Document:

Exhibit 10.44

 

 

SEVERANCE PAY PLAN OF

FIRST WIND ENERGY, LLC

 

I.              PURPOSE

 

First
Wind Energy, LLC (“Company”) has established the Severance Pay Plan of First
Wind Energy, LLC (the “Plan”) to provide severance pay to certain individuals
whose employment with the Company is involuntarily terminated under certain
circumstances, as described herein. The Company is a subsidiary of First Wind
Holdings LLC (“First Wind”).

 

This
Plan supersedes any prior separation pay plan, program, or policy, whether
written or oral, previously applied by the Company to individuals whose
employment was involuntarily terminated.

 

This
document constitutes both the Plan Document and the Summary Plan Description
required under the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”).  In the event of any conflict
between the provisions of this document and any other communication, the
provisions of this document will govern.

 

II.            ELIGIBILITY

 

A.
           Except as provided below,
any individual classified as a regular full-time employee by the Company will
be eligible for benefits under this Plan (“Participant”) if:

 

1.
            the Company notifies the
individual that his or her employment will be involuntarily terminated; and

 

2.
            the individual remains
employed through the date specified by the Company; and

 

3.
            the individual remains an
employee in good standing with the Company until the termination of employment
date designated by the Company; and

 

4.             the individual
executes and complies with a release agreement as described in Section IV
(“Release”) within 75 days of the date of such individual’s termination of
employment, and does not revoke such release (if revocable in accordance with
its terms).

 

B.
           An individual will not be
eligible for benefits under this Plan if:

 

1.
            the individual has, pursuant
to a written employment agreement, an enforceable right to the continuation of
salary or the payment of other termination benefits in the event of the
termination of his or her employment; or

 

 

2.
            the individual has, in the opinion
of the Company and within its sole discretion, exhibited unsatisfactory job
performance or has engaged in unsatisfactory behavior, misconduct, acts of
dishonesty, or material violations of company policy, including but not limited
to violation of the Employee Code of Conduct, the Code of Business Conduct and
Ethics Policy, or other Company policy promulgated from time to time; or

 

3.
            the individual’s employment
is terminated in connection with the sale or other disposition of a business
unit, division or other assets, a restructuring of First Wind or a subsidiary,
outsourcing of any aspect of First Wind or a subsidiary’s business or other
similar event or transition and the individual is offered continued employment
following such transaction or event by First Wind or a third party engaged with
First Wind in such transaction or event; or

 

4.
            the individual’s termination
is the result of the employee’s voluntary resignation, retirement or other
voluntary termination of employment, the employee’s  failure to return from a vacation or an
approved leave of absence, or the employee’s death or disability.

 

III.           BENEFITS

 

A.
           Separation
Pay

 

The
amount of separation pay a Participant will receive will depend upon his/her
position in the Company and his/her length of service as outlined in the
applicable Annex for the individual’s position. Notwithstanding the amount that
may be specified pursuant to the applicable Annex, the Plan Administrator may
direct the payment of a lesser amount of severance benefits, to the extent that
the Plan Administrator shall determine an adjustment is warranted by the
circumstances, including, but not limited to, the conduct or performance of the
individual while an employee, the extent of notice of termination provided, and
the extent to which the individual has received prior performance reviews and
the opportunity to improve such performance.

 

“Salary” for purposes of
Separation Pay under this Plan will be calculated on the basis of the
Participant’s annual base salary exclusive of any bonus, overtime, commissions,
incentives or other pay on the last day of his or her employment with the
Company.

 

So
long as an amount payable hereunder is not deferred compensation subject to Section 409A
of the Internal Revenue Code of 1986, as amended (the “Section 409A”), payments
will be made in the form of salary continuance consistent with the Company’s  payroll practice, or in a lump sum, at the
sole option of the Company. Notwithstanding the foregoing, no payment of
benefits will commence until all conditions to the payment of such benefits
shall have been satisfied, including the expiration of the revocation period,
if any, specified in the Participant’s Release. It is intended that any amount
payable hereunder will not be deferred compensation subject to the provisions
of Section 409A, due to the nature of the Plan and the ability of the
Company to take the actions specified in Article V, and because the
benefits hereunder are designed to satisfy the provisions of the special
exception available under the Section 409A regulations for separation pay
that is available only upon an involuntary separation from service. To the
extent that any portion of the benefits payable hereunder to a given
Participant exceeds

 

2

 

the amount that may be paid
at the relevant time under such special rule, the maximum permissible amount
shall be paid in accordance with the such rule and the provisions set
forth above, and any such excess amount shall be payable in a single lump sum
not later than 90 days after the date the Participant’s employment terminates
(or, if at that time, the Company is treated as a publicly traded corporation
and the Participant is a specified employee, in each case, within the meaning of
Section 409A, such lump sum payment shall be made six months and one day
following the date of such Participant’s separation from service.)

 

The
Company will withhold all applicable Federal, State, and local payroll taxes
from any payment(s) made under this Plan.

 

B.
           Health
Coverage. A Participant may elect COBRA continuation
coverage, at his or her own expense for a period of time up to the maximum
allowable by applicable federal law. The Participant bears the full cost of
Cobra coverage; provided, however, that, to the extent that the Participant is
eligible to apply for any available government subsidy or other government
provides assistance in respect of paying any portion of the premiums to elect
COBRA coverage, the Plan Administrator shall provide the Participant with any
required notice or other information. Provision of any such notice or
information shall not be construed as a representation, promise or other
assertion that the Participant is eligible for or will receive such assistance.

 

IV.           RELEASE REQUIREMENT

 

Any
benefits under this Plan are conditioned upon the Participant’s execution of
documents the Company deems necessary, including, but not limited to, timely
execution and delivery and, if applicable, non-revocation of the Release provided
by the Company.

 

V.            AMENDMENT OR TERMINATION

 

The
Company reserves the right to amend or terminate this Plan at any time, with or
without notice.

 

VI.           SOURCE OF BENEFITS

 

Benefits
under this Plan will be paid from the general assets of the Company. The
Company will not segregate assets or funds with respect to benefits payable
under this Plan.

 

VII.         ADMINISTRATION

 

The
Company is designated as the Plan Administrator for the Plan. The Company is
responsible for the operation of the Plan, and may establish such rules and
regulations for the administration of the Plan as it deems necessary.

 

The
Plan Administrator will have full discretionary authority and the exclusive
right (except as to matters which the Company may reserve to itself if it is
not the Plan Administrator) to interpret the Plan terms, to determine
eligibility for benefits, to determine the amount of such benefits, and to
decide all matters arising under the Plan, including the right to remedy
possible

 

3

 

ambiguities,
inconsistencies, or omissions. All determinations of the Plan Administrator
with respect to any matter under the Plan will be final, conclusive and binding
on all persons.

 

The
Company may appoint or employ such persons as it deems necessary to render
advice with respect to any responsibility the Plan Administrator may have under
the Plan.

 

If
the Participant dies before the payment of all or some of his or her benefits
under the Plan, all unpaid benefits will be paid to the Participant’s spouse,
if any. In the absence of a spouse, those benefits will be paid to the
Participant’s estate.

 

VIII.        CLAIMS PROCEDURE

 

You
or your Beneficiary may file a written claim for benefits under this Plan with
the Plan Administrator at any time. If the Plan Administrator denies your claim
to any extent, a written notification must be sent to you within 90 days,
unless special circumstances delay notification. If a delay occurs, you will be
given written notice, prior to the end of the 90-day period, of the reason for
the delay and a date by which the claim determination is expected, not to
exceed 90 additional days after the end of the 90-day period. If your request
for benefits is denied, you will be notified in writing of:

 

·                                         The reason for
the denial; and

 

·                                          The Plan
provision on which the denial is based; and

 

·                                          A description
of any information needed to change the decision to deny the claim and why it
is needed; and

 

·                                          An explanation
of the Plan’s review process and the time limits applicable to filing a request
for review.

 

Within
60 days of receiving notice or learning of the denial of your claim, or if you
haven’t heard anything within 90 days after you sent in your claim, you may
submit a written request for review to the Plan Administrator. You may submit
written comments, documents, records, and any other information necessary to
support your claim. You are entitled to review Plan documents and to have
anyone you wish represent you. The Plan Administrator will generally respond
with a decision within 60 days of receiving your request for review, unless
special circumstances require an extension. In the event of an extension, the
Plan Administrator will respond with a decision not more than 120 days after
receiving your request for review. If your request is denied, you will receive
a written notice of the reason for the denial, reference to the Plan provision
on which the denial is based and a statement informing you of your right to
review the Plan documents relevant to your claim for benefits.

 

Note
that you or a Beneficiary generally cannot seek a judicial review of a denial
of benefits, or bring any action in any court to enforce a claim for benefits,
before you or a Beneficiary file a claim for benefits and exhaust your rights
to review as described above.

 

4

 

IX.            GENERAL INFORMATION:

 

	
  Plan Name:

  	
   

  	
  Severance Pay Plan of
  First Wind Energy, LLC

  
	
   

  	
   

  	
   

  
	
  Type of Plan:

  	
   

  	
  Welfare
  Benefits—Involuntary Severance

  
	
   

  	
   

  	
   

  
	
  Plan Number:

  	
   

  	
  001

  
	
   

  	
   

  	
   

  
	
  Effective Date:

  	
   

  	
  November 1, 2009

  
	
   

  	
   

  	
   

  
	
  Employer Identification Number:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Plan Sponsor and Plan

  	
   

  	
  First Wind Energy, LLC

  
	
   

  	
   

  	
   

  
	
  Administrator:

  	
   

  	
  First Wind Energy, LLC

  
	
   

  	
   

  	
   

  
	
  Agent for Service of

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Legal Process:

  	
   

  	
  First Wind Energy, LLC

  

 

X.            ERISA RIGHTS

 

A
Participant under this Plan is entitled to certain rights and protections under
the Employee Retirement Income Security Act of 1974 (“ ERISA”).  ERISA provides that all Plan Participants are
entitled to:

 

·                                          examine,
without charge, at the Plan Administrator’s office and at other specified
locations, such as worksites, all Plan documents and copies of all documents
filed by the Plan with the U.S. Department of Labor; and

 

·                                          obtain copies
of all Plan documents and other Plan information upon written request to the
Plan Administrator may make a reasonable charge for the copies.

 

In
addition to creating rights for Plan Participants, ERISA imposes duties upon
the people who are responsible for the operation of the individual benefit
plan. The people who administer this Plan, called “fiduciaries” of the Plan,
have a duty to do so prudently and in the interest of Plan Participants and
beneficiaries. No one, including the Company or any other person, may dismiss a
Participant or otherwise discriminate against a Participant in any way to
prevent that person from obtaining a benefit or exercising his or her rights
under ERISA.

 

If
a claim for a benefit is denied in whole or in part, a Participant must receive
a written explanation of the reason for the denial. The Participant has the
right to have the Plan Administrator review and reconsider the claim.

 

Under
ERISA, there are steps a Participant can take to enforce the above rights. For
instance, if a Participant requests material from the Plan and does not receive
them within 30

 

5

 

days, the Participant may
file suit in a federal court. In such a case the court may require the Plan
Administrator to provide the materials and pay the Participant up to $110 a day
until the person receives the materials, unless the materials were not sent
because of reasons beyond the control of the Administrator.

 

If
a Participant has a claim for benefits which is denied or ignored, in whole or
in part, the Participant may file suit in a state or federal court. If it
should happen that Plan fiduciaries misuse this Plan’s money, or if a
Participant is discriminated against for asserting his or her rights, the
Participant may seek assistance from the U.S. Department of Labor, or may file
suite in a federal court. The court will decide who should pay court costs and
legal fees. If the Participant is successful, the court may order the person
who was sued to pay these costs and fees. If the Participant loses, the court
may order the Participant to pay these costs and fees (for example, if it finds
the Participant’s claim is frivolous).

 

If
a Participant has any questions about this Plan, the person should contact the
Plan Administrator. If a Participant has any questions about this statement or
about his or her rights under ERISA, that person should contact the nearest
office of the Employee Benefits Security Administration, U.S. Department of
Labor, listed in the telephone directory, or the Division of Technical
Assistance and Inquiries, Employee Benefits Security Administration, U.S.
Department of Labor, 200 Constitution Avenue, N.W., Washington, D.C. 20210.

 

	
  Executed this 1st day of
  November, 2009

  	
   

  
	
   

  	
   

  
	
  FIRST WIND ENERGY, LLC

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By

  	
  /s/ Lori Erickson

  	
   

  
	
   

  	
   

  
	
  Lori Erickson

  	
   

  
	
   

  	
   

  
	
  Title:  Senior Vice President, Human Resources

  	
   

  
			

 

6

 

Annex A

 

	
   

  	
   

  	
  Minimum

  	
   

  	
   

  	
   

  	
  Maximum

  
	
  Position Level

  	
   

  	
  Severance

  	
   

  	
  Plus

  	
   

  	
  Severance

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  All employees below the
  level of Vice President

  	
   

  	
  2 weeks

  	
   

  	
  1 week for every full year of

  	
   

  	
  6 months

  
	
   

  	
   

  	
   

  	
  service

  	
   

  	
   

  

 

7

 

Annex-
Vice President

 

	
   

  	
   

  	
  Minimum

  	
   

  	
   

  	
   

  	
  Maximum

  
	
  Position Level

  	
   

  	
  Severance

  	
   

  	
  Plus

  	
   

  	
  Severance

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Vice President

  	
   

  	
  3 months

  	
   

  	
  1 month for every full year

  	
   

  	
  9 months

  
	
   

  	
   

  	
   

  	
   

  	
  of service

  	
   

  	
   

  

 

8

 

Annex
–Senior Vice President and Executive Vice President

 

	
   

  	
   

  	
  Minimum

  	
   

  	
   

  	
   

  	
  Maximum

  
	
  Position Level

  	
   

  	
  Severance

  	
   

  	
  Plus

  	
   

  	
  Severance

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Senior Vice President

  	
   

  	
  6 months

  	
   

  	
  1 month for every full year

  	
   

  	
  12 months

  
	
   

  	
   

  	
   

  	
   

  	
  of service

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Executive Vice President

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

9

 

Annex –President and Chief
Executive Officer

 

	
   

  	
   

  	
  Minimum

  	
   

  	
   

  	
   

  	
  Maximum

  
	
  Position Level

  	
   

  	
  Severance

  	
   

  	
  Plus

  	
   

  	
  Severance

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  President

  	
   

  	
  12 months

  	
   

  	
  1 month for every full year

  	
   

  	
  18 months

  
	
   

  	
   

  	
   

  	
   

  	
  of service

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  CEO

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

10EXHIBIT 10.26

 

SUBLEASE AGREEMENT

 

4820 Eastgate Mall, San Diego, California 92121

 

This Sublease (“Sublease”)
is made as of the
              
day of December, 2009 (the “Effective Date”)
by and between AMYLIN PHARMACEUTICALS, INC., a Delaware corporation (“Sublessor”), and KRATOS DEFENSE & SECURITY
SOLUTIONS, INC., a Delaware corporation (“Sublessee”).

 

Recitals

 

A.            Pursuant
to that certain Deed of Lease dated March 6, 2007 (the “Lease”), between THE IRVINE COMPANY LLC, a Delaware limited
liability company (as successor in interest to CA-BRIDGE POINTE CORPORATE
CENTRE III LIMITED PARTNERSHIP, a Delaware limited partnership) (“Prime Lessor”), as landlord, and Sublessor, as tenant, as
amended by that certain First Amendment to Lease dated as of May 28, 2008,
between Prime Lessor and Sublessor (the Lease and any amendments thereto are
collectively referred to herein as the “Prime Lease”
and is attached hereto as Exhibit A)
Prime Lessor leased and demised to Sublessor certain premises (the “Leased Premises”) including the building known as 4820
Eastgate Mall (“Building 6”), which building is
situated in the City of San Diego, County of San Diego, State of California, in
the project commonly known as Bridge Pointe Corporate Centre (the “Project”) as depicted 
on and more fully described in the Prime Lease.

 

B.            Sublessor
wishes to sublease to Sublessee and Sublessee wishes to sublease from Sublessor
a portion of the Leased Premises consisting of approximately 31,766 rentable
square feet on the second floor, and 2,158 rentable square feet on the first
floor of Building 6 (hereinafter, the “Sublet Premises”)
as depicted on Exhibit B
attached hereto, under the terms and subject to
the conditions hereinafter set forth, the actual measurement of which will be
confirmed by Sublessor’s architect using the Standard Method for Measuring
Floor Area in Office Buildings published by the Building Owners and Managers
Association International (“BOMA”).  Once
confirmed, any discrepancy between the square footage set forth above and the
actual square footage of the Sublet Premises, the square footage set forth
above shall prevail for all purposes.

 

NOW, THEREFORE, for and in consideration of
the foregoing Recitals and the mutual covenants, promises, and agreements
herein contained, the parties hereto, intending to be legally bound hereby,
covenant and agree as follows:

 

1.             Demise and
Premises.  Sublessor hereby grants
and demises to Sublessee, and Sublessee hereby accepts from Sublessor, subject
to the terms and conditions of this Sublease and the Prime Lease, for the
period set forth in Section 2 below, the Sublet Premises together with the
non-exclusive right to use the parking, driveway areas and all common
facilities, if any, available to Sublessor under the Prime Lease, in common with
Prime Lessor and other tenants of Prime Lessor, and their invitees, licensees,
employees, officers, servants, contractors and visitors.

 

 

2.             Sublease Term.  Sublessor shall deliver possession of the
Sublet Premises to Sublessee on or before December 15, 2009 (the “Delivery Date”). 
Sublessee shall be permitted to begin construction of its improvements
and installation of its furniture, fixtures and equipment after the Delivery
Date.  The term of this Sublease (the “Sublease Term”) shall commence on May 1, 2010 (“Commencement Date”), assuming Sublessor has received both
the consent of the Prime Lessor to this Sublease and the Letter of Credit
(hereinafter defined) and shall end on September 30, 2018 (the “Sublease Expiration Date”). 
Rent shall commence on May 1, 2011 (the “Rent
Commencement Date”). Sublessor shall not be liable to Sublessee for
any loss or damage incurred by Sublessee if Sublessor does not deliver
possession of the Sublet Premises to Sublessee on the Delivery Date; provided,
however, that if Sublessor does not, for any reason, deliver possession of the
Sublet Premises to Sublessee by the anticipated Delivery Date, then (a) Sublessee
shall not be subject to any liability therefor, nor shall such failure affect
the validity of this Sublease, or the obligations of Sublessee hereunder, or
extend the Sublease Term, but in such case, Sublessee shall, except as
otherwise provided herein be entitled to a one (1) day postponement,
without payment of Fixed or Additional Rent during such period, of the Rent
Commencement Date for each day of delay in delivery of the Sublet Premises
until Sublessor delivers possession of the Sublet Premises to Sublessee.  Notwithstanding anything in this Sublease to
the contrary, in the event the Prime Lease is terminated for any reason, this
Sublease Agreement shall also terminate as of the date of termination of the
Prime Lease.  Sublessor shall have no
liability to Sublessee due to the termination of this Sublease Agreement as a
result of the termination of the Prime Lease, provided Sublessor is not in
default of its obligation to pay rent as provided in the Prime Lease or does
not otherwise cause a default which results in the termination of the Prime
Lease.  Notwithstanding anything
contained in the Prime Lease or this Sublease to the contrary, Sublessee shall
have no right or option to extend the term of this Sublease beyond the
expiration or sooner termination of the Sublease Term.

 

3.             Fixed Rent.  Commencing on the Rent Commencement Date,
Sublessee shall pay to Sublessor’s property manager, Colliers International, at
4660 La Jolla Village Drive, Suite 100, San Diego, CA 92122, or at such
other address or to such other property manager as Sublessor shall notify
Sublessee in writing, the base monthly rent per rentable square foot of the
Sublet Premises set forth below (the “Fixed Rent”):

 

	
  Months After

  Commencement Date

  	
   

  	
  Fixed Monthly Rent

  (NNN)/Sq. Ft

  	
   

  
	
  1 through 12

  	
   

  	
  $

  	
  1.29

  	
  *

  
	
  13 through 24

  	
   

  	
  $

  	
  1.33

  	
   

  
	
  25 through 36

  	
   

  	
  $

  	
  1.37

  	
   

  
	
  37 through 48

  	
   

  	
  $

  	
  1.41

  	
   

  
	
  49 through 60

  	
   

  	
  $

  	
  1.45

  	
   

  
	
  61 through 72

  	
   

  	
  $

  	
  1.50

  	
   

  
	
  73 through 84

  	
   

  	
  $

  	
  1.54

  	
   

  
	
  85 through 96

  	
   

  	
  $

  	
  1.59

  	
   

  
	
  97 through Expiration Date

  	
   

  	
  $

  	
  1.63

  	
   

  

 

* Subject to abatement as set forth below.

 

 

Provided there is no continuing and uncured
Event of Default (as defined below) by Sublessee under this Sublease, Sublessor
and Sublessee agree that commencing on the Rent Commencement Date and
continuing until the date which is twelve (12) months after the Rent
Commencement Date (the “Rent Abatement Period”)
Fixed Rent and Expenses and Taxes (defined below) shall be abated, except that
Sublessee shall pay for all electricity and janitorial services provided to the
Sublet Premises from and after the Delivery Date.  If, at the expiration of the Sublease Term,
there is no continuing and uncured Event of Default by Sublessee under this
Sublease, Sublessor shall waive the payment of all such conditionally abated
Fixed Rent and Expenses and Taxes.  
Should there be an Event of Default, at any time during the Sublease
Term, and such Event of Default gives Sublessor the right to terminate this
Sublease prior to September 30, 2018, pursuant to the express terms of
this Sublease then the total amount of the conditionally abated Fixed Rent and
Expenses and Taxes shall be immediately due and payable by Sublessee to
Sublessor and Sublessee hereby waives any and all rights and defenses it may
have with respect to any statute of limitations arising in connection with
Sublessor’s exercise of its rights and remedies relating to the conditionally
abated Fixed Rent and Expenses and Taxes.

 

Subject to the abatement set forth above,
Fixed Rent shall be payable in monthly installments in advance during the
Sublease Term on the first day of each month, commencing on Rent Commencement
Date.  Notwithstanding the above, Sublessee
shall pay the Fixed Rent for the thirteenth (13th) month of the Sublease Term on the Effective Date.

 

4.             Additional Rent.  Subject to the abatement provisions set forth
in Section 3 above, from and after the Rent Commencement Date, Sublessee
shall pay to Sublessor’s property manager, Sublessee’s pro rata share of
Expenses and Taxes (as defined in the Prime Lease) and other associated project
operating expenses as defined in Exhibit B to the Prime Lease as
additional rent, to the Sublessor or Sublessor’s agents.  Sublessee’s pro rata share of such Expenses
and Taxes is currently estimated to be $0.49 per rentable square foot per
month.  Sublessor or Prime Lessor shall
provide common area maintenance services and daily janitorial services (Monday —
Friday), the cost of which shall be included in Expenses and Taxes.  Sublessor shall not charge a property
management fee or administration fee related to this Sublease other than those
charges by Prime Lessor under the Prime Lease. 
Notwithstanding the foregoing, Sublessor and Sublessee acknowledge that
the Sublet Premises will be separately metered for electricity at Sublessee’s
sole cost and expense and Sublessee shall directly pay to the electricity
provider, prior to the due date thereof, all charges for electricity usage in
the Sublet Premises. Notwithstanding the foregoing or anything to the contrary
in this Sublease or the Prime Lease, Sublessee shall pay for all utilities
commencing on the Delivery Date, provided that Sublessee shall not pay
any utilities in the nature of Expenses and Taxes during the Rent Abatement
Period. As used herein, the term “rent” shall mean and include Fixed Rent,
additional rent and any other sums due hereunder or pursuant to the Prime
Lease.  Except as set forth herein, all
rent shall be due and payable without prior notice, demand, deduction or
offset.

 

5.             Interest on
Overdue Payments.  In the event that
Sublessee shall fail to pay any installment of Fixed Rent or additional rent or
any other sum due hereunder or pursuant to the Prime Lease, Sublessee shall pay
Sublessor the administration fee equal to $500 pursuant to Section 4.01 of
the Prime Lease, provided that Sublessee shall be entitled to a grace period of
five (5) business days for the first two (2) late payments of rent in
a calendar year without payment of the administrative fee.  In addition, past due rent shall accrue
interest at 12% per 

 

 

annum, provided that Sublessee shall be entitled to a grace period of
five (5) business days for the first two (2) late payments of rent in
a calendar year, during which two (2) grace periods no interest shall
accrue. The parties agree that the payment of such interest represents the
liability that Sublessor will incur to Prime Lessor by reason of the late
payment by Sublessee, and is therefore not a penalty.

 

6.             Use.  Sublessee shall use and occupy the Sublet
Premises for the uses permitted under the Prime Lease.

 

7.             Access to Sublet
Premises.  During the period of time
from the date hereof until the Delivery Date, Sublessee shall be granted access
to the Sublet Premises one day a week during a four-hour time period (which day
of the week and time period shall be mutually agreed upon by Sublessor and
Sublessee) subject to at least 48 hour advance notice to Sublessor to gather
information for initial planning and design to the Sublet Premises.  Notwithstanding the foregoing, the Sublet
Premises shall not be deemed delivered to Sublessee, and Sublessee shall not be
deemed in possession of the Sublet Premises until the Delivery Date.  In the event Prime Lessor has consented to
this Sublease on or before the Delivery Date, Sublessee shall have the right to
occupy the Sublet Premises from and after the Delivery Date for construction of
Sublessee’s improvements and/or instillation of furniture equipment and
furnishings in the Sublet Premises.  The
obligation to pay Fixed Rent shall be abated for any such period of early
occupancy but all other terms of this Sublease (including, but not limited to,
Sublessee’s obligation to carry the insurance required by Section 10)
shall be in effect during such period, and prior to Sublessee’s early occupancy
of the Sublet Premises, Sublessee shall have previously provided Prime Lessor
and Sublessor with proof of Sublessee’s insurance as set forth in Section 10
of this Sublease.  Any such early
possession shall not affect nor advance the Sublease Expiration Date of the
Sublease Term.  Any and all materials,
work, installations, equipment and decorations of any nature brought upon the
Building or installed by Sublessee in the Sublet Premises prior to the Rent
Commencement Date shall be at Sublessee’s sole risk.  Neither Sublessor nor any party acting on
Sublessor’s behalf on or about the Building shall be responsible for any claim,
damage or loss or destruction of such items brought to the Building or
installed in the Sublet Premises prior to the Rent Commencement Date and
Sublessee shall indemnify, defend and hold Sublessor harmless from any claim,
loss, damage or destruction as a result of such early occupancy.

 

7.1          Application of
Prime Lease.  As applied to this
Sublease, the words, “Landlord” and “Tenant” in the Prime Lease will be deemed to refer to
Sublessor and Sublessee, respectively under this Sublease.  Except as otherwise provided in this
Sublease, or except to the extent inconsistent herewith, the rights and
obligations of Prime Lessor and Sublessor under the Prime Lease will be deemed
to be the rights and obligations of Sublessor and Sublessee, respectively,
under this Sublease, and will inure to the benefit of, and be binding on,
Sublessor and Sublessee, respectively. 
All provisions of the Prime Lease shall apply to this Sublease unless
specifically excluded or modified by this Agreement.  Sublessor represents that it has delivered to
Sublessee a true and complete copy of the Prime Lease to Sublessee, and
Sublessee acknowledges receipt of a copy of the Prime Lease from Sublessor,
which such copy is attached hereto as Exhibit A.  Notwithstanding the foregoing, the parties
hereto acknowledge that the following sections of the Prime Lease shall not be
incorporated within this Sublease:  1.02,
1.03, 1.04, 1.05, 1.06, 1.07, 1.08, 1.10, 1.14, 3.01, 6, 18, the first three
sentences of Section 

 

 

20, 22 (except as incorporated by reference in Section 36 of this
Sublease), Section 2.04 of Exhibit B, Exhibit C, and Sections 1
through 3 and 9 of Exhibit F.

 

8.             Indemnification
of Sublessor.  To the extent
permitted by law, Sublessee shall and does hereby indemnify Sublessor as a
result of or arising out of Sublessee’s breach of this Sublease or the Prime
Lease and agrees to save Sublessor harmless and, at Sublessor’s option, defend
Sublessor from and against any and all claims, actions, damages, liabilities
and expenses (including reasonable attorneys’ and consultants’ fees) judgments,
settlement payments, and fines paid, incurred or suffered by Sublessor as a
result of or arising out of Sublessee’s breach of this Sublease or the Prime
Lease, violations of any law or in connection with loss of life, personal injury
and/or damage to the property or environment suffered by third parties arising
from or out of the occupancy or use by Sublessee of the Sublet Premises or any
part thereof occasioned wholly or in part by any act or omission of Sublessee,
its officers, agents, contractors, employees or invitees (each a “Sublessee Party” and collectively, the “Sublessee
Parties”), or arising directly or indirectly, wholly or in part,
from any conduct, activity, act, omission or operation by any Sublessee Party
involving the use, handling, generation, treatment, storage, disposal, other
management or Release (hereinafter defined) of any substance or material
defined or designated as hazardous or toxic, or other similar term, by any
present or future local, state or federal environmental statute, regulation or
ordinance, in, from or to the Sublet Premises, whether or not Sublessee may
have acted negligently with respect to such substance or material.  Sublessee’s obligations pursuant to this Section shall
survive any termination of this Sublease with respect to any act, omission, or
occurrence which took place prior to such termination.  As used in this Section, the term “Release”
shall have the meaning ascribed to such term in the Federal Comprehensive
Environmental Response, Compensation and Liability Act, (42 U.S.C.  Section 6901 et seq.  (“CERCLA”).

 

9.             Sublessor’s
Performance.  Sublessee has reviewed
the provisions of the Prime Lease concerning the obligation of the Prime Lessor
to supply building services to the Sublet Premises.  Sublessee recognizes that Sublessor  is not in a position to render nor is
Sublessor obligated to render any of the services or perform any of the
obligations required of Prime Lessor by the terms of the Prime Lease,
including, without limitation, (i) the furnishing of electrical energy,
heat, ventilation, water, air conditioning, elevator service, cleaning, window
washing, or rubbish removal services, (ii) making any alterations, repairs
or restorations, (iii) complying with any laws or requirements of any
governmental authorities, or (iv) taking any action that Prime Lessor has
agreed to provide, make, comply with, take or cause to be provided, made,
compiled with or taken under the Prime Lease. 
Therefore, despite anything to the contrary in this Sublease, Sublessee
agrees that performance by Sublessor of its obligations under this Sublease is
conditioned on performance by Prime Lessor of its corresponding obligations
under the Prime Lease, and Sublessor will not be liable to Sublessee for any
default of the Prime Lessor under the Prime Lease unless such default results
from Sublessor’s failure to perform its obligations hereunder.  If and to the extent Sublessor is entitled to
any rent abatement from Prime Lessor under the terms of the Prime Lease (including,
without limitation, Section 7.05 of the Prime Lease), then Sublessee shall
be entitled to a corresponding abatement of rent under this Sublease.

 

 

10.          Insurance.

 

10.1        Sublessee, at
Sublessee’s sole expense, shall maintain for the benefit of Sublessor and Prime
Lessor such policies of insurance (and in such form) with respect to the Sublet
Premises as are required by the Prime Lease, which policies shall be reasonably
satisfactory to Sublessor as to coverage and insurer, shall be maintained as a
primary policies, and shall extend to and cover the acts and omission of
Sublessee, and anyone acting by, through or under Sublessee notwithstanding
anything contained in the Prime Lease to the contrary.  Each policy of insurance required under this
paragraph shall name Sublessor and Prime Lessor each as an additional
insured.  Sublessee shall provide
Sublessor with certificates of insurance evidencing such policies and that
Sublessor has been named as an additional insured as promptly as reasonably
practical, but in no event later than thirty (30) days after the execution of
this Sublease, and copies of such policies upon Sublessor’s request
therefor.  All insurance policies shall
contain a provision and the certificate of insurance shall expressly state that
the insurer will give to Prime Lessor and Sublessor and such other parties in
interest at least thirty (30) days notice in writing in advance of any material
change, cancellation, termination or lapse, or the effective date of any
reduction in the amounts of insurance below the amounts specified herein.

 

10.2        The parties hereto, by
reason of their consent hereto, release each other, the Prime Lessor and their
respective agents, employees, successors and assigns from all liability for
damage to any property that is caused by or results from a risk which is
actually insured against or which would normally be covered by the standard
form of “all risk” property insurance, without regard to the negligence or
willful misconduct of the entity so released. 
Each party shall use its reasonable efforts to cause each insurance
policy it obtains to provide that the insurer thereunder waives all right of
recovery by way of subrogation as required herein in connection with any damage
covered by the policy.

 

11.          Sublessee Defaults.  The occurrence of any of the following,
beyond all applicable notice and cure periods, shall be a default (an “Event of Default”) under this Sublease:

 

11.1        Sublessee shall fail
to pay in full when due any and all installments of rent or any other charge
agreed to be paid by Sublessee, if the failure continues for five (5) business
days after written notice to Sublessee; or

 

11.2        Sublessee violates or
fails to perform any term, covenant, condition or agreement herein contained or
provided for in the Prime Lease and such failure continues for a period of
seventeen (17) days after written notice thereof is given to Sublessee.  If the default is of such a nature that it
cannot be completely remedied within the seventeen (17) day period, this provision
shall be complied with if Sublessee begins correction of the default within the
seventeen (17) day period and thereafter proceeds with reasonable diligence and
in good faith to effect the remedy as soon as practicable and to prosecute the
same to completion, or

 

11.3        Sublessee becomes
insolvent, or makes an assignment for the benefit of creditors, or if a
petition in bankruptcy is filed by or against Sublessee, or a bill in equity or
other proceeding for the appointment of a receiver for Sublessee is filed, or
if proceedings for 

 

 

reorganization or for composition with creditors under any state or
federal law be instituted by or against Sublessee, or if the subleasehold
interest is levied on under execution, or

 

11.4        Sublessee abandons (as
defined in California Civil Code §1951.3 (or any successor provision)) all or
any portion of the Sublet Premises.

 

12.          Sublessor Remedies.  In the Event of Default by Sublessee, and
without any other action by Sublessor, and at Sublessor’s option, Sublessor may
exercise any and all remedies of the Prime Lessor under the Prime Lease.  In addition to the foregoing, Sublessor may
exercise any and all other rights or remedies, granted or allowed landlords by
any existing or future statute or other law applicable in cases where a
landlord seeks to enforce rights arising under a lease agreement against a
tenant who has defaulted or otherwise breached the terms of such lease
agreement- subject, however, to all of the rights granted or created by any
such statute or other applicable law existing protection and benefit of
tenants.

 

13.          Remedies
Cumulative.  All of the remedies
hereinbefore given to Sublessor and all rights and remedies given to it by law
and equity shall be cumulative and concurrent. 
Except as expressly provided herein and in the Prime Lease, no
termination of this Sublease or the taking or recovering of the Sublet Premises
shall deprive Sublessor of any of its remedies or actions against Sublessee for
rent due or other breach hereof at the time or which, under the terms hereof,
would in the future become due as if there has been no termination, or for any
and all sums due at the time or which, under the terms hereof, would in the
future become due as if there had been no termination, nor shall the bringing
of any action for rent or breach of any covenant, or the resort to any other
remedy herein provided for the recovery of rent or other breach be construed as
a waiver of the right to obtain possession of the Sublet Premises.

 

14.          Notices.  All notices required hereunder shall be
deemed to be given when hand delivered or one day after deposit with express
overnight courier delivery, or three days after mailing by certified U.S. mail,
return receipt requested, postage prepaid. 
Any notices to Sublessor shall be addressed as follows:

 

If to Sublessor:

 

Attention: 
Real Estate Manager

9360 Towne Centre Drive

San Diego, California 92121

 

With a copy of legal notices to:

 

Amylin Pharmaceuticals, Inc.

9360 Towne Centre Drive

San Diego, California 92121

Attn: Marcea Bland Lloyd, General Counsel

 

and

 

Grant Puleo, Esq.

 

 

Procopio, Cory, Hargreaves & Savitch
LLP

530 B Street, Suite 2100

San Diego, CA 92101

 

Address for Payment of Rent:

 

Colliers International

4660 La Jolla Village Drive, Suite 100

San Diego, CA 92122

 

If to Sublessee prior to
Delivery Date:

 

Kratos Defense &
Security Solutions, Inc.

4810 Eastgate Mall

San Diego, CA 92121

Attn: Law Department

 

If to Sublessee after
Delivery Date:

 

Kratos Defense &
Security Solutions, Inc.

4820 Eastgate Mall

San Diego, CA 92121

Attn: Law Department

 

The time limits provided for in the provisions of
the Prime Lease for the giving of notice, making of demands, performance of any
act, condition or covenant, or the exercise of any right, remedy or option, are
amended for the purposes of this Sublease by lengthening or shortening the same
in each instance by two (2) business days, as appropriate, so that notices
may be given, demands made, or any act, condition or covenant performed, or any
right, remedy or option hereunder exercised, by Sublessor or Sublessee, as the
case may be, within the time limit relating thereto contained in the Prime
Lease.  If the Prime Lease allows only
four (4) business days or less for Sublessor to perform any act, or to
undertake to perform such act, or to correct any failure relating to the Sublet
Premises or this Sublease, then Sublessee shall nevertheless be allowed two (2) business
days to perform such act, undertake such act and/or correct such failure.

 

15.          Assignment and
Subletting.  Sublessee shall comply
with the provisions of Section 11 of the Prime Lease with regard to
assignment and subletting and in those instances where applicable, shall be
subject to the Prime Lessor’s approval as provided in the Prime Lease;
provided, however, if Sublessor must first obtain the consent of Prime Lessor,
Sublessor’s consent, which shall not be unreasonably withheld or delayed.  Notwithstanding the foregoing, nothing in
this Section shall impose upon Sublessor any obligation to obtain, beyond
its reasonable efforts to do so, the consent of Prime Lessor or any other third
party.  Sublessor shall pay fees up to
$1,500.00 due to Prime Lessor under the Prime Lease in connection with the
subletting of the Sublet Premises to Sublessee. 
Any amount in excess of $1,500.00 to obtain Prime Lessor consent shall
be paid by Sublessee.

 

 

16.          Parking.  Sublessee shall have the non-exclusive right
to use, free of charge for the duration of the Sublease Term, 4.3 non-reserved
non-exclusive parking spaces per 1,000 rentable square feet of the Sublet
Premises which, shall include a pro rata share of covered parking spaces (“Parking Spaces”) in designated parking areas in common with
the other tenants, occupants, and visitors of the Project.  During the Sublease Term, Sublessee shall be
entitled to designate its pro rata share of designated parking spaces described
on Exhibit G to the Prime Lease as reserved parking spaces for Sublessee’s
visitors and employees in areas immediately adjacent to or below Building 6;
provided, however, Sublessee must pay all costs and expenses for Prime Lessor
to mark such spaces and restore such spaces at the expiration of the Term.  Sublessee’s continued right to use the
Parking Spaces is conditioned upon Sublessee abiding by the provisions of the
Prime Lease and all commercially reasonable rules and regulations which
are prescribed from time to time for the orderly operation and use of the
parking facility where the Parking Spaces are located, including any sticker or
other identification system established by Prime Lessor, Sublessee’s
cooperation in seeing that the Sublesee Parties also comply with such rules and
regulations, and Sublessee not being in default under this Sublease.

 

17.          Communication
Equipment.  Subject to Sublessor and
Prime Lessor’s approval and to the terms of the Prime Lease, Sublessee shall
have the non-exclusive right, at Sublessee’s sole cost and expense, to
reasonable access and use of its pro rata share of the (i) roof of the
Sublet Premises to install, repair and maintain upon the roof, Sublessee
installed telecommunication devices, such as satellite dishes and antennae or
other similar devices, for the purpose of receiving and sending radio,
television, computer, telephone or other communications signals and (ii) internal
passageways, shafts, utility connections, risers and conduits in order to
connect such telecommunication devices to the Sublet Premises and/or to the
Leased Premises Space.  Sublessee shall
advise Sublessor and Prime Lessor in advance of the planned installation of
such devices.  Sublessee shall, at its
sole cost, repair any damage caused by any roof penetration which may result
from the installation or removal of any rooftop equipment and shall defend,
indemnify and hold Sublessor harmless for any claim, liability or damage caused
by Sublessee’s installation, repair, removal, maintenance or replacement of or
access to or use of such equipment.

 

18.          Right of First
Offer.  Sublessor hereby grants to
Sublessee the right of first offer to sublease available space in
Building 6 (“Expansion Space”).  Sublessor shall use its reasonable efforts to
notify Sublessee of the availability of the Expansion Space and the anticipated
date on which the Expansion Space will be vacated by existing subtenants.  For a period of five (5) days following
receipt of Sublessor’s written notice containing such information, Sublessee
shall have the right of first offer to sublease the Expansion Space commencing
on the date set forth in Sublessor’s notice and on the same terms and conditions
as those contained in the notice, which shall be the then current “Market
Rental Rate” for comparable steel frame and glass buildings in the UTC
submarket offering covered parking. “Market Rental Rate” means the average per
square foot rental rate per month for comparable space pursuant to fully
executed subleases or leases and approximately the same number of months,
executed by existing tenants in the Building for comparable space expansions
during the twelve (12) months immediately prior to the date upon which such
Market Rental Rate is to become effective and payable under the terms of this
Sublease, where the rates for such expansions were not set in such leases,
subject to reasonable adjustments for comparable space 

 

 

on more desirable, or less desirable floors or areas of the
Building.  If no such comparable space
has been leased during such twelve (12) month period, the rental rates used for
purposes of this provision shall be adjusted to the amounts Sublessor would
have used had leases for such comparable space been entered.  In all cases, such rates shall be determined
inclusive of any free rent periods, improvement allowances, takeover lease
obligations, or other economic incentives; however, any such economic
incentives generally provided by Sublessor in such comparable expansion
subleases shall also be provided to Sublessee. 
In addition, if such comparable expansion leases include base years, tax
or expense stops or other provisions respecting taxes or operating expenses, or
include any other economic provisions, such as but not limited to consumer
price index provisions, utility reimbursements or fixed rent increases, the
same shall be included in the expansion terms to Sublessee.

 

If
Sublessee fails to elect to sublease the Expansion Space within said five (5) day
period, Sublessor shall be entitled to place such Expansion Space on the open
market for sublease by third parties on terms no more favorable than those upon
which the Expansion Space was offered to Sublessee.  Notwithstanding any provision of this Section 18
to the contrary, the rights granted herein shall be personal to the originally
named Sublessee, and may not be exercised or assigned voluntarily or
involuntarily by or to any person or entity other than the original Sublessee,
and shall not be assignable.

 

If the Expansion Space is currently not legally available to sublease,
the foregoing expansion right shall be subject to the existing subtenants or
occupants thereof renewing their existing leases and/or exercising any options to
extend or expand, and in all events is subject and subordinate to any other
rights of any other person or entity to sublease the Expansion Space, if such
rights have already been granted prior to the date of this Sublease.

 

19.          Sublease Contains
All Agreements.  It is expressly
understood and agreed by and between the parties hereto that this Sublease
(together with the Prime Lease and any amendments thereto) sets forth all the
terms, conditions and agreements between Sublessor, Sublessee and Prime Lessor
relative to the Sublet Premises, and that there are no promises, agreements,
conditions or understandings, either oral or written, between them other than
as are herein set forth.  It is further
understood and agreed that, except as herein otherwise provided, no subsequent
alteration, amendment, change or addition to this Sublease shall be binding
upon Sublessor or Sublessee unless reduced to a writing and signed by Sublessor
and Sublessee.  Notwithstanding anything
in the foregoing to the contrary, Sublessor represents and warrants to
Sublessee that Sublessor, as of the Effective Date, is not in default in any
material respect under the terms of the Prime Lease nor has Sublessor received
written notice from Prime Lessor that Sublessor is in default under the Prime
Lease.

 

20.          Successors and
Assignees.  All rights and
liabilities herein given to, or imposed upon, the respective parties hereto
shall extend to and bind the several and respective successors and permitted
assigns of said parties.

 

21.          Security Deposit.  Sublessee shall have no right, title or
interest in or with respect to the Sublessor security deposit, or any portion
thereof, that is held by Prime Lessor under the Prime Lease.  Within ten (10) business days of the
Effective Date, Sublessee shall deliver to Sublessor, as collateral for the
full performance by Sublessee of all of its obligations under this

 

 

Sublease and for all losses and damages Sublessor may suffer as a
result of Sublessee’s failure to comply with one or more provisions of this
Sublease, including, but not limited to, any post sublease termination damages
under section 1951.2 of the California Civil Code, a standby,  unconditional, irrevocable, transferable
letter of credit (the “Letter of Credit”)
substantially in the form of Exhibit J to the Prime Lease and containing
the terms required herein, in the original face amount equal to the Fixed Rent
and Subtenant’s pro rata share of the estimated Expenses and Taxes (as defined
in Section 4 above) for the last month of the Sublease Term (the “Letter of Credit Amount”), naming Sublessor as beneficiary,
issued (or confirmed) by a financial institution that is mutually acceptable to
Sublessor and Sublessee, permitting multiple and partial draws thereon, and
otherwise in form acceptable to Sublessor in its sole discretion.  Sublessee shall cause the Letter of Credit to
be continuously maintained in effect (whether through replacement, renewal or
extension) in the Letter of Credit Amount through the date (the “Final LC Expiration Date”) that is thirty (30) days after
the scheduled expiration date of the term or any renewal term of this
Sublease.  If the Letter of Credit held
by Sublessor expires earlier than the Final LC Expiration Date (whether by
reason of a stated expiration date or a notice of termination or non-renewal
given by the issuing bank), Sublessee shall deliver a new Letter of Credit or certificate
of renewal or extension (a “Renewal or Replacement LC”)
to Sublessor not later than thirty (30) days prior to the expiration date of
the Letter of Credit then held by Sublessor. 
Any Renewal or Replacement LC shall comply with all of the provisions of
this Section, shall be irrevocable, transferable (provided Sublessor pays any
transfer fees) and shall remain in effect (or be automatically renewable)
through the Final LC Expiration Date upon the same terms as the expiring Letter
of Credit.  Upon Sublessee’s failure to
comply with one or more material provisions of this Sublease, Sublessor may,
without prejudice to any other remedy provided in this Sublease or by Law, draw
on the Letter of Credit and use all or part of the proceeds to (a) satisfy
any amounts due to Sublessor from Sublessee, and (b) satisfy any other
damage, injury, expense or liability caused by Sublessee’s failure to so
comply.  In addition, if Sublessee fails
to furnish a Renewal or Replacement LC complying with all of the provisions of
this Article 6 at least thirty (30) days prior to the stated expiration
date of the Letter of Credit then held by Sublessor, Sublessor may draw upon
such Letter of Credit and hold the proceeds thereof (and such proceeds need not
be segregated) in accordance with the terms of this Sublease (the “LC Proceeds Account”). 
An authorized officer or other representative of Sublessor may make
demand on Sublessor’s behalf for the Letter of Credit Amount, or any portion
thereof, from time to time; provided the proper identification of the party
making such demand accompanied by the original Letter of Credit and a written
statement signed by such party certifying that such amount is due and owing;
together with a certificate of incumbency executed by Sublessor which certifies
the position and signature of such party is presented to the issuing financial
institution.  Nothing in this Article or
elsewhere in the Sublease shall be deemed to prohibit or restrict Sublessee
from challenging the validity or amount of the draw after the draw occurs.  The proceeds of the Letter of Credit shall
constitute Sublessor’s sole and separate property (and not Sublessee’s property
or the property of Sublessee’s bankruptcy estate) and Sublessor may immediately
upon any draw (and without notice to Sublessee) apply or offset the proceeds of
the Letter of Credit: (a) against any rent payable by Sublessee under this
Sublease that is not paid when due; (b) against all losses and damages
that Sublessor has suffered or that Sublessor reasonably estimates that it may
suffer as a result of Sublessee’s failure to comply with one or more provisions
of this Sublease, including any damages arising under section 1951.2 of the
California Civil Code following termination of the Sublease; (c) against any
costs incurred by 

 

 

Sublessor in connection with the Sublease (including reasonable
attorneys’ fees); and (d) against any other amount that Sublessor may
incur by reason of Sublessee’s Default. 
Provided Sublessee has performed all of its obligations under this
Sublease, Sublessor agrees to pay to Sublessee within thirty (30) days after
the Final LC Expiration Date the amount of any proceeds of the Letter of Credit
received by Sublessor and not applied as allowed above; provided, that if prior
to the Final LC Expiration Date a voluntary petition is filed by Sublessee

 

or
any Guarantor, or an involuntary petition is filed against Sublessee or any
Guarantor by any of Sublessee’s or Guarantor’s creditors, under the Federal
Bankruptcy Code, then Sublessor shall not be obligated to make such payment in
the amount of the unused Letter of Credit proceeds until either all preference
issues relating to payments under this Sublease have been resolved in such
bankruptcy or reorganization case or such bankruptcy or reorganization case has
been dismissed, in each case pursuant to a final court order not subject to
appeal or any stay pending appeal.  If,
as result of any application or use by Sublessor of all or any part of the
Letter of Credit, the amount of the Letter of Credit shall be less than the
Letter of Credit Amount, Sublessee shall, within 5 business days thereafter,
provide Sublessor with additional letter(s) of credit in an amount equal
to the deficiency (or a replacement letter of credit in the total Letter of
Credit Amount), and any such additional (or replacement) letter of credit shall
comply with all of the provisions of this Section 21, and if Sublessee
fails to comply with the foregoing, notwithstanding anything to the contrary
contained in this Sublease, the same shall constitute an incurable Default by
Sublessee.   Notwithstanding anything to
the contrary set forth in this Sublease, if, Sublessee is late in the payment
of any rent due under this Sublease, beyond any applicable notice and cure
periods under this Sublease, three (3) or more times in any twelve (12)
calendar month period, Sublessee shall, within 5 business days after notice
from Sublessor, provide Sublessor with additional letter(s) of credit in
an amount equal to the final last two (2) months’ Fixed Rent and Expenses
and Taxes (or a replacement letter of credit in such amount plus the total
original Letter of Credit Amount), and any such additional (or replacement)
letter of credit shall comply with all of the provisions of this Section 21,
and if Sublessee fails to comply with the foregoing, notwithstanding anything
to the contrary contained in this Sublease, the same shall constitute an
incurable Default by Sublessee. 
Sublessee further covenants and warrants that it will neither assign nor
encumber the Letter of Credit or any part thereof and that neither Sublessor
nor its successors or assigns will be bound by any such assignment,
encumbrance, attempted assignment or attempted encumbrance.  Sublessee further covenants and warrants that
it will neither assign nor encumber the Letter of Credit or any part thereof
and that neither Sublessor nor its successors or assigns will be bound by any
such assignment, encumbrance, attempted assignment or attempted encumbrance.

 

Sublessor and Sublessee (a) acknowledge and agree that in no event
or circumstance shall the Letter of Credit or any renewal thereof or substitute
therefor or any proceeds thereof (including the LC Proceeds Account) be deemed
to be or treated as a “security deposit”
under any Law applicable to security deposits in the commercial context
including Section 1950.7 of the California Civil Code, as such section now
exist or as may be hereafter amended or succeeded (“Security
Deposit Laws”), (b) acknowledge and agree that the Letter of
Credit (including any renewal thereof or substitute therefor or any proceeds
thereof) is not intended to serve as a security deposit, and the Security
Deposit Laws shall have no applicability or relevancy thereto, and (c) waive
any and all rights, duties and obligations either party may now or, in the
future, will have relating to or arising from the Security Deposit Laws.
Sublessee 

 

 

hereby
waives the provisions of Section 1950.7 of the California Civil Code and
all other provisions of Law, now or hereafter in effect, which (i) establish
the time frame by which Sublessor must refund a security deposit under a lease,
and/or (ii) provide that Sublessor may claim from the security deposit
only those sums reasonably necessary to remedy Defaults in the payment of rent,
to repair damage caused by Sublessee or to clean the Premises, it being agreed
that Sublessor may, in addition, claim those sums specified above in this Section 1
and/or those sums reasonably necessary to compensate Sublessor for any loss or
damage caused by Sublessee’s breach of this Sublease or the acts or omission of
Sublessee or any other Sublessee Related Parties, including any damages
Sublessor suffers following termination of the Sublease.

 

Tenant Improvement Allowance.  Sublessor shall, at its sole cost, expense
and discretion, pay all costs to construct any fire corridors on the ground
floor of Building 6 required for exiting Building 6.  In addition, Sublessor shall provide
Sublessee with a tenant improvement allowance of up to and in no event greater
than $25.00 per rentable square foot or $794,150.00 for the second floor space
and $30.—per rentable square foot or $64,740.00 for the first floor space for a
total of $858,190 (the “Allowance”) the
final “Allowance” of which will be determined using the rentable square footage
as described in paragraph B of the Recitals. 
In addition, Sublessor shall pay Sublessee a moving allowance equal to
$1.00 per rentable square foot or $33,924.00 (“Moving
Allowance”) expendable for costs and expenses relating to the
relocation of Sublessee’s business (including, but not limited to, costs of
moving Sublessee’s fixtures, furniture, equipment and general moving related
expenses) from its current space to the Premises. The Moving Allowance shall be
paid by Sublessor to Sublessee upon Sublessor’s receipt of Sublessee’s written
demand therefor, accompanied by, as applicable, invoices documenting and
evidencing such moving related costs and expenses.  The Allowance may be used for but not limited
to the cost of preparing design and construction documents and mechanical and
electrical plans for tenant improvements for the Sublet Premises and for both
hard and soft costs in connection with such tenant improvements.  The Allowance, less a 10% retainage (which retainage
shall be payable as part of the final draw), shall be paid to the order of the
general contractor that performs, or architect who designs, the tenant
improvements, in periodic disbursements within thirty (30) days after receipt
of the following documentation: (i) an application for payment and sworn
statement of contractor substantially in the form of AIA Document G-702
covering all work for which disbursement is to be made to a date specified
therein; (ii) a certification from an AIA architect substantially in the
form of the Architect’s Certificate for Payment which is located on AIA
Document G702, Application and Certificate of Payment; (iii) Contractor’s,
subcontractor’s and material supplier’s waivers of liens which shall cover all
tenant improvements for which disbursement is being requested and all other
statements and forms required for compliance with the mechanics’ lien laws of
the state in which the Sublet Premises is located, together with all such
invoices, contracts, or other supporting data as Sublessor may reasonably
require; (iv) a cost breakdown for each trade or subcontractor performing
the tenant improvements; (v) plans and specifications for the tenant
improvements, together with a certificate from an AIA architect that such plans
and specifications comply in all material respects with all laws affecting the
Project or Sublet Premises; (vi) copies of all construction contracts for
the tenant improvements, together with copies of all change orders, if any; and
(vii) a request to disburse from Sublessee containing an approval by
Sublessee of the work done and a good faith estimate of the cost to complete
the tenant improvements.  Upon completion
of the tenant improvements, and prior to final disbursement of the Allowance,
Sublessee shall furnish Sublessor with: (1) general contractor and
architect’s completion 

 

 

affidavits, (2) full and final waivers
of lien, (3) receipted bills covering all labor and materials expended and
used, (4) as-built plans of the tenant improvements, and (5) the
certification of Sublessee and its architect that the tenant improvements have
been installed in a good and workmanlike manner in accordance with the approved
plans, and in accordance with applicable laws, codes and ordinances.  In no event shall Sublessor be required to
disburse the Allowance more than one time per month.  If the tenant improvements exceed the
Allowance, Sublessee shall be entitled to the Allowance in accordance with the
terms hereof, but each individual disbursement of the Allowance shall be
disbursed in the proportion that the Allowance bears to the total cost for the
tenant improvements, less the 10% retainage referenced above.  Notwithstanding anything herein to the
contrary, Sublessor shall not be obligated to disburse any portion of the
Allowance during the continuance of Sublessee’s uncured default under this
Sublease, and Sublessor’s obligation to disburse shall only resume when and if
such default is cured.  In no event shall
the Allowance be used for rent, operating expenses, relocation costs, the
purchase of equipment, furniture or other items of personal property of
Sublessee but rather must be used in accordance with the requirements as set
forth in the Master Lease.  If Sublessee
does not submit a request for payment of the entire Allowance to Sublessor in
accordance with the provisions contained in this Section by November 1,
2010, any unused portion of the Allowance shall accrue to the sole benefit of
Sublessor, it being understood that Sublessee shall not be entitled to any
credit, abatement or other concession in connection therewith.  Should Sublessor fail to pay over any portion
of the Allowance or the Moving Allowance due to Sublessee within the time
period set forth herein, then Sublessee may set off such unpaid amounts from
its payment of Fixed Rent to Sublessor hereunder, provided that
Sublessee has, prior to November 1, 2010, requested such unpaid amounts
from Sublessor in accordance with this Section 21.  Sublessee shall be responsible for all
applicable state sales or use taxes, if any, payable in connection with the
tenant improvements and/or Allowance. 
Furthermore, Sublessee agrees to a full open book process allowing
Sublessor or Sublessor’s representative to review construction costs records
and schedule to confirm actual construction items and costs as outlined above.

 

There will be no deduction from the Allowance for Sublessee’s
construction management fee other than any construction management fee imposed
by Prime Lessor in accordance with the Prime Lease.  Except for any such Prime Lessor construction
management fee, Sublessee shall not be required to pay any construction
management fees or other similar fees for the tenant improvements.  Notwithstanding the foregoing, Sublessee
hereby agrees and acknowledges that all tenant improvements to the Sublet
Premises must be approved by Prime Lessor prior to being made as provided in
the Prime Lease.

 

22.          Condition of the
Sublet Premises.  Sublessee hereby
acknowledges that Sublessee has examined the Sublet Premises and that they are
in good and tenantable condition as of the Effective Date.  Sublessor has let the Sublet Premises in
their present condition, as hereinabove provided, and without any further
improvements or alterations and without any representations on the part of the
Sublessor, its officers, further, servants and/or agents.

 

23.          Sublessor’s Duties.

 

23.1        The obligations of
Prime Lessor under the Prime Lease shall remain the obligations of Prime
Lessor, and shall not be considered the obligations or responsibility of
Sublessor.  Sublessor shall fully perform
all of its obligations under the Prime Lease to the extent 

 

 

Sublessee has not expressly agreed to perform such obligations under
this Sublease.  In the event, however,
that Sublessor defaults in the performance or observance of any of Sublessor’s
remaining obligations under the Prime Lease as Tenant or fails to perform
Sublessor’s stated obligations under this Sublease (provided such failure to
perform Sublessor’s stated obligations under this Sublease is not the result of
or caused by Prime Lessor’s failure to perform Prime Lessor’s stated
obligations under the Prime Lease or due to Prime Lessor’s default under the
Prime Lease) or to enforce, for Sublessee’s benefit, Prime Lessor’s obligations
under the Prime Lease then Sublessee shall be entitled, following fifteen (15)
days prior written notice of any such failure or default and the expiration of
the thirty (30) day cure period, to cure such default and promptly collect from
Sublessor, Sublessee’s reasonable expenses in so doing (including, without
limitation, reasonable attorneys’ fees and costs).  Sublessee shall not be required, however, to
wait the entire applicable cure period if earlier action is required of
Sublessee to comply with the Prime Lease or with any applicable law, regulation
or governmental order, or to ensure the safety and/or security of the Sublet
Premises.

 

23.2        With respect to the
obligations of Prime Lessor under the Prime Lease, Sublessor’s only obligation
shall be to use diligent, good faith efforts to cause Prime Lessor to perform
such obligations for the benefit of Sublessee. 
Such diligent, good faith efforts shall include, without limitation: (i) upon
Sublessee’s written request, immediately notify Prime Lessor of its nonperformance
under the Prime Lease and request that Prime Lessor perform its obligations
under the Prime Lease; (ii) use commercially reasonable efforts to obtain
Prime Lessor’s consent to this Sublease and to other actions requiring Prime
Lessor’s consent and (iii) permitting Sublessee to commence a legal action
in Sublessor’s name to obtain the performance required from Prime Lessor under
the Prime Lease, provided, however, that Sublessee shall pay all costs and
expenses and any other liability incurred in connection therewith and Sublessee
shall indemnify and hold Sublessor harmless against all reasonable costs and
expenses incurred by Sublessor in connection therewith.

 

24.          Subordination and
Non-Disturbance.  This Sublease is
subordinate and subject to any mortgages, ground leases and/or other
encumbrances to the same extent, and on the same terms, as the Prime Lease is
so subordinate and subject under the terms thereof Sublessee agrees to execute
such instruments and, upon the failure to do so, hereby appoints the Prime
Lessor and/or Sublessor its attorney-in-fact to execute such instruments.

 

Sublessor shall use commercially reasonable efforts
to assist Sublessee in obtaining from Prime Lessor a non-disturbance and
attornment agreement in favor of the Sublessee reasonably acceptable to
Sublessee so that Sublessee’s occupancy under the terms and provisions of this
Sublease will not be disturbed in the event of a default by Sublessor of the
Prime Lease (the “Prime Lessor
Non-Disturbance Agreement”).

 

25.          Alterations and
Improvements.  Sublessee shall be
permitted to make any Alterations (as defined in the Prime Lease) in accordance
with Section 9 of the Prime Lease. 
Should Prime Lease or Sublessor require restoration of Alterations made
by or for Sublessee, Sublessee will be responsible, at its sole cost and
expense, to complete such work no later than the expiration of this
Sublease.  Sublessor shall inform
Sublessee of its (or Prime Lessor’s decision regarding removal of such
Alterations upon approval of the requested improvements of Alterations by
Sublessor and Prime Lessor.  If for any
reason Sublessor does not provide 

 

 

Sublessee direction with regard to restoration then Sublessee will be
required to remove improvements prior to the sublease expiration date.  Notwithstanding anything in this Section 26
to the contrary, once Sublessor has agreed in writing that Sublessee shall not
be responsible for restoring Alterations in accordance with this Section 26,
Sublessor may not later require Sublessee to remove or restore such Alteration.

 

26.          Surrender of the
Sublet Premises.  Upon the expiration
or sooner termination of this Sublease, Sublessee shall adhere to the terms and
conditions set forth in the Prime Lease concerning the condition of the Sublet
Premises upon surrender.  In addition,
Sublessee shall not be required to remove any alterations or improvements made
by or for the account of Sublessor.  If
the Prime Lease requires the removal of any alterations or improvements made by
or for Sublessor, Sublessor shall, at its sole cost and expense, remove such
alterations and improvements.  However,
Sublessee at Sublessee’s expense, may be required at Sublessor’s discretion to
remove alterations or improvements made for the benefit of Sublessee.

 

27.          Damage to Cables
and Pipes.  Sublessor shall not be
responsible or liable to Sublessee, or to those claiming by, through or under
Sublessee, for any loss or damage resulting, to Sublessee, or to those claiming
by, through or under Sublessee, or its or their property, from the breaking,
bursting, stoppage or leakage of electrical cable wires, gas, sewer, water
or steam pipes unless such loss or damage is caused by the gross negligence or
willful misconduct of Sublessor or Sublessor’s agents, employees or contractors
or unless Sublessor is made aware of any condition which results in any of the
aforementioned loss or damage which it willfully neglects to repair or replace
(to the extent it is obligated to do so).

 

28.          Prime Lessor’s
Approval.  This Sublease and Sublessor’s
and Sublessee’s liability hereunder are subject to Prime Lessor’s consent
hereto, as required under Section 11 of the Prime Lease, and this Sublease
shall be null and void, and neither Sublessor nor Sublessee shall have any
liability hereunder whatsoever, should Prime Lessor fail to give such consent
to this Sublease.  In the event that
Prime Lessor has not consented to this Sublease Janurary 1, 2010, then
Sublessee may terminate this Sublease and neither Sublessor nor Sublessee shall
have any liability hereunder whatsoever. 
Such Prime Lessor consent shall be substantially in the form and
substance of Exhibit C.

 

29.          Separability.  Should any portion of this Sublease be found
to be unenforceable, the remaining provisions of this Sublease shall continue
in full force and effect, without giving regard to such unenforceable
provision.

 

30.          Exhibits and
Recitals Incorporated.  All exhibits
referred to in this Sublease are hereby incorporated in this Sublease by this
reference and the Recitals to this Sublease are hereby incorporated in this
Sublease by this reference.

 

31.          Counterparts.  This Sublease may be signed by the parties in
two or more counterparts, each of which shall be deemed to be an original, and
all of which taken together shall constitute one and the same document.  Receipt by telecopier or email of a signed
copy of this Sublease shall be deemed receipt of the original document.

 

 

32.          Signage.  Subject to the terms and conditions of the
Prime Lease and where applicable, subject to the approval of Prime Lessor,
Sublessee, at Sublessee’s expense, shall have the right to display appropriate
signage with its logo and name on entrance doors and its pro-rata share of 1
building top and monument exterior sign which will be inclusive of 1 slot, as
given to Sublessor in the Prime Lease.

 

33.          Warranties.  Sublessor shall, at Sublessee’s expense,
cooperate with Sublessee to enforce, for the benefit of Sublessee, all (a) warranties
given and indemnities made, if any, by Prime Lessor to Sublessor under the
Prime Lease which would reduce Sublessee’s obligations hereunder and (b) warranties
given, if any, by any contractors concerning any existing improvements made to
the Sublet Premises.

 

34.          Right to Cure
Sublessee’s Defaults.  If Sublessee
shall at any time fail to make any payment or perform any other obligation of
Sublessee hereunder or under the Prime Lease, then Sublessor shall have the
right, but not the obligation, after ten (10) days notice for monetary
defaults and ten (10) days notice for non-monetary defaults or the time
within which Prime Lessor may act on Sublessor’s behalf under the Prime Lease,
or without notice to Sublessee in the case of any emergency, and without
waiving or releasing Sublessee from any obligations of Sublessee hereunder, to
make such payment or perform such other obligation of Sublessee in such manner
and to such extent as Sublessor shall deem necessary, and in exercising any
such right, to pay any reasonable and related costs and expenses, employ
attorneys and other professionals, and incur and pay attorneys’ fees and other
costs reasonably required in connection therewith.  Sublessee shall pay to Sublessor upon demand
all sums so paid by Sublessor and all incidental costs and expenses of
Sublessor in connection therewith as Sublessee shall indemnify and hold
Sublessor harmless against all reasonable costs and expenses incurred by
Sublessor in connection therewith.

 

35.          Holding Over.  Sublessee acknowledges that the term of the
Prime Lease and the Sublease Term expire on the same date and Sublessor will
suffer considerable damage if Sublessee holds over.  Thus, if Sublessee holds over after the
expiration of the Sublease Term or earlier termination of this Sublease, with
or without the express or implied consent of Sublessor, then at the option of
Sublessor, Sublessee will become and be only a month-to-month subtenant at a
rent equal to the rent payable by Sublessor under the Prime Lease for the
Premises (including the amount of any holdover rent payable to Prime Lessor under
the Premises Lease, as a result of Sublessee’s failure to timely surrender the
Premises at the time and in the condition required by this Sublease, and
otherwise upon the terms, covenants and conditions herein specified.  Notwithstanding any provision to the contrary
contained herein, (a) Sublessor expressly reserves the right to require
Sublessee to surrender possession of the Premises upon the expiration of
Sublease Term or upon the earlier termination of this Sublease and the right to
assert any remedy at law or in equity to evict Sublessee and/or collect damages
in connection with any holding over, and (b) Sublessee shall pay all
holdover rent or other amounts Sublessor is obligated to pay under Section 22
of the Prime Lease and shall indemnify, defend and hold Sublessor harmless from
and against any and all other liabilities, claims, demands, actions, losses,
restoration costs, damages, obligations, costs and expenses, including, without
limitation, attorneys’ fees incurred or suffered by Sublessor by reason of
Sublessee’s failure to surrender the Premises on the expiration of the Sublease
Term or earlier termination of this Sublease.

 

 

36.          Authority.  Each person executing this Sublease on behalf
of a party hereto represents and warrants that he or she is authorized and
empowered to do so and to thereby bind the party on whose behalf he or she is
signing.

 

37.          Brokers.  Sublessor shall pay all commissions owed to
Irving Hughes, as Sublessee’s broker, and Colliers International and BioScience
Properties, as Sublessor’s brokers, as set forth in and pursuant to the terms
of separate agreements.  Each of the
parties represent and warrant to the other that all of its dealings in regard
to the Sublet Premises have been solely with the brokers referenced above and
that no other real estate broker, agent, finder or intermediary has shown the
Sublet Premises to Sublessee or referred the Sublessee to Sublessor or the
Sublessor to Sublessee, or otherwise involved or procured Sublessee with
respect to the Sublease.  Each of the
parties agrees to indemnify and hold the other harmless against any claims for
brokerage or other commission arising by reason of a breach by such party of
the aforesaid representations and warranties.

 

38.          Confidentiality.  Sublessor and Sublessee hereby agree to keep
confidential the terms of this Sublease and the Prime Lease and any financial
information transmitted in connection with this Sublease; provided, however,
either party may disclose such terms (i) to its attorneys, brokers, accountants,
lenders, prospective lenders, prospective purchasers, prospective assignees,
prospective sub-sublessees, partners and prospective partners and in SEC
filings, but only to the extent such persons or entities need to review such
information in connection with this Sublease and further provided that such
party causes such persons or entities to keep such information strictly
confidential as required by this Sublease or (ii) to the extent required
by law.

 

39.          Workstations.  For the entire Term of this Sublease,
Sublessee shall have the use of up to 150 of Sublessor’s existing workstations
(general depictions of which appear on Exhibit D attached hereto) (the “Workstations”) pursuant to a mutually agreed space plan and
agreed upon ratio of office Workstations and cubical Workstations, subject to
availability of Sublessor’s existing inventory of Workstations.  The Workstations shall be provided for
Sublessee’s use in their “as-is”, “where-is” and “with all faults” condition,
at no additional cost to Sublessee but Sublessee shall have the obligation to
configure, repair, replace, store, maintain, insure, and surrender such
Workstations at the expiration or earlier termination of the Term in the same
condition as upon the Delivery Date, normal wear and tear excepted.  Sublessee shall have the sole obligation to
maintain and pay any applicable taxes on the Workstations during the Term and
the Workstations shall be considered part of the Premises for purposes of this
Lease.

 

[CONTINUED ON FOLLOWING PAGE]

 

 

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

 

	
   

  	
  SUBLESSOR:

  
	
   

  	
   

  
	
   

  	
  Amylin Pharmaceuticals, Inc., a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SUBLESSEE:

  
	
   

  	
   

  
	
   

  	
  KRATOS DEFENSE & SECURITY SOLUTIONS, INC., a Delaware
  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

Exhibit A

 

Prime Lease

 

(TO BE ATTACHED PRIOR TO SUBMITTAL)

 

 

Exhibit B

 

Sublet Premises

 

4820 2nd Floor

 

Amylin Test Fit (Draft)

 

 

 

 

4820 1nd Floor

 

Amylin Test Fit (Draft)

 

 

 

Exhibit C

 

CONSENT TO SUBLETTING

 

[To be provided by Prime Lessor]

 

 

Exhibit D

 

WORKSTATIONS

 

Amylin 10x12 Office

 

 

 

Amylin Existing Office

 

 

Amylin Typical Cubicle

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