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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------
FORM 10-Q
(Mark one)
X Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
- --- Act of 1934. For the quarterly period ended June 30, 1997.
or
Transition report pursuant to Section 13 or 15(d) of the Securities
- --- Exchange Act of 1934. For the transition period from ___________ to
___________.
Commission File Number:
0-24814
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SUGEN, Inc.
(Exact name of registrant as specified in its charter)
Delaware 13-3629196
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
351 Galveston Drive, Redwood City, California 94063
(address of principal executive offices)
(415) 306-7700
(Registrant's telephone number, including area code)
-----------------------------
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 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. Common Stock $.01 par value;
13,128,836 shares outstanding at July 31, 1997.
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<PAGE>
SUGEN, Inc.
INDEX
PAGE NO.
--------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements and Notes
Condensed Balance Sheets - June 30, 1997
and December 31, 1996 3
Statements of Operations - for the three and six
months ended June 30, 1997 and 1996 4
Condensed Statements of Cash Flows - for the six
months ended June 30, 1997 and 1996 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 13
Exhibit Index 14
2
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS AND NOTES
SUGEN, Inc.
CONDENSED BALANCE SHEETS
(In thousands)
June 30, December 31,
1997 1996
--------- ---------
ASSETS (unaudited)
Current assets:
Cash and cash equivalents $ 8,185 $ 24,852
Short-term investments 34,679 31,482
Accounts receivable 178 264
Prepaid expenses and other current assets 690 468
--------- ---------
Total current assets 43,732 57,066
Property and equipment, net 4,000 4,095
Other assets 981 775
--------- ---------
$ 48,713 $ 61,936
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,558 $ 852
Accrued liabilities 6,789 7,406
Deferred contract revenue 375 375
Capital lease obligations - current portion 2,123 1,835
--------- ---------
Total current liabilities 11,845 10,468
Capital lease obligations - non-current portion 3,226 2,938
Stockholders' equity:
Common stock 108,700 108,120
Deferred compensation (560) (710)
Note receivable from stockholder (883) (883)
Accumulated deficit (73,615) (57,997)
--------- ---------
Total stockholders' equity 33,642 48,530
--------- ---------
$ 48,713 $ 61,936
========= =========
See accompanying notes.
3
<PAGE>
<TABLE>
SUGEN, Inc.
STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(unaudited)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------- ---------------------------
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Contract revenue (includes amounts from
related party) $ 1,484 $ 4,429 $ 2,971 $ 7,908
Costs and expenses:
Research and development 8,570 7,717 16,576 14,332
General and administrative 1,512 1,587 2,990 2,967
-------- -------- -------- --------
Total costs and expenses 10,082 9,304 19,566 17,299
-------- -------- -------- --------
Operating loss (8,598) (4,875) (16,595) (9,391)
Other income and expenses:
Interest income 610 598 1,303 1,288
Interest expense (174) (174) (344) (354)
-------- -------- -------- --------
Other income, net 436 424 959 934
-------- -------- -------- --------
Net loss $ (8,162) $ (4,451) $(15,636) $ (8,457)
======== ======== ======== ========
Net loss per share $ (0.62) $ (0.42) $ (1.20) $ (0.81)
======== ======== ======== ========
Shares used in computing net loss
per share 13,079 10,500 13,050 10,486
======== ======== ======== ========
<FN>
See accompanying notes.
</FN>
</TABLE>
4
<PAGE>
<TABLE>
SUGEN, Inc.
CONDENSED STATEMENTS OF CASH FLOWS
Increase (decrease) in cash and cash equivalents
(In thousands)
(unaudited)
<CAPTION>
Six Months Ended
June 30,
------------------------------
1997 1996
-------- --------
<S> <C> <C>
Cash flows from operating activities
Net loss $(15,636) $ (8,457)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 1,500 1,080
Deferred revenue -- (4,942)
Changes in operating assets and liabilities:
Prepaid expenses and other current assets (136) 199
Other assets (206) (789)
Accounts payable 1,706 1,143
Accrued liabilities (617) 1,729
-------- --------
Net cash used in operating activities (13,389) (10,037)
-------- --------
Cash flows from investing activities
Sales/maturities (purchases) of short-term investments, net (3,179) 13,705
Purchases of property and equipment, net (1,255) (666)
-------- --------
Net cash provided by (used in) investing activities (4,434) 13,039
-------- --------
Cash flows from financing activities
Proceeds from issuance of common stock, net 580 424
Repurchase of common stock -- (2,698)
Proceeds from issuance of warrant -- 200
Proceeds from lease financing of property and equipment 1,534 632
Payments under capital lease obligations (958) (673)
-------- --------
Net cash provided by (used in) financing activities 1,156 (2,115)
-------- --------
Net increase (decrease) in cash and cash equivalents (16,667) 887
Cash and cash equivalents at beginning of period 24,852 8,226
-------- --------
Cash and cash equivalents at end of period $ 8,185 $ 9,113
======== ========
<FN>
See accompanying notes.
</FN>
</TABLE>
5
<PAGE>
SUGEN, Inc.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. Summary of Significant Accounting Policies
Basis of Presentation
The financial information at June 30, 1997 and for the six months ended
June 30, 1997 and 1996 is unaudited but includes all adjustments
(consisting only of normal recurring adjustments) which SUGEN, Inc. (the
"Company") considers necessary for the fair presentation of the financial
position at such date and the operating results and cash flows for those
periods. The accompanying condensed financial statements should be read in
conjunction with the financial statements and notes thereto for the year
ended December 31, 1996 included in the Company's Form 10-K. The results of
the Company's operations for any interim period are not necessarily
indicative of the results of the Company's operations for a full fiscal
year.
Change in Method of Computing Earnings Per Share
In February 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 128, Earnings Per Share.
Effective December 31, 1997, the Company will adopt Statement of Financial
Accounting Standards No. 128, Earnings Per Share. In accordance with the
Statement, the Company would be required to change the method currently
used to compute earnings per share and restate all prior periods. The
impact of Statement 128 on the calculation of basic and dilutive earnings
per share is expected to have no impact on the net loss per share to be
presented at year end.
2. Accrued Liabilities
The components of accrued liabilities consist of the following:
June 30, December 31,
1997 1996
------ ------
(In thousands)
Accrued research & development services $3,586 $3,724
Accrued compensation 962 883
Accrued professional fees 516 524
Other 1,725 2,275
------ ------
$6,789 $7,406
====== ======
3. Facility Lease Agreement
In June 1997, the Company entered into a seventeen year build-to-suit
facility lease agreement for an approximately 100,000 square foot facility.
Construction of the new facility is currently targeted for completion
during the fourth quarter of 1998, which coincides with the expiration of
the Company's current lease facilities. Annual rental commitments for the
building (including owner financed improvements) over the first five years
range from $2.4 million to $3.4 million per year. In addition, the Company
issued warrants to purchase Common Stock in connection with this lease
agreement.
6
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SUGEN, Inc.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
In addition to historical information contained herein, the following
discussion contains words such as "intends," "believes," "anticipates," "plans,"
"expects" and similar expressions which are intended to identify forward-looking
statements that involve risks and uncertainties. The Company's actual results
could differ significantly from the results discussed in these forward-looking
statements. Factors that could cause or contribute to such differences include
the factors discussed below as well as the factors discussed in the Company's
Form 10-K for the year ended December 31, 1996. 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 release the results of
any revision to these forward-looking statements which may be made to reflect
events or circumstances occurring after the date hereof or to reflect the
occurrence of unanticipated events.
Overview
SUGEN was founded in July 1991 to discover and develop new classes of small
molecule drugs which interact in a specific manner with different members of the
tyrosine kinase, serine-threonine kinase and tyrosine phosphatase families of
signal transduction pathways. These pathways are involved in a number of human
diseases including cancer and diabetes as well as disorders of the body's immune
defenses and neurological systems. SUGEN's most advanced drug in clinical
development is SU101, a PDGF receptor antagonist, that is currently in Phase II
testing in malignant glioma and Phase I-II in prostate, ovarian and lung
cancers. In addition to SU101, the Company has SU5271 (EGF receptor inhibitor)
in Phase I clinical studies for the treatment of psoriasis and has recently
filed an Investigational New Drug ("IND") application for a Flk-1 angiogenesis
inhibitor. Through June 30, 1997, all of the Company's revenue has been earned
pursuant to collaborations with Zeneca Limited ("Zeneca"), ASTA Medica
Aktiengesellschaft ("ASTA Medica"), Vision Pharmaceuticals L.P., an affiliate of
Allergan, Inc. and Allergan, Inc. (collectively "Allergan") and Amgen Inc.
("Amgen"). The Company intends to pursue its drug discovery programs
independently and in collaboration with established pharmaceutical companies.
The financial results for the six months ended June 30, 1997 reflect
planned increases in operating expenses necessary for advancing multiple product
candidates through the development process. The Company has not been profitable
since inception and expects to incur substantial losses for the foreseeable
future, primarily due to the expansion of preclinical and clinical development
activities as more of its proprietary cancer-related programs progress toward
and into the clinic. The Company expects that losses will fluctuate from quarter
to quarter and that such fluctuations may be substantial. As of June 30, 1997,
the Company's accumulated deficit was $73.6 million.
Results of Operations
The Company's revenues for the three and six months ended June 30, 1997
were $1.5 million and $3.0 million, respectively. These results compare to
revenues of $4.4 million and $7.9 million for the same periods last year.
Revenues for the three and six months ended June 30, 1997 included contract
revenue from the Allergan and Zeneca collaborations and contract services
revenue earned under the ASTA Medica collaboration for non-collaboration work.
In addition to contract revenues earned from existing collaborations, 1996
revenues included set-up fees associated with the ASTA Medica collaboration and
wind-down fees in connection with the termination of the Amgen collaboration
agreement. The Company recognizes revenue from set-up fees and wind-down fees as
the related activities are performed, which is generally over a twelve-month
period or less. Through December 31, 1996, the set-up and wind-down fees from
the ASTA Medica and Amgen collaborations, respectively, had been fully
recognized as revenue. Going forward, the Company will
7
<PAGE>
not recognize any additional revenue under the Amgen collaboration and will
recognize additional revenue under the ASTA Medica collaboration only upon the
achievement of specified milestones and for contract services provided by ASTA
Medica for non-collaboration work. As a result, 1997 contract revenue will
continue to be lower than 1996 in the absence of additional collaboration
agreements during the year. The Company is actively pursuing additional
collaborations, but no assurance can be given as to the ability of the Company
to enter such collaborations on a timely basis or at all.
Research and development expenses increased to $8.6 million and $16.6
million for the three and six months ended June 30, 1997, respectively, from
$7.7 million and $14.3 million for the same periods last year. The increase
during 1997 was primarily due to higher personnel related costs associated with
the expansion of the Company's research and development programs. In addition,
the progression of clinical activities, including expanded Phase I and Phase II
studies of the Company's lead anti-cancer compound, SU101, and the initiation of
clinical studies under the Company's psoriasis program contributed to higher
expenses during 1997. Further, the continued advancement of multiple programs
through preclinical development, including costs associated with the Company's
June 1997 IND filing with the Food and Drug Administration ("FDA") for its
Flk-1/KDR angiogenesis inhibitor, led to higher expenses in the first six months
of 1997.
General and administrative expenses for the three and six months ended June
30, 1997 were $1.5 million and $3.0 million, respectively, and approximated the
level of spending during the same periods last year. The Company expects that
its general and administrative expenses will increase in future periods in order
to support the Company's research and development efforts.
Interest income for the three and six months ended June 30, 1997 were
$610,000 and $1.3 million, respectively. The Company earned slightly higher
interest income during 1997, despite the decline in interest rates from the same
period last year, due to higher investment balances arising primarily from
issuances of the Company's capital stock. Interest expense for the three and six
months ended June 30, 1997 were $174,000 and $344,000, respectively. Although
consistent on a quarterly basis from the same period last year, for the first
half of 1997, interest expense was slightly below the prior year level primarily
due to the scheduled termination of some of the Company's leases. The Company
expects that interest expense will increase in future periods due to the
continued use of capital lease financing for equipment and facility
improvements.
Liquidity and Capital Resources
The Company had cash, cash equivalents and short-term investments of
approximately $42.9 million at June 30, 1997, compared with approximately $56.3
million at December 31, 1996. The decrease in cash and investments during the
six months ended June 30, 1997 was primarily due to the net loss for the first
six months.
Through June 30, 1997, the Company's principal sources of financing have
been its initial and follow-on public offerings of Common Stock, placements of
the Company's Preferred and Common Stock and funds received under the Company's
corporate collaborations. The Company's current principal sources of liquidity
are its research and development collaborations with ASTA Medica, Zeneca and
Allergan, its cash, cash equivalents and short-term investments and income
earned thereon as well as capital lease financing. In March 1997, the Company
secured a capital lease line in the amount of $3.5 million for the purchase of
equipment and facilities improvements. At June 30, 1997, the Company had $2.6
million available under this line.
The Company has entered into license and research agreements whereby the
Company funds research projects performed by others or in-licenses compounds
from third parties. Some of the agreements may require the Company to make
milestone and royalty payments. Under these programs, commitments for external
research funding are approximately $2.7 million in 1997. A number of these
agreements expire in late 1997. However, the Company anticipates renewing most
8
<PAGE>
of these agreements which may increase future commitments of the Company. Most
of these commitments are cancelable within a three to six month period and limit
the amounts payable by the Company for sponsored research under the programs
after notice of cancellation by the Company.
From time to time, the Company evaluates potential investments in
complementary businesses, products or technologies. Currently, the Company is
considering modest investments in such complementary businesses during 1997. The
Company has no other present undertakings, commitments or agreements with
respect to investments in other businesses.
Net additions of equipment and leasehold improvements for the six months
ended June 30, 1997 and 1996 were $1.3 million and $666,000, respectively.
Capital additions during the first half of 1997 included the initial phases of a
limited facility expansion and the continued investment in enhancing the
Company's laboratory capabilities. The Company expects that its capital
additions for 1997 will be higher than that of the prior year primarily due to
anticipated facility improvements to its laboratory and office space. The
Company intends to fund future capital expenditures, including those associated
with the build-to-suit facility discussed below, principally through lease
financing or other debt arrangements. Accordingly, it is expected that the
Company's capital lease obligations and related interest expense, as well as its
depreciation expense, will increase in future periods.
In June 1997, the Company entered into a build-to-suit facility lease
agreement. Construction of the new facility is targeted for completion during
the fourth quarter of 1998, which coincides with the expiration of the Company's
current facility leases. Although the Company has not expended significant
amounts to date, the Company expects to invest in facility improvements and
incur move related costs during 1998 as it approaches building completion.
The Company estimates that its existing capital resources, together with
facility and equipment financing, anticipated revenues from its current
collaborations and net income from investment activities, will be sufficient to
fund its planned operations into late 1998. The Company anticipates that the
funds from future collaborations will extend this time period. However, there
can be no assurance that the Company will enter into any such collaborations. In
addition, there can be no assurance that the underlying assumed levels of
revenue and expense will prove accurate. Whether or not these assumptions prove
to be accurate, the Company will need to raise substantial additional capital to
fund its operations. The Company intends to seek such additional funding through
collaborative arrangements, public or private equity or debt financings and
capital lease transactions; however, there can be no assurance that additional
financing will be available on acceptable terms or at all. If additional funds
are raised by issuing equity securities, further dilution to stockholders may
result. In addition, in the event that additional funds are obtained through
arrangements with collaborative partners or other partners, such arrangements
may require the Company to relinquish rights to certain of its technologies,
product candidates or products that the Company would otherwise seek to develop
or commercialize itself. If adequate funds are not available, the Company may be
required to delay, reduce the scope of or eliminate one or more of its research
or development programs, which could have a material adverse effect on the
Company.
The Company is at an early stage of development and must be evaluated in
light of the uncertainties and complications present in a biotechnology company.
The Company has been in existence only since 1991 and to date two drug
candidates (SU101 and SU5271) have entered human clinical testing, with the
Company's third drug candidate (a Flk-1 angiogenesis inhibitor) expected to
follow based on its recent IND filing. To achieve profitable operations on a
continuing basis, the Company, alone or with collaborative partners, must
successfully develop, manufacture, introduce and market its proposed products.
Products, if any, resulting from the Company's research and development programs
are not expected to be commercially available for a number of years, even if
they are developed successfully and proven to be safe and effective. Before
obtaining regulatory clearance for the commercial sale of any of its products
under development, the Company must demonstrate through preclinical studies and
clinical trials that the potential product is safe and efficacious for use in
humans for each target indication. The failure to adequately demonstrate the
9
<PAGE>
safety and efficacy of a product under clinical development could delay or
prevent regulatory clearance of the potential product and could have a material
adverse effect on the Company. In addition, several of the Company's currently
proposed products are subject to development and licensing arrangements with the
Company's collaborators. Therefore, the Company is dependent on the research and
development efforts of these collaborators with respect to some of its proposed
products and is entitled only to a portion of the revenues, if any, realized
from the commercial sale of any of the potential products covered by the
collaborations in many jurisdictions. The Company has experienced significant
operating losses since its inception. The Company expects to incur significant
operating losses at least for the next several years and expects cumulative
losses to increase as the Company's research and development efforts, including
preclinical and clinical testing, are expanded. All of the Company's revenues to
date have been received pursuant to the Company's collaborations or interest
income from cash, cash equivalent and short term investments. Should the Company
or its collaborators fail to perform in accordance with the terms of any of
their agreements, any consequent loss of revenue under the agreements could have
a material adverse effect on the Company's results of operations. The foregoing
risks reflect the Company's early stage of development and the nature of the
Company's industry and potential products. Also inherent at the Company's stage
of development are a range of additional risks, including manufacturing
uncertainties, the Company's lack of sales and marketing capabilities,
competition, uncertainties regarding protection of patents and proprietary
rights, government regulation and uncertainties regarding pharmaceutical pricing
and reimbursement.
10
<PAGE>
PART II. OTHER INFORMATION
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a.) On May 21, 1997, the Company held its Annual Meeting of Stockholders. The
following actions were taken at the meeting:
(b.) The following four directors were each elected for a three-year term
expiring at the 2000 Annual Meeting of Stockholders:
1. 9,570,889 shares voted in favor of Charles M. Hartman, and 361,575
shares withheld their vote;
2. 9,435,409 shares voted in favor of Donald E. Nickelson and 497,055
shares withheld their vote;
3. 9,566,487 shares voted in favor of Bruce R. Ross and 365,977 shares
withheld their vote;
4. 9,569,189 shares voted in favor of Richard D. Spizzirri and 363,275
shares withheld their vote.
The following individuals' terms of office as directors continued after the
meeting:
Jeremy Curnock Cook
Stephen Evans-Freke
Anthony B. Evnin, Ph.D.
Heinrich Kuhn
Axel Ullrich, Ph.D.
Glenn Utt
Michael Wall
(c.)
1. A proposal to approve an amendment to the Company's 1992 Stock
Option Plan, as amended, to increase the aggregate number of shares
of Common Stock available for issuance by 650,000 shares: 8,761,630
shares were voted in favor of the proposal, 1,131,071 shares were
voted against the proposal, 39,763 shares abstained and zero shares
were broker non-votes.
2. The ratification the selection of Ernest & Young, LLP as the
Company's independent auditors: 9,885,859 shares were voted in
favor of the proposal, 39,155 shares were voted against the
proposal, 7,450 shares abstained and zero shares were broker
non-votes.
11
<PAGE>
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit Number Description
-------------- -----------
3.1 Restated Certificate of Incorporation (2)
3.2(ii) Bylaws of the Registrant (1)
3.3 Certificate of Designation of Series A Junior Participating
Preferred Stock of the Registrant (3)
10.63+ Build-To-Suit Lease Agreement, dated June 11, 1997, between
the Registrant and Britannia Pointe Grand Limited
Partnership.
10.64+ Form of Warrant for the Purchase of Common Stock, dated June
30, 1997, issued in the connection with Build-To-Suit
Lease. Agreement filed as Exhibit 10.63.
10.65+ Second Amended and Restated Research and License Agreement,
dated June 30, 1997, between the Registrant and New York
University.
10.66+ Termination notice, dated June 1, 1997, between the Registrant
and Yissum Research Development Company of The Hebrew
University of Jerusalem.
27 Financial Data Schedule
- -----------------------
+ The Registrant has requested confidential treatment with respect to
portions of this Exhibit.
(1) Incorporated by reference to identically numbered exhibits filed in
response to Item 16 "Exhibits" of the Company's Registration
Statement on Form S-1, as amended (File Number 33-77074), which
became effective October 4, 1994.
(2) Incorporated by reference to identically numbered exhibits filed in
response to Item 14 "Exhibits" of the Company's Annual Report of
Form 10-K for the year ended December 31, 1994.
(3) Filed as an exhibit to the Form 8-K Current Report dated July 26, 1995
and incorporated herein by reference.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended June 30,
1997.
12
<PAGE>
SUGEN, Inc.
SIGNATURES
Date: August 12, 1997 SUGEN, Inc.
By: /s/ Stephen Evans-Freke By: /s/ Christine E. Gray-Smith
--------------------------- ----------------------------
Stephen Evans-Freke Christine E. Gray-Smith
Chairman and Vice President, Finance
Chief Executive Officer (Principal Financial and
Accounting Officer)
13
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SUGEN, Inc.
EXHIBIT INDEX
Exhibit Number Description
-------------- -----------
3.1 Restated Certificate of Incorporation (2)
3.2(ii) Bylaws of the Registrant (1)
3.3 Certificate of Designation of Series A Junior Participating
Preferred Stock of the Registrant (3)
10.63+ Build-To-Suit Lease Agreement, dated June 11, 1997, between
the Registrant and Britannia Pointe Grand Limited
Partnership.
10.64+ Form of Warrant for the Purchase of Common Stock, dated June
30, 1997, issued in the connection with Build-To-Suit
Lease. Agreement filed as Exhibit 10.63.
10.65+ Second Amended and Restated Research and License Agreement,
dated June 30, 1997, between the Registrant and New York
University.
10.66+ Termination notice, dated June 1, 1997, between the Registrant
and Yissum Research Development Company of The Hebrew
University of Jerusalem.
27 Financial Data Schedule
- ---------------------
+ The Registrant has requested confidential treatment with respect
to portions of this Exhibit.
(1) Incorporated by reference to identically numbered exhibits filed
in response to Item 16 "Exhibits" of the Company's
Registration Statement on Form S-1, as amended (File Number
33-77074), which became effective October 4, 1994.
(2) Incorporated by reference to identically numbered exhibits filed
in response to Item 14 "Exhibits" of the Company's Annual
Report of Form 10-K for the year ended December 31, 1994.
(3) Filed as an exhibit to the Form 8-K Current Report dated July
26, 1995 and incorporated herein by reference.
14
EXHIBIT 10.63
*** TEXT OMITTED AND FILED SEPARATELY
CONFIDENTIAL TREATMENT REQUESTED
UNDER 17 C.F.R. SS.SS.200.80(B)(4),
200.83 AND 240.24B-2
BUILD-TO-SUIT LEASE
Landlord: Britannia Pointe Grand Limited Partnership
Tenant: SUGEN, Inc.
Date: June 11, 1997
TABLE OF CONTENTS
1. PROPERTY................................................................. 1
1.1 Lease of Property................................................... 1
1.2 Landlord's Reserved Rights.......................................... 2
2. TERM..................................................................... 3
2.1 Term................................................................ 3
2.2 Early Possession.................................................... 3
2.3 Delay In Possession................................................. 4
2.4 Acknowledgement Of Rent Commencement................................ 5
2.5 Holding Over........................................................ 5
2.6 Option To Extend Term............................................... 5
2.7 Extension of Initial Term........................................... 6
3. RENTAL................................................................... 6
3.1 Minimum Rental...................................................... 6
(a) Rental Amounts............................................. 6
(b) Rental Adjustment Due to Change in Square Footage.......... 7
(c) Rental Adjustment in Connection with Cost of Improvements.. 7
<PAGE>
(d) Rental Adjustment Due to Deferral of Tenant Improvements... 9
(e) Rental Amounts During First Extended Term.................. 9
(f) Rental Amounts During Second Extended Term................. 10
3.2 Late Charge......................................................... 10
4. STOCK WARRANTS........................................................... 11
4.1 Stock Warrants...................................................... 11
5. CONSTRUCTION............................................................. 13
5.1 Construction of Improvements........................................ 13
5.2 Condition of Property............................................... 13
5.3 Compliance with Law................................................. 14
6. EXPANSION OPTIONS........................................................ 15
6.1 Adjacent Property Lock-Up........................................... 15
6.2 Lock-Up Consideration............................................... 15
6.3 Exercise of Phase II Expansion Options.............................. 16
7. REFUSAL RIGHTS WITH RESPECT TO LEASES.................................... 18
7.1 Refusal Rights...................................................... 18
8. TAXES.................................................................... 20
8.1 Personal Property................................................... 20
8.2 Real Property....................................................... 20
9. OPERATING EXPENSES....................................................... 21
9.1 Payment Of Operating Expenses....................................... 21
9.2 Definition Of Operating Expenses.................................... 21
9.3 Determination Of Operating Expenses................................. 24
9.4 Final Accounting For Lease Year..................................... 25
9.5 Proration........................................................... 25
10. UTILITIES............................................................... 26
10.1 Payment............................................................. 26
10.2 Interruption........................................................ 26
11. ALTERATIONS; SIGNS...................................................... 26
11.1 Right To Make Alterations........................................... 26
11.2 Title To Alterations................................................ 27
11.3 Tenant Fixtures..................................................... 28
11.4 No Liens............................................................ 28
<PAGE>
11.5 Signs............................................................... 28
12. MAINTENANCE AND REPAIRS................................................. 29
12.1 Landlord's Work..................................................... 29
12.2 Tenant's Obligation For Maintenance................................. 29
(a) Good Order, Condition And Repair........................... 29
(b) Landlord's Remedy.......................................... 30
(c) Condition Upon Surrender................................... 30
13. USE OF PROPERTY......................................................... 30
13.1 Permitted Use....................................................... 30
13.2 [Omitted.].......................................................... 31
13.3 No Nuisance......................................................... 31
13.4 Compliance With Laws................................................ 31
13.5 Liquidation Sales................................................... 31
13.6 Environmental Matters............................................... 32
14. INSURANCE AND INDEMNITY................................................. 36
14.1 Insurance........................................................... 36
14.2 Quality Of Policies And Certificates................................ 38
14.3 Workers' Compensation............................................... 38
14.4 Waiver Of Subrogation............................................... 38
14.5 Increase In Premiums................................................ 38
14.6 Indemnification..................................................... 39
14.7 Blanket Policy...................................................... 39
15. SUBLEASE AND ASSIGNMENT................................................. 40
15.1 Assignment And Sublease Of Property................................. 40
15.2 Rights Of Landlord.................................................. 40
16. RIGHT OF ENTRY AND QUIET ENJOYMENT...................................... 42
16.1 Right Of Entry...................................................... 42
16.2 Quiet Enjoyment..................................................... 42
17. CASUALTY AND TAKING..................................................... 42
17.1 Damage or Destruction............................................... 42
17.2 Condemnation........................................................ 44
17.3 Reservation Of Compensation......................................... 45
17.4 Restoration Of Improvements......................................... 45
18. DEFAULT................................................................. 45
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18.1 Events Of Default................................................... 45
(a) [Omitted.]................................................. 45
(b) Nonpayment................................................. 46
(c) Other Obligations.......................................... 46
(d) General Assignment......................................... 46
(e) Bankruptcy................................................. 46
(f) Receivership............................................... 46
(g) Attachment................................................. 46
(h) Insolvency................................................. 47
18.2 Remedies Upon Tenant's Default...................................... 47
18.3 Remedies Cumulative................................................. 48
19. SUBORDINATION, ATTORNMENT AND SALE...................................... 48
19.1 Subordination To Mortgage........................................... 48
19.2 Sale Of Landlord's Interest......................................... 49
19.3 Estoppel Certificates............................................... 49
19.4 Subordination to CC&R's............................................. 50
19.5 Mortgagee Protection................................................ 50
20. SECURITY................................................................ 51
20.1 Deposit............................................................. 51
21. MISCELLANEOUS........................................................... 52
21.1 Notices............................................................. 52
21.2 Successors And Assigns.............................................. 53
21.3 No Waiver........................................................... 53
21.4 Severability........................................................ 53
21.5 Litigation Between Parties.......................................... 53
21.6 Surrender........................................................... 54
21.7 Interpretation...................................................... 54
21.8 Entire Agreement.................................................... 54
21.9 Governing Law....................................................... 54
21.10 No Partnership...................................................... 54
21.11 Financial Information............................................... 54
21.12 Costs............................................................... 55
21.13 Time................................................................ 55
21.14 Rules And Regulations............................................... 55
21.15 Brokers............................................................. 55
21.16 Memorandum Of Lease................................................. 56
21.17 Corporate Authority................................................. 56
21.18 Execution and Delivery.............................................. 56
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21.19 Survival............................................................ 56
EXHIBITS
--------
EXHIBIT A Real Property Descriptions (Property and Center)
EXHIBIT B Site Plan
EXHIBIT C Workletter
EXHIBIT D Estimated Construction Schedule
EXHIBIT E Acknowledgement of Rent Commencement Date
<PAGE>
BUILD-TO-SUIT LEASE
THIS BUILD-TO-SUIT LEASE ("Lease") is made and entered into as
of June 11, 1997, by and between BRITANNIA POINTE GRAND LIMITED PARTNERSHIP, a
Delaware limited partnership ("Landlord"), and SUGEN, INC., a Delaware
corporation ("Tenant").
THE PARTIES AGREE AS FOLLOWS:
1. PROPERTY
1.1 Lease of Property.
(a) Landlord leases to Tenant and Tenant hires and leases from
Landlord, on the terms, covenants and conditions hereinafter set forth, the
building (the "Initial Building") to be constructed pursuant to Article 5 hereof
and Exhibit C attached hereto on the real property described as "The Property"
in Exhibit A attached hereto (the "Property"), to consist of a two-story office
and laboratory building containing approximately [...*...] square feet. The
location of the Initial Building on the Property is intended to be substantially
as shown for the building designated as "Initial Building" on the site plan
attached hereto as Exhibit B (the "Site Plan"). The Property is part of the
Britannia Pointe Grand Business Park (the "Center") on East Grand Avenue in the
City of South San Francisco, County of San Mateo, State of California, which
presently consists of the real property described as "The Center" in Exhibit A
attached hereto and presently includes the existing buildings designated as
Buildings D, E, F and G on the Site Plan (containing, in the aggregate,
approximately [...*...] square feet of office and research and development
space). The Initial Building and the other improvements to be constructed on the
Property pursuant to Article 5 hereof and Exhibit C attached hereto, partly by
Landlord and partly by Tenant, are sometimes referred to collectively herein as
the "Improvements." The parking areas, driveways, sidewalks, landscaped areas
and other portions of the Center that lie outside the exterior walls of the
buildings now existing or to be constructed in the Center, as depicted in the
Site Plan and as hereafter modified by Landlord from time to time in accordance
with the provisions of this Lease, are sometimes referred to herein as the
"Common Areas."
(b) As an appurtenance to Tenant's leasing of the Initial
Building pursuant to Section 1.1(a), Landlord hereby grants to Tenant, for the
benefit of Tenant and its employees, suppliers, shippers, customers and
invitees, during the term of this Lease, the non-exclusive right to use, in
common with others entitled to such use, (i) those portions of the Common Areas
improved from time to time for use as parking areas, driveways, sidewalks,
landscaped areas,
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or for other common purposes, and (ii) all access easements and similar rights
and privileges relating to or appurtenant to the Center and created or existing
from time to time under any access easement agreements, declarations of
covenants, conditions and restrictions, or other written agreements now or
hereafter of record with respect to the Center, subject however to any
limitations applicable to such rights and privileges under applicable law, under
this Lease and/or under the written agreements creating such rights and
privileges. Landlord represents that the Property, in conjunction with the
balance of the Center, shall include parking spaces available for use (on a
non-exclusive basis) by Tenant and its employees, agents and invitees at the
rate of at least 3.5 spaces per 1,000 square feet of building area, and that
Tenant shall be entitled to have ten (10) parking spaces marked as being
reserved for exclusive use by Tenant, at a location to be reasonably designated
by Tenant and approved by Landlord (which approval shall not be unreasonably
withheld or delayed) at an appropriate time in the course of the development of
Common Area plans and Initial Building plans pursuant to Article 5 and Exhibit
C.
1.2 Landlord's Reserved Rights. To the extent reasonably necessary to
permit Landlord to exercise any rights of Landlord and discharge any obligations
of Landlord under this Lease, Landlord shall have, in addition to the right of
entry set forth in Section 16.1 hereof, the following rights: (i) to make
changes to the Common Areas, including, without limitation, changes in the
location, size or shape of any portion of the Common Areas, and to relocate
parking spaces in the Center (but not materially decrease the number of such
parking spaces in areas of the Center generally adjacent to the Initial
Building); (ii) to close temporarily any of the Common Areas for maintenance or
other reasonable purposes, provided that reasonable parking and reasonable
access to the Initial Building remain available; (iii) to construct, alter or
add to any improvements in the Common Areas of the Center, and to construct,
alter or add to buildings and Common Area improvements in the Center (including,
but not limited to, construction of buildings in the areas designated as future
buildings C and H on the Site Plan, and construction of site improvements and
Common Area improvements in adjacent portions of the Center); (iv) to build in
areas adjacent to the Center and to add such areas to the Center; (v) to use the
Common Areas while engaged in making additional improvements, repairs or
alterations to the Center or any portion thereof; and (vi) to do and perform
such other acts with respect to the Common Areas and the Center as may be
necessary or appropriate; provided, however, that notwithstanding anything to
the contrary in this Section 1.2, Landlord's exercise of its rights hereunder
shall not cause any material diminution of Tenant's rights, nor any material
increase of Tenant's obligations, under this Lease or with respect to the
Improvements.
2
<PAGE>
2. TERM
2.1 Term.
(a) The term of this Lease shall commence upon mutual
execution of this Lease by Landlord and Tenant. Tenant's minimum rental and
Operating Expense obligations shall commence on the earlier of (i) the date
which is one hundred eighty (180) days after the date Landlord delivers to
Tenant a Structural Completion Certificate pursuant to the Workletter attached
hereto as Exhibit C (subject to any adjustments authorized or required under the
provisions of such Exhibit C), notifying Tenant that Landlord's construction of
the shell of the Initial Building pursuant to Article 5 and Exhibit C is
substantially complete, or (ii) the date Tenant takes occupancy of and commences
operation of its business in the Initial Building, the earlier of such dates
being herein called the "Rent Commencement Date." The term of this Lease shall
end on the day (the "Termination Date") immediately preceding the date seventeen
(17) years after the Rent Commencement Date, unless sooner terminated or
extended as hereinafter provided.
(b) Notwithstanding any other provisions of this Lease, Tenant
shall have the right to terminate this Lease by written notice to Landlord, at
any time during the period from July 1, 1997 through July 9, 1997, inclusive, if
the [...*...] has not, by June 30, 1997, confirmed in a writing satisfactory to
Tenant in form and substance (in Tenant's reasonable judgment) the [...*...] of
Landlord's proposed acquisition of the Adjacent Property, including (but not
limited to) the [...*...] with respect to some or all of the Adjacent Property
to the extent necessary to facilitate such acquisition.
2.2 Early Possession. Tenant shall have the nonexclusive right to
occupy and take possession of the Initial Building from and after the date of
Landlord's delivery of the Structural Completion Certificate described in clause
(i) of Section 2.1, even though Landlord will be continuing to construct the
balance of Landlord's Work as contemplated in Exhibit C, for the purpose of
constructing Tenant's Work as contemplated in Exhibit C and for the purpose of
installing fixtures and furniture, laboratory equipment, computer equipment,
telephone equipment, low voltage data wiring and personal property and other
similar work related to the construction of Tenant's Work and/or preparatory to
the commencement of Tenant's business on the Property. Such occupancy and
possession, and any early access under the next sentence of this Section 2.2,
shall be subject to and upon all of the terms and conditions of this Lease and
of the Workletter attached hereto as Exhibit C (including, but not limited to,
conditions relating to the maintenance of required insurance), except that
Tenant shall have no obligation to pay minimum rental or Operating Expenses for
any period prior to the Rent Commencement Date as determined under Section 2.1;
such early possession shall not advance or otherwise affect the Rent
Commencement Date or Termination Date determined under Section 2.1. Tenant shall
also be entitled to have early access to the Property at all appropriate times
prior to Landlord's delivery of the Structural Completion Certificate, subject
to the approval of Landlord and its
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<PAGE>
general contractor (which approval shall not be unreasonably withheld or
delayed) and to all other provisions of this Section 2.2, solely for the purpose
of performing work preparatory to the construction of Tenant's Work or necessary
for the orderly sequencing of such work, and Tenant shall not be required to pay
minimum rental or Operating Expenses by reason of such early access until the
Rent Commencement Date otherwise occurs; without limiting the generality of the
preceding portion of this sentence, Tenant shall be entitled to have early
access to the Property and the Initial Building as soon as the roof metal
decking is in place to begin hanging electrical, mechanical and plumbing
services from the overhead structure, subject to all of the provisions of this
Section 2.2. Tenant shall not interfere with or delay Landlord's contractors by
any early access, occupancy or possession under this Section 2.2, shall
coordinate and cooperate with Landlord and its contractors (who shall similarly
coordinate and cooperate with Tenant and its contractors) to minimize any
interference or delay by either party with respect to the other's work following
Landlord's delivery of the Structural Completion Certificate, and shall
indemnify, defend and hold harmless Landlord and its agents and employees from
and against any and all claims, demands, liabilities, actions, costs and
expenses, including (but not limited to) reasonable attorneys' fees, arising out
of or in connection with Tenant's early entry upon the Property hereunder.
2.3 Delay In Possession. Landlord agrees to use its best reasonable
efforts to complete the work described in Section 5.1 and Exhibit C promptly,
diligently and within the respective time periods set forth in the estimated
construction schedule attached hereto as Exhibit D and incorporated herein by
this reference, as such schedule may be modified from time to time by mutual
agreement of Landlord and Tenant, and subject to the effects of any delays
caused by or attributable to Tenant or any other circumstances beyond Landlord's
reasonable control (excluding any financial inability); provided, however, that
except to the extent caused by a material default by Landlord of its obligations
set forth in this Lease (including, but not limited to, its obligations set
forth in this Section 2.3 and in Section 5.1 and Exhibit C), Landlord shall not
be liable for any damages caused by any delay in the completion of such work,
nor shall any such delay affect the validity of this Lease or the obligations of
Tenant hereunder. Notwithstanding any other provisions of this Section 2.3,
however, if Landlord fails to deliver the Structural Completion Certificate and
tender possession of the completed structural portions of the Building Shell
(i.e., those portions required to be completed as a condition of delivery of the
Structural Completion Certificate) to Tenant by the date which is [...*...]
after the date of this Lease, then Tenant shall have the right to terminate this
Lease without further liability hereunder by written notice delivered to
Landlord at any time prior to Landlord's delivery of the Structural Completion
Certificate and tender of possession of the completed structural portions of the
Building Shell to Tenant; provided, however, that the [...*...] period set forth
in this sentence shall be extended, day for day, for a period equal to the
length of any delays in Landlord's design and construction of the Building Shell
that are caused by any material default by Tenant in the performance of its
obligations under this Lease, including (but not limited to) any failure of
Tenant to make prompt and timely delivery to Landlord of all information
reasonably necessary for Landlord to complete the preparation of all drawings,
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<PAGE>
designs and specifications for the Building Shell and/or any failure of Tenant
to respond in a prompt and timely manner to any requests by Landlord or its
architect for approval of drawings, designs, specifications, changes or other
matters requiring Tenant's review or approval under the provisions of Exhibit C.
2.4 Acknowledgement Of Rent Commencement. Promptly following the Rent
Commencement Date, Landlord and Tenant shall execute a written acknowledgement
of the Rent Commencement Date, Termination Date and related matters,
substantially in the form attached hereto as Exhibit E (with appropriate
insertions), which acknowledgement shall be deemed to be incorporated herein by
this reference. Notwithstanding the foregoing requirement, the failure of either
party to execute such a written acknowledgement shall not affect the
determination of the Rent Commencement Date, Termination Date and related
matters in accordance with the provisions of this Lease.
2.5 Holding Over. If Tenant holds possession of the Property or any
portion thereof after the term of this Lease with Landlord's written consent,
then except as otherwise specified in such consent, Tenant shall become a tenant
from month to month at [...*...] of the rental and otherwise upon the terms
herein specified for the period immediately prior to such holding over and shall
continue in such status until the tenancy is terminated by either party upon not
less than thirty (30) days prior written notice. If Tenant holds possession of
the Property or any portion thereof after the term of this Lease without
Landlord's written consent, then Landlord in its sole discretion may elect (by
written notice to Tenant) to have Tenant become a tenant either from month to
month or at will, at [...*...] of the rental (prorated on a daily basis for an
at-will tenancy, if applicable) and otherwise upon the terms herein specified
for the period immediately prior to such holding over, or may elect to pursue
any and all legal remedies available to Landlord under applicable law with
respect to such unconsented holding over by Tenant. Tenant shall indemnify and
hold Landlord harmless from any loss, damage, claim, liability, cost or expense
(including reasonable attorneys' fees) resulting from any delay by Tenant in
surrendering the Property (except to the extent such delay is with Landlord's
prior written consent), including but not limited to any claims made by a
succeeding tenant by reason of such delay. Acceptance of rent by Landlord
following expiration or termination of this Lease shall not constitute a renewal
of this Lease.
2.6 Option To Extend Term. Tenant shall have the option to extend the
term of this Lease, at the minimum rental set forth in Section 3.1(e) and (f)
and otherwise upon all the terms and provisions set forth herein with respect to
the initial term of this Lease, for up to two (2) additional periods of five (5)
years each, commencing upon expiration of the initial term hereof. Exercise of
such option with respect to the first such extended term shall be by written
notice to Landlord at least twelve (12) months prior to the expiration of the
initial term hereof; exercise of such option with respect to the second extended
term, if the first extension option has been duly exercised, shall be by like
written notice to Landlord at least twelve (12) months prior to the expiration
of the first extended term hereof. If Tenant is in default hereunder, beyond any
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<PAGE>
applicable notice and cure periods, on the date of such notice or on the date
any extended term is to commence, then the exercise of the option shall be of no
force or effect, the extended term shall not commence and this Lease shall
expire at the end of the then current term hereof (or at such earlier time as
Landlord may elect pursuant to the default provisions of this Lease). If Tenant
properly exercises one or more extension options under this Section, then all
references in this Lease (other than in this Section 2.6) to the "term" of this
Lease shall be construed to include the extension term(s) thus elected by
Tenant. Except as expressly set forth in this Section 2.6 and in Section 2.7,
Tenant shall have no right to extend the term of this Lease beyond its
prescribed term.
2.7 Extension of Initial Term. In the event Tenant exercises any of its
expansion options under Article 6 hereof, the initial term and the Termination
Date shall be extended in accordance with Section 6.3(c), below.
3. RENTAL
3.1 Minimum Rental.
(a) Rental Amounts. Tenant shall pay to Landlord as minimum
rental for the Initial Building, in advance, without deduction, offset, notice
or demand, on or before the Rent Commencement Date and on or before the first
day of each subsequent calendar month of the term of this Lease, the following
amounts per month, subject to adjustment in accordance with the terms of this
Section 3.1:
[rest of page intentionally left blank]
6
<PAGE>
Months Monthly Minimum Rental
--------- ----------------------------------------------
001 - 012 $ [...*...] ($[...*...] per square foot)
013 - 024 [...*...] ($[...*...] per square foot)
025 - 036 [...*...] ($[...*...] per square foot)
037 - 048 [...*...] ($[...*...] per square foot)
049 - 060 [...*...] ($[...*...] per square foot)
061 - 072 [...*...] ($[...*...] per square foot)
073 - 084 [...*...] ($[...*...] per square foot)
085 - 096 [...*...] ($[...*...] per square foot)
097 - 108 [...*...] ($[...*...] per square foot)
109 - 120 [...*...] ($[...*...] per square foot)
121 - 132 [...*...] ($[...*...] per square foot)
133 - 144 [...*...] ($[...*...] per square foot)
145 - 156 [...*...] ($[...*...] per square foot)
157 - 168 [...*...] ($[...*...] per square foot)
169 - 180 [...*...] ($[...*...] per square foot)
181 - 192 [...*...] ($[...*...] per square foot)
193 - 204 [...*...] ($[...*...] per square foot)
If the obligation to pay minimum rental hereunder commences on other than the
first day of a calendar month or if the term of this Lease terminates on other
than the last day of a calendar month, the minimum rental for such first or last
month of the term of this Lease, as the case may be, shall be prorated based on
the number of days the term of this Lease is in effect during such month. If an
increase in minimum rental becomes effective on a day other than the first day
of a calendar month, the minimum rental for that month shall be the sum of the
two applicable rates, each prorated for the portion of the month during which
such rate is in effect.
(b) Rental Adjustment Due to Change in Square Footage. The
minimum rental amounts specified in this Section 3.1 are based upon an estimated
area of [...*...] square feet for the Initial Building. If the actual area of
the Initial Building (measured from the exterior faces of exterior walls,
excluding overhangs, which are not expected to be substantial), when completed,
is greater or less than such estimated area, then the minimum rentals specified
in Section 3.1(a) shall be adjusted for each rental period in strict proportion
to the ratio between the actual area of the Initial Building during the
applicable period (determined on the basis of measurement described above in
this sentence) and the assumed area of [...*...] square feet. Measurements of
building area under this paragraph shall be made initially by Landlord's
architect, subject to review and approval by Tenant's architect.
(c) Rental Adjustment in Connection with Cost of Improvements.
The minimum rental amounts specified in Section 3.1(a) are based on an assumed
amount of [...*...] per square foot for the Cost of Improvements (determined in
accordance with Exhibit C) of the
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Tenant Improvements to be constructed by Tenant pursuant to Section 5.1 and
Exhibit C (and are thus based on an assumed amount of [...*...] per square foot
for Landlord's share of such Cost of Improvements). Under no circumstances shall
Landlord's liability for such Cost of Improvements exceed the lesser of (i)
[...*...] of the total Cost of Improvements for such Tenant Improvements or (ii)
[...*...] per square foot multiplied by the area of the Initial Building as
determined in accordance with Section 3.1(b) hereof. If, upon completion of
construction of the Tenant Improvements, it is determined that Landlord's share
of the Cost of Improvements of such Tenant Improvements (determined in
accordance with Exhibit C) is less than [...*...] per square foot (using the
area of the Premises as determined in accordance with Section 3.1(b) hereof),
then the minimum rental amounts specified in Section 3.1(a) shall be adjusted as
follows:
(i) If Landlord's share of such Cost of Improvements
is less than [...*...] per square foot but is at least [...*...] per
square foot, then the minimum rental under Section 3.1(a) during months
1 through 84 of the term of this Lease shall be decreased by [...*...]
per square foot per month for each [...*...] per square foot by which
Landlord's share of such Cost of Improvements is less than [...*...]
per square foot (prorated for any portion of such shortfall
representing a fraction of [...*...] per square foot);
(ii) If Landlord's share of such Cost of Improvements
is less than [...*...] per square foot but is at least [...*...] per
square foot, then the minimum rental under Section 3.1(a) during months
1 through 84 of the term of this Lease shall be decreased by the sum of
(A) [...*...] per square foot per month plus (B) [...*...] per square
foot per month for each [...*...] per square foot by which Landlord's
share of such Cost of Improvements is less than [...*...] per square
foot, and the minimum rental under Section 3.1(a) during months 85
through 120 of the term of this Lease shall be decreased by [...*...]
per square foot per month for each [...*...] per square foot by which
Landlord's share of such Cost of Improvements is less than [...*...]
per square foot (prorated, in each case, for any portion of such
shortfall representing a fraction of [...*...] per square foot); and
(iii) If Landlord's share of such Cost of
Improvements is less than [...*...] per square foot but is more than
[...*...] per square foot, then the minimum rental under Section 3.1(a)
during months 1 through 84 of the term of this Lease shall be decreased
by the sum of (A) [...*...] per square foot per month plus (B)
[...*...] per square foot per month for each [...*...] per square foot
by which Landlord's share of such Cost of Improvements is less than
[...*...] per square foot, the minimum rental during months 85 through
120 shall be decreased by the sum of (C) [...*...] per square foot per
month plus (D) [...*...] per square foot per month for each [...*...]
per square foot by which Landlord's share of such Cost of Improvements
is less than [...*...] per square foot, and the minimum rental during
months 121 through 168 shall be decreased
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<PAGE>
by [...*...] per square foot per month for each [...*...] per square
foot by which Landlord's share of such Cost of Improvements is less
than [...*...] per square foot (prorated, in each case, for any portion
of such shortfall representing a fraction of [...*...] per square
foot).
(d) Rental Adjustment Due to Deferral of Tenant Improvements.
If Tenant elects to defer completion of any portion of the Tenant Improvements
as contemplated in Section 5.1(b) and Exhibit C and, as a result of such
deferral, Landlord's share of the Cost of Improvements of the Tenant
Improvements completed on or about the Rent Commencement Date is less than
[...*...] per square foot, then Tenant's minimum rental obligation under Section
3.1(a) shall be reduced, to reflect such shortfall in Landlord's actual
contribution in accordance with the formula set forth in Section 3.1(c), for the
period from the Rent Commencement Date until the earlier to occur of (i)
substantial completion of the deferred portion of the Tenant Improvements or
(ii) eighteen (18) months after the Rent Commencement Date. Any continued
reduction in minimum rental after the end of the period described in the
preceding sentence shall be made only if construction of the deferred Tenant
Improvements is substantially completed within eighteen (18) months after the
Rent Commencement Date and Landlord's share of the aggregate Cost of
Improvements of the Tenant Improvements (taking into account both the initial
Tenant Improvements and the deferred Tenant Improvements) is less than [...*...]
per square foot, in which event a continuing reduction in minimum rental shall
be implemented in accordance with the formula set forth in Section 3.1(c)
hereof.
(e) Rental Amounts During First Extended Term. If Tenant
properly exercises its right to extend the term of this Lease pursuant to
Section 2.6 hereof, the minimum rental during the first extended term shall be
equal to [...*...] of the fair market rental value of the Initial Building (as
defined below), including any rental increase provisions then customary in the
City of South San Francisco for comparable commercial leases for office,
laboratory and research and development projects, determined as of the
commencement of such extended term in accordance with this paragraph. Upon
Landlord's receipt of a proper notice of Tenant's exercise of its option to
extend the term of this Lease, the parties shall have sixty (60) days in which
to agree on the fair market rental (including any applicable rental increase
provisions) for the Initial Building at the commencement of the first extended
term for the uses permitted hereunder. If the parties agree on such fair market
rental and rental increase provisions (if any), they shall execute an amendment
to this Lease stating the amount of the applicable minimum monthly rental and
any applicable rental increase provisions. If the parties are unable to agree on
such rental (including any applicable rental increase provisions) within such
sixty (60) day period, then within fifteen (15) days after the expiration of
such period each party, at its cost and by giving notice to the other party,
shall appoint a real estate appraiser with at least five (5) years experience
appraising similar commercial properties in northeastern San Mateo County to
appraise and set the fair market rental and any applicable rental increase
provisions for the Initial Building at the commencement of the first extended
term in accordance with the provisions of this Section 3.1(e). If either party
fails to appoint an appraiser within the allotted time, the
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<PAGE>
single appraiser appointed by the other party shall be the sole appraiser. If an
appraiser is appointed by each party and the two appraisers so appointed are
unable to agree upon a fair market rental (and any appropriate rental increase
provisions) within thirty (30) days after the appointment of the second, the two
appraisers shall appoint a third similarly qualified appraiser within ten (10)
days after the expiration of such 30-day period; if they are unable to agree
upon a third appraiser, then either party may, upon not less than five (5) days
notice to the other party, apply to the Presiding Judge of the San Mateo County
Superior Court for the appointment of a third qualified appraiser. Each party
shall bear its own legal fees in connection with appointment of the third
appraiser and shall bear one-half of any other costs of appointment of the third
appraiser and of such third appraiser's fee. The third appraiser, however
selected, shall be a person who has not previously acted for either party in any
capacity. Within thirty (30) days after the appointment of the third appraiser,
a majority of the three appraisers shall set the fair market rental and any
applicable rental increase provisions for the first extended term and shall so
notify the parties. If a majority are unable to agree within the allotted time,
(i) the three appraised fair market rentals shall be added together and divided
by three and the resulting quotient shall be the fair market rental for the
first extended term, and (ii) the applicable rental increase provision shall be
equal to the mathematical average (or the nearest reasonable approximation
thereof) of the two rental increase provisions that are most nearly comparable,
which determinations shall be binding on the parties and shall be enforceable in
any further proceedings relating to this Lease. For purposes of this Section
3.1(e), the "fair market rental" of the Initial Building shall be determined
with reference to the then prevailing market rental rates for properties in the
City of South San Francisco with shell, office, laboratory and research and
development improvements and site (common area) improvements comparable to those
then existing in the Initial Building and on the Property, including (without
limitation) the Improvements constructed by Landlord pursuant to Section 5.1 and
Exhibit C, the Tenant Improvements constructed by Tenant pursuant to Section 5.1
and Exhibit C and any and all other alterations, additions and improvements
(including, but not limited to, equipment and laboratory improvements, but
excluding any equipment installed by Tenant after substantial completion of
Tenant's initial build-out of the Tenant Improvements pursuant to Section 5.1
and Exhibit C) constructed by or for Tenant, whether at Landlord's or Tenant's
expense and whether paid for in cash or through additional rent or financed in
any other manner.
(f) Rental Amounts During Second Extended Term. If Tenant
properly exercises its right to a second extended term of this Lease pursuant to
Section 2.6 hereof, the minimum rental during such second extended term shall be
determined in the same manner provided in the preceding paragraph for the first
extended term, except that the determination shall be made as of the
commencement of the second extended term.
3.2 Late Charge. If Tenant fails to pay when due rental or other
amounts due Landlord hereunder, such unpaid amounts shall bear interest for the
benefit of Landlord at a rate equal to the lesser of [...*...] per annum or the
[...*...], from the date due to the date of payment. In addition to such
interest, Tenant shall pay to Landlord a late charge in an amount
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equal to [...*...] of any installment of minimum rental and any other amounts
due Landlord if not paid in full on or before the fifth (5th) day after such
rental or other amount is due. Tenant acknowledges that late payment by Tenant
to Landlord of rental or other amounts due hereunder will cause Landlord to
incur costs not contemplated by this Lease, including, without limitation,
processing and accounting charges and late charges which may be imposed on
Landlord by the terms of any loan relating to the Property. Tenant further
acknowledges that it is extremely difficult and impractical to fix the exact
amount of such costs and that the late charge set forth in this Section 3.2
represents a fair and reasonable estimate thereof. Acceptance of any late charge
by Landlord shall not constitute a waiver of Tenant's default with respect to
overdue rental or other amounts, nor shall such acceptance prevent Landlord from
exercising any other rights and remedies available to it. Acceptance of rent or
other payments by Landlord shall not constitute a waiver of late charges or
interest accrued with respect to such rent or other payments or any prior
installments thereof, nor of any other defaults by Tenant, whether monetary or
non-monetary in nature, remaining uncured at the time of such acceptance of rent
or other payments.
4. STOCK WARRANTS
4.1 Stock Warrants.
(a) Within thirty (30) days after the execution of this Lease
and as a condition to Landlord's obligations hereunder, Tenant shall deliver to
Landlord or Landlord's assignees (which may be any partners, shareholders or
affiliates of Landlord or any affiliates of any such partners, shareholders or
affiliates of Landlord) warrants registered in the name of Landlord or
Landlord's assignees for the acquisition of an aggregate of [...*...] shares of
Tenant's common stock, which warrants shall be in form and substance mutually
satisfactory to Landlord and Tenant. The warrants shall have an exercise price
per share equal to [...*...] of the average closing price for Tenant's common
stock on the NASDAQ National Market System for the twenty (20) trading days
immediately preceding the date of execution of this Lease and shall be
exercisable for a period of [...*...] years from the date of issuance.
(b) If Tenant elects to exercise the Phase IIA Expansion
Option under Section 6.3(a) hereof, then within thirty (30) days after the
execution of a lease or lease amendment covering the Phase IIA Expansion
Premises and as a condition to Landlord's obligations thereunder, Tenant shall
deliver to Landlord or Landlord's assignees (which may be any partners,
shareholders or affiliates of Landlord or any affiliates of any such partners,
shareholders or affiliates of Landlord) warrants registered in the name of
Landlord or Landlord's assignees for the acquisition of a number of shares of
Tenant's common stock equal to [...*...] of the number of square feet to be
included in the Phase IIA Expansion Premises, subject to adjustment if, between
the date of this Lease and the date of issuance of a warrant pursuant to this
Section, the common stock of Tenant is changed into a different number or class
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of shares by reason of any stock dividend, subdivision, reclassification,
recapitalization, split-up, combination or similar transaction, which warrants
shall be in form and substance substantially identical to those issued pursuant
to Section 4.1(a). The warrants shall have an exercise price per share equal to
[...*...] of the average closing price for Tenant's common stock on the NASDAQ
National Market System, or on such other exchange or trading system as Tenant's
common stock, or other security into which such common stock may be changed by
reason of any reclassification, recapitalization, split-up, combination or
similar transaction, may then be listed or traded, for the twenty (20) trading
days immediately preceding the date of execution of the lease or lease amendment
for the Phase IIA Expansion Premises and shall be exercisable for a period of
[...*...] years from the date of issuance.
(c) If Tenant elects to exercise the Phase IIB Expansion
Option under Section 6.3(b) hereof, then within thirty (30) days after the
execution of a lease or lease amendment covering the Phase IIB Expansion
Premises and as a condition to Landlord's obligations thereunder, Tenant shall
deliver to Landlord or Landlord's assignees (which may be any partners,
shareholders or affiliates of Landlord or any affiliates of any such partners,
shareholders or affiliates of Landlord) warrants registered in the name of
Landlord or Landlord's assignees for the acquisition of a number of shares of
Tenant's common stock equal to [...*...] of the number of square feet to be
included in the Phase IIB Expansion Premises, subject to adjustment if, between
the date of this Lease and the date of issuance of a warrant pursuant to this
Section, the common stock of Tenant is changed into a different number or class
of shares by reason of any stock dividend, subdivision, reclassification,
recapitalization, split-up, combination or similar transaction, which warrants
shall be in form and substance substantially identical to those issued pursuant
to Section 4.1(a). The warrants shall have an exercise price per share equal to
[...*...] of the average closing price for Tenant's common stock on the NASDAQ
National Market System, or on such other exchange or trading system as Tenant's
common stock, or other security into which such common stock may be changed by
reason of any reclassification, recapitalization, split-up, combination or
similar transaction, may then be listed or traded, for the twenty (20) trading
days immediately preceding the date of execution of the lease or lease amendment
for the Phase IIB Expansion Premises and shall be exercisable for a period of
[...*...] years from the date of issuance.
(d) Notwithstanding any other provisions of this Section 4.1,
Tenant shall not be committed or obligated, under the terms of paragraphs
4.1(a), (b) and (c) in the aggregate, to issue warrants for more than [...*...]
shares of Tenant's common stock, subject to adjustment if, between the date of
this Lease and the date of issuance of warrants pursuant to Section 4.1(a), (b)
and/or (c), as applicable, the common stock of Tenant is changed into a
different number or class of shares by reason of any stock dividend,
subdivision, reclassification, recapitalization, split-up, combination or
similar transaction. Since the maximum of [...*...] shares has been set with
reference to an anticipated total square footage of [...*...] square feet for
the Initial Premises, the Phase IIA Expansion Premises and the Phase IIB
Expansion Premises, however, nothing in Article 6 or elsewhere in this Lease
shall be construed to require Landlord to make
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available to Tenant more than [...*...] square feet of premises in the
aggregate, and to the extent Tenant requests at any time the right to occupy
premises containing, in the aggregate, more than [...*...] square feet, Landlord
shall be entitled to condition its agreement to lease such larger premises upon,
among other things, agreement between Landlord and Tenant on a mutually
satisfactory number of warrants (if any) to be issued in connection with the
expanded premises.
5. CONSTRUCTION
5.1 Construction of Improvements.
(a) Landlord shall, at Landlord's cost and expense (except as
otherwise provided herein and in Exhibit C), construct Landlord's Work as
defined in and in accordance with the terms and conditions of the Workletter
attached hereto as Exhibit C (the "Workletter"). Landlord shall use its best
reasonable efforts to complete such construction promptly, diligently and within
the applicable time periods set forth in the construction schedule developed or
to be developed pursuant to Exhibit D and incorporated herein by this reference,
as such schedule may be modified from time to time in accordance with the
Workletter, subject to the effects of any delays caused by Tenant or any other
circumstances beyond Landlord's reasonable control (excluding any financial
inability), and subject to the provisions of Section 2.3 above.
(b) Tenant shall, at Tenant's cost and expense (except as
otherwise provided herein and in Exhibit C), promptly and diligently construct
Tenant's Work as defined in and in accordance with the terms and conditions of
the Workletter. Notwithstanding the preceding sentence, Tenant shall have the
right, as set forth in the Workletter, to defer completion of the Tenant
Improvements in up to [...*...] square feet of the Initial Building for up to
eighteen (18) months after the Rent Commencement Date. Landlord and Tenant
acknowledge, however, that even within the area as to which such completion of
Tenant Improvements is to be deferred, it is likely to be necessary to complete
a portion of the Tenant Improvements in that area (such as, but not limited to,
plumbing and HVAC) in order for the City of South San Francisco to issue a
certificate of occupancy (or reasonable equivalent thereof) for the Initial
Building at or about the Rent Commencement Date, and that Tenant's right to
defer completion of Tenant Improvements will not extend to any such work that is
necessary in order to obtain a certificate of occupancy for the Initial
Building.
5.2 Condition of Property. Landlord shall deliver the Building Shell
and other Improvements constructed by Landlord to Tenant clean and free of
debris, promptly upon completion of construction thereof, and Landlord warrants
to Tenant that the Building Shell and other Improvements constructed by Landlord
(i) shall be free from material structural defects and shall be in good
operating condition on the Rent Commencement Date, and (ii) shall be constructed
in compliance in all material respects with the plans and specifications
developed pursuant to the Workletter and mutually approved (to the extent
required thereunder) by
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Landlord and Tenant, subject to any changes implemented in such plans and
specifications in accordance with the procedures set forth in the Workletter. If
it is determined that this warranty has been violated in any respect, then it
shall be the obligation of Landlord, after receipt of written notice from Tenant
setting forth with specificity the nature of the violation, to promptly, at
Landlord's sole cost, correct the condition(s) constituting such violation.
Tenant's failure to give such written notice to Landlord within one (1) year
after the Rent Commencement Date shall give rise to a conclusive presumption
that Landlord has complied with all Landlord's obligations hereunder, except
with respect to latent defects (as to which such one-year limitation shall not
apply). Without limiting the scope of Landlord's obligations under the foregoing
provisions of this Section 5.2, Landlord also agrees to either (x) use its best
reasonable efforts to enforce when and as necessary, for the benefit of Tenant
and the Improvements, any and all contractor's and/or manufacturer's warranties
extending more than one (1) year after the Rent Commencement Date with respect
to any of Landlord's Work or, at Tenant's request, (y) assign any or all of such
warranties to Tenant for enforcement purposes. TENANT ACKNOWLEDGES THAT THE
FOREGOING WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, WITH
RESPECT TO THE PHYSICAL CONDITION OF THE IMPROVEMENTS TO BE CONSTRUCTED BY
LANDLORD AND THAT LANDLORD MAKES NO OTHER WARRANTIES EXCEPT AS EXPRESSLY SET
FORTH IN THIS LEASE.
5.3 Compliance with Law. Landlord warrants to Tenant that the Building
Shell and other Improvements constructed by Landlord (when constructed), as they
exist on the Rent Commencement Date, but without regard to the use for which
Tenant will occupy the Property, shall not violate any covenants or restrictions
of record or any applicable law, building code, regulation or ordinance in
effect on the Rent Commencement Date. Tenant warrants to Landlord that the
Tenant Improvements and any other improvements constructed by Tenant from time
to time shall not violate any applicable law, building code, regulation or
ordinance in effect on the Rent Commencement Date or at the time such
improvements are placed in service. If it is determined that any of these
warranties has been violated, then it shall be the obligation of the warranting
party, after written notice from the other party, to correct the condition(s)
constituting such violation promptly, at the warranting party's sole cost and
expense. Tenant acknowledges that except as expressly set forth in this Lease,
neither Landlord nor any agent of Landlord has made any representation or
warranty as to the present or future suitability of the Property or Improvements
for the conduct of Tenant's business or proposed business thereon.
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6. EXPANSION OPTIONS
6.1 Adjacent Property Lock-Up. The parties acknowledge that at Tenant's
request and in order to make available to Tenant the expansion rights
contemplated in this Article 6, Landlord agrees to attempt to acquire the real
property designated as "Adjacent Property" on the Site Plan (the "Adjacent
Property"), and that such acquisition may [...*...] or other assistance from
[...*...] (as contemplated in Section 2.1(b) hereof). If Landlord acquires the
Adjacent Property at any time during the period from the date of this Lease
until [...*...] after the Rent Commencement Date, then (i) Tenant shall have
certain expansion options with respect to the Adjacent Property, as more
particularly set forth in Section 6.3 hereof, and (ii) until all such expansion
options under Section 6.3 hereof have lapsed, terminated, expired or been
exercised (the "Lock-Up Period"), Landlord shall refrain from entering into an
agreement with any person or entity other than Tenant for the sale or leasing of
the Adjacent Property or of any buildings constructed thereon (provided,
however, that nothing in this Article 6 shall restrict Landlord's right to
construct and lease to one or more third parties a building or buildings in the
southerly portion of the Adjacent Property, as shown on the Site Plan, so long
as Landlord retains the ability, under existing land use restrictions and
requirements, to build at least [...*...] square feet of space for Tenant in the
northerly portion of the Adjacent Property as shown on the Site Plan). Failure
of Tenant to exercise its expansion option(s) on or before the applicable
deadline under Section 6.3 shall result in the lapse or expiration of such
expansion option(s) and the termination of all further rights of Tenant under
this Article 6.
6.2 Lock-Up Consideration. As consideration for Landlord's willingness
to agree to the restrictions set forth in clause (ii) of Section 6.1 for the
duration of the Lock-Up Period, Tenant shall pay or reimburse to Landlord
[...*...] of all reasonable carrying costs incurred by Landlord in connection
with the Adjacent Property during or with respect to the Lock-Up Period
(collectively, "Carrying Costs"), including (but not limited to) (i) interest
expense at the Bank of America prime rate on Landlord's acquisition costs for
the Adjacent Property, (ii) interest expense at the Bank of America prime rate
on Landlord's costs incurred prior to or during the Lock-Up Period for any
construction of utilities, Common Area improvements and other infrastructure
improvements (but not for construction of any buildings) on the Adjacent
Property, and (iii) real property taxes, assessments and insurance on or
allocable to the Adjacent Property; provided, however, that Landlord's Carrying
Costs shall be reduced or offset by the amount of net income, if any, derived by
Landlord from the Adjacent Property during the applicable portion of the Lock-Up
Period from any leasing of any portion of the Adjacent Property to any tenant
other than Tenant. Tenant shall pay Landlord's estimated Carrying Costs during
the Lock-Up Period in advance, on a quarterly basis, as follows: When Landlord
acquires the Adjacent Property, Landlord shall give Tenant prompt written notice
of such acquisition and shall accompany such notice with Landlord's written
estimate, in reasonable detail, of the Carrying Costs for the period ending at
the end of the then current calendar quarter. Within fifteen (15) days after
receipt of such notice, Tenant shall pay the amount of such estimated
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Carrying Costs to Landlord. Thereafter, on or about the first day of each
calendar quarter during the Lock-Up Period, Landlord shall give Tenant a further
written estimate, in reasonable detail, of the Carrying Costs for such upcoming
calendar quarter and Tenant shall pay the amount of such estimated Carrying
Costs to Landlord within fifteen (15) days after receipt of such notice. Within
fifteen (15) days after the end of each calendar quarter during the Lock-Up
Period, Landlord shall notify Tenant in writing of Landlord's actual Carrying
Costs for such calendar quarter, and within ten (10) days after such notice
either (i) Tenant shall pay Landlord the amount by which such actual Carrying
Costs exceeded the estimated Carrying Costs paid by Tenant for such calendar
quarter or (ii) Landlord shall pay Tenant the amount by which the estimated
Carrying Costs paid by Tenant exceeded the actual Carrying Costs for such
calendar quarter. If taxes or other Carrying Costs allocable to any calendar
quarter are increased or decreased (for example, by a tax reduction or
additional tax assessment) following completion of the reconciliation process
described in the preceding sentence, Landlord shall promptly notify Tenant in
writing of such further increase or decrease and the parties shall make any
further adjustment payments in cash in the same manner contemplated in the
preceding sentence. Failure of Tenant to make any payment when due under this
Section 6.2 shall be deemed a material default by Tenant and shall, if not cured
within ten (10) days after Tenant's receipt of written notice of default from
Landlord, entitle Landlord, at its election and in its sole discretion, to
declare the expansion options terminated and of no further force and effect; the
existence of such termination right, however, shall be without prejudice to any
other remedies available to Landlord under this Lease or under applicable law
with respect to Tenant's breach, including (but not limited to) the right to
seek money damages from Tenant for Tenant's nonpayment of Carrying Costs. The
allocation to Tenant of [...*...] of the Carrying Costs for the Adjacent
Property is based on the assumption that approximately [...*...] square feet of
buildings will be constructed on the Adjacent Property, of which [...*...]
square feet will constitute Tenant's expansion space subject to Section 6.3, but
this allocation is not intended to be mathematically exact or to fluctuate with
minor changes in the size, design or location of the buildings planned for or
actually constructed on the Adjacent Property.
6.3 Exercise of Phase II Expansion Options. Contingent upon Landlord's
acquisition of the Adjacent Property, Tenant shall have the right, on the terms
and conditions set forth in this Section 6.3 and subject to the provisions of
Section 4.1(d) above, to elect to have Landlord construct, for occupancy by
Tenant as expansion space, up to [...*...] square feet of space in new two-story
buildings to be constructed by Landlord at the northerly end of the Adjacent
Property. The Site Plan attached hereto designates as "Phase II" two buildings
of [...*...] square feet and [...*...] square feet, respectively; those building
sizes and locations are illustrative only, and are not to be construed as being
binding on Landlord or Tenant.
(a) At any time within the period beginning on the later of
the Rent Commencement Date or the date on which Landlord acquires the Adjacent
Property and ending on the date which is [...*...] after the Rent Commencement
Date (the "Phase IIA Option
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Period"), Tenant shall have the right (the "Phase IIA Expansion Option") to
elect by written notice to Landlord to occupy up to [...*...] square feet of
space in the building(s) to be constructed at the northerly end of the Adjacent
Property (the quantity of space thus designated by Tenant being hereinafter
called the "Phase IIA Expansion Premises"). There is no minimum size for the
Phase IIA Expansion Premises, but if the size of the Phase IIA Expansion
Premises as designated by Tenant is not at least [...*...] square feet, then the
Phase IIB Expansion Option shall not come into effect and Tenant shall have no
further expansion options hereunder. If Tenant timely exercises the Phase IIA
Expansion Option, then Landlord and Tenant shall negotiate diligently and in
good faith toward a new lease or lease amendment covering the Phase IIA
Expansion Premises in accordance with Section 6.3(c) hereof.
(b) At any time within the period beginning on the date of
expiration of the Phase IIA Option Period and ending on the date which is
[...*...] thereafter (the "Phase IIB Option Period"), if Tenant timely exercised
the Phase IIA Expansion Option for at least [...*...] square feet and for less
than [...*...] square feet of space, Tenant shall have the right (the "Phase IIB
Expansion Option") to elect by further written notice to Landlord to occupy
additional space in an amount up to the difference between the size of the Phase
IIA Expansion Premises and [...*...] square feet, again to be located in the
building(s) to be constructed at the northerly end of the Adjacent Property (the
quantity of space thus designated by Tenant in such further notice being
hereinafter called the "Phase IIB Expansion Premises"). If Tenant timely
exercises the Phase IIB Expansion Option, then Landlord and Tenant shall
negotiate diligently and in good faith toward a new lease or lease amendment
covering the Phase IIB Expansion Premises in accordance with Section 6.3(c)
hereof. If Tenant does not timely exercise the Phase IIB Expansion Option or
does not exercise that option in such a way that the aggregate size of the Phase
IIA Expansion Premises and the Phase IIB Expansion Premises is [...*...] square
feet, then Tenant's unexercised expansion rights shall lapse or expire at the
end of the Phase IIB Option Period and shall be of no further force or effect.
Notwithstanding any other provisions of this Article 6, (i) during the Phase IIB
Option Period, Tenant's obligation with respect to payment of Carrying Costs
shall be reduced to the fraction or percentage calculated by dividing the size
of the space remaining available pursuant to the Phase IIB Expansion Option by
[...*...] square feet, and (ii) to the extent Tenant designates a size of
[...*...] square feet or more for the Phase IIA Expansion Premises and/or the
Phase IIB Expansion Premises, Tenant shall be entitled to have each such phase
constituting [...*...] square feet or more designed as a stand-alone building
with Tenant as the sole occupant.
(c) The parties contemplate that except as Landlord and Tenant
may otherwise agree at the time, the general structure of a lease or lease
amendment for the Phase IIA Expansion Premises and/or the Phase IIB Expansion
Premises, as applicable, shall include Landlord's construction of a building
shell or shells on substantially the same economic terms applicable to the
Initial Building (as reflected in this Lease), but adjusted to take into account
changes in costs of land acquisition, costs of construction and cost of money
(determined by
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reference to changes in the Bank of America prime rate). The location of such
building(s) shall be determined by Landlord in its reasonable discretion;
Landlord agrees to give reasonable consideration to Tenant's then current needs
and future plans (as communicated to Landlord at the time) in planning the
location of the expansion building(s), but the final decision with respect
thereto shall be Landlord's. The construction and financing of interior tenant
improvements in the expansion building(s) shall be open for negotiation between
Landlord and Tenant; Landlord is not required to agree to construct or fund
tenant improvements and Tenant is not required to agree to have Landlord
construct or fund them, except that Landlord agrees, if Tenant so requests, to
finance construction of tenant improvements of a nature and quality generally
comparable to those to be constructed in the Initial Building on the same
[...*...] basis provided in this Lease for the Tenant Improvements in the
Initial Building. The rent structure for the Phase IIA Expansion Premises or
Phase IIB Expansion Premises, as applicable, shall take into account, in
addition to the cost factors mentioned above, any required construction or
funding of tenant improvements by Landlord, and shall also reflect any changes
in Tenant's financial condition at that time. Stock warrants with respect to the
expansion premises shall be issuable in accordance with Section 4.1(b) or (c)
hereof, as applicable. The lease term for the Phase IIA Expansion Premises or
Phase IIB Expansion Premises, as applicable, shall be fifteen (15) years; in
order to provide for coterminous lease terms, (i) upon execution of a lease or
lease amendment for the Phase IIA Expansion Premises, the Termination Date for
this Lease with respect to the Initial Building under Section 2.1 hereof shall
be deemed to be extended until the expiration date for the 15-year term for the
Phase IIA Expansion Premises, with all other terms of this Lease relating to the
Initial Building to remain the same (and with minimum rental to remain fixed at
the level applicable immediately prior to commencement of the extension period),
and (ii) upon execution of a lease or lease amendment for the Phase IIB
Expansion Premises, the Termination Date for this Lease with respect to the
Initial Building under Section 2.1 hereof and the termination date for the Phase
IIA Expansion Premises shall be deemed to be extended until the expiration date
for the 15-year term for the Phase IIB Expansion Premises, with all other terms
of this Lease relating to the Initial Building and all terms of the lease or
lease amendment with respect to the Phase IIA Expansion Premises to remain the
same (and with minimum rental to remain fixed in both cases at the level
applicable immediately prior to commencement of the extension period).
7. REFUSAL RIGHTS WITH RESPECT TO LEASES
7.1 Refusal Rights.
(a) If Landlord intends during the term of this Lease to lease
all or any portion of the Refusal Space (as hereinafter defined), and if Tenant
is not then in material default (beyond any applicable cure periods) under this
Lease (for which purpose, without limitation, any event of default under Section
18.1 hereof shall be considered "material"), Landlord shall
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first give written notice of such intention to Tenant, specifying the material
terms on which Landlord proposes to lease the Refusal Space or portion thereof
(the "Offered Space"), and shall offer to Tenant the opportunity to lease the
Offered Space on the terms specified in Landlord's notice. Tenant shall have
seven (7) business days after the date of Tenant's receipt of such notice from
Landlord in which to accept such offer by written notice to Landlord. Upon such
acceptance by Tenant, the Offered Space shall be leased to Tenant on the terms
set forth in Landlord's notice and on the additional terms and provisions set
forth herein (except to the extent inconsistent with the terms set forth in
Landlord's said notice), and the parties shall promptly execute an amendment to
this Lease adding the Offered Space to the premises covered by this Lease and
making any appropriate amendments to provisions of this Lease to reflect
different rent and other obligations applicable to the Offered Space under the
terms of Landlord's said notice. If Tenant does not accept Landlord's offer
within the allotted time, Landlord shall thereafter have the right to lease the
Offered Space to a third party, at any time within [...*...] days after Tenant's
failure to accept Landlord's offer, at a minimum rental and on other terms and
conditions not more favorable to the lessee than the minimum rental and other
terms offered to Tenant in said Landlord's notice. If Tenant does not accept
Landlord's offer and Landlord does not lease the Offered Space to a third party
within [...*...] days, Tenant's refusal right under this Section 7.1 shall
reattach to that space.
(b) For purposes of this Section 7.1, the areas constituting
the "Refusal Space" and the priority of Tenant's refusal rights with respect to
such areas are as follows:
(i) Until the later of December 31, 1997 or the date
Landlord enters into an unconditional binding contract or contracts for
the acquisition of the Adjacent Property (as defined in Section 6.1
hereof in connection with Tenant's expansion rights), the Refusal Space
shall include any and all space in the new building to be constructed
in the area marked as "Alternate Expansion" (Building C) on the Site
Plan; after the later of the dates specified in this subparagraph, such
Building C space shall no longer constitute part of the Refusal Space
and Tenant shall have no further refusal rights with respect thereto.
Notwithstanding any other provisions of this Section 7.1, Tenant's
refusal right with respect to the Building C portion of the Refusal
Space is a second refusal right, junior in priority to existing rights
in favor of Cor Therapeutics, Inc.
(ii) Until the date Landlord enters into an
unconditional binding contract or contracts for the acquisition of the
Adjacent Property (as defined in Section 6.1 hereof in connection with
Tenant's expansion rights), the Refusal Space shall include any and all
space in the existing buildings designated as Buildings D, E, F and G
on the Site Plan; after the date specified in this subparagraph, such
Building D, E, F and G space shall no longer constitute part of the
Refusal Space and Tenant shall have no further refusal rights with
respect thereto. Notwithstanding any other provisions of this Section
7.1, Tenant's refusal right with respect to the Building D, E, F and G
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portion of the Refusal Space is junior in priority to all existing
rights in favor of Cor Therapeutics, Inc. and/or in favor of any other
existing tenants of the Center.
(iii) If Landlord acquires the Adjacent Property (as
defined in Section 6.1 hereof in connection with Tenant's expansion
rights) and Tenant timely exercises its Phase IIA Expansion Option
under Section 6.3(a) hereof for at least [...*...] square feet of space
on the Adjacent Property, then after the expiration of the Phase IIB
Option Period as defined in Section 6.3(b) hereof, the Refusal Space
shall include any and all space not already occupied by Tenant in the
buildings existing from time to time on the Adjacent Property. Tenant's
refusal right with respect to buildings located from time to time on
the Adjacent Property is a first refusal right and is not junior in
priority to any other existing rights in favor of any other person or
entity.
(iv) For purposes of this Section 7.1(b), a contract
for acquisition of the Adjacent Property or any portion thereof shall
be deemed to be "unconditional" when all "due diligence" conditions
have been waived and the contract remains subject only to conditions
that are customarily satisfied only at the closing date, including (but
not limited to) conditions relating to the seller's delivery of title
and the title company's issuance of a title policy insuring Landlord's
title as buyer subject only to the permitted exceptions defined in the
purchase contract.
8. TAXES
8.1 Personal Property. Tenant shall be responsible for and shall pay
prior to delinquency all taxes and assessments levied against or by reason of
(a) any and all alterations, additions and items installed or placed on the
Property and taxed as personal property rather than as real property, and/or (b)
all personal property, trade fixtures and other property placed by Tenant on or
about the Property. Upon request by Landlord, Tenant shall furnish Landlord with
satisfactory evidence of Tenant's payment thereof. If at any time during the
term of this Lease any of said alterations, additions or personal property,
whether or not belonging to Tenant, shall be taxed or assessed as part of the
Center, then such tax or assessment shall be paid by Tenant to Landlord within
fifteen (15) days after presentation by Landlord of copies of the tax bills in
which such taxes and assessments are included and shall, for the purposes of
this Lease, be deemed to be personal property taxes or assessments under this
Section 8.1.
8.2 Real Property. To the extent any real property taxes and
assessments on the Property (including, but not limited to, the Improvements)
are assessed directly to Tenant, Tenant shall be responsible for and shall pay
prior to delinquency all such taxes and assessments levied against the Property.
Upon request by Landlord, Tenant shall furnish Landlord with satisfactory
evidence of Tenant's payment thereof. To the extent the Property and/or
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Improvements are taxed or assessed to Landlord following the Rent Commencement
Date, such real property taxes and assessments shall constitute Operating
Expenses (as that term is defined in Section 9.2 of this Lease) and shall be
paid in accordance with the provisions of Article 9 of this Lease.
9. OPERATING EXPENSES
9.1 Payment Of Operating Expenses.
(a) Tenant shall pay to Landlord, at the time and in the
manner hereinafter set forth, as additional rental, an amount equal to [...*...]
("Tenant's Operating Cost Share") of the Operating Expenses defined in Section
9.2.
(b) Tenant's Operating Cost Share as specified in paragraph
(a) of this Section is based upon an estimated area of [...*...] square feet for
the Initial Building and upon an aggregate area of [...*...] square feet for the
existing buildings owned by Landlord in the Center (Buildings D, E, F and G) and
the two additional buildings that Landlord is committed to build in the Center
(the Initial Building and Building H, as designated on the Site Plan). If the
actual area of the Initial Building (when completed), of the premises covered by
this Lease or of the buildings owned from time to time by Landlord in the
Center, as determined in good faith by Landlord's architect on the basis of
measurement set forth in Section 3.1(b) hereof, differs from the assumed numbers
set forth above, then Tenant's Operating Cost Share shall be adjusted to reflect
the actual areas so determined.
(c) If Landlord constructs additional buildings in the Center,
on the Adjacent Property or on any other adjacent property owned by Landlord and
operated, for common area purposes, on an integrated basis with the Center from
time to time, Tenant's Operating Cost Share shall be adjusted to be equal to the
percentage determined by dividing the gross square footage of the Initial
Building as it then exists by the gross square footage of all buildings located
in the Center, on the Adjacent Property or on any applicable adjacent property
owned by Landlord as described above. In determining said percentage, a building
shall be taken into account from and after the date on which a tenant first
enters into possession of the building or a portion thereof, and the good faith
determination of the gross square footage of any such building by Landlord's
architects shall be final and binding upon the parties.
9.2 Definition Of Operating Expenses.
(a) Subject to the exclusions and provisions hereinafter
contained, the term "Operating Expenses" shall mean the total costs and expenses
incurred by or allocable to Landlord for management, operation and maintenance
of the Improvements, the Property and
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the Center, including, without limitation, costs and expenses of (i) insurance
(which may include, at Landlord's option, earthquake insurance as part of or in
addition to any casualty or property insurance policy), property management,
landscaping, and the operation, repair and maintenance of buildings and Common
Areas; (ii) all utilities and services; (iii) real and personal property taxes
and assessments or substitutes therefor levied or assessed against the Center or
any part thereof, including (but not limited to) any possessory interest, use,
business, license or other taxes or fees, any taxes imposed directly on rents or
services, any assessments or charges for police or fire protection, housing,
transit, open space, street or sidewalk construction or maintenance or other
similar services from time to time by any governmental or quasi-governmental
entity, and any other new taxes on landlords in addition to taxes now in effect;
(iv) supplies, equipment, utilities and tools used in management, operation and
maintenance of the Center; (v) capital improvements to the Property, the
Improvements or the Center, amortized over a reasonable period, (aa) which
reduce or will cause future reduction of other items of Operating Expenses for
which Tenant is otherwise required to contribute or (bb) which are required by
law, ordinance, regulation or order of any governmental authority or (cc) of
which Tenant has use or which benefit Tenant; and (vi) any other costs
(including, but not limited to, any parking or utilities fees or surcharges)
allocable to or paid by Landlord, as owner of the Center or Improvements,
pursuant to any applicable laws, ordinances, regulations or orders of any
governmental or quasi-governmental authority or pursuant to the terms of any
declarations of covenants, conditions and restrictions now or hereafter
affecting the Center or over which Tenant has non-exclusive usage rights as
contemplated in Section 1.1(b) hereof. Operating Expenses shall not include any
costs attributable to the work for which Landlord is required to pay under
Article 5 or Exhibit C, nor any costs attributable to the initial construction
of buildings or Common Area improvements in the Center. The distinction between
items of ordinary operating maintenance and repair and items of a capital nature
shall be made in accordance with generally accepted accounting principles
applied on a consistent basis or in accordance with tax accounting principles,
as determined in good faith by Landlord's accountants.
(b) Notwithstanding anything to the contrary contained in this
Lease, the following shall not be included within Operating Expenses:
(i) Costs of maintenance or repair of the roof
membrane for any building within the Center, except during periods (if any) in
which costs of maintenance or repair of the roof membrane for the building(s)
occupied by Tenant pursuant to this Lease are likewise included as an Operating
Expense (rather than being incurred directly by Tenant or passed through
directly to Tenant on a building-by-building basis);
(ii) Leasing commissions, attorneys' fees, costs,
disbursements, and other expenses incurred in connection with negotiations or
disputes with tenants, or in connection with leasing, renovating or improving
space for tenants or other occupants or prospective tenants or other occupants
of the Center;
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(iii) The cost of any service sold to any tenant
(including Tenant) or other occupant for which Landlord is entitled to be
reimbursed as an additional charge or rental over and above the basic rent and
operating expenses payable under the lease with that tenant;
(iv) Any depreciation on the Initial Building or on
any other improvements in the Center;
(v) Expenses in connection with services or other
benefits of a type that are not offered or made available to Tenant but that are
provided to another tenant of the Center;
(vi) Costs incurred due to Landlord's violation of
any terms or conditions of this Lease or of any other lease relating to the
Initial Building or to any other portion of the Center or the Property;
(vii) Overhead profit increments paid to any
subsidiary or affiliate of Landlord for management or other services on or to
the Center or any portion thereof or for supplies or other materials to the
extent that the cost of the services, supplies or materials exceeds the cost
that would have been paid had the services, supplies or materials been provided
by unaffiliated parties on a competitive basis;
(viii) All interest, loan fees and other carrying
costs related to any mortgage or deed of trust or related to any capital item,
and all rental and other amounts payable under any ground or underlying lease,
or under any lease for any equipment ordinarily considered to be of a capital
nature (except (A) janitorial equipment which is not affixed to the Building
and/or (B) equipment the cost of which, if purchased, would be considered an
amortizable Operating Expense under the provisions of this Section 9.2,
notwithstanding the capital nature of such equipment);
(ix) Any compensation paid to clerks, attendants or
other persons in commercial concessions operated by Landlord;
(x) Advertising and promotional expenditures;
(xi) Costs of repairs and other work occasioned by
fire, windstorm or other casualty of an insurable nature, except to the extent
of any applicable deductible amounts under insurance actually carried by
Landlord;
(xii) Any costs, fines or penalties incurred due to
violations by Landlord of any governmental rule or authority or of this Lease or
any other lease of any portion of the Center or the Property, or due to
Landlord's negligence or willful misconduct;
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(xiii) Management costs to the extent they exceed a
reasonable and competitive rate for such services in the market for management
of comparable commercial properties in the San Francisco Bay Area;
(xiv) Costs for sculpture, paintings or other objects
of art, and for any insurance thereon or extraordinary security in connection
therewith;
(xv) Wages, salaries or other compensation paid to
any executive employees above the grade of building manager;
(xvi) The cost of correcting any building code or
other violations which were violations prior to the Rent Commencement Date;
(xvii) The cost of containing, removing or otherwise
remediating any contamination of the Property (including the underlying land and
groundwater) by any toxic or hazardous materials (including, without limitation,
asbestos and PCBs); and
(xviii) Premiums for earthquake insurance coverage,
but only to the extent (if any) that such premiums exceed, in any applicable
period, a commercially reasonable rate, taking into account all relevant factors
(including, but not limited to, the nature, size and location of the Center, the
nature and value of the improvements therein that are owned by or insurable by
Landlord, and the general availability and cost of commercial earthquake
insurance in the insurance markets existing from time to time during the term of
this Lease).
9.3 Determination Of Operating Expenses. On or before the Rent
Commencement Date and during the last month of each calendar year of the term of
this Lease ("Lease Year"), or as soon thereafter as practical, Landlord shall
provide Tenant notice of Landlord's estimate of the Operating Expenses for the
ensuing Lease Year or applicable portion thereof. On or before the first day of
each month during the ensuing Lease Year or applicable portion thereof,
beginning on the Rent Commencement Date, Tenant shall pay to Landlord Tenant's
Operating Cost Share of the portion of such estimated Operating Expenses
allocable (on a prorata basis) to such month; provided, however, that if such
notice is not given in the last month of a Lease Year, Tenant shall continue to
pay on the basis of the prior year's estimate, if any, until the month after
such notice is given. If at any time or times it appears to Landlord that the
actual Operating Expenses will vary from Landlord's estimate by more than
[...*...], Landlord may, by notice to Tenant, revise its estimate for such year
and subsequent payments by Tenant for such year shall be based upon such revised
estimate.
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9.4 Final Accounting For Lease Year.
(a) Within ninety (90) days after the close of each Lease
Year, or as soon after such 90-day period as practicable, Landlord shall deliver
to Tenant a statement of Tenant's Operating Cost Share of the Operating Expenses
for such Lease Year prepared by Landlord from Landlord's books and records,
which statement shall be final and binding on Landlord and Tenant (except as
provided in Section 9.4(b)). If on the basis of such statement Tenant owes an
amount that is more or less than the estimated payments for such Lease Year
previously made by Tenant, Tenant or Landlord, as the case may be, shall pay the
deficiency to the other party within thirty (30) days after delivery of the
statement. Failure or inability of Landlord to deliver the annual statement
within such ninety (90) day period shall not impair or constitute a waiver of
Tenant's obligation to pay Operating Expenses, or cause Landlord to incur any
liability for damages.
(b) At any time within three (3) months after receipt of
Landlord's annual statement of Operating Expenses as contemplated in Section
9.4(a), Tenant shall be entitled, upon reasonable written notice to Landlord and
during normal business hours at Landlord's office or such other places as
Landlord shall designate, to inspect and examine those books and records of
Landlord relating to the determination of Operating Expenses for the immediately
preceding Lease Year covered by such annual statement or, if Tenant so elects by
written notice to Landlord, to request an independent audit of such books and
records. The independent audit of the books and records shall be conducted by a
certified public accountant acceptable to both Landlord and Tenant or, if the
parties are unable to agree, by a certified public accountant appointed by the
Presiding Judge of the San Mateo County Superior Court upon the application of
either Landlord or Tenant (with notice to the other party). In either event,
such certified public accountant shall be one who is not then employed in any
capacity by Landlord or Tenant or by any of their respective affiliates. The
audit shall be limited to the determination of the amount of Operating Expenses
for the subject Lease Year, and shall be based on generally accepted accounting
principles and tax accounting principles, consistently applied. If it is
determined, by mutual agreement of Landlord and Tenant or by independent audit,
that the amount of Operating Expenses billed to or paid by Tenant for the
applicable Lease Year was incorrect, then the appropriate party shall pay to the
other party the deficiency or overpayment, as applicable, within thirty (30)
days after the final determination of such deficiency or overpayment. All costs
and expenses of the audit shall be paid by Tenant unless the audit shows that
Landlord overstated Operating Expenses for the subject Lease Year by more than
[...*...], in which case Landlord shall pay all costs and expenses of the audit.
Each party agrees to maintain the confidentiality of the findings of any audit
in accordance with the provisions of this Section 9.4.
9.5 Proration. If the Rent Commencement Date falls on a day other than
the first day of a Lease Year or if this Lease terminates on a day other than
the last day of a Lease Year, the
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amount of Operating Expenses payable by Tenant with respect to such first or
last partial Lease Year shall be prorated on the basis which the number of days
during such Lease Year in which this Lease is in effect bears to 365. The
termination of this Lease shall not affect the obligations of Landlord and
Tenant pursuant to Section 9.4 to be performed after such termination.
10. UTILITIES
10.1 Payment. Commencing with the Rent Commencement Date and thereafter
throughout the term of this Lease, Tenant shall pay, before delinquency, all
charges for water, gas, heat, light, electricity, power, sewer, telephone, alarm
system, janitorial and other services or utilities supplied to or consumed in or
upon the Property (other than any separately metered costs for water,
electricity or other services or utilities furnished with respect to the Common
Areas, which costs shall be paid by Landlord and shall constitute Operating
Expenses under Section 9.2 hereof), including any taxes on such services and
utilities. It is the intention of the parties that all such services shall be
separately metered to the Property. In the event that any of such services
supplied to the Property are not separately metered, then the amount thereof
shall be an item of Operating Expenses and shall be paid as provided in Article
9.
10.2 Interruption. There shall be no abatement of rent or other charges
required to be paid hereunder and Landlord shall not be liable in damages or
otherwise for interruption or failure of any service or utility furnished to or
used on the Property because of accident, making of repairs, alterations or
improvements, severe weather, difficulty or inability in obtaining services or
supplies, labor difficulties or any other cause. Notwithstanding the foregoing
provisions of this Section 10.2, however, in the event of any interruption or
failure of any service or utility to the Premises that (i) is caused in whole or
in material part by the active negligence or willful misconduct of Landlord or
its agents or employees and (ii) continues for more than three (3) business days
and (iii) materially impairs Tenant's ability to use the Premises for their
intended purposes hereunder, then following such three (3) business day period,
Tenant's obligations for payment of rent and other charges under this Lease
shall be abated in proportion to the degree of impairment of Tenant's use of the
Premises, and such abatement shall continue until Tenant's use of the Premises
is no longer materially impaired thereby.
11. ALTERATIONS; SIGNS
11.1 Right To Make Alterations. Tenant shall make no alterations,
additions or improvements to the Initial Building or the Property, other than
interior non-structural alterations costing less than [...*...] in the aggregate
during any twelve (12) month period, without the prior written consent of
Landlord, which consent shall not be unreasonably withheld or delayed. All such
alterations, additions and improvements shall be completed with due diligence in
a first-
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class workmanlike manner, in compliance with plans and specifications approved
in writing by Landlord and in compliance with all applicable laws, ordinances,
rules and regulations. Tenant shall cause any contractors engaged by Tenant for
work in the Initial Building or on the Property to maintain public liability and
property damage insurance, and other customary insurance, with such terms and in
such amounts as Landlord may reasonably require, naming as additional insureds
Landlord and any of its partners, shareholders, property managers and lenders
designated by Landlord for this purpose, and shall furnish Landlord with
certificates of insurance or other evidence that such coverage is in effect. In
addition, Tenant covenants and agrees that all contractors and subcontractors at
any tier performing any tenant improvements, build-out, alterations, additions,
improvements, renovations, repairs and/or installations of fixtures or other
equipment, or with respect to any other construction work in, on or to the
Premises shall (i) be bound by and signatory to a collective bargaining
agreement with a labor organization (A) whose jurisdiction covers the type of
work to be performed on the Premises, and (B) who is affiliated with the
Building and Construction Trades Department of the AFL-CIO; and (ii) each such
contractor or subcontractor shall observe area standards for wages and other
terms and conditions of employment, including fringe benefits. Notwithstanding
any other provisions of this Section 11.1, under no circumstances shall Tenant
make any structural alterations or improvements, or any substantial changes to
the roof or substantial equipment installations on the roof, or any substantial
changes or alterations to the building systems, without Landlord's prior written
consent (which consent shall not be unreasonably withheld or delayed). If Tenant
so requests in seeking Landlord's consent to any alterations, additions or
improvements, Landlord shall specify in granting such consent whether Landlord
intends to require that Tenant remove such alterations, additions or
improvements (or any specified portions thereof) upon expiration or termination
of this Lease. Landlord shall receive no fee for supervision, profit, overhead
or general conditions in connection with any alterations, additions or
improvements constructed or installed by Tenant under this Lease.
11.2 Title To Alterations. All alterations, additions and improvements
installed in, on or about the Initial Building or the Property shall become part
of the Property and shall become the property of Landlord, unless Landlord
elects to require Tenant to remove the same upon the termination of this Lease;
provided, however, that the foregoing shall not apply to Tenant's movable
furniture and equipment and trade fixtures. Tenant shall promptly repair any
damage caused by its removal of any such furniture, equipment or trade fixtures.
Notwithstanding any other provisions of this Article 11, however, (a) under no
circumstances shall Tenant have any right to remove from the Initial Building or
the Property, at the expiration or termination of this Lease, any lab benches,
fume hoods, cold rooms or other similar improvements and equipment installed in
the Initial Building, even if such equipment and improvements were installed by
Tenant and paid for by Tenant in cash or in the form of additional rent; and (b)
if Tenant requests Landlord's written consent to any alterations, additions or
improvements under Section 11.1 hereof and, in requesting such consent, asks
that Landlord specify whether Landlord will require removal of such alterations,
additions or improvements upon termination or expiration of this Lease, then
Landlord shall not be entitled to require such removal unless
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Landlord specified its intention to do so at the time of granting of Landlord's
consent to the requested alterations, additions or improvements.
11.3 Tenant Fixtures. Subject to the final sentence of Section 11.2 and
to Section 11.5, Tenant may install, remove and reinstall trade fixtures without
Landlord's prior written consent, except that installation and removal of any
fixtures which are affixed to the Initial Building or the Property or which
affect the exterior or structural portions of the Initial Building or the
building systems shall require Landlord's prior written approval, which approval
shall not be unreasonably withheld or delayed. Tenant shall immediately repair
any damage caused by installation and removal of fixtures under this Section
11.3.
11.4 No Liens. Tenant shall at all times keep the Initial Building and
the Property free from all liens and claims of any contractors, subcontractors,
materialmen, suppliers or any other parties employed either directly or
indirectly by Tenant in construction work on the Initial Building or the
Property. Tenant may contest any claim of lien, but only if, prior to such
contest, Tenant either (i) posts security in the amount of the claim, plus
estimated costs and interest, or (ii) records a bond of a responsible corporate
surety in such amount as may be required to release the lien from the Initial
Building and the Property. Tenant shall indemnify, defend and hold Landlord
harmless against any and all liability, loss, damage, cost and other expenses,
including, without limitation, reasonable attorneys' fees, arising out of claims
of any lien for work performed or materials or supplies furnished at the request
of Tenant or persons claiming under Tenant. Notwithstanding any other provisions
of this Lease, however, Tenant shall have the right to obtain third-party
financing for Tenant's share of the cost of the Tenant Improvements to be
constructed under the Workletter, and for any other equipment or improvements
installed or constructed by Tenant from time to time during the term of the
Lease, and in connection with such financing shall have the right to grant the
lender a lien on specific items of such Tenant Improvements, and/or on any such
other equipment or improvements, having an aggregate cost not greater than
Tenant's share of the total cost of the applicable Tenant Improvements,
equipment or other improvements; the specific items of such Tenant Improvements,
equipment or other improvements on which Tenant is authorized to grant such
liens shall be negotiated and approved in good faith by Landlord and Tenant,
promptly and diligently following any written request by Tenant from time to
time for identification of such items.
11.5 Signs. Tenant shall have the right to display its corporate name
and logo on the Initial Building and in front of the entrance to the Initial
Building, subject to Landlord's prior approval as to location, size, design and
composition (which approval shall not be unreasonably withheld or delayed),
subject to the established sign criteria for the Center and subject to all
restrictions and requirements of applicable law and of any covenants, conditions
and restrictions and other written agreements now or hereafter applicable to the
Property. Landlord is hereby deemed to have approved, as to location, any
signage the location of which is expressly designated on the Site Plan attached
hereto as Exhibit B or on any Approved Plan listed in or
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developed pursuant to the Workletter, and Landlord agrees that Tenant shall be
permitted to have exterior signage on at least two (2) sides of the Initial
Building (facing Highway 101 and facing East Grand Avenue), subject to all other
requirements and criteria set forth above in this Section 11.5.
12. MAINTENANCE AND REPAIRS
12.1 Landlord's Work.
(a) Landlord shall repair and maintain or cause to be repaired
and maintained the Common Areas of the Center and the roof (structural portions
only), exterior walls and other structural portions of the Initial Building. The
cost of all work performed by Landlord under this Section 12.1 shall be an
Operating Expense hereunder, except to the extent such work (i) is required due
to the negligence of Landlord, (ii) involves the repair or correction of a
condition or defect that Landlord is required to correct pursuant to Section 5.2
hereof, (iii) is a capital expense not includible as an Operating Expense under
Section 9.2 hereof, (iv) is required due to the negligence or willful misconduct
of Tenant or its agents, employees or invitees (in which event Tenant shall bear
the full cost of such work pursuant to the indemnification provided in Section
14.6 hereof, subject to the release set forth in Section 14.4 hereof). Tenant
knowingly and voluntarily waives the right to make repairs at Landlord's
expense, or to offset the cost thereof against rent, under any law, statute,
regulation or ordinance now or hereafter in effect.
(b) If Tenant so requests in writing, Landlord shall also
repair and maintain or cause to be repaired or maintained, on the same basis set
forth in Section 12.1(a), the roof membrane of the Initial Building; provided,
however, that the cost of such repair or maintenance shall not constitute an
Operating Expense hereunder, but shall instead be entirely allocated to and paid
by Tenant as the sole lessee of the Initial Building, except to the extent such
cost falls into one of the categories set forth in clauses (i) through (iii) of
Section 12.1(a), in which case Tenant shall to that extent have no liability or
obligation with respect thereto. Any such payment for which Tenant is
responsible under this Section 12.1(b) shall be paid by Tenant to Landlord in
cash within fifteen (15) days after Tenant's receipt of Landlord's written
request for such payment, accompanied by invoices and other supporting
documentation reasonably evidencing the costs for which such payment is
requested.
12.2 Tenant's Obligation For Maintenance.
(a) Good Order, Condition And Repair. Except as provided in
Section 12.1 hereof, Tenant at its sole cost and expense shall keep and maintain
in good and sanitary order, condition and repair the Initial Building and every
part thereof, wherever located, including but not limited to the roof
(non-structural portions only), signs, interior, ceiling, electrical system,
plumbing system, telephone and communications systems of the Initial Building,
the HVAC
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equipment and related mechanical systems serving the Initial Building (for which
equipment and systems Tenant shall enter into a service contract with a person
or entity designated or approved by Landlord), all doors, door checks, windows,
plate glass, door fronts, exposed plumbing and sewage and other utility
facilities, fixtures, lighting, wall surfaces, floor surfaces and ceiling
surfaces of the Initial Building and all other interior repairs, foreseen and
unforeseen, with respect to the Initial Building, as required.
(b) Landlord's Remedy. If Tenant, after notice from Landlord,
fails to make or perform promptly any repairs or maintenance which are the
obligation of Tenant hereunder, Landlord shall have the right, but shall not be
required, to enter the Property and make the repairs or perform the maintenance
necessary to restore the Property and the Initial Building to good and sanitary
order, condition and repair. Immediately on demand from Landlord, the cost of
such repairs shall be due and payable by Tenant to Landlord.
(c) Condition Upon Surrender. At the expiration or sooner
termination of this Lease, Tenant shall surrender the Initial Building and the
Improvements, including any additions, alterations and improvements thereto,
broom clean, in good and sanitary order, condition and repair, ordinary wear and
tear excepted, first, however, removing all goods and effects of Tenant and all
and fixtures and items required to be removed or specified to be removed at
Landlord's election pursuant to this Lease, and repairing any damage caused by
such removal. Tenant shall not have the right to remove fixtures or equipment if
Tenant is in default hereunder unless Landlord specifically waives this
provision in writing. Tenant expressly waives any and all interest in any
personal property and trade fixtures not removed from the Property by Tenant at
the expiration or termination of this Lease, agrees that any such personal
property and trade fixtures may, at Landlord's election, be deemed to have been
abandoned by Tenant, and authorizes Landlord (at its election and without
prejudice to any other remedies under this Lease or under applicable law) to
remove and to retain, store or dispose of such property at Tenant's cost and
expense, and Tenant waives all claims against Landlord for any damages resulting
from any such removal, storage, retention or disposal.
13. USE OF PROPERTY
13.1 Permitted Use. Subject to Sections 13.3, 13.4 and 13.6 hereof,
Tenant shall use the Initial Building solely for a laboratory research and
development facility, including (but not limited to) wet chemistry and biology
labs, clean rooms, pilot scale, clinical scale and GMP scale manufacturing,
storage and use of toxic and radioactive materials and laboratory animals,
administrative offices, and other lawful purposes reasonably related to or
incidental to such specified uses (subject in each case to receipt of all
necessary approvals from the City of South San Francisco and other governmental
agencies having jurisdiction over the Property), and for no other purpose.
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13.2 [Omitted.]
13.3 No Nuisance. Tenant shall not use the Property for or carry on or
permit upon the Property or any part thereof any offensive, noisy or dangerous
trade, business, manufacture, occupation, odor or fumes, or any nuisance or
anything against public policy, nor interfere with the rights or business of
Landlord in the Initial Building or the Property, nor commit or allow to be
committed any waste in, on or about the Property. Tenant shall not do or permit
anything to be done in or about the Property, nor bring nor keep anything
therein, which will in any way cause the Property or the Center to be
uninsurable with respect to any insurance required by this Lease or with respect
to standard fire and extended coverage insurance with vandalism, malicious
mischief and riot endorsements.
13.4 Compliance With Laws. Tenant shall not use the Property or permit
the Property or any other portion of the Center to be used in whole or in part
for any purpose or use that is in violation of any applicable laws, ordinances,
regulations or rules of any governmental agency or public authority. Tenant
shall keep the Improvements equipped with all safety appliances required by law,
ordinance or insurance on the Property, or any order or regulation of any public
authority because of Tenant's particular use of the Property. Tenant shall
procure all licenses and permits required for its use of the Property. Tenant
shall use the Property in strict accordance with all applicable ordinances,
rules, laws and regulations and shall comply with all requirements of all
governmental authorities now in force or which may hereafter be in force
pertaining to the use of the Property by Tenant, including, without limitation,
regulations applicable to noise, water, soil and air pollution, and making such
nonstructural alterations and additions thereto as may be required from time to
time by such laws, ordinances, rules, regulations and requirements of
governmental authorities or insurers of the Property (collectively,
"Requirements") because of Tenant's construction of improvements in or other
particular use of the Property. Any structural alterations or additions required
from time to time by applicable Requirements because of Tenant's construction of
improvements in the Initial Building or other particular use of the Property
shall, at Landlord's election, either (i) be made by Tenant, at Tenant's sole
cost and expense, in accordance with the procedures and standards set forth in
Section 11.1 for alterations by Tenant, or (ii) be made by Landlord at Tenant's
sole cost and expense, in which event Tenant shall pay to Landlord as additional
rent, within ten (10) days after demand by Landlord, an amount equal to all
costs incurred by Landlord in connection with such alterations or additions. The
judgment of any court, or the admission by Tenant in any proceeding against
Tenant, that Tenant has violated any law, statute, ordinance or governmental
rule, regulation or requirement shall be conclusive of such violation as between
Landlord and Tenant.
13.5 Liquidation Sales. Tenant shall not conduct or permit to be
conducted any auction, bankruptcy sale, liquidation sale, or going out of
business sale, in, upon or about the Property, whether said auction or sale be
voluntary, involuntary or pursuant to any assignment for the benefit of
creditors, or pursuant to any bankruptcy or other insolvency proceeding.
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13.6 Environmental Matters.
(a) For purposes of this Section, "hazardous substance" shall
mean the substances included within the definitions of the term "hazardous
substance" under (i) the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, 42 U.S.C. ss.ss. 9601 et seq., and the
regulations promulgated thereunder, as amended, (ii) the California
Carpenter-Presley-Tanner Hazardous Substance Account Act, California Health &
Safety Code ss.ss. 25300 et seq., and regulations promulgated thereunder, as
amended, (iii) the Hazardous Materials Release Response Plans and Inventory Act,
California Heath & Safety Code ss.ss. 25500 et seq., and regulations promulgated
thereunder, as amended, and (iv) petroleum; "hazardous waste" shall mean (i) any
waste listed as or meeting the identified characteristics of a "hazardous waste"
under the Resource Conservation and Recovery Act of 1976, 42 U.S.C. ss.ss. 6901
et seq., and regulations promulgated pursuant thereto, as amended (collectively,
"RCRA"), (ii) any waste meeting the identified characteristics of "hazardous
waste," "extremely hazardous waste" or "restricted hazardous waste" under the
California Hazardous Waste Control Law, California Health & Safety Code ss.ss.
25100 et seq., and regulations promulgated pursuant thereto, as amended
(collectively, the "CHWCL"), and/or (iii) any waste meeting the identified
characteristics of "medical waste" under California Health & Safety Code ss.ss.
25015-25027.8, and regulations promulgated thereunder, as amended; and
"hazardous waste facility" shall mean a hazardous waste facility as defined
under the CHWCL.
(b) Without limiting the generality of the obligations set
forth in Section 13.4 of this Lease:
(i) Tenant shall not cause or permit any hazardous
substance or hazardous waste to be brought upon, kept, stored or used in or
about the Property without the prior written consent of Landlord, which consent
shall not be unreasonably withheld, except that Tenant, in connection with its
permitted use of the Property as provided in Section 13.1, may keep, store and
use materials that constitute hazardous substances which are customary for such
permitted use, provided such hazardous substances are kept, stored and used in
quantities which are customary for such permitted use and are kept, stored and
used in full compliance with clauses (ii) and (iii) immediately below.
(ii) Tenant shall comply with all applicable laws,
rules, regulations, orders, permits, licenses and operating plans of any
governmental authority with respect to the receipt, use, handling, generation,
transportation, storage, treatment and/or disposal of hazardous substances or
wastes by Tenant or its agents or employees, and Tenant will provide Landlord
with copies of all permits, licenses, registrations and other similar documents
that authorize Tenant to conduct any such activities in connection with its
authorized use of the Property from time to time.
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(iii) Tenant shall not (A) operate on or about the
Property any facility required to be permitted or licensed as a hazardous waste
facility or for which interim status as such is required, nor (B) store any
hazardous wastes on or about the Property for ninety (90) days or more, nor (C)
conduct any other activities on or about the Property that could result in the
Property being deemed to be a "hazardous waste facility" (including, but not
limited to, any storage or treatment of hazardous substances or hazardous wastes
which could have such a result).
(iv) Tenant shall comply with all applicable laws,
rules, regulations, orders and permits relating to underground storage tanks
installed by Tenant or its agents or employees or at the request of Tenant
(including any installation, monitoring, maintenance, closure and/or removal of
such tanks) as such tanks are defined in California Health & Safety Code ss.
25281(x), including, without limitation, complying with California Health &
Safety Code ss.ss. 25280-25299.7 and the regulations promulgated thereunder, as
amended. Tenant shall furnish to Landlord copies of all registrations and
permits issued to or held by Tenant from time to time for any and all
underground storage tanks located on or under the Property.
(v) If applicable, Tenant shall provide Landlord in
writing the following information and/or documentation within fifteen (15) days
after the Rent Commencement Date, and shall update such information at least
annually, on or before each anniversary of the Rent Commencement Date, to
reflect any change in or addition to the required information and/or
documentation (provided, however, that in the case of the materials described in
subparagraphs (B), (C) and (E) below, Tenant shall not be required to deliver
copies of such materials to Landlord but shall maintain copies of such materials
to such extent and for such periods as may be required by applicable law and
shall permit Landlord or its representatives to inspect and copy such materials
during normal business hours at any time and from time to time upon reasonable
notice to Tenant):
(A) A list of all hazardous substances
and/or wastes that Tenant receives, uses, handles, generates, transports,
stores, treats or disposes of from time to time in connection with its
operations on the Property.
(B) All Material Safety Data Sheets
("MSDS's"), if any, required to be completed with respect to operations of
Tenant at the Property from time to time in accordance with Title 26, California
Code of Regulations ss. 8-5194 or 42 U.S.C. ss. 11021, or any amendments
thereto, and any Hazardous Materials Inventory Sheets that detail the MSDS's.
(C) All hazardous waste manifests (as
defined in Title 26, California Code of Regulations ss. 22-66481), if any, that
Tenant is required to complete from time to time in connection with its
operations at the Property.
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(D) A copy of any Hazardous Materials
Management Plan required from time to time with respect to Tenant's operations
at the Property, pursuant to California Health & Safety Code ss.ss. 25500 et
seq., and any regulations promulgated thereunder, as amended.
(E) Any Contingency Plans and Emergency
Procedures required of Tenant from time to time due to its operations in
accordance with Title 26, California Code of Regulations ss.ss. 22-67140 et
seq., and any amendments thereto, and any Training Programs and Records required
under Title 26, California Code of Regulations, ss. 22-67105, and any amendments
thereto.
(F) Copies of any biennial reports to be
furnished to the California Department of Health Services from time to time
relating to hazardous substances or wastes, pursuant to Title 26, California
Code of Regulations, ss. 22-66493, and any amendments thereto.
(G) Copies of all industrial wastewater
discharge permits issued to or held by Tenant from time to time in connection
with its operations on the Property.
(H) Copies of any other lists or inventories
of hazardous substances and/or wastes on or about the Property that Tenant is
otherwise required to prepare and file from time to time with any governmental
or regulatory authority.
(vi) Tenant shall secure Landlord's prior written
approval for any proposed receipt, storage, possession, use, transfer or
disposal of "radioactive materials" or "radiation," as such materials are
defined in Title 26, California Code of Regulations ss. 17-30100, and/or any
other materials possessing the characteristics of the materials so defined,
which approval Landlord may withhold in its sole and absolute discretion;
provided, that such approval shall not be required for any radioactive materials
for which Tenant has secured prior written approval of the Nuclear Regulatory
Commission and delivered to Landlord a copy of such approval. Tenant, in
connection with any such authorized receipt, storage, possession, use, transfer
or disposal of radioactive materials or radiation, shall:
(A) Comply with all federal, state and local
laws, rules, regulations, orders, licenses and permits issued to or applicable
to Tenant with respect to its business operations on the Property;
(B) Maintain, to such extent and for such
periods as may be required by applicable law, and permit Landlord and its
representatives to inspect during normal business hours at any time and from
time to time upon reasonable notice to Tenant, a list of all radioactive
materials or radiation received, stored, possessed, used, transferred or
disposed of by Tenant or in connection with the operation of Tenant's business
on the Property from time
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to time, to the extent not already disclosed through delivery of a copy of a
Nuclear Regulatory Commission approval with respect thereto as contemplated
above; and
(C) Maintain, to such extent and for such
periods as may be required by applicable law, and permit Landlord or its
representatives to inspect during normal business hours at any time and from
time to time upon reasonable notice to Tenant, all licenses, registration
materials, inspection reports, governmental orders and permits in connection
with the receipt, storage, possession, use, transfer or disposal of radioactive
materials or radiation by Tenant or in connection with the operation of Tenant's
business on the Property from time to time.
(vii) Tenant shall comply with any and all applicable
laws, rules, regulations and orders of any governmental authority with respect
to the release into the environment of any hazardous wastes or substances or
radiation or radioactive materials by Tenant or its agents or employees. Tenant
shall give Landlord immediate verbal notice of any unauthorized release of any
such hazardous wastes or substances or radiation or radioactive materials into
the environment, and shall follow such verbal notice with written notice to
Landlord of such release within twenty-four (24) hours of the time at which
Tenant became aware of such release.
(viii) Tenant shall indemnify, defend and hold
Landlord harmless from and against any and all claims, losses (including, but
not limited to, loss of rental income), damages, liabilities, costs, legal fees
and expenses of any sort arising out of or relating to (A) any failure by Tenant
to comply with any provisions of this paragraph 13.6(b), or (B) any receipt, use
handling, generation, transportation, storage, treatment, release and/or
disposal of any hazardous substance or waste or any radioactive material or
radiation on or about the Property as a proximate result of Tenant's use of the
Property or as a result of any intentional or negligent acts or omissions of
Tenant or of any agent, employee or invitee of Tenant.
(ix) Tenant shall cooperate with Landlord in
furnishing Landlord with complete information regarding Tenant's receipt,
handling, use, storage, transportation, generation, treatment and/or disposal of
any hazardous substances or wastes or radiation or radioactive materials. Upon
request, Tenant shall grant Landlord reasonable access at reasonable times to
the Property to inspect Tenant's receipt, handling, use, storage,
transportation, generation, treatment and/or disposal of hazardous substances or
wastes or radiation or radioactive materials, without being deemed guilty of any
disturbance of Tenant's use or possession and without being liable to Tenant in
any manner.
(x) Notwithstanding Landlord's rights of inspection
and review under this paragraph 13.6(b), Landlord shall have no obligation or
duty to so inspect or review, and no third party shall be entitled to rely on
Landlord to conduct any sort of inspection or review by reason of the provisions
of this paragraph 13.6(b).
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(xi) If Tenant receives, handles, uses, stores,
transports, generates, treats and/or disposes of any hazardous substances or
wastes or radiation or radioactive materials on or about the Property at any
time during the term of this Lease, then within thirty (30) days after the
termination or expiration of this Lease, Tenant at its sole cost and expense
shall obtain and deliver to Landlord an environmental study, performed by an
expert reasonably satisfactory to Landlord, evaluating the presence or absence
of hazardous substances and wastes, radiation and radioactive materials on and
about the Property. Such study shall be based on a reasonable and prudent level
of tests and investigations of the Property and surrounding portions of the
Center (if appropriate), which tests shall be conducted no earlier than the date
of termination or expiration of this Lease. Liability for any remedial actions
required or recommended on the basis of such study shall be allocated in
accordance with Sections 13.4, 13.6, 14.6 and other applicable provisions of
this Lease.
(c) Landlord shall indemnify, defend and hold Tenant harmless
from and against any and all claims, losses, damages, liabilities, costs, legal
fees and expenses of any sort arising out of or relating to (i) the presence on
the Property of any hazardous substances or wastes or radiation or radioactive
materials as of the Rent Commencement Date (other than as a result of any
intentional or negligent acts or omissions of Tenant or of any agent, employee
or invitee of Tenant), (ii) any unauthorized release into the environment
(including, but not limited to, the Property) of any hazardous substances or
wastes or radiation or radioactive materials to the extent such release results
from the negligence of or willful misconduct or omission by Landlord or its
agents or employees, and/or (iii) the presence on the Property of any hazardous
substances or wastes or radiation or radioactive materials arising after the
Rent Commencement Date from any cause or source other than as a result of any
intentional or negligent acts or omissions of Tenant or of any agent, employee
or invitee of Tenant.
(d) The provisions of this Section 13.6 shall survive the
termination of this Lease.
14. INSURANCE AND INDEMNITY
14.1 Insurance.
(a) Tenant shall procure and maintain in full force and effect
at all times during the term of this Lease, at Tenant's cost and expense,
commercial general liability insurance to protect against liability to the
public, or to any invitee of Tenant or Landlord, arising out of or related to
the use of or resulting from any accident occurring in, upon or about the
Property, with limits of liability of not less than (i) [...*...] for injury to
or death of one person, (ii) [...*...] for personal injury or death, per
occurrence, and (iii) [...*...] for property damage, or a combined single limit
of liability of not less than [...*...]. Such insurance shall
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*CONFIDENTIAL TREATMENT REQUESTED
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name Landlord, its general partners, its Managing Agent and any lender holding a
deed of trust on the Property from time to time (as designated in writing by
Landlord to Tenant from time to time) as additional insureds thereunder. The
amount of such insurance shall not be construed to limit any liability or
obligation of Tenant under this Lease. Tenant shall also procure and maintain in
full force and effect at all times during the term of this Lease, at Tenant's
cost and expense, products/completed operations coverage on terms and in amounts
(A) customary in Tenant's industry for companies engaged in the marketing of
products on a scale comparable to that in which Tenant is engaged from time to
time and (B) mutually satisfactory to Landlord and Tenant in their respective
reasonable discretion.
(b) Landlord shall procure and maintain in full force and
effect at all times during the term of this Lease, at Landlord's cost and
expense (but reimbursable as an Operating Expense under Section 9.2 hereof),
policies of property insurance providing protection against "all risk of direct
physical loss" (as defined by and detailed in the Insurance Service Office's
Commercial Property Program "Cause of Loss--Special Form [CP1030]" or its
equivalent) on the shell of the Initial Building and on the improvements in the
Common Areas of the Center, on a full replacement cost basis (with no
co-insurance or, if coverage without co-insurance is not reasonably available,
then on an "agreed amount" basis). Such insurance may include earthquake
coverage to the extent Landlord in its discretion elects to carry such coverage,
and shall have such commercially reasonable deductibles and other terms as
Landlord in its discretion determines to be appropriate. Landlord shall have no
obligation to carry property damage insurance for any alterations, additions or
improvements installed by Tenant in or about the Initial Building.
(c) Tenant shall procure and maintain in full force and effect
at all times during the term of this Lease, at Tenant's cost and expense,
policies of property insurance providing protection against "all risk of direct
physical loss" (as defined by and detailed in the Insurance Service Office's
Commercial Property Program "Cause of Loss--Special Form [CP1030]" or its
equivalent) on the Tenant Improvements constructed pursuant to the Workletter
and on all other alterations, additions and improvements installed by Tenant
from time to time in or about the Initial Building, on a full replacement cost
basis (with no co-insurance or, if coverage without co-insurance is not
reasonably available, then on an "agreed amount" basis). Such insurance may have
such commercially reasonable deductibles and other terms as Tenant in its
discretion determines to be appropriate, and shall name both Tenant and Landlord
as insureds as their interests may appear.
(d) During the course of construction of the improvements
being constructed by Landlord and Tenant under Section 5.1 and Exhibit C,
Landlord and Tenant respectively shall each procure and maintain in full force
and effect, at its respective sole cost and expense, policies of builder's risk
insurance on the improvements respectively being constructed by it, in such
amounts and with such commercially reasonable deductibles and other terms as
Landlord in its discretion determines to be appropriate with respect to the
insurance to be maintained by
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Landlord, and in such amounts and with such commercially reasonable deductibles
and other terms as Landlord and Tenant may mutually and reasonably determine to
be appropriate with respect to the insurance to be maintained by Tenant.
14.2 Quality Of Policies And Certificates. All policies of insurance
required to be maintained by Tenant hereunder shall be issued by responsible
insurers and shall be written as primary policies not contributing with and not
in excess of any coverage that Landlord may carry. Tenant shall deliver to
Landlord copies of policies or certificates of insurance showing that said
policies are in effect. The coverage provided by such policies shall include the
clause or endorsement referred to in Section 14.4. If Tenant fails to acquire,
maintain or renew any insurance required to be maintained by it under this
Article 14 or to pay the premium therefor, and such failure continues for ten
(10) days after written notice from Landlord to Tenant specifying such failure,
then Landlord, at its option and in addition to its other remedies, but without
obligation so to do, may procure such insurance, and any sums expended by it to
procure any such insurance shall be repaid upon demand, with interest as
provided in Section 3.2 hereof. Tenant shall obtain written undertakings from
each insurer under policies required to be maintained by it to notify all
insureds thereunder at least thirty (30) days prior to cancellation of coverage.
14.3 Workers' Compensation. Tenant shall maintain in full force and
effect during the term of this Lease workers' compensation insurance in at least
the minimum amounts required by law, covering all of Tenant's employees working
on the Property.
14.4 Waiver Of Subrogation. To the extent permitted by law and without
affecting the coverage provided by insurance required to be maintained
hereunder, Landlord and Tenant each waive any right to recover against the other
with respect to (i) damage to property, (ii) damage to the Property or any part
thereof, or (iii) claims arising by reason of any of the foregoing, but only to
the extent that any of the foregoing damages and claims under clauses (i) -
(iii) hereof are covered, and only to the extent of such coverage, by casualty
insurance actually carried or required to be carried hereunder by either
Landlord or Tenant. This provision is intended to waive fully, and for the
benefit of each party, any rights and claims which might give rise to a right of
subrogation in any insurance carrier. Each party shall procure a clause or
endorsement on any casualty insurance policy denying to the insurer rights of
subrogation against the other party to the extent rights have been waived by the
insured prior to the occurrence of injury or loss. Coverage provided by
insurance maintained by Tenant shall not be limited, reduced or diminished by
virtue of the subrogation waiver herein contained.
14.5 Increase In Premiums. Tenant shall do all acts and pay all
expenses necessary to insure that the Property is not used for purposes
prohibited by any applicable fire insurance, and that Tenant's use of the
Property complies with all requirements necessary to obtain any such insurance.
If Tenant uses or permits the Property to be used in a manner which increases
the existing rate of any insurance carried by Landlord on the Center and such
use continues for
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longer than a reasonable period specified in any written notice from Landlord to
Tenant identifying the rate increase and the factors causing the same, then
Tenant shall pay the amount of the increase in premium caused thereby, and
Landlord's costs of obtaining other replacement insurance policies, including
any increase in premium, within ten (10) days after demand therefor by Landlord.
14.6 Indemnification.
(a) Tenant shall indemnify, defend and hold Landlord and its
partners, shareholders, officers, directors, agents and employees harmless from
any and all liability for injury to or death of any person, or loss of or damage
to the property of any person, and all actions, claims, demands, costs
(including, without limitation, reasonable attorneys' fees), damages or expenses
of any kind arising therefrom which may be brought or made against Landlord or
which Landlord may pay or incur by reason of the use, occupancy and enjoyment of
the Property by Tenant or any invitees, sublessees, licensees, assignees,
employees, agents or contractors of Tenant or holding under Tenant (including,
but not limited to, any such matters arising out of or in connection with any
early entry upon the Property by Tenant pursuant to Section 2.2 hereof) from any
cause whatsoever other than negligence or willful misconduct or omission by
Landlord, its agents or employees. Landlord and its partners, shareholders,
officers, directors, agents and employees shall not be liable for, and Tenant
hereby waives all claims against such persons for, damages to goods, wares and
merchandise in or upon the Property, or for injuries to Tenant, its agents or
third persons in or upon the Property, from any cause whatsoever other than
negligence or willful misconduct or omission by Landlord, its agents or
employees. Tenant shall give prompt notice to Landlord of any casualty or
accident in, on or about the Property.
(b) Landlord shall indemnify, defend and hold Tenant and its
partners, shareholders, officers, directors, agents and employees harmless from
any and all liability for injury to or death of any person, or loss of or damage
to the property of any person, and all actions, claims, demands, costs
(including, without limitation, reasonable attorneys' fees), damages or expenses
of any kind arising therefrom which may be brought or made against Tenant or
which Tenant may pay or incur, to the extent such liabilities or other matters
arise in, on or about the Property by reason of any negligence or willful
misconduct or omission by Landlord, its agents or employees.
14.7 Blanket Policy. Any policy required to be maintained hereunder may
be maintained under a so-called "blanket policy" insuring other parties and
other locations so long as the amount of insurance required to be provided
hereunder is not thereby diminished.
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15. SUBLEASE AND ASSIGNMENT
15.1 Assignment And Sublease Of Property. Except in the case of a
Permitted Transfer, Tenant shall not have the right or power to assign its
interest in this Lease, or make any sublease of the Initial Building or any
portion thereof, nor shall any interest of Tenant under this Lease be assignable
involuntarily or by operation of law, without on each occasion obtaining the
prior written consent of Landlord, which consent shall not be unreasonably
withheld or delayed. Any purported sublease or assignment of Tenant's interest
in this Lease requiring but not having received Landlord's consent thereto (to
the extent such consent is required hereunder) shall be void. Except in the case
of a Permitted Transfer, any dissolution, consolidation, merger or other
reorganization of Tenant, or any sale or transfer of substantially all of the
stock or assets of Tenant in a single transaction or series of related
transactions, shall be deemed to be an assignment hereunder and shall be void
without the prior written consent of Landlord as required above. Notwithstanding
the foregoing, Tenant shall have the right to assign this Lease or sublet the
Initial Building, or any portion thereof, without Landlord's consent (but with
prior or concurrent written notice by Tenant to Landlord), to any Affiliate of
Tenant, or to any entity which results from a merger or consolidation with
Tenant, or to any entity which acquires substantially all or substantially all
of the stock or assets of Tenant, as a going concern (hereinafter each a
"Permitted Transfer"). For purposes of the preceding sentence, an "Affiliate" of
Tenant shall mean any entity in which Tenant owns at least a twenty percent
(20%) equity interest, any entity which owns at least a twenty percent (20%)
equity interest in Tenant, and/or any entity which is related to Tenant by a
chain of ownership interests involving at least a twenty percent (20%) equity
interest at each level in the chain. Landlord shall have no right to terminate
this Lease in connection with, and shall have no right to any sums or other
economic consideration resulting from, any Permitted Transfer. Except as
expressly set forth in this Section 15.1, however, the provisions of Section
15.2 shall remain applicable to any Permitted Transfer and the transferee under
such Permitted Transfer shall be and remain subject to all of the terms and
provisions of this Lease.
15.2 Rights Of Landlord.
(a) Consent by Landlord to one or more assignments of this
Lease, or to one or more sublettings of the Initial Building or any portion
thereof, or collection of rent by Landlord from any assignee or sublessee, shall
not operate to exhaust Landlord's rights under this Article 15, nor constitute
consent to any subsequent assignment or subletting. No assignment of Tenant's
interest in this Lease and no sublease shall relieve Tenant of its obligations
hereunder, notwithstanding any waiver or extension of time granted by Landlord
to any assignee or sublessee, or the failure of Landlord to assert its rights
against any assignee or sublessee, and regardless of whether Landlord's consent
thereto is given or required to be given hereunder. In the event of a default by
any assignee, sublessee or other successor of Tenant in the performance of any
of the terms or obligations of Tenant under this Lease, Landlord may proceed
directly against Tenant without the necessity of exhausting remedies against any
such
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assignee, sublessee or other successor. In addition, Tenant immediately and
irrevocably assigns to Landlord, as security for Tenant's obligations under this
Lease, all rent from any subletting of all or any part of the Initial Building
as permitted under this Lease, and Landlord, as Tenant's assignee and as
attorney-in-fact for Tenant, or any receiver for Tenant appointed on Landlord's
application, may collect such rent and apply it toward Tenant's obligations
under this Lease; except that, until the occurrence of an act of default by
Tenant which continues beyond any applicable cure period, Tenant shall have the
right to collect such rent.
(b) Upon any assignment of Tenant's interest in this Lease for
which Landlord's consent is required under Section 15.1 hereof, Tenant shall pay
to Landlord, within ten (10) days after receipt thereof by Tenant from time to
time, [...*...] of all cash sums and other economic considerations received by
Tenant in connection with or as a result of such assignment, after first
deducting therefrom (i) the unamortized cost of any leasehold improvements
previously made in the Initial Building and paid for by Tenant, (ii) any costs
incurred by Tenant for leasehold improvements (including, but not limited to,
third-party architectural and space planning costs) in the Initial Building in
connection with such assignment, and (iii) any real estate commissions and/or
attorneys' fees incurred by Tenant in connection with such assignment. Nothing
in this paragraph 15.2(b) shall entitle Landlord to receive any portion of any
consideration received by Tenant in connection with any sale of its personal
property.
(c) Upon any sublease of all or any portion of the Initial
Building for which Landlord's consent is required under Section 15.1 hereof,
Tenant shall pay to Landlord, within ten (10) days after receipt thereof by
Tenant from time to time, [...*...] of all cash sums and other economic
considerations received by Tenant in connection with or as a result of such
sublease, after first deducting therefrom (i) the rental due hereunder for the
corresponding period, prorated (on the basis of the average per-square-foot cost
paid by Tenant for the entire Initial Building for the applicable period under
this Lease) to reflect the size of the subleased portion of the Initial
Building, (ii) any costs incurred by Tenant for leasehold improvements in the
subleased portion of the Initial Building (including, but not limited to,
third-party architectural and space planning costs) for the specific benefit of
the sublessee in connection with such sublease, amortized over the term of the
sublease, (iii) any real estate commissions and/or attorneys' fees incurred by
Tenant in connection with such sublease, amortized over the term of such
sublease, and (iv) the unamortized cost of any leasehold improvements previously
made and paid for by Tenant with respect to the subleased portion of the Initial
Building. Nothing in this paragraph 15.2(c) shall entitle Landlord to receive
any portion of any consideration received by Tenant in connection with any sale
of its personal property.
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16. RIGHT OF ENTRY AND QUIET ENJOYMENT
16.1 Right Of Entry. Landlord and its authorized representatives shall
have the right to enter the Initial Building at any time during the term of this
Lease during normal business hours and upon not less than twenty-four (24) hours
prior notice, except in the case of emergency (in which event no notice shall be
required and entry may be made at any time), for the purpose of inspecting and
determining the condition of the Initial Building or for any other proper
purpose including, without limitation, to make repairs, replacements or
improvements which Landlord may deem necessary, to show the Initial Building to
prospective purchasers, to show the Initial Building to prospective tenants (but
only during the final year of the term of this Lease), and to post notices of
nonresponsibility. Landlord shall not be liable for inconvenience, annoyance,
disturbance, loss of business, quiet enjoyment or other damage or loss to Tenant
by reason of making any repairs or performing any work upon the Initial Building
or the Property or by reason of erecting or maintaining any protective
barricades in connection with any such work, and the obligations of Tenant under
this Lease shall not thereby be affected in any manner whatsoever, provided,
however, Landlord shall use reasonable efforts to minimize the inconvenience to
Tenant's normal business operations caused thereby.
16.2 Quiet Enjoyment. Landlord covenants that Tenant, upon paying the
rent and performing its obligations hereunder and subject to all the terms and
conditions of this Lease, shall peacefully and quietly have, hold and enjoy the
Initial Building and the Property throughout the term of this Lease, or until
this Lease is terminated as provided by this Lease.
17. CASUALTY AND TAKING
17.1 Damage or Destruction.
(a) If the Initial Building, or the Common Areas of the
Property, are damaged or destroyed in whole or in part under circumstances in
which (i) repair and restoration is permitted under applicable governmental
laws, regulations and building codes then in effect and (ii) repair and
restoration reasonably can be completed within a period of one (1) year (or, in
the case of an occurrence during the last year of the term of this Lease, within
a period of sixty (60) days) following the date of the occurrence, then Landlord
shall commence and complete, with all due diligence and as promptly as is
reasonably practicable under the conditions then existing, all such repair and
restoration as may be required to return the Common Areas of the Property and
the Improvements previously constructed by Landlord under Section 5.1 and
Exhibit C to the condition existing immediately prior to the occurrence. In the
event of damage or destruction the repair of which is not permitted under
applicable governmental laws, regulations and building codes then in effect, if
such damage or destruction (despite being corrected to the extent then permitted
under applicable governmental laws, regulations and building codes) would still
materially impair Tenant's ability to conduct its business in the Initial
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Building, then either party may terminate this Lease as of the date of the
occurrence by giving written notice to the other within thirty (30) days after
the date of the occurrence; if neither party timely elects such termination, or
if such damage or destruction does not materially impair Tenant's ability to
conduct its business in the Initial Building, then this Lease shall continue in
full force and effect, except that there shall be an equitable adjustment in
monthly minimum rental and of Tenant's Operating Cost Share of Operating
Expenses, based upon the extent to which Tenant's ability to conduct its
business in the Initial Building is impaired, and Landlord shall restore the
Common Areas of the Property and the Improvements previously constructed by
Landlord under Section 5.1 and Exhibit C to a complete architectural whole and
to a functional condition. In the event of damage or destruction which cannot
reasonably be repaired within one (1) year (or, in the case of an occurrence
during the last year of the term of this Lease, within a period of sixty (60)
days) following the date of the occurrence, then either Landlord or Tenant, at
its election, may terminate this Lease as of the date of the occurrence by
giving written notice to the other within thirty (30) days after the date of the
occurrence; if neither party timely elects such termination, then this Lease
shall continue in full force and effect and Landlord shall repair and restore
the Property in accordance with, and to the extent provided in, the first
sentence of this Section 17.1.
(b) Landlord's obligations pursuant to Section 17.1(a) are
subject to the following limitations:
(i) If the occurrence results from an insured
casualty, Landlord's rebuilding obligation shall not exceed the amount of
insurance proceeds received by Landlord from insurers by reason of such
occurrence, plus the amount of any applicable deductible (provided that Landlord
shall be obligated to use its best efforts to recover any available proceeds
from its then existing insurance), and, if such proceeds are insufficient,
either party may terminate the Lease unless the other party promptly elects and
agrees, in writing, to contribute the amount of the shortfall; and
(ii) If the occurrence results from an uninsured
casualty, Landlord shall be required to repair and restore the Initial Building
and Common Areas of the Property (as contemplated in Section 17.1(a)) to the
condition existing immediately prior to the occurrence of such casualty (but
only to the extent of the improvements previously constructed or installed by
Landlord pursuant to this Lease), provided that Landlord's obligation to repair
and restore shall not exceed an amount equal to [...*...] of the aggregate
replacement cost of the Common Area improvements on the Property and the
Improvements originally constructed by Landlord under Section 5.1 and Exhibit C;
if the replacement cost as to Landlord exceeds such amount, then Landlord may
terminate this Lease unless Tenant promptly elects and agrees, in writing, to
contribute the amount of the shortfall.
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(c) From and after the date of an occurrence resulting in
damage to or destruction of the Initial Building or of the Common Areas of the
Property, and continuing until repair and restoration thereof are completed,
there shall be an equitable abatement of minimum rental and of Tenant's
Operating Cost Share of Operating Expenses based upon the degree to which
Tenant's ability to conduct its business in the Initial Building is impaired.
17.2 Condemnation.
(a) If during the term of this Lease the Property or the
Improvements, or any substantial part of either, is taken by eminent domain or
by reason of any public improvement or condemnation proceeding, or in any manner
by exercise of the right of eminent domain (including any transfer in avoidance
of an exercise of the power of eminent domain), or receives irreparable damage
by reason of anything lawfully done under color of public or other authority,
then (i) this Lease shall terminate as to the entire Property at Landlord's
election by written notice given to Tenant within sixty (60) days after the
taking has occurred, and (ii) this Lease shall terminate as to the entire
Property at Tenant's election, by written notice given to Landlord within thirty
(30) days after the nature and extent of the taking have been finally
determined, if the portion of the Property taken is of such extent and nature as
substantially to handicap, impede or permanently impair Tenant's use of the
balance of the Property. If Tenant elects to terminate this Lease, Tenant shall
also notify Landlord of the date of termination, which date shall not be earlier
than thirty (30) days nor later than ninety (90) days after Tenant has notified
Landlord of Tenant's election to terminate, except that this Lease shall
terminate on the date of taking if such date falls on any date before the date
of termination designated by Tenant. If neither party elects to terminate this
Lease as hereinabove provided, this Lease shall continue in full force and
effect (except that there shall be an equitable abatement of minimum rental and
of Tenant's Operating Cost Share of Operating Expenses based upon the degree to
which Tenant's ability to conduct its business in the Initial Building is
impaired) and Landlord shall restore the Common Areas of the Property and the
Improvements originally constructed by Landlord under Section 5.1 and Exhibit C
to a complete architectural whole and a functional condition and as nearly as
reasonably possible to the condition existing before the taking. In connection
with any such restoration, each party shall use its respective best efforts
(including, without limitation, any necessary negotiation or intercession with
its respective lender, if any) to ensure that any severance damages or other
condemnation awards intended to provide compensation for rebuilding or
restoration costs are promptly collected and made available to Landlord, subject
only to such payment controls as either party's lender may reasonably require in
order to ensure the proper application of such proceeds toward the restoration
of the Improvements. Each party waives the provisions of Code of Civil Procedure
Section 1265.130, allowing either party to petition the Superior Court to
terminate this Lease in the event of a partial condemnation of the Property.
(b) Notwithstanding any of the provisions of Section 17.2(a),
Landlord's obligations to repair and restore pursuant to Section 17.2(a) shall
not exceed, net of any
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condemnation awards or other proceeds available for and allocable to such
restoration as contemplated in Section 17.2(a), an amount equal to [...*...] of
the aggregate replacement cost of the Common Area improvements on the Property
and of the Improvements originally constructed by Landlord under Section 5.1 and
Exhibit C; if the replacement cost as to Landlord exceeds such amount, then
Landlord may terminate this Lease unless Tenant promptly elects and agrees, in
writing, to contribute the amount of the shortfall.
17.3 Reservation Of Compensation. Landlord reserves, and Tenant waives
and assigns to Landlord, all rights to any award or compensation for damage to
the Improvements, the Property and the leasehold estate created hereby, accruing
by reason of any taking in any public improvement, condemnation or eminent
domain proceeding or in any other manner by exercise of the right of eminent
domain or of anything lawfully done by public authority, except that Tenant
shall be entitled to any and all compensation or damages paid for or on account
of Tenant's moving expenses, trade fixtures, equipment and any leasehold
improvements on the Property installed by Tenant at its own expense, but only to
the extent Tenant would have been entitled to remove such items at the
expiration of the term of this Lease and then only to the extent of the then
remaining unamortized value of such improvements computed on a straight-line
basis over the term of this Lease. Tenant covenants to deliver such further
assignments of the foregoing as Landlord may from time to time request.
17.4 Restoration Of Improvements. In connection with any repair or
restoration of Improvements by either party following a casualty or taking as
hereinabove set forth, the party responsible for such repair or restoration
shall, to the extent possible, return such Improvements to a condition
substantially equal to that which existed immediately prior to the casualty or
taking. To the extent such party wishes to make material modifications to such
Improvements, such modifications shall be subject to the prior written approval
of the other party (not to be unreasonably withheld or delayed), except that no
such approval shall be required for modifications that are required by
applicable governmental authorities as a condition of the repair or restoration,
unless such required modifications would impair or impede Tenant's conduct of
its business in the Initial Building (in which case any such modifications in
Landlord's work shall require Tenant's consent, not unreasonably withheld or
delayed) or would materially and adversely affect the exterior appearance, the
structural integrity or the mechanical or other operating systems of the Initial
Building (in which case any such modifications in Tenant's work shall require
Landlord's consent, not unreasonably withheld or delayed).
18. DEFAULT
18.1 Events Of Default. The occurrence of any of the following shall
constitute an event of default on the part of Tenant:
(a) [Omitted.]
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(b) Nonpayment. Failure to pay, when due, any amount payable
to Landlord hereunder, such failure continuing for a period of five (5) business
days after written notice of such failure; provided, however, that any such
notice shall be in lieu of, and not in addition to, any notice required under
California Code of Civil Procedure Section 1161 et seq., as amended from time to
time;
(c) Other Obligations. Failure to perform any obligation,
agreement or covenant under this Lease other than those matters specified in
subsection (b) hereof, such failure continuing for thirty (30) days after
written notice of such failure; provided, however, that if such failure is
curable in nature but cannot reasonably be cured within such 30-day period, then
Tenant shall not be in default if, and so long as, Tenant promptly (and in all
events within such 30-day period) commences such cure and thereafter diligently
pursues such cure to completion; and provided further, however, that any such
notice shall be in lieu of, and not in addition to, any notice required under
California Code of Civil Procedure Section 1161 et seq., as amended from time to
time;
(d) General Assignment. A general assignment by Tenant for the
benefit of creditors;
(e) Bankruptcy. The filing of any voluntary petition in
bankruptcy by Tenant, or the filing of an involuntary petition by Tenant's
creditors, which involuntary petition remains undischarged for a period of
thirty (30) days. In the event that under applicable law the trustee in
bankruptcy or Tenant has the right to affirm this Lease and continue to perform
the obligations of Tenant hereunder, such trustee or Tenant shall, in such time
period as may be permitted by the bankruptcy court having jurisdiction, cure all
defaults of Tenant hereunder outstanding as of the date of the affirmance of
this Lease and provide to Landlord such adequate assurances as may be necessary
to ensure Landlord of the continued performance of Tenant's obligations under
this Lease. Specifically, but without limiting the generality of the foregoing,
such adequate assurances must include assurances that the Property continues to
be operated only for the use permitted hereunder. The provisions hereof are to
assure that the basic understandings between Landlord and Tenant with respect to
Tenant's use of the Property and the benefits to Landlord therefrom are
preserved, consistent with the purpose and intent of applicable bankruptcy laws;
(f) Receivership. The employment of a receiver appointed by
court order to take possession of substantially all of Tenant's assets or the
Property, if such receivership remains undissolved for a period of thirty (30)
days;
(g) Attachment. The attachment, execution or other judicial
seizure of all or substantially all of Tenant's assets or the Property, if such
attachment or other seizure remains undismissed or undischarged for a period of
thirty (30) days after the levy thereof; or
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(h) Insolvency. The admission by Tenant in writing of its
inability to pay its debts as they become due, the filing by Tenant of a
petition seeking any reorganization or arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any present or future statute,
law or regulation, the filing by Tenant of an answer admitting or failing timely
to contest a material allegation of a petition filed against Tenant in any such
proceeding or, if within thirty (30) days after the commencement of any
proceeding against Tenant seeking any reorganization or arrangement,
composition, readjustment, liquidation, dissolution or similar relief under any
present or future statute, law or regulation, such proceeding shall not have
been dismissed.
18.2 Remedies Upon Tenant's Default.
(a) Upon the occurrence of any event of default described in
Section 18.1 hereof, Landlord, in addition to and without prejudice to any other
rights or remedies it may have, shall have the immediate right to re-enter the
Property or any part thereof and repossess the same, expelling and removing
therefrom all persons and property (which property may be stored in a public
warehouse or elsewhere at the cost and risk of and for the account of Tenant),
using such force as may be necessary to do so (as to which Tenant hereby waives
any claim for loss or damage that may thereby occur). In addition to or in lieu
of such re-entry, and without prejudice to any other rights or remedies it may
have, Landlord shall have the right either (i) to terminate this Lease and
recover from Tenant all damages incurred by Landlord as a result of Tenant's
default, as hereinafter provided, or (ii) to continue this Lease in effect and
recover rent and other charges and amounts as they become due.
(b) Even if Tenant has breached this Lease, this Lease shall
continue in effect for so long as Landlord does not terminate Tenant's right to
possession under subsection (a) hereof and Landlord may enforce all of its
rights and remedies under this Lease, including the right to recover rent as it
becomes due, and Landlord, without terminating this Lease, may exercise all of
the rights and remedies of a lessor under California Civil Code Section 1951.4
(lessor may continue lease in effect after lessee's breach and abandonment and
recover rent as it becomes due, if lessee has right to sublet or assign, subject
only to reasonable limitations), or any successor Code section. Acts of
maintenance, preservation or efforts to relet the Property or the appointment of
a receiver upon application of Landlord to protect Landlord's interests under
this Lease shall not constitute a termination of Tenant's right to possession.
(c) If Landlord terminates this Lease pursuant to this Section
18.2, Landlord shall have all of the rights and remedies of a landlord provided
by Section 1951.2 of the Civil Code of the State of California, or any successor
Code section, which remedies include Landlord's right to recover from Tenant (i)
the worth at the time of award of the unpaid 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 rent and additional rent which would have been
earned after termination until the time of award exceeds the amount of such
rental loss that
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Tenant proves could have been reasonably avoided, (iii) the worth at the time of
award of the amount by which the unpaid 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, and (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 therefrom, including, but not limited
to, the cost of recovering possession of the Property, expenses of reletting,
including necessary repair, renovation and alteration of the Initial Building,
reasonable attorneys' fees, and other reasonable costs. The "worth at the time
of award" of the amounts referred to in clauses (i) and (ii) above shall be
computed by allowing interest at [...*...] per annum from the date such amounts
accrued to Landlord. The "worth at the time of award" of the amounts referred to
in clause (iii) above shall be computed by discounting such amount at [...*...]
above the discount rate of the Federal Reserve Bank of San Francisco at the time
of award.
18.3 Remedies Cumulative. All rights, privileges and elections or
remedies of Landlord contained in this Article 18 are cumulative and not
alternative to the extent permitted by law and except as otherwise provided
herein.
19. SUBORDINATION, ATTORNMENT AND SALE
19.1 Subordination To Mortgage. This Lease, and any sublease entered
into by Tenant under the provisions of this Lease, shall be subject and
subordinate to any ground lease, mortgage, deed of trust, sale/leaseback
transaction or any other hypothecation for security now or hereafter placed upon
the Initial Building, the Property, the Center, or any of them, and the rights
of any assignee of Landlord or of any ground lessor, mortgagee, trustee,
beneficiary or leaseback lessor under any of the foregoing, and to any and all
advances made on the security thereof and to all renewals, modifications,
consolidations, replacements and extensions thereof; provided, however, that
such subordination in the case of any future ground lease, mortgage, deed of
trust, sale/leaseback transaction or any other hypothecation for security placed
upon the Initial Building, the Property, the Center, or any of them shall be
conditioned on Tenant's receipt from the ground lessor, mortgagee, trustee,
beneficiary or leaseback lessor of a Non-Disturbance Agreement in a form
reasonably acceptable to Tenant (i) confirming that so long as Tenant is not in
material default hereunder beyond any applicable cure period (for which purpose
the occurrence of any event of default under Section 18.1 hereof shall be deemed
to be "material"), Tenant's rights hereunder shall not be disturbed by such
person or entity and (ii) agreeing that the benefit of such Non-Disturbance
Agreement shall be transferable to any transferee under a Permitted Transfer and
to any other assignee or subtenant that is acceptable to the ground lessor,
mortgagee, trustee, beneficiary or leaseback lessor at the time of transfer.
Moreover, Tenant's obligations under this Lease shall be conditioned on Tenant's
receipt within thirty (30) days after mutual execution of this Lease, from any
ground lessor, mortgagee,
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*CONFIDENTIAL TREATMENT REQUESTED
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trustee, beneficiary or leaseback lessor currently owning or holding a security
interest in the Property, of a Non-Disturbance Agreement in a form reasonably
acceptable to Tenant confirming (i) that so long as Tenant is not in material
default hereunder beyond any applicable cure period (for which purpose the
occurrence of any event of default under Section 18.1 hereof shall be deemed to
be "material"), Tenant's rights hereunder shall not be disturbed by such person
or entity and (ii) agreeing that the benefit of such Non-Disturbance Agreement
shall be transferable to any transferee under a Permitted Transfer and to any
other assignee or subtenant that is acceptable to the ground lessor, mortgagee,
trustee, beneficiary or leaseback lessor at the time of transfer. If any
mortgagee, trustee, beneficiary, ground lessor, sale/leaseback lessor or
assignee elects to have this Lease be an encumbrance upon the Property prior to
the lien of its mortgage, deed of trust, ground lease or leaseback lease or
other security arrangement and gives notice thereof to Tenant, this Lease shall
be deemed prior thereto, whether this Lease is dated prior or subsequent to the
date thereof or the date of recording thereof. Tenant, and any sublessee, shall
execute such documents as may reasonably be requested by any mortgagee, trustee,
beneficiary, ground lessor, sale/leaseback lessor or assignee to evidence the
subordination herein set forth, subject to the conditions set forth above, or to
make this Lease prior to the lien of any mortgage, deed of trust, ground lease,
leaseback lease or other security arrangement, as the case may be. Upon any
default by Landlord in the performance of its obligations under any mortgage,
deed of trust, ground lease, leaseback lease or assignment, Tenant (and any
sublessee) shall, notwithstanding any subordination hereunder, attorn to the
mortgagee, trustee, beneficiary, ground lessor, leaseback lessor or assignee
thereunder upon demand and become the tenant of the successor in interest to
Landlord, at the option of such successor in interest, and shall execute and
deliver any instrument or instruments confirming the attornment herein provided
for.
19.2 Sale Of Landlord's Interest. Upon sale, transfer or assignment of
Landlord's entire interest in the Initial Building and the Property, Landlord
shall be relieved of its obligations hereunder with respect to liabilities
accruing from and after the date of such sale, transfer or assignment.
19.3 Estoppel Certificates. Landlord or Tenant (the "responding
party"), as applicable, shall at any time and from time to time, within ten (10)
days after written request by the other party (the "requesting party"), execute,
acknowledge and deliver to the requesting party a certificate in writing
stating: (i) that this Lease is unmodified and in full force and effect, or if
there have been any modifications, that this Lease is in full force and effect
as modified and stating the date and the nature of each modification; (ii) the
date to which rental and all other sums payable hereunder have been paid; (iii)
that the requesting party is not in default in the performance of any of its
obligations under this Lease, that the responding party has given no notice of
default to the requesting party and that no event has occurred which, but for
the expiration of the applicable time period, would constitute an event of
default hereunder, or if the requesting party alleges that any such default,
notice or event has occurred, specifying the same in reasonable detail; and (iv)
such other matters as may reasonably be requested by the
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requesting party or any institutional lender, mortgagee, trustee, beneficiary,
ground lessor, sale/leaseback lessor, prospective purchaser of the Property, or
prospective sublessee or assignee of this Lease. Any such certificate provided
under this Section 19.3 may be relied upon by any lender, mortgagee, trustee,
beneficiary, assignee or successor in interest to Landlord or Tenant, by any
prospective purchaser, by any purchaser on foreclosure or sale, by any grantee
under a deed in lieu of foreclosure of any mortgage or deed of trust on the
Property, by any subtenant or assignee, or by any other third party. Failure to
execute and return within the required time any estoppel certificate requested
hereunder, if such failure continues for five (5) days after a second written
request by the requesting party for such estoppel certificate, shall be deemed
to be an admission of the truth of the matters set forth in the form of
certificate submitted by the requesting party for execution.
19.4 Subordination to CC&R's. This Lease, any permitted sublease
entered into by Tenant under the provisions of this Lease, and the interests in
real property conveyed hereby and thereby shall be subject and subordinate (a)
to any declarations of covenants, conditions and restrictions affecting the
Property or the Center from time to time, provided that the terms of such
declarations are reasonable, do not materially impair Tenant's ability to
conduct the uses permitted hereunder on the Property, and do not discriminate
against Tenant relative to other similarly situated tenants occupying portions
of the Center, (b) to the Declaration of Covenants, Conditions and Restrictions
for Pointe Grand Business Park dated November 4, 1991 and recorded on February
25, 1992 as Instrument No. 92025214, Official Records of San Mateo County, as
amended from time to time (the "Master Declaration"), the provisions of which
Master Declaration are an integral part of this Lease, (c) to the Declaration of
Covenants, Conditions and Restrictions dated November 23, 1987 and recorded on
November 24, 1987 as Instrument No. 87177987, Official Records of San Mateo
County, which declaration imposes certain covenants, conditions and restrictions
on the Property, and (d) to the Environmental Restriction and Covenant (Pointe
Grand) dated as of April 16, 1997 and recorded on April 16, 1997 as Instrument
No. 97-043682, Official Records of San Mateo County, which declaration imposes
certain covenants, conditions and restrictions on the Center. Tenant agrees to
execute, upon request by Landlord, any documents reasonably required from time
to time to evidence such subordination.
19.5 Mortgagee Protection. If, following a default by Landlord under
any mortgage, deed of trust, ground lease, leaseback lease or other security
arrangement covering the Initial Building, the Property, the Center, or any of
them, the Initial Building, the Property and/or the Center, as applicable, is
acquired by the mortgagee, beneficiary, master lessor or other secured party, or
by any other successor owner, pursuant to a foreclosure, trustee's sale,
sheriff's sale, lease termination or other similar procedure (or deed in lieu
thereof), then any such person or entity so acquiring the Initial Building, the
Property and/or the Center shall not be:
(a) liable for any act or omission of a prior landlord or
owner of the Property (including, but not limited to, Landlord);
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(b) subject to any offsets or defenses that Tenant may have
against any prior landlord or owner of the Property and/or the Center
(including, but not limited to, Landlord);
(c) bound by any rent or additional rent that Tenant may have
paid in advance to any prior landlord or owner of the Property and/or the Center
(including, but not limited to, Landlord) for a period in excess of one month,
or by any security deposit, cleaning deposit or other prepaid charge that Tenant
may have paid in advance to any prior landlord or owner (including, but not
limited to, Landlord), except to the extent such deposit or prepaid amount has
been expressly turned over to or credited to the successor owner thus acquiring
the Property and/or the Center, as applicable;
(d) liable for any warranties or representations of any nature
whatsoever, whether pursuant to this Lease or otherwise, by any prior landlord
or owner of the Property and/or the Center (including, but not limited to,
Landlord) with respect to the use, construction, zoning, compliance with laws,
title, habitability, fitness for purpose or possession, or physical condition
(including, without limitation, environmental matters) of the Property, the
Initial Building or the Center; or
(e) liable to Tenant in any amount beyond the interest of such
mortgagee, beneficiary, master lessor or other secured party or successor owner
in the Property and the Center as they exist from time to time, it being the
intent of this provision that Tenant shall look solely to the interest of any
such mortgagee, beneficiary, master lessor or other secured party or successor
owner in the Property and Center for the payment and discharge of the landlord's
obligations under this Lease and that such mortgagee, beneficiary, master lessor
or other secured party or successor owner shall have no separate personal
liability for any such obligations.
20. SECURITY
20.1 Deposit. Within thirty (30) days after mutual execution of this
Lease, Tenant shall deposit with Landlord the sum of [...*...] which sum (the
"Security Deposit") shall be held by Landlord as security for the faithful
performance of all of the terms, covenants, and conditions of this Lease to be
kept and performed by Tenant during the term hereof. If Tenant defaults with
respect to any provision of this Lease, including, without limitation, the
provisions relating to the payment of rental and other sums due hereunder,
Landlord shall have the right, but shall not be required, to use, apply or
retain all or any part of the Security Deposit for the payment of rental or any
other amount which Landlord may spend or become obligated to spend by reason of
Tenant's default or to compensate Landlord for any other loss or damage which
Landlord may suffer by reason of Tenant's default. If any portion of the
Security Deposit is so used or 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 and
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Tenant's failure to do so shall be a material breach of this Lease. Landlord
shall not be required to keep any deposit under this Section separate from
Landlord's general funds, and Tenant shall not be entitled to interest thereon.
If Tenant fully and faithfully performs every provision of this Lease to be
performed by it, the Security Deposit, or any balance thereof, shall be returned
to Tenant or, at Landlord's option, to the last assignee of Tenant's interest
hereunder, at the expiration of the term of this Lease and after Tenant has
vacated the Property. In the event of termination of Landlord's interest in this
Lease, Landlord shall transfer all deposits then held by Landlord under this
Section to Landlord's successor in interest, whereupon Tenant agrees to release
Landlord from all liability for the return of such deposit or the accounting
thereof.
21. MISCELLANEOUS
21.1 Notices. All notices, consents, waivers and other communications
which this Lease requires or permits either party to give to the other shall be
in writing and shall be deemed given when delivered personally (including
delivery by private courier or express delivery service) or four (4) days after
deposit in the United States mail, registered or certified mail, postage
prepaid, addressed to the parties at their respective addresses as follows:
To Tenant: (until Rent Commencement Date)
SUGEN, Inc.
351 Galveston Drive
Redwood City, CA 94603-4720
Attn: Vice President, Finance
(after Rent Commencement Date)
SUGEN, Inc.
_____ East Grand Avenue [to be determined]
South San Francisco, CA 94080
Attn: Vice President, Finance
with copy to: Cooley Godward LLP
5 Palo Alto Square
Palo Alto, CA 94306-2155
Attn: Anna B. Pope, Esq.
To Landlord: Britannia Pointe Grand Limited Partnership
1939 Harrison Street, Suite 412
Park Plaza Building
Oakland, CA 94612
Attn: T. J. Bristow
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with copy to: Folger Levin & Kahn LLP
Embarcadero Center West
275 Battery Street, 23rd Floor
San Francisco, CA 94111
Attn: Donald E. Kelley, Jr.
or to such other address as may be contained in a notice at least fifteen (15)
days prior to the address change from either party to the other given pursuant
to this Section. Rental payments and other sums required by this Lease to be
paid by Tenant shall be delivered to Landlord at Landlord's address provided in
this Section, or to such other address as Landlord may from time to time specify
in writing to Tenant, and shall be deemed to be paid only upon actual receipt.
21.2 Successors And Assigns. The obligations of this Lease shall run
with the land, and this Lease shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns, except that the
original Landlord named herein and each successive Landlord under this Lease
shall be liable only for obligations accruing during the period of its ownership
of the Property, said liability terminating upon termination of such ownership
and passing to the successor lessor.
21.3 No Waiver. The failure of Landlord to seek redress for violation,
or to insist upon the strict performance, of any covenant or condition of this
Lease shall not be deemed a waiver of such violation, or prevent a subsequent
act which would originally have constituted a violation from having all the
force and effect of an original violation.
21.4 Severability. If any provision of this Lease or the application
thereof is held to be invalid or unenforceable, the remainder of this Lease or
the application of such provision to persons or circumstances other than those
as to which it is invalid or unenforceable shall not be affected thereby, and
each of the provisions of this Lease shall be valid and enforceable, unless
enforcement of this Lease as so invalidated would be unreasonable or grossly
inequitable under all the circumstances or would materially frustrate the
purposes of this Lease.
21.5 Litigation Between Parties. In the event of any litigation or
other dispute resolution proceedings between the parties hereto arising out of
or in connection with this Lease, the prevailing party shall be reimbursed for
all reasonable costs, including, but not limited to, reasonable accountants'
fees and attorneys' fees, incurred in connection with such proceedings
(including, but not limited to, any appellate proceedings relating thereto) or
in connection with the enforcement of any judgment or award rendered in such
proceedings. "Prevailing party" within the meaning of this Section shall
include, without limitation, a party who dismisses an action for recovery
hereunder in exchange for payment of the sums allegedly due, performance of
covenants allegedly breached or consideration substantially equal to the relief
sought in the action.
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21.6 Surrender. A voluntary or other surrender of this Lease by Tenant,
or a mutual termination thereof between Landlord and Tenant, shall not result in
a merger but shall, at the option of Landlord, operate either as an assignment
to Landlord of any and all existing subleases and subtenancies, or a termination
of all or any existing subleases and subtenancies. This provision shall be
contained in any and all assignments or subleases made pursuant to this Lease.
21.7 Interpretation. The provisions of this Lease shall be construed as
a whole, according to their common meaning, and not strictly for or against
Landlord or Tenant. The captions preceding the text of each Section and
subsection hereof are included only for convenience of reference and shall be
disregarded in the construction or interpretation of this Lease.
21.8 Entire Agreement. This written Lease, together with the exhibits
hereto, contains all the representations and the entire understanding between
the parties hereto with respect to the subject matter hereof. Any prior
correspondence, memoranda or agreements are replaced in total by this Lease and
the exhibits hereto. This Lease may be modified only by an agreement in writing
signed by each of the parties.
21.9 Governing Law. This Lease and all exhibits hereto shall be
construed and interpreted in accordance with and be governed by all the
provisions of the laws of the State of California.
21.10 No Partnership. The relationship between Landlord and Tenant is
solely that of a lessor and lessee. Nothing contained in this Lease shall be
construed as creating any type or manner of partnership, joint venture or joint
enterprise with or between Landlord and Tenant.
21.11 Financial Information. From time to time Tenant shall promptly
provide directly to prospective lenders and purchasers of the Property and/or
Center designated by Landlord such financial information pertaining to the
financial status of Tenant as Landlord may reasonably request; provided, Tenant
shall be permitted to provide such financial information in a manner which
Tenant deems reasonably necessary to protect the confidentiality of such
information, including (if Tenant so requests) conditioning disclosure of such
information upon execution of a reasonable confidentiality agreement by Landlord
and by any other proposed or permitted recipient of such information. In
addition, from time to time, Tenant shall provide Landlord with such financial
information pertaining to the financial status of Tenant as Landlord may
reasonably request. Landlord agrees that all financial information supplied to
Landlord by Tenant shall be treated as confidential material, and shall not be
disseminated to any party or entity (including any entity affiliated with
Landlord) without Tenant's prior written consent, except that Landlord shall be
entitled to provide such information, subject to reasonable precautions to
protect the confidential nature thereof, (i) to Landlord's partners and
professional advisors, solely to use in connection with Landlord's execution and
enforcement of this Lease, and (ii) to prospective lenders and/or purchasers of
the Property and/or Center, solely for use
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in connection with their bona fide consideration of a proposed financing or
purchase of the Property and/or Center, provided that such prospective lenders
and/or purchasers are not then engaged in businesses directly competitive with
the business then being conducted by Tenant. For purposes of this Section,
without limiting the generality of the obligations provided herein, it shall be
deemed reasonable for Landlord to request copies of Tenant's most recent audited
annual financial statements, or, if audited statements have not been prepared,
unaudited financial statements for Tenant's most recent fiscal year, accompanied
by a certificate of Tenant's chief financial officer that such financial
statements fairly present Tenant's financial condition as of the date(s)
indicated. Notwithstanding any other provisions of this Section 21.11, during
any period in which Tenant has outstanding a class of publicly traded securities
and is filing with the Securities and Exchange Commission, on a regular basis,
Forms 10Q and 10K and any other periodic filings required under the Securities
Exchange Act of 1934, as amended, it shall constitute sufficient compliance
under this Section 21.11 for Tenant to furnish Landlord with copies of such
periodic filings substantially concurrently with the filing thereof with the
Securities and Exchange Commission.
Landlord and Tenant recognize the need of Tenant to maintain
the confidentiality of information regarding its financial status and the need
of Landlord to be informed of, and to provide to prospective lenders and
purchasers of the Property and/or Center financial information pertaining to,
Tenant's financial status. Landlord and Tenant agree to cooperate with each
other in achieving these needs within the context of the obligations set forth
in this Section.
21.12 Costs. If Tenant requests the consent of Landlord under any
provision of this Lease for any act that Tenant proposes to do hereunder,
including, without limitation, assignment or subletting of the Property, Tenant
shall, as a condition to doing any such act and the receipt of such consent,
reimburse Landlord promptly for any and all reasonable costs and expenses
incurred by Landlord in connection therewith, including, without limitation,
reasonable attorneys' fees.
21.13 Time. Time is of the essence of this Lease, and of every term and
condition hereof.
21.14 Rules And Regulations. Tenant shall observe, comply with and
obey, and shall cause its employees, agents and, to the best of Tenant's
ability, invitees to observe, comply with and obey such rules and regulations as
Landlord may promulgate from time to time for the safety, care, cleanliness,
order and use of the Improvements, the Property and the Center.
21.15 Brokers. Landlord agrees to pay a brokerage commission to
Catalyst Real Estate Group and to Cornish & Carey Commercial in connection with
the consummation of this Lease in accordance with a separate agreement. Tenant
and Landlord each represents and warrants that no other broker participated in
the consummation of this Lease and agrees to indemnify,
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defend and hold the other party harmless against any liability, cost or expense,
including, without limitation, reasonable attorneys' fees, arising out of any
claims for brokerage commissions or other similar compensation in connection
with any conversations, prior negotiations or other dealings by the indemnifying
party with any other broker.
21.16 Memorandum Of Lease. At any time during the term of this Lease,
either party, at its sole expense, shall be entitled to record a memorandum of
this Lease and, if either party so elects, both parties agree to cooperate in
the preparation, execution, acknowledgement and recordation of such document in
reasonable form.
21.17 Corporate Authority. The person signing this Lease on behalf of
Tenant warrants that he or she is fully authorized to do so and, by so doing, to
bind Tenant. As evidence of such authority, Tenant shall deliver to Landlord,
upon or prior to execution of this Lease, a certified copy of a resolution of
Tenant's board of directors authorizing the execution of this Lease and naming
the officer that is authorized to execute this Lease on behalf of Tenant.
21.18 Execution and Delivery. This Lease may be executed in one or more
counterparts and by separate parties on separate counterparts, but each such
counterpart shall constitute an original and all such counterparts together
shall constitute one and the same instrument.
21.19 Survival. Without limiting survival provisions which would
otherwise be implied or construed under applicable law, the provisions of
Sections 2.6, 9.4, 11.2, 11.3, 11.4, 13.6, 14.6 and 21.5 hereof shall survive
the termination of this Lease with respect to matters occurring prior to the
expiration of this Lease.
IN WITNESS WHEREOF, the parties hereto have executed this
Lease as of the day and year first set forth above.
"Landlord"
BRITANNIA POINTE GRAND LIMITED
PARTNERSHIP, a Delaware limited
partnership
By: BRITANNIA POINTE GRAND,
LLC, a California limited liability
company, General Partner
By: /s/ T.J. Bristow
------------------------------------
T. J. Bristow
Its Manager
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"Tenant"
SUGEN, INC., a Delaware corporation
By: /s/ Stephen Evans-Freke
----------------------------------
Stephen Evans-Freke
Its Chairman and Chief Executive
Officer
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EXHIBITS
--------
EXHIBIT A Real Property Descriptions (Property and Center)
EXHIBIT B Site Plan
EXHIBIT C Workletter
EXHIBIT D Estimated Construction Schedule
EXHIBIT E Acknowledgement of Rent Commencement Date
<PAGE>
EXHIBIT A
REAL PROPERTY DESCRIPTIONS
The Property
All that certain real property in the City of South San Francisco, County of San
Mateo, State of California, more particularly described as follows:
Lot 1 as shown on Parcel Map No. 91-284, "Being a resubdivision of the parcels
described in the deeds to Metal and Thermit Corporation, recorded in Book 293,
at Page 394 of Deeds; in Book 49, at Page 490, Official Records; in Book 77, at
Page 415, Official Records; and, except that parcel described in Book 1352, at
Page 373, Official Records," filed on February 25, 1992, in Book 65 of Parcel
Maps, in the Office of the Recorder of the County of San Mateo, California.
The Center
All that certain real property in the City of South San Francisco, County of San
Mateo, State of California, more particularly described as follows:
Lots 1, 2, 3 and 4, inclusive, as shown on Parcel Map No. 91-284, "Being a
resubdivision of the parcels described in the deeds to Metal and Thermit
Corporation, recorded in Book 293, at Page 394 of Deeds; in Book 49, at Page
490, Official Records; in Book 77, at Page 415, Official Records; and, except
that parcel described in Book 1352, at Page 373, Official Records," filed on
February 25, 1992, in Book 65 of Parcel Maps, in the Office of the Recorder of
the County of San Mateo, California.
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EXHIBIT C
WORKLETTER
This Workletter ("Workletter") constitutes part of the Build-to-Suit
Lease dated as of June 11, 1997 (the "Lease") between BRITANNIA POINTE GRAND
LIMITED PARTNERSHIP, a Delaware limited partnership ("Landlord"), and SUGEN,
INC., a Delaware corporation ("Tenant"). The terms of this Workletter are
incorporated in the Lease for all purposes.
1. Defined Terms. As used in this Workletter, the following capitalized terms
have the following meanings:
(a) Approved Plans: Plans and specifications prepared by the applicable
Architect for the respective Improvements and approved by both Landlord and
Tenant in accordance with Paragraph 2 of this Workletter (subject to further
modification in accordance with such Paragraph 2).
(b) Architect: Chamorro Design Group, or any other architect selected
by Landlord in its sole discretion, with respect to the Building Shell, the Site
Improvements and any other Improvements which Landlord is to design pursuant to
this Workletter; any architect selected by Tenant with the written approval of
Landlord (which approval shall not be unreasonably withheld or delayed), with
respect to the Tenant Improvements and any other Improvements which Tenant is to
design pursuant to this Workletter.
(c) Building Shell: The shell of the Initial Building, as more fully
defined on Schedule C-1 attached to this Workletter.
(d) Change Order: See definition in Paragraph 2(e)(ii) hereof.
(e) Cost of Improvement: See definition in Paragraph 2(c) hereof.
(f) Final Completion Certificate: See definition in Paragraph 3(b)
hereof.
(g) Final Working Drawings: See definition in Paragraph 2(a) hereof.
(h) General Contractor: Concrete Shell Structures, Inc., or any other
general contractor selected by Landlord in its sole discretion, with respect to
Landlord's Work. The General Contractor with respect to Tenant's Work shall be
selected by Tenant, subject to
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Landlord's approval (not to be unreasonably withheld or delayed), as
contemplated in Paragraph 5(a) hereof.
(i) Improvements: The Building Shell, Site Improvements, Tenant
Improvements and other improvements shown on the Approved Plans from time to
time and to be constructed on the Property pursuant to the Lease and this
Workletter.
(j) Landlord Delay: Any of the following types of delay in the
completion of construction of the Tenant Improvements:
(i) Any delay resulting from Landlord's failure to furnish, in
a timely manner, information requested by Tenant or by the Architect or General
Contractor for Tenant's Work in connection with the design or construction of
Tenant's Work, or from Landlord's failure to approve in a timely manner any
matters requiring approval by Landlord; or
(ii) Any delay of any other kind or nature caused by Landlord
(or Landlord's contractors, agents or employees) or resulting from the
performance of Landlord's Work.
(k) Landlord's Work: The Building Shell and Site Improvements, and any
other Improvements which Landlord is to construct or install pursuant to this
Workletter or by mutual agreement of Landlord and Tenant from time to time.
(l) Punch List Work: Minor corrections of construction or decoration
details, and minor mechanical adjustments, that are required in order to cause
any applicable portion of the Improvements as constructed to conform to the
Approved Plans in all material respects and that do not materially interfere
with Tenant's use or occupancy of the Initial Building and the Property.
(m) Site Improvements: The parking areas, driveways, landscaping and
other improvements to the Common Areas of the Property that are depicted on
Exhibit B to the Lease (as the same may be modified pursuant to the process of
development and approval of the Approved Plans).
(n) Structural Completion Certificate: See definition in Paragraph 3(a)
hereof.
(o) Tenant Delay: Any of the following types of delay in the completion
of construction of the Building Shell:
(i) Any delay resulting from Tenant's failure to furnish, in a
timely manner, information requested by Landlord or by the Architect or General
Contractor for Landlord's Work in connection with the design or construction of
the Building Shell, or from Tenant's failure to approve in a timely manner any
matters requiring approval by Tenant;
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(ii) Any delay attributable to any need to construct the
Building Shell in an "above standard" manner;
(iii) Any delay resulting from Change Orders, including any
delay resulting from the need to revise any drawings or obtain further
governmental approvals as a result of any Change Order; or
(iv) Any delay of any other kind or nature caused by Tenant
(or Tenant's contractors, agents or employees) or resulting from the performance
of Tenant's Work.
(p) Tenant Improvements: The improvements to or within the Initial
Building, other than improvements constituting part of the Building Shell, shown
on the Approved Plans from time to time and to be constructed by Tenant (except
as otherwise provided herein) pursuant to the Lease and this Workletter,
including (but not limited to) the improvements listed on Schedule C-2 attached
to this Workletter.
(q) Tenant's Work: All of the Improvements other than those
constituting Landlord's Work, and such other materials and improvements as
Tenant deems necessary or appropriate for Tenant's use and occupancy of the
Initial Building.
(r) Unavoidable Delays: Delays due to acts of God, acts of public
agencies, labor disputes, strikes, fires, freight embargoes, rainy or stormy
weather, inability to obtain supplies, materials, fuels or permits, delays of
contractors or subcontractors, or other causes or contingencies beyond the
reasonable control of Landlord or Tenant, as applicable.
(s) Work Deadlines: The target dates for performance by the applicable
party of the steps listed in the Estimated Construction Schedule attached as
Exhibit D to the Lease.
(t) Capitalized terms not otherwise defined in this Workletter shall
have the definitions set forth in the Lease.
2. Plans, Cost of Improvements and Construction. Landlord and Tenant shall
comply with the procedures set forth in this Paragraph 2 in preparing,
delivering and approving matters relating to the Improvements.
(a) Approved Plans and Working Drawings for Landlord's Work. Landlord
shall promptly and diligently (and in all events prior to any applicable Work
Deadlines, subject to Tenant Delays and Unavoidable Delays) cause to be prepared
and delivered to Tenant, for approval, plans and specifications for the
Improvements constituting Landlord's Work. Following mutual approval of such
plans and specifications, Landlord shall then cause to be prepared and delivered
to Tenant, on or before the applicable Work Deadline (assuming timely delivery
by Tenant of all information, decisions and drawings required to be furnished or
made
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by Tenant in order to permit complete preparation of plans and drawings), final
working drawings and specifications for the Improvements constituting Landlord's
Work, including structural, fire protection, life safety, mechanical and
electrical working drawings and final architectural drawings (collectively,
"Landlord's Final Working Drawings"). Landlord's Final Working Drawings shall
substantially conform to the Approved Plans. Landlord's obligation to deliver
Landlord's Final Working Drawings to Tenant within the time period set forth
above shall be extended for any delay encountered by Landlord as a result of a
request by Tenant for changes in accordance with the procedure set forth below,
any other Tenant Delays, or any Unavoidable Delays. No later than the applicable
Work Deadline (assuming timely delivery of plans and drawings by Landlord),
Tenant shall either approve Landlord's Final Working Drawings or set forth in
writing with particularity any changes necessary to bring Landlord's Final
Working Drawings into substantial conformity with the Approved Plans or into a
form which will be acceptable to Tenant. In no event, however, shall Tenant have
the right to object to any aspect of the proposed plans and specifications or
proposed Landlord's Final Working Drawings for Landlord's Work (including, but
not limited to, any change from the Approved Plans) that is necessitated by
applicable law, or to any aspect of such proposed plans and specifications or
proposed Landlord's Final Working Drawings that relates to the Building Shell or
Site Improvements, although Landlord agrees to consult with Tenant and to give
reasonable consideration to Tenant's views regarding functional characteristics
of the Building Shell and Site Improvements. Failure of Tenant to deliver to
Landlord written notice of disapproval and specification of required changes on
or before the applicable Work Deadline shall constitute and be deemed to be
approval of Landlord's Final Working Drawings. Upon approval, actual or deemed,
of Landlord's Final Working Drawings by Landlord and Tenant, Landlord's Final
Working Drawings shall be deemed to be incorporated in and considered part of
the Approved Plans, superseding (to the extent of any inconsistencies) any
inconsistent features of the previously existing Approved Plans.
(b) Approved Plans and Working Drawings for Tenant's Work. Tenant shall
promptly and diligently (and in all events prior to any applicable Work
Deadlines, subject to Landlord Delays and Unavoidable Delays) cause to be
prepared and delivered to Landlord, for approval, plans and specifications for
the Improvements constituting Tenant's Work. Following mutual approval of such
plans and specifications, Tenant shall then cause to be prepared and delivered
to Landlord final working drawings and specifications for the Improvements
constituting Tenant's Work, including any applicable life safety, mechanical and
electrical working drawings and final architectural drawings (collectively,
"Tenant's Final Working Drawings"). Tenant's Final Working Drawings shall
substantially conform to the Approved Plans. Landlord shall either approve
Tenant's Final Working Drawings or set forth in writing with particularity any
changes necessary to bring Tenant's Final Working Drawings into substantial
conformity with the Approved Plans or into a form which will be acceptable to
Landlord. Upon approval of Tenant's Final Working Drawings by Landlord and
Tenant, Tenant's Final Working Drawings shall be deemed to be incorporated in
and considered part of
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the Approved Plans, superseding (to the extent of any inconsistencies) any
inconsistent features of the previously existing Approved Plans.
(c) Cost of Improvements. "Cost of Improvement" shall mean, with
respect to any item or component for which a cost must be determined in order to
allocate such cost, or an increase in such cost, to Landlord and/or Tenant
pursuant to this Workletter, the sum of the following (unless otherwise agreed
in writing by Landlord and Tenant with respect to any specific item or component
or any category of items or components): (i) all sums paid to contractors or
subcontractors for labor and materials furnished in connection with construction
of such item or component; (ii) all costs, expenses, payments, fees and charges
(other than penalties) paid or incurred to or at the direction of any city,
county or other governmental or quasi-governmental authority or agency which are
required to be paid in order to obtain all necessary governmental permits,
licenses, inspections and approvals relating to construction of such item or
component; (iii) engineering and architectural fees for services rendered in
connection with the design and construction of such item or component
(including, but not limited to, the applicable Architect for such item or
component and an electrical engineer, mechanical engineer and civil engineer);
(iv) sales and use taxes; (v) testing and inspection costs; (vi) the cost of
power, water and other utility facilities and the cost of collection and removal
of debris required in connection with construction of such item or component;
and (vii) all other "hard" costs incurred in the construction of such item or
component in accordance with the Approved Plans and this Workletter. Cost of
Improvement shall not include any project management fee relating to the
construction of such item or component.
(d) Construction of Landlord's Work. Promptly following approval of
Landlord's Final Working Drawings, Landlord shall apply for and use reasonable
efforts to obtain the necessary permits and approvals to allow construction of
all Improvements constituting Landlord's Work. Upon receipt of such permits and
approvals, Landlord shall, at Landlord's sole expense (except as otherwise
provided in the Lease or in this Workletter), diligently construct and complete
the Improvements constituting Landlord's Work substantially in accordance with
the Approved Plans, subject to Unavoidable Delays and Tenant Delays (if any).
Such construction shall be performed in a neat and workmanlike manner and shall
conform to all applicable governmental codes, laws and regulations in force at
the time such work is completed. Landlord shall use only union labor on or in
connection with Landlord's Work and shall use the General Contractor specified
in Paragraph 1(h) to construct all Improvements constituting Landlord's Work.
(e) Changes.
(i) If Landlord determines at any time that changes in
Landlord's Final Working Drawings or in any other aspect of the Approved Plans
relating to any item of Landlord's Work are required as a result of applicable
law or governmental requirements, or at the insistence of any other third party
whose approval may be required with respect to the
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Improvements, or as a result of unanticipated conditions encountered in the
course of construction, then Landlord shall promptly (A) advise Tenant of such
circumstances and (B) cause revised Approved Plans and/or Landlord's Final
Working Drawings, as applicable, reflecting such changes to be prepared by
Architect and, to the extent such changes relate to items other than the
Building Shell or Site Improvements, submitted to Tenant for approval in
accordance with the procedure contemplated in Paragraph 2(a) hereof. Upon final
approval of revised drawings by Landlord and Tenant (if applicable), Landlord's
Final Working Drawings and/or Approved Plans shall be deemed to be modified
accordingly.
(ii) If Tenant at any time desires any changes, alterations or
additions to the Approved Plans or Landlord's Final Working Drawings with
respect to any of Landlord's Work, Tenant shall submit a detailed written
request to Landlord specifying such changes, alterations or additions (a "Change
Order"). Upon receipt of any such request, Landlord shall promptly notify Tenant
of (A) whether the matters proposed in the Change Order are approved by Landlord
(which approval shall not be unreasonably withheld), (B) Landlord's estimate of
the number of days of delay, if any, which shall be caused by such Change Order
if implemented (including, without limitation, delays due to the need to obtain
any revised plans or drawings and any governmental approvals), and (C)
Landlord's estimate of the increase, if any, which shall occur in the Cost of
Improvement for the items or components affected by such Change Order if such
Change Order is implemented (including, but not limited to, any costs of
compliance with laws or governmental regulations that become applicable because
of the requested Change Order). If Tenant notifies Landlord in writing, within
five (5) business days after receipt of such notice from Landlord, of Tenant's
approval of the Change Order (including the estimated delays and cost increases,
if any, described in Landlord's notice), then Landlord shall cause such Change
Order to be implemented and Tenant shall be responsible for all costs or cost
increases resulting from or attributable to the Change Order, subject to the
provisions of Paragraph 4 hereof. If Tenant fails to notify Landlord in writing
of Tenant's approval of such Change Order within said five (5) business day
period, then such Change Order shall be deemed to be withdrawn and shall be of
no further effect.
3. Completion.
(A) When Landlord receives written certification from Architect that
construction of the foundation, structural slab on grade, underslab plumbing
work, structural steel framework, decking and concrete on second floor, roof
structure and installation of main fire sprinkler lines in the Initial Building
have been completed in accordance with the Approved Plans, Landlord shall
prepare and deliver to Tenant a certificate signed by both Landlord and
Architect (the "Structural Completion Certificate") certifying that the
construction of such portions of the Initial Building has been substantially
completed in accordance with the Approved Plans in all material respects and
specifying the date of that completion. The delivery of such Structural
Completion Certificate shall commence the running of the 180-day time period
until the Rent Commencement Date under Section 2.1 of the Lease.
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(B) When Landlord receives written certification from Architect that
construction of the remaining Improvements constituting Landlord's Work has been
completed in accordance with the Approved Plans (except for Punch List Work),
Landlord shall prepare and deliver to Tenant a certificate signed by both
Landlord and Architect (the "Final Completion Certificate") certifying that the
construction of the remaining Improvements constituting Landlord's Work has been
substantially completed in accordance with the Approved Plans in all material
respects, subject only to completion of Punch List Work, and specifying the date
of that completion. Upon receipt by Tenant of the Final Completion Certificate,
the Improvements constituting Landlord's Work will be deemed delivered to Tenant
for all purposes of the Lease (subject to Landlord's continuing obligations with
respect to the Punch List Work).
(C) Notwithstanding any other provisions of this Workletter or of the
Lease, if Landlord is delayed in substantially completing any of Landlord's Work
necessary for issuance of the Structural Completion Certificate as a result of
any Tenant Delay, then the 180-day period between the delivery of the Structural
Completion Certificate and the Rent Commencement Date pursuant to Section 2.1 of
the Lease shall be reduced, day for day, by the number of days by which such
Tenant Delay delayed completion of the portions of Landlord's Work necessary for
issuance of the Structural Completion Certificate, and Tenant shall reimburse
Landlord in cash, within fifteen (15) days after written demand by Landlord
(accompanied by reasonable documentation of the items claimed), for any
increased construction-related costs and expenses incurred by Landlord as a
result of the Tenant Delay.
(D) At any time within thirty (30) days after delivery of the
Structural Completion Certificate or the Final Completion Certificate, as
applicable, Tenant shall be entitled to submit one or more lists to Landlord
specifying Punch List Work to be performed on the applicable Improvements
constituting Landlord's Work, and upon receipt of such list(s), Landlord shall
diligently complete such Punch List Work at Landlord's sole expense. In the
event of any dispute as to completion of any item or component of Landlord's
Work, the certificate of the applicable Architect shall be conclusive. Promptly
after Landlord provides Tenant with the Final Completion Certificate, Landlord
shall cause the recordation of a Notice of Completion (as defined in Section
3093 of the California Civil Code) with respect to Landlord's Work.
4. Payment of Costs.
(a) Landlord's Work. Except as otherwise expressly provided in this
Workletter or by mutual written agreement of Landlord and Tenant, the cost of
construction of Landlord's Work shall be borne by Landlord at its sole cost and
expense, including any costs or cost increases incurred as a result of
Unavoidable Delays, governmental requirements or unanticipated conditions;
provided, however, that notwithstanding any other provisions of this Paragraph
4(a), to the extent the Cost of Improvement relating to the construction of any
item or component of Landlord's Work is increased as a result of any permitted
Change Order or any Tenant Delay, or as a result of any "above standard"
Building Shell components requested by
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Tenant or otherwise necessitated by Tenant's particular use requirements or by
the contemplated Tenant's Work, or as a result of any other plan changes or
compliance costs attributable to Tenant's particular use requirements or to the
contemplated Tenant's Work, the amount of the increase in the Cost of
Improvement with respect to such item or component shall be reimbursed by Tenant
to Landlord in cash or, by mutual agreement of Landlord and Tenant, may be
deducted from Landlord's maximum obligation under Paragraph 4(b) with respect to
the cost of Tenant's Work.
(b) Tenant's Work. Except as otherwise expressly provided in this
Workletter or by mutual written agreement of Landlord and Tenant, the cost of
construction of the Tenant Improvements shall be borne [...*...] by Landlord and
[...*...] by Tenant, up to a maximum Landlord's obligation of [...*...] per
square foot of space in the Initial Building (measured in accordance with
Section 3.1(b) of the Lease), equating to a total Cost of Improvements for the
Tenant Improvements of [...*...] per square foot. Tenant shall be responsible,
at its sole cost and expense (subject to any third-party financing arrangements
entered into by Tenant as contemplated in Section 11.4 of the Lease), for
payment of [...*...] of the first [...*...] per square foot of the Cost of
Improvements of the Tenant Improvements, for the entire Cost of Improvements of
the Tenant Improvements in excess of [...*...] per square foot (if any such
excess occurs) and for the entire cost of any Tenant's Work that is not part of
the Tenant Improvements, including (but not limited to), in each case, any costs
or cost increases incurred as a result of Unavoidable Delays, governmental
requirements or unanticipated conditions. If Landlord's share of the Cost of
Improvements of the Tenant Improvements is less than [...*...] per square foot
in the aggregate, the amount of such difference shall result in a rental
adjustment pursuant to Section 3.1(c) of the Lease. The timing, conditions and
other procedures for payment or disbursement of Landlord's share of the cost of
the Tenant Improvements (up to the maximum amount specified above) shall be
subject to mutual agreement of Landlord, Tenant and Landlord's lender (if any).
To the extent the Cost of Improvement with respect to the Tenant Improvements
exceeds [...*...] per square foot (reduced by [...*...] any amounts deducted
from Landlord's maximum payment obligation as a result of the final sentence of
Paragraph 4(a) hereof), whether as a result of Change Orders, Tenant Delays
and/or Unavoidable Delays or otherwise, the amount of such excess shall in all
events be Tenant's sole responsibility and expense.
5. Tenant's Work. On or before the applicable Work Deadline (subject to Landlord
Delays and Unavoidable Delays, if any), Tenant shall construct and install in
the Initial Building the Tenant's Work, substantially in accordance with the
Approved Plans or, with respect to Tenant's Work not shown on the Approved
Plans, substantially in accordance with plans and specifications prepared by
Tenant and approved in writing by Landlord (which approval shall not be
unreasonably withheld or delayed). Tenant's Work shall be performed in
accordance with, and shall in all respects be subject to, the terms and
conditions of the Lease (to the extent not inconsistent with this Workletter),
and shall also be subject to the following conditions:
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*CONFIDENTIAL TREATMENT REQUESTED
67
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(a) Contractor Requirements. The contractor engaged by Tenant for
Tenant's Work, and any subcontractors, shall be duly licensed in California,
shall use only union labor on or in connection with Tenant's Work and shall be
subject to Landlord's prior written approval, which approval shall not be
unreasonably withheld or delayed. Without limiting the generality of the
preceding sentence, Tenant shall engage only union contractors for the
construction and installation of Tenant's furnishings, fixtures and equipment in
the Initial Building and shall require all such contractors engaged by Tenant,
and all of their subcontractors, to use only union labor on or in connection
with such work.
(b) Costs and Expenses of Tenant's Work. Subject to Landlord's payment
or reimbursement obligations under Paragraph 4(b) hereof with respect to
Landlord's share of the Cost of Improvements for the Tenant Improvements, Tenant
shall promptly pay all costs and expenses arising out of the performance of
Tenant's Work (including the costs of permits) and shall furnish Landlord with
evidence of payment on request. Tenant shall provide Landlord with ten (10)
days' prior written notice before commencing any Tenant's Work. On completion of
Tenant's Work, Tenant shall deliver to Landlord a release and waiver of lien
executed by each contractor, subcontractor and materialman involved in the
performance of Tenant's Work.
(c) Indemnification. Tenant shall indemnify, defend (with counsel
satisfactory to Landlord) and hold Landlord harmless from all suits, claims,
actions, losses, costs and expenses (including, but not limited to, claims for
workers' compensation, attorneys' fees and costs) based on personal injury or
property damage or contract claims (including, but not limited to, claims for
breach of warranty) arising from the performance of Tenant's Work. Tenant shall
repair or replace (or, at Landlord's election, reimburse Landlord for the cost
of repairing or replacing) any portion of the Improvements and/or any of
Landlord's real or personal property or equipment that is damaged, lost or
destroyed in the course of or in connection with the performance of Tenant's
Work.
(d) Insurance. Tenant's contractors shall obtain and provide to
Landlord certificates evidencing workers' compensation, public liability and
property damage insurance in amounts and forms and with companies satisfactory
to Landlord.
(e) Rules and Regulations. Tenant and Tenant's contractors shall comply
with any other rules, regulations and requirements that Landlord or General
Contractor may reasonably impose with respect to the performance of Tenant's
Work. Tenant's agreement with Tenant's contractors shall require each contractor
to provide daily cleanup of the construction area to the extent that such
cleanup is necessitated by the performance of Tenant's Work.
(f) Early Entry. Landlord shall permit entry of contractors into the
Initial Building for the purposes of performing Tenant's Work, subject to
satisfaction of the conditions set forth in the Lease. This license to enter is
expressly conditioned on the contractor(s) retained by Tenant working in harmony
with, and not interfering with, the workers, mechanics and
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contractors of Landlord. If at any time the entry or work by Tenant's
contractor(s) causes any material interference with the workers, mechanics or
contractors of Landlord, permission to enter may be withdrawn by Landlord
immediately on written notice to Tenant.
(g) Risk of Loss. All materials, work, installations and decorations of
any nature brought onto or installed in the Initial Building, by or at the
direction of Tenant or in connection with the performance of Tenant's Work,
before the commencement of the Term shall be at Tenant's risk, and neither
Landlord nor any party acting on Landlord's behalf shall be responsible for any
damage, loss or destruction thereof.
(h) Condition of Tenant's Work. All work performed by Tenant shall be
performed in a good and workmanlike manner, shall be free from defects in
design, materials and workmanship, and shall be completed in compliance with the
plans approved by Landlord for such Tenant's Work in all material respects and
in compliance with all applicable governmental laws, ordinances, codes and
regulations in force at the time such work is completed.
(i) Deferral of Construction. Notwithstanding any other provisions of
this Paragraph 5, Tenant shall have the right to defer completion of some or all
of the Tenant Improvements in up to [...*...] square feet of the Initial
Building for up to eighteen (18) months after the Rent Commencement Date under
the Lease. Landlord and Tenant acknowledge, however, that even within the area
as to which such completion of Tenant Improvements is to be deferred, it is
likely to be necessary to complete a portion of the Tenant Improvements in that
area (such as, but not limited to, plumbing and HVAC) in order for the City of
South San Francisco to issue a certificate of occupancy (or reasonable
equivalent thereof) for the Initial Building at or about the Rent Commencement
Date, and that Tenant's right to defer completion of Tenant Improvements will
not extend to any such work that is necessary in order to obtain a certificate
of occupancy for the Initial Building.
6. No Agency. Nothing contained in this Workletter shall make or constitute
Tenant as the agent of Landlord.
7. Survival. Without limiting survival provisions which would otherwise be
implied or construed under applicable law, the provisions of Paragraph 5(c) of
this Workletter shall survive the termination of the Lease with respect to
matters occurring prior to expiration of the Lease.
8. Miscellaneous. All references in this Workletter to a number of days shall be
construed to refer to calendar days, unless otherwise specified herein. In all
instances where Tenant's approval is required, if no written notice of
disapproval is given within the applicable time period, at the end of that
period Tenant shall be deemed to have given approval and the next succeeding
time period shall commence. If any item requiring approval is disapproved by
Tenant in a timely manner, the procedure for preparation of that item and
approval shall be repeated.
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*CONFIDENTIAL TREATMENT REQUESTED
69
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IN WITNESS WHEREOF, the parties have executed this Workletter
concurrently with and as of the date of the Lease.
"Landlord"
BRITANNIA POINTE GRAND LIMITED
PARTNERSHIP, a Delaware limited
partnership
By: BRITANNIA POINTE GRAND,
LLC, a California limited liability
company, General Partner
By: /s/ T.J. Bristow
-----------------------------
T. J. Bristow
Its Manager
"Tenant"
SUGEN, INC., a Delaware corporation
By: /s/ Stephen Evans-Freke
------------------------------
Stephen Evans-Freke
Its Chairman and Chief Executive
Officer
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Schedule C-1 to Workletter
DEFINITION OF BUILDING SHELL
The "Building Shell" as defined in the Workletter to which this Schedule C-1 is
attached shall consist of the following:
A standard shell for a building to be constructed for a biotech company,
considering the uses set forth in this Lease, including but not limited to the
following elements and improvements:
Building envelope (reinforced grade beam foundation on prestressed concrete
piles; ground floor to be 10" thick reinforced concrete slab supported
by concrete piles; second floor to have metal decking with concrete
topping slab; roof structure to be metal deck with concrete for mass
dampening in areas to receive mechanical equipment and rigid insulation
over the balance (at least R-19 to meet Title 24 calculations); roof
membrane to be built-up system, four-ply minimum including mineral
fiber cap sheet, with flashing and sealants; building structural
framing to consist of steel beams, girders, columns with a non-bearing
exterior curtain wall; seismic system utilizing steel braced frames;
floor system designed with live load capacity of 100 psf; roof live
load to be 20 psf with 50 psf in center bays to receive mechanical
loads; floor to floor heights of 17 feet)
Elevator pit
Interior stairs
Roof drains and drain lines
One (1) hour fire protection on columns and beams
Subsurface piping (water, gas, sewer lateral, storm water) sized to Tenant's use
requirements; sanitary plumbing gut line cost to be allocated 50% to
shell and 50% to Tenant Improvements
Trash enclosure/fence/metal gate
Two (2) or more rollup doors, one (1) dock high door or scissors lift
Utilities:
site lighting and exterior lighting
electric transformer
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underground electrical to building pull-section
gas to exterior meter on building
telephone conduit to building
site storm drain system
main sanitary sewer line under ground floor slab
domestic fire and water lines stubbed into building
automatic fire sprinkler system (for shell, but excluding drops to
suspended ceilings)
utility connection and development fees for systems which are part of
shell (but excluding fees based on facilities or elements that are
part of Tenant Improvements)
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Schedule C-2 to Workletter
DEFINITION OF TENANT IMPROVEMENTS
The "Tenant Improvements" as defined in the Workletter to which this Schedule
C-2 is attached shall include, but not necessarily be limited to, the following:
Toilet cores
Elevator(s)
Specialty items, such as skylights
Variable air volume HVAC system
Building exhaust system
Service yard enclosures
Equipment pad
Roof top mechanical screen
Utilities:
All electrical beyond pull section, including electrical main
disconnect and distribution panels
Gas piping beyond main gas meter
Telephone conduit beyond utility company termination point (inside the
building), and PVC conduit for telephone/data connections (wiring or
fiber optics) to future buildings
Sanitary sewer lines to main "gut" line under ground floor
Laboratory gas piping
Communications wiring
Utility connection fees based on items that are part of Tenant
Improvements
Air Compressor with Dryer/Tank
Purified Water System with Storage Tank
Emergency Generator
Vacuum Pump
Casework
Fume Hoods, Laminor Flow Hoods
73
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Mechanical, Electrical, Plumbing Infrastructure not included in Building Shell
and not otherwise described above
Automatic Gas Manifolds
Process Cooling Water Chiller
Animal Rooms, Epoxy Flooring, Animal Racks
Office Areas, Interior Partitioning, Floor Coverings, Lighting, Interior
Finishes
Cold Rooms
Tissue Culture Rooms
Automatic fire sprinkler system drops to suspended ceilings
74
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EXHIBIT D
ESTIMATED CONSTRUCTION SCHEDULE
[to be promptly developed by Landlord and reviewed and agreed
upon by the parties following execution of Lease, but in no
event later than June 23, 1997; among other things, shall (1)
include a series of window dates for significant tasks and
procedures, including (but not limited to) the need for Tenant
to provide details for shell modifications (steel, etc.) to
accommodate HVAC, plumbing, etc. within a period to be
specified, and (2) provide for an anticipated final completion
date for all tenant improvements and occupancy by Tenant no
later than October 31, 1998]
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EXHIBIT E
ACKNOWLEDGEMENT OF RENT COMMENCEMENT DATE
This Acknowledgement is executed as of _________________, 199__, by
BRITANNIA POINTE GRAND LIMITED PARTNERSHIP, a Delaware limited partnership
("Landlord"), and SUGEN, INC., a Delaware corporation ("Tenant"), pursuant to
Section 2.4 of the Build-to-Suit Lease dated June ___, 1997 between Landlord and
Tenant (the "Lease") covering premises located at ________ East Grand Avenue,
South San Francisco, CA 94080 (the "Initial Building").
Landlord and Tenant hereby acknowledge and agree as follows:
1. The Rent Commencement Date under the Lease is __________________,
199__.
2. The Termination Date under the Lease shall be _________________, 201__,
subject to any applicable provisions of the Lease for extension or early
termination thereof.
3. Based on the final cost of the Improvements and on any change orders,
delays and other factors reflected in that cost, the rent schedule under Section
3.1(a) of the Lease is amended to read as shown in the schedule attached hereto
and incorporated herein by this reference.
4. Tenant accepts the Initial Building and acknowledges the satisfactory
completion of all Improvements thereon required to be made by Landlord, subject
only to any applicable "punch
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list" or similar procedures specifically provided under the Lease or under the
Workletter governing such work.
EXECUTED as of the date first set forth above.
"Landlord"
BRITANNIA POINTE GRAND LIMITED
PARTNERSHIP, a Delaware limited
partnership
By: BRITANNIA POINTE GRAND, LLC,
a California limited liability company,
General Partner
By: __________________________
Its Manager
"Tenant"
SUGEN, INC., a Delaware corporation
By: _______________________________
Its: ______________________________
77
EXHIBIT 10.64
*** TEXT OMITTED AND FILED SEPARATELY
CONFIDENTIAL TREATMENT REQUESTED
UNDER 17 C.F.R. SS.SS.200.80(B)(4),
200.83 AND 240.24B-2
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF ANY STATE.
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND
MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE
APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN
FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED
TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE
SECURITIES LAWS.
SUGEN, INC.
WARRANT FOR THE PURCHASE OF SHARES OF COMMON STOCK
June 30, 1997 [...*...] Shares
For Value Received, SUGEN, Inc. a Delaware corporation (the "Company"),
with its principal office at 351 Galveston Drive, Redwood City, California
94063-4720, hereby certifies that SDK Incorporated, a Delaware corporation
("Holder"), or its assigns, in partial consideration for that certain
Build-to-Suit Lease dated June 11, 1997 between the Company and Britannia Pointe
Grand Limited Partnership, a Delaware limited partnership ("Landlord"), is
entitled, subject to the provisions of this Warrant, to purchase from the
Company, at any time before 5:00 p.m. (Pacific Daylight Time) [...*....] (the
"Expiration Date"), the number of fully paid and nonassessable shares of Common
Stock of the Company set forth above, subject to adjustment as hereinafter
provided.
Holder may purchase such number of shares of Common Stock at a purchase
price per share (as appropriately adjusted pursuant to Section 6 hereof) of
[...*...] (the "Exercise Price"). The term "Common Stock" shall mean the
aforementioned Common Stock of the Company, together with any other equity
securities that may be issued by the Company in addition thereto or in
substitution therefor as provided herein.
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*CONFIDENTIAL TREATMENT REQUESTED
1.
<PAGE>
The number of shares of Common Stock to be received upon the exercise
of this Warrant and the price to be paid for a share of Common Stock are subject
to adjustment from time to time as hereinafter set forth. The shares of Common
Stock deliverable upon such exercise, as adjusted from time to time, are
hereinafter sometimes referred to as "Warrant Shares."
Section 1. EXERCISE OF WARRANT. This Warrant may be exercised in whole
or in part, but in no more than three parts, on any business day prior to the
Expiration Date by presentation and surrender hereof to the Company at its
principal office at the address set forth in the initial paragraph hereof (or at
such other address as the Company may hereafter notify Holder in writing) with
the Purchase Form annexed hereto duly executed and accompanied by proper payment
of the Exercise Price in lawful money of the United States of America in the
form of a check, subject to collection, for the number of Warrant Shares
specified in the Purchase Form. If this Warrant should be exercised in part
only, the Company shall, upon surrender of this Warrant, execute and deliver a
new Warrant dated as of the date hereof and evidencing the rights of Holder
thereof to purchase the balance of the Warrant Shares purchasable hereunder.
Upon receipt by the Company of this Warrant and such Purchase Form, together
with proper payment of the Exercise Price, at the principal office of the
Company, Holder shall be deemed to be the holder of record of the Warrant
Shares, notwithstanding that the stock transfer books of the Company shall then
be closed or that certificates representing such Warrant Shares shall not then
be actually delivered to Holder.
In addition to and without limiting the rights of Holder under any
other terms set forth herein, Holder shall have the right, upon written request
by Holder delivered or transmitted to the Company together with this Warrant, to
exchange this Warrant, in whole or in part at any time on or before the
Expiration Date, for the number of shares of Common Stock of the Company having
an aggregate current market price on the date of such exchange (determined as
provided in Section 3 below) equal to the difference between (a) the aggregate
current market value on the date of such exchange (determined as aforesaid) of a
number of Warrant Shares designated by Holder (the "Designated Shares"), and (b)
the aggregate Exercise Price Holder would have paid to the Company to purchase
the Designated Shares upon exercise of this Warrant. Upon such exchange, the
number of Warrant Shares purchasable upon exercise of this Warrant shall be
reduced by the number of Designated Shares and, if a balance of purchasable
Warrant Shares remains after such exchange, the Company shall execute and
deliver to Holder a new Warrant dated as of the date hereof and evidencing the
right to purchase such balance of Warrant Shares; provided, that no fractional
shares shall be issuable upon such exchange, and if the number of shares of
Common Stock determined in accordance with the foregoing formula is other than a
whole number, the Company shall pay Holder an amount by check, determined in
accordance with the provisions of Section 3.
Section 2. RESERVATION OF SHARES. The Company hereby agrees that at all
times there shall be reserved for issuance and delivery upon exercise of this
Warrant all shares of its Common Stock or other shares of capital stock of the
Company from time to time issuable upon exercise of this Warrant. All such
shares shall be duly authorized and, when issued upon such exercise in
accordance with the terms of this Warrant, shall be validly issued, fully paid
and nonassessable, free and clear of all liens, security interests, charges and
other encumbrances or restrictions on sale (other than as provided in the
Company's certificate of incorporation and any
2.
<PAGE>
restrictions on sale set forth herein or pursuant to applicable federal and
state securities laws) and free and clear of all preemptive rights.
Section 3. FRACTIONAL INTEREST. The Company will not issue a fractional
share of Common Stock upon exercise of a Warrant. Instead, the Company will
deliver its check for the current market value of the fractional share. The
current market value of a fraction of a share is determined as follows: multiply
the current market price of a full share by the fraction of a share and round
the result to the nearest cent.
The current market price of a share of Common Stock for purposes of
this Section 3 is the last reported sales price of the Common Stock on the last
trading day prior to the exercise date, as reported by the Nasdaq National
Market, or the primary national securities exchange on which the Common Stock is
then quoted; provided, however, that if the Common Stock is neither traded on
the Nasdaq National Market nor on a national securities exchange, the price
referred to above shall be the closing price reflected in the over-the counter
market for the last trading day prior to the exercise date for which such a
price is reported, as reported by the National Quotation Bureau, Inc. or any
organization performing a similar function, or if closing price are not then
routinely reported for the over-the-counter market, the mean between the last
bid and asked prices reported for the last trading day prior to the exercise
date for which such prices are reported.
Section 4. TRANSFERS; ASSIGNMENT OR LOSS OF WARRANT.
(a) Subject to the terms and conditions contained in paragraph
(b) below and in Section 9 hereof, this Warrant and all rights hereunder are
transferable in whole or in part by Holder and any successor transferee;
provided that, except with respect to transfers to Landlord, to any partner of
Landlord, to any person or entity controlling, controlled by or under common
control with Holder, Landlord or any partner of Landlord or to the National
Electrical Benefit Fund, prior to such transfer Holder shall give thirty (30)
days prior written notice of any such transfer to the Company, and the Company
shall have the right to acquire the Warrant under the identical provisions
contained in such notice by giving Holder written notice within fifteen (15)
days of receipt of such notice. The Company's failure to respond to said notice
within said fifteen (15) days shall be deemed a waiver of this right of first
refusal. The transfer shall be recorded on the books of the Company upon receipt
by the Company of the Transfer Notice annexed hereto, at its principal offices
and the payment to the Company of all transfer taxes and other governmental
charges imposed on such transfer.
(b) Holder shall not, without obtaining the prior written
consent of the Company, which consent shall not be unreasonably withheld, assign
its interest in this Warrant in whole or in part to any person or persons,
except that Holder shall have the right, without the Company's consent but with
prior or concurrent written notice to the Company, to transfer this Warrant to
Landlord, to any partner of Landlord, to any person or entity controlling,
controlled by or under common control with Holder, Landlord or any partner of
Landlord or to the National Electrical Benefit Fund (so long as the number of
such transferee partners or affiliates does not exceed five (5) in the
aggregate), subject to compliance with applicable federal and state securities
laws. Subject to the provisions of Section 9, upon surrender of this Warrant
3.
<PAGE>
to the Company or at the office of its stock transfer agent or warrant agent,
with the Assignment Form annexed hereto duly executed and funds sufficient to
pay any transfer tax, the Company shall, without charge, execute and deliver a
new Warrant or Warrants dated as of the date hereof and registered in the name
of the assignee or assignees named in such instrument of assignment (any such
assignee will then be a "Holder" for purposes of this Warrant) and, if Holder's
entire interest is not being assigned, in the name of Holder, and this Warrant
shall promptly be canceled.
(c) Upon receipt of evidence satisfactory to the Company of
the loss, theft, destruction or mutilation of this Warrant, (such as an
affidavit of the registered Holder) and (in the case of loss, theft or
destruction) of indemnification satisfactory to the Company, and upon surrender
and cancellation of this Warrant, if mutilated, the Company shall execute and
deliver a new Warrant of like tenor and date. In the event that this Warrant is
lost, stolen, destroyed or mutilated, Holder shall pay all reasonable attorneys'
fees and expenses incurred by the Company in connection with the replacement of
this Warrant and the issuance of a new Warrant.
Section 5. RIGHTS OF HOLDER. Holder shall not, by virtue hereof, be
entitled to any rights of a stockholder in the Company, either at law or equity,
and the rights of Holder are limited to those expressed in this Warrant. Nothing
contained in this Warrant shall be construed as conferring upon Holder hereof
the right to vote or to consent or to receive notice as a stockholder of the
Company on any matters or with respect to any rights whatsoever as a stockholder
of the Company. No dividends or interest shall be payable or accrued in respect
of this Warrant or the interest represented hereby or the Warrant Shares
purchasable hereunder until, and only to the extent that, this Warrant shall
have been exercised in accordance with its terms.
Section 6. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES. The
number and kind of securities purchasable upon the exercise of this Warrant and
the Exercise Price shall be subject to adjustment from time to time upon the
beginning of certain events, as follows:
(a) Adjustment for Change in Capital Stock. If at any time
after the date hereof the Company:
(A) pays a dividend in Common Stock or makes a
distribution on its Common Stock in shares of its
Common Stock;
(B) subdivides its outstanding shares of Common Stock
into a greater number of shares;
(C) combines its outstanding shares of Common Stock into
a smaller number of shares;
(D) makes a distribution on its Common Stock in shares of
its capital stock other than Common Stock; or
4.
<PAGE>
(E) issues by reclassification, recapitalization or
reorganization of its Common Stock or in exchange for
its Common Stock any shares of its capital stock;
then the Exercise Price in effect immediately prior to such action and the
number and kind (if applicable) of securities purchasable upon exercise of this
Warrant shall be adjusted so that Holder may receive upon exercise of this
Warrant and payment of the same aggregate consideration the number of shares of
capital stock of the Company which Holder would have owned immediately following
such action if Holder had exercised this Warrant immediately prior to such
action.
The adjustment shall become effective immediately after the record date
in the case of a dividend or distribution and immediately after the effective
date in the case of a subdivision, combination or reclassification.
(b) Minimum Adjustment. All calculations under this Section 6
shall be made to the nearest cent or to the nearest share, as the case may be.
(c) Deferral of Issuance or Payment. In any case in which an
event covered by this Section 6 shall require that an adjustment in the Exercise
Price be made effective as of a record date, the Company may elect to defer
until the occurrence of such event (i) issuing to Holder, if this Warrant is
exercised after such record date, the shares of Common Stock and other capital
stock of the Company, if any, issuable upon such exercise over and above the
shares of Common Stock or other capital stock of the Company, if any, issuable
upon such exercise on the basis of the Exercise Price in effect prior to such
adjustment, and (ii) paying to Holder by check any amount in lieu of the
issuance of fractional shares pursuant to Section 3.
(d) When No Adjustment Required. No adjustment shall be
required for a change in the par value or no par value of the Common Stock. To
the extent this Warrant becomes exercisable into cash, no adjustment shall be
required thereafter as to the cash, and interest will not accrue on the cash.
(e) Notice of Certain Actions. In the event that:
(A) the Company shall authorize the issuance to all
holders of its Common Stock of rights, warrants, options or convertible
securities to subscribe for or purchase shares of its Common Stock or of any
other subscription rights, warrants, options or convertible securities; or
(B) the Company shall authorize the distribution to all
holders of its Common Stock of evidences of its indebtedness or assets (other
than dividends paid in or distributions of the Company's capital stock for which
the Exercise Price shall have been adjusted pursuant to subsection (a) of this
Section 6 or cash dividends or cash distributions payable out of consolidated
current or retained earnings as shown on the books of the Company and paid in
the ordinary course of business); or
5.
<PAGE>
(C) the Company shall authorize any capital reorganization
or reclassification of the Common Stock (other than a subdivision or combination
of the outstanding Common Stock and other than a change in par value of the
Common Stock) or any consolidation or merger to which the Company is a party and
for which approval of any stockholders of the Company is required (other than a
consolidation or merger in which the Company is the continuing corporation and
that does not result in any reclassification or change of the Common Stock
outstanding), or the conveyance or transfer of the properties and assets of the
Company as an entirety or substantially as an entirety; or
(D) the Company is the subject of a voluntary or
involuntary dissolution, liquidation or winding-up procedure; or
(E) the Company proposes to take any action (other than
actions of the character described in subsection (a) of this Section 6) that
would require an adjustment of the Exercise Price pursuant to this Section 6;
then the Company shall cause to be mailed by first-class mail to Holder, at
least ten (10) days prior to the applicable record or effective date hereinafter
specified, a notice stating (x) the date as of which the holders of Common Stock
of record to be entitled to receive any such rights, warrants or distributions
are to be determined and the date on which distribution of such rights, warrants
or distributions is expected to be made, or (y) the date on which any such
consolidation, merger, conveyance, transfer, dissolution, liquidation or
winding-up is expected to become effective, and the date as of which it is
expected that holders of Common Stock of record shall be entitled to exchange
their shares of Common Stock for securities or other property, if any,
deliverable upon such reorganization, reclassification, consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding-up; provided, however,
that Holder shall make a best efforts attempt to respond to such notice (to the
extent any such response is required or permitted hereunder or is reasonably
requested by the Company) as early as possible after the receipt thereof.
(f) No Adjustment After Exercise of Warrant. No adjustments
shall be made under any Section herein in connection with the issuance of
Warrant Shares after exercise of this Warrant.
Section 7. NOTICE OF ADJUSTMENT. Upon any adjustment of the Exercise
Price or any increase or decrease in the number of shares of Common Stock
purchasable upon the exercise of this Warrant, the Company shall give written
notice thereof, by certified or registered mail, postage prepaid and return
receipt requested, addressed to the registered Holder at the address of such
Holder as shown on the books of the Company. The notice shall be signed by the
Company's chief financial officer and shall state the Exercise Price resulting
from such adjustment and the increase or decrease, if any, in the number of
shares purchasable at such price upon the exercise of this Warrant, setting
forth in reasonable detail the method of calculation and the facts upon which
such calculation is based.
Section 8. RECLASSIFICATION, REORGANIZATION, CONSOLIDATION OR MERGER.
In the event of any reclassification, capital reorganization or other change of
outstanding shares of
6.
<PAGE>
Common Stock of the Company (other than a subdivision or combination of the
outstanding Common Stock and other than a change in the par value of the Common
Stock) or in the event of any consolidation or merger of the Company with or
into another corporation (other than a merger in which the Company is the
continuing corporation and that does not result in any reclassification, capital
reorganization or other change of outstanding shares of Common Stock of the
class issuable upon exercise of this Warrant) or in the event of any sale,
lease, transfer or conveyance to another corporation of the property and assets
of the Company as an entirety or substantially as an entirety, the Company
shall, as a condition precedent to such transaction, cause effective provisions
to be made so that Holder shall have the right thereafter, by exercising this
Warrant (in lieu of the shares of the Common Stock of the Company immediately
theretofore purchasable and receivable upon exercise of the rights represented
hereby) to purchase the kind and amount of shares of stock and other securities
and property (including cash) receivable upon such reclassification, capital
reorganization and other change, consolidation, merger, sale or conveyance by a
holder of the number of shares of Common Stock that might have been received
upon exercise of this Warrant immediately prior to such reclassification,
capital reorganization, change, consolidation, merger, sale or conveyance;
provided, however, that in the event (a) the value of the stock, securities or
other assets or property (determined in good faith by the Board of Directors of
the Company) issuable or payable with respect to one share of the Common Stock
of the Company immediately theretofore purchasable and receivable upon the
exercise of the rights represented hereby is in excess of the Exercise Price
hereof effective at the time of the merger (after giving effect to any
adjustment in such Exercise Price required to be made under the terms of this
Warrant), and (b) the securities received in such reorganization, if any, are
publicly traded, then this Warrant shall expire unless exercised prior to the
reorganization. Any such provision shall include provisions for adjustments in
respect of such shares of stock and other securities and property that shall be
as nearly equivalent as may be practicable to the adjustments provided for in
this Warrant. The foregoing provisions of this Section 8 shall similarly apply
to successive reclassifications, capital reorganizations and changes of shares
of Common Stock and to successive consolidations, mergers, sales or conveyances.
In the event that in connection with any such capital reorganization or
reclassification, consolidation, merger, sale or conveyance, additional shares
of Common Stock shall be issued in exchange, conversion, substitution or
payment, in whole or in part, for or of, a security of the Company other than
Common Stock, any such issue shall be treated as an issue of Common Stock
covered by the provisions of subsection (a) of Section 6.
Section 9. TRANSFER TO COMPLY WITH THE SECURITIES ACT OF 1933. This
Warrant may not be exercised and neither this Warrant nor any of the Warrant
Shares, nor any interest in either, may be offered, sold, assigned, pledged,
hypothecated, encumbered or in any other manner transferred or disposed of, in
whole or in part, except in compliance with applicable United States federal and
state securities or blue sky laws and the terms and conditions hereof. Each
Warrant shall bear a legend in substantially the same form as the legend set
forth on the first page of this Warrant. Each certificate for Warrant Shares
issued upon exercise of this Warrant, unless at the time of exercise such
Warrant Shares are acquired pursuant to a registration statement that has been
declared effective under the Securities Act of 1933, as amended (the "Securities
Act"), and applicable blue sky laws, shall bear a legend substantially in the
following form:
7.
<PAGE>
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES
LAWS OF ANY STATE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT
AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS,
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. THE ISSUER OF THESE
SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR
RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE
SECURITIES LAWS.
Any certificate for any Warrant Shares issued at any time in exchange or
substitution for any certificate for any Warrant Shares bearing such legend
(except a new certificate for any Warrant Shares issued after the acquisition of
such Warrant Shares pursuant to a registration statement that has been declared
effective under the Securities Act) shall also bear such legend unless, in the
opinion of counsel for the Company, the Warrant Shares represented thereby need
no longer be subject to the restriction contained herein. The provisions of this
Section 9 shall be binding upon all subsequent holders of certificates for
Warrant Shares bearing the above legend and all subsequent holders of this
Warrant, if any.
Section 10. REPRESENTATIONS AND COVENANTS OF HOLDER. This Warrant has
been entered into by the Company in reliance upon the following representations
and covenants of Holder, which by its execution hereof Holder hereby confirms:
(a) Investment Purpose. The right to acquire Common Stock, and
any Common Stock issued upon exercise of Holder's rights contained herein, will
be acquired for investment and not with a view to the sale or distribution of
any part thereof, and Holder has no present intention of selling or engaging in
any public distribution of the same except pursuant to a registration or
exemption.
(b) Private Issue. Holder understands (i) that the Common
Stock issuable upon exercise of Holder's rights contained herein is not
registered under the Securities Act or qualified under applicable state
securities laws on the ground that the issuance contemplated by this Warrant
will be exempt from the registration and qualification requirements thereof, and
(ii) that the Company's reliance on such exemption is predicated on the
representations set forth in this Section 10.
(c) Disposition of Holder's Rights. In no event will Holder
make a disposition of any of its rights to acquire Common Stock, or of any
Common Stock issued upon exercise of such rights, unless and until (i) it shall
have notified the Company of the proposed disposition, and (ii) if requested by
the Company, it shall have furnished the Company with an opinion of counsel
(which counsel may either be inside or outside counsel to Holder) satisfactory
to the Company and its counsel to the effect that (A) appropriate action
necessary for compliance with the Securities Act has been taken, or (B) an
exemption from the registration requirements
8.
<PAGE>
of the Securities Act is available. Notwithstanding the foregoing, the
restrictions imposed upon the transferability of any of its rights to acquire
Common Stock, or of any Common Stock issued on the exercise of such rights do
not apply to transfers from the beneficial owner of any of the aforementioned
securities to its nominee or from such nominee to its beneficial owner, and
shall terminate as to any particular share of Common Stock when (1) such
security shall have been effectively registered under the Act and sold by the
holder thereof in accordance with such registration, (2) such security shall
have been sold without registration in compliance with Rule 144 under the
Securities Act, or (3) a letter shall have been issued to Holder at its request
by the staff of the Securities and Exchange Commission or a ruling shall have
been issued to Holder at its request by such Commission stating that no action
shall be recommended by such staff or taken by such Commission, as the case may
be, if such security is transferred without registration under the Securities
Act in accordance with the conditions set forth in such letter or ruling, and
such letter or ruling specifies that no subsequent restrictions on transfer are
required. Whenever the restrictions imposed hereunder shall terminate, as
hereinabove provided, Holder or a holder of a share of Common Stock then
outstanding as to which such restrictions have terminated shall be entitled to
receive from the Company, without expense to such holder, one or more new
certificates for the Warrant or for such shares of Common Stock not bearing any
restrictive legend.
(d) Financial Risk. Holder has such knowledge and experience
in financial and business matters as to be capable of evaluating the merits and
risks of its investment and has the ability to bear the economic risks of its
investment.
(e) Risk of No Registration. Holder understands that if the
Company does not register with the Securities and Exchange Commission pursuant
to Section 12 of the Securities Act, or file reports pursuant to Section 15(d)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act), or if a
registration statement covering the securities under the Securities Act is not
in effect when Holder desires to sell (i) the rights to purchase Common Stock
pursuant to this Warrant, or (ii) the Common Stock issued upon exercise of the
right to purchase, Holder may be required to hold such securities for an
indefinite period. Holder also understands that any sale of the rights of Holder
to purchase Common Stock, or of any Common Stock, which might be made by Holder
in reliance upon Rule 144 under the Securities Act may be made only in
accordance with the terms and conditions of that Rule.
(f) Accredited Investor. Holder is an "accredited investor"
within the meaning of the Securities and Exchange Commission's Rule 501 of
Regulation D, as presently in effect.
Section 11. REGISTRATION RIGHTS.
(a) If at any time the Company shall determine to register any
of its securities under the Securities Act either for its own account or the
account of a security holder or holders, other than a registration relating
solely to employee benefit plans, or a registration relating solely to a Rule
145 transaction, or a registration on any registration form that does not permit
secondary sales, then the Company will:
(A) promptly give to Holder a written notice thereof; and
9.
<PAGE>
(B) use its best efforts to include in such registration
(and any related qualification under blue sky laws or other compliance), except
as set forth in Section 11(b) below, and in any underwriting involved therein,
all of the Warrant Shares specified in a written request or requests made by
Holder and received by the Company within ten (10) days after the written notice
from the Company described in clause (A) above is mailed or delivered by the
Company. Such written request may specify all or a part of the Warrant Shares.
(b) If the registration of which the Company gives notice to
Holder is for a registered public offering involving an underwriting, the
Company shall so advise Holder as a part of the written notice given pursuant to
Section 11(a)(A). In such event, the right of Holder to registration pursuant to
Section 11(a) shall be conditioned upon Holder's participation in such
underwriting and the inclusion of all or any part of the Warrant Shares
specified in Holder's notice in the underwriting to the extent provided herein.
Holder shall (together with the Company and the other holders of securities of
the Company with registration rights to participate therein distributing their
securities through such underwriting) enter into an underwriting agreement in
customary form with the representative of the underwriter or underwriters
selected by the Company.
Notwithstanding any other provision of Sections 11(a) or (b), if the
representative of the underwriters advises the Company in writing that marketing
factors require a limitation on the number of shares to be underwritten, the
representative may (subject to the limitations set forth below) exclude all of
the Warrant Shares from, or limit the number of Warrant Shares to be included
in, the registration and underwriting. The Company shall so advise Holder and
other holders of securities requesting registration, and the number of shares
that are entitled to be included in the registration and underwriting shall be
allocated first to the Company for securities being sold for its own account and
thereafter the number of shares that are entitled to be included in the
registration shall be allocated among Holder and other holders requesting
inclusion of shares on a pro rata basis, subject to any prior agreements among
the Company and its other stockholders, but only to the extent that such other
agreements provide for additional limitations on the number of shares such other
stockholders or the Company will be entitled to include in the registration,
which agreements are in effect as of the date hereof. If Holder or any other
person does not agree to the terms of any such underwriting, Holder and any
other such person shall be excluded therefrom by written notice from the Company
or the underwriter. Any Warrant Shares or other securities excluded or withdrawn
from such underwriting shall also be withdrawn from such registration.
(c) As used herein, "Registration Expenses" shall mean all
expenses incurred by the Company in complying with this Section 11, including,
without limitation, all registration, qualification and filing fees; printing
expenses; fees and disbursements of counsel for the Company and the fees and
disbursements of counsel for the Company in its capacity as counsel to Holder
and other holders hereunder; if due to an actual or potential conflict of
interest Company counsel does not make itself available for this purpose, the
Company will pay the reasonable fees and disbursements of one counsel for Holder
and other holders as mutually agreed upon by all such holders; fees of the
Company's independent accounting firm; blue sky fees and expenses; and the
expense of any special audits incident to or required by any such registration
(but excluding the compensation of regular employees of the Company which shall
10.
<PAGE>
be paid in any event by the Company). All Registration Expenses in connection
with any registration pursuant to Section 11(a) hereof shall be borne by the
Company; provided, however, that (A) any incremental filing fees or other
expenses incurred by the Company solely by reason of Holder's exercise of
registration rights pursuant to Section 11(a), and (B) any underwriting
discounts and commissions payable in connection with Holder's exercise of
registration rights pursuant to Section 11(a) shall be borne by Holder.
(d) The rights conferred upon Holder under this Section 11 may
be assigned by Holder to any permitted transferee of the Warrant Shares;
provided that such transfer complies with Section 9 hereof.
(e) In the event any Warrant Shares are included in a
registration statement under Section 11(a):
(A) To the extent permitted by law, the Company will
indemnify and hold harmless Holder, the partners, officers, directors and legal
counsel of Holder, any underwriter (as defined in the Securities Act) for Holder
and each person, if any, who controls Holder or such underwriter within the
meaning of the Securities Act or the Exchange Act, against any losses, claims,
damages, or liabilities (joint or several) to which they may become subject
under the Securities Act, the Exchange Act or other federal or state law,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any of the following statements,
omissions or violations (collectively a "Violation") by the Company: (i) any
untrue statement or alleged untrue statement of a material fact contained in
such registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto, (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not misleading, or
(iii) any violation or alleged violation by the Company of the Securities Act,
the Exchange Act, any state securities law or any rule or regulation promulgated
under the Securities Act, the Exchange Act or any state securities law in
connection with the offering covered by such registration statement; and the
Company will reimburse Holder and each partner, officer or director, underwriter
or controlling person for any legal or other expenses reasonably incurred by
them in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity agreement contained
in this Section 11(e)(A) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability or action if such settlement is effected
without the consent of the Company, which consent shall not be unreasonably
withheld, nor shall the Company be liable in any such case for any such loss,
claim, damage, liability or action to the extent that it arises out of or is
based upon a Violation which occurs in reliance upon and in conformity with
written information furnished expressly for use in connection with such
registration by Holder or such partner, officer, director, underwriter or
controlling person of Holder.
(B) To the extent permitted by law, Holder will indemnify
and hold harmless the Company, each of its directors, its officers and legal
counsel and each person, if any, who controls the Company within the meaning of
the Securities Act, any underwriter and any other person selling securities
under such registration statement or any of such other person's partners,
directors or officers or any person who controls such person, against any
11.
<PAGE>
losses, claims, damages or liabilities (joint or several) to which the Company
or any such director, officer, controlling person, underwriter or other such
person, or partner, director, officer or controlling person of such person may
become subject under the Securities Act, the Exchange Act or other federal or
state law, insofar as such losses, claims, damages or liabilities (or actions in
respect thereto) arise out of or are based upon any Violation, in each case to
the extent (and only to the extent) that such Violation occurs in reliance upon
and in conformity with written information furnished by Holder under an
instrument duly executed by Holder and stated to be specifically for use in
connection with such registration; and Holder will reimburse any legal or other
expenses reasonably incurred by the Company or any such director, officer,
controlling person, underwriter or other person, or partner, officer, director
or controlling person of such other person in connection with investigating or
defending any such loss, claim, damage, liability or action if it is judicially
determined that there was such a Violation; provided, however, that the
indemnity agreement contained in this Section 11(e)(B) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of Holder, which consent
shall not be unreasonably withheld; provided further, that in no event shall any
indemnity under this Section 11(e)(B) exceed the net proceeds from the offering
received by such Holder.
(C) Promptly after receipt by an indemnified party under
this Section 11(e) of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 11(e), deliver
to the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if materially prejudicial to its ability to
defend such action, shall relieve such indemnifying party of any liability to
the indemnified party under this Section 11(e), but the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Section
11(e).
(D) If the indemnification provided for in this Section
11(e) is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any losses, claims, damages or liabilities
referred to herein, the indemnifying party, in lieu of indemnifying such
indemnified party thereunder, shall to the extent permitted by applicable law
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability in such proportion as is appropriate to
reflect the relative fault of the indemnifying party on the one hand and of the
indemnified party on the other in connection with the Violation(s) that resulted
in such loss, claim, damage or liability, as well as any other relevant
equitable considerations. The relative fault of the indemnifying party and of
the indemnified party shall be determined by a court of law by reference to,
among other things,
12.
<PAGE>
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission; provided, that in no event shall any contribution by
Holder hereunder exceed the proceeds from the offering received by Holder.
(E) The obligations of the Company and Holder under this
Section 11(e) shall survive completion of any offering of securities in a
registration statement pursuant to Section 11. No indemnifying party, in the
defense of any such claim or litigation, shall, except with the consent of each
indemnified party, consent to entry of any judgment or enter into any settlement
which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such indemnified party of a release from all liability
in respect to such claim or litigation.
Section 12. SATURDAYS, SUNDAYS AND HOLIDAYS. If the last or appointed
day for the taking of any action or the expiration of any right required or
granted herein shall be a Saturday or a Sunday or shall be a legal holiday in
the State of California, then such action may be taken or such right may be
exercised on the next succeeding day not a Saturday, Sunday or legal holiday in
the State of California.
Section 13. ISSUE TAX. The issuance of certificates for Common Stock
upon the exercise of the Warrant shall be made without charge to the holder of
the Warrant for any issue tax (other than any applicable income taxes) in
respect thereof; provided, however, that the Company shall not be required to
pay any tax which may be payable in respect of any transfer involved in the
issuance and delivery of any certificates in a name other than that of the then
Holder of the Warrant being exercised.
Section 14. MODIFICATION AND WAIVER. Neither this Warrant nor any term
hereof may be changed, waived, discharged or terminated other than by an
instrument in writing signed by the Company and by Holder.
Section 15. NOTICES. Unless otherwise specified herein, any notice,
request or other document required or permitted to be given or delivered to
Holder or the Company shall be given in writing and shall be deemed effectively
given (i) upon personal delivery to the party to be notified, (ii) three (3)
days after deposit in the United States mail if sent by registered or certified
mail, postage prepaid, or (iii) one (1) day after deposit with an overnight
courier, specifying next day delivery, with written verification of receipt. All
communications shall be sent to Holder at its address as shown on the books of
the Company, or to the Company at the address indicated therefor in the first
paragraph of this Warrant.
Section 16. DESCRIPTIVE HEADINGS AND GOVERNING LAW. The descriptive
headings of the several sections and paragraphs of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant. This Warrant
shall be construed and enforced in accordance with, and the rights of the
parties shall be governed by, the laws of the State of California, without
regard to its conflicts of laws principles.
13.
<PAGE>
Section 17. ATTORNEYS' FEES. In any litigation, arbitration or court
proceeding between the Company and Holder relating hereto, the prevailing party
shall be entitled to attorneys' fees and expenses and all costs of proceedings
incurred in enforcing this Warrant.
Section 18. SURVIVAL. The representations, warranties, covenants and
conditions of the respective parties contained herein or made pursuant to this
Warrant shall survive the execution and delivery of this Warrant.
Section 19. SEVERABILITY. In the event any one or more of the
provisions of this Warrant shall for any reason be held invalid, illegal or
unenforceable, the remaining provisions of this Warrant shall be unimpaired, and
the invalid, illegal or unenforceable provision shall be replaced by a mutually
acceptable valid, legal and enforceable provision, which comes closest to the
intention of the parties underlying the invalid, illegal or unenforceable
provision.
Section 20. NO IMPAIRMENT. The Company will not, by amendment of its
charter or through reorganization, consolidation, merger, dissolution, sale of
assets or any other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times in good
faith assist in the carrying out of all such terms and in the taking of all such
action as may be necessary or appropriate in order to protect the rights of the
holder of this Warrant against impairment.
Section 21. COMPANY INFORMATION. Notwithstanding the provisions of
Section 5 hereof, as a courtesy to Holder and to assist Holder in making
informed decisions regarding the possible exercise of this Warrant, the Company
agrees to provide to Holder from time to time, upon written request by Holder to
the chief financial officer of the Company from time to time (but not more often
than twice in any calendar year), copies of (a) the Company's Form 10-K and
annual report most recently filed with the Securities and Exchange Commission,
(b) any Form 10-Qs or other interim reports filed by the Company with the
Securities and Exchange Commission since the end of the period covered by such
Form 10-K and annual report, and (c) any proxy statements, reports or other
notices distributed to holders of the Company's Common Stock within the twelve
(12) months preceding such request (or within the period since the last such
request by Holder, whichever is shorter).
14.
<PAGE>
IN WITNESS WHEREOF, the Company has duly caused this Warrant to be
signed by its duly authorized officer and to be dated as of June 30, 1997.
Company:
SUGEN, INC.
By:
---------------------------------
Stephen Evans-Freke
Chief Executive Officer
Holder:
SDK INCORPORATED
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
15.
<PAGE>
PURCHASE FORM
Dated ___________, 19____
The undersigned hereby irrevocably elects to exercise the within
Warrant to purchase ______ shares of Common Stock and hereby makes payment of
$_____________ in payment of the exercise price thereof, together with all
applicable transfer taxes, if any.
In exercising its rights to purchase the Common Stock of SUGEN, Inc.,
the undersigned hereby confirms and acknowledges the investment representations
and warranties made in Section 10 of the Warrant.
Please issue a certificate or certificates representing said shares of
Common Stock in the name of the undersigned or in such other name as is
specified below.
------------------------------------
(Name)
------------------------------------
(Address)
Holder:
SDK INCORPORATED
By:
--------------------------------
Name:
-------------------------------
Title:
------------------------------
<PAGE>
ASSIGNMENT FORM
Dated _________, _____
FOR VALUE RECEIVED, SDK Incorporated hereby sells, assigns and
transfers unto _______________________________________________ (the "Assignee"),
(please type or print in block letters)
________________________________________________________________________________
(insert address)
its right to purchase up to _______ shares of Common Stock represented by this
Warrant and does hereby irrevocably constitute and appoint
____________________________ attorney, to transfer the same on the books of the
Company, with full power of substitution in the premises.
SDK INCOPORATED
By:
--------------------------------
Name:
-------------------------------
Title:
------------------------------
<PAGE>
TRANSFER NOTICE
(To transfer or assign the foregoing Warrant, execute this form and
supply required information. Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby transferred and assigned to:
________________________________________________________________________________
(Please Print)
whose address is _______________________________________________________________
________________________________________________________________________________
Dated_______________________________
Holder's Signature__________________
Holder's Address____________________
____________________________________
Note: The signature to this Transfer Notice must correspond with the name
as it appears on the face of the Warrant, without alteration or
enlargement or any change whatever. Officers of corporations and
those acting in a fiduciary or other representative capacity should
file proper evidence of authority to assign the foregoing Warrant.
EXHIBIT 10.65
***TEXT OMITTED AND FILED SEPARATELY
CONFIDENTIAL TREATMENT REQUESTED
UNDER 17 C.F.R. SS.SS. 200.80(B)(4),
200.83 AND 240.24B-2
SECOND AMENDED AND RESTATED
NYU/SUGEN
RESEARCH AND LICENSE AGREEMENT
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS..................................................... 1
SECTION 2. EFFECTIVE DATE.................................................. 4
SECTION 3. PERFORMANCE OF THE NYU RESEARCH PROJECT......................... 4
SECTION 4. FUNDING OF THE NYU RESEARCH PROJECT............................. 5
SECTION 5. TITLE........................................................... 6
SECTION 6. PATENTS AND PATENT APPLICATIONS................................. 6
SECTION 7. GRANT OF LICENSE................................................ 8
SECTION 8. PAYMENTS FOR LICENSE............................................ 9
SECTION 9. SUGEN OWNERSHIP CHANGE.......................................... 10
SECTION 10. METHOD OF PAYMENT. ............................................. 11
SECTION 11. DEVELOPMENT AND COMMERCIALIZATION............................... 11
SECTION 12. CONFIDENTIAL INFORMATION........................................ 13
SECTION 13. PUBLICATION..................................................... 13
SECTION 14. INFRINGEMENT OF NYU PATENT...................................... 14
SECTION 15. LIABILITY AND INDEMNIFICATION................................... 15
SECTION 16. SECURITY FOR INDEMNIFICATION.................................... 16
SECTION 17. EXPIRY AND TERMINATION.......................................... 17
SECTION 18. REPRESENTATIONS BY SUGEN AND NYU................................ 18
i.
<PAGE>
SECTION 19. ASSIGNMENT...................................................... 19
SECTION 20. USE OF NAME..................................................... 19
SECTION 21. MISCELLANEOUS................................................... 20
ii.
<PAGE>
SECOND AMENDED AND RESTATED
NYU/SUGEN
RESEARCH AND LICENSE AGREEMENT
This Agreement, effective as of September 1, 1991 ("the Effective
Date"), is by and between:
NEW YORK UNIVERSITY, a corporation organized and existing under the
laws of the State of New York ("NYU") and having a place of business at 70
Washington Square South, New York, New York 10012; and
SUGEN, INC., a corporation organized and existing under the laws of the
State of Delaware ("SUGEN") and having its principal office at 515 Galveston
Drive, Redwood City, California 94063-4720.
RECITALS
WHEREAS, Dr. Joseph Schlessinger of NYU (the "NYU Scientist") has made
certain inventions (the "Pre-Existing Inventions") with respect to Receptors (as
hereinafter defined), including those listed in Appendix I.
WHEREAS, NYU is willing to perform the NYU Research Project;
WHEREAS, subject to the terms and conditions hereinafter set forth, NYU
is willing to grant to SUGEN and SUGEN is willing to accept from NYU the License
(as hereinafter defined); and
WHEREAS, NYU and SUGEN have heretofore entered into the NYU/SUGEN
Research and License Agreement, which became effective on September 1, 1991 (the
"Original Agreement"), and the Amended and Restated NYU/SUGEN Research and
License Agreement effective in November 1993 (the "Amended Agreement") and each
of them desires to amend and restate the Original Agreement and Amended
Agreement in their entireties,
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS.
Whenever used in this Agreement, the following terms shall have the
following meanings:
(a) "Calendar Year" shall mean any consecutive period of twelve months
commencing on the first day of January of any year.
(b) "Corporation Entity" shall mean any company or other legal entity
which controls, or is controlled by, or is under common control with, SUGEN;
"control" means the
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holding of more than 50% of (i) the capital and/or (ii) the voting rights and/or
(iii) the right to elect or appoint directors.
(c) "Date of First Commercial Sale" shall mean the date on which the
first arms-length commercial sale of a SUGEN Product is made on a product by
product and country by country basis.
(d) "Force Majeure" shall mean any occurrence that prevents or
substantially interferes with the performance by a party of any of its
obligations hereunder, if such occurs by reason of any act of God, flood, fire,
explosion, breakdown of plant, strike, lockout, labor dispute, casualty,
accident, war, revolution, civil commotion, acts of public enemies, blockage,
embargo, injunction, law, order, proclamation, regulation, ordinance, demand or
requirement of any government or of any subdivision, authority or representative
of any such government, inability to procure or use materials, labor, equipment,
transportation or energy sufficient to meet manufacturing needs without the
necessity of allocation, or any other cause whatsoever, whether similar or
dissimilar to those above enumerated, beyond the reasonable control of such
party, if and only if the party affected shall have used reasonable efforts to
avoid such occurrence and to remedy it promptly if it shall have occurred.
(e) "License" shall mean the exclusive worldwide license to practice
the Research Technology (as hereinafter defined) for the research, development,
manufacture, use and sale of SUGEN Products (as hereinafter defined).
(f) "License Revenues" shall mean [...*...] provided that, License
Revenues shall not include any such payments made by any Corporation Entity or
SUGEN to SUGEN or any other Corporation Entity.
(g) "Net Sales" shall mean the total amount [...*...] after deduction
of all the following to the extent applicable to such sale:
(i) all trade, case and quantity credits discounts, refunds or
rebates, including government rebates;
(ii) all amounts of insurance and freight expenses included in
such invoice;
(iii) all allowances or credits for returns;
(iv) all sales commissions; and
(v) all sales taxes (including value added taxes);
provided, that, in respect of any sale that [...*...], after the aforementioned
deductions.
(h) "MPG" shall mean Max-Planck-1 Institut fur Biochemie, Abteilung
Molekularbiologie (Director: Prof. Dr. Axel Ullrich), located in Am Klopferspitz
18a, W-8003
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Martinsreid, an institute of the Max-Planck-Gesellschaft zur Forderung der
Wissenschaften e.V., located in Residenzstrasse 1a, W-8000 Munchen 2, or any
scientist affiliated with Max-Planck-1 Institut fur Biochemie, and/or Garching
Intrumente Gesellschaft zur industriellen Nutzung von Forschungsergebnissen
m.b.h. located in Koniginstrabe 19, W-8000 Munchen 22.
(i) "NYU Know-How" shall mean the Pre-Existing Inventions and any
information and materials (including, but not limited to, pharmaceutical,
chemical, biological and biochemical products, information, trade secrets,
know-how, technical and non-technical data, materials, methods and processes and
any drawings, plans, diagrams, specifications and/or other documents containing
such information) [...*...]. For the avoidance of doubt, NYU Know-How shall
include any of the foregoing that are developed [...*...].
(j) "NYU Patents" shall mean NYU's share in all United States and
foreign patents and patent applications, and any divisions, continuations, in
whole or in part, reissues, renewals and extensions thereof, and pending
applications therefor:
(x) which claim Pre-Existing Inventions and which are
identified on Appendix I hereto; or
(y) which claim inventions that are made, in whole or in
part, [...*...]. For the avoidance of doubt, NYU Patents
shall include any such inventions that are made
[...*...].
(k) "NYU Research Project" shall mean the investigations during the
Research Period into the field of the Receptors under the direction of the NYU
Scientist which are funded by SUGEN and include the research programs described
in Appendix II hereto which forms an integral part hereof.
(l) "Patentable Invention" shall mean a claim in an issued, unexpired
patent that has not been held invalid by any final decision of a court in the
relevant country. It also includes claims in a pending application that has
priority from a specification filed less than seven years previous.
(m) "Receptor" shall mean:
(i) [...*...] and/or
(ii) [...*...] and/or
(iii) [...*...]and/or
(iv) [...*...] of the above receptors.
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(n) "Research Period" shall mean the ten year period commencing on the
Effective Date hereof and any extension thereof as to which NYU and SUGEN shall
mutually agree in writing.
(o) "Research Technology" shall mean all NYU Patents and NYU Know-How.
(p) "Sublicensee" shall mean an entity licensed by SUGEN or a licensee
of SUGEN to develop, make, distribute or sell a SUGEN Product.
(q) "SUGEN Product" shall mean any product for the diagnosis, treatment
or prevention of human disease which contains or comprises:
(i) any Receptor (as hereinafter defined); and/or
(ii) any substance which [...*...] and/or
(iii) any substance [...*...] and/or
(iv) any substance [...*...] and/or
(v) [...*...]
provided that an Investigational New Drug (IND) application is filed for such
SUGEN Product within 4 years from the end of the Research Period. SUGEN Product
shall not include any product that is licensed by SUGEN from a third party other
than MPG, provided that such product does not act by [...*...] a Validated
Target.
(r) "Validated Target" shall mean a Receptor target that has been shown
to be correlated with a particular disease in which a small molecule therapeutic
would offer a reasonable commercial opportunity, and where inhibition of target
function in in vitro and in vivo models leads to effective inhibition of
pathophysiology.
SECTION 2. EFFECTIVE DATE.
This Agreement shall be effective as of the Effective Date and shall
remain in full force and effect until it expires or is terminated in accordance
with Section 17 hereof.
SECTION 3. PERFORMANCE OF THE NYU RESEARCH PROJECT.
(a) In consideration of the sums to be paid to NYU as set forth in
Section 4 below, NYU undertakes to perform the NYU Research Project under the
leadership of the NYU Scientist during the Research Period. If, during the
Research Period, the NYU Scientist shall cease to lead the NYU Research Project,
then NYU shall promptly so notify SUGEN and shall endeavor to find from among
the scientists employed by NYU a scientist or scientists acceptable
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to SUGEN to continue the leadership of the NYU Research Project in place of the
NYU Scientist. If NYU is unable to find such a scientist acceptable to SUGEN
[...*...] the NYU Research Project may be terminated by SUGEN upon written
notice to NYU, in which case SUGEN shall have no further obligation to fund the
NYU Research Project and NYU shall have no further obligation to perform the NYU
Research Project. Such termination of funding of the NYU Research Project
pursuant to this Section 3(a) shall not terminate this Agreement or the License
granted herein. [...*...].
(b) Nothing contained in this Agreement shall be construed as a
warranty on the part of NYU that any results or inventions will be achieved by
the NYU Research Project or that the Research Technology and/or any other
results or inventions achieved by the NYU Research Project, if any, are or will
be commercially exploitable and, furthermore, NYU makes no warranties whatsoever
as to the commercial or scientific value of the Research Technology and/or any
results which may be achieved by the NYU Research Project.
(c) Within sixty (60) days after the end of each six-month period of
each year during the Research Period, NYU shall prepare a written report
summarizing the results of the work conducted on the NYU Research Project during
such preceding six-month period. Within sixty (60) days of the date on which
such report is due to SUGEN, SUGEN and NYU shall hold a meeting at the NYU
research facility, or such other site as the parties may agree, to review the
written report in the format of a scientific exchange. Such meeting shall
include the NYU Scientist.
(d) NYU will have full authority and responsibility for the NYU
Research Project. All students and employees of NYU who work on the NYU Research
Project will do so as employees or students of NYU, and not as employees or
consultants of SUGEN.
SECTION 4. FUNDING OF THE NYU RESEARCH PROJECT.
(a) In addition to prior payments to NYU, as compensation for work to
be performed on the NYU Research Project during the Research Period, subject to
any earlier termination of the Research Project pursuant to Section 3(a) hereof,
SUGEN will pay NYU the following amounts for the remaining years of the Research
Period, after execution of this Second Amended Agreement, for a total of
[...*...]:
Seventh Year [...*...]
Eighth Year [...*...]
Ninth Year [...*...]
Tenth Year [...*...]
such payments shall be paid according to the Schedule of Payments set forth in
Appendix III, which is an integral part of this Agreement.
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(b) Charges with respect to the NYU Research Project shall be made in
accordance with NYU's then prevailing policies and procedures for charging
research expenditures to individual research projects. NYU shall deliver to
SUGEN, [...*...] a report setting out the income and disbursements received and
expended in connection with the NYU Research Project during such year.
(c) SUGEN shall have the annual right (at its own expense) to meet with
the NYU Scientist and review expenditures by NYU in connection with the Research
Project during such year.
(d) NYU shall not, without SUGEN's prior written consent, permit
funding other than provided by SUGEN to be spent on the NYU Research Project;
provided that, nothing in this Agreement shall be interpreted to prohibit NYU
(or the NYU Scientist) from obtaining additional financing or research grants
for the NYU Research Project from not-for-profit entities or United States
government agencies, which grants or financing may render all or part of the NYU
Research Project or the results thereof subject to the patent rights of the
United States government and its agencies, as set forth in Title 35 U.S.C. ss.
200 et seq, provided that such funding is not subject to rights to any other
third party.
SECTION 5. TITLE.
(a) Subject to the License granted to SUGEN hereunder, it is hereby
agreed that all right, title and interest in and to the Research Technology
shall vest solely in NYU except to the extent that any technology is jointly
developed by SUGEN and NYU, in which case, such technology shall be jointly
owned.
(b) SUGEN acknowledges that, subject to the License granted to SUGEN
hereunder, for so long as Dr. Joseph Schlessinger (or any scientist or
researcher working on the NYU Research Project) is employed by NYU, any and all
inventions made by Dr. Schlessinger (or such other scientist or researcher)
shall be owned solely by NYU.
SECTION 6. PATENTS AND PATENT APPLICATIONS.
(a) NYU will promptly disclose to SUGEN in writing any inventions made
during the Research Period and in the course of performance of the NYU Research
Project pertaining to the Research Technology which may constitute the basis for
potential NYU Patents. NYU will fully cooperate with SUGEN to ensure that such
inventions are promptly disclosed, and will make the scientists which made such
inventions available for consultation to attorneys for SUGEN and NYU to achieve
this.
(b) At the initiative of SUGEN or NYU, the parties shall consult with
each other regarding the filing of patent applications in respect of any
inventions pertaining to the Research Technology, including without limitation,
the timing of the filing of such applications, the jurisdiction within which
foreign counterparts of such applications should be filed and other
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details pertaining to the prosecution and maintenance of patent rights.
Notwithstanding the foregoing, the parties agree that:
(i) if SUGEN and NYU disagree at any time regarding the
filing of any patent application in respect of any such invention pertaining to
the Research Technology, upon the delivery of written instructions to the other
party from the party who desires to file such application, the party who so
desires to file such application may proceed to file such application and the
other party shall fully cooperate, and shall instruct their patent counsel to
cooperate, in all matters to ensure that such application may be properly filed
on a timely basis;
(ii) neither party may abandon the prosecution or maintenance
of any such patent application without the prior written consent of the other
party; and
(iii) NYU shall act with respect to the filing of any foreign
counterpart of any such patent application only on and in conformity with the
written instructions of SUGEN.
(c) Patent applications on any inventions pertaining to the Research
Technology shall be filed, prosecuted and maintained by [...*...]. Copies of all
such patent applications and patent office actions shall be forwarded to each of
NYU and SUGEN. [...*...] shall have the right, at its own expense, to have such
patent applications and patent office actions independently reviewed by other
patent counsel separately retained by it, upon prior notice to and consent of
[...*...], which consent shall not unreasonably be withheld.
(d) NYU and SUGEN shall assist, and cause their respective employees
and consultants to assist each other, in assembling inventorship information and
data for the filing and prosecution of patent applications on inventions
pertaining to the Research Technology.
(e) All NYU Patents shall be filed, prosecuted and maintained at the
expense of SUGEN; provided, that, with respect to the filing of those NYU
Patents with which SUGEN disagreed, pursuant to Section 6(c)(i) hereof, such NYU
Patents shall be filed, prosecuted and maintained at the expense of NYU. SUGEN
shall pay [...*...] directly for all costs and fees in connection with the
preparation, filing, maintenance, prosecution, protection and the like of the
NYU Patents, except such costs and fees incurred in connection with those NYU
Patents referred to in the proviso in the immediately preceding sentence, which
shall be paid by NYU.
(f) Nothing herein contained shall be deemed to be a warranty by NYU
that (i) NYU can or will be able to obtain any patent or patents on any patent
application or applications in the NYU Patents or any portion thereof, or that
any of the NYU Patents will afford adequate or commercially worthwhile
protection, or (ii) the manufacture, use or sale of any element of the Research
Technology or any SUGEN Product will not infringe any patent of any third party.
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SECTION 7. GRANT OF LICENSE.
(a) Subject to the terms and conditions hereinafter set forth, NYU
hereby grants to SUGEN and SUGEN hereby accepts from NYU the License.
(b) With respect to each SUGEN Product, the royalty obligations under
this Agreement for the License granted to SUGEN in Section 7(a) hereto shall
remain in force on a country by country basis beginning from the Date of First
Commercial Sale of such SUGEN Product in a country until the expiration date of
the last to expire of an NYU Patent or any patent claiming a Patentable
Invention licensed to or owned by SUGEN relating to the SUGEN Product in such
country, or 15 years, whichever shall be earlier. SUGEN shall inform NYU in
writing of the Date of First Commercial Sale with respect to each SUGEN Product
in each country as soon as practicable after the making of each such first
commercial sale. Upon expiration of such period with respect to any SUGEN
Product in any country as provided in this Section 7(b), SUGEN shall have a
fully paid up license to make, have made, use and sell such SUGEN Product in
such country.
(c) SUGEN shall be entitled to grant sublicenses under the License on
terms and conditions in compliance with the terms and conditions of this
Agreement (except that the rate of royalty may be at higher rates than those set
forth in this Agreement) (i) to a Corporation Entity or (ii) to other third
parties [...*...], subject to the following conditions:
(i) All sublicenses shall only be granted under written
agreements. SUGEN shall notify NYU of all relevant sublicense agreements as soon
as practicable after the signing thereof, and upon written request by NYU shall
provide copies of such agreements to NYU under an agreement in the form of
Appendix IV.
(ii) Each sublicense granted hereunder shall be [...*...];
(iii) Subject to the last sentence of this clause (c), the
sublicense shall expire automatically on the termination of the License;
(iv) Any Sublicensee or any Corporation Entity may grant
further sublicenses for the development, manufacture, use, sale or distribution
of SUGEN Products;
(v) Both during the term of the sublicense and thereafter the
Sublicensee shall be bound by a confidentiality obligation similar to that
imposed on SUGEN in Section 11 below;
(vi) Any sublicense agreement shall include an equivalent
obligation of the Sublicensee thereunder to SUGEN's obligations under Sections
14 and 15 hereof and shall state that NYU is an intended third party beneficiary
of such sublicense agreement for the purpose of enforcing such indemnification
and insurance provisions;
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(vii) If further sublicensing is permitted thereunder, the
sublicense shall require the Sublicensee thereunder to give notice to SUGEN in
writing promptly after the grant by any such Sublicensee of a further
sublicense. SUGEN shall give written notice to NYU promptly after the receipt of
any such notice from any Sublicensee.
In the event that the License is terminated, any sublicense granted by SUGEN
under the License and any further sublicenses thereunder shall, [...*...] remain
in full force and effect, provided that such Sublicensee is not then in breach
of its sublicense agreement and [...*...] under the terms and conditions of such
sublicense agreement.
SECTION 8. PAYMENTS FOR LICENSE.
(a) NYU acknowledges that SUGEN has a fully paid up and non-exclusive
license to all NYU Know-How related to the use or development of a SUGEN
Product, but excluding Pre-Existing Inventions, in consideration of payments for
the Research Program as described in Section 4 herein. NYU acknowledges that
SUGEN retains all rights to the License that accumulated since the Effective
Date up to [...*...], including those rights granted in Section 7 of the Amended
Agreement.
(b) In consideration for the grant and during the term provided in
Section 7(b) with respect to each SUGEN Product SUGEN shall pay to NYU:
(i) a royalty of [...*...] of the Net Sales of SUGEN or any
Corporation Entity; and
(ii) a portion of License Revenues determined as follows:
(A) [...*...] of License Revenues with respect to any
SUGEN Product; or
(B) [...*...] of License Revenues with respect to any
SUGEN Product that is covered under SUGEN's agreements with [...*...], and any
extensions, modifications, or revisions thereof, provided that with respect to
amounts paid to NYU for royalties such amounts shall not exceed [...*...] of the
Sublicensee's Net Sales in any period;
(c) For the purpose of computing the royalties due to NYU hereunder,
the year shall be divided into two parts ending on [...*...]. SUGEN shall, not
later than [...*...] after each June [...*...] in each Calendar Year during the
term of the License, submit to NYU a full and detailed report of royalties or
payments due NYU under the terms of this Agreement for the preceding half year
(hereinafter "the Half-Year Report"), setting forth the Net sales, License
Revenues and all other payments due to NYU hereunder, including at least:
(i) the quantity of Licensed Products sold;
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(ii) the selling price of each SUGEN Product sold;
(iii) the deductions permitted under Section 1(g) hereof to
arrive at Net Sales; and
(iv) the royalty computations and subject of payment.
If no royalties or other payments are due, a statement shall be sent to
NYU stating such fact. Payment of the full amount of any royalties or other
payments due to NYU for the preceding half year shall accompany each such
Half-Year Report.
(d) SUGEN shall maintain, and shall require all Sublicensees and
Corporation Entities to maintain for a period of two years after the end of the
Calendar year to which they relate, true and complete books of account
consistent with standard accounting practice containing an accurate record of
all data necessary for the proper computation of all payments due to NYU under
the terms of this Agreement and NYU shall have the right, through a nationally
recognized independent certified public accountant, to examine such books (not
more than once in each calendar Year) within two Calendar Years after the end of
the Calendar Year to which they relate for the purpose of verifying such
payments. Any such examination shall be made during normal business hours where
the records are regularly kept. NYU agrees that the information furnished to it
as a result of any such examination shall be limited to a statement by such
certified public accountant to the effect that they have reviewed such books of
account and that the amounts of the payments due under the terms of this
Agreement are in conformity with such books of account and the applicable
provisions of this Agreement, or setting forth any required adjustments. The
fees and expenses of such examination shall be borne by NYU; provided, however,
that if such examination reveals an underpayment of more than [...*...] for any
period, SUGEN shall promptly reimburse NYU for such fees and expenses. Any such
accountants shall be required to keep all information derived from such
examination confidential.
SECTION 9. SUGEN OWNERSHIP CHANGE
In the event that SUGEN is acquired or merged with another company, or
that SUGEN acquires or forms a joint venture with another company, then SUGEN
may at its option notify NYU that such other company wishes to make a
determination as to which targets shall be included under the terms of the
Agreement prior to the effective date of any such acquisition, merger, or joint
venture, or as soon as possible thereafter. This determination shall be made in
good faith by NYU and SUGEN and shall be based on an examination of SUGEN's lab
books and other information available to the parties, full access (under
appropriate confidentiality agreements) to which will be provided to NYU. With
respect to targets that were adopted by SUGEN into drug discovery prior to the
effective date of the acquisition, merger, or joint venture, SUGEN Products
developed based on such targets shall be subject to the license payments
described in Section 8 hereto. SUGEN Products that are developed based on
Receptor targets which were not adopted into drug discovery at the time of the
effective date of such acquisition, merger, or joint venture shall be subject to
a). a royalty of [...*...] on Net Sales
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of SUGEN, and/or Corporation Entity, which may be offset by [...*...] of the
royalties paid by SUGEN to third parties (other than MPG), provided that the
royalties due to NYU shall not be less than [...*...] of Net Sales of SUGEN and
/or Corporation Entity and b). [...*...] of License Revenues with respect to any
SUGEN Product, provided that with respect to such SUGEN Product there exists a
Patentable Invention with respect to such target and/or its utility which is
derived from or based on the Research Technology, and provided further that such
SUGEN Product shall include a product irrespective of whether an IND application
is filed with respect thereto within 4 years from the end of the Research
Period, or not.
SECTION 10. METHOD OF PAYMENT.
(a) Royalties and any other payments due to NYU hereunder shall be paid
to NYU in United States dollars. Any such royalties on or other payments
relating to transactions in a foreign currency shall be converted into United
States dollars based on the closing buying rate of the Morgan Guaranty Trust
Company of New York applicable to transactions under exchange regulations for
the particular currency on the last business day of the accounting period for
which such royalty or other payment is due.
(b) SUGEN shall be responsible for payment to NYU of all royalties,
License Revenues and all other payments due to NYU under this Agreement on sale,
transfer or disposition of SUGEN Products by any Corporation Entity of SUGEN
under the License. SUGEN shall use its best efforts to collect all License
Revenues due to NYU under this agreement from Sublicensees.
SECTION 11. DEVELOPMENT AND COMMERCIALIZATION.
(a) In the event a Validated Target is identified directly by NYU in
the course of the NYU Research Project and i). the Validated Target is a
Receptor target validated by NYU after the effective date of this amendment to
the Amended Agreement ii). the Validated Target is covered by a Patentable
Invention in an NYU Patent and iii). the necessary reagents are available to
NYU, in which case they will be made available to SUGEN, SUGEN shall use
reasonable diligence consistent with prudent commercial practices to [...*...]
of receiving the Validated Target and all reagents from NYU. If the Validated
Target is not [...*...], SUGEN shall initiate an outlicensing effort to find an
appropriate commercial partner. If the Validated Target is not i). [...*...]
period or ii). [...*...] area by SUGEN or iii). [...*...] then NYU shall have
the right upon written notice to SUGEN to terminate the License in respect of
the Validated Target. If at any point prior to the termination of the License in
respect of a Validated Target SUGEN shall validate the Validated Target in an
additional disease or therapeutic area, then SUGEN shall have an additional
[...*...] period to initiate [...*...] and an additional [...*...] period to
outlicense. In the event that NYU shall terminate the License in respect of a
Validated Target as aforesaid, and notwithstanding anything to the contrary in
Section 17(d), all rights in and to the Research Technology relating to such
Validated Target shall revert to NYU and SUGEN shall not make any further use
thereof (except to the extent that a third party is free to use them without a
license from NYU).
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(b) SUGEN or its Sublicensees shall use reasonable diligence consistent
with prudent commercial practices to carry out all developmental activities,
including but not limited to, [...*...]. SUGEN or its Sublicensees shall use
reasonable diligence consistent with prudent commercial practices to obtain the
appropriate approvals of the health authorities for the production, use and sale
of the SUGEN Products in each of the other countries of the world in which SUGEN
or its Sublicensees under the License intend to produce, use, and/or sell SUGEN
Products.
(c) Provided that applicable laws, rules and regulations require that
the performance of the tests, trials, studies and other activities specified in
subsection (a) above shall be carried out in accordance with FDA Good Laboratory
Practices and in a manner acceptable to the relevant foreign health authorities,
SUGEN or its Sublicensees shall carry out such tests, trials, studies and other
activities in accordance with FDA Good Laboratory Practices and in a manner
acceptable to the relevant foreign health authorities. Furthermore, the SUGEN
Products shall be produced in accordance with FDA Good Manufacturing Practice
procedures ("GMP") in a facility which has been certified by the FDA as
complying with GMP, provided that applicable laws, rules and regulations so
require.
(d) SUGEN shall have the right, but not the obligation, in its sole
discretion, to select one or more SUGEN Products for commercialization. SUGEN
shall advise NYU in writing promptly of each SUGEN Product so selected. SUGEN
undertakes, or shall cause its Sublicensees to agree to undertake, to use
reasonable diligence consistent with prudent commercial practices [...*...] for
SUGEN, the commercialization of those SUGEN Products selected by SUGEN for
commercialization.
(e) SUGEN shall provide NYU with written reports on all material
activities and actions undertaken by SUGEN to develop and commercialize the
SUGEN Products; such reports shall be made, during the royalty term of the
License with respect to such SUGEN Product as provided in Section 7(b),
[...*...]. Promptly after filing of an IND application with respect to any SUGEN
Product, SUGEN shall notify NYU in writing of such filing.
(f) If SUGEN fails to use reasonable diligence consistent with prudent
commercial practices either to [...*...] or thereafter to [...*...], unless in
either case such delay is necessitated by [...*...] NYU shall have the right to
notify SUGEN in writing of such failure with respect to such SUGEN Product and
shall allow SUGEN [...*...] to cure such failure. If SUGEN does not cure such
failure within such period of time, NYU shall have the right by notice in
writing to SUGEN to terminate the License with respect to [...*...] and/or to
convert the License granted herein with respect to such Receptor into a
non-exclusive license. In the event that the License is converted to a
non-exclusive license, all royalty and other consideration due shall be reduced
to [...*...] of the amount stated in Section 8 or to the amount that [...*...]
should that represent a lower royalty rate or other consideration payment,
provided, that SUGEN shall retain all of its right, title and interest, in, to
and under the Research Technology with respect to [...*...] and all other
technology owned or developed by or on behalf of SUGEN with respect to such
Receptor.
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12.
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SECTION 12. CONFIDENTIAL INFORMATION.
(a) Except as otherwise provided in Sections 12(c) and 13 below, NYU
shall maintain any and all of the Research Technology in confidence and shall
not release or disclose any tangible or intangible component thereof to any
third partywithout first receiving the prior written consent of SUGEN to said
release or disclosure.
(b) Except as otherwise provided in Sections 12(c) and 12(d) below,
SUGEN and its Sublicensees shall maintain any and all of the Research Technology
in confidence and shall not release or disclose any tangible or intangible
component thereof to any third party, except MPG, without first receiving the
prior written consent of NYU to said release or disclosure.
(c) The obligations of confidentiality on each party or any Sublicensee
set forth in Sections 12(a) and (b) shall not apply to any component of the
Research Technology (i) which was part of the public domain prior to the
Effective Date of this Agreement, which subsequently becomes a part of the
public domain through no fault of such party, which was disclosed with the prior
written approval of the other party or which was disclosed to such party by a
third party who had the right to make such disclosure; or (ii) to the extent,
but only to the extent, that such disclosure or delivery is necessary for such
party or Sublicensee to comply with applicable laws or regulations.
(d) The provisions of Section 12(b) notwithstanding, SUGEN or any
Sublicensee may disclose the Research Technology (i) to third parties, so long
as any such third party shall have signed a written agreement of confidentiality
containing provisions substantially to the effect of Sections 12(b) and (c) made
applicable to such third party; and (ii) to the extent that such disclosure or
delivery is required by regulatory authorities in order to obtain necessary
approvals for any SUGEN Product or to the extent such disclosure is necessary in
connection with any actions taken or proposed to be taken by SUGEN or such
Sublicensee in accordance with either Section 6 or Section 11 hereof.
(e) The obligation of any party, Sublicensee or other person to hold
any Research Technology or other information in confidence shall be satisfied if
they exercise the same care with respect to such information as they would take
to preserve the confidentiality of their own similar information.
SECTION 13. PUBLICATION.
(a) Prior to submission for publication of a manuscript describing the
results of any aspect of the NYU Research Project, NYU shall send SUGEN a copy
of the manuscript to be submitted, and shall allow SUGEN sixty (60) days from
the date of such mailing to determine whether the manuscript contains subject
matter for which patent protection should be sought prior to publication of such
manuscript. Should SUGEN believe the subject matter of the manuscript contains a
patentable invention, then, prior to the expiration of such 60-day period, SUGEN
shall give written notification to NYU of:
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* CONFIDENTIAL TREATMENT REQUESTED
13.
<PAGE>
(i) its determination that such manuscript contains patentable
subject matter for which patent protection should be sought; and
(ii) the countries in which such patent protection should be
sought.
(b) After the expiration of such 60-day period, unless NYU has received
the written notice specified above from SUGEN, NYU shall be free to submit such
manuscript for publication in any manner consistent with academic standards.
(c) upon receipt of such written notice from SUGEN, NYU will thereafter
delay submission of the manuscript for an additional period of [...*...] to
permit the preparation and filing, in accordance with section 6 hereof, of a
U.S. patent application on the subject matter to be disclosed in such
manuscript. After expiration of such [...*...], or the filing of a patent
application on each such invention, whichever shall occur first, NYU shall be
free to submit the manuscript and to publish the disclosed results.
SECTION 14. INFRINGEMENT OF NYU PATENT.
(a) In the event a party to this Agreement acquires information that a
third party is infringing one or more of the NYU Patents, the party acquiring
such information shall promptly notify the other party to the Agreement in
writing of such infringement.
(b) In the event of an infringement of an NYU Patent, SUGEN shall be
privileged but not required to bring suit against the infringer. Should SUGEN
elect to bring suit against an infringer and to join NYU as a party plaintiff in
any such suit, NYU shall have the right to approve the counsel selected by SUGEN
to represent SUGEN, which approval by NYU shall not unreasonably be withheld.
The expenses of such suit or suits that SUGEN elects to bring, including any
reasonable expenses of NYU incurred in conjunction with the prosecution of such
suit or the settlement thereof, shall be paid for entirely by SUGEN and SUGEN
shall hold NYU free, clear and harmless from and against any and all costs of
such litigation, including reasonable attorneys, fees.
(c) In the event SUGEN exercises the right to sue herein conferred, it
shall have the right to first reimburse itself out of any sums recovered in such
suit or in settlement thereof for all costs and expenses of every kind and
character, including reasonable attorneys' fees incurred in the prosecution of
any such suit, and if after such reimbursement, any funds shall remain from said
recovery, SUGEN shall promptly pay to NYU a portion of such funds as determined
in section 8 (b) (ii) and SUGEN shall be entitled to receive and retain the
balance of the remainder of such recovery.
(d) If SUGEN does not bring suit against said infringer pursuant to
Section 14(b) hereof, or has not commenced negotiations with said infringer for
discontinuance of said
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* CONFIDENTIAL TREATMENT REQUESTED
14.
<PAGE>
infringement, within [...*...] days after receipt of such notice, NYU shall have
the right, but shall not be obligated, to bring suit for such infringement and
to join SUGEN as a party plaintiff, in which case, if NYU joins SUGEN party
plaintiff in such a suit, SUGEN shall have the right to approve the counsel
selected by NYU to represent NYU, which approval by SUGEN shall not unreasonably
be withheld. The expenses of such suit or suits that NYU elects to bring,
including any reasonable expenses of SUGEN incurred in conjunction with the
prosecution of such suit or the settlement thereof, shall be paid for entirely
by NYU and NYU shall hold SUGEN free, clear and harmless from and against any
and all costs and expenses of such litigation, including reasonable attorneys'
fees. If SUGEN has commenced negotiations with an alleged infringer of the NYU
Patent for discontinuance of such infringement within such [...*...] period,
SUGEN shall have an additional [...*...] from the termination of such initial
[...*...] period to conclude its negotiations before NYU may bring suit for such
infringement. In the event NYU brings suit for infringement of any NYU Patent,
NYU shall have the right to first reimburse itself out of any sums recovered in
such suit or settlement thereof for all costs and expenses of every kind and
character, including reasonable attorneys, fees incurred in the prosecution of
such suit, and if after such reimbursement, any funds shall remain from said
recovery, NYU shall promptly pay to SUGEN an amount equal to [...*...] of such
remainder and NYU shall be entitled to receive and retain the balance of the
remainder of such recovery.
(e) Each party shall always have the right to be represented by counsel
of its own selection in any suit for infringement of the NYU Patents instituted
by the other party to this Agreement under the terms hereof. The reasonable
expense of such counsel shall be borne by that party.
(f) SUGEN agrees to cooperate fully with NYU at the request of NYU,
including by giving testimony and producing documents lawfully requested, in the
prosecution of any suit by NYU for infringement of the NYU parents; provided
that NYU shall pay all reasonable expenses (including attorneys' fees) incurred
by SUGEN in connection with such cooperation. NYU shall, and shall endeavor to
cause the NYU Scientist to, cooperate fully with SUGEN at the request of SUGEN,
including by giving testimony and producing documents lawfully requested, in the
prosecution of any suit by SUGEN for infringement of the NYU Patents; provided
that SUGEN shall pay all reasonable expenses (including attorneys' fees)
incurred by NYU in connection with such cooperation.
SECTION 15. LIABILITY AND INDEMNIFICATION.
(a) SUGEN shall, subject to clause (b) of this Section 15, indemnify,
defend and hold harmless NYU and its trustees, officers, medical and
professional staff, employees, students and agents and their respective
successors, heirs and assigns (the "Indemnitees"), against any liability,
damage, loss or expense (including reasonable attorneys' fees and expenses of
litigation) incurred by or imposed upon the Indemnitees or any one of them in
connection with any claims, suits, actions, demands or judgments (i) arising out
of the production, manufacture, sale, use in commerce or in human clinical
trials, lease, or promotion by SUGEN, any Sublicensee under the License,
Corporation Entity or agent of SUGEN of any SUGEN Product,
________________________
* CONFIDENTIAL TREATMENT REQUESTED
15.
<PAGE>
process or service relating to, or developed pursuant to, this Agreement or (ii)
arising out of any other activities to be carried out by SUGEN, any Sublicensee
under the License, Corporation Entity or agent of SUGEN pursuant to this
Agreement.
(b) SUGEN's indemnification obligation under Section 15(a)(I) shall
apply to any liability, damage, loss or expense whether or not it is
attributable to the negligent activities of the Indemnitees. SUGEN's
indemnification obligation with respect to any Indemnitee under Section
15(a)(ii) shall not apply to any liability, damage, loss or expense to the
extent that it is attributable to the negligent activities of such Indemnitee.
(c) SUGEN agrees, at its own expense, to provide attorneys reasonably
acceptable to NYU to defend against any actions brought or filed against any
Indemnitee with respect to the subject of indemnity to which such Indemnitee is
entitled hereunder whether or not such actions are rightfully brought.
SECTION 16. SECURITY FOR INDEMNIFICATION.
(a) At such time as any SUGEN Product, process or service relating to,
or developed pursuant to, this Agreement is being commercially distributed or
sold (other than for the purpose of obtaining regulatory approvals) by SUGEN,
any Sublicensee under the License, Corporation Entity or agent of SUGEN, SUGEN
shall, at its sole cost and expense, procure and maintain policies of
comprehensive general liability insurance in amounts not less than [...*...] per
incident and [...*...] annual aggregate and naming the Indemnitees as additional
insureds. Such comprehensive general liability insurance shall provide (i)
product liability coverage and (ii) broad form contractual liability coverage
for SUGEN's indemnification under Section 15 of this Agreement. If SUGEN elects
to self-insure all or part of the limits described above (including deductions
or retentions which are in excess of [...*...] annual aggregate) such self
insurance program must be acceptable to NYU. The minimum amounts of insurance
coverage required under this Section 16 shall not be construed to create a limit
of SUGEN's liability with respect to its indemnification under Section 15 of
this Agreement.
(b) SUGEN shall provide NYU with written evidence of such insurance
upon the request of NYU. SUGEN shall provide NYU with written notice at least
sixty (60) days prior to any cancellation, non-renewal or material change in
such insurance. If SUGEN fails to obtain replacement insurance providing
comparable coverage within such 60-day period, NYU shall have the right to
terminate this Agreement effective at the end of such 60-day period without
notice or any additional waiting periods.
(c) SUGEN shall maintain such comprehensive general liability insurance
beyond the expiration or termination of this Agreement during (i) the period
that any product, process or service, relating to, or developed pursuant to,
this Agreement is being commercially distributed or sold (other than for the
purpose of obtaining regulatory approvals) by SUGEN or by a Sublicensee,
Corporation Entity or agent of SUGEN and (ii) a reasonable period after the
period
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* CONFIDENTIAL TREATMENT REQUESTED
16.
<PAGE>
referred to in subclause (c)(i) above; provided that the sum of the periods
referred to in subclauses (c)(i) and (c)(ii) of this Section 15 shall in no
event be [...*...].
SECTION 17. EXPIRY AND TERMINATION.
(a) unless terminated Pursuant to Section 17(b) or Section 16(b)
hereof, except as provided in subsection (f), this Agreement shall expire upon
the expiration of the royalty term of the License in all countries for all SUGEN
Products as set forth in section 7(b) hereof. Notwithstanding the foregoing, the
last sentence of Section 7(b) and all of Section 7(c) shall survive any such
expiration of this Agreement.
(b) At any time prior to the expiration of this Agreement, either party
may terminate this Agreement forthwith for cause, as "cause" is described below,
by giving written notice to the other party. Cause for termination by one party
of this Agreement shall be deemed to exist if (i) the other party materially
breaches or defaults in the performance or observance of any of the provisions
of this Agreement and such breach or default is not cured within [...*...] or,
in the case of failure to pay any amounts due hereunder, [...*...] (unless
otherwise specified herein) after the giving of notice by The party specifying
such breach or default, or (ii) if, with respect to the other party:
(A) (I) a voluntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect shall be instituted
by such party, or such party shall consent to the entry of an order for relief
in an involuntary case under any such law; (II) a general assignment for the
benefit of creditors shall be made by such party; (III) such party shall consent
to the appointment of or possession by a receiver, liquidator, trustee,
custodian, sequestrator or similar official of such party or of any substantial
part of its property; or (IV) such party shall adopt a board resolution in
furtherance of any of the foregoing actions specified in this paragraph (A); or
(B) a decree or order for relief by a court of competent
jurisdiction shall be entered in respect of such party in an involuntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or appointing a receiver, liquidator, trustee, sequestrator
or other similar official of such party or of any substantial part winding up or
liquidation of its affairs, and any such decree or order shall remain unstayed
or undischarged and in effect for a period of sixty days.
If any act or omission by any Sublicensee under the License (including any
further Sublicensee thereunder) shall cause SUGEN to be in breach or default in
the performance or observance of any of the provisions of this Agreement and
such sublicense is terminated, then notwithstanding anything to the contrary
contained in this Agreement, NYU shall not have the right to terminate this
Agreement for any such breach or default.
(c) Any amount payable hereunder by one of the parties to the other,
which has not been paid by the date on which such payment is due, shall bear
interest from such date until the
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* CONFIDENTIAL TREATMENT REQUESTED
17.
<PAGE>
date on which such payment is made, at the rate [...*...] per annum in excess of
the prime rate prevailing at Citibank, N.A. in New York during the period of
arrears and such amount and the interest thereon may be set off against any
amount due, whether in terms of this Agreement or otherwise, to the party in
default by any nondefaulting party.
(d) Except as provided in Section 3(a), if either party terminates this
Agreement for any reason permitted hereunder, all rights in and to the Research
Technology shall revert to NYU, and, subject to the last sentence of Section 7,
Section 8 (a) and the last sentence of section 11(a), SUGEN or any Sublicensee
thereof shall not be entitled to make any further use of such rights (except to
the extent that a third party is free to use them without a license from NYU);
provided, that SUGEN shall retain all of its right, title and interest in, to
and under any other technology developed by or on behalf of SUGEN (and not
developed by NYU). In the event SUGEN shall terminate this Agreement for cause,
such termination shall not terminate the License granted herein, so long as
payments due under Section 8 and Section 9 are maintained.
(e) Termination of this Agreement shall not relieve either party of any
obligation to the other party incurred prior to such termination.
(f) Sections 3(c), 5, 6, 9, 10, 12, 13, 14, 15, 16, 17 and 21 hereof
shall survive and remain in full force and effect after any termination or
expiration of this Agreement.
SECTION 18. REPRESENTATIONS BY SUGEN AND NYU.
(a) SUGEN hereby represents and warrants to NYU as follows:
(i) SUGEN is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. SUGEN has all
requisite power and authority to carry on its business and to own and operate
its properties and assets. The execution, delivery and performance of this
Agreement have been duly authorized by the Board of Directors of SUGEN;
(ii) There is no pending or, to SUGEN's knowledge, threatened
litigation involving SUGEN which would have any material adverse effect on this
Agreement or on SUGEN's ability to perform its obligations hereunder; and
(iii) There is no indenture, contract, or agreement to which
SUGEN is a party or by which SUGEN is bound which prohibits or would prohibit
the execution and delivery by SUGEN of this Agreement or the performance or
observance by SUGEN of any material term or condition of this Agreement.
(b) NYU represents and warrants to SUGEN as follows:
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* CONFIDENTIAL TREATMENT REQUESTED
18.
<PAGE>
(i) The execution and delivery of this Agreement have been
duly authorized by all requisite action on the part of NYU and NYU has all
right, power and authority necessary to grant the License and perform its other
obligations hereunder.
(ii) There is no pending or, to NYU's knowledge, threatened
litigation involving NYU which would have any material adverse effect on this
Agreement or on NYU's ability to perform its obligations hereunder;
(iii) There is no indenture, contract, or agreement to which
NYU is a party or by which NYU is bound which prohibits or would prohibit the
execution and delivery by NYU of this Agreement or the performance or observance
by NYU of any material term or condition of this Agreement; and
(iv) NYU holds ail right, title and interest in and to the
Research Technology and, as of the Effective Date is the sole and exclusive
owner thereof, subject only to the rights, if any, of the United States
government and its agencies, to the extent permitted under Section 4(c) hereof,
as set forth in 35 U.S.C. ss.200 et seq. NYU has not received notice of, nor has
any knowledge of any basis for, any claim that the Research Technology infringes
on any patent or other intellectual property right or trade secret of any third
party.
SECTION 19. ASSIGNMENT.
Neither party shall have the right to assign, delegate or transfer at:
any time to any third party, in whole or in part, any or all of the rights,
duties and interest herein granted without first obtaining the written consent
of the other party hereto to such assignment or delegation; provided, however,
that if SUGEN consolidates with or merges into, or sells or transfers all or
substantially all of its assets to, any other entity, then SUGEN may assign all
of its rights and delegate all of its duties hereunder to such successor entity
without first obtaining the consent of NYU to such assignment and delegation.
SECTION 20. USE OF NAME.
Without the prior written consent of NYU, SUGEN shall not use the name
of NYU or of any NYU staff member, employee or student, or any adaptation
thereof:
(i) in any product labeling, advertising, promotional or sales
literature;
(ii) in connection with any public or private offering or in
conjunction with any application for regulatory approval, unless disclosure is
otherwise required by law, in which case SUGEN may make factual statements
concerning the Agreement or file copies of the Agreement after providing NYU
with an opportunity to comment and reasonable time within which to do so on such
statement in draft.
19.
<PAGE>
Except as provided herein, neither NYU or SUGEN will issue
public announcements about this Agreement or the status or existence of the NYU
Research Project without prior written approval of the other party.
SECTION 21. MISCELLANEOUS.
(a) In carrying out this Agreement the parties shall comply with all
local, state and federal laws and regulations including but not limited to, the
provisions of 35 U.S.C. ss. 200 et seq., and 15 CFR ss. 368 et seq.. Without
NYU's express prior written consent, neither SUGEN nor any Sublicensee under the
License shall knowingly export, directly or indirectly, (1) any of the NYU
Patents and NYU Know-How, or, (2) the direct product thereof into any country or
territory to which the exportation thereof directly from the United States is
illegal at the time in question, according to the laws of the United States or
to regulations of any department or agency of the Government of the United
States made according to such laws.
(b) If any provision of this Agreement is determined to be invalid or
void, the remaining provisions shall remain in effect.
(c) This Agreement shall be deemed to have been made in the State of
New York and shall be governed and interpreted in all respects under the laws of
the State of New York.
(d) Any dispute arising under this Agreement shall be resolved in an
action in the courts of New York State or the federal courts located in New York
State, and the parties hereby consent to personal jurisdiction of such courts in
any such action.
(e) All payments or notices required or permitted to be given under
this Agreement shall be given in writing and shall be effective when either
personally delivered or deposited, postage prepaid, in the United States
registered or certified mail, addressed as follows:
To NYU: New York University Medical Center 550 First Avenue New
York, NY 10016
Attention: Isaac T. Kohlberg
Vice President for
Industrial Liaison
and
Office of Legal Counsel
New York University
Bobst Library
70 Washington Square South
New York, NY 10012
Attention: Annette B. Johnson, Esq.
Associate General Counsel
20.
<PAGE>
To SUGEN: Stephen Evans-Freke
Chairman and Chief Executive Officer
SUGEN, Inc.
351 Galveston Drive
Redwood City, California 94063-4720
or such other address or addresses as either party may hereafter
specify by written notice to the other. Such notices and communications shall be
deemed effective on the date of delivery or fourteen (14) days after having been
sent by registered or certified mail.
(f) This Agreement (and the annexed Appendices) constitute the entire
Agreement between the parties and no variation, modification or waiver of any of
the terms or conditions hereof shall be deemed valid unless made in writing and
signed by both parties hereto. This Agreement supersedes any and all prior
agreements or understandings, whether oral or written, between SUGEN and NYU.
(g) No waiver by either party of any nonperformance or violation by the
other party of any of the covenants, obligations or agreements of such other
party hereunder shall be deemed to be a waiver of any subsequent violation or
non-performance of the same or any other covenant, agreement or obligation, nor
shall forbearance by any party be deemed to be a waiver by such party of its
rights or remedies with respect to such violation or nonperformance.
(h) The descriptive headings contained in this Agreement are included
for convenience and reference only and shall not be held to expand, modify or
aid in the interpretation, construction or meaning of this Agreement.
(i) It is not the intent of the parties to create a partnership or
joint venture or to assume partnership responsibility or liability. The
obligations of the parties shall be limited to those set out herein and such
obligations shall be several and not joint.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the date and year first above written.
NEW YORK UNIVERSITY
By: /s/ Isaac T. Kohlberg
---------------------------
Name: Isaac T. Kohlberg
Title: Vice President for
Industrial Liaison
SUGEN, INC.
By: /s/ Stephen Evans-Freke
---------------------------
Name: Stephen Evans-Freke
Title: Chairman and
Chief Executive Officer
21.
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APPENDIX I
PRE-EXISTING INVENTIONS
[...*...]
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* CONFIDENTIAL TREATMENT REQUESTED
22.
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APPENDIX II
RESEARCH PROGRAM
The proposed research is an investigation of the mechanisms underlying
the action of receptors which control the level of cellular phosphotyrosine by
regulating the activity of either protein tyrosine kinases or protein tyrosine
phosphatases. The goals of this research project are as follows:
[...*...]
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* CONFIDENTIAL TREATMENT REQUESTED
23.
<PAGE>
APPENDIX III
SCHEDULE OF PAYMENTS
Payment Due Amount
----------- ------
[...*...]1991 [...*...]
[...*...]1992 [...*...]
[...*...]1992 [...*...]
[...*...]1992 [...*...]
[...*...]1992 [...*...]
[...*...]1992 [...*...]
[...*...]1993 [...*...]
[...*...]1993 [...*...]
[...*...]1993 [...*...]
[...*...]1993 [...*...]
[...*...]1994 [...*...]
[...*...]1994 [...*...]
[...*...]1994 [...*...]
[...*...]1994 [...*...]
[...*...]1995 [...*...]
[...*...]1995 [...*...]
[...*...]1995 [...*...]
[...*...]1995 [...*...]
[...*...]1996 [...*...]
[...*...]1996 [...*...]
[...*...]1996 [...*...]
[...*...]1996 [...*...]
[...*...]1997 [...*...]
[...*...]1997 [...*...]
[...*...]1997 [...*...]
[...*...]1997 [...*...]
[...*...]1998 [...*...]
[...*...]1998 [...*...]
[...*...]1998 [...*...]
[...*...]1998 [...*...]
[...*...]1999 [...*...]
[...*...]1999 [...*...]
[...*...]1999 [...*...]
[...*...]1999 [...*...]
[...*...]2000 [...*...]
[...*...]2000 [...*...]
[...*...]2000 [...*...]
[...*...]2000 [...*...]
[...*...]2001 [...*...]
[...*...]2001 [...*...]
[...*...]2001 [...*...]
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* CONFIDENTIAL TREATMENT REQUESTED
<PAGE>
APPENDIX IV
6 June, 1997
Issac T. Kohlberg
Vice President, Industrial Liaison
NYU Medical Center
550 First Avenue
New York, NY 10016
CONFIDENTIALITY AGREEMENT
Dear Dr. Kohlberg:
We are in possession of certain information relating to SUGEN's
proprietary programs with various entities in the field of tyrosine kinases and
phosphatases, including licensing agreements (hereinafter called the "Subject
Matter"), which we consider confidential. We are willing to provide copies of
licensing agreements with these entities to you for the sole purpose ("the
Purpose") of your reviewing those agreements to assure yourself that SUGEN is in
compliance with its existing agreements with you and of preserving and/or
enforcing any right you may have under said existing agreement you have with
SUGEN. You agree to receive such information from us during the term of this
Agreement on the following basis:
1. You will hold in confidence any and all information on the Subject
Matter disclosed to you by us under this Agreement except:
(a) information which at the time of disclosure was in the public
domain;
(b) information which, after disclosure, becomes part of the public
domain by publication or otherwise, except by breach of this
Agreement by you;
(c) information which you can establish by written documents was in
your possession at the time of disclosure by us and was not
acquired, directly or indirectly, from us;
(d) information which you received non-confidentially from a third
party, provided, however, that such information was not obtained
by said third party, directly or indirectly, from us; and
25.
<PAGE>
(e) information which you can demonstrate written documents was
independently developed by or for you by persons who did not access
information disclosed by us under this Agreement.
2. Such information may include confidential and proprietary information
supplied to you with the legend "SUGEN Confidential and Proprietary,"
and information of third parties as to which SUGEN has an obligation of
confidentiality.
3. You agree that you will not use the information relating to the Subject
Matter, which you are required hereunder to keep confidential, for any
purpose other than the aforesaid Purpose, without first entering into
an agreement with us covering the use thereof.
4. Your obligation under this Agreement shall not expire.
If you agree to the foregoing, kindly indicate your acceptance thereof and
assent thereto by signing and dating the duplicate copy of this letter at the
space provided for below, returning such signed copy to us. We will then proceed
to disclose to you our information relating to the Subject Matter.
Very truly yours,
SUGEN, Inc.
By: _________________________
Stephen Evans-Freke
Chief Executive Officer
AGREED TO AND ACCEPTED:
By: _____________________________
Title: __________________________
Date: ___________________________
26.
EXHIBIT 10.66
*** TEXT OMITTED AND FILED SEPARATELY
CONFIDENTIAL TREATMENT REQUESTED
UNDER 17 C.F.R. SS.SS. 200.80(B)(4),
200.83 AND 240.24B-4
TERMINATION NOTICE
YISSUM RESEARCH DEVELOPMENT COMPANY OF THE HEBREW UNIVERSITY OF JERUSALEM of 46
Jabotinsky Street, Jerusalem (hereinafter "Yissum"), and SUGEN, INC. of 351
Galveston Drive, Redwood City, California, U.S.A. (hereinafter "SUGEN"),
WHEREAS, Yissum and SUGEN are parties to an Amended and Restated
Research and License Agreement "Cancer" originally effective September
23, 1993, as amended and restated effective March 27, 1995 (the
"Research Agreement").
WHEREAS, on June 1, 1997, the Research Period under the Research
Agreement ended.
NOW, THEREFORE, it is hereby declared and agreed between the parties,
intending to be legally bound, as follows:
1. The definitions and references to the Research Agreement in the
above introduction are an integral part of this Agreement. All capitalized terms
not defined herein shall have the same meaning as in the Research Agreement.
2. Yissum hereby acknowledges that all its rights, title and interest
in the Proprietary Rights related to the Listed Compounds, Listed Target
Technologies and HUJ Compounds used to select a Listed Compound (the
"Technology") listed on Appendix I hereto are subject to the terms of the
Research Agreement.
3. SUGEN hereby assigns to Yissum all its right, title and interest in
the Proprietary Rights related to the HUJ Compounds not listed on Appendix I
hereto. From the date of the signing of this Agreement, Yissum shall be
independently entitled to take any action regarding the Technology not listed on
Appendix I hereto, including to sell, license or effect any other disposition
thereof and SUGEN shall not have any other rights to such compounds.
4. SUGEN shall perform all the necessary actions in order to effect the
transfer of rights in the Proprietary Rights to the Technology not listed in
Appendix I hereto, and shall sign the documents necessary to effect the transfer
including the patent assignment documents appropriate for each involved country
and any additional document required to implement and said transfer and
assignment. Yissum shall be responsible for all legal and governmental fees
associated with the preparation, filing and/or recording of said assignments and
documents.
5. The parties further agree that, if it should be determined that any
of the Proprietary Rights with respect to the Technology listed in Appendix I in
the case of SUGEN or not so listed in the case of Yissum are dominant to any of
the Proprietary Rights of the other
1.
<PAGE>
party, it does grant an exclusive license to the other party (with right to
sublicense) to practice any such dominant Proprietary Rights for the sole and
limited purpose of practicing the Proprietary Rights as otherwise set forth
herein.
6. All notices and communications pursuant to this Agreement shall be
made in writing by registered mail such as international Federal Express or such
other courier service providing a written record of such mailing and its
receipt, and shall be deemed to have been received by the receiving party 96
hours after being posted, unless the written record provided for herein
establishes that delivery was not made until a later date.
7. The provisions of this Agreement and everything concerning the
relationship between the parties in accordance with this Agreement shall be
governed by law of England and Wales.
Dated: as of June 1, 1997
YISSUM Research Development Company SUGEN, INC.
of the Hebrew University of Jerusalem
By: /s/ Uri Litrin By: /s/ Peter Hirth
-------------------------------- ---------------------------------
Name: Uri Litrin Name: Peter Hirth
Title: Managing Director Title: Executive V.P. of Drug R&D
2.
<PAGE>
APPENDIX I TO TERMINATION NOTICE
DATED: AS OF JUNE 1, 1997
LISTED COMPOUNDS
[... * ...]
- -------------------------
* CONFIDENTIAL TREATMENT REQUESTED
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S FORM 10-Q FOR THE SIX MONTHS ENDED JUNE 30, 1997 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> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 8,185
<SECURITIES> 34,679
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 43,732
<PP&E> 9,638
<DEPRECIATION> 5,638
<TOTAL-ASSETS> 48,713
<CURRENT-LIABILITIES> 11,845
<BONDS> 3,226
0
0
<COMMON> 108,700
<OTHER-SE> (75,058)
<TOTAL-LIABILITY-AND-EQUITY> 48,713
<SALES> 0
<TOTAL-REVENUES> 2,971
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 16,576
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 344
<INCOME-PRETAX> (15,636)
<INCOME-TAX> 0
<INCOME-CONTINUING> (15,636)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (15,636)
<EPS-PRIMARY> (1.20)
<EPS-DILUTED> (1.20)
</TABLE>
