EXHIBIT 10.38

 

FIRST AMENDMENT TO SUBLEASE

 

THIS FIRST AMENDMENT TO SUBLEASE (this “Amendment”) is dated as of this 28th day
of July, 2004, by and between COOLEY GODWARD LLP, a California limited liability
partnership (“Sublandlord”), and HOLLIS-EDEN PHARMACEUTICALS, INC., a Delaware
corporation (“Subtenant”).

 

RECITALS

 

A. Sublandlord and Subtenant entered into a Sublease dated December 19, 2001
(the “Sublease”) for premises located on the fourth (4th) floor of that certain
building located at 4435 Eastgate Mall, San Diego, California.

 

B. Sublandlord and Subtenant now desire to amend the Sublease to extend the term
of the Sublease and provide Subtenant certain termination rights, all pursuant
to the terms, covenants and conditions set forth herein. Capitalized terms used
in this Amendment and not otherwise defined shall have the meanings assigned to
them in the Sublease.

 

AGREEMENT

 

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Subtenant and Sublandlord hereby agree as
follows:

 

1. Term; Options. The Expiration Date of the Sublease is hereby extended until
December 31, 2007, and the period from September 23, 2004 until such extended
Expiration Date shall be referred to as the “Extended Term.” Additionally,
Section 2(b) of the Sublease (except for the definition of Original Subtenant)
and all references to an extension option in the Sublease are hereby deleted in
their entirety.

 

2. Base Rent. The reference to “Option Terms” in the table of monthly Base Rent
set forth in Section 4(a)(i) of the Sublease is hereby deleted, and such table
is hereby supplemented as follows:

 

Period

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

   Amount per Rentable
Square Foot

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

September 23, 2004 – December 31, 2005

   $ 2.20

January 1, 2006 – December 31, 2006

   $ 2.30

January 1, 2007 – December 31, 2007

   $ 2.40

 

3. Additional Rent. The first sentence of Section 4(a)(ii) is hereby deleted in
its entirety and replaced with the following: “In addition to Base Rent,
Subtenant shall also pay to Sublandlord Subtenant’s Proportionate Share of the
amounts paid by Sublandlord under the Master Lease as “Tenant’s Share of
Increased Direct Expenses” in the same manner and times under which Sublandlord
pays such amounts to Master Landlord under the Master Lease, to the extent such
amounts accrue during the term of this Sublease; provided, however, Subtenant’s
Proportionate Share shall be computed with reference to a Base Year of 2005.”

 

4. Termination Right. During the Extended Term, provided Subtenant is not in
default under the Sublease, Subtenant shall have the right to terminate the
Sublease upon eight (8) months’ prior written notice to Sublandlord.

 

5. Right of First Refusal. Subtenant acknowledges and agrees that the right of
first refusal set forth in Section 6 of the Sublease is inapplicable during the
Extended Term.

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

6. Ratification. The Sublease, as amended by this Amendment, is hereby ratified
by Sublandlord and Subtenant, and Sublandlord and Subtenant hereby agree that
the Sublease, as so amended, shall continue in full force and effect.

 

7. Miscellaneous.

 

  (a) Voluntary Agreement. The parties have read this Amendment and on the
advice of counsel they have freely and voluntarily entered into this Amendment.

 

  (b) Attorney’s Fees. If either party commences an action against the other
party arising out of or in connection with this Amendment, the prevailing party
shall be entitled to recover from the losing party reasonable attorney’s fees
and costs of suit.

 

  (c) Successors. This Amendment shall be binding on and inure to the benefit of
the parties and their successors.

 

  (d) Counterparts. This Amendment may be signed in two or more counterparts.
When at least one such counterpart has been signed by each party, this Amendment
shall be deemed to have been fully executed, each counterpart shall be deemed to
be an original, and all counterparts shall be deemed to be one and the same
agreement.

 

IN WITNESS WHEREOF, Sublandlord and Subtenant have executed this First Amendment
to Sublease as of the date first written above.

 

SUBLANDLORD:      

COOLEY GODWARD LLP,

a California limited liability partnership

           

By:

  /s/    FREDERICK T. MUTO                    

Name:

  Frederick T. Muto            

Title:

  Partner-in-charge SUBTENANT:      

HOLLIS-EDEN PHARMACEUTICALS, INC.,

a Delaware corporation

           

By:

  /s/    ROBERT WEBER                    

Name:

  Robert Weber            

Title:

  Chief Accounting Officer