EXHIBIT 10.16

 

AGREEMENT OF SUBLEASE, dated as of the              day of November, 2003, by
and between HARRISON & STAR, INC. D/B/A HYPHEN SOLUTIONS, having offices c/o
Omnicom Group Inc., 437 Madison Avenue, New York, New York 10022 (“Sublessor”),
and NPS PHARMACEUTICALS, INC., a Delaware corporation, having offices at 420
Chipeta Way, Salt Lake City, Utah 84108 (“Sublessee”).

 

W I T N E S S E T H:

 

WHEREAS, Sublessor is a tenant of the entire third floor and a portion of the
second floor (the “Premises”) in the building known as Morris Corporate Center
I, 300 Interpace Parkway, Parsippany, New Jersey (the “Building”), and Sublessee
is desirous of subletting a portion of the Premises consisting of the entirety
of the 3rd floor of the Building (the “demised premises”) from Sublessor upon
the terms and conditions hereinafter set forth:

 

NOW, THEREFORE, in consideration of the rental payments to be made hereunder by
Sublessee to Sublessor and the mutual terms, covenants, conditions, provisions
and agreements hereinafter set forth, Sublessor does hereby sublet to Sublessee
and Sublessee does hereby take and hire from Sublessor, the demised premises.

 

This Sublease shall be expressly subject and subordinate to all of the terms,
covenants, conditions, provisions and agreements contained in that certain
Agreement of Lease dated as of June 17, 1997, as amended by that certain First
Amendment to Lease dated as of September 30, 1997, that certain Second Amendment
to Lease dated as of December 31, 1997 and by that certain Third Amendment to
Lease dated as of January 21, 1998 entered into between Morris Corporate Center,
L.L.C., as landlord (“Underlying Landlord”), and Sublessor, as tenant therein
(which lease, as amended, is hereinafter referred to as the “Underlying Lease”).
A true copy of the Underlying Lease, with certain of the Excluded Provisions (as
hereinafter defined) deleted or redacted, has been delivered to, and reviewed
by, Sublessee and is annexed hereto and made a part hereof as Exhibit A. The
provisions of the Underlying Lease are specifically incorporated herein by
reference, except such terms, covenants, conditions, provisions and agreements
as are specifically inconsistent with the terms hereof or are expressly set
forth in Paragraph 20 below (the “Excluded Provisions”) and except that all
references therein to “Landlord” shall mean Underlying Landlord, all references
therein to “Tenant” shall mean Sublessee, all references to “Demised/Leased
Premises” shall mean demised premises, and all references to “this Lease” shall
mean this Sublease.

 

1. Term. The term of this Sublease shall commence (the “Commencement Date”) on
the later to occur of (a) December 1, 2003 and (b) the date that the Underlying
Landlord shall consent hereto in writing and shall end on September 29, 2007
(the “Expiration Date”). Notwithstanding anything to the contrary contained
herein, this Sublease is contingent upon Sublessee receiving a Business
Employment Incentive Program grant (the “BEIP Grant”) from the State of New
Jersey no later than December 31, 2003 (the “Outside Date”), time being of the
essence with respect thereto. In the event such approval is not secured by that
date and such failure is not caused by any act or omission on the part of
Sublessee or anyone claiming by, under or through Sublessee, then either
Sublessor or Sublessee shall have the right to cancel this Sublease by giving
written notice of cancellation to the other party within ten (10) days of the
Outside Date, time being of the essence with respect thereto. If either
Sublessor or Sublessee timely delivers the aforesaid cancellation notice, this
Sublease shall terminate five (5) days after the date of such notice, unless
Sublessee receives the BEIP Grant within such five (5) day period, in which case
the cancellation notice shall be void and this Sublease shall continue in full
force and effect. Failure by either party to exercise such right to cancel this
Sublease within such ten (10) day period shall constitute a waiver of such
right, time being of the essence with respect thereto.

 

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2. Fixed Rent. A. Sublessee shall pay to Sublessor, during the term of this
Sublease, the annual rental (“fixed rent”), which shall be inclusive of
Sublessee’s electric charges, of: commencing on the Commencement Date and
continuing through and including the Expiration Date, at the rate of Five
Hundred Five Thousand Seven Hundred Sixty One Dollars ($505,761.00) per annum
payable in equal monthly installments of $42,146.75. Each monthly installment of
fixed rent shall be paid on the first day of each and every calendar month
during the term, except the first full monthly installment of fixed rent shall
be paid upon execution of this Sublease. The fixed rent for any month of the
term of this Sublease which does not begin or end on the first or last day of a
calendar month shall be prorated on a daily basis in accordance with the fixed
rent due for the calendar month. Since the installment for the first full
month’s fixed rent is being paid by Sublessee upon the execution of this
Sublease regardless of whether the term shall have commenced on the first day of
a calendar month, any adjustment to which Sublessee is entitled on account of
the immediately preceding sentence shall be made to the monthly installment of
fixed rent due on the first day of the calendar month next following the month
in which the Commencement Date occurs. All fixed rent, additional rent and other
sums and charges due to Sublessor under this Sublease shall be paid by Sublessee
at the office of Sublessor set forth above, or at such other place as Sublessor
may designate, without any notice, setoff or deduction whatsoever. Sublessee’s
obligation to make such payments shall survive the Expiration Date or sooner
termination of this Sublease.

 

B. All other costs and expenses which Sublessee assumes or agrees to pay
pursuant to this Sublease shall be deemed additional rent and, in the event of
non-payment, Sublessor shall have all the rights and remedies herein provided
for in case of non-payment of base rent and additional rent as per Section 1.5
of the Underlying Lease. The payment of any late charge shall be in addition to
all other rights and remedies available to Sublessor in the case of non-payment
of fixed rent.

 

C. In the event Sublessor incurs any costs or expenses with respect to the
demised premises and which are directly attributable to services or utilities
furnished to the demised premises at the request of or on behalf of Sublessee or
attributable to repairs made in the demised premises at the request of or on
behalf of Sublessee, whether they are considered additional rent under the Lease
or not, then Sublessee shall pay Sublessor upon demand the amount of such costs
and expenses incurred by Sublessor.

 

3. Electricity Charge. Sublessee’s annual electrical charges of $79,857.00 are
included in the fixed rent. Sublessor shall not be liable in any way to
Sublessee for any failure or defect in supply or character of electric current
furnished to the demised premises. Sublessee covenants and agrees that, at all
times, its connected electrical load shall not cause a default under the
Underlying Lease. Any sums due and payable to Sublessor under this paragraph
shall be deemed to be, and collectible as, additional rent. In no event shall
the charge payable by Sublessee for electrical charges for the demised premises
be less than $79,857.00 per annum.

 

4. Additional Rent. Sublessee shall pay to Sublessor, as additional rent, 50% of
all amounts payable by Sublessor to Underlying Landlord pursuant to Article 5 of
the Underlying Lease, which are applicable to the term of this Sublease, except
that for purposes of determining the amounts payable by Sublessee pursuant to
this paragraph, the Base Year shall mean calendar year 2004. The additional rent
payable by Sublessee shall be paid to Sublessor in the manner and five (5) days
before each such date as Sublessor shall be required to pay its corresponding
share of such additional rent pursuant to the Underlying Lease. Payments for the
first and last years of the term hereof shall be equitably prorated. In the
event that the demised premises increase or decrease during the term of this
Sublease or the premises demised pursuant to the Underlying Lease increase or
decrease, then Sublessee’s proportionate share of amounts payable pursuant to
this paragraph shall be equitably adjusted.

 

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5. Use. Sublessee shall use the demised premises only for the uses specified in
the Underlying Lease. Sublessee shall use and occupy the demised premises in a
manner consistent with the terms of the Underlying Lease.

 

6. Compliance with Underlying Lease. Sublessee covenants and agrees to observe
and perform all of the terms, covenants, conditions, provisions and agreements
to be performed by Sublessor, as tenant pursuant to the Underlying Lease, except
for any Excluded Provisions, and further covenants and agrees not to do or
suffer or permit anything to be done which would violate the Underlying Lease or
result in a default under or cause the Underlying Lease to be terminated. All
grace periods specified in the Underlying Lease shall, for purposes of
determining compliance by Sublessee with the provisions hereof, be each reduced
by five (5) days.

 

7. Non-Liability, Indemnity. Sublessee shall and hereby does indemnify, defend
and hold Sublessor harmless from and against any and all actions, claims,
demands, damages, liabilities and expenses (including, without limitation,
reasonable attorneys’ fees and disbursements) asserted against, imposed upon or
incurred by Sublessor by reason of (a) any violation caused, suffered or
permitted by Sublessee, its agents, contractors, servants, licensees, employees
or invitees, of any of the terms, covenants, conditions, provisions or
agreements of the Underlying Lease, (b) any damage or injury to persons or
property occurring upon or in connection with the use or occupancy of the
demised premises by Sublessee or anyone claiming by, under or through Sublessee,
(c) the use or maintenance of the demised premises or any business therein or
any work or thing whatsoever done, or any condition created in or about the
demised premises during the term (or any time prior to the Commencement Date
that Sublessee may have been given access to the demised premises), (d) any
negligent or otherwise wrongful act or omission of Sublessee or any of its
agents, contractors, servants, licensees, employees or invitees, (e) any failure
of Sublessee to perform or comply with all of the provisions of this Sublease
hereof that are applicable to Sublessee, and (f) any obligation Sublessor may
have to indemnify Underlying Landlord under the Underlying Lease, to the extent
related to the use of the demised premises by Sublessee or anyone claiming by,
under or through Sublessee. Neither Sublessor nor any agent, contractor,
servant, licensee, employee or invitee of Sublessor shall be liable to Sublessee
for any death of or injury or damage to Sublessee or any other person or for any
damage to or loss (by theft or otherwise) of any property of Sublessee or any
other person, except to the extent caused by or due to the gross negligence or
willful act of Sublessor. In case any action or proceeding be brought against
Sublessor or any agent, contractor, servant, licensee, employee or invitee of
Sublessor by reason of any of the foregoing, Sublessee, upon notice from
Sublessor, shall defend such action or proceeding by counsel chosen by
Sublessee, who shall be reasonably satisfactory to Sublessor. Sublessee or its
counsel shall keep Sublessor fully apprised at all times of the status of such
defense and shall not settle same without the written consent of Sublessor,
which consent shall not be unreasonably withheld.

 

8. Performance by Underlying Landlord. Sublessor does not assume any obligation
to perform the terms, covenants, conditions, provisions and agreements contained
in the Underlying Lease on the part of Underlying Landlord to be performed. In
the event Underlying Landlord shall fail to perform any of the terms, covenants,
conditions, provisions and agreements contained in the Underlying Lease on its
part to be performed, Sublessor shall be under no obligation or liability
whatsoever to Sublessee. Sublessor shall cooperate with Sublessee, at no cost to
Sublessor, in seeking to obtain the performance of Underlying Landlord under the
Underlying Lease. Sublessee shall not be allowed any abatement or diminution of
fixed rent or additional rent under this Sublease because of Underlying
Landlord’s failure to perform any of its obligations under the Underlying Lease.
Notwithstanding the foregoing, in the event that Sublessor receives an abatement
or diminution of fixed rent or additional rent from Underlying Landlord that
relates to the demised premises and the term of this Sublease, Sublessee shall
be entitled to an abatement or diminution of fixed rent or additional rent equal
to the amount thereof.

 

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9. Repairs: cleaning. Sublessee shall take good care of the demised premises and
shall assume the entire responsibility for cleaning and janitorial services and
for repairs which may be required under the Underlying Lease or as otherwise
necessary during the term of this Sublease, excepting only those services and
repairs, if any, which Underlying Landlord may be obligated to provide and to
make under the terms, covenants, conditions, provisions and agreements of the
Underlying Lease.

 

10. Alterations. Sublessee shall not make any changes, alterations, additions or
improvements to the demised premises without first obtaining the written consent
of the Underlying Landlord and Sublessor. Sublessor’s consent shall not be
unreasonably withheld if the written consent of the Underlying Landlord is first
obtained and no restoration is required of Sublessor pursuant to the Underlying
Lease on the Expiration Date. Simultaneously with the submission of documents
regarding alterations to the Underlying Landlord, Sublessee shall send copies of
all such documents regarding alterations to Sublessor. Sublessee shall pay all
costs and expenses relating to any changes, alterations, additions or
improvements and shall cause same to be completed in accordance with law and the
terms, covenants, conditions, provisions and agreements of the Underlying Lease.
Sublessee hereby agrees to indemnify, defend and hold Sublessor harmless from
any and all loss, cost, and expense (including, without limitation, reasonable
attorneys fees) incurred by Sublessor as a result of Sublessee’s failure to
comply with the aforesaid terms, covenants, conditions, provisions or
agreements.

 

11. Initial Occupancy. Sublessee represents that it has inspected the demised
premises and agrees to take the same in their present condition, and Sublessee
acknowledges that no representations with respect to the condition thereof have
been made. Any work required by Sublessee to prepare the demised premises for
its occupancy shall be made and paid for by Sublessee and shall be subject to
all of the terms, covenants, conditions, provisions and agreements set forth in
the Underlying Lease.

 

12. Assignment and Subletting. (a) Sublessee shall not assign this Sublease or
sublet the demised premises or otherwise transfer, mortgage or encumber this
Sublease, the demised premises or any part thereof or permit the use thereof
without first complying with the provisions of the Underlying Lease and
obtaining Sublessor’s consent thereto. Sublessor’s consent shall not be
unreasonably withheld if the written consent of the Underlying Landlord is first
obtained. Sublessor shall not be required to consent to any such assignment or
further subletting if Sublessee is then in default under the Sublease or if such
further subletting or assignment would cause Sublessor to be in default under
the Underlying Lease. No such consent shall relieve Sublessee from the
obligation to seek consent to a further subletting or assignment, and Sublessor
may withhold its consent to same in its sole and absolute discretion. Copies of
all materials required by the Underlying Lease shall be delivered simultaneously
to Sublessor, together with Sublessee’s request for consent. No Sublessor
consent to an assignment of this Sublease or a sublease of all or a portion of
the demised premises shall be deemed to be a release of Sublessee from the
performance of Sublessee’s covenants hereunder, and in all such cases Sublessee
shall remain fully liable for its obligations under this Sublease. If Underlying
Landlord and Sublessor shall give their consent to any assignment of this
Sublease or any subsublease, Sublessee shall, in consideration therefor, pay to
Sublessor, as additional rent:

 

(i) In the case of an assignment, an amount equal to 50% of all sums and other
consideration paid to Sublessee by the assignee for or by reason of such
assignment.

 

(ii) In the case of a subsublease, 50% of any rents, additional rents or other
consideration payable under the subsublease or otherwise to Sublessee by the
subsubtenant which are in excess of the fixed annual rent and additional rent
accruing during the term of this Sublease in respect of the subsubleased space
(at the rate per square foot payable by Sublessee hereunder) pursuant to the
terms hereof.

 

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The sums payable under this paragraph shall be paid to Sublessor as and when
paid by the assignee or by the subsubtenant, as the case may be.

 

(b) Notwithstanding anything to the contrary contained herein, Sublessee may,
without Sublessor’s prior written consent, but upon prior written notice to
Sublessor (and provided further that Sublessee obtains Underlying Landlord’s
consent pursuant to the terms and provisions of the Underlying Lease) assign
this Sublease or subsublease all or a portion of the demised premises to an
entity controlled by, under common control with or controlling Sublessee,
subject, however, to compliance with Sublessee’s obligations under this Sublease
and provided further that Sublessee shall not be in default in the performance
of any of its obligations under this Sublease beyond any applicable notice and
cure period. . For the purposes hereof, “control” shall be deemed to mean
ownership of not less than 50% of all of the ownership interests of the
corporation or other business entity in question. Neither such subletting or
assignment shall relieve, release, impair or discharge any of Sublessee’s
obligations hereunder (it being understood and agreed that Sublessee shall
continue to remain liable for the performance of all obligations under this
Sublease, including, without limitation, the payment of fixed rent and
additional rent due hereunder throughout the term of this Sublease).

 

(c) If this Sublease be assigned, or if the demised premises or any portion
thereof be underlet or occupied by anybody other than Sublessee, Sublessor may,
after default by Sublessee, collect rent from the assignee, undertenant or
occupant, and apply the net amount collected to the rent herein reserved, but no
such assignment, underletting, occupancy or collection shall be deemed a waiver
of this covenant, or the acceptance of the assignee, undertenant or occupant as
tenant, or a release of Sublessee from the further performance by Sublessee of
the covenants on the part of Sublessee herein contained.

 

13. Insurance. A. During the term of this Sublease, Sublessee, at its sole cost
and expense, shall provide and maintain comprehensive public liability and
property damage insurance in conformity with the provisions of the Underlying
Lease which shall include, without limitation, coverage of replacement value of
any and all now or hereafter existing leasehold improvements, which replacement
value coverage shall, as of the Commencement Date, be in the amount of
1,000,000.00. Sublessee shall cause Sublessor and Underlying Landlord to be
included as additional insureds in said policy or policies which shall contain
provisions, if and to the extent available, that it or they will not be
cancellable except upon at least twenty (20) days prior notice to all insureds
and additional insured and that the act or omission of one insured or additional
insured will not invalidate the policy as to the other insureds. Sublessee shall
furnish to Sublessor reasonably satisfactory evidence that such insurance is in
effect at or before the Commencement Date and, on request, at reasonable
intervals thereafter.

 

B. Sublessee shall include in all of its insurance policies a waiver of the
insurer’s right of subrogation against Underlying Landlord, Sublessor and others
required by the Underlying Lease, if any. If such waiver shall not be, or shall
cease to be, obtainable (a) without additional charge, or (b) at all, then
Sublessee shall so notify Sublessor promptly after learning thereof. In case
such waiver can only be obtained at additional charge, if Sublessor shall so
elect and shall pay the insurer’s additional charge therefor, such waiver,
agreement or permission shall be included in the policy. Provided that
Sublessee’s right of full recovery under the aforesaid policy or policies are
not adversely affected or prejudiced thereby, Sublessee hereby waives any and
all right of recovery it might otherwise have against Underlying Landlord,
Sublessor and others, if any, required by the Underlying Lease, their respective
agents, contractors, servants, licensees, employees and invitees, for loss or
damage to Sublessee’s property, notwithstanding that such loss or damage may
result from the negligence or fault of Underlying Landlord, Sublessor or such
others as aforementioned, or their respective agents, contractors, servants,
licensees, employees or invitees. If, notwithstanding the recovery of insurance
proceeds by Sublessee for loss, damage or destruction of its property, Sublessor
is liable to Sublessee with respect to such loss, damage or destruction or is
obligated under this Sublease to make replacement, repair or restoration or
payment for such loss, damage or destruction then, provided Sublessee’s right of
full recovery under its insurance policies is not thereby prejudiced or
otherwise adversely affected, the amount of the net

 

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proceeds of Sublessee’s insurance against such loss, damage or destruction shall
be offset against Sublessor’s liability to Sublessee therefor, or shall be made
available to Sublessor to pay for replacement, repair or restoration, as the
case may be.

 

14. Default. In the event Sublessee defaults in the performance of any of the
terms, covenants, conditions, provisions and agreements of this Sublease or of
the Underlying Lease, Sublessor shall be entitled to exercise any and all of the
rights and remedies to which it is entitled by law and also any and all of the
rights and remedies specifically provided for in the Underlying Lease, which are
hereby incorporated herein and made a part hereof with the same force and effect
as if herein specifically set forth in full, and that wherever in the Underlying
Lease rights and remedies are given to Underlying Landlord, the same shall be
deemed to refer to Sublessor.

 

15. Sublease Consent. This Sublease shall become fully effective only if the
written consent hereto of Underlying Landlord is obtained. If such written
consent is not obtained within thirty (30) days of the date hereof, then, at
Sublessor’s option, this Sublease shall be automatically void and of no force or
effect and Sublessor shall return to Sublessee the first month’s rent and the
security deposit, and thereupon neither party shall have any further obligation
to the other.

 

16. Notice. Any notice to be given under this Sublease shall be in writing and
shall be sent by registered or certified mail, return receipt requested, by
nationally-recognized overnight courier or by hand (against receipt therefor),
addressed to (i) Sublessor at its address herein stated, Attention: CFO, with a
copy of the same to Omnicom Group Inc., 437 Madison Avenue, New York, New York
10022, Attention: Legal Department, and (ii) Sublessee at its address herein
stated prior to the Commencement Date and at the demised premises after the
Commencement Date, Attention: Legal Department. Each party shall have the right
to change, by notice in writing, the address to which such party’s notice is to
be sent. Any notice to be given by Sublessor may be given by the attorneys for
Sublessor. Notices shall be deemed given upon receipt or refusal thereof.

 

17. Quiet Enjoyment. Sublessor covenants that Sublessee, on paying the fixed
rent and additional rent and performing all the terms, covenants, conditions,
provisions and agreements aforesaid, shall and may peacefully and quietly have,
hold and enjoy the demised premises for the term aforesaid, free from any
interference or hindrance by Sublessor, but subject to the exceptions,
reservations and conditions hereof.

 

18. Surrender of demised premises. On the date upon which the term hereof shall
expire and come to an end, whether on the Expiration Date, by lapse of time or
otherwise, Sublessee, at Sublessee’s sole cost and expense, shall quit and
surrender the demised premises to Sublessor in the same good order and condition
as Sublessor is delivering them to Sublessee, subject to the provisions of the
Underlying Lease.

 

19. Brokers. Sublessee represents to Sublessor that Cushman & Wakefield of New
Jersey Inc., CB Richard Ellis Inc. and WF Realty LLC (collectively, the
“Brokers”) are the only brokers with whom Sublessee dealt in relation to this
transaction and that Sublessee has had no dealings, either direct or indirect,
with any other real estate agent or broker in connection with this transaction.
Sublessee agrees to indemnify, defend and hold Sublessor harmless from any loss,
liability and expense incurred by Sublessor as a result of any claim made
against Sublessor which is based upon a breach of said representation by
Sublessee. Sublessee’s indemnification obligation hereunder shall survive the
Expiration Date or sooner termination of this Sublease. Sublessor hereby agrees
to pay the Brokers a commission pursuant to separate agreements.

 

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20. Excluded Provisions. The following provisions of the Underlying Lease are
deemed to be Excluded Provisions: Sections 1.3 (iii) and 1.4, Article 2, Section
5.3, Articles 33, 34 and 35, Exhibit B and Exhibit F; and Paragraph 7 of the
Third Amendment to Lease.

 

21. Successors and Assigns. This Sublease shall be binding upon and, except as
prohibited by this Sublease or the Underlying Lease, inure to the benefit of the
parties hereto and their respective successors and permitted assigns, if any.
Nothing herein, however, shall be construed as permitting an assignment of this
Sublease.

 

22. No Modifications. This Sublease may not be modified except by written
agreement signed by Sublessor and Sublessee.

 

23. Security Deposit. A. Subject to subparagraph (B) below, Sublessee has
deposited with Sublessor, the sum of $106,476.00 to be held in a non-interest
bearing account by Sublessor as security for the faithful performance and
observance by Sublessee of the terms, covenants, conditions, provisions and
agreements of this Sublease. It is agreed that in the event Sublessee defaults
in respect of any of the terms, covenants, conditions, provisions and agreements
of this Sublease, including, but not limited to, the payment of fixed rent and
additional rent, Sublessor may use, apply or retain the whole or any part of the
security so deposited to the extent required for the payment of any fixed rent
and additional rent or any other sum as to which Sublessee is in default or for
any sum which Sublessor may expend or may be required to expend by reason of
Sublessee’s default in respect of any of the terms, covenants, conditions,
provisions and agreements of this Sublease, including but not limited to, any
damages or deficiency in the reletting of the demised premises, whether such
damages or deficiency accrued before or after summary proceedings or other
re-entry by Sublessor. If Sublessor so applies or retains any part of the
security, Sublessee shall, upon demand, promptly deposit with Sublessor the
amount so applied or retained so that Sublessor shall have the full deposit on
hand at all times during the term of this Sublease. In the event that Sublessee
shall fully and faithfully comply with all of the terms, covenants, conditions,
provisions and agreements of this Sublease, the security shall be returned to
Sublessee after the Expiration Date and after delivery of the possession of the
demised premises to Sublessor. In the event of an assignment by Sublessor of its
interest under the Underlying Lease, Sublessor shall have the right to transfer
the security and Sublessee agrees to look to the new Sublessor solely for the
return of said security and it is agreed that the provisions hereof shall apply
to every transfer or assignment made of the security to a new Sublessor.
Sublessee further covenants that it shall not assign or encumber or attempt to
assign or encumber the monies deposited herein as security and that neither
Sublessor nor its successors or assigns shall be bound by any such assignment,
encumbrance, attempted assignment or attempted encumbrance.

 

B. In lieu of the cash security deposit referred to in subsection (A) above,
Sublessee may deliver to Sublessor, and shall maintain in effect at all times
during the term following delivery thereof, a clean, unconditional and
irrevocable letter of credit, in form and substance satisfactory to Sublessor in
the amount of $106,476.00, issued by a banking corporation (“Bank”) reasonably
satisfactory to Sublessor and having its principal place of business or its duly
licensed branch in the City and County of New Jersey at which the letter of
credit may be presented for payment. Such letter of credit shall have an
expiration date no earlier than the first anniversary of the date of issuance
thereof and shall provide that it shall be automatically renewed from year to
year unless terminated by the Bank by notice to Sublessor given not less than
ninety (90) days prior to the then expiration date therefor. It is agreed that
in the event Sublessee defaults in respect of any of the terms, covenants,
conditions, provisions or agreements of this Sublease, including, but not
limited to, the payment of fixed rent and additional rent, or if the letter of
credit is terminated pursuant to the preceding sentence and is not replaced
within thirty (30) days prior to its expiration date, then (i) Sublessor shall
have the right to require the Bank to make payment to Sublessor of so much of
the entire proceeds of the letter of credit as shall be reasonably necessary to
cure the default, or to make payment of the entire proceeds of the letter of
credit if it has not been replaced within said 30-day period, and (ii) Sublessor
may apply said sum so

 

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paid to it by the Bank to the extent required for the payment of any fixed rent
or additional rent or any other sum as to which Sublessee is in default or for
any sum which Sublessor may expend or may be required to expend by reason of
Sublessee’s default in respect of any of the terms, covenants, conditions,
provisions and agreements of this Sublease, including, but not limited to, any
damages or deficiency in the reletting of the demised premises, whether such
damages or deficiency accrues before or after summary proceedings or other
re-entry by Sublessor, without thereby waiving any other rights or remedies of
Sublessor with respect to such default. Sublessor agrees to give Sublessee
notice if it applies any portion of the proceeds of the letter of credit, which
notice may be given after such application. If Sublessor applies any part of the
proceeds of the letter of credit, Sublessee, upon demand, shall promptly deposit
with Sublessor, the amount so applied or retained so that the Sublessor shall
have the full deposit on hand at all times during the term of this Sublease. If
Sublessee shall fully and faithfully comply with all of the terms, covenants,
conditions, provisions and agreements of this Sublease, any letter of credit, or
any remaining portion of any sum collected by Sublessor hereunder from the Bank,
together with any other portion or sum held by Sublessor as security, shall be
returned to Sublessee within sixty (60) days after the Expiration Date and after
delivery of the entire possession of the demised premises to Sublessor in the
condition required by the Underlying Lease. In the event Sublessee exercises
said right of substitution, the letter of credit held by Sublessor prior to said
substitution shall be promptly returned to Sublessee. In the event of an
assignment by Sublessor of its interest under the Underlying Lease and this
Sublease, Sublessor shall have the right to transfer the security to the
assignee, and Sublessee agrees to look to the new Sublessor solely for the
return of said security and it is agreed that the provisions hereof shall apply
to every transfer or assignment made of the security to a new Sublessor,
provided the new Sublessor shall assume the obligations of the Sublessor
hereunder. Sublessee shall have the right to substitute one letter of credit for
another, provided that, at all times, the letter of credit shall meet the
requirements of this paragraph.

 

24. Signage. Sublessor agrees to request that Underlying Landlord add
Sublessee’s name on the entrance doors and floor lobby, as well as on the
Building lobby directory or provide Sublessee with Sublessor’s existing
directory lines.

 

25. Inability to Perform, Delays. If Sublessee shall be delayed in obtaining
possession of the demised premises because of delays in obtaining consent or for
any other reason beyond the reasonable control of Sublessor, Sublessor shall not
be subject to any liability, the effectiveness of this Sublease shall not be
affected and the term hereof shall not be extended, but the fixed rent shall be
abated (provided Sublessee is not responsible for the delay in obtaining consent
or possession and provided the delay is not due to delays in obtaining consent
to, work required or permitted to be performed by Sublessee) until possession
shall have been made available to Sublessee.

 

26. Notice of Accidents. Sublessee shall give Sublessor and Underlying Landlord
notice of any fire, casualty or accident in or about the demised premises
promptly after Sublessee becomes aware of such event.

 

27. Destruction by Fire or Other Cause. If the demised premises shall be
partially or totally damaged or destroyed by fire, casualty or other cause as a
consequence of which Sublessor shall, pursuant to the Underlying Lease, receive
an abatement of rent with respect to the demised premises, there shall be a
corresponding abatement of the fixed rent payable hereunder. This Sublease shall
not be terminated as a consequence of any damage to, or destruction of the
demised premises, unless, as a result thereof, the Underlying Lease is
terminated in accordance with its terms.

 

28. Bankruptcy. In the event Sublessee becomes the subject of proceedings
involving bankruptcy, insolvency or reorganization of Sublessee, or if Sublessee
makes an assignment for the benefit of creditors, or petitions for, or enters
into an arrangement with creditors, Sublessor shall have the same rights as to
Sublessee as are afforded Underlying Landlord under the Underlying Lease under
similar circumstances involving Sublessor.

 

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29. No Waiver, etc. No agreement to accept a surrender of this Sublease shall be
valid unless in writing and signed by Sublessor. The failure of Sublessor or
Sublessee to enforce any terms, covenants, conditions, provisions or agreements
of this Sublease shall not prevent the later enforcement thereof or a subsequent
act which would have constituted a violation from having all the force and
effect of an original violation. The receipt by Sublessor or payment by
Sublessee of fixed rent or other rent or charges with knowledge of the breach of
any covenant of this Sublease shall not be deemed a waiver of such breach. The
parties hereto, to the fullest extent permitted by law, waive trial by jury in
any action or proceeding relating hereto and consent to the jurisdiction of the
New York State court system. Sublessee hereby waives any right to interpose any
counterclaim in any action brought by Sublessor in connection herewith. The
foregoing shall not be deemed a waiver by Sublessee of the right to interpose
any counterclaim to the extent that the failure to interpose same would prohibit
Sublessee from bringing the claim, which is the basis thereof, in a separate
action.

 

30. Occupancy Tax. If applicable, Sublessee shall pay directly to the City of
Parsippany all occupancy and rent taxes which may be payable by Sublessee to the
City of Parsippany in respect of the rent reserved by this Sublease and will pay
all other taxes, the payment of which shall be imposed directly upon any
occupant of the demised premises.

 

31. Miscellaneous. Paragraph headings are for ease of reference only and are not
part of the agreement of the parties. This Sublease shall be governed by New
Jersey law without giving affect to its conflict of laws rules. This Sublease
may not be changed or terminated, or any provision hereof waived, orally. The
rights and remedies of Sublessor hereunder shall survive the expiration of the
term or sooner termination hereof. The submission of this Sublease for
examination or for signature is not intended to nor shall it create or evidence
an offer to, or any other right by, Sublessee with respect to the demised
premises or otherwise; it being expressly agreed that this Sublease shall not be
effective, and Sublessor shall not be bound hereby, until it is executed and
delivered by each party hereto.

 

32. Furniture. Sublessee shall have the right to use the furniture set forth on
Exhibit B attached hereto during the term of this Sublease. Sublessee shall keep
and maintain such furniture in good condition and return the furniture to
Sublessor on the Expiration Date in the same condition as it existed on the
Commencement Date, reasonable wear and tear excepted.

 

33. Parking. Sublessee shall be entitled to Sublessee’s proportionate share
(i.e., 50%) of Sublessor’s reserved and unreserved parking spaces pursuant to
Section 1.2 of the Underlying Lease.

 

34. Right of First Offer. (a) If at any time during the term of this Sublease
prior to the last 18 months of the term, Sublessor proposes to sublease any
portion of the Premises which is not initially leased to Sublessee hereunder
(the “Offered Space”) and such space shall be Available (as hereinafter
defined), Sublessor shall deliver notice thereof to Sublessee (an “Offered Space
Notice”), which Offered Space Notice shall set forth the fixed rent for such
Offered Space, the rentable square footage of the Offered Space, Sublessee’s
proportionate share in respect of the rentable square feet comprising such
Offered Space, and the date Sublessor anticipates that such Offered Space will
become Available for leasing. Provided that all of the conditions precedent set
forth in this Paragraph are fully satisfied by Sublessee, Sublessee shall have a
one time option (an “Offered Space Option”), exercisable by Sublessee delivering
irrevocable notice to Sublessor (an “Acceptance Notice”) within seven (7) days
of the giving by Sublessor of such Offered Space Notice, to lease all (but not
less than all) of such Offered Space, upon the terms and conditions set forth in
this Paragraph, and this Sublease shall thereupon be modified as provided in
subsection (e) of this Paragraph.

 

(b) Time shall be of the essence as to Sublessee’s giving of any Acceptance
Notice. If Sublessee fails to timely give any Acceptance Notice, Sublessor shall
have no further obligation to Sublessee, and Sublessee shall have no further
rights, with respect to the Offered Space in question, and

 

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Sublessor shall be free to lease such Offered Space to any third party or to
otherwise dispose of such Offered Space. Notwithstanding anything to the
contrary contained herein, the terms and provisions of this Paragraph are
subject to the Underlying Landlord’s consent to be given following Sublessee’s
Acceptance Notice.

 

(c) “Available” shall mean that at the time in question (i) no person or entity
leases or occupies the Offered Space in question or any portion thereof, whether
pursuant to a lease or other agreement, and (ii) no person or entity holds any
option or right to lease or occupy such Offered Space or to renew its lease or
right of occupancy thereof. So long as a tenant or other occupant leases or
occupies Offered Space or any portion thereof and has a right to renew its lease
or other agreement, Sublessor shall be free to extend any such tenancy or
occupancy, whether or not pursuant to the precise terms of such right and such
space shall not be deemed to be Available.

 

(d) Sublessee shall have no right to exercise any Offered Space Option unless
all of the following conditions have been satisfied on the date the applicable
Acceptance Notice is delivered to Sublessor and on the applicable Offered Space
Commencement Date:

 

(i) No event of default beyond the expiration of all applicable notice and cure
periods shall have occurred and then be continuing hereunder;

 

(ii) Sublessee shall be in occupancy of the entire Premises; and

 

(iii) There shall not have occurred any material adverse change in the financial
condition of Sublessee from the condition described on the financial statements
submitted by Sublessee to Sublessor in connection with this Sublease.

 

(e) Effective as of the date on which Sublessor delivers vacant possession of
the Offered Space in question to Sublessee (an “Offered Space Commencement
Date”):

 

(i) the fixed rent for such Offered Space shall be equal to the greater of (a)
the then rental rate per square foot as set forth in Paragraph 2 of this
Sublease with respect to the demised premises initially leased by Sublessee
hereunder multiplied by the number of rentable square feet contained in such
Offered Space and (b) the “Offered Space Fair Market Value”, which shall mean
the fair market annual rental value of the Offered Space in question as
determined by Sublessor at the commencement of the leasing of such Offered Space
for a term commencing on the Offered Space Commencement Date applicable to such
Offered Space and ending on the Expiration Date, taking into consideration all
relevant factors and with (i) such Offered Space considered as vacant and in the
“as is” condition which same shall be in on such Offered Space Commencement Date
and (ii) the Base Year being the calendar year in which such Offered Space
Commencement Date occurs;

 

(ii) Sublessee shall make additional payments on account of additional rent with
respect to such Offered Space in accordance with Paragraph 4 of this Sublease;

 

(iii) The Offered Space shall be delivered in its “as is” condition, and
Sublessor shall not be obligated to perform any work with respect thereto or
make any contribution to Sublessee to prepare the Offered Space for Sublessee’s
occupancy. The leasing of any furniture existing in the Offered Space to
Sublessee shall be determined pursuant to the terms and provisions of a separate
agreement mutually acceptable to Sublessor and Sublessee;

 

(iv) The security deposit amount shall be increased by an amount equal to (x)
the then existing amount of the security deposit required by Paragraph 23 of
this Sublease, divided by the number of rentable square feet then contained in
the demised premises, multiplied by (y) the number of rentable square feet
contained in such Offered Space; and

 

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(v) Such Offered Space shall be added to and be deemed to be a part of the
demised premises for all purposes of this Sublease (except as otherwise provided
in this Paragraph).

 

(f) In no event shall Sublessor be subject to any liability and this Sublease
shall not be impaired if Sublessor shall be unable to deliver possession of any
Offered Space to Sublessee on any particular date or if Underlying Landlord does
not provide its consent thereto.

 

(g) Upon request by Sublessor made on or following any Offered Space
Commencement Date, Sublessee will execute, acknowledge and deliver to Sublessor
an amendment to this Sublease setting forth such Offered Space Commencement Date
and reflecting the incorporation of such Offered Space into the demised
premises, and the modifications to this Sublease resulting therefrom, as
provided in this Paragraph. The failure of either party to execute and deliver
such an amendment shall not affect the rights of the parties under this
Sublease.

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement of Sublease
as of the day and year first above written.

 

        HARRISON & STAR, INC.             By:   /s/                

--------------------------------------------------------------------------------

               

Name:

Title:

 

        NPS PHARMACEUTICALS, INC.         By:   /s/

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Federal Identification Number          

Name:

Title:

 

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