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EXHIBIT 10.26
THIRD LEASE AMENDMENT
This Lease Amendment (Amendment) is made as of June 6, 1996, between
XXXXXXX REALTY I LIMITED PARTNERSHIP (Landlord) and NEUROCRINE BIOSCIENCES, INC.
(Tenant).
RECITALS:
Landlord's predecessor-in-interest, Hartford Accident and Indemnity
Company, and Tenant entered into a lease dated June 1, 1993, as amended by First
Lease Amendment dated July 8, 1993, Landlord's Subordination Agreement dated
December 6, 1993, Landlord's Subordination Agreement dated November 18, 1994,
Second Lease Amendment dated June 30, 1995, and Letter Agreement dated December
20, 1995 (Lease) for space known as Suite 100 (Premises) in the building located
at 0000 Xxxxxxx Xxxx Xxxx, Xxx Xxxxx, Xxxxxxxxxx (Building). Tenant desires to
extend the Term of the Lease and to expand the Premises to include the entire
Building and Landlord has agreed to such extension and expansion, subject to the
terms hereof. Any capitalized term used herein and not otherwise defined shall
have the meaning given to it in the Lease.
NOW THEREFORE, the parties hereby agree to amend the Lease as
follows:
1. The Termination Date of the Lease shall be the later of June 30,
2006 or the last day of the 120th full calendar month after the Hybritech Space
Commencement Date (as defined in Section 2 of this Amendment).
2. Commencing on the later of June 17, 1996 or the date Landlord
delivers possession of the Hybritech Space, as defined in and subject to Section
8 of this Amendment (the Hybritech Space Commencement Date):
(a) In Section II.A. of the Lease, the Premises shall be deemed
to consist of the entire Building (approximately 47,591 rentable square feet).
(b) Sections II.J. & K. of the Lease shall be modified as
follows:
(1) From the Hybritech Space Commencement Date to the date which
is 61 days after the Hybritech Space Commencement Date (expected to be June 17,
1996 to August 16, 1996), the Monthly Installments of Base Rent shall be at the
rate of $56,510.40 per month, and effective the 62nd day after the Hybritech
Space Commencement Date (expected to be August 17, 1996), the Base Rent shall be
$1,240,768.80 per annum and Monthly Installments of Base Rent shall be
$103,397.40. For purposes of illustration only, if the Hybritech Space
Commencement Date is June 17, 1996, the Monthly Installments of Base Rent for
the months of June, July and August of 1996 would be computed as follows:
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For the month of June: on June 1, 1996, Tenant would have paid a
Monthly Installment of Base Rent in the amount of $58,962.17 (Old Monthly
Installment). After prorating the Old Monthly Installment for 16 days and the
Monthly Installment of Base Rent at the rate payable for the last 14 days of
June, the resulting payment for June would be $57,818.01, entitling Tenant to a
credit of $1,144.16 against the Monthly Installment of Base Rent for July.
For the month of July: $55,366.24, computed by deducting the credit
from June from the Monthly Installment of Base Rent at the rate due for July.
For the month of August: $79,197.66, computed by prorating the
Monthly Installment of Base Rent at the rate due for the first 16 days of August
and the Monthly Installment of Base Rent at the rate due for the last 15 days of
August.
(2) The Base Rent shall thereafter increase as follows: commencing
on the first day of the fourth Lease Year (January 1, 1997) and on the first day
of each Lease Year thereafter, the Base Rent to be paid by Tenant during such
Lease Year shall automatically increase, without notice to Tenant, to the
greater of (A) an amount equal to 103 percent of the Base Rent for the
immediately preceding Lease Year or (B) the lesser of (1) an amount equal to 106
percent of the Base Rent for the immediately preceding Lease Year or (2) the
"CPI Amount". The CPI Amount shall be determined as follows: the level of the
CPI (as defined below) on the first day of the third Lease Year shall be deemed
to be the "base level". If the CPI on the first day of the fourth Lease Year or
on any anniversary of such date thereafter is in excess of the base level, the
CPI Amount for such Lease Year shall be an amount equal to the Base Rent for the
third Lease Year increased by the same percentage as the percentage change in
the CPI above the base level. For purposes of this section, the Base Rent for
the third Lease Year shall be deemed to be $1,240,768.80 plus the product of the
Monthly Amortization Payment (as defined in Section 6(b)) multiplied by 12.
"CPI" shall mean the United States Bureau of Labor Statistics Consumer Price
Index for Urban Wage Earners and Clerical Workers (Revised Series), All Items,
San Diego, California. The CPI for a specific date (as required by this Lease)
shall be deemed to mean the CPI published on that date or, if not published on
that date, the most recent publication of the CPI prior to such date. If the CPI
is changed or no longer published, the most comparable index (in the reasonable
opinion of Landlord) then published shall be used for these purposes. Monthly
Installments of Base Rent shall be increased accordingly.
(c) In Section II.L. of the Lease, Tenant's Proportionate Share
shall be 100 percent. Tenant's Proportionate Share of Excess Expenses for
calendar year 1996 shall be prorated based on Tenant's Proportionate Share of
49.72 percent from January 1, 1996 through the Hybritech Space Commencement Date
and 100 percent from that date through December 31, 1996.
(d) Landlord and Tenant acknowledge that, as of the date of this
Amendment, Landlord is holding security required under Section 11.0.(i) of the
Lease in cash in the amount of $222,310.00 (Cash). The security required under
Section II.O.(i) shall be increased to $422,310.00 and the additional
$200,000.00 (Additional Subsection (i) Security) shall be delivered
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to Landlord upon the execution of this Amendment in cash or as a Letter of
Credit, in the form attached to the Lease as Attachment 10. If Tenant delivers
the Additional Subsection (i) Security in cash, it will be held by Landlord
subject to the same requirements regarding the payment of interest on the Cash.
If this Amendment is terminated pursuant to Section 8 hereof, then the
Additional Subsection (i) Security shall be immediately returned to Tenant.
(e) In Section II.T. of the Lease, Tenant shall be entitled to a
maximum of 72 covered parking spaces in the parking facility which is shown on
the Land and Building Plan. In addition, Tenant shall be entitled to the
nonexclusive use in common with Landlord and others in the Building (and others
in the building located at 0000 Xxxxxxx Xxxx Xxxx to the extent applicable) a
maximum of 69 uncovered parking spaces in the parking facility which is shown on
the Land and Building Plan.
(f) Delete Attachment 2 of the Lease (Plan showing the Premises) and
add Attachment 2A (Revised Plan showing the Premises) attached hereto.
3. In Section II.P., Landlord's Mailing Address shall be 000 Xxxxx
Xxxxxx, Xxxxxxxx, Xxxxxxxxxxx 00000.
4. Delete Section 7 of the Additional Terms and substitute the
following:
Line 3 after "Premises' add ", including repairing and maintaining
the elevator, security system, chillers and air handling equipment serving the
Building".
Line 4 after "maintain" add "the roof (including the roof membrane),
foundation, load bearing walls and structural portions of the Building, common
areas outside the Building, the "shell" of the Premises and".
Line 5 after "Section 11)." add "If replacement of the elevator,
security system, or chillers serving the Building is necessary prior to the
Termination Date, in Landlord's reasonable judgment, Landlord shall replace such
items at Landlord's expense (subject to the Expense Escalation attachment to the
Lease). "
5. Delete Section II.A. of the Additional Terms.
6. (a) Landlord acknowledges that Tenant may desire to make certain
alterations to the Premises (in accordance with the Lease) and may purchase from
Hybritech Incorporated certain laboratory benches in the Hybritech Space
(collectively the Work). At Tenant's request, Landlord shall make available to
Tenant up to $480,900.00 (Allowance) for so much of the Work as is completed
within 210 days after the Hybritech Space Commencement Date. So much of the
Allowance as equals the cost of the Work (up to the total amount of the
Allowance) shall be paid to Tenant within 30 days after receipt from Tenant of
copies of the invoices for which payment is requested together with: (1)
Tenant's certification that each invoice is true and complete, that the full
amount shown thereon is due and owing to the party requesting payment, that
Tenant has not received nor shall it receive any rebate, setoff or other similar
consideration from the party
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to whom the payment is due (other than payments to a parent, subsidiary or
affiliate of Tenant which are not in excess of market value) and that the total
amount shown on the invoices submitted to Landlord represents the total amount
due and owing Tenant under this Section 6, (2) lien waivers for all the Work,
and Tenant's certification that the lien waivers represent all the Work and (3)
Tenant's certification and the certification of Tenant's architect (if any) and
Tenant's contractor that the Work is substantially completed in a good and
workmanlike manner, subject to normal punchlist items, and has been accepted by
Tenant. If Landlord fails to pay to Tenant the Allowance (or any portion
thereof) as and when the Allowance (or portion thereof) becomes due and payable
hereunder, then Tenant shall, subject to Section 6(b) of this Amendment, have
the right to offset against all future payments of Base Rent any and all amounts
that Landlord so fails to pay, until such amounts are exhausted.
(b) To the extent the Allowance is paid to Tenant in accordance with
Section 6(a) of this Amendment (Paid Allowance), the Paid Allowance shall be
amortized monthly with interest at the rate of 12 percent per annum over a
period equal to the number of full calendar months in the Term remaining after
such payment is made (Monthly Amortization Payment). Monthly Installments of
Base Rent shall thereafter be increased by an amount equal to the Monthly
Amortization Payment and Base Rent shall be increased by an amount equal to the
product of the Monthly Amortization Payment multiplied by 12.
(c) For purposes of illustration only, if the Paid Allowance equals
$400,000.00 and is paid to Tenant on November 17, 1996, then the Monthly
Amortization Payment would be $5,868.98, assuming the Hybritech ISpace
Commencement Date is June 17, 1996 (based on an amortization period of 115
months) and the Monthly Installment of Rent due on December 1, 1996 would be
increased to $109,266.38. If the CPI for January 1, 1997, determined in
accordance with Section 2(a), is 3 percent higher than the "base level", then
the Base Rent due for calendar year 1997, beginning with the installment due on
January 1, 1997, would be $1,350,532.46 (computed by increasing the Base Rent
for calendar year 1996, deemed to be $1,311,196.56, $1,240,768.80 plus
$70,427.76, by 3 percent). Monthly Installments of Base Rent would be
$112,544.37.
7. Landlord acknowledges that Tenant may sublet a portion of the
Premises (Immusol Space) to Immusol, Inc. (Immusol) for a period of 2 to 5
years, subject to Landlord's consent which shall not be unreasonably withheld.
Immusol may desire to construct certain improvements in such space, subject to
the terms of the Lease. Pursuant to the sublease between Tenant and Immusol,
Tenant may grant to Immusol an allowance (Immusol Allowance) to construct such
improvements. Landlord hereby agrees that if Immusol elects to construct such
improvements, Tenant may, subject to the requirements of Section 6 of this
Amendment and such additional requirements as Tenant may impose in the sublease,
use the Allowance to finance the Immusol Allowance and that, accordingly, the
Allowance also may be used to pay for improvements made by Immusol.
8. Tenant acknowledges that Hybritech Incorporated (Hybritech)
currently leases that portion of the Building not occupied by Tenant (Hybritech
Space) and the Hybritech lease expires on June
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16, 1996 (Expected Expiration Date) . If Landlord is unable to deliver
possession of the Hybritech Space to Tenant within 90 days after the Expected
Expiration Date (the Outside Commencement Date), then Tenant, as its sole
remedy, may terminate this Amendment by notice to Landlord given within 10 days
after the Outside Commencement Date. Landlord shall not be liable to Tenant or
any third party for its failure to deliver possession of the Hybritech Space to
Tenant. If Landlord fails to deliver the Hybritech Space to Tenant within one
year after the Expected Expiration Date, this Amendment shall terminate and
Landlord and Tenant shall have no further obligations to the other, except as
may otherwise be provided in this Lease.
9. After the Hybritech Space Commencement Date has been determined,
Landlord and Tenant shall execute a supplemental agreement specifying the
Hybritech Space Commencement Date, Termination Date and such other information
as Landlord shall reasonably require.
10. In Section 4 of the General Terms, Covenants and Conditions, in
Line 3 after "office use" add "or the Permitted Use".
11. Delete Section 29 of the General Terms, Covenants and
Conditions.
12. (a) Landlord shall deliver the Hybritech Space to Tenant in "as
is" condition and Landlord shall have no responsibility for making any
improvements to the Hybritech Space. For purposes of the first sentence of this
Section 12, "as is" condition shall be deemed to mean the condition then
existing on the Hybritech Space Commencement Date subject to the following:
(1) Notwithstanding the foregoing, Tenant acknowledges that
Hybritech has notified Landlord of its intent to remove certain items from the
Hybritech Space (Hybritech Items). If Hybritech removes such items or any other
items before or after the Hybritech Space Commencement Date, Tenant shall be
responsible for the replacement of such items (provided, however, that Tenant
shall not be obligated to replace any of such items) and Landlord shall have no
responsibility for such replacement. The Allowance may be utilized for such
costs. If the removal causes any damage to the Premises, Landlord shall promptly
repair such damage at its expense.
(2) Tenant further acknowledges that Hybritech has been notified by
Landlord's property manager that Landlord believes the Hybritech Items claimed
by Hybritech are Landlord's property and may not be removed. If Hybritech
nevertheless proceeds to remove such items (or any other items which are the
property of Landlord), Landlord shall, upon Tenant's reasonable request, attempt
to prevent their removal or, if necessary, seek damages from Hybritech after
removal, provided Tenant shall indemnify and defend Landlord for, from and
against all claims, expenses, liabilities and losses, including reasonable
attorneys' fees, resulting from such action. Landlord may, in its sole
discretion, assign to Tenant any claim it may have against Hybritech for the
removal of such items, in which event Landlord shall cooperate with Tenant in
any action commenced by Tenant in its reasonable judgment, provided that Tenant
shall reimburse Landlord for its reasonable expenses incurred with regard to
such cooperation.
(3) Anything in Sections 12(a)(1) and (2) to the contrary
notwithstanding and without waiving any rights or claims either Landlord or
Tenant may otherwise have with respect to the
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Hybritech Items, the parties wish to avoid the expense and aggravation a dispute
over such items would create and, therefore, Tenant may pursue a settlement
regarding the Hybritech Items, including the payment of a fee as consideration
to Hybritech for the assignment of any rights Hybritech may have in the
Hybritech Items. Subject to delivery to Landlord of the settlement documentation
and a certification from Hybritech that Tenant has satisfied all conditions of
such a settlement (including the payment, if any, of any consideration
therefor), Landlord hereby consents to such a settlement and assigns any right,
title and interest it may have in such items to Tenant. A "quitclaim" xxxx of
sale for the Hybritech Items executed by Hybritech shall be deemed to satisfy
the requirement of settlement documentation.
(b) For purposes of Section 8 of the General Terms, Covenants and
Conditions, Tenant shall not be required to remove any of the improvements
existing in the Hybritech Space as of the date hereof. For purposes of the first
sentence of Section 12 of the General Terms, Covenants and Conditions, the
Hybritech Space shall be separately considered from the remainder of the
Premises and Tenant's possession shall be deemed to begin on the Hybritech Space
Commencement Date. For purposes of the second sentence of Section 12 of the
General Terms, Covenants and Conditions: (1) the following items shall be deemed
to be Landlord's property and not removable by Tenant: the items designated as
"Landlord's Property" on the schedule entitled "List of Property" (attached to
this Amendment); any items paid for out of the Allowance; and, except to the
extent identified as "Tenant's Property" on the List of Property, any items paid
for out of the initial allowance provided Tenant under the lease; and (2) the
following items shall be deemed to be Tenant's property: the items identified as
"Tenant's Property" on the List of Property; the Hybritech Items (or any of
them) which Tenant acquires from Hybritech pursuant to Section 12(a)(3) of this
Amendment; and any item installed and paid for by Tenant.
13. Section 30 of the General Terms, Covenants and Conditions is
restated here for purposes of this Amendment. Landlord shall be responsible for
any commission due CB Commercial Real Estate Services arising from or in
connection with the transaction contemplated by this Amendment.
14. If the Building (including leasehold improvements in the
Premises, but excluding Tenant's property) is damaged by earthquake, Tenant
shall be responsible for the payment to Landlord of 50 percent of the deductible
amount under a policy of earthquake insurance carried by Landlord covering the
Premises (to the extent such deductible amount is allocable to the Premises),
which payment shall be amortized without interest in equal monthly payments over
the greater of: (a) the number of months remaining in the Term as of the date of
the casualty and (b) 60 months. Such payments shall be made with Monthly
Payments of Base Rent, provided that in no event shall Tenant be required to
make any payments becoming due after the Termination Date (i.e., if the
amortization period exceeds the remaining number of months in the Term).
Anything in Section l(b) in the Expense Escalation attachment to the Lease to
the contrary notwithstanding, Landlord shall not include the remaining 50
percent of the cost of such repair in Operating Expenses. Landlord shall seek
the lowest, economically reasonable deductible for earthquake insurance coverage
for the Building (consistent with Landlord's national insurance program), which
at the date hereof is deemed to be not greater than 5 percent of the total
insurable value of
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the Building. Landlord shall not obtain a higher deductible without first
discussing it with Tenant (e.g., Tenant may choose to pay for a smaller
deductible).
15. Except as modified herein, the Lease is ratified and confirmed
and shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment.
(Landlord) (Tenant)
XXXXXXX REALTY I LIMITED NEUROCRINE BIOSCIENCES, INC.
PARTNERSHIP
By Xxxxxxx Equities Limited Partnership
Its Managing General Partner By [SIG.]
By Xxxxxxx Corporation -------------------------
Its General Partner
-------------------------
[Print Name]
By XXXXX X. XXXXXXXX Its Senior Vice President & CFO
------------------------- ----------------------------
Xxxxx X. Xxxxxxxx [Title]
Senior Vice President
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LIST OF PROPERTY
Landlord's Property
1. Control air compressor.
2. Dryer for control air compressor.
3. Boiler, low pressure.
4. CO2 distribution system.
5. Chiller.
6. Control equipment (h.v.a.c.r.).
7. D.I. water system (first floor).
8. Electrical distribution equipment.
9. Emergency management equipment.
10. Emergency generator.
11. Evaluation equipment (panic hardware).
12. Fire alarm system.
13. Fire fighting equipment.
14. Filter systems (air).
15. Glass xxxx racks.
16. Lab benches.
17. Liquid nitrogen tanks or equipment.
18. Neutralization system.
19. Reagent racks.
20. 23 fume hoods first floor. NBI may remove energy valves on 19 of
these and restore to normal operating efficiency.
21. Scrubbers (air).
22. Ultraviolet sterilizes (water).
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23. Wall mounted casework.
24. Water heater.
25. Circulation pumps.
Tenant's Property
1. Air compressor.
2. Air dryer.
3. Autoclaves.
4. Boiler high pressure.
5. Bio safety hoods.
6. Clean rooms.
7. Cage washer.
8. Dish washer.
9. Dish dryer.
10. Filter systems (water).
11. High purity water system.
12. Liopizer.
13. 6 fume hoods second floor (tenant's property).
14. Security systems.
15. Vacuum systems.
16. Water purification system.
17. Telephone systems (P.B.X.)
18. Gas distribution equipment.
19. DI water system (second floor).
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[FIRST FLOOR MAP]
[ATTACHMENT 2A]
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[SECOND FLOOR MAP]
