SUBLEASE
EXHIBIT 10.19
This SUBLEASE (“Sublease”), dated October___, 2007 for reference purposes only, is
entered into by and between VERENIUM CORPORATION, a Delaware corporation (“Sublandlord”), and
ARDEA BIOSCIENCES, INC., a Delaware corporation (“Subtenant”).
RECITALS:
A. Sublandlord leases certain premises consisting of approximately 60,662 square
feet in a building located at 0000 Xxxxxxxxx Xxxxx, Xxx Xxxxx, Xxxxxxxxxx (the “Premises”),
pursuant to that certain Lease dated February 11, 2000, between KR-Gateway Partners,
Delaware limited partnership, as landlord (the “Master Landlord”) and Sublandlord, as tenant
(as amended or otherwise modified from time to time, the “Master Lease”), a copy of which is
attached as Exhibit A, as more particularly described therein. Capitalized terms used but not
defined herein have the same meanings as they have in the Master Lease.
B. Sublandlord desires to sublease to Subtenant, and Subtenant desires to sublease
from Sublandlord a portion of the Premises which is agreed to be approximately 51,660 rentable
square feet, and more particularly shown on the layout attached at Exhibit B hereto (“Sublease
Premises”) upon the terms and conditions provided for herein.
NOW, THEREFORE, in consideration of the mutual covenants and conditions contained herein,
Sublandlord and Subtenant covenant and agree as follows:
AGREEMENT :
1. Sublease Premises. On and subject to the terms and conditions below,
Sublandlord hereby leases to Subtenant, and Subtenant hereby leases from Sublandlord, the
Sublease Premises.
2. Term.
(a) Initial Term. The term of this Sublease (the “Term”) shall commence on
the date (the “Commencement Date”) that is the earlier of (a) March 1, 2008 or (b) the date
that Subtenant commences occupancy of the Sublease Premises for operation of its business and shall
expire eighty-four (84) months thereafter, unless sooner terminated pursuant to any provision
hereof. This Sublease and the parties obligations hereunder are expressly conditioned upon
receipt of Master Landlord’s consent hereto no later than December 3, 2007. In the event
Sublandlord has not obtained Master Landlord’s consent by December 3, 2007, either party may
terminate this Sublease by written notice to the other party given within ten (10) days
thereafter.
Sublandlord agrees to use good faith and diligent efforts to obtain Master Landlord’s consent
to this Sublease.
(b) Extension Option. Subtenant shall have one option to extend the term of
the Sublease to expire on March 31, 2017 (“Extension Term”). This option is personal to the
Subtenant originally named herein and shall not be exercisable and shall be deemed void if
Subtenant is in default under this Sublease at the time of the exercise of such option, or if
Subtenant has been in material default (after any applicable notice and cure period) at any time
during the term hereof. The option must be exercised, if at all, by written notice (the “Commitment
Notice”) to Sublandlord not less than nine (9) months prior to the expiration of the Term. All of
the terms and conditions of this Sublease shall continue to apply during the term of such option,
except that Base Rent for the first (1st) year of the Extension Term shall be the “Fair
Market Rent” for the Sublease Premises as determined pursuant to this Section 2(b) and, if
applicable, Exhibit C. On each anniversary of the commencement date of the Extension Term, the Base
Rent shall increased by three and one-half percent (3.5%), compounded. Upon receipt of the
Commitment Notice, Sublandlord shall determine the Fair Market Rent for the Sublease Premises,
which shall be based on comparable rents then charged and collected for non-renewing tenants for
comparable space in the Sorrento Mesa area of San Diego County, taking into account items that
professional real estate brokers customarily consider including location, whether the space is
subleased or direct leased, rental rates, tenant improvements, office space availability, tenant
size and other relative factors affecting properties in such area. In the event Subtenant objects
to Sublandlord’s determination of the Fair Market Rent, Sublandlord and Subtenant shall attempt to
agree in good faith upon the Fair Market Rent. If Sublandlord and Subtenant fail to reach agreement
within thirty (30) days following Subtenant’s delivery of the Commitment Notice (the “Outside
Agreement Date”), then each party shall make a separate determination of the Fair Market Rent
within five (5) business days after the Outside Agreement Date, concurrently exchange such
determinations and such determinations shall be submitted to arbitration in accordance with Exhibit
C.
3. Possession. Sublandlord agrees that Subtenant shall have access to the Sublease
Premises upon mutual execution of this Sublease for purposes of installing improvements,
furniture, fixtures and equipment, provided that (a) such activity shall be done during
mutually
agreeable time and with the approval and coordination of Sublandlord and Sublandlord’s
architect and (b) Subtenant complies with all of the terms of this Sublease (including,
without
limitation, the requirement to carry insurance and obtain consent to alterations and
improvements
in the Sublease Premises), other than the payment of Rent.
4. Rent.
(a) Commencing on the Commencement Date and continuing throughout the term of this Sublease,
Subtenant shall pay monthly rent consisting of Base Rent and Additional Rent (as defined below)
(collectively, “Rent”) to Sublandlord in the following amounts:
(i) Base Rent. Subtenant shall pay to Sublandlord monthly base rent (“Base
Rent”) as follows:
-2-
| Period | Amount | |||||
| Months 1-12 | $1.50 per rsf | |||||
| Months 13-24 | $1.55 per rsf | |||||
| Months 25-36 | $1.60 per rsf | |||||
| Months 37-48 | $1.66 per rsf | |||||
| Months 49-60 | $1.72 per rsf | |||||
| Months 61 -72 | $1.78 per rsf | |||||
| Months 73-84 | $1.84 per rsf |
(ii) Additional Rent. In addition to Base Rent, Subtenant shall also pay to
Sublandlord, Subtenant’s Proportionate Share (as defined below) of Tenant’s Share of Direct
Expenses (as such terms are defined in Section 4.2 of the Master Lease) and Subtenant’s
Proportionate Share of all other costs payable by Sublandlord under the Master Lease (“Additional
Rent”). Additional Rent shall be payable to Sublandlord as and when payments are due from
Sublandlord pursuant to the Master Lease, but at least five (5) business days prior to the date
Sublandlord must pay such amounts to Master Landlord. For purposes hereof, “Subtenant’s
Proportionate Share” shall mean eighty five and 16/100 percent (85.16%). Within a reasonable time
period after Subtenant’s request, Sublandlord shall provide all statements identifying such
Additional Rent.
(iii) Direct Costs. Subtenant shall further pay to Sublandlord as Additional Rent any
costs and expenses applicable to the Sublease Premises which are paid directly by Sublandlord,
including, but not limited to, janitorial, maintenance, repair and improvement costs, utilities
(including nitrogen systems serving the Sublease Premises), personal property taxes and real
property taxes, and the actual costs incurred by Sublandlord to provide Subtenant with facilities
services, as requested by Subtenant. Without limiting the foregoing, Subtenant acknowledges that
the Sublease Premises are not separately metered for electricity and agrees that it shall pay
Subtenant’s Proportionate Share of the electricity consumed at the Premises.
(iv) Exclusions. Notwithstanding the foregoing, in the event any amounts payable by
Sublandlord to Master Landlord or any direct costs incurred by Subtenant applicable to the
Sublease Premises are (A) due to Subtenant’s breach of any provision of the Master Lease, (B) due
to Subtenant’s negligence or willful misconduct, or (C) are for the sole benefit of Subtenant,
then such amounts shall not be prorated between Sublandlord and Subtenant and shall be the sole
responsibility of Subtenant. In addition, notwithstanding the foregoing, in the event any amounts
payable by Sublandlord to Master Landlord are (A) due to Sublandlord’s breach of any provision of
the Master Lease (unless caused by Subtenant’s breach hereunder), (B) due to Sublandlord’s
negligence or willful misconduct, or (C) are for the sole benefit of Sublandlord, then such
amounts shall not be prorated between Sublandlord and Subtenant and shall be the sole
responsibility of Sublandlord.
(v) Payment of Rent. If the Commencement Date does not fall on the first day of a
calendar month, Rent for the first month shall be prorated on a daily basis based
-3-
upon a calendar month. Rent shall be payable to Sublandlord in lawful money of the United States,
in advance, without prior notice, demand, or offset, on or before the first day of each calendar
month during the term hereof. All Rent shall be paid to Sublandlord at the address specified for
notices to Sublandlord in Section 18 below.
(b) Upon execution of this Sublease, Subtenant shall deliver to Sublandlord
the sum of Seventy-Eight Thousand Dollars ($78,000), representing the first (1st)
month’s Base
Rent.
(c) In the event of any casualty or condemnation affecting the Sublease
Premises, Rent payable by Subtenant shall be abated hereunder, but only to the extent that
Rent
under the Master Lease is abated.
5. Security Deposit. Upon execution of this Sublease, Subtenant shall deposit with
Sublandlord the sum of Three Hundred Twelve Thousand Dollars ($312,000) as a security
deposit (together with accrued interest hereunder, the “Security Deposit”). Subtenant hereby
grants to Sublandlord a security interest in the Security Deposit, including but not limited
to
replenishments thereof. If Subtenant fails to pay Rent or other charges when due under this
Sublease, or fails to perform any of its other obligations hereunder, Sublandlord may use or
apply all or any portion of the Security Deposit for the payment of any Rent or other amount
then
due hereunder and unpaid, for the payment of any other sum for which Sublandlord may become
obligated by reason of Subtenant’s default or breach, or for any loss or damage sustained by
Sublandlord as a result of Subtenant’s default or breach. If Sublandlord so uses any portion
of
the Security Deposit, Subtenant shall restore the Security Deposit to the full amount
originally
deposited within ten (10) days after Sublandlord’s written demand. Sublandlord shall not be
required to keep the Security Deposit separate from its general accounts and no interest shall
be
payable thereon. The Security Deposit, or so much thereof as had not theretofore been applied
by Sublandlord, shall be returned to Subtenant within thirty (30) days of the expiration or
earlier
termination of this Sublease, provided Subtenant has vacated the Sublease Premises.
6. Assignment and Subletting. Subtenant may not assign, sublet, transfer, pledge,
hypothecate or otherwise encumber the Sublease Premises, in whole or in part, or permit the
use
or occupancy of the Sublease Premises by anyone other than Subtenant, unless Subtenant has
obtained Sublandlord’s consent thereto (which shall not be unreasonably withheld) and the
consent of Master Landlord. Notwithstanding the foregoing, Section 14.8 of the Master Lease
shall apply to the Subtenant. Regardless of Sublandlord’s consent, no subletting or assignment
shall release Subtenant of its obligations hereunder. Any rent or other consideration payable
to
Subtenant pursuant to any sublease or assignment permitted by this paragraph which is in
excess
of the Rent payable to Sublandlord pursuant hereto shall be divided equally between
Sublandlord
and Subtenant, after payment to Master Landlord of any amount required to be paid under the
Master Lease.
7. Condition of Sublease Premises.
(a) Except for the Improvement Loan set forth in subsection (c) below and as otherwise
expressly set forth in this Sublease, Subtenant agrees that (i) Sublandlord has made no
representations or warranties of any kind or nature whatsoever respecting the Sublease Premises,
-4-
their condition or suitability for Subtenant’s use; and (ii) Subtenant agrees to accept the
Sublease Premises “as is, where is,” with all faults, without any obligation on the part of
Sublandlord to modify, improve or otherwise prepare the Sublease Premises for Subtenant’s
occupancy. Sublandlord shall provide Subtenant with the benefit of all warranties held by
Sublandlord or provided by the Master Lease in connection with the construction of the Building
which are applicable to the Sublease Premises. Notwithstanding the foregoing, Sublandlord covenants
and agrees to demise the Sublease Premises from the remainder of the Premises prior to the
Commencement Date and to deliver the Sublease Premises to Subtenant with all Building systems in
good working order.
(b) Sublandlord has not made an independent investigation of the Premises or
determination with respect to the physical and environmental condition of the Premises
including
without limitation the existence of any underground tanks, pumps, piping, toxic or hazardous
substances on the Premises. Notwithstanding the foregoing, if reasonably requested by
Subtenant, Sublandlord, at its sole cost and expense, will cause a Phase I environmental
assessment to be performed and delivered to Subtenant prior to the Commencement Date.
Throughout the Term, Sublandlord shall be responsible, at its expense, for ensuring that the
exterior of the Building and the common areas of the Premises comply with the “American With
Disabilities Act” (“ADA”). However, no investigation has been made by Sublandlord to ensure
compliance of the Sublease Premises with ADA. ADA may require a variety of changes to the
Sublease Premises, including potential removal of barriers to access by disabled persons and
provision of auxiliary aids and services for hearing, vision or speech impaired persons.
Subtenant shall rely solely on its own investigations and/or that of a licensed professional
specializing in the areas referenced in this Section 7(b), and shall be responsible for
ensuring that
the Sublease Premises comply with ADA.
(c) Subtenant, at its sole cost and expense, shall construct all improvements in
the Sublease Premises required by Subtenant for operation of its business therein (the
“Subtenant Improvements”), subject to all requirements of this Sublease and the Master Lease,
including, without limitation, obtaining Sublandlord’s and Master Landlord’s approval of plans
and specifications therefor. Sublandlord’s consent shall not be unreasonably withheld or
delayed. If Master Landlord approves of Subtenant’s contractor and architect, Sublandlord’s
consent thereto shall not be required. If Master Landlord requires the Subtenant Improvements
or any subsequent improvements to be removed at the expiration or earlier termination of this
Sublease, Subtenant shall comply with all such requirements, whether imposed upon granting of
consent or thereafter, as provided in the Master Lease. If Master Landlord does not so require
the Subtenant to remove the Subtenant Improvements or any subsequent improvements,
Subtenant shall not be required to remove the Subtenant Improvements and all subsequent
improvements, except that if Sublandlord notifies Subtenant in writing that Subtenant is
required
to remove any of improvements, Subtenant shall have such removal obligation as to such
improvements and shall restore the Sublease Premises to their condition existing as of the
date
hereof, reasonable wear and tear excepted; provided that if Subtenant exercises the extension
option set forth in Section 2(b) above, then Subtenant shall not have such removal obligation
as
to any of the improvements.
(d) To the extent Subtenant incurs construction costs for the Subtenant
Improvements in excess of Two Hundred Fifty Thousand Dollars ($250,000), Sublandlord
-5-
hereby agrees to loan to Subtenant (“Improvement Loan”) a maximum of an Two Hundred Fifty Thousand
Dollars ($250,000) (“Cap”), which Improvement Loan shall be (i) used solely to reimburse Subtenant,
up to the Cap, for actual “hard” costs (i.e., materials and labor as opposed to costs of
consultants and other “soft” costs) incurred for the construction of the Subtenant Improvements
which are in excess of the initial Two Hundred Fifty Thousand Dollars ($250,000) incurred by
Subtenant for the Subtenant Improvements (which initial costs shall first be paid by Subtenant),
and (ii) disbursed in accordance with the provisions of Exhibit D. The Improvement Loan shall be
repaid by Subtenant to Sublandlord in equal monthly installments (“Improvement Loan Payments”) in
an amount that would fully amortize the Improvement Loan over an amortization period of eighty-four
(84) months commencing on the Commencement Date, with interest from the date of expenditure on the
outstanding principal balance, computed at the rate equal to the lesser of seven percent (7%) per
annum or the maximum rate permitted by law. The Improvement Loan Payments shall be due and payable
on the first day of each month along with the payments of Rent payable under this Sublease. The
obligation of Subtenant to pay the Improvement Loan Payments is separately enforceable by
Sublandlord and shall survive (but shall be repayable in full, including all outstanding principal
and accrued and unpaid interest, upon) the expiration or earlier termination of this Sublease and,
because such obligation is intended to be a loan, is not subject to any mitigation of the amount
due. Sublandlord will use good faith and diligent efforts to obtain Master Landlord’s consent to
the Subtenant Improvements. Sublandlord agrees that it will not charge a supervision fee for its
own review of the Subtenant Improvements or other improvements to the Sublease Premises by
Subtenant. Subtenant acknowledges that Master Landlord may impose a supervision fee under the
Master Lease, which fee shall be paid by Subtenant.
8. Use. Subtenant may use the Sublease Premises only for the purposes as allowed
applicable laws and by the Master Lease, and for no other purpose. Subtenant shall promptly comply
with all applicable statutes, ordinances, rules, regulations, orders, restrictions of record, and
requirements in effect during the term of this Sublease governing, affecting and regulating the
Sublease Premises, including but not limited to the use thereof. Sublandlord will notify Subtenant
of any non-compliance with the foregoing of which Sublandlord becomes aware. Subtenant shall not
use or permit the use of the Sublease Premises in a manner that will create waste or a nuisance,
interfere with or disturb other tenants in the Building or violate the provisions of the Master
Lease. Subtenant acknowledges and agrees that the operation and use of the Sublease Premises may
require that Subtenant apply for and receive licenses and/or permits from various federal, state
and local governments, and Subtenant covenants and agrees to apply for and receive such licenses
and/or permits as are required. Subtenant shall provide to Sublandlord copies of any such licenses
and/or permits to the extent applicable to the Sublease Premises. Subtenant acknowledges, agrees
and covenants that its occupancy, operation and use of such Sublease Premises shall be in
accordance with: (a) all applicable state and federal regulations; (b) all licenses and permits
that either Subtenant or Sublandlord has received or receives in the future respecting such
Sublease Premises; and (c) all policies and procedures Sublandlord has reasonably promulgated
respecting such Sublease Premises. In connection with Subtenant’s use of the Sublease Premises,
Sublandlord shall provide Subtenant with card access keys for use with the security system of the
Building. The card access keys will provide access only to the Sublease Premises and the common
areas of the Building shown on Exhibit B. The security system for the Sublease Premises shall be
set to prohibit employees, contractors, vendors and guests of Sublandlord from accessing the
Sublease Premises, except in the case of
-6-
an emergency (in which case Sublandlord’s employees and security vendor shall have access), and
except for (i) interior security patrols by Sublandlord’s security vendor, as requested by
Subtenant, (ii) facilities personnel for provision of facilities services as requested by
Subtenant, (iii) Sublandlord’s janitorial vendor to provide janitorial services to the Sublease
Premises, as requested by Subtenant, and (iv) the provision of any other services to the Sublease
Premises as requested by Subtenant.
9. Parking. Subtenant shall have Subtenant’s Proportionate Share of the parking for
the Building, subject to the terms of the Master Lease. In addition, Sublandlord shall label
seven
(7) of the parking spaces on the front west side of the Building as “Visitor’s Parking” for
Subtenant.
10. Furniture. During the term of this Sublease, Subtenant shall have the right to use
the chemical and biological fume hoods, workstations, cubicles, cabling and furniture existing
in
the Sublease Premises on the date hereof (“Furniture”). Subtenant shall accept such Furniture
in its “as-is” condition without any representation or warranty by Sublandlord, and agrees
that
Sublandlord shall have no liability or repair obligations with regard to the Furniture. At
the
expiration or earlier termination of this Sublease, Subtenant may remove and keep all
Furniture
other than the chemical and biological fume hoods, and shall have no obligation to return such
Furniture to Sublandlord.
11. Signage. Subject to receipt of Master Landlord’s consent and all of the terms of
the Master Lease, Subtenant shall have the right to install, at its sole cost and expense,
standard
directional and building top signage. Upon expiration or earlier termination of this
Sublease,
Subtenant shall remove all such signs and repair damage to the Property and the Building
caused
by their removal.
12. Utilities. Subject to Subtenant’s obligation to reimburse Sublandlord pursuant to
Section 4 of this Sublease, Sublandlord shall cause to be furnished (a) electricity for
lighting and
the operation of equipment, (b) heat and air conditioning to the extent reasonably required
for the
comfortable occupancy by Subtenant in its use of the Sublease Premises, and (c) water for
lavatory and drinking purposes. Sublandlord may establish reasonable measures to conserve
energy, including but not limited to, automatic switching of lights after hours and more
efficient
forms of lighting, so long as such measures do not unreasonably interfere with Subtenant’s use
of
the Sublease Premises, provided that Sublandlord shall provide a system for Subtenant to turn
on
building systems outside of the core period listed above. Sublandlord shall not be in
default
hereunder or be liable for any damages directly or indirectly resulting from, nor shall the
rental
herein reserved be abated by reason of (i) the installation, use or interruption of use of any
equipment in connection with the furnishing of any of the foregoing services, provided such
acts
are done at reasonable times and Sublandlord uses reasonable efforts to avoid disruption of
Subtenant’s use of the Sublease Premises, (ii) failure to furnish or delay in furnishing any
such
services when such failure or delay is caused by accident or any condition beyond the control
of
Sublandlord or by the making of necessary repairs or improvements to the Premises or to the
Building, or (iii) the limitation, curtailment, rationing or restrictions on use of water,
electricity,
gas or any other form of energy serving the Premises or the Building. Subtenant hereby waives
the provisions of California Civil Code Section 1932 or any other applicable existing or
future
law or ordinance or governmental regulation permitting the termination of this Sublease due to
-7-
any interruption, failure or inability to provide Sublandlord services as provided for herein.
Subtenant shall have the right to use the distribution lines for liquid nitrogen which are
existing in the Sublease Premises, and to the extent required for such use, the liquid nitrogen
storage tank(s) at the Building; provided that Subtenant will not be permitted to have direct
contact with the liquid nitrogen tank(s) (which will at all times remain the sole property of
Sublandlord). Sublandlord shall maintain the distribution lines and tanks in good condition and
repair, subject to reimbursement pursuant to Section 4(a) above.
13. Outside Improvements. Subject to Subtenant’s receipt of all permits required
therefor, Subtenant may construct, at its sole cost and expense, three (3) hazardous materials
sheds and a nitrogen storage and delivery system outside the Premises, in the locations shown
on
Exhibit F (the “Outside Improvements”). Prior to constructing the Outside Improvements,
Subtenant shall obtain Master Landlord’s prior written consent, as required by the terms of
the
Master Lease. In addition, Subtenant shall obtain Master Landlord’s consent to the contractor
and architect for the Outside Improvements. Subtenant’s construction and operation of the
Outside Improvements shall comply with all requirements of the Master Lease, including,
without limitation Article 8 of the Master Lease as incorporated
herein, and with all laws. In
addition, Subtenant shall be responsible for all costs due to Master Landlord under the Master
Lease in connection with the Outside Improvements. Upon expiration or earlier termination of
this Sublease, Subtenant shall remove the Outside Improvements and all associated Hazardous
Materials and repair all damage to the area caused by the constructions and/or removal of
thereof.
14. Vivarium. Subtenant may construct, in its sole discretion and at its sole cost and
expense, a vivarium in the Sublease Premises for housing of rats and mice (and no other
animals), in the location shown on Exhibit B (the “Vivarium”). Prior to constructing the
Vivarium, Subtenant shall obtain Master Landlord’s prior written consent, as required by the
terms of the Master Lease. In addition, Subtenant shall obtain Master Landlord’s consent to
the
contractor and architect for the Vivarium. Subtenant’s construction of the Vivarium shall
comply with all requirements of the Master Lease, including, without limitation Article 8 of
the
Master Lease as incorporated herein, and with all laws. In addition, Subtenant shall be
responsible for all costs due to Master Landlord under the Master Lease in connection with the
alterations, additions, or improvements. Upon construction, the Vivarium shall be deemed part
of
the Sublease Premises and shall become the property of the Sublandlord.
15. Incorporation of Master Lease.
(a) All of the terms and provisions of the Master Lease, except as provided in subsection (b)
below, are incorporated into and made a part of this Sublease, and the rights and obligations of
the parties under the Master Lease are hereby imposed upon the parties hereto with respect to the
Sublease Premises, the Sublandlord being substituted for the Landlord in the Master Lease, the
Subtenant being substituted for the Tenant in the Master Lease provided, however, that the term
“Landlord” in the following Sections and Articles of the Master Lease (i) shall mean Master
Landlord, not Sublandlord: Section 6.1, Articles 7, 11, 13, and 29.13 and (ii) shall mean both
Master Landlord and Sublandlord: Article 8. It is further understood that where reference is made
in the Master Lease to the “Premises,” the same shall mean the Sublease Premises as defined
herein; where reference is made to the “Commencement Date,” the same
-8-
shall mean the Commencement Date as defined herein; and where reference is made to the “Lease,” the
same shall mean this Sublease. The parties specifically agree that any provisions relating to any
construction obligations of “Landlord” under the Master Lease with respect to construction that
occurred or was to have occurred prior to the Commencement Date hereof, are hereby deleted.
Sublandlord shall not be liable to Subtenant for any failure by Master Landlord to perform its
obligations under the Master Lease, nor shall such failure by Master Landlord excuse performance by
Subtenant of its obligations hereunder; provided, however, that Sublandlord shall use its
commercially reasonable efforts to cause Master Landlord to perform its obligations under the
Master Lease, including instituting legal proceedings at Subtenant’s sole cost and expense if
reasonably requested by Subtenant, provided that Sublandlord is not exposed to any risk of
termination of the Master Lease or the Building A Lease. Anything in the Master Lease to the
contrary notwithstanding, no personal liability shall at any time be asserted or enforceable
against Sublandlord’s stockholders, directors, officers or partners on account of any of
Sublandlord’s obligations or actions under this Sublease.
(b) The following Sections and Exhibits of the Master Lease are not
incorporated herein: Summary of Basic Lease Information (except Items 7 and 9), Sections 1.1.1
and 1.2, Articles 2 and 3, Sections 4.6 and 8.5, Articles 20, 21 and 22 (unless Master
Landlord
consents to such equipment), Sections 23.4.1 (subject to Section 11 above), 29.32, 29.34,
29.35,
29.36 and 29.37, Exhibits A, B, C and G, and First, Second, Third and Fourth Amendments to
Lease.
(c) Subtenant hereby assumes and agrees to perform for Sublandlord’s
benefit, during the term of this Sublease, all of Sublandlord’s obligations as Subtenant with
respect to the Premises under the Master Lease, as such obligations apply to the Sublease
Premises, except as otherwise provided herein. Subtenant shall not commit or permit to be
committed any act or omission which violates any term or condition of the Master Lease.
Notwithstanding anything to the contrary contained herein, this Sublease shall be subject and
subordinate to all of the terms of the Master Lease and Master Landlord shall have all rights
in
respect of the Master Lease and the Premises as set forth therein.
16. Insurance. Subtenant shall be responsible for compliance with the insurance
provisions of the Master Lease. Such insurance shall insure the performance by Subtenant of
its
indemnification obligations hereunder and shall name Master Landlord and Sublandlord as
additional insureds. All insurance required under this Sublease shall contain an endorsement
requiring thirty (30) days written notice from the insurance company to Subtenant and
Sublandlord before cancellation or change in the coverage, insureds or amount of any policy.
Subtenant shall provide Sublandlord with certificates of insurance evidencing such coverage
prior to the commencement of this Sublease.
17. Default. In addition to defaults and applicable cure periods contained in the
Master Lease, failure of Subtenant to make any payment of Rent within three (3) days of when
due hereunder shall constitute an event of default hereunder. If Subtenant’s default causes
Sublandlord to default under the Master Lease, Subtenant shall defend, indemnify and hold
Sublandlord harmless from all damages, costs (including reasonable attorneys’ fees),
liability,
expenses or claims relating to such default.
-9-
18. Notices. The addresses specified in the Master Lease for receipt of notices
to each of the parties are deleted and replaced with the following:
| To Sublandlord at: | 0000 Xxxxxxxxx Xxxxx | |||
| Xxx Xxxxx, Xxxxxxxxxx 00000 | ||||
| Attn: Xx. Xxxxxxx Xxxx | ||||
| To Subtenant at: | 0000 Xxxxxxx Xxxxxxx Xxxx, Xxxxx 000 | |||
| Xxxxxxxx, Xxxxxxxxxx 00000 | ||||
| Attn: Chief Business Officer | ||||
| After Commencement Date: | At the Sublease Premises | |||
| Attn: Chief Business Officer |
Sublandlord hereby agrees to provide Subtenant with a copy of any notice it receives from
Master Landlord which pertains to the Sublease Premises within five (5) business days after
Sublandlord’s receipt of such notice.
19. Sublandlord’s Obligations.
(a) To the extent that the provision of any services or the performance of any
maintenance or any other act respecting the Sublease Premises, the Premises or Building is the
responsibility of Master Landlord (collectively “Master Landlord Obligations”), upon
Subtenant’s request, Sublandlord shall make reasonable efforts to cause Master Landlord to
perform such Master Landlord Obligations, provided, however, that in no event shall
Sublandlord be liable to Subtenant for any liability, loss or damage whatsoever in the event
that
Master Landlord should fail to perform the same, unless Master Landlord’s failure to perform
is
caused by Sublandlord’s own negligence or willful misconduct, nor shall Subtenant be entitled
to
withhold the payment of Rent or terminate this Sublease. It is expressly understood that the
services and repairs which are incorporated herein by reference, including but not limited to
the
maintenance of exterior walls, structural portions of the roof, foundations, walls and floors,
will
in fact be furnished by Master Landlord and not by Sublandlord.
(b) Subject to reimbursement by Subtenant pursuant to Section 4 hereof,
Sublandlord agrees to maintain in good condition and repair (i) the backup generators serving
the Building (which will be available for service to the Sublease Premises), (ii) the common
areas inside the Building, and (iii) the HVAC, electrical, and plumbing systems of the
Building.
Except as otherwise provided herein, Sublandlord shall have no other obligations to Subtenant
with respect to the Sublease Premises or the performance of the Master Landlord Obligations.
20. Early Termination of Sublease. If the Master Lease should terminate prior to
the expiration of this Sublease, Sublandlord shall have no liability to Subtenant on account
of
such termination. Notwithstanding the foregoing, Sublandlord will not voluntarily do, or fail
to
do, anything which will constitute a default under the Master Lease or permit the Master Lease
to be terminated for any reason other than as expressly permitted by the Master Lease due to
casualty, condemnation, or material default of Master Landlord thereunder.
-10-
21. Consent of Master Landlord and Sublandlord. If Subtenant desires to take any
action which requires the consent or approval of Sublandlord pursuant to the terms of this
Sublease, prior to taking such action, including, without limitation, making any alterations,
then,
notwithstanding anything to the contrary herein, (a) Sublandlord shall have the same rights of
approval or disapproval as Master Landlord has under the Master Lease, and (b) Subtenant shall
not take any such action until it obtains the consent of Sublandlord and Master Landlord, as
may
be required under this Sublease or the Master Lease. This Sublease shall not be effective
unless
and until any required written consent of the Master Landlord shall have been obtained.
22. Indemnity. Subtenant shall indemnify, defend, protect, and hold Sublandlord and
Master Landlord harmless from and against all actions, claims, demands, costs, liabilities,
losses,
reasonable attorneys’ fees, damages, penalties, and expenses (collectively “Claims”) which are
brought or made against Sublandlord or which Sublandlord pays or incurs to the extent caused
by (a) a breach of this Sublease by Subtenant, (b) any violation of law by Subtenant or its
employees, agents, contractors or invitees (collectively, “Agents”) relating to the use or
occupancy of the Sublease Premises or the area occupied by the Outside Improvements, (c) any
act or omission by Subtenant or its Agents resulting in contamination of any part or all of
the
Premises or area occupied by the Outside Improvements by Hazardous Materials, (d) the gross
negligence or willful misconduct of Subtenant or its Agents, and (e) Subtenant’s use of the
Premises, including the Outside Improvements and Vivarium. Nothing in the Master Lease or
the Sublease shall be construed to impose any liability, cost or other requirement on
Subtenant
for any Hazardous Materials existing in the Sublease Premises or the area occupied by the
Outside Improvements prior to the date the Sublease Premises are delivered to Subtenant, or
any
Hazardous Materials introduced to the Sublease Premises or the area occupied by the Outside
Improvements by Sublandlord or its Agents. Sublandlord shall indemnify, defend, protect, and
hold Subtenant harmless from and against all Claims which are brought or made against
Subtenant or which Subtenant pays or incurs to the extent caused by (i) Sublandlord’s or its
Agent’s gross negligence or willful misconduct, (ii) any event relating to the Premises that
occurred prior to the entry by Subtenant onto the Premises pursuant to Section 3 hereof, and
(iii)
a breach of this Sublease or the Master Lease by Sublandlord.
23. Brokers. Each party hereto represents and warrants that it has dealt with no
broker in connection with this Sublease and the transactions contemplated herein, except
Xxxxxx
Xxxxxx Group (“Broker”). Each party shall indemnify, protect, defend and hold the other party
harmless from all costs and expenses (including reasonable attorneys’ fees) arising from or
relating to a breach of the foregoing representation and warranty. Sublandlord agrees to pay
the
Broker pursuant to a separate written agreement.
24. Surrender of Sublease Premises. In lieu of any obligation or liability set forth
in the Master Lease, upon the termination of the Sublease, Subtenant shall surrender the
Sublease
Premises and the area occupied by the Outside Improvements to Sublandlord broom-clean and in
as good a condition as on the Commencement Date, ordinary wear and tear excepted. In
addition, at Sublandlord’s option (by written notice to Subtenant at the time of its consent
to such
alteration, addition or improvements, if Subtenant obtained Sublandlord’s consent thereto, and
if
not, by written notice at least sixty (60) days prior to the expiration of this Sublease)
Subtenant
shall remove any alterations, additions and improvements , prior to the termination of the
Sublease and restore the Sublease Premises to its prior condition, ordinary wear and tear
-11-
excepted, repairing all damage caused by or related to any such removal, all at Subtenant’s
expense. Removal of the Subtenant Improvements shall be governed by Section 7(c) above. Removal of
the Outside Improvements shall be governed by Section 13 above.
25. Right of First Offer. Sublandlord hereby grants to Subtenant the continuing
right of first offer to amend this Sublease to add any or all of the remainder of the
Building, and
any or all of Building A (“First Offer Space”) in the event Sublandlord elects to offer such
space to sublet during the Term of this Sublease, or in the event Sublandlord decides to
assign
the remainder of the Master Lease to any third party. Sublandlord will deliver written
notice
(“Offer Notice”) to Subtenant from time to time whenever Sublandlord determines that it will
commence marketing any portion of the First Offer Space for sublease or assignment or prior to
entering into negotiations to sublet any portion of the First Offer Space or assign the Master
Lease, which Offer Notice will describe the space which Sublandlord proposes to sublease or
assign. Within ten (10) business days after Subtenant’s receipt of the Offer Notice,
Subtenant
may elect to exercise its right of first offer with respect to any of the space described in
the Offer
Notice by delivering written notice (“Exercise Notice”) to Sublandlord. The right of first
offer
shall not apply if, as of the date Sublandlord receives Subtenant’s Exercise Notice, Subtenant
is
in default of any terms, covenants or conditions of this Sublease after the expiration of any
applicable notice and cure periods. If Subtenant properly exercises the right of first offer,
the
First Offer Space will be leased to Subtenant on the same terms and conditions as affect the
original Sublease Premises (except for the Improvement Loan, which shall not be applicable),
at
the same Base Rent rate as then applies to the original Sublease Premises; provided, however,
that Subtenant’s Proportionate Share shall be increased to take into account the additional
rentable square feet of the First Offer Space. The parties agree to execute an amendment to
this
Sublease promptly after the exercise of the right of first offer to include the First Offer
Space and
the terms thereof. This right of first offer shall be a continuing right and in the event
Subtenant
fails to lease any space offered to Subtenant, the right of first offer will continue to apply
to any
subsequent availability of such space.
26. No Third Party Rights. The benefit of the provisions of this Sublease is
expressly limited to Sublandlord and Subtenant and their respective permitted successors and
assigns. Under no circumstances will any third party be construed to have any rights as a
third
party beneficiary with respect to any of said provisions.
27. Counterparts. This Sublease may be signed in two or more counterparts, each of
which shall be deemed an original and all of which shall constitute one agreement.
28. Quiet Enjoyment. Subtenant shall peacefully have, hold and enjoy the Sublease
Premises, subject to the terms and conditions of this Sublease and subject to the Master
Lease,
provided that Subtenant pays all rent and performs all of Subtenant’s covenants and agreements
contained herein.
29. Option to Purchase. In the event Sublandlord becomes an owner of the Building
(whether pursuant to Section 29.35 of the Master Lease or otherwise), this Sublease will
become
a direct lease between Sublandlord, as Landlord and Subtenant as Tenant on all the same terms
and conditions contained herein.
-12-
30. Estoppel. Sublandlord hereby represents and warrants that (i) the Master Lease is
in full force and effect, (ii) to Sublandlord’s actual knowledge, no defaults exist by either
Sublandlord or the Master Landlord under the Master Lease, (iii) to Sublandlord’s actual knowledge
there are no circumstances which, given notice or the passage of time or both, would constitute a
default under the Master Lease, and (iv) that Sublandlord has the full right, power and authority
to enter into this Sublease (subject to the consent of Master Landlord).
[Remainder of Page Intentionally Left Blank]
-13-
IN WITNESS WHEREOF, the parties have executed this Sublease as of the date first written
above.
| SUBLANDLORD: | ||
| VERENIUM CORPORATION, | ||
| a Delaware corporation |
| By: | /s/ (ILLEGIBLE) | |||||
| Name: | (ILLEGIBLE) | |||||
| Title: | EVP & CFO |
| SUBTENANT: | ||
| ARDEA BIOSCIENCES, INC., | ||
| a Delaware corporation |
| By: | /s/ Xxxxx Quart | |||||
| Name: | Xxxxx Quart | |||||
| Title: | President & CEO | |||||
CONSENT OF MASTER LANDLORD
KR-Gateway Partners, LLC, the Master Landlord under the Master Lease, hereby consents to the
Sublease attached hereto, and all of the terms and conditions contained therein.
| KR-GATEWAY PARTNERS, LLC, | ||
| a Delaware limited liability company |
| By: | Xxxxxx Realty, L.P., | |||
| a Delaware limited partnership, | ||||
| Managing Member |
| By: | Xxxxxx Realty Corporation, | |||
| a Maryland corporation, | ||||
| General Partner |
| By: | ||||||
| Its: | ||||||
| Date: | ||||||
EXHIBIT A
MASTER LEASE
EXHIBIT A-Page 1
EXHIBIT B
SUBLEASE PREMISES
EXHIBIT B-Page 1
EXHIBIT B-Page 2
EXHIBIT C
DETERMINATION OF FAIR MARKET RENT
1. Sublandlord and Subtenant shall each appoint one arbitrator who shall by
profession be a real estate broker or appraiser who shall have been active over the five (5)
year
period ending on the date of such appointment in the leasing (or appraisal, as the case may
be) of
commercial / industrial properties in the Sorrento Mesa submarket of San Diego, California.
The
determination of the arbitrators shall be limited solely to the issue of whether Sublandlord’s
or
Subtenant’s submitted Fair Market Rent is the closest to the actual Fair Market Rent, as
determined by the arbitrators, taking into account the requirements of Section 2(b) of this
Sublease (i.e., the arbitrators may only select Sublandlord’s or Subtenant’s determination and
shall not be entitled to make a compromise determination). Each such arbitrator shall be
appointed within fifteen (15) business days after the applicable Outside Agreement Date.
2. The two (2) arbitrators so appointed shall within five (5) days of the date
of the appointment of the last appointed arbitrator agree upon and appoint a third arbitrator
who
shall be qualified under the same criteria set forth hereinabove for qualification of the
initial two
(2) arbitrators.
3. The three (3) arbitrators shall within five (5) days of the appointment of
the third arbitrator reach a decision as to whether the parties shall use Sublandlord’s or
Subtenant’s submitted Fair Market Rent and shall notify Sublandlord and Subtenant thereof.
4. The decision of the majority of the three (3) arbitrators shall be binding
upon Sublandlord and Subtenant.
5. If either Sublandlord or Subtenant fails to appoint an arbitrator within
fifteen (15) business days after the applicable Outside Agreement Date, the arbitrator
appointed
by one of them shall reach a decision, notify Sublandlord and Subtenant thereof, and such
arbitrator’s decision shall be binding upon Sublandlord and Subtenant.
6. If the two (2) arbitrators fail to agree upon and appoint a third arbitrator,
or both parties fail to appoint an arbitrator, then the appointment of the third arbitrator or
any
arbitrator shall be dismissed and the Fair Market Rent be decided shall be forthwith submitted
to
arbitration under the provisions of the American Arbitration Association, but subject to the
instruction set forth in this Exhibit C.
7. The cost of arbitration shall be paid by Sublandlord and Subtenant equally.
EXHIBIT C-Page 1
EXHIBIT D
DISBURSEMENT OF IMPROVEMENT LOAN
Subtenant shall prepare a budget for the design, permitting and construction of the Subtenant
Improvements (“Subtenant Improvement Budget”), including, without limitation: (i) design and
architectural fees, (ii) engineering fees, (iii) costs of processing and obtaining permits from any
governmental entity, (iv) water and sewer connection charges, utilities consumed for construction,
and other expenses related or similar thereto, (v) payments to architects, designers, contractors,
subcontractors and material suppliers and the other direct costs incurred in the design and
construction of the Subtenant Improvements, and (vi) premiums for insurance carried by Subtenant or
its contractors, subcontractors, designers, or architects with respect to the construction. As work
progresses on the Subtenant Improvements, Subtenant shall submit an application for payment
(“Application for Payment”) to Sublandlord no more often than monthly, for work completed by and
through the twentieth (20th) day of the month, for disbursement of the Improvement Loan.
Applications for Payment may be made only for work actually completed or services actually provided
and shall include a detailed description of such completed Subtenant Improvement work or services.
Applications for Payment shall include copies of the invoices to Subtenant by Subtenant’s
contractor(s) or other vendors for the work completed. As a condition of payment of any Application
for Payment, Sublandlord shall require the certification by both Subtenant and Subtenant’s
architect that the described Subtenant Improvement Work or services have been completed.
Sublandlord shall disburse the requested funds directly to Subtenant (or, at Subtenant’s election,
to a contractor or other vendor) on or before the later of the tenth (10th) day following the date
the Application for Payment was submitted to Sublandlord or the tenth (10th) day of the calendar
month immediately succeeding the last day covered by the Application for Payment. Notwithstanding
the foregoing, if Subtenant fails to promptly pay to any vendor or contractor any amount included
in an Application for Payment submitted to Sublandlord, then at its election, Sublandlord may
disburse any sums otherwise owing by Sublandlord to Subtenant hereunder by joint check in the name
of the Subtenant and the applicable vendors or contractors, until Subtenant demonstrates to
Sublandlord’s reasonable satisfaction that all vendors and contractors have been paid current;
provided, however, that the foregoing shall not apply to any vendor or contractor (i) with which
Subtenant has a good faith dispute, (ii) to whom Subtenant has paid all sums that are not in
dispute, and (iii) for whom Subtenant has provided Sublandlord with a bond or other appropriate
assurances that no lien will attach to Master Landlord’s right, title and interest in the Premises.
EXHIBIT D-Page 1
EXHIBIT E
OUTSIDE IMPROVEMENTS
EXHIBIT E-Page 1
