Exhibit 10.1

 

STATE OF NORTH CAROLINA

 

COUNTY OF DURHAM

  SECOND AMENDMENT TO LEASE

 

THIS SECOND AMENDMENT TO LEASE (the “Second Amendment”) is made and entered into
as of the 6th day of June, 2003, by and between ROYAL CENTER IC, LLC, a Delaware
limited liability company (“Landlord”) [successor-in-interest to Royal Center
Two IC, LLC, a Delaware limited liability company (“RC Two”) and Petula
Associates, Ltd., an Iowa corporation (“Petula”)] and INSPIRE PHARMACEUTICALS,
INC., a Delaware corporation (“Tenant”).

 

WITNESSETH:

 

A. Petula and Tenant entered into a Lease dated as of December 30, 1997 (the
“Existing Lease”) for certain premises known as Suite 225 (and erroneously
referred to in the Existing Lease as Suite 470) consisting of approximately
5,400 rentable square feet of space (the “Existing Premises”) in that certain
building known as Royal Center II (the “Building”) located at 4222 Emperor
Blvd., Durham, North Carolina as more particularly described in the Existing
Lease;

 

B. The Existing Premises were expanded to include an additional 7,130 rentable
square feet of space creating the “Expanded Premises” containing 12,530 rentable
square feet pursuant to a First Amendment to Lease dated June 28, 2002 (the
“First Amendment”) by and between RC Two (as successor-in-interest to Petula)
and Tenant;

 

C. Landlord (as successor-in-interest to Petula and to RC Two) and Tenant desire
to further amend the terms of the Existing Lease: (i) to increase the size of
the Expanded Premises to include approximately 7,220 rentable square feet of
additional space immediately adjacent to the Expanded Premises as shown on
Exhibit A-2 attached hereto (the “Triangle J Space”), and (ii) to modify certain
other terms and conditions of the Existing Lease. For purposes hereof, the
Existing Lease as amended by this Second Amendment is referred to as the
“Lease.”

 

NOW, THEREFORE, for and in consideration of Ten Dollars ($10.00) and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Landlord and Tenant hereby agree that, effective as of the date
set forth above, the Existing Lease shall be, and hereby is, amended as follows:

 

1. Recitals. The recitals shall form a part of this Second Amendment.

 

2. Premises. Effective as of August 16, 2003 (the “Triangle J Space Commencement
Date”), the Expanded Premises shall be further expanded to include the Triangle
J Space and shall be redefined as 19,750 rentable square feet on the first floor
of the Building (the “Revised Premises”) as more particularly described on the
floor plan attached hereto as Exhibit “A-2”. Accordingly, as of the Triangle J
Space Commencement Date, wherever reference is made in the Lease to the
Premises, it shall be deemed to mean the Revised Premises, and Exhibit A-1 to
the

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First Amendment shall be replaced with Exhibit A-2 attached hereto in order to
evidence the location of the Revised Premises.

 

3. Term. The Term of the Lease for the Expanded Premises shall remain as set
forth in the First Amendment and shall expire on November 30, 2006. The Term of
the Lease for the Triangle J Space shall be for a period of approximately
twenty-three and one-half (23½) months (the “Triangle J Space Term”), commencing
on the Triangle J Space Commencement Date and expiring on July 31, 2005.

 

4. Delivery of Triangle J Space. On or before the Triangle J Space Commencement
Date, Landlord shall deliver the Triangle J Space to Tenant in its “as is, where
is” condition without any further improvements thereto by Landlord. Landlord
shall deliver the Triangle J Space to Tenant in broom clean condition with all
base building systems in good working order and in compliance with all
applicable laws. Prior to the Triangle J Space Commencement Date, Landlord and
Tenant shall conduct a joint walk through of the Triangle J Space to confirm the
compliance of said space with the foregoing requests and to the extent of any
non-compliance, Landlord shall remedy such non-compliance as soon as reasonably
possible under the circumstances following the completion of such walk through.

 

5. Rental. Notwithstanding anything in the Existing Lease to the contrary,
beginning on the Triangle J Space Commencement Date and continuing throughout
the remainder of the Triangle J Space Term, in addition to the Rental to be paid
by Tenant for the Expanded Premises, Tenant shall pay Minimum Rental for the
Triangle J Space as follows:

 

Period

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Minimum Rental per

rentable square foot:

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Monthly Minimum

Rental

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Annual

Minimum Rental:

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8/16/03 to 7/31/04

  $11.60   $6,979.33   $83,752.00

8/1/04 to 7/31/05

  $11.95   $7,189.92   $86,279.00

 

Commencing as of the Triangle J Space Commencement Date and continuing
throughout the Triangle J Space Term, as same may be extended, Tenant’s
Proportionate Share of Tenant Expenses, including insurance costs, taxes and
operating expense charges, and any other amounts due and payable under the
Lease, shall be adjusted to reflect the Revised Premises.

 

6. Option to Extend.

 

A. Notice and Exercise. Provided no Event of Default is continuing under this
Lease and Tenant has not assigned this Lease nor sublet all or any portion of
the Triangle J Space, Tenant is hereby granted the option to extend the Triangle
J Space Term once for an additional period of one (1) year and four (4) months
(the “Triangle J Space Extension Term”) commencing upon the expiration of the
Triangle J Space Term on the same terms and conditions as contained in the other
provisions of this Lease other than any upfitting allowance (Tenant accepting
the Triangle J Space in its “as, is” condition), additional renewal options and
as otherwise provided in this Section. This option shall be exercised only by
delivery of written notice (the “Renewal Notice”) to Landlord no later than six
(6) months prior to the expiration of the Triangle J Space Term. The Minimum
Rental for the Triangle J Space shall be the greater of

 

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(i) Eleven and 37/100 Dollars ($11.37) per rentable square foot of floor area in
the Triangle J Space, or (ii) the then fair market rental (“Market Rate”)
applicable to the Triangle J Space. Tenant shall continue to pay its
Proportionate Share of Tenant Expenses for the Triangle J Space throughout the
Triangle J Space Extension Term.

 

B. Determination of Market Rate. For purposes of this Section 6, the term
“Market Rate” shall mean the annual amount per rentable square foot that
comparable landlords of comparable buildings have accepted in then-current
transactions between non-affiliated parties from new, non-expansion, non-renewal
(unless the lease involved a procedure invoked by landlord and tenant for a 100%
determination of “fair market rental”) and non-equity tenants of comparable
credit-worthiness, for comparable space, for a comparable use, for a comparable
period of time (“Comparable Transactions”). In any determination of Comparable
Transactions appropriate consideration shall be given to the annual rental rates
per rentable square foot, the standard of measurement by which the rentable
square footage is measured, the ratio of rentable square feet to usable square
feet, the type of escalation clause implemented, the extent of tenant’s
liability under the lease, abatement provisions reflecting free rent and/or no
rent during the period of construction or subsequent to the commencement date as
to the space in question, parking considerations, length of the lease term, size
and location of premises being leased, building standard work letter and/or
tenant improvement allowances, if any, or any other tenant concessions and other
generally applicable conditions of tenancy for such Comparable Transactions. The
intent is that Tenant will obtain the same rent and other economic benefits that
Landlord would otherwise give in Comparable Transactions and that Landlord will
make, and receive the same economic payments and concessions that Landlord would
otherwise make, and receive in Comparable Transactions.

 

Landlord shall determine the Market Rate by using its good faith judgment.
Landlord shall provide written notice of such amount within thirty (30) days
(but in no event later than forty-five (45) days) after Tenant provides the
notice to Landlord exercising Tenant’s option rights which require a calculation
of the Market Rate. Tenant shall have thirty (30) days (“Tenant’s Review
Period”) after receipt of Landlord’s notice of the new rental within which to
accept such rental or to object thereto in writing. In the event Tenant objects,
Landlord and Tenant shall attempt to agree upon such Market Rate using their
best good faith efforts. If Landlord and Tenant fail to reach agreement within
thirty (30) days following Tenant’s Review Period (“Outside Agreement Date”),
then each party shall place in a separate sealed envelope its final proposal as
to Market Rate and such determination shall be submitted to arbitration in
accordance with subsections (i) through (v) below. Failure of Tenant to so
accept in writing such rental within Tenant’s Review Period shall conclusively
be deemed its disapproval of the Market Rate determined by Landlord.

 

(i) Landlord and Tenant shall meet with each other within five (5) business days
of the Outside Agreement Date and exchange the sealed envelopes and then open
such envelopes in each other’s presence. If Landlord and Tenant do not mutually
agree upon the Market Rate within one (1) business day of the exchange and
opening of envelopes, then, within ten (10) business days of the exchange and
opening of envelopes Landlord and Tenant shall agree upon and jointly appoint a
single arbitrator who shall by profession be a real estate broker who shall have
been active over the five (5) year period ending on the date of such appointment
in the leasing of comparable commercial properties in the vicinity of the
Building. Neither Landlord

 

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nor Tenant shall consult with such broker as to his or her opinion as to Market
Rate prior to the appointment. The determination of the arbitrator shall be
limited solely to the issue of whether Landlord’s or Tenant’s submitted Market
Rate for the Premises is the closer to the actual Market Rate for the Premises
as determined by the arbitrator, taking into account the requirements of this
Section 2. Such arbitrator may hold such hearings and require such briefs as the
arbitrator, in his or her sole discretion, determines is necessary. In addition,
Landlord or Tenant may submit to the arbitrator with a copy to the other party
within five (5) business days after the appointment of the arbitrator any market
data and additional information that such party deems relevant to the
determination of Market Rate (“MR Data”) and the other party may submit a reply
in writing within five (5) business days after receipt of such MR Data.

 

(ii) The arbitrator shall, within thirty (30) days of his or her appointment,
reach a decision as to whether the parties shall use Landlord’s or Tenant’s
submitted Market Rate, and shall notify Landlord and Tenant of such
determination. Alternatively, the arbitrator may elect to engage another real
estate broker (who shall have been active over the five (5) year period ending
on the date of such appointment in the leasing of comparable commercial
properties in the vicinity of the Building) to determine the Market Rate and the
arbitrator may elect to use such broker’s submitted Market Rate and thereafter
notify Landlord and Tenant of such determination.

 

(iii) The decision of the arbitrator shall be binding upon Landlord and Tenant.

 

(iv) If Landlord and Tenant fail to agree upon and appoint an arbitrator, then
the appointment of the arbitrator shall be made by the Presiding Judge of the
Superior Court, or, if he or she refuses to act, by any judge having
jurisdiction over the parties.

 

(v) The cost of arbitration shall be paid by Landlord and Tenants equally.

 

Immediately after the base rent for the Triangle J Space Extension Period is
determined pursuant to this Section, Landlord and Tenant shall execute an
amendment to the Lease stating the new base rent in effect.

 

7. Contingency. The effectiveness of this Second Amendment is contingent in all
respects upon execution of an agreement by the current occupant of the Triangle
J Space terminating its lease with respect to the Triangle J Space. Landlord
shall use reasonable efforts to obtain such agreement on or before the Triangle
J Commencement Date; provided, however, if Landlord does not obtain such
agreement prior to the earlier of: (i) the Triangle J Space Commencement Date,
or (ii) June 16, 2003, either party may elect to terminate this Second Amendment
upon five (5) days advance written notice to the other, whereupon the parties
hereto shall have no further rights or obligations under this Second Amendment.

 

8. Broker. Landlord and Tenant represent and warrant each to the other that they
have not dealt with any broker(s) or any other person claiming any entitlement
to any commission in connection with this transaction except Tri Properties,
Inc. and Advantis GVA (collectively, the “Broker”). Tenant agrees to indemnify
and save Landlord and Landlord’s agent, Tri Properties, Inc., harmless from and
against any and all claims, suits, liabilities, costs, judgments and expenses,
including reasonable attorneys’ fees, for any leasing commissions or

 

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other commissions, fees, charges or payments due, owing, or made to a broker
(except as provided immediately below) in connection with this Amendment.
Landlord agrees to indemnify and save Tenant and Tenant’s agent, Advantis GVA,
harmless from and against any and all claims, suits, liabilities, costs,
judgments and expenses, including reasonable attorneys’ fees, for any leasing
commissions or other commissions, fees, charges or payments resulting from or
arising out of its actions in connection with this Amendment. Neither Landlord
nor Tenant shall have any obligation for payment of any commission to Broker;
provided, however, Landlord and Tenant hereby acknowledge their understanding
that a commission will be paid to Advantis GVA by the current occupant of the
Triangle J Space.

 

9 Ratification. Except as expressly or by necessary implication amended or
modified hereby, the terms of the Existing Lease are hereby ratified, confirmed
and continued in full force and effect.

 

IN WITNESS WHEREOF, each of the parties hereto has duly executed this Second
Amendment as of the day and year first above written.

 

LANDLORD:

ROYAL CENTER IC, LLC,

a Delaware limited liability company

By:

 

PRINCIPAL REAL ESTATE INVESTORS, LLC,

a Delaware limited liability company, its authorized

agent

By:

 

/s/ Mark F. Scholz

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Name:

 

Mark F. Scholz

Title:

 

Investment Director, Asset Management

Date:

 

June 12, 2003

TENANT:

INSPIRE PHARMACEUTICALS, INC.,

a Delaware corporation

By:

 

/s/ Mary Bennett

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Name:

 

Mary Bennet

Its:

 

MB

Date:

 

June 6, 2003

 

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EXHIBIT “A-2”

 

Floor Plan

 

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