Exhibit 10.13

 

OFFICE SUBLEASE

 

THIS SUBLEASE is made and entered into as of the 23rd day of February, 2016 (the
“Effective Date”), by and between Restoration Hardware, Inc., a Delaware
corporation (the “Sublandlord”) and Intercept Pharmaceuticals, Inc., a Delaware
corporation (the “Subtenant”).

 

WITNESSETH:

 

WHEREAS, Sublandlord leases the land and the building located at 437 West 16th
Street, New York, New York 10011 (the “Building”) pursuant to that certain Net
Lease (the “Master Lease”) dated April 12, 2013, between Henya Realty, LLC and
Salmir Realty, LLC (together, “Master Landlord”) [as successors-in-interest to
437 West 16th Street LLC], and Sublandlord, a copy of which Lease is attached
hereto as Exhibit A and is made a part hereof. All capitalized terms not
otherwise defined herein shall retain that meaning ascribed to them in the
Lease; and

 

WHEREAS, Subtenant desires to sublease from Sublandlord a portion of the
Building consisting of the entire 4th Floor (5,382 rentable square feet) and the
entire 5th Floor (5,403 rental square feet) (together, the 4th Floor and the 5th
Floor are referred to herein as the “Subleased Premises”); and

 

WHEREAS, the parties desire to enter into this Sublease defining their
respective rights, duties, and liabilities relating to the Subleased Premises;

 

NOW, THEREFORE, in consideration of the mutual promises and covenants contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Sublandlord and Subtenant hereby agree as
follows:

 

1.          Recitals. The recitals above and exhibits attached hereto are all
hereby incorporated into the body of this Sublease as if fully set forth herein.

 

2.          Term. Sublandlord, for and in consideration of the payment of the
rent and the performance of the covenants hereinafter mentioned, does hereby
demise, lease and assign unto Subtenant the Subleased Premises, on the terms and
conditions set forth herein, commencing as of the date that exclusive
broom-clean possession of the Subleased Premises is delivered to Subtenant in
the Delivery Condition, as such term is hereinafter defined (the “Sublease
Commencement Date”) and ending at 11:59 p.m. on the last day of the calendar
month in which the fifth (5th) anniversary of the Sublease Rent Commencement
Date (as defined below) occurs (the “Sublease Expiration Date”). The time period
between the Sublease Commencement Date and the Sublease Expiration Date is
hereinafter referred to as the “Sublease Term”). Notwithstanding anything to the
contrary contained herein, in no event shall the Sublease Term extend beyond the
“Expiration of the Term” of the Master Lease.

 

3.          Subtenant Termination Right. Provided that Subtenant is not then in
default, Subtenant shall have the one-time right to terminate this Sublease
effective as of the third (3rd) anniversary of the Sublease Rent Commencement
Date (as defined below). Such early termination right shall only be exercised,
if at all, by (i) providing Sublandlord advance irrevocable written notice of
such exercise no later than the second (2nd) anniversary of the Sublease Rent
Commencement Date, and (ii) simultaneous with delivery of such notice (and as a
condition precedent to the effectiveness of such notice), paying to Sublandlord
an amount equal to the sum of (A) all of the unamortized transaction costs
(including, without limitation: (w) brokerage commissions actually paid by
Sublandlord (up to a customary and commercially reasonable amount), (x) an
amount equal to the Base Rent abated between the Commencement Date and the Rent
Commencement Date, (y) an amount equal to the TI Work Allowance, and (z) all
reasonable out-of-pocket legal fees incurred by Sublandlord in pursuing this
Sublease) multiplied by 1.08%, plus (B) $167,167.50 (i.e., an amount equal to
two months’ Base Rent). For purposes of the foregoing calculation, “transactions
costs” shall be amortized on a straight-line basis over the original Term of the
Sublease.

 

 

 

 

4.          Rent.

 

a.“Base Rent” for the Subleased Premises is One Million Three Thousand Five
Dollars ($1,003,005) per year. The Base Rent will be paid by Subtenant to
Sublandlord in equal monthly installments, in advance, with the “First Payment”
due upon execution of this Sublease. The First Payment shall be equal to
$83,583.75 (and such payment shall be allocable to, and actually applied
against, the fifth (5th) full month of the Sublease Term), plus a prorated
amount payable for the period of time from the Sublease Commencement Date
through the last day of the calendar month in which the Sublease Commencement
Date occurs. The parties acknowledge that, unless the Sublease Expiration Date
occurs on the last day of a calendar month, the final month’s Base Rent payment
shall likewise be prorated.

 

So long as Subtenant shall not then be in default under this Sublease after
notice and the expiration of any applicable cure periods, Base Rent shall be
abated in full for the first four (4) full calendar months following the
Sublease Commencement Date. The first day of the fifth (5th) full calendar month
following the Sublease Commencement Date is the “Sublease Rent Commencement
Date”. However, as noted above, Base Rent for the fifth (5th) full calendar
month is included in the First Payment, thus, Subtenant will resume regular Base
Rent payments as of the sixth (6th) full calendar month following the Sublease
Commencement Date.

 

b.Subtenant acknowledges that the Subleased Premises is submetered for
electricity, and Subtenant agrees to pay Sublandlord for such amounts actually
consumed by Subtenant within twenty (20) business days following Sublandlord’s
written request therefore, accompanied by a copy of the electric bill. Or, at
Sublandlord’s election, provided Sublandlord has arranged for the direct
metering of electricity at Sublandlord’s sole cost and expense, Sublandlord may
direct Subtenant to pay the electric provider directly. For purposes of
computing Subtenant’s submetered consumption of electricity, the cost of
electricity shall be computed utilizing the average kilowatt per hour rate
charged to Sublandlord under the Lease.

 

c.All amounts due hereunder from Subtenant, including Base Rent, shall be
referred to herein as “Rent”. Subtenant shall pay Rent without any demand,
setoff or deduction of any kind, except as herein or in the incorporated
provisions of the Master Lease to the extent applicable to this Sublease. In the
event any installment of Rent is not paid by the fifth (5th) day of each month,
a late charge of three (3%) percent of the delinquent installment shall be due
and payable; provided, however, that the first such late charge in any twelve
(12) month period shall be forgiven so long as Subtenant pays the delinquent
installment no later than the fifth (5th) business day following Sublandlord’s
notice of such delinquency). All payments of Rent shall be by good and
sufficient check or by other means (such as automatic debit or electronic
transfer) acceptable to Sublandlord. Sublandlord’s acceptance of less than the
correct amount of Rent shall be considered a payment on account of the earliest
Rent due. No endorsement or statement on a check or letter accompanying a check
or payment shall be considered an accord and satisfaction, and either party may
accept such check or payment without such acceptance being considered a waiver
of any rights such party may have under this Sublease or applicable law.
Subtenant’s covenant to pay Rent is independent of every other covenant in this
Sublease.

 

5.          Operating Expenses. Notwithstanding anything in the Master Lease to
the contrary, commencing upon written request from Sublandlord, accompanied by a
copy of the invoice, any time from and after the January 2017 Base Rent payment,
Subtenant shall pay to Sublandlord, within thirty (30) days following written
request therefore, 33.83% (representing Subtenant’s proportionate share) of
increases in Operating Expenses over a calendar 2016 base year. As used herein,
“Operating Expenses” shall mean those expenses set forth in Exhibit “B” attached
hereto. Notwithstanding the foregoing, it is agreed that base building HVAC
shall be provided at no additional cost to Subtenant during normal Building
hours; however, all distribution within the Subleased Premises shall be the sole
responsibility of Subtenant (and at its expense); provided, however, that
Subtenant may reuse any HVAC distribution system and components presently
installed in the Subleased Premises. Further, Subtenant shall be solely
responsible for cleaning the Subleased Premises, including depositing any
rubbish from the Subleased Premises in the designated area within the Building;
provided, however, that Sublandlord, at its sole cost and expense, will be
responsible for rubbish removal from the designated area within the Building.
Subject to Section 8 herein, Subtenant shall keep neat and clean and maintain in
first class order, condition and repair, the Subleased Premises and every part
thereof, including, without limitation, the exterior and interior portions of
all doors, windows, plate glass, all plumbing and sewage facilities within the
Subleased Premises, fixtures and interior walls, floors, ceilings, signs
(including exterior signs where permitted), and all wiring, electrical systems,
and any distribution of the HVAC system.

 

 

 

  

6.          Real Estate Taxes. Notwithstanding anything in the Master Lease to
the contrary, commencing upon written request from Sublandlord any time from and
after the July 2017 Base Rent payment, Subtenant shall pay to Sublandlord,
within thirty (30) days following written request therefore, 33.83% representing
Subtenant’s proportionate share of increases in Real Estate Taxes over the
average of the 2015 / 2016 and 2016 / 2017 fiscal base years. As used herein,
“Real Estate Taxes” shall mean real estate taxes and any other taxes, charges
and assessments which are levied with respect to the Building or the land
appurtenant to the Building, or with respect to any improvements, fixtures and
equipment or other property of Sublandlord, real or personal, located in the
Building and used in connection with the operation of the Building and said
land, any payments to any ground lessor in reimbursement of tax payments made by
such lessor; and all reasonable fees, expenses and costs incurred by Landlord in
investigating, protesting, contesting or in any way seeking to reduce or avoid
increase in any assessments, levies or the tax rate pertaining to any Real
Estate Taxes to be paid by Sublandlord. Real Estate Taxes shall not include any
corporate franchise, or estate, inheritance or net income tax, or tax imposed
upon any transfer by Landlord of its interest in this Lease or the Building.

 

7.          Furniture & Equipment. Subtenant may use any existing pantry
appliances and security cameras within the Subleased Premises. Sublandlord makes
no representation or warranty as to the condition of such appliances or cameras
and has no obligations to maintain, repair or replace such items. Sublandlord
will disconnect service to the cameras by the Commencement Date, and Subtenant,
at its sole cost and expense, shall pay for any costs related to the cameras
should Subtenant choose to utilize them.

 

8.          Subordinate to Master Lease. This Sublease is expressly made subject
and subordinate to the terms and conditions of the Master Lease, and Subtenant
hereby represents and warrants that (a) it is not a debtor nor a
debtor-in-possession in any voluntary or involuntary bankruptcy proceeding, and
(b) it is in compliance with, agrees to, and confirms the requirements, terms
and conditions set forth in Section 7.1(k) of the Master Lease as if the same
were reprinted in full herein. With regard to the Subleased Premises,
Sublandlord shall have all the rights of “Landlord” under the Master Lease and
Subtenant shall assume all the obligations of “Tenant” under the Master Lease as
if Sublandlord had been named “Landlord” and Subtenant had been named “Tenant”
thereunder, except as expressly modified herein. Subtenant shall have no
obligation to (x) perform any structural repair or, subject to the provisions of
Section 5 herein, perform any maintenance or repair of the working systems of
the Building, except and to the extent the necessity of such repair or
maintenance was caused by the negligence or willful misconduct of Subtenant, its
employees, agents, contractors, or invitees, and (y) cure any violation or
illegal condition existing on the Sublease Commencement Date. Unless otherwise
expressly provided in this Sublease, all such terms and conditions of the Master
Lease are hereby incorporated herein by reference as though fully set forth
herein at length, except (a) the Rent shall be as herein expressly provided and
shall be paid to Sublandlord (instead of the Landlord as provided in the Master
Lease), and (b) the time limits contained in the Master Lease for the giving of
notices, making of demands or performing of any act, condition or covenant on
the part of the “Tenant” thereunder, or for the exercise of the “Tenant”
thereunder of any right, remedy or option, are changed by shortening the same in
each instance by three business (3) days, so that in each instance Subtenant
shall have three (3) business days’ less time to observe or perform hereunder
than Sublandlord has as the “Tenant” under the Master Lease (provided, however,
that in no event shall any notice or cure period be reduced below three (3)
days); and provided further that the following provisions of the Master Lease
shall be deleted or modified as follows for purposes of incorporation by
reference in this Sublease: Sections 1.2, 1.3, 1.4, 1.5, 28.2, Articles 2, 5 and
30, Exhibit C and Exhibit G of the Master Lease shall be deemed deleted; Article
3 of the Master Lease shall be amended as provided in Section 6 of this
Sublease; Article 9 of the Master Lease shall be amended as provided in Sections
5 and 8 of this Sublease; Article 10 of the Master Lease shall be amended as
provided in Sections 4(b) and 5 of this Sublease; Article 12 of the Master Lease
shall be amended as provided in Section 14 of this Sublease; Article 15 of the
Master Lease shall be amended as provided in Sections 8 and 9 of this Sublease;
Article 16 of the Master Lease shall be amended so that the addresses for
notices set forth therein shall be deemed to refer to the addresses for notices
provided in this Sublease; Article 19 of the Master Lease shall be deemed
amended as provided in Section 13 of this Sublease; and Section 24.1 shall be
deemed amended as provided in Section 19 of this Sublease. Subtenant agrees to
comply with and abide by all the terms, provisions, covenants and conditions of
the Master Lease, and any violation of the same by Subtenant shall constitute a
default under this Sublease. A default by Sublandlord under the Master Lease
shall constitute a default under this Sublease to the extent such default under
the Master Lease materially adversely affects Subtenant’s use or occupancy of
the Subleased Premises. The parties acknowledge and agree that this Sublease is
not a “Major Sublease” as defined in the Master Lease, and thus does not require
the consent of the Master Landlord. Nevertheless, the parties agree that
Sublandlord may, at its option, provide a copy of this Sublease to Master
Landlord as a courtesy. Sublandlord shall notify the Master Landlord within five
(5) business days after Subtenant notifies Sublandlord of a breach of the Master
Lease by the Master Landlord, to the extent such breach materially adversely
affects the Subleased Premises; and if the Master Landlord does not cure such
breach within the cure periods provided under the Master Lease (or if no cure
periods are provided, within a reasonable period under the circumstances)
Sublandlord shall use commercially reasonable efforts to compel Master Landlord
to comply with its obligations under the Master Lease (which efforts may include
instituting an action or court proceeding against the Master Landlord), provided
that Subtenant indemnifies Sublandlord against all losses, damages, costs and
expenses paid or incurred by Sublandlord (including reasonable attorneys’ fees
and charges through all appeals) as a result of any such action or proceeding.
Additionally, if and to the extent Sublandlord receives a rent abatement or
reduction from the Master Landlord under the Master Lease on account of a
failure to provide any services or comply with any obligations under the Master
Lease which failure or noncompliance materially adversely affects Subtenant’s
use or occupancy of the Subleased Premises, Subtenant shall be entitled to
33.83% representing Subtenant’s share of such abatement or reduction after
deduction for Sublandlord's reasonable out-of-pocket costs, if any, in obtaining
such rent abatement or reduction.

 

 

 

  

9.          Default. Upon default by Subtenant in the payment of Rent or any
other payment required to be made by it or in the performance of any of its
obligations hereunder, Sublandlord shall have the same rights and remedies
against Subtenant as are afforded Master Landlord against Sublandlord in the
event of Sublandlord’s default under the terms of the Master Lease.

 

10.         Assignment / Subletting. Subtenant shall not sub-sublease or
sub-assign all or any portion of the Subleased Premises without Sublandlord’s
written consent (not to be unreasonably withheld, conditioned or delayed), and,
in all cases, any such sub-sublease or sub-assignment must be in strict
compliance with the terms and conditions of the Master Lease. To the extent
permitted by the Master Lease, Sublandlord and Subtenant shall split any such
profits 50/50. As used in this section, “profits” means the base rental payments
received under any such sub-sublease or sub-assignment (if any) in excess of the
Base Rent received hereunder after first deducting (i) reasonable expenses
incurred by the Subtenant (e.g., lease procurement costs, TI allowance, free
rent, brokerage commissions, advertising, etc., but all such expenses shall be
limited to commercially reasonable amounts as would be incurred in subleasing or
assigning similar-situated space) and (ii) any profit paid to Master Landlord
pursuant to the Master Lease.

 

Notwithstanding the foregoing and subject to the terms of the Master Lease,
Subtenant may assign, encumber or transfer its interest in this Sublease to its
parent company or a corporation or other entity under common control with
Subtenant or a subsidiary or affiliate of it or its parent company, or to a
corporation or other entity in which it is merged, consolidated or acquired by,
or to which all or substantially all of its assets are sold. Additionally, a
transfer of stock or other beneficial interests in Subtenant (i) among the
existing shareholders or beneficial interest holders, or (ii) the issuance of
stock or other beneficial ownership interests in Subtenant for the purpose of
obtaining equity financing, or (iii) transfers of stock or other beneficial
interests in Subtenant for estate planning purposes, shall not require
Sublandlord’s consent as long as it is for a good business purpose and not for
the principal purpose of transferring Subtenant’s interest in this Sublease.

 

11.         Delivery Condition / Sublandlord’s Representations. To the best of
Sublandlord’s actual knowledge and belief, the following representations are (or
will be, as applicable) true as they relate to the Subleased Premises:

 

a.           As of the Sublease Commencement Date, the Subleased Premises will
be vacant and in broom clean condition.

 

b.           As of the Effective Date, the building systems (including, but not
limited to, the existing fire protection infrastructure) serving the Subleased
Premises are in good operating condition. Further, the existing sprinkler loop
on each floor of the Subleased Premises will remain in place.

 

 

 

  

c.           As of the Effective Date, Sublandlord has received no notice of
violation of any applicable codes, laws and/or regulations, whether pertaining
to hazardous substances, fire and safety systems, or otherwise, which have not
been cured or are not in the process of being cured Copies of Sublandlord’s
filed ACP-5 Certificates for the Subleased Premises shall be delivered to
Subtenant on or before the Effective Date.

 

d.           As of the Effective Date, Sublandlord has not received actual
notice of any outstanding construction liens and/or violations with the
Department of Buildings, Environmental Control Board, and/or the Fire Marshall,
which have not been cured or are not in the process of being cured.

 

e.           As of the Effective Date, Sublandlord has a valid and subsisting
leasehold estate under the Master Lease, the Master Lease is in full force and
effect, Sublandlord has not delivered or received written notice of default
under the Master Lease which remains uncured.

 

Except as expressly provided otherwise herein, Subtenant accepts the Subleased
Premises in its current condition “as-is”, “where-is”, and “with all faults”. In
this Sublease, the term “Delivery Condition” shall mean that condition of the
Subleased Premises in respect of which all of the representations set forth in
clauses a. – e. of this Paragraph 11 shall be true in all material respects.

 

12.         Subtenant’s Improvements. Subject to strict compliance by Subtenant
with all terms and conditions of Article 6 of the Master Lease, Subtenant may
complete Subtenant’s Improvements using architects, engineers, contractors, and
subcontractors selected by Subtenant and approved by Sublandlord (which approval
shall not be unreasonably withheld, conditioned or delayed). As used herein,
“Subtenant’s Improvements” means the interior fit-out of the Subleased Premises,
the plans for which are subject to Sublandlord’s prior approval (which approval
shall not be unreasonably withheld, conditioned or delayed).

 

So long as Subtenant shall not then be in default under this Sublease
(including, by extension, the incorporated provisions of the Master Lease),
after notice and the expiration of any applicable cure periods, Sublandlord will
contribute up to Three Hundred Twenty-Three Thousand Five Hundred Fifty Dollars
($323,550) [i.e., $30.00 per rentable square foot] towards Subtenant’s actual,
reasonable costs for Subtenant’s Improvements (the “Subtenant Improvement
Allowance”). No more than ten percent (10%) of the foregoing Subtenant
Improvement Allowance may be utilized for soft costs (including, without
limitation, architect fees, engineering fees, and permitting fees). Sublandlord
will pay the Subtenant Improvement Allowance to Subtenant within thirty (30)
days following receipt of written request from Subtenant, which written request
must include the following: (i) documents evidencing Subtenant’s architect’s
self-certification of Subtenant’s Improvements, or a letter of completion from
the City of New York Department of Buildings and all associated permit sign-offs
for the Subtenant’s Improvements and the Subleased Premises, (ii) written
certification from Subtenant that it has completed the Subtenant’s Improvements
in their entirety and taken occupancy of the Subleased Premises (i.e., there
shall be no “progress payments”), (iii) proof of final cost (e.g., AIA G702 or
similar) from its general contractor or construction consultant, (iv)
unconditional lien waivers from all contractors and subcontractors who rendered
services or materials in connection with Subtenant’s Improvements, and (v)
written certification from Subtenant that it is full compliance with this
Sublease.

 

So long as Subtenant shall not then be in default under this Sublease
(including, by extension, the incorporated provisions of the Master Lease),
after notice and the expiration of any applicable cure periods, Sublandlord
agrees to make an additional contribution of up to Sixty-Four Thousand Seven
Hundred Ten Dollars ($64,710) [i.e., $6 per rentable square foot] towards the
actual, reasonable costs of upgrading the HVAC distribution within the Subleased
Premises (the “Supplemental Subtenant Improvement Allowance”). Such HVAC
upgrades shall be considered part of Subtenant’s Improvements and the
Supplemental Subtenant Improvement Allowance shall be payable, if at all,
pursuant to the same terms, conditions and requirements as the Subtenant
Improvement Allowance set forth in the immediately preceding paragraph.

 

In no event shall the Subtenant Improvement Allowance or the Supplemental
Subtenant Improvement Allowance paid exceed the actual costs incurred by
Subtenant in connection with such work.

 

 

 

  

13.         Use & Indemnification. Subtenant shall use the Subleased Premises
only for the Permitted Uses as provided in the Master Lease (and Sublandlord
represents to Subtenant that the Subleased Premises may be used for executive
and general offices and uses ancillary thereto). Subtenant shall be fully
responsible and liable (Master Landlord and Sublandlord being indemnified) for
the operation of its business in the Subleased Premises in compliance with all
applicable laws and regulations from and after the Sublease Commencement Date.
Subtenant shall indemnify, defend and hold Sublandlord and Master Landlord, and
Sublandlord’s and Master Landlord’s officers, agents, and employees
(collectively, the “Master Landlord and Sublandlord Indemnitees”) harmless from
and against all liabilities, obligations, damages, judgments, penalties, claims,
costs, charges and expenses, including, without limitation, reasonable
attorneys’ fees, which may be imposed upon, incurred by, or asserted against any
of the Master Landlord and Sublandlord Indemnities and arising, directly or
indirectly, out of or in connection with (a) Subtenant’s breach of its
obligations under this Sublease (including, by extension, the Master Lease), (b)
the negligence or willful acts of Subtenant, its agents, contractors, and
employees, and (c) any work or thing done in, on or about the Subleased Premises
or any part thereof, by Subtenant or its agents, contractors, and employees,
including, without limitation, any Subtenant’s Improvements. In no event shall
Subtenant dispose, store, or otherwise utilize hazardous materials within the
Subleased Premises except in full compliance with the Master Lease and all
applicable law.

 

Sublandlord shall indemnify, defend and hold harmless Subtenant from and against
any loss, cost, damage or expense (including reasonable attorneys’ fees), or any
claim therefor, arising out of (i) any negligence by Sublandlord; (ii) any
accident, injury or damage whatsoever caused to any person, or to the property
of any person, occurring outside of Subleased Premises but within or about the
Building, where such accident, damage or injury results or is claimed to have
resulted from an act or omission on the part of the Sublandlord and not from the
negligence or willful misconduct of Subtenant, or (iii) any failure by
Sublandlord to observe or perform any of the terms, covenants or conditions of
(A) the applicable terms of the Master Lease (to the extent such failure
materially adversely affects Subtenant’s use or occupancy of the Subleased
Premises) or (B) this Sublease to the extent required to be observed or
performed by Sublandlord, including any loss, cost, damage or expense any
default under or termination of the Master Lease arising by reason of any such
failure.

 

It is the intent of the parties that Subtenant have access to the Subleased
Premises on a 24/7/365 basis, including use of the Building elevator(s) on a
24/7/365 basis, at no cost or expense to Subtenant. The parties acknowledge that
there is no freight elevator for the Building.

 

14.         Insurance. Subtenant shall at all times during the term hereof keep
in force at its own expense all insurance coverages required to be maintained by
Sublandlord under the Master Lease that are applicable to Subtenant’s use of the
Subleased Premises; subject, however, to certain adjustments in such insurance
coverages as reflected on an insurance certificate provided by Tenant and
approved by Sublandlord and Master Landlord pursuant to a separate letter or
email transmittal. Except as aforesaid, all such insurance shall conform to the
requirements for Sublandlord’s insurance policies under the Master Lease. As
soon as reasonably practicable, Subtenant shall deliver to Sublandlord an
insurance certificate and required endorsements evidencing the insurance
coverages required under this Sublease.

 

15.         Security Deposit / Letter of Credit Security. On execution of this
Sublease, Subtenant shall deliver to Sublandlord an irrevocable letter of credit
(the “Letter of Credit”) in the amount of Two Hundred Fifty Thousand Seven
Hundred Fifty-One and 25/100ths Dollars ($250,751.25) issued in favor of
Sublandlord in such amount, as security for the full and faithful performance of
Subtenant’s obligations under this Sublease. The Letter of Credit shall be an
irrevocable, unconditional letter of credit with an initial term of not less
than one (1) year from the Commencement Date of this Lease. Without further act
or instrument required by Sublandlord, the Letter of Credit shall be
automatically renewed for successive one (1) year periods throughout the
remainder of the Term unless, not less than forty-five (45) days prior to the
then current expiration date of the Letter of Credit, the issuing bank notifies
Sublandlord of its intention not to renew the Letter of Credit. The Letter of
Credit (or any renewal, extension or replacement thereof) shall continue in full
force and effect and shall be maintained in its full face amount for thirty (30)
days beyond the later of (x) expiration of the Term of this Sublease, and (y)
the date Subtenant vacates and surrenders possession of the Subleased Premises
to Sublandlord. The Letter of Credit shall (i) be negotiable and freely
transferable in connection with a sale or transfer by Sublandlord as hereinafter
described; (ii) be issued or confirmed by a banking institution reasonably
acceptable to Sublandlord; (iii) provide for payment of all or any portion of
the face amount of the Letter of Credit to Sublandlord upon the receipt by the
issuing bank of a sight draft presented to the issuing bank by a representative
of Sublandlord; and (iv) be otherwise in form and substance reasonably
satisfactory to Sublandlord. Sublandlord's receipt of notice from the issuing
bank of its intention not to renew the Letter of Credit or Subtenant's failure
to deliver a renewal or replacement letter of credit shall entitle Sublandlord
to draw the full face amount of the Letter of Credit and retain such sum as
security hereunder in lieu of the Letter of Credit. Subtenant's failure to
maintain the Letter of Credit shall constitute a default under this Sublease. If
Subtenant defaults in its obligations under this Sublease beyond any applicable
notice and cure period, Sublandlord may draw upon the Letter of Credit to the
extent required for the payment of any sum as to which Subtenant is in default
or for any sum which Sublandlord may have expended or may be required to expend
by reason of Subtenant’s default. In the event Sublandlord draws upon the Letter
of Credit and applies or retains any portion or all of the sum received upon
such draw, Subtenant shall forthwith take such action as is necessary to restore
the face amount of the Letter of Credit so that at all times the amount of the
Letter of Credit shall be equal to Two Hundred Fifty Thousand Seven Hundred
Fifty-One and 25/100ths Dollars ($250,751.25). Upon expiration of the Sublease
Term or earlier termination of this Sublease, and after Subtenant has delivered
possession of the Subleased Premises in the condition required by this Sublease
and otherwise fully performed its covenants and obligations hereunder,
Sublandlord shall promptly return the Letter of Credit to Subtenant.

 

 

 

  

Notwithstanding the foregoing provisions of this Sublease, Subtenant may deposit
with Sublandlord the sum of $75,000.00 (the "Temporary Security Deposit ") upon
Tenant's execution and submission of the Lease; provided, however, that
Subtenant agrees that it shall, on or before the forty-fifth (45th) day next
following the date that this Sublease has been fully executed and delivered,
deliver the Letter of Credit, as hereinabove defined, in the form required under
this Section 15 to Sublandlord, whereupon Sublandlord shall promptly return the
Temporary Security Deposit to Subtenant. Sublandlord shall deposit the Temporary
Security Deposit in its general bank account and will have no obligation to
accrue or pay to Subtenant interest on such Temporary Security Deposit. The
Temporary Security Deposit is security for performance of Subtenant’s
obligations under this Sublease. If Subtenant defaults with respect to any
provision of this Sublease, including but not limited to the provisions relating
to the payment of Rent, and such default continues after any applicable notice
and cure period under this Sublease, Sublandlord, without prejudice to any other
right or remedy it may have, may use, apply or retain all or any part of the
Temporary Security Deposit for the payment of any rent or additional rent, or
the cure of any such default. If Subtenant fails for any reason to deliver to
Landlord the Letter of Credit by the forty-fifth (45th) day next following the
date that this Sublease has been fully executed and delivered, Subtenant's
failure to deliver the Letter of Credit by such date shall constitute an event
of default under this Sublease, notwithstanding that no other default on the
part of Subtenant may then exist under this Sublease; and Sublandlord shall be
entitled to exercise all rights and remedies available to Sublandlord under this
Sublease on account of such event of default.

 

16.         Brokers. Each party represents that no real estate broker, salesman,
or agent other than JLL (“Sublandlord’s Broker) and Newmark Grubb Knight Frank
(“Subtenant’s Broker”) were instrumental in procuring this Sublease. Each party
will indemnify the other against any claim or commission brought by a party
other than the Sublandlord’s Broker and the Subtenant’s Broker. If and only if
this Sublease is fully executed, Sublandlord shall pay a commission to
Sublandlord’s Broker and/or Subtenant’s Broker pursuant to one or more separate
agreements with the brokers.

 

17.         Notice. It is expressly agreed that any notice required or desired
to be sent shall be delivered to the following addresses and shall be deemed
given (i) three (3) business days after deposited in the US mail and sent by
United States Certified and/or Registered Mail, postage prepaid, return receipt
requested, or (ii) on the day delivered if by hand, or (iii) when delivered if
by overnight delivery by a professional delivery service:

 

If to Sublandlord: If to Subtenant:     Restoration Hardware, Inc. At the
Subleased Premises Attn: Eugene Chang  

VP & Senior Counsel

15 Koch Road | Corte Madera, CA 94925

Direct: 415.945.5996 | echang@rh.com

With a copy to:

 

Mario J. Suarez, Esq.

Thompson Hine LLP

335 Madison Avenue (12th Floor)

New York, New York 10017

 

Additionally, Subtenant acknowledges that the address to which all payments of
Rent due the Sublandlord should be sent is to the Sublandlord at the
aforementioned Sublandlord address.

 

 

 

 

18.         Attorneys’ Fees. If either party institutes a suit against the other
for violation of or to enforce any covenant or condition of this Sublease, or if
either party intervenes in any suit in which the other is a party to enforce or
protect its interest or rights, the prevailing party shall be entitled to all of
its actual out-of-pocket costs and expenses, including reasonable attorneys’
fees actually incurred.

 

19.         Return of Sublease Premises. At the end of the Term, Subtenant shall
remove its personal property, equipment and trade fixtures from the Subleased
Premises, and shall remove any Specialty Improvements installed by Subtenant and
repair any damage caused by such removal, all in accordance with the terms of
the Master Lease. Sublandlord shall advise Subtenant at the time Sublandlord
provides its approval to Subtenant’s improvements as provided in Section 12
herein which Specialty Improvements, if any, shall be removed upon expiration or
earlier termination of the Sublease. In this Sublease, the term “Specialty
Improvements” shall mean any alterations or improvements that are not “typical”
office improvements or which would not be conducive for use by subsequent office
occupants, and will also include any alterations that (i) perforate, penetrate
or require reinforcement of a floor slab (including, without limitation,
interior stairwells or high-density filing or racking systems), (ii) consist of
the installation of a raised flooring system, (iii) consist of the installation
of a vault or other similar device or system intended to secure the Sublease
Premises or a portion thereof in a manner that exceeds the level of security
necessary for ordinary office space, and (iv) involve material plumbing
connections (such as, for example but not by way of limitation, kitchens,
saunas, showers, and executive bathrooms outside of the Building core and/or
special fire safety systems).

 

20.         Early Termination of the Master Lease. If the Master Lease should
terminate prior to the Expiration of the Term, through no fault of Sublandlord,
Sublandlord shall have no liability to Subtenant. Where the Master Lease grants
Sublandlord any discretionary right to terminate the Master Lease as to all or
any portion of the Master Lease Premises, whether due to casualty, condemnation,
or otherwise, Sublandlord shall be entitled to exercise or not exercise such
right in its sole and absolute discretion, but only after notice to Subtenant.

 

21.         Signage. Subject to the consent of Sublandlord, which consent shall
not be unreasonably withheld, and the consent of the landlord under the Master
Landlord, Subtenant, at Subtenant’s sole cost and expense, may maintain signs in
the elevator lobbies of each floor that the Subleased Premises is located on;
and a sign in the Building lobby as approved in a separate sketch initialed by
Sublandlord; and a proportionate share of the listings in the Building’s
directory.

 

22.         Exclusive License to Use Roof Deck. Subject to applicable laws,
governmental codes, regulations and requirements and ordinances (collectively,
“Law”) and the applicable provisions of the Master Lease, Subtenant and its
employees and invitees shall have an exclusive license to use the Building’s
rooftop deck during the Term of this Sublease in accordance with the following
terms and conditions:

 

a. Subtenants use or occupancy of the rooftop deck shall be in accordance with
and subject to the applicable provisions of the Sublease and Master Lease, as if
the rooftop deck were a part of the Subleased Premises, except that (1) the
rooftop deck shall not be included in the calculation of Subtenant’s
proportionate share of Operating Expenses and Real Estate Taxes and no
additional Base Rent is due for Subtenant’s use or occupancy of the rooftop
deck, and (2) nothing contained herein shall be deemed to grant Subtenant (or
any person claiming by, through or under Subtenant), a leasehold interest in the
rooftop deck. Subtenant’s license to the use of the rooftop deck is limited to
the existing rooftop deck, but not the underlying components comprising the roof
or the parapets, copings and railings enclosing the roof or the areas housing
equipment located on the roof. Subtenant’s access to the rooftop deck is not
assignable or transferable except in connection with an assignment of this
Sublease or a subletting of the Subleased Premises in accordance with, or
otherwise permitted pursuant to, the terms and conditions of Section 10 of this
Sublease. Subtenant’s use or occupancy of the rooftop desk shall be subject to
inspection, maintenance, repair, alteration, additions, improvements and other
uses of Sublandlord or Master Landlord, and Subtenant shall not use or occupy,
or suffer any use or occupancy of, the rooftop deck in a manner that impairs,
infringes or interferes with such rights of Sublandlord or Master Landlord or
any equipment now or hereafter housed on the rooftop. Subtenant acknowledges
that the Building has an alarm system, and Subtenant shall (i) reasonably
cooperate with Sublandlord to coordinate the alarm system with Subtenant’s use
or occupancy of the rooftop deck, and (ii) be solely responsible for any costs
associated with any alterations, modifications, changes or additions to the
alarm system to accommodate Subtenant’s use or occupancy of the rooftop deck.

 

 

 

 

b. Subtenant’s use and occupancy of the rooftop deck shall be limited to
Subtenant’s employees and invitees for only passive purposes like eating or
lounging, and in no event shall any general public access be allowed on the
rooftop deck. Subtenant shall not (1) store or keep any equipment, supplies,
refuse or merchandise on the rooftop deck, except Subtenant may place outdoor
furniture and plants on the rooftop deck, (2) use the rooftop deck for lodging;
(3) place anything on the parapets, ledges or railings on the perimeter of the
rooftop deck, (4) overload the rooftop deck, or (5) make any improvements,
additions or installations to or on, or otherwise penetrate, the rooftop deck.

 

c. Sublandlord (1) makes no representation or warranty whatsoever with respect
to the permitted use or occupancy of the rooftop deck or access thereto, or the
condition of the rooftop deck, or the legality of its use or occupancy, nor its
fitness for a particular purpose, and (2) shall have no obligation whatsoever to
Subtenant to make any improvements, modifications or alterations or to perform
any maintenance, repair or other work with respect to the rooftop deck or access
thereto and shall bear no cost with respect to the rooftop deck or access
thereto. In no event shall Subtenant have any manner of recourse against
Sublandlord, nor any right to abate or set-off against Base Rent or any other
amounts owed under the Sublease, if Subtenant’s use or occupancy of the rooftop
deck or access thereto violates the Law or the Master Lease or is interrupted in
connection with the maintenance, repair, restoration, or alteration thereon or
therein.

 

d. Subtenant acknowledges and expressly agrees that any use and occupancy of the
rooftop deck by Subtenant, its employees, invitees, agents, or anyone under
Subtenant’s direction or control (collectively “Subtenant Parties”) shall be at
Subtenant’s sole risk and expense. SUBTENANT FURTHER AGREES TO DEFEND, INDEMNIFY
AND HOLD HARMLESS SUBLANDLORD AND THE MASTER LANDLORD FROM AND AGAINST ANY AND
ALL LOSS, LIABILITY, DEMANDS, JUDGMENTS, AWARDS, EXPENSES (INCLUDING REASONABLE
ATTORNEYS’ FEES), GOVERNMENTAL FINES, PENALTIES AND IMPOSITIONS, CLAIMS,
PROCEEDINGS AND ACTIONS (COLLECTIVELY, “CLAIMS”) WHICH ARISE OR RESULT FROM OR
RELATE TO SUBTENANT PARTIES’ USE OR OCCUPANCY OF, OR ACCESS TO, OR ENTRY ONTO
THE ROOFTOP DECK INCLUDING, WITHOUT LIMITATION, DAMAGE TO PROPERTY OR HARM,
INJURY (INCLUDING DEATH), OR ILLNESS TO PERSONS, OR VIOLATIONS OF LAW OR THE
MASTER LEASE. THE INDEMNIFICATION PROVISIONS OF THIS SECTION 21 ARE IN ADDITION
TO THE INDEMNIFICATION PROVISIONS OF SECTION 13 IN THIS SUBLEASE. TO THE FULLEST
EXTENT ALLOWED BY LAW, SUBTENANT HEREBY IRREVOCABLY WAIVES AND UNCONDITIONALLY
RELEASES AND FOREVER DISCHARGES SUBLANDLORD AND MASTER LANDLORD AND THEIR
RESPECTIVE AGENTS, PARTNERS, DIRECTORS, SHAREHOLDERS, EMPLOYEES, AND PRINCIPALS
CLAIMS ARISING OUT OF SUBTENANT PARTIES’ ACCESS TO AND/OR USE OR OCCUPANCY OF
THE ROOFTOP DECK. The provisions of this paragraph shall survive the expiration
or termination of this Sublease.

 

e. Subtenant will cause its insurance (as required hereunder) to include
Subtenant’s use and occupancy of the rooftop deck.

 

f. If (1) Subtenant’s use or occupancy of the rooftop deck constitutes a default
or breach under the Master Lease, or (2) a governmental violation is issued (or
threatened) against the Building relating to Subtenant’s use or occupancy, or
manner of use or occupancy, of the rooftop deck, Subtenant must either
immediately cease and desist its use and occupancy of the rooftop deck or cure
any such default, breach or violation, as applicable, and provide Sublandlord
with evidence of such curing and discharge.

 

23.         Miscellaneous. This Sublease shall be construed and interpreted in
accordance with the laws of the State of New York. All obligations under this
Sublease are performable in the county or other jurisdiction where the Subleased
Premises is located, which shall be venue for all legal actions. If any term or
provision of this Sublease shall be invalid or unenforceable, then such term or
provision shall be automatically reformed to the extent necessary to render such
term or provision enforceable, without the necessity of execution of any
amendment or new document. The remainder of this Sublease shall not be affected,
and each remaining and reformed provision of this Sublease shall be valid and
enforced to the fullest extent permitted by law. The headings and titles to the
Sections of this Sublease are for convenience only and shall have no effect on
the interpretation of any part of this Sublease. The words “include”,
“including” and similar words will not be construed restrictively to limit or
exclude other items not listed. All of the covenants and agreements herein
contained shall be binding upon and shall inure to the benefit of the parties
hereto and their respective heirs, representatives, successors and permitted
assigns. All understandings, discussions, and agreements previously made between
the parties, written or oral, are superseded by this Sublease, and neither party
is relying upon any warranty, statement or representation not contained in this
Sublease. This Sublease may be modified only by a written agreement signed by
Sublandlord and Subtenant. Both parties covenant and agree to keep the financial
terms of this Sublease confidential, disclosing them only to their accountants,
consultants, shareholders, and legal advisors as may be reasonably necessary.

 

[SIGNATURES APPEAR ON THE FOLLOWING PAGE]

 

 

 

  

IN WITNESS WHEREOF, Sublandlord and Subtenant have executed this Sublease as of
the date first written above, intending to be bound hereby.

 

SUBLANDLORD:       Restoration Hardware, Inc., a Delaware corporation        
By: /s/ Karen Boone   Name: Karen Boone   Title: CFO         SUBTENANT:      
Intercept Pharmaceuticals, Inc., a Delaware corporation         By: /s/ Mark
Pruzanski   Name: Mark Pruzanski   Title: CEO  

 

 

 

 

EXHIBIT A

 

Master Lease

 

INTENTIONALLY OMITTED

 

 

 

  

EXHIBIT B

 

Definition of Operating Expenses

 

All costs of operation, maintenance, repair, replacement and management of the
Building (including the amount of any credits which Sublandlord may grant to
particular subtenants of the Building in lieu of providing any standard services
or paying any standard costs described in this definition for similar tenants),
as determined in accordance with generally accepted accounting principles,
including the following costs by way of illustration, but not limitation: water
and sewer charges; insurance charges of or relating to all insurance policies
and endorsements deemed by Sublandlord to be reasonably necessary or desirable
and relating in any manner to the protection, preservation, or operation of the
Building or any part thereof; utility costs, including, but not limited to, the
cost of heat, light, power, steam, gas; waste disposal; the cost of janitorial
services; the cost of security and alarm services (including any central station
signaling system); costs of cleaning, repairing, replacing and maintaining the
common areas, including parking and landscaping, window cleaning costs; labor
costs; costs and expenses of managing the Building including management fees;
air conditioning maintenance costs; elevator maintenance fees and supplies;
material costs; equipment costs including the cost of maintenance, repair and
service agreements and rental and leasing costs; purchase costs of equipment;
current rental and leasing costs of items which would be capital items if
purchased; tool costs; licenses, permits and inspection fees; wages and
salaries; employee benefits and payroll taxes; accounting and legal fees; any
sales, use or service taxes incurred in connection therewith. In addition,
Sublandlord shall be entitled to recover, as additional rent (which, along with
any other capital expenditures constituting Operating Expenses, Sublandlord may
either include in Operating Expenses or cause to be billed to Subtenant along
with Operating Expenses and Real Estate Taxes but as a separate item),
Subtenant’s proportionate share of: (i) an allocable portion of the cost of
capital improvement items which are reasonably calculated to reduce operating
expenses; (ii) the cost of fire sprinklers and suppression systems and other
life safety systems; and (iii) other capital expenses which are required under
any governmental laws, regulations or ordinances which were not applicable to
the Building at the time it was constructed; but the costs described in this
sentence shall be amortized over the reasonable life of such expenditures in
accordance with such reasonable life and amortization schedules as shall be
determined by Sublandlord in accordance with generally accepted accounting
principles, with interest on the unamortized amount at one percent (1%) in
excess of the Wall Street Journal prime lending rate announced from time to
time. Expenses shall not include depreciation or amortization of the Building or
equipment in the Building except as provided herein, loan principal payments,
costs of alterations of tenants’ premises, leasing commissions, interest
expenses on long-term borrowings or advertising costs.