir mesylate" to treat and prevent Human Immunodeficiency Virus
infections. Agouron, JT and Roche now agree to enter into a license
agreement under which Roche will be licensed to sell nelfinavir mesylate in
certain countries of the world. This Letter of Intent ("LOI") which shall
be binding on the parties sets forth the basic license terms upon which the
parties have agreed. The full terms of the license will be set forth in a
definitive agreement to be prepared as described below.
NOW THEREFORE, the parties agree as follows:
1. Terms. The parties hereby enter into this Letter of Intent to
confirm their entering into a license agreement on terms substantially in
accordance with those contained in Exhibit A attached hereto. The parties
acknowledge that Exhibit A only states the basic terms of the understanding
between the parties and is subject to the further negotiation and
preparation of an agreement containing the full terms of the license between
the parties ("Definitive Agreement"). Each party agrees to act in good
faith in an effort to negotiate, execute and deliver the Definitive
Agreement on or before * .
2. Disclosure. The parties shall jointly prepare and release a
statement about the existence of this Letter of Intent and of the license
between Agouron, JT and Roche. Except as agreed to by the parties, Agouron,
JT and Roche shall not release any further information to any third party
who is not under an obligation of confidentiality with respect thereto about
any of the terms of this Letter of Intent or of the license without the
prior written consent of the other parties, which consent shall not
unreasonably be withheld. This prohibition includes, but is not limited to,
press releases, educational and scientific conferences, promotional
materials and discussions with the media. If a party determines that it is
required by law to release information to any third party regarding the
terms of this Letter of Intent or the subject matter of the license, it
shall notify the other parties of this fact prior to releasing the
information. The notice to the other parties shall include the text of the
information proposed for release. The other parties
<PAGE>
shall have the right to confer with the notifying party regarding the
necessity for the disclosure and the text of the information proposed for
release.
3. Miscellaneous. This Letter of Intent contains the entire
agreement between the parties as to the matters set forth herein and shall
be construed in accordance with the laws of the State of California, United
States of America. Exhibit A describes the parties' understanding with
respect to the development and sale of nelfinavir mesylate by Roche in
certain countries of the world. This Letter of Intent, including Exhibit A,
shall not be amended, supplemented or otherwise modified, except by an
instrument in writing signed by duly authorized officers of all of the
parties. Roche shall bear all of the expenses incurred by it in connection
with the negotiation and preparation of this Letter of Intent and the
Definitive Agreement. Agouron and JT shall bear all of the expenses
incurred by them in connection with the negotiation and preparation of this
Letter of Intent and the Definitive Agreement. Notwithstanding the
preceding, the use and disclosure of confidential and proprietary
information disclosed to Roche for the purpose of determining Roche's
interest in entering into (and for the subsequent negotiation and
performance of) a license agreement for Viracept for certain countries of
the world shall be governed by the terms of the Confidentiality Agreement
between the parties with an effective date of January 7, 1997.
IN WITNESS WHEREOF, the parties hereto have executed this Letter of
Intent by their respective officers thereunto duly authorized, the day and
year hereinabove written. This Letter of Intent may be executed in
counterparts and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.
AGOURON PHARMACEUTICALS, INC. JAPAN TOBACCO INC.
By: /s/ Kent Snyder By: /s/ Masamichi Nishimoto
Name: Kent Snyder Name: Masamichi Nishimoto
Title: Vice President Title: Executive Vice President
By: /s/ Gary Friedman By: /s/ Masakazu Kakei
Name: Gary Friedman Name: Masakazu Kakei
Title: Vice President Title: Managing Director
F. HOFFMANN-LA ROCHE LTD
By: /s/ Werner Henrich
Name: Werner Henrich
Title: Director
By: /s/ Dr. Bruno Maier
Name: Dr. Bruno Maier
Title: Deputy Director
<PAGE>
Exhibit A
1. JT and Agouron, individually and directly, under terms and conditions
specified below, hereby grant Roche the exclusive right, even as to
Agouron and JT, to sell the Product in the Field in the Licensed
Territory.
2. Definitions: Except as otherwise set forth herein, items containing
an initial capitalized letter shall have the meaning stated in the
Letter of Intent ("LOI") and/or this Exhibit A.
(a) "Product" means nelfinavir mesylate, however formulated, whose
chemical name is as follows:
[3S-(3R*, 4aR*, 8aR*, 2'S*, 3'S*)]-2-[2'-hydroxy-3'-
phenylthiomethyl-4'-aza-5'-oxo-5'-(2''-methyl-3''-
hydroxyphenyl)pentyl]-decahydroisoquinoline-3-N-t-butyl
carboxamide methanesulfonic acid salt,
and whose chemical structure is as follows:
<DIAGRAM>
(b) "Licensed Territory" means all countries of the world, except
for the United States (and its territories, possessions and
protectorates, and the District of Columbia), Canada, Mexico,
Japan, Taiwan, South Korea, North Korea, and all the countries
of Asia listed on Schedule 1 attached hereto.
(c) "Field" means the treatment and prevention of Human
Immunodeficiency Virus ("HIV") infections.
(d) "Affiliate" means any person, organization or entity which is,
directly or indirectly, controlling, controlled by, or under
common control with Roche, Agouron or JT, as the case may be.
The term "control" (including, with correlative meaning, the
terms "controlled by" and "under common control with"), as used
with respect to any person or entity, means the possession,
directly or indirectly, of the power to direct or cause the
direction of the management and
A-1
<PAGE>
policies of such person, organization or entity, whether through the
ownership of voting securities, or by contract, or court order, or
otherwise. The ownership of voting securities of a person,
organization or entity shall not, in and of itself, constitute
"control" for purposes of this definition, unless said ownership is
of a majority of the outstanding securities entitled to vote of such
person, organization or entity. For purposes of this Agreement,
Genentech, Inc. shall be considered to be an Affiliate of Roche.
(e) "Major European Country" means the *
(f) "MAA" means Marketing Authorization Application.
(g) "EMEA" means the European Agency for the Evaluation of Medicinal
Products.
(h) "D&L Agreement" means the December 1, 1994 Development and
License Agreement between Agouron and JT.
3. The term of this license will extend on a country-by-country basis
from the effective date of the signing of the LOI to which this
Exhibit A is an attachment, until the later of: (i) the last to
expire of any patents covering the Product in a country; or (ii) * years
after the date of the initial commercial launch of the Product in such
country.
4. With the consent of JT and Agouron, whose consent shall not be
unreasonably withheld, Roche shall have the right to sublicense its
rights in the Product in one or more countries of the Licensed
Territory.
5. Subject to the provisions of the D&L Agreement, Agouron may *
be agreed upon by the parties after discussions between Roche and
Agouron. Subject to the provisions of the D&L Agreement, JT may *
to
be agreed upon by the parties after discussions between Roche and JT.
The terms of the *
modified to reflect the *
6. Until * except for the countries of *
in countries where either JT or Agouron control the
exclusive rights to the Product, *
On or before *
the parties agree to further discuss the *
A-2
<PAGE>
For purposes of this paragraph, JT and
Agouron shall not be considered independent third parties.
7. Except as otherwise agreed to by the parties, Agouron and JT will be
responsible for
completing in a reasonable manner and funding the studies *
studies include the core development program studies designed to
achieve registration of the Product in the Field in the major
countries of the Licensed Territory. The parties acknowledge that
Agouron and JT despite reasonable diligence may be unable to *
8. In collaboration with Roche, Agouron will be responsible for *
and will have
the primary responsibility for *
Roche and its Affiliates will provide assistance, as
necessary, to *
Roche
will have the primary responsibility for the *
Roche will be
responsible for *
9. Alterations to the * which are required for *
will be the
responsibility of * Except as
otherwise agreed to by the parties, Roche will be responsible for *
10. Roche will be responsible for *
(other than those * ) which involve the *
(including *
). Roche will be responsible
for the
A-3
<PAGE>
*
11. A party conducting a study involving the Product will assist the other
parties in the incorporation of the data from such study into their
dossiers, if necessary. *
12. Roche will be responsible for the cost and implementation (possibly in
cooperation with a previously-contracted contract research
organization) of an expanded access program in Europe and Australia
which will be consistent in scope with the expanded access program
implemented by Agouron in North America.
13. Roche shall use reasonable diligence in the development and
registration of the Product in the Field in the countries of the
Licensed Territory. Reasonable diligence shall mean at least the
comparable standard of effort used by Roche in *
If, after *
days written notice of the failure by Roche to use reasonable
diligence in the development and registration of the Product in the
Field in a country located in the Licensed Territory Roche fails to
fulfill its obligations under this paragraph, such failure shall be
deemed to be an election pursuant to *
14. Roche will purchase the Product from JT or Agouron directly as
determined by JT and Agouron,*
15. Roche will make the following license issue fee payments to Agouron
and JT directly.
On January 24, 1997
To Agouron USD 9 million
To JT USD 9 million
Within thirty (30) days of first regulatory approval
in a Major European Country or upon marketing
authorization from the European Commission
To Agouron USD 11 million
To JT USD 11 million
--------------
TOTAL USD 40 million
A-4
<PAGE>
16. *
will be consistent with the
*
will modify the *
only to the extent required to respond to *
and implement *
As
they deem appropriate, Agouron, JT and their licensees will *
17. It is the intent of the parties that a single trademark be identified
and developed for use in connection with marketing the Product in the
Field wherever possible throughout the Territory. The parties
acknowledge their intention to use the VIRACEPT (R) trademark in
connection with the marketing of the Product in the Field wherever
possible. Unless otherwise agreed and as permitted by law, Roche will
sell the Product under the VIRACEPT brand name in all countries of the
Licensed Territory. The parties also acknowledge their intention to
use, if appropriate, the same trade dress in connection with the
marketing of the Product in the Field wherever possible. In
countries where Roche is exclusively marketing the Product, unless
prohibited by law or regulation, the labeling for the Product shall
state that the Product is licensed from Agouron and JT.
18. *
19. * Roche using diligent
marketing efforts, agrees to provide sales and other promotional
support for the Product in each country in the Licensed Territory
which is equivalent to or greater than that which Roche, its
Affiliates and/or sublicenses are providing *
After the * Roche will provide a reasonable level of
sales and other promotional support for the Product in each country in
the Licensed Territory which, when measured as a percentage of
adjusted gross product sales in such country, is equivalent to or
greater than that which Roche, its Affiliates and/or sublicenses are
providing for *
shall be attributed to *. If, after * written
notice of the failure by Roche to
A-5
<PAGE>
provide the agreed upon level of
sales and other promotional support for the Product in a country
located in the Licensed Territory Roche fails to fulfill its
obligation under this Paragraph, Agouron and JT shall have the right,
*
20. Roche shall keep Agouron and JT informed of its progress in the
development and registration of the Product. This shall include, at
least * the regular meetings of the parties and such
written progress reports as are agreed to by the parties summarizing
Roche's activities during each reporting period and Roche's planned
activities for the succeeding period. Agouron and JT shall keep Roche
informed of their development and registration activities to the
extent that such development and registration activities are relevant
to the development and registration of the Product by Roche in the
Licensed Territory. Each of the parties will *
each representative shall report
to his/her management on the matters discussed at each of the meetings
of the parties. Each party, prior to the implementation of *
will provide the other parties with a copy of
the * and an opportunity in a timely manner to
comment on the *
Roche agrees to use its diligent
efforts in responding in a timely manner, but not more than *
to requests from Agouron or JT for information *
21. Roche shall keep Agouron and JT informed of *
This shall include, at least *
the regular meetings of the parties and such written progress reports
as are agreed to by the parties summarizing Roche's activities during
each reporting period and Roche's planned activities for the Product
for the succeeding period. Each of the parties will *
each representative shall report
to his management on the matters discussed at each of the meetings of
the parties. The representatives of the parties at the meeting will
review and discuss *
Each
party agrees to inform the other parties, *
A-6
<PAGE>
22. Agouron, JT and Roche each acknowledge the interests of the other
parties *
The parties also recognize their mutual interests in
obtaining *
Consequently, a party, its employees or
consultants
*
Furthermore, in acknowledgment that certain *
the parties agree that each party
shall
*
After giving reasonable consideration
to the suggestions of the objecting party, the party wishing to *
23. Roche will pay JT and Agouron directly, a royalty based on the net
sales of the Product by Roche, its Affiliates and sublicenses,
consolidated into CHF, in amounts which equal the greater of: (i) the
royalty amounts calculated according to Schedule 1 below (Product
only); or (ii) the royalty amounts calculated according to Schedule 2
below (Product and any formulations of INVIRASE which Roche markets
with royalties being calculated separately for the consolidated annual
net sales of the Product and INVIRASE). Schedule 2 shall not apply to
net sales in a country until the Product is approved and available for
sale in such country. The following royalties shall be divided
equally between JT and Agouron.
Schedule 1
Royalty Rate
Per Consolidated Consolidated Annual Net Sales Level
Annual Net Sales Level of the Product in Licensed Territory
---------------------- --------------------------------------
* <= CHF *
* > CHF * / <= CHF *
* > CHF *
A-7
<PAGE>
Schedule 2
Consolidated Annual Net Sales Level for
the Product and INVIRASE in the Licensed
Territory (With Royalties Being
Royalty Rate Calculated Separately for the
Per Consolidated Consolidated Annual Net Sales of the
Annual Net Sales Level Product and INVIRASE)
---------------------- --------------------------------------
* <= CHF *
* > CHF * / <= CHF *
* > CHF *
24. If either: (i) regulatory approval for the Product is not obtained in
a Major European Country prior to * or (ii) marketing
authorization for the Product is not obtained from the European
Commission prior to * the royalty rate for Schedule 2
will be adjusted as follows:
Schedule 2
Consolidated Annual Net Sales Level for
the Product and INVIRASE in the
Licensed Territory (With Royalties
Royalty Rate Being Calculated Separately for the
Per Consolidated Consolidated Annual Net Sales of the
Annual Net Sales Level Product and INVIRASE)
---------------------- --------------------------------------
* <= CHF *
* > CHF * / <= CHF *
* > CHF *
25. If either: (i) regulatory approval for the Product is not obtained in
a Major European Country prior to * or (ii) marketing
authorization for the Product is not obtained from the European
Commission prior to * Schedule 2 will not apply and
Roche will be obligated to pay JT and Agouron directly, royalties
according to Schedule 1 only.
26. Roche agrees not to market any other HIV protease inhibitors in the
Licensed Territory during the term of the agreement, unless sales for
such product(s) are included in the consolidated net sales calculation
according to Schedule 2.
27. * despite reasonable efforts to *
provided,
however, that in no case will *
The parties acknowledge that the *
that the provisions of this paragraph do not apply
to *
A-8
<PAGE>
The parties
specifically acknowledge that *
Notwithstanding the
preceding, *
which are then being commercially used in the manufacture of the
Product, the parties will *
28. In any country where the amount of third party unlicensed sales of
drug products containing nelfinavir mesylate for a quarterly period
exceed * of the total sales of all drug products containing
nelfinavir mesylate in such country for such quarterly period,
royalties due on the net sales of the Product in such country for such
quarterly period will be *
29. Roche will purchase the Product from Agouron or JT directly, for sale
in the Licensed Territory at a price which *
30. * and
if Agouron or JT, independently or jointly, *
31. Roche will assist Agouron and JT in the identification of low-cost
manufacturing sources for the Product. Roche will also provide
without charge, to the extent available, technical and manufacturing
assistance and use of its technology and proprietary information to
Agouron and JT in an effort to decrease the production costs of the
Product. Agouron and JT agree to discuss in good faith with Roche an
arrangement under which Roche could be the contract manufacturer of
the Product to be used in the Licensed Territory, including the
prerequisite requirement that *
Notwithstanding the preceding, Agouron and JT shall be entitled to *
including the right to continue their *
32. *
A-9
<PAGE>
Subject to the provisions of the D&L Agreement, in the event
that *
Agouron and JT, their Affiliates and
sublicensees shall be free, without any further action by Agouron, JT
or Roche and without any further obligation to Roche and its
Affiliates, to *
provided that Agouron and JT
shall not
*
For purposes of this paragraph, Roche's *
In the event of *
pursuant
to the terms of this paragraph: (i) the *
(ii) Agouron and JT, their Affiliates and
sublicensees shall
*
(iii) Roche shall *
and
(iv) Roche shall
*
Roche
shall be responsible for *
33. Roche may elect to *
In the event that Roche elects to *
, subject to the provisions of the D&L Agreement: (i)
Agouron and JT shall
*
(ii) Agouron and JT will *
(iii) Roche shall *
and (iv) Roche shall *
34. This Agreement shall be assignable by Agouron and JT, but shall not be
assignable by Roche, except to an Affiliate, without the prior written
consent of Agouron and JT, which consent may be withheld at the sole
discretion of Agouron and JT. Any such assignment without the prior
written consent of Agouron and JT shall be void. If this Agreement is
assigned to an Affiliate, Roche shall still be responsible for all of
its obligations specified in this Agreement. Notwithstanding the
preceding, in the event of: (i) a sale or transfer of all or
substantially all of Roche's assets; or (ii) the merger or
A-10
<PAGE>
consolidation of Roche with another company, this Agreement shall be
assignable to the transferee or successor company.
35. *
A-11
<PAGE>
SCHEDULE 1 TO EXHIBIT A
ASIAN COUNTRIES
*
*
*
*
*
*
*
*
*
*
*
*
*
*
Licenses in the above-listed countries shall be subject to compliance by
Roche with the United States laws and regulations governing exports and re-
exports of the Product and any technology developed or disclosed as a result
of this Agreement.
S1-1
<PAGE>
SCHEDULE 2 TO EXHIBIT A
NELFINAVIR MESYLATE *
Protocol Title
* *
* *
* *
* *
* *
* *
* *
* *
* *
* *
* *
* *
* *
* *
* *
* *
* *
S2-1
<PAGE>
Protocol Title
* *
* *
* *
* *
* *
* *
S2-2
<PAGE>
Protocol Title
* *
* *
* *
* *
* *
* *
* *
* *
* *
S2-3
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AND THE STATEMENT OF OPERATIONS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> DEC-31-1996
<CASH> 16,827
<SECURITIES> 92,071
<RECEIVABLES> 6,151
<ALLOWANCES> 0
<INVENTORY> 21,400
<CURRENT-ASSETS> 137,819
<PP&E> 24,646
<DEPRECIATION> 15,241
<TOTAL-ASSETS> 147,224
<CURRENT-LIABILITIES> 18,279
<BONDS> 0
0
0
<COMMON> 237,369
<OTHER-SE> (110,048)
<TOTAL-LIABILITY-AND-EQUITY> 147,224
<SALES> 0
<TOTAL-REVENUES> 32,623
<CGS> 0
<TOTAL-COSTS> 45,378
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 80
<INCOME-PRETAX> (27,003)
<INCOME-TAX> 0
<INCOME-CONTINUING> (27,003)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
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0
0
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RESTATED FINANCIAL DATA SCHEDULE
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0
0
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