Document:

Exhibit
10.2

 

FIRST
AMENDMENT TO LEASE

 

THIS
FIRST AMENDMENT TO LEASE (“Agreement”) is made and entered into this
        day of February, 2004 between EPICOR SOFTWARE CORPORATION, a Delaware
corporation (“Sublandlord”) and PIXELWORKS, INC.,
an Oregon corporation (“Subtenant”).

 

WHEREAS,
by Lease Agreement dated October 6, 1995, COPPER MOUNTAIN
TRUST CORPORATION AS TRUSTEE FOR QUEST GROUP TRUST VI  (“Landlord”) leased to Sublandlord, on
a full service basis, office space (the “Premises”) consisting of a portion of
the building commonly known as Lakeside Center located at 8100 SW Nyberg Road,
Tualatin, Oregon 97062 (the “Building”), as amended by that certain Addendum to
the Lease dated October 1, 1995, that certain Addendum A dated March 15, 1999,
that certain Second Amendment dated December 13, 2000, and that certain Third
Amendment dated February 2, 2001, and that certain Third [sic Fourth] Amendment dated August 20,
2001 (collectively, the “Master Lease”, attached hereto and made a part hereof
as Exhibit A).   The Master Lease
expires on February 28, 2006.   Unless otherwise indicated herein, the terms
defined in the Lease Agreement shall have the same meanings when used herein;
and

 

WHEREAS,
Sublandlord and Subtenant did enter into a certain sublease agreement dated
September 7th, 2001 (the “Subease
Agreement”) under the terms of which Subtenant is currently leasing from
Sublandlord approximately 14,679 rentable square feet consisting of the entire
third floor of the Building (the “Original Premises”). Unless otherwise
indicated herein, the terms defined in the Sublease Agreement shall have the
same meanings when used herein; and

 

WHEREAS, Subtenant, pursuant to Section 9 of the
Sublease Agreement, has exercised its option to expand the Original Premises
(“Option to Expand”) to include Sublandlord’s premises on the second floor of
the Building (Suite 203) consisting of 2,870 rentable square feet (the “Second
Floor Expansion Premises”) and Sublandlord’s premises on the fourth floor of
the Building (Suite 400) consisting of 14,679 square feet (the “Fourth Floor
Expansion Premises”; collectively, the “Expansion Premises”);

 

NOW,
THEREFORE, in consideration of the Expansion Premises and mutual covenants and
conditions contained herein, it is hereby agreed that the Sublease Agreement
shall be, and is hereby amended as follows:

 

1.                                       Expansion Premises.  Subject to the terms and conditions of this
First Amendment and the Sublease Agreement, Sublandlord hereby subleases to
Subtenant and Subtenant hereby subleases from Sublandlord a portion of the
Premises consisting of a portion of the second floor and the entire fourth
floor of the Building as more particularly shown in Exhibit A attached hereto
and made a part hereof (the “Expansion Premises”).   The size of the Sublease Premises shall be amended to 32,228
rentable square feet.

 

2.                                       Expansion Premises Term and Commencement.  The
term of for the Expansion Premises shall be approximately twenty-two (22)
months in length with a commencement date of May 5, 2004 (“Expansion Effective
Date”) and a fixed expiration date of February 28, 2006.

 

3.                                       Delivery and Possession.

 

(a)          Fourth Floor Expansion Premises.  Sublandlord shall deliver the Fourth Floor
Expansion Premises to Subtenant on the Expansion Effective Date.  Further, Subtenant shall not be allowed any
early access to the Fourth Floor Expansion

 

 

Premises (in contrast to the Original Premises as described in paragraph
2 of the Sublease Agreement), provided however, that Sublandlord, upon
reasonable advance notice from Subtenant to Sublandlord, agrees to make the
Fourth Floor Expansion Premises reasonably accessible to Subtenant and
Subtenant’s employees and agents so that Subtenant may make arrangements for it
use of the Fourth Floor Expansion Premises.

 

(b)         Second Floor Expansion Premises.   Sublandlord shall deliver the Second Floor
Expansion Premises to Subtenant on the later of the date of full execution of
this Agreement and the date written approval of this Agreement is received from
Landlord.    Regardless of the actual
date of Subtenant’s occupancy of the Second Floor Expansion Premises, Subtenant
shall not be required to pay rent on any of the Expansion Premises prior to May
5, 2004.

 

4.                                       Base Rent.   The Base Rent schedule
contained in paragraph 5 of the Sublease Agreement shall be amended as follows:

 

	
  Months

  	
   

  	
  Annual
  Base Rent/SF

  	
   

  	
  Base
  Rent/Month

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  May 5, 2004 –

  December 31, 2004:

  	
   

  	
  $

  	
  23.20

  	
   

  	
  $

  	
  62,307.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  January 1, 2005
  –

  February 28, 2006:

  	
   

  	
  $

  	
  24.00

  	
   

  	
  $

  	
  64,456.00

  	
   

  

 

5.                                       Operating Expenses and Taxes.  
Paragraph 6 of the Sublease Agreement shall be amended to state that
Subtenant’s “proportionate share” of Operating Expenses is 58.16%.

 

6.                                       Leasehold Improvements.  
Sublandlord shall not be required to provide a tenant improvement
allowance for the Expansion Premises.

 

7.                                       Security Deposit.   On
or prior to the Expansion Delivery Date, Subtenant shall submit to Sublandlord
an additional security deposit of $33,928.06 for a total security deposit of
$59,861.07.

 

8.                                       Brokerage Commissions.  
Sublandlord shall not be required to pay a brokerage commission to any
party for representing Subtenant in connection with this First Amendment or the
leasing of the Expansion Premises.   Subtenant
warrants that it has dealt with no real estate broker or agent in connection
with this Sublease Agreement and Subtenant agrees to indemnify and hold
Sublandlord harmless from any cost, expense or liability (including reasonable
attorneys’ fees) for any compensation, commission or charges claimed by any
other real estate broker or agent employed or claiming to represent or to have
been employed by Subtenant in connection with the negotiation of this Sublease
Agreement.

 

2

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement to
be effective the day and year first above written.

 

 

	
  AGREED AND ACCEPTED:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SUBLANDLORD:

  	
   

  	
  SUBTENANT:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  EPICOR SOFTWARE CORPORATION

  	
   

  	
  PIXELWORKS, INC.

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
  Date:

  	
   

  
								

 

3Exhibit
10.1

 

February 5, 2004

 

William R. Shanahan, Jr., M.D.,
J.D.

15 Ellicott Way

Sugar Land TX 77479

281-565-2647

 

 

Re: Amended Offer

 

Dear William:

 

I am pleased to offer you the full-time, exempt position of Chief
Medical Officer, reporting to Jack Lief, President and CEO.

 

You will receive a semi-monthly salary of $12,500.00 which annualized
is $300,000. In addition, subject to approval by the Compensation Committee of
the Board of Directors, you will be granted 60,000  stock options that entitle you to purchase
Arena stock at a price and on terms to be determined by such committee. The
stock options will be subject to a four-year vesting schedule (25% every 12
months), contingent upon your remaining an Arena employee. You will also be
eligible to participate in the employee benefit programs provided by Arena,
which currently include medical, dental/vision reimbursement, life, short-term
and long-term disability insurance programs, a 401(k) plan, and Employee Stock
Purchase Plan (ESPP).

 

Arena will also pay up to $100,000 of your qualified moving expenses
for relocation to the San Diego area. Qualified moving expenses include actual
moving expenses from Sugar Land, Texas to San Diego and are summarized in the
Internal Revenue Service Publication 521. If your qualified moving expenses are
less than $100,000 the company will pay you any unused portion as a bonus,
subject to regular payroll taxes. The entire sum will be repayable to Arena if
you voluntarily choose to terminate your employment within 24 months of your
hire date.

 

Arena will also pay an additional amount of $25,000 to be used for
temporary housing and personal travel expenses. This amount will be taxable as
regular wages and will be paid up to a maximum of $7,500 per month.

 

This offer is subject to:

 

•                  Verification
of your eligibility to work in the United States, as required by the
Immigration Reform and Control Act of 1986. You must complete section 1 only of the attached* I-9 form
and provide the required documentation on your first day of employment. For
assistance with work visa issues, please contact Christine Pizzo at extension
1654.

 

 

•                  Execution
of the attached* Arena Employee Proprietary- Information and Inventions
Agreement. In addition to other information, this agreement specifies your
responsibilities regarding the improper use or disclosure of any proprietary
information or trade secrets of Arena or any former or concurrent employer,
individuals, or entities.

 

•                  Completion
and confirmation of all other required employment and benefits forms, including
the attached* Policy-Protection of Material/Prevention of Insider Trading,
Lab Notebook Policy, and Arena Policy Regarding Regulatory Matters.

 

All other forms will be included in your new hire package and must be
completed on
or  before your first
day of employment.

 

Consistent with Arena policy, your employment will be terminable at
will and is guaranteed for no specified period. This means that you may resign
at any time and Arena may terminate your employment at any time without cause
and without notice. Notwithstanding this, we agree to pay you six (6) months
salary in the event you are terminated other than for cause during the first
two years of your employment with us. “Cause” means (i) your willful and
continued failure to substantially perform your duties with Arena (other than
any such failure resulting from incapacity due to physical or mental illness),
(ii) your willful engaging in gross misconduct which is materially and
demonstrably injurious to Arena or (ii) your conviction of, or plea of guilty
or nolo contendere to, a felony.

 

This employment status may not be changed except by written agreement
signed by both you and the Chief Executive Officer of Arena Pharmaceuticals. By
signing this offer letter, you acknowledge that no representative of Arena has
made any statement to the contrary in discussing prospective employment with
you.

 

You represent that your employment with Arena will not conflict with or
violate any agreement or understanding with a former employer or other person
or entity.

 

If you accept this offer, please sign both copies of this letter
signifying your agreement, and return one copy on or before February 20, 2004,
as well as the attached legal documents. Please contact me if you have any
questions or concerns.

 

2

 

William, we look forward to having you as a member of the Arena team
and hope our future association will be rewarding for you as well as the
company.

 

	
  Sincerely,

  
	
   

  
	
  /s/ Jack Lief

  	
   

  
	
   

  
	
  Jack Lief

  
	
  President and CEO

  

 

Acceptance:

I accept the offer as stated in this letter and I agree to the terms of
employment described, including that my employment relationship is terminable
at will by either me or the company, with or without cause or notice.

 

	
  /s/ William R. Shanahan, Jr.

  	
   

  
	
   

  
	
  Name

  	
  Date

  
			

 

Offer Expiration Date: February 20, 2004

Proposed Start Date: March 29, 2004

 

*These forms will not be attached to faxed or emailed copies of the
offer letter.

 

3

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