Exhibit 10.3


 


FIRST LEASE EXTENSION AGREEMENT


 


Building #7, Suite H


1430 O’Brien Drive


Menlo Park, California 94025


 


THIS LEASE EXTENSION AGREEMENT (this “Agreement”) is made and entered
into on March 18, 2008 by and between MENLO BUSINESS PARK, LLC, a California
limited liability company (“Lessor”), and DEPOMED, INC., a California
corporation (“Lessee”).


 


RECITALS


 


A.            Lessor and
Lessee entered into a Lease dated July 28, 2006 (the “Lease”) of the
premises referred to as Building #7, Suite H, located at 1430 O’Brien
Drive, Menlo Park, California 94025, more particularly described on Exhibit “A”
attached to the Lease and incorporated by reference herein (the “Premises”).  The Premises contain approximately 9,255
rentable square feet of space.


 


B.            The expiration
date of the initial term of the Lease is June 30, 2009.  Lessor and Lessee wish to extend the
expiration date of the initial term of the Lease, subject to the terms and
conditions set forth herein.


 


AGREEMENT


 


NOW
THEREFORE, in consideration of the mutual covenants contained herein, the
parties agree as follows:


 


1.             Defined Terms.  Terms defined in the Lease and used in this
Agreement shall have the meaning ascribed to them in the Lease.


 


2.             Extension of
Initial Term.


 


(a)           The term of the Lease is
hereby extended for a period of thirty-one (31) calendar months commencing on July 1,
2009 and ending on January 31, 2012 (the “First Extension Term”).  The First Extension Term shall be upon all of
the same terms and conditions of the Lease, except that the Monthly Base Rent
payable by Lessee to Lessor during the First Extension Term shall be as set
forth in Paragraph 3 hereof.


 


(b)           The option to extend
provided for in Paragraph 3 of the Lease shall be for one (1) period of
sixty (60) calendar months immediately following the expiration of the First
Extension Term and shall otherwise be upon the same terms and conditions as set
forth in Paragraph 3 of the Lease.


 

















 


3.             Monthly Base
Rent.  Lessee shall pay to Lessor
Monthly Base Rent during the First Extension Term, in monthly installments in
advance on a triple net basis in lawful money of the United States, as follows:


 


(a)           Commencing on July 1,
2009, and continuing through June 30, 2010, the sum of Twenty
Thousand Eight Hundred Twenty-Three and Seventy-Five Hundredths Dollars
($20,823.75) per month ($2.25/square foot/NNN).


 


 (b)          Commencing
on July 1, 2010 (the “Rental Adjustment Date”), on each anniversary
date of the commencement the Monthly Base Rent shall be adjusted to reflect any increases in the cost of living.  The adjustment shall be calculated upon the
basis of the United States Department of Labor, Bureau of Labor Statistics
Consumer Price Index, all items,  for all
Urban Consumers - San Francisco-Oakland-San Jose (1982-84=100), hereafter
referred to as the “Index.”  The Index
for said subgroup published most recently as of the end of the calendar month
immediately preceding the month in which the commencement date of the Extension
Term occurs shall be considered the “Base Index.”


 


(c)           The Monthly Base Rent
shall be adjusted as of the Rental Adjustment Date to an amount equal to the
product obtained by multiplying the Monthly Base Rent for the Premises
commencing on July 1, 2010 referred to in Paragraph 3(a) above),
by a fraction, the numerator of which is the Index most recently published as
of the end of the calendar month immediately preceding the Rental Adjustment
Date and the denominator of which is the base Index; provided that in no event
shall the Monthly Base Rent be increased on the Rental Adjustment Date to an
amount less than three percent (3%) per annum or more than six percent (6%) per
annum of the Monthly Base Rent immediately payable before the Rental Adjustment
Date.  The Monthly Base Rent as so adjusted
shall continue through January 31, 2012, the expiration date of the
initial Term of the Lease.


 


(d)           When the new Monthly Base Rent is determined for the Rental Adjustment
Date, Lessor shall give Lessee written notice of the amount of the new Monthly
Base Rent and how the new Monthly Base Rent figure was computed in accordance
with subparagraphs 3(b) and 3(c) above.  Lessee shall pay to Lessor retroactively any
unpaid increase in Monthly Base Rent due from and after the Rental Adjustment
Date.  If the Index does not exist on the
Rental Adjustment Date in the same format as referred to in subparagraph 3(b) above,
Lessor shall substitute in lieu thereof an index reasonably comparable to the
Index referred to above which is acceptable to Lessee and which is then
published by the Bureau of Labor Statistics, or successor or similar
governmental agency, or if no governmental agency then publishes an index,
Lessor shall substitute therefor any index commonly accepted which is published
by a reputable private organization.


 


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(e)           Monthly Base Rent for any partial month shall be prorated on the basis of
the number of calendar days in such month.


 


4.             Additional
Rent; Operating Expenses and Taxes.  In addition to the Monthly Base Rent payable
by Lessee pursuant to Paragraph 3 above, Lessee shall pay to Lessor during the
First Extension Term, as Additional Rent, Operating Expenses and Taxes pursuant
to Paragraph 5 of the Lease.


 


5.             Condition of
the Premises.  Lessee is
currently in possession of the Premises and is conducting business thereon
pursuant to the Lease.  Lessee agrees to
accept the Premises in its “as is” condition at the commencement of the
Extension Term, subject to the performance by Lessor of Lessor’s obligations
under Paragraph 14(a) of the Lease. 
Lessee acknowledges that Lessor has not inspected the Premises as a
condition to entering into this Agreement. Accordingly, Lessee agrees that the
execution and delivery of this Agreement by Lessor shall not constitute the
approval by Lessor of any alterations to the Premises of which Lessor lacks
actual knowledge, or the waiver by Lessor of any provisions of the Lease
relating to alterations.


 


6.             Security
Deposit.  Lessor acknowledges that
Lessor has received from Lessee and is currently holding the
sum of Fifteen Thousand Seven Hundred Thirty-Three and Fifty Hundredths Dollars ($15,733.50) in cash (the “Security Deposit”), as security for Lessee’s faithful
performance of Lessee’s obligations under the Lease.  Lessor shall continue to hold the Security
Deposit during the remainder of the initial term and during the First Extension
Term pursuant to Paragraph 7 of the Lease.


 


7.             Real Estate
Brokers.  Lessor
shall pay a leasing commission to Tarlton Properties, Inc., who has acted
as exclusive leasing agent for Lessor in connection with this Agreement,
pursuant to a separate agreement between Lessor and said broker.  Lessor shall also pay leasing commissions to
GVA Kidder Mathews, who have acted as leasing agents for Lessee in connection
with this Agreement, pursuant to an agreement between Lessor and said
brokers.  Each party represents and
warrants to the other party that it has not had any dealings with any real
estate broker, finder, or other person with respect to this Agreement other
than the above named brokers.  Each party
shall hold harmless the other party from all damages, expenses, and liabilities
resulting from any claims that may be asserted against the other party by any
broker, finder, or other person with whom the other party has or purportedly
has dealt, other than the above named brokers.


 


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8.             Notices.  Paragraph 24, Notices, of the Lease is
amended to read as follows:


 


“24.         Notices.  All notices, statements, demands, requests,
or consents given hereunder by either party to the other shall be in writing
and shall be personally delivered or sent by United States mail, registered or
certified, return receipt requested, postage prepaid, and addressed to the
parties as follows:


 


	
  Lessor:

  	
  Menlo Business Park, LLC

  
	
   

  	
  C/o Tarlton Properties, Inc.

  
	
   

  	
  955 Alma Street

  
	
   

  	
  Palo Alto, California 94301

  
	
   

  	
   

  
	
   

  	
  Attention: John C. Tarlton

  
	
   

  	
  Telephone: (650) 330-3600

  
	
   

  	
   

  
	
  Lessee:

  	
  Depomed, Inc.

  
	
   

  	
  1330 O’Brien Drive

  
	
   

  	
  Menlo Park, California 94025

  
	
   

  	
   

  
	
   

  	
  Attention:

  	
  Carl
  Pelzel

  
	
   

  	
  Telephone:

  	
  650-462-5900

  



 


All such notices or other communications
given hereunder shall be addressed to the parties to such other address as
either party may have furnished to the other as a place for the service of
notice.  Notices shall be deemed given
upon receipt or attempted delivery where delivery is not accepted.”


 


9.             Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.


 


10.           Continuing
Effect.  The parties acknowledge that
the Lease remains in full force and effect as amended hereby, and with the
initial term extended as provided herein.


 


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IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date set
forth above.


 


	
   

  	
  “Lessor”

  
	
   

  	
   

  
	
   

  	
  MENLO BUSINESS PARK, LLC

  
	
   

  	
  a California limited
  liability company

  
	
   

  
	
   

  
	
   

  	
  By: 

  	
  /s/ J.O. Oltmans, II

  
	
   

  	
   

  	
  J. O. Oltmans, II, Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ James R. Swartz

  
	
   

  	
   

  	
  James R. Swartz, Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  “Lessee”

  
	
   

  	
   

  
	
   

  	
  DEPOMED, INC.,

  
	
   

  	
  a California corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Carl A. Pelzel

  
	
   

  	
   

  	
    Carl Pelzel,
  President and CEO

  



 


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