EXHIBIT 10.9
SUBLEASE
1. Parties. This agreement ("this Sublease") is made and entered into as
of November 6, 1998, by and between CELLEGY PHARMACEUTICALS, INC., a California
corporation ("Sublessor"), and PLANETRX, INC., a Delaware corporation
("Sublessee"), under the written agreement entitled "Lease" dated April 8, 1998
between TC NORTHERN CALIFORNIA, INC., a Delaware corporation ("Owner") as
landlord and Sublessor as tenant, as supplemented by the letter agreement dated
April 7, 1998 between said parties concerning landlord's work and upgrades. Said
agreement entitled "Lease" and said letter agreement are hereinafter
collectively called the "Master Lease". A copy of the Master Lease is attached
hereto as Attachment I. Any defined terms used in this Sublease without
independent definition herein shall have the meaning of the same defined terms
in the Master Lease. As used herein the term "Project" shall mean the entirely
of the premises governed by the Master Lease.
2. Provisions Constituting Sublease.
2.1 This Sublease is subject to all the provisions of the Master
Lease. Sublessee hereby assumes and agrees to perform all of the obligations of
Sublessor as tenant under the Master Lease to the extent said obligations apply
to the Subleased Premises. Any provision contained in this Section 2.1 or
elsewhere in this Sublease shall not prevent or prohibit Sublessor from
assigning or otherwise transferring Sublessor's interest in this Sublease to a
third party (including Owner), provided that Sublessor makes any such assignment
or transfer in compliance with applicable requirements of the Master Lease.
2.2 The provisions of the Master Lease are incorporated herein by
reference. Sublessor shall be responsible, as between Sublessor and Sublessee,
for the performance of the obligations of the tenant under the Master Lease
which are set forth in the following provisions of the Master Lease. Sublessee
shall only have the right to exercise or enforce the rights of Sublessor under
the Master Lease insofar as said rights pertain to the use and occupancy of the
Subleased Premises and Common Area, but in no event shall Sublessee have rights
under Section 37.D (right of first offer) or Section 37.E (right to extend term)
of the Master Lease.
3. Subleased Premises and Rent.
3.1 Subleased Premises. Sublessor leases to Sublessee and Sublessee
leases from Sublessor the Subleased Premises pursuant to the provisions of in
this Sublease. The Subleased Premises consist of approximately 15,821 rentable
square feet, which are located on the second floor of the freestanding building
commonly known as 000 Xxxxxx Xxxxx Xxxxxxxxx, Xxxxx Xxx Xxxxxxxxx, Xxxxxxxxxx
00000. Upon completion of installation of the demising walls which enclose the
Subleased Premises, Sublessor shall cause Sublessor's architect or construction
manager to measure the rentable area in the Subleased Premises.
3.2 Rent. Sublessee shall pay monthly rent to Sublessor in
consideration for the Subleased Premises in accordance with the following
schedule:
Months Sq. Ft.* Rental Rate
------ --------- -----------------------
12/18/98 to 2/17/99 9,254 $2.15 psf, Full Service
2/18/99 to 12/17/99 15,821 $2.15 psf, Full Service
12/18/99 to 12/17/01 15,821 $2.15 psf, Full Service
Extension terms
12/18/01 to 6/17/02 15,821 2.29 psf, Full Service
6/18/02 to 12/18/02 15,821 2.29 psf, Full Service
* See Section 3.1 above concerning final determination of rentable area.
Sublessee shall pay the rent, and all other amounts which become due from
Sublessee to Sublessor under this Sublease, in lawful money of the United
States, without deduction, offset, prior notice or demand. Rent shall be payable
by Sublessee to Sublessor in consecutive monthly installments on or before the
seventeenth (17th) day of each calendar month during the Sublease Term. The rent
for any partial calendar month at the end of the Sublease Term, shall be
prorated on the basis of the number of days in such month.
3.3 Full Service Sublease. Subject to the limitations and conditions
set forth in this Section 3.3, Sublessor shall pay the amounts due under the
Master Lease on account of the Subleased Premises for utilities, janitorial
services (so long as Sublessee accepts service from janitorial contractor whom
Sublessor has hired to provide janitorial services for Sublessor), operating
expenses (including building and common area maintenance, costs of insurance,
repairs, and real property taxes and assessments)
Notwithstanding the foregoing, if Sublessor determines that Sublessee's
consumption of electricity exceeds normal usage. Sublessor may install a
submeter to measure Sublessee's actual consumption and may then charge
Sublessee, at the same rate at which the public utility providing electricity
charges Sublessor, for excess usage. Furthermore, if Sublessee shall use the
Subleased Premises outside normal working hours (which shall mean 7 am to 6 pm
Monday through Friday, 9 am to 1 pm on Saturdays, Sublessor will charge
Sublessee $30 per hour for use of heating or cooling outside of normal working
hours only upon notice to Sub-lessor by Sublessee in advance of anticipated
usage. In the event that Sublessee utilizes lighting and electricity, but does
not require any special heating or cooling outside of normal working hours there
shall be no said charge.
3.4 Payment of First Month's Rent. Concurrently with the execution of
this Sublease by Sublessee, Sublessee shall pay to Sublessor the amount of
$19,896 on account of rent due hereunder for the first month of the initial term
of this Sublease. Once the final rentable area of the Subleased Premises and the
duration of any early entry by Sublessee are determined, Sublessor shall notify
Sublessee of any resulting adjustment to the rent due for the first month.
3.5 Security Deposit. In addition to the monthly rent which this
Sublease requires Sublessee to pay, Sublessee shall pay to Sublessor the amount
of $68,030 (the "Security Deposit") as a deposit to secure the performance of
Sublessee's obligations, payment will be due at the earlier of 12/18/98 or the
Sublease start date. Sublessor shall have no obligation to pay interest or any
other return to Sublessee on account of the Security Deposit. Sublessor may draw
upon the Security Deposit to compensate Sublessor for any costs or damages
Sublessor incurs on account of the failure of Sublessee to perform the
obligations of Sublessee under this Sublease. Upon demand from Sublessor
following any such draw, Sublessee shall immediately deliver to Sublessor an
amount sufficient to restore the Security Deposit to its full original amount.
If, at the expiration or sooner termination of this Sublease,
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Sublessee shall have performed all the obligations of Sublessee hereunder,
including, without limitation, the surrender of the Subleased Premises to
Sublessor in the condition which this Sublease requires, Sublessor shall return
to Sublessee, within ten days after Sublessee has fully vacated the Subleased
Premises and completed any repairs which removal from the Subleased Premises may
have occasioned, the Security Deposit less any sums due and owing to Sublessor.
The subleases will be permitted to substitute a valid letter of credit in the
amount of the security deposit payable to the Sublessor under conditions
described above in section 3.5.
4. Rights of Access and Use.
4.1 Use. Sublessee shall use the Subleased Premises only for
the purposes of general office use, software development and data processing and
for no other uses unless both Sublessor and Master Landlord consent in writing
to each such other use prior to the commencement thereof.
4.4 Parking. Sublessee shall have the right to use up to fifty-
five (55) parking spaces in the parking facilities which the Project includes,
on an undesignated, non-exclusive basis, throughout the initial term and any
extended term of this Sublease. Sublessee shall cooperate with Sublessor in
enabling Sublessor to comply with the provisions of the Master Lease concerning
parking.
4.5 Initial Condition of the Subleased Premises. Sublessor shall
make certain improvements to the Subleased Premises for Sublessee's, at the cost
of no more than $9,080.40 in accordance with the floor plan attached hereto as
Attachment II and deliver the Subleased Premises so improved, with the
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electrical and HVAC systems in good operating condition. Sublessee shall accept
the Subleased Premises in the aforesaid condition.
4.6 Alterations by Sublessee. Sublessee, at Sublessee's sole
cost and expense, may make additions, improvements and alterations (collectively
Alterations) to the Subleased Premises at any time and from time to time
provided that Sublessee first obtains Sublessor's prior written approval of the
Alterations, which approval Sublessor shall not unreasonably withhold or delay,
but which approval Sublessor may condition upon satisfaction of one or more of
the following requirements: (A) the Alterations do not result in any violation
of the Master Lease; (B) the Alterations receive the approval of Owner, if such
approval is a requirement under the Master Lease; (C) the Alterations are
described in plans and specifications prepared by a licensed architect (D)
Sublessee shall not commence any work on any Alterations without first obtaining
an permits necessary therefor, (E) the Alterations are installed by a licensed
general contractor, in accordance with the permits therefor and with all
applicable laws, regulations, ordinances, codes, orders, and rules of
governmental authorities with jurisdiction over the Subleased Premises; and (F)
Sublessee shall affirm in writing its obligation, if Sublessor shall so request,
to remove the Alterations at the end of the term of this Sublease and to restore
the Subleased Premises to their original condition as of the date of this
Sublease. Unless Sublessor shall have asked Sublessee to remove particular
Alterations, all Alterations installed in the Subleased Premises shall remain
therein and shall become the property of Sublessor at the end of the term of
this Sublease. Initial alterations by Sublessee are contained in Attachment
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111.
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4.7 Upkeep and Surrender. Sublessee, at Sublessee's expense,
shall keep and maintain the Subleased Premises and all equipment and systems
located therein and
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serving the Subleased Premises, together in good condition and repair throughout
the term of this Sublease. At the end of the term of this Sublease Sublessee
shall remove all Sublessee's furniture, trade fixtures, shelving and portable
equipment from the Subleased Premises and return the Subleased Premises to
Sublessor in broom-clean condition with all equipment, systems and utilities
services in the Subleased Premises in good condition and repair.
4.8 Hazardous Materials; Indemnification.
A. Use. Sublessee shall not bring any Hazardous Materials onto
the Subleased Premises or use any Hazardous Materials at the Subleased Premises
without first obtaining Sublessor's prior written approval, which Sublessor
shall not unreasonably withhold or delay, but which approval Sublessor may
condition upon the following requirements: (i) Sublessee shall identify the
nature and quantity of each Hazardous Material which Sublessee proposes to use
on the Subleased Premises and Sublessee's protocol for the use, storage and
disposition thereof; and (ii) Sublessee shall reasonably assure Sublessor that
Sublessee's use of each such Hazardous Material complies with the requirements
of the Master Lease and the requirements of applicable law concerning each such
Hazardous Material.
B. Indemnity. Sublessee shall indemnify, protect, defend and
hold Sublessor harmless from and against any and all claims, damages, losses and
liabilities which Sublessor may incur or suffer on account of the violation of
any provision of the Master Lease caused by Sublessee or resulting from the
introduction to the Project or use of any Hazardous Materials by Sublessee at
the Subleased Premises. The obligations Sublessee under this Section 48B shall
survive the expiration or sooner termination of this Sublease and shall be
enforceable against Sublessee thereafter.
4.9 Right of First Refusal. Sublessor may offer the space (the
"First Level Space") consisting of approximately 9,728 square feet on the
first level of Sublessor's Premises for sublease. If Sublessor decides to
offer the First Level Space for sublease, Sublessor shall notify Sublessee
in writing of the first bonafide offer received for the First Floor Space
for sublease and of the minimum terms and conditions offered to sublet the
First Level Space. If Sublessee, within three (3) calendar days after the
date of Sublessor's notice to Sublessee, shall submit an offer to sublet
the First Level Space which meets or xxxxxxx the specified conditions,
Sublessor will then negotiate with Sublessee in good faith with a view to
concluding a mutually acceptable sublease of the First Level Space.
Sublessor shall have the right to terminate such negotiations at any time
if Sublessor concludes, in Sublessor's good faith judgment, that the
negotiations unlikely to result in an agreement. Sublessor has no future
obligation to offer the first floor space to the Sublessee after the first
offer.
4.10 Assigning and Subletting.
Sublessee shall have the right, so long as at least six (6)
months of the initial term of this Sublease remain unexpired at the time the
sublease (in either case, a "Transfer") takes effect, to assign or sublet all or
any portion of the Subleased Premises to an assignee or subtenant whom Sublessor
approves. Sublessor shall not unreasonably withhold or delay its approval, but
Sublessor may condition its approval upon the satisfaction of one or more of the
following requirements:
(A) At the time of the Transfer, Sublessee shall not be in
default in the performance and observance of any of Sublessee's
obligations under this
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Sublease or, if a default exists, the transferee shall have cured
such default prior to or concurrently wish the Transfer,
(B) The transferee shall expressly assume in writing all of
Sublessee's obligations hereunder;
(C) Owner shall approve the transferee;
(D) The proposed transferee shall provide Sublessor with reasonably
detailed historical and current financial information about the
transferee and that the transferee has a financial condition which is
satisfactory to Sublessor and Sublessor's lender.
(E) The use which the proposed transferee proposes does not conflict
with the uses permitted under the Master Lease or with the use
Sublessee is making of its own premises. The proposed transferee
undertakes, in favor of Owner and Sublessor, to comply, at the
transferee's sole expense, with any requirements under the Americans
With Disabilities Act of 1990 which may become applicable to the
Project or the Subleased Premises on account of the proposed
transferee's use thereof.
If Sublessee wishes to engage in a Transfer, Sublessee shall notify Sublessor by
delivering to Sublessor a written request for Sublessor's consent to the
Transfer at least thirty (30) days prior to the proposed effective date for the
Transfer and shall provide Sublessor, at the time Sublessee delivers the request
for consent to Sublessor, with the following:
(I) The full particulars of the proposed transaction,
including its nature, effective date, semis and conditions, the
name, address, telephone and facsimile numbers of the parties and
other documents pertaining to the proposed transaction;
(II) A description of the identity, net worth and previous
business experience of the proposed transferee, including,
without limitation, copies of financial statements for the
proposed transferee.
(III) A signed statement from Sublessee that Sublessee intends
to conclude the proposed Transfer if Sublessor consents thereto.
If Sublessee fails to make the aforesaid written request in accordance with the
foregoing requirements and seeks nonetheless to proceed with a Transfer,
Sublessee's said failure shall constitute a material breach of this Sublease on
the part of Sublessee.
In no event shall any request for consent submitted by Sublessee pursuant to
this Section 15 be deemed granted unless Sublessor has expressly granted such
consent in a writing signed by Sublessor.
No Transfer, notwithstanding that Sublessor shall have consented thereto, shall
relieve or release Sublessee from liability for payment of all rent and other
charges payable hereunder or from the performance of Sublessee's other
obligations under this Sublease.
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Within not more than thirty (30) days after the commencement of any Transfer to
which Sublessor shall have consented hereunder, Sublessee shall notify Sublessor
and Sublessor, in turn, shall notify Landlord in writing of the amount of (i)
Sublessee's direct out-of-pocket costs in connection with the Transfer and (ii)
the amount, if any, by which the revenue and other consideration Sublessee
receives under or on account of the Transfer exceeds the Rent which Sublessee
was paying Sublessee. The Sublessee shall pay to Sublessor, on a monthly basis,
fifty percent (50%) of all such further excess that Sublessee receives, after
deducting the Landlord's share of any excess rent agreed to in the master lease,
on account of the Transfer (provided that Sublessee, after recovery of
Sublessee's costs, shall immediately pay to Sublessor the portion remaining of
any such excess resulting from a lump sum payment to Sublessee, for example, key
money or a Transfer fee).
5. Sublease Term.
5.1 Sublease Term. The Sublease Term shall commence on December 18,
1998 and shall expire on December 17, 2001. In no event shall the Sublease Term
extend beyond the Term of the Master Lease.
5.2 Inability to Deliver Possession. If Sublessor is unable to
deliver possession of the Subleased Premises at the commencement of the term,
Sublessor shall not be liable for any damage caused thereby, nor shall this
Sublease be void or voidable but Sublessee shall not be liable for Rent until
such time as Sublessor offers to deliver possession of the Subleased Premises to
Sublessee. The term of this Sublease shall not be extended by such delay. If
Sublessor does not tender delivery of possession of the Subleased Premises to
Sublessor on or before January 31, 1999, Sublessee, at Sublessee's option, may
temperate this Sublease by delivering a written notice of termination to
Sublessor. If Sublessee, with Sublessor's consent, takes possession of the
Subleased Premises prior to December 17, 1998, Sublessee shall do so subject to
all the covenants and conditions hereof and shall pay Rent for the period
commencing on the date of Sublessee's entry into the Subleased Premises and
ending on December 16, 1998 at the same rental as that prescribed for the first
month of the term prorated at the rate of 1/30th thereof per day.
5.3 Right to Extend the Sublease Term. Sublessor hereby grants to
Sublessee the right to extend the term of this Sublease for six (6) months after
the expiration of the lease term (ending 6/17102). Sublessee may exercise this
right by delivering written notice of exercise to Sublessor on or before July
18, 2001. Sublessor will also grant Sublessee the right to extend the term of
this Sublease for an additional six (6) month period after the expiration of the
extended lease terms (second extension period ending 12/18/02). Sublessee's
aforesaid right to extend the term is subject, however, to the unilateral right
of Sublessor to cancel Sublessee's extension right if Sublessor determines, in
Sublessor's business judgment, that Sublessor will require the Subleased
Premises for Sublessor's own use. The rent for the extension term shall as
specified in Section 3.2 above.
6. Notices. All notices, demands, consents and approvals which may or
are required to be given by either party to the other hereunder shall be given
in the manner provided in the Master Lease, at the following addresses:
(enter addresses here)
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Sublessor shall notify Sublessee of any Event of Default under the Master Lease
or of any other event of which Sublessor has actual knowledge which may, in
Sublessor's reasonable business judgment, materially adversely affect
Sublessee's ability to conduct its normal business at the Subleased Premises, as
soon as reasonably practicable following Sublessor's receipt of notice from
Owner of an Event of Default or actual knowledge of such a material adverse
effect.
7. Brokerage Representation. Sublessor has dealt exclusively with Cornish
& Xxxxx Commercial, a licensed real estate broker ("Sublessor's Brokers"), in
arranging this Sublease. Sublessor, pursuant to a separate written contract,
between Sublessor and Sublessor's Broker, shall pay the compensation which said
contract provides. Sublessee shall indemnify, protect, defend and hold Sublessor
harmless against the claims of any other finder or real estate licensee who may
claim compensation from Sublessor on account of the transaction evidenced by
this Sublease.
8. Compliance With Americans With Disabilities Act. Sublessee shall be
responsible for the installation and cost of any and all improvements,
alterations or other work required on or to the Subleased Premises or to any
other portion of the Project, which work is required or reasonably necessary
because of Sublessee's use of the Subleased Premises or any portion thereof,
including any improvements, alterations or other work required under the
Americans With Disabilities Act of 1990.
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IN WITNESS WHEREOF, Sublessor and Sublessee have executed this Sublease as of
the date first above written.
SUBLESSOR CELLEGY PHARMACEUTICALS, INC.
a California corporation
By:______________________________
Name:
Title:
By:______________________________
Name:
Title:
SUBLESSEE PLANETRX, INC.
a Delaware corporation
By:______________________________
Name:
Title:
By:______________________________
Name:
Title:
