Document:

exv10w1

Exhibit 10.1

Sublease Agreement

between

Avanir Pharmaceuticals, Inc.

as Sublandlord

and

Halozyme,
Inc.

as Subtenant

	 	 	 
	Building Address:

	 	11408 Sorrento Valley Road
	 

	 	San Diego, California 92121

 

 

Sublease Agreement

     This Sublease Agreement (this “Sublease”) is made as of this 21st day of April, 2009
(the “Effective Date”), by and between Avanir Pharmaceuticals, Inc., a Delaware
corporation (“Sublandlord”) and Halozyme, Inc., a California corporation (“Subtenant”), a
subsidiary of Halozyme Therapeutics, Inc., a Delaware corporation (“Parent”), with
Sublandlord and Subtenant hereinafter sometimes referred to collectively as the “Parties” and
individually as a “Party”).

Witnesseth:

     Whereas, Sorrento Plaza, a California limited partnership (“Master Landlord”) and
Sublandlord, are parties to a certain Standard Industrial Net Lease, dated as of May 20, 2002, as
amended by that certain First Amendment to Standard Industrial Net Lease, dated as of August 1,
2002, and as amended by that certain Second Amendment to Standard Industrial Net Lease, dated as of
April 2, 2003 (collectively, the “Master Lease”), a copy of which is attached hereto as Exhibit A;

     Whereas, pursuant to the terms of the Master Lease, Master Landlord has leased to
Sublandlord, certain premises consisting of approximately 30,370 rentable square feet (the “Master
Lease Premises”) and which are located in an office industrial center with a street address of
11404 and 11408 Sorrento Valley Road, San Diego, California 92121 (collectively, the “Center”);

     Whereas, the Center is part of an office industrial center (the “Campus”) which
includes 11388 Sorrento Valley Road, San Diego, California 92121.

     (Initially capitalized terms not otherwise defined in this Sublease shall have the meanings
attributed to such terms in the Master Lease, and unless otherwise expressly provided herein, all
references in this Sublease to “Section” shall refer to the respective “Section” of the Master
Lease and all references to “Paragraph” in this Sublease shall refer to the respective “Paragraph”
of this Sublease.)

     Whereas, Sublandlord now desires to sublease to Subtenant and Subtenant now desires
to sublease from Sublandlord a portion of the Master Lease Premises consisting of the entirety of
the building located at 11408 Sorrento Valley Road (the “Sublease Premises”), on the terms,
covenants and conditions hereinafter provided; and

     Now, Therefore, Sublandlord and Subtenant covenant and agree as follows:

     1. Summary and Definitions. The following definitions apply in this Sublease:

          (a) Base Rent. Base Rent shall be as follows:

1

 

  	 	 	 	 	 
	Period
        During Sublease Term	 	Monthly
        Base Rent	 	Annual
        Base Rent
	
        Sublease Commencement
          Date (estimated to be January 15, 2010), through and including
          January 14, 2011 

      	 	$2.25 per sq. foot per month or $20,670.75	 	$248,049.00
	
         

      	 	 	 	 
	
        January 15, 2011
          through and including January 14, 2012

      	 	$2.32 per sq. foot per month or $21,313.84	 	$255,766.08
	
         

      	 	 	 	 
	
        January 15, 2012
          through and including January 14, 2013

      	 	$2.39 per sq. foot per month or $21,956.93	 	$263,483.16
	
         

      	 	 	 	 

          (b) Improvement Allowance. Seventy Five Thousand Dollars ($75,000.00) (the
“Allowance”).

          (c) Sublease Premises. A portion of the Master Lease Premises constituting
approximately 9,187 Rentable Square Feet constituting the entire building located at 11408 Sorrento
Valley Road, San Diego, California 92121 (the “Building”).

          (d) Term. The term of this Sublease (“Sublease Term”) shall commence on the later of
the following two occurrences: (1) the date upon which Subtenant shall have obtained the consent
of Master Landlord to this Sublease, which shall be diligently prosecuted (the “Landlord Consent”),
or (2) January 15, 2010 (“Sublease Commencement Date”). The Sublease Term shall expire on January
14, 2013, or such earlier date on which this Sublease may be terminated in accordance with the
provisions hereof or the provisions of the Master Lease, as incorporated herein (“Sublease
Expiration Date”), in which case Sublandlord shall promptly provide Subtenant with prior written
notice of such termination.

          (e) Early Access/Sirion Premises.

               (i) Sublandlord acknowledges that a portion of the Subleased Premises containing approximately
eight thousand five hundred eighty-seven (8,587) Rentable Square Feet (the “Sirion Premises”) is
currently leased to Sirion Therapeutics, Inc. (“Sirion”) pursuant to that certain Sublease
Agreement dated as of September 5, 2006, and entered into by and between Sublandlord and Sirion
(the “Sirion Sublease”) which expires by its terms on September 4, 2009 (the “Sirion Sublease
Expiration Date”). For the period beginning on February 27, 2009, and continuing through the
Sirion Sublease Expiration Date, Subtenant has had, and shall have, the right to access the
approximately six hundred (600) Rentable Square Foot portion of the Subleased Premises that is not
leased to Sirion under the Sirion Sublease (the “Storage Space”) for the purposes set forth and
subject to the terms and conditions of that certain Alterations Agreement dated February 24, 2009.
As full consideration for such early access to the Storage Space through the Sirion Sublease
Expiration Date, Subtenant shall pay to Sublandlord a one time payment of Three Thousand Dollars
($3,000.00) promptly following Subtenant’s execution hereof. For the avoidance of doubt, Subtenant
shall not be obligated to pay to Sublandlord any Operating Costs, Real Estate Taxes and Utilities
pursuant to Paragraph 8 in connection with Subtenant’s use of the Storage Space prior to September
5, 2009.

2

 

               (ii) Sublandlord acknowledges that Subtenant also currently subsubleases and occupies an
approximately two thousand seven hundred (2,700) Rentable Square Foot portion of the Sirion
Premises (the “Sub-Sublease Premises”) pursuant to that certain Sub-Sublease Agreement dated as of
January 27, 2009 and entered into by and between Subtenant and Sirion. Subtenant shall have the
right, commencing as of September 5, 2009 and continuing through the Sublease Commencement Date, to
continue to use and occupy the Sub-Sublease Premises and the Storage Space for any purpose
permitted under the Master Lease; provided, however, that any such use and occupancy shall be
subject to Subtenant’s obligations herein. In consideration for such access to, and use and
occupancy of, the Sub-Sublease Premises and the Storage Space from September 5, 2009 through the
Sublease Commencement Date, Subtenant shall pay to Sublandlord a base rent equal to Seven Thousand
Four Hundred Twenty-Five Dollars ($7,425.00) per month, prorated for any partial months. For the
avoidance of doubt, Subtenant shall be obligated to pay to Sublandlord all Operating Costs, Real
Estate Taxes and Utilities pursuant to and in accordance with Paragraph 8 in connection with
Subtenant’s use and occupancy of the Sub-Sublease Premises and the Storage Space from September 5,
2009 through the Sublease Commencement Date.

               (iii) In addition to the right of early access to, and use and occupancy of, the Sub-Sublease
Premises pursuant to Paragraph 1(e)(ii) above, Subtenant also shall have the right, commencing as
of September 5, 2009 (or such later date upon which Sirion vacates the Sirion Premises in
conformity with the requirements of the Sirion Sublease) and continuing through the Sublease
Commencement Date, to use and occupy all or any portion of the remainder of the Sirion Premises for
any purpose permitted under the Master Lease; provided, however, that any such use and occupancy
shall be subject to Subtenant’s obligations herein. For the avoidance of doubt, at such time as
Subtenant commences to use and occupy all or any portion of the Sirion Premises for business
purposes (as opposed to pre-occupancy construction activities) Subtenant shall be obligated to pay
to Sublandlord Operating Costs, Real Estate Taxes and Utilities pursuant to and in accordance with
Paragraph 8 allocable to the occupied portion of the Sirion Premises, but shall not be obligated to
pay any additional base rent or other consideration therefore until the Sublease Commencement Date.

     2. Sublease. Sublandlord hereby subleases to Subtenant, and Subtenant hereby
subleases from Sublandlord, the Sublease Premises, together with all appurtenances thereto as
provided in the Master Lease, for the Sublease Term and on the terms and conditions contained in
this Sublease. Subtenant’s sublease of the Sublease Premises is subject to the terms and
conditions of the Master Lease as incorporated herein and further subject to the terms and
conditions of this Sublease.

     3. Condition of Sublease Premises.

          (a) In entering into this Sublease, Subtenant acknowledges that, except as expressly set forth
in this Sublease, Subtenant has not relied upon or been induced by any statements or
representations of Sublandlord or any other parties or persons with respect to the physical
condition of the Sublease Premises or with respect to any other matter affecting the Sublease
Premises, that might be pertinent in considering the leasing of the Sublease Premises or the
execution of this Sublease. Subtenant has, on the contrary and except as expressly set forth in
this Sublease, relied solely on such investigations, examinations and inspections as Subtenant

3

 

has chosen to make or have made on its behalf. Upon taking possession of any portion of the
Sublease Premises, Subtenant shall be deemed to have accepted such portion of the Sublease Premises
in its then “as-is” “where-is” condition, except for Sublandlord’s remediation obligations set
forth in Paragraph 3 of this Sublease.

          (b) Sublandlord represents and warrants that, to the best of its knowledge, the Sublease
Premises presently complies with all laws, codes, ordinances and other governmental requirements
applicable to the Sublease Premises. Sublandlord is not presently aware of any reason why, upon
the occurrence of the Sublease Commencement Date, the Sublease Premises will not continue to comply
with all laws, codes, ordinances and other governmental requirements then applicable to the
Sublease Premises. Further, Sublandlord is not presently aware of any material defects in the
Sublease Premises which will unreasonably interfere with the normal use and enjoyment of the
Sublease Premises by any occupant thereof.

          (c) By taking possession of any portion of the Sublease Premises, Subtenant shall conclusively
evidence that such portion of the Sublease Premises are fully completed and are suitable for
Subtenant’s purposes, that such portion of the Building and such portion of the Sublease Premises
are in good and satisfactory condition, and that Subtenant waives any defect therein.

          (d) Sublandlord shall complete an Exit Assessment as described in Section 14.8 of the Master
Lease and shall obtain any required regulatory certification of the Sublease Premises promptly
following the expiration or earlier termination of the Sirion Sublease but in any event no later
than October 1, 2009, unless waived in writing by Subtenant.

     4. Base Rent. During the Sublease Term, Subtenant shall pay Sublandlord, as rent for
the Sublease Premises, the Base Rent as set forth in Paragraph 1 of this Sublease, without
set-off or deduction whatsoever, except as otherwise provided herein. Base Rent shall be due and
payable by Subtenant in immediately available funds, in advance on or before the first day of each
calendar month without notice or demand.

     5. Additional Rent. In addition to the Base Rent under Paragraph 4 above as
well as the additional payment obligations set forth in Paragraph 1(e), any and all charges,
expenses or other sums Subtenant is required to pay under the terms of this Sublease, including,
without limitation, any additional rent required under the Master Lease, shall be deemed additional
rent (“Additional Rent,” and together with Base Rent, “Subtenant’s Rent”) and shall be paid by
Subtenant. Sublandlord shall have the same rights and remedies with respect to payment of
Additional Rent as Sublandlord shall have with respect to the Base Rent. Subtenant shall remain
responsible for Subtenant’s Rent and any other charges, expenses or other sums which first arise,
accrue or are invoiced at any time during or after the expiration of the Sublease Term, whether by
Sublandlord or Master Landlord, to the extent they arise or accrue with respect to any period
during the Sublease Term from any liabilities or obligations of Subtenant under the provisions of
this Sublease (including any obligations under the Master Lease which are incorporated herein as
liabilities or obligations of Subtenant). Except as expressly set forth in Section 1(e) above,
Subtenant shall not be required to pay any Additional Rent, or to perform any obligation that is
(i) allocable to any period of time prior to the Sublease Commencement Date or following the
expiration or sooner termination of the Sublease (for any reason other than

4

 

Subtenant’s default), (ii) allocable to any portion of the Master Premises other than the
Sublease Premises, (iii) payable as a result of a default by Sublandlord of any of its obligations
under the Master Lease, or as a result of the gross negligence or willful misconduct of Sublandlord
or any of its agents, employees or contractors, or (iv) are incurred for the sole and exclusive
benefit of Sublandlord.

     6. Rent Payments.

          (a) Subtenant’s Rent and all other charges, expenses or other sums Subtenant is required to
pay to Sublandlord hereunder shall be due and payable without billing or demand, and without
deduction, set-off or counterclaim, except as otherwise provided herein, in lawful money of the
United States of America, at Sublandlord’s address for notices in Paragraph 15 hereof or to
such other person or at such other place as Sublandlord may designate in writing, and shall be due
and payable by Subtenant to Sublandlord on or before the date specified in this Sublease, provided
that if no date is specified as to the applicable payment, then on or before (i) three (3) business
days prior to the corresponding date provided in the Master Lease for payment of the same by
Sublandlord to Master Landlord (provided that in no event shall such period be shortened to a
duration of less than two (2) business days) or (ii) if there is no corresponding date provided in
the Master Lease for payment of the same by Sublandlord to Master Landlord, then ten (10) business
days after written request from Sublandlord to Subtenant. The failure of Subtenant to make payment
in full of Subtenant’s Rent or any other charges, expenses or other sums Subtenant is required to
pay to Sublandlord hereunder by the due date provided herein for such payment, shall potentially
subject Subtenant to the obligation to pay to Sublandlord interest in accordance with the
provisions of Paragraph 18.

          (b) If the Sublease Term commences on a day other than the first day of a calendar month or
ends on a day other than the last day of a calendar month, then Subtenant’s Rent for the first and
last fractional months of the Sublease Term shall be appropriately prorated.

          (c) Sublandlord may upon reasonable prior written notice (which notice shall include Master
Landlord’s address and Master Landlord’s acknowledgement of such notice) instruct Subtenant to make
any payment of Subtenant’s Rent directly to Master Landlord, in which event Subtenant shall timely
make all such payments so instructed directly to Master Landlord (with a copy of the check to be
contemporaneously forwarded by Subtenant to Sublandlord at the time of making of each such
payment), and in such event Sublandlord shall have no responsibility to Subtenant for the payment
of any such amount, and Subtenant shall be solely responsible for any interest or late charges that
may be imposed as a result of any failure of Subtenant to have timely and properly made any such
payment to Master Landlord. Any payment made directly by Subtenant to Master Landlord at the
request of Sublandlord shall be credited against any of Subtenant’s Rent due under this Sublease as
and when received by Master Landlord.

     7. Use. Subtenant shall use and occupy the Sublease Premises only for the purposes
permitted under, and in a manner consistent with, the provisions of the Master Lease. Subtenant
will pay for any damage to any part of the Sublease Premises, Building or Center, subject to any
applicable waiver of subrogation provisions, if (i) caused by any act or omission by Subtenant or
Subtenant’s employees, agent, licensees, contractors or invitees and (ii) Sublandlord is required

5

 

to pay for such damage under the Master Lease. Subtenant will comply with applicable
provisions of the Master Lease and the Center’s Rules and Regulations.

     8. Operating Costs, Real Estate Taxes and Utilities.

          (a) Commencing on the Sublease Commencement Date, Subtenant shall pay Subtenant’s Pro Rata
Share (as defined below) of Operating Costs (as defined in the Master Lease), Real Property Taxes
(as defined in the Master Lease), and insurance costs incurred by Sublandlord under the Master
Lease. As used herein, “Subtenant’s Pro Rata Share” means a fraction, the numerator of which is
the Rentable Square Footage of the Sublease Premises and the denominator of which is the Rentable
Square Footage of the Master Lease Premises. Subtenant’s Pro Rata Share shall be computed by
Sublandlord on a monthly or other periodic basis selected by Sublandlord. As of the Commencement
Date, Subtenant’s Pro Rata Share shall be thirty and twenty-five one-hundredths percent (30.25%).
Subtenant’s shall pay the amount of such Pro Rata Share within ten (10) business days after receipt
of a statement from Sublandlord. Subtenant agrees that fire system certification for the Sublease
Premises will be an Operating Cost.

          (b) Sublandlord may incur actual, third-party, out-of-pocket costs and expenses related to the
operation of the Center or Campus, as more specifically described on Exhibit F attached hereto
(collectively, “Additional Operating Costs”). Subtenant shall be responsible for reimbursing
Sublandlord for Subtenant’s prorate share of such Additional Operating Costs as provided below.
Subtenant’s pro rata share of Additional Operating Costs shall be one hundred percent (100%) with
respect to Additional Operating Costs that are incurred by Sublandlord for the sole benefit of the
Sublease Premises. To the extent that the Additional Operating Costs are not for the sole benefit
of the Sublease Premises and benefit or are related to the Campus and/or Center as a whole, then
Subtenant’s pro rata share of the Additional Operating costs shall represent the ratio of the
Rentable Square Footage of the Sublease Premises to the Rentable Square Footage of the Campus
and/or the Center, as applicable; provided, however, that in no event shall Subtenant have any
obligation to reimburse Sublandlord under this Sublease for any Additional Operating Costs that are
incurred for the sole benefit of premises other than those located at 11408 Sorrento Valley Road.
Subtenant shall pay the amount of such pro rata share within ten (10) business days after receipt
of a statement from Sublandlord along with reasonable documentary evidence of Sublandlord’s payment
of such costs. Subtenant shall bear such Additional Operating Costs commencing on the Sublease
Commencement Date. The Additional Operating Costs shall be included in the defined term
Subtenant’s Rent.

          (c) To the extent not separately metered or monitored with respect to the Sublease Premises,
Sublandlord shall use commercially reasonable efforts to provide those utilities set forth in
Exhibit D attached hereto (as provided in the Sublease Premises, the “Utilities”). Subtenant shall
be responsible for its Pro Rata Share of Sublandlord’s cost of those Utilities in accordance with
Paragraph 8(a) above. Sublandlord shall in no way be liable or responsible for any loss,
damage or expense the Subtenant may sustain or incur by reason of any change, failure,
interruption, interference or defect in the supply or character of the electricity or other
Utilities supplied to the Sublease Premises. Sublandlord makes no representation or warranty as
the suitability of the Utility service for Subtenant’s requirements, and no such

6

 

change, failure, defect, unavailability or unsuitability shall constitute any actual or
constructive eviction, in whole or in part, or entitle Subtenant to any abatement or diminution of
rent, or relieve Subtenant of any of its obligations under this Sublease. Sublandlord shall not be
liable in damages or otherwise for any failure or interruption of any Utility service, and no such
failure or interruption shall entitle Subtenant to terminate this Sublease or abate the rent due
hereunder.

     9. Status of Master Lease.

          (a) Sublandlord and Subtenant confirm and agree that this Sublease is subject and subordinate
to all of the terms, covenants and conditions of the Master Lease and to the matters to which the
Master Lease shall be subordinate. Without limiting the generality of the foregoing, in the event
of termination of Sublandlord’s interest under the Master Lease for any reason (including, without
limitation, upon the occurrence of any casualty or condemnation pertaining to the Sublease
Premises) this Sublease shall terminate coincidentally therewith and Sublandlord shall return to
Subtenant any prepaid Subtenant’s Rent not applied to a default of Subtenant within twenty (20)
days of such termination.

          (b) Sublandlord represents to Subtenant that the Master Lease represents that entire agreement
between Master Landlord and Sublandlord respecting the subject matter thereof, is in full force and
effect, and, that to Sublandlord’s knowledge, no default or event that, with the passing of time or
the giving of notice or both, would constitute a default, exists on the part of Sublandlord, or, to
Sublandlord’s knowledge, the Master Landlord. Sublandlord agrees to perform all of its obligations
under the Master Lease and, except for a termination of the Master Lease in connection with a
casualty or condemnation pursuant to Sublandlord’s express rights as set forth therein, to maintain
the Master Lease in full force and effect, except to the extent that any failure to maintain the
Master Lease is due to the failure of Subtenant to comply with any of its obligations under this
Sublease. Sublandlord shall not amend or modify the Master Lease in such a manner as to materially
adversely affect Subtenant’s use of the Subleased Premises or increase the obligations or decrease
the rights of Subtenant hereunder, without the prior written consent of Subtenant, which may be
granted or withheld at Subtenant’s sole discretion.

          (c) If Sublandlord fails to pay any sum of money to Master Landlord, or fails to perform any
other act on its part to be performed under the Master Lease or this Sublease, then Subtenant may,
but shall not be obligated to, make such payment or perform such act. All such sums paid, and all
reasonable costs and expenses of performing any such act, shall be payable by Sublandlord to
Subtenant upon demand.

          (d) In the event that Subtenant desires to make any alterations or improvements, or otherwise
take any action that will require the consent of Master Landlord, then Subtenant shall process such
consent with the Master Landlord. Sublandlord shall cooperate, at no cost or expense to
Sublandlord in connection with Subtenant obtaining such consent of Master Landlord.

7

 

     10. Incorporation of Master Lease Terms.

          (a) The applicable terms, covenants and conditions contained in the Master Lease are hereby
incorporated herein and shall, as between Sublandlord and Subtenant, constitute additional terms,
covenants and conditions of this Sublease, except to the extent set forth below. Except as
provided in this Paragraph 10, all references in the Master Lease to “Landlord,” “Tenant,”
“Lease,” “Premises,” “Commencement Date” and “Rent” shall, for purposes of incorporation thereof
into this Sublease, mean and refer to “Sublandlord,” “Subtenant,” “Sublease,” “Sublease Premises,”
“Sublease Commencement Date” and “Subtenant’s Rent,” respectively. Subtenant agrees to be bound by
the provisions of the Master Lease incorporated herein and to keep, observe and perform for the
benefit of the Master Landlord and Sublandlord each off the terms, covenants and conditions on its
part to be kept, observed and performed hereunder as well as those applicable terms, covenants and
conditions to be observed and performed by Sublandlord as Tenant under the Master Lease with
respect to the Sublease Premises. Without limiting the foregoing, Subtenant shall not commit or
permit to be committed on the Sublease Premises any act or omission which shall violate any term,
covenant or condition of the Master Lease. Subtenant shall under no circumstances have any rights
with respect to the Sublease Premises greater than Sublandlord’s rights under the Master Lease.

          (b) In the event of conflict between any provision of the Master Lease which is incorporated
herein as described above in this Paragraph 10 and any provision of this Sublease, the
provisions of this Sublease shall control.

          (c) The following Sections and provisions of the Mater Lease do not apply to, shall not be a
part of, and are not incorporated into this Sublease.

	 	 	 	 	 
	 	 	 	 	Specific Section Excluded
	Section	 	Subject Matter	 	(if not entire Section)
	Section 1

	 	Basic Lease Terms
	 	1.1, 1.2, 1.3, 1.4, 1.5, 1.6, 1.7, 1.9, 1.10
	Section 2

	 	The Premises	 	 
	Section 3

	 	Lease Term	 	 
	Section 4

	 	Rent
	 	Section 4.1 (Minimum Monthly Rent)
	Section 5

	 	Security Deposit	 	 
	Section 6

	 	Operating Expenses
	 	6.1, 6.2, 6.5
	Section 8

	 	Real Property Taxes
	 	8.1, 8.2
	Section 16

	 	Damage and Destruction	 	 
	Section 17

	 	Condemnation	 	 
	Section 18

	 	Assignment and Subletting
	 	18.2(c)
	Section 20

	 	Surrender
	 	20.4
	Section 21

	 	Default by Tenant
	 	Section 21(d)(v)
	Section 23

	 	Default by Landlord
	 	23.3(a)
	Section 24

	 	General Provisions
	 	24.6

8

 

Exhibits B “Rules and Regulations” and C “Sign Criteria” to the Master Lease shall
be incorporated into this Sublease but all other exhibits and references thereto as well as the
First Amendment and Second Amendment shall be excluded.

          (d) References in the following sections of the Master Lease to “Landlord” shall be deemed to
refer to Master Landlord only: 7.2, 9.1, 9.4, 9.7, 11.5, and 24.24.

          (e) The reference to “Avanir Pharmaceuticals” in Section 14.2 shall be deemed to refer to
Halozyme, Inc.

          (f) Sublandlord and Subtenant agree that Sublandlord shall not be responsible or liable to
Subtenant for the performance or non-performance of any obligations of Master Landlord under the
Master Lease, and in furtherance thereof agree as follows:

               (i) Except as otherwise specifically set forth in this Sublease, Sublandlord shall not be
required to provide or perform any insurance and services or any alterations, improvements,
improvement allowances or other construction obligations as to the Sublease Premises.
Notwithstanding anything to the contrary contained in this Sublease, Sublandlord shall not be
required to (A) perform any maintenance or make any of the repairs to the Sublease Premises,
Building or the Center, (B) comply with any laws or requirements of governmental authorities
regarding the maintenance or operation of the Sublease Premises after Subtenant takes possession of
the Premises or prior thereto the extent required to be complied with by Master Landlord under the
Master Lease, (C) take any other action relating to the operation, maintenance, repair, alteration
or servicing of the Sublease Premises that Master Landlord may have agreed to provide, furnish,
make, comply with, or take, or cause to be provided, furnished, made, complied with or taken under
the Master Lease, or (D) provide Subtenant with any rebate, credit, allowance or other concession
required of Master Landlord for any reason pursuant to the Master Lease unless Sublandlord receives
a rent abatement with respect to the Sublease Premises and Subtenant is not in default of its
obligations under the Sublease, beyond all applicable notice and cure periods. Sublandlord makes
no representation or warranty of quiet enjoyment as to any persons claiming by, through or under
Master Landlord, but Sublandlord represents and warrants quiet enjoyment as against any person
claiming by, through or under Sublandlord.

               (ii) Sublandlord agrees, upon request of Subtenant, to use reasonable efforts, at Subtenant’s
sole cost and expense, to cause Master Landlord to provide, furnish, or comply with any of Master
Landlord’s obligations under the Master Lease or to provide any required consents or approvals;
provided, however, that Sublandlord shall not be obligated to use such efforts or take any action
which, in Sublandlord’s reasonable judgment, might give rise to a default by Sublandlord under the
Master Lease. Such efforts shall include, without limitation, upon Subtenant’s request, notifying
Master Landlord within two (2) business days of its non-performance under the Master Lease and
requesting that Master Landlord perform its obligations thereunder. If Master Landlord shall
default in the performance of any of its obligations under the Master Lease or at law, Sublandlord
shall, upon request and at the expense of Subtenant, cooperate with Subtenant in the prosecution of
any reasonable action or proceeding, in order to have Master Landlord (A) make such repairs,
furnish such electricity, provide such services or

9

 

comply with any other obligation of Master Landlord under the Master Lease or as required by
law, and/or (B) compensate Subtenant for any earlier default by Master Landlord in the payment or
performance of its liabilities and obligations under the Master Lease during the Sublease Term.
Such cooperation shall include assigning Sublandlord’s rights under the Master Lease to Subtenant
to the extent necessary to permit Subtenant to institute legal proceedings against Master Landlord
to obtain the performance of Master Landlord’s obligations under the Master Lease; provided,
however, that if Subtenant commences a lawsuit or other action, Subtenant shall pay all costs and
expenses incurred in connection therewith (with any matter affecting the Sublease Premises, or a
proportionate share of such costs if the matter also effects the Master Premises), and Subtenant
shall indemnify Sublandlord against, and hold Sublandlord harmless from, all costs and expenses
incurred by Sublandlord in connection therewith.

               (iii) Subtenant shall not make any claim against Sublandlord for any damage which may arise by
reason of: (A) the failure of Master Landlord to keep, observe or perform any of its obligations
under the Master Lease; or (B) the acts or omissions of Master Landlord or its employees, agents,
licensees, contractors or invitees.

               (iv) Subtenant agrees that any waiver of liability, waiver of subrogation rights, or
indemnification provisions in the Master Lease which are incorporated herein as waivers or
obligations of Subtenant (including, but not limited to, in Sections 9.5, 12.2, 13 and 14.5 of the
Master Lease, to the extent applicable to and incorporated in this Sublease), shall be deemed
expanded so as to provide for Subtenant to make such waivers and provide such indemnities not only
in favor of Sublandlord, but also in favor of Master Landlord, and the respective affiliated
employees, agents and the like of both Sublandlord and Master Landlord as enumerated in such
provisions.

          (g) In the event that Sublandlord, as Tenant, is entitled to termination rights for all or a
portion of the Sublease Premises, including, without limitation, as a result of (i) damage and
destruction under Section 16 of the Master Lease, or (ii) a partial condemnation under Section 17
of the Master Lease, then Subtenant shall be entitled to similar termination rights with respect to
the portion or all of the Sublease Premises affected, regardless of whether or not Sublandlord
seeks to enforce such termination rights under the Master Lease.

          (h) In the event that Sublandlord, as Tenant, receives a rent abatement for all or a portion
of the Sublease Premises, including, without limitation, as a result of (i) damage and destruction
under Section 16 of the Master Lease, or (ii) a partial condemnation under Section 17 of the Master
Lease, then Subtenant shall be entitled to similar abatement of Subtenant’s Rent with respect to
the portion or all of the Sublease Premises affected.

          (i) Notwithstanding the incorporation of Section 6 of the Master Lease, Subtenant shall only
be responsible for its proportionate share of Operating Costs, Real Property Taxes and insurance
costs incurred by the Master Landlord under the Master Lease and charged through to Sublandlord.
Subject to the provisions of Paragraph 8(b) above, under no circumstances shall Subtenant
be liable for any such costs directly incurred by Sublandord.

     11. Insurance. Subtenant shall comply at all times and in all respects with the
provisions of Section 9 of the Master Lease with regard to the maintenance of insurance by

10

 

“Tenant.” Such insurance shall name, as additional insureds, Master Landlord, Sublandlord and
any other parties required to be named under the terms of the Master Lease, and a policy or
certificate thereof shall be provided to Sublandlord not later than two (2) business days prior to
Subtenant’s occupancy of any portion of the Sublease Premises. The maintenance of insurance
coverage with respect to the Sublease Premises and any property of Subtenant shall be the sole
obligation of Subtenant. All insurance required to be maintained by Subtenant shall provide for
thirty (30) days’ prior written notice to Sublandlord and Master Landlord in the event of any
termination or reduction in coverage of such insurance. All property insurance policies which
either Party obtains affecting the Sublease Premises shall include a clause or endorsement denying
the insurer any rights of subrogation against the other Party or Master Landlord. Sublandlord and
Subtenant waive any rights of recovery against the other for any actually insured injury or loss
including all amounts within any deductible or self-insured retention amount applicable to any such
insured injury or loss.

     12. Surrender of Sublease Premises; Holding Over.

          (a) As soon as its right to possession ends, Subtenant shall surrender the Sublease Premises
to Sublandlord in as good repair and condition as when Subtenant first occupied, except for
reasonable wear and tear and those improvements that Sublandlord made to the Sublease Premises that
were not otherwise acquired by Subtenant in connection with this Sublease, or as otherwise
consented to by the Master Landlord in the consent. Subtenant will concurrently deliver to
Sublandlord all keys to the Sublease Premises, and restore any locks that it has changed to the
system that existed at the commencement of the Sublease Term. If possession is not immediately
surrendered, Sublandlord may enter upon and take possession of the Sublease Premises and expel or
remove Subtenant and any other person who may be occupying the Sublease Premises or any part
thereof.

          (b) At the expiration or termination of the Sublease Term, Sublandlord may require the removal
of any or all of Subtenant’s furniture, personal property and equipment from the Sublease Premises,
and the restoration of the Sublease Premises to its prior condition, except for reasonable wear and
tear, at Subtenant’s expense. All of Subtenant’s furniture, personal property and equipment on or
about the Sublease Premises, shall be removed from the Sublease Premises by Subtenant at the
expiration or termination of the Sublease Term. All removals by Subtenant will be accomplished in
a good and workmanlike manner so as not to damage any portion of the Center, Building or the Master
Lease Premises and Subtenant will promptly repair and restore all damage done except for normal
wear and tear. If Subtenant does not so remove any property which it has the right or duty to
remove, Sublandlord may immediately either claim it as abandoned property, or remove, store and
dispose of it in any manner Sublandlord may choose, at Subtenant’s cost and without liability to
Subtenant or any other party.

          (c) As a condition to this Sublease and to facilitate Sublandlord’s performance of its
obligations under the Master Lease, Subtenant agrees that Sublandlord shall be entitled to enter
the Sublease Premises, upon two (2) business days’ advance notice to Subtenant, at any time during
the ten (10) days preceding the Sublease Expiration Date for the purpose of making any repairs or
modifications or removing any alterations or other improvements required under the terms of the
Master Lease to the extent the same will not materially interfere with Subtenant’s continuous use
of the Sublease Premises for the purposes of conducting its business

11

 

therein. Sublandlord’s right to enter the Sublease Premises under this Paragraph
12(c) shall not be exclusive of any other right of entry Sublandlord may have under the terms
of this Sublease.

          (d) If Subtenant does not surrender the Sublease Premises as required and holds over after its
right to possession ends, Subtenant shall become a tenant at sufferance only, at a monthly rental
rate equal to the greater of (i) one hundred fifty percent (150%) of the total Subtenant’s Rent
payable in the last prior full month, or (ii) the amount payable by Sublandlord as “Tenant” under
the Master Lease as a result of such holdover, without renewal, extension or expansion rights, and
otherwise subject to the terms, covenants and conditions herein specified, so far as applicable.
Nothing other than a fully executed written agreement of the Parties creates any other
relationship. Subtenant will be liable for Sublandlord’s loss, costs and damage from such holding
over, including, without limitation, those from Sublandlord’s delay in delivering possession to
other parties. These provisions are in addition to other rights of Sublandlord hereunder and as
provided by law.

     13. Waiver and Indemnification. The provisions of the Master Lease relating to
waiver of liability, waiver of subrogation and indemnification shall apply to this Sublease as
incorporated by Paragraph 10 hereof.

     14. Hazardous Materials.

          (a) The provisions of the Master Lease relating to Hazardous Materials shall apply to this
Sublease as incorporated by Paragraph 10. Notwithstanding anything in this Sublease to the
contrary, Subtenant shall have no liability or obligation whatsoever for any Hazardous Materials
located in, on or about the Center, Building or Sublease Premises prior to the Sublease
Commencement Date or that migrate onto the property on which the Center is located or appear within
the Center, Building, or Sublease Premises, provided that neither Subtenant nor its employees,
agents, licensees, contractors or invitees was the cause or source of such Hazardous Materials.

          (b) To the extent required by law or for Subtenant’s use and occupancy of the Building and
Sublease Premises, Sublandlord shall cause, at its sole cost and expense, any and all such
Hazardous Materials discovered in, on or about the Building or Sublease Premises to be removed or
otherwise remediated.

12

 

     15. Notices. In the event any notice from the Master Landlord or otherwise relating
to this Sublease or the Master Lease is delivered to, or is otherwise received by, Sublandlord,
then Sublandlord shall, as soon thereafter as possible, but in any event within forty-eight (48)
hours, deliver such notice to Subtenant if such notice is written or advise Subtenant thereof by
telephone if such notice is oral. All notices, demands, statements and other communications that
may or are required to be given by either Party to the other hereunder shall be in writing and
shall be (i) personally delivered to the address or addressee provided herein, or (ii) sent by
certified mail, postage prepaid and return receipt requested or (iii) delivered by a reputable
messenger or overnight courier service and, in any case, addressed as follows:

	 	If to Sublandlord: 	 	Avanir Pharmaceuticals

101 Enterprise, Suite 300

Aliso Viejo, California 92656

Attention: Chief Financial Officer
	 
	 	With a copy to: 	 	Goodwin Procter llp

4370 La Jolla Village Drive, Suite 400

San Diego, California 92122

Fax: (858) 232-0349

Attention: Ryan Murr, Esq.
	 
	 	If to Subtenant: 	 	Halozyme, Inc.

11388 Sorrento Valley Road

San Diego, California 92121

Fax: (858) 704-8311

Attention: General Counsel
	 
	 	With a copy to: 	 	Morrison & Foerster llp

425 Market Street

San Francisco, California 94105-2482

Fax: (415) 268-7522

Attention: Derek Boswell, Esq.

Any notice or document addressed to the Parties hereto at the respective addresses set forth on
this Sublease or at such other address as they may specify from time to time by written notice
delivered in accordance with this Paragraph 15 shall be considered delivered (w) in the
case of personal delivery, at the time of delivery or refusal to accept delivery; (x) on the third
day after deposit in the United States mail, certified mail, postage prepaid; (y) in the case of
reputable messenger or overnight courier service, upon delivery or refusal to accept delivery; or
(z) in the event of failure of delivery by reason of changed address of which no notice was
delivered or refusal to accept delivery, as of the date of such failure or refusal. If any such
day of delivery is not a business day, the notice or document will be considered delivered on the
next business day.

     16. Tenant Improvement Allowance. Subject to the condition that Landlord Consent is
given to this Sublease, Subtenant shall be entitled to the Allowance set forth in Section 1(b)
above, for all hard and soft costs relating to the design and construction of any

13

 

alterations or improvements made to all, or any portion, of the Sublease Premises (including,
without limitation, the Sirion Premises and the Storage Space) that are made by Subtenant whether
prior to, or following, the Effective Date (the “Tenant Improvements”). Subject to the
above-stated proviso regarding the Landlord Consent and the last clause of this Section 16, the
Allowance (or portions thereof) will be disbursed within thirty (30) days following Sublandlord’s
receipt of reasonable documentary evidence of any payment for the Tenant Improvements. In no event
shall Sublandlord be obligated to disburse any amount in excess of the Allowance in connection with
the construction of the Tenant Improvements. For the avoidance of doubt, Sublandlord hereby
acknowledges that Subtenant may, at Subtenant’s sole option, commence the design and construction
of the Tenant Improvements, and receive distribution(s) of the Allowance, prior to the Sublease
Commencement Date, provided that Sublandlord will not be obligated to distribute any portion of the
Allowance prior to the full execution of the Landlord Consent.

     17. Assignment and Subletting. Subject to the prior written consent of both
Sublandlord (which shall not be unreasonably withheld, conditioned or delayed) and Master Landlord,
Subtenant shall have the same rights as Sublandlord enjoys as Tenant under such portions of Section
18 of the Master Lease as are incorporated herein, to assign this Sublease or sub-sublease the
Sublease Premises. Except in connection with a Permitted Transfer (as defined below), Sublandlord
shall have the right to fifty percent (50%) of all subrent or other consideration (net of
Subtenant’s reasonable expenses in connection with such assignment or sub sublease, including,
without limitation, brokerage commissions, legal costs, and tenant improvement costs or allowances)
to be paid to Subtenant under the terms of any assignment or sub sublease in excess of the total
Subtenant’s Rent due hereunder. Notwithstanding anything in this Sublease to the contrary,
Subtenant may assign the Sublease or sublet the Sublease Premises, or any portion thereof, without
Sublandlord’s consent, to any entity which controls, is controlled by, or is under common control
with Subtenant; to any entity which results from a merger of, reorganization of, or consolidation
with Subtenant; to any entity which acquires substantially all of the stock or assets of Subtenant,
as a going concern, with respect to the business that is being conducted in the Sublease Premises
(hereinafter, each, a “Permitted Transfer”). In addition, a sale or transfer of the majority
capital stock of Subtenant shall be deemed a Permitted Transfer if (1) such sale or transfer occurs
in connection with any bona fide financing or capitalization for the benefit of Subtenant, or (2)
Subtenant is or becomes a publicly traded corporation. Sublandlord shall have no right to
terminate the Lease in connection with, and shall have no right to any sums or other economic
consideration resulting from any Permitted Transfer.

     18. Interest on Subtenant’s Obligations. Any Subtenant’s Rent or other charge,
expense or other sum due from Subtenant to Sublandlord under this Sublease which is not paid on the
date due, shall bear interest from the date such payment is due until paid (computed on the basis
of a 365-day-year) at the lesser of (a) the maximum lawful rate per annum or (b) twelve percent
(12%) per annum. The payment of such interest shall not excuse or cure a default by Subtenant
hereunder.

     19. Authority. By delivering this Sublease, each Party hereby represents and
warrants to the other that such execution and delivery has been duly authorized by all necessary
corporate or partnership action and that the person(s) executing same have been duly authorized to
do so.

14

 

     20. Signage and Access. Subject to Master Landlord’s approval, Subtenant shall have
the right to install signage at the Center, Building and Sublease Premises, at its sole cost and
expense, subject to, and in compliance with, the provisions of the Master Lease. In addition,
subject to Master Landlord’s approval, Subtenant shall have the right, at its sole cost and
expense, to install signage that is visible from Sorrento Valley Road, subject to the provisions of
the Master Lease. At its cost, Subtenant shall remove any such signage at the expiration of the
Sublease Term and repair any damage caused thereby.

     21. Commissions. Sublandlord has entered into certain listing agreements with Grubb
& Ellis/BRE Commercial, pursuant to which Sublandlord shall pay any commission payable in
connection with this Sublease, and Subtenant is represented by Burnham Real Estate Services in
connection with this Sublease. Sublandlord hereby represents and warrants to Subtenant, and
Subtenant hereby represents and warrants to Sublandlord, that no other broker or finder has been
engaged by it, respectively, in connection with any of the transactions contemplated by this
Sublease or to its knowledge is in any way connected with any such transactions. In the event of
any other claims for brokers’ or finders’ fees or commissions in connection with the negotiation,
execution or consummation of this Sublease, then Subtenant shall indemnify, save harmless and
defend Sublandlord from and against such claims if they shall be based upon any statement,
representation or agreement by Subtenant, and Sublandlord shall indemnify, save harmless and defend
Subtenant from and against such claims if they shall be based upon any statement, representation or
agreement by Sublandlord.

     22. Captions. The captions in this Sublease are used for convenience and reference
only and are not to be taken as part of this Sublease or to be used in determining the intent of
the Parties or otherwise interpreting this Sublease.

     23. Successors and Assigns. Subject to the restrictions on assignment set forth in
this Sublease, this Sublease shall be binding upon and inure to the benefit of Sublandlord and
Subtenant and their respective successors and assigns.

     24. Parking. Subtenant shall have the non-exclusive right to use all parking areas
available to Sublandlord under the Master Lease, which are adjacent to 11408 Sorrento Valley Road,
provided Subtenant shall not use more than twenty-three (23) spaces at any one time, which
represents Subtenant’s Pro Rata Share or parking spaces at the Center.

     25. Master Landlord Consent. This Sublease shall not become effective and shall not
be deemed to be an offer to sublease or create any rights or obligations between Subtenant or
Sublandlord unless and until Sublandlord and Subtenant have executed and delivered the same, and
Master Landlord has executed and delivered a consent to this Sublease in substantially the form
attached hereto as Exhibit C, with such changes as may reasonably be accepted by Subtenant and
Sublandlord as long as Master Landlord does not change the new lease provisions in paragraph 5 of
the consent set forth in Exhibit C. Subtenant shall use commercially reasonable efforts to obtain
the consent of Master Landlord promptly following mutual execution hereof. If no such consent to
this Sublease is given by Master Landlord within thirty (30) days after the delivery of a copy of
the fully executed Sublease to Master Landlord, then either Sublandlord or Subtenant shall have the
right, by written notice to the other, to terminate this Sublease at any time prior to such consent
from Master Landlord being given. By

15

 

delivering this Sublease, each Party hereby represents and warrants to the other that such
execution and delivery has been duly authorized by all necessary corporate or partnership action
and that the person(s) executing same have been duly authorized to do so.

     In the event the Master Lease is terminated prior to the expiration of the Sublease Term,
whether as a result of a voluntary termination by Sublandlord or a default on the part of
Sublandlord, this Sublease shall, upon notice from Master Landlord to Subtenant, remain in full
force and effect as a direct lease between Subtenant and Master Landlord (in which event Subtenant
shall attorn to Master Landlord).

     26. Financial Statements. Subtenant represents, warrants and covenants that any
financial statements heretofore furnished to Sublandlord, in connection with this Sublease, are
accurate and are not materially misleading.

     27. Furniture, Fixtures and Equipment. During the Sublease Term, Subtenant shall
have the right to use the furniture, fixtures and equipment described on Exhibit B attached hereto
(the “FF&E”) at no additional cost or charge. The FF&E shall be provided by Sublandlord to
Subtenant in its then “as-is” condition, and Sublandlord makes no, and Subtenant acknowledges it is
not relying on any, representation or warranty of any kind whatsoever, express or implied, as to
any other matters concerning the FF&E including, without limitation, any implied warranties of
merchantability or fitness for a particular purpose. Upon the expiration or earlier termination of
this Sublease, Subtenant shall surrender the FF&E to Sublandlord in the same condition received,
ordinary wear and tear excepted.

     28. Parent Guaranty. Concurrent with the execution of this Sublease, Parent
covenants and agrees to execute a guaranty substantially in the form attached hereto as Exhibit E.

     29. Cross Default. Sublandlord and Subtenant agree that this Sublease (sometimes
hereinafter referred to as the “11408 Sublease”) and that certain Sublease between Sublandlord and
Subtenant, dated July 2, 2007 for premises at 11404 Sorrento Valley Road, San Diego, CA (the “11404
Sublease”) are hereby cross defaulted, so that a default beyond applicable notice and grace period
under the 11404 Sublease shall constitute, without any requirement that further notice or
opportunity to cure be given, a default beyond applicable notice and grace period under this
Sublease, and a default beyond applicable notice and grace period under this Sublease shall
constitute, without any requirement that further notice or opportunity to cure be given, a default
beyond applicable notice and grace period under the 11404 Sublease (this Paragraph 29 constituting
an amendment to the 11404 Sublease to such effect). Without limitation of the foregoing, the
security deposit being held under the 11404 Sublease shall be available for application in
connection with any default, whether under the 11404 Sublease or the 11408 Sublease.

     30. Miscellaneous.

          (a) Time is of the essence of each and every term of this Sublease.

          (b) Subtenant waives any right it may now or hereafter have (i) for exemption of property from
liability for debt or for distress for rent or (ii) relating to notice or delay in levy of
execution in case of eviction for nonpayment of rent.

16

 

          (c) If there is more than one party constituting Subtenant, their obligations are joint and
several, and Sublandlord need not first proceed against all of them before proceeding against any
or all of the others.

          (d) Subtenant acquires no rights by implication from this Sublease, and is not a beneficiary
of any past, current or future agreements between Sublandlord and third parties.

          (e) California law governs this Sublease. Neither Party may record this Sublease or a copy or
memorandum thereof. Submission of this Sublease to Subtenant is not an offer, and Subtenant will
have no rights hereunder until each Party executes a counterpart and delivers it to the other
Party.

          (f) This Sublease cannot be changed or terminated orally. All informal understandings and
agreements, representation or warranties heretofore made between the Parties are merged in this
Sublease, which alone fully and completely expresses the agreement between Sublandlord and
Subtenant as to the subleasing of the Sublease Premises.

          (g) Each and every indemnification obligation set forth in this Sublease, or incorporated into
this Sublease from the Master Lease, shall survive the expiration or earlier termination of the
term of this Sublease.

          (h) If, for any reason, any suit be initiated between Sublandlord and Subtenant to interpret
or enforce any provision of this Sublease, the prevailing Party shall be entitled to recover from
the other Party its legal costs, expert witness expenses, and reasonable attorneys’ fees, as fixed
by the court.

          (i) The Parties mutually acknowledge that this Sublease has been negotiated at arm’s length.
The provisions of this Sublease shall be deemed to have been drafted by all of the Parties and this
Sublease shall not be interpreted or constructed against any Party solely by virtue of the fact
that such Party or its counsel was responsible for its preparation.

          (j) This Sublease may be executed in counterparts, each of which shall be deemed an original,
but all of which together shall constitute one instrument.

[Remainder of page intentionally blank]

17

 

     In Witness Whereof, this Sublease has been executed as of the day and year first
above written.

	 	 	 	 	 
	Sublandlord:   	
Avanir Pharmaceuticals, INC.,

a Delaware corporation

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	Subtenant:   	
Halozyme, Inc.,

a California corporation

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

     The undersigned “Parent” has executed this Sublease for the purpose of affirming its
obligation under Paragraph 28.

	 	 	 	 	 
	Parent:   	
Halozyme Therapeutics, Inc.,

a Delaware corporation

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

18

 

	 	 	 	 	 

Exhibit A

Master Lease

 

 

Exhibit B

Furniture, Fixtures and Equipment

 

 

Exhibit C

Consent to Sublease Agreement

(11408 Sorrento Valley Road)

 

 

Exhibit D

Utilities

Schedule of Utility Obligations: 11404 & 11408

	 	 	 	 	 	 	 
	 	 	Vendor	 	Service/Utility	 	Status
	1.

	 	SDG&E
	 	Gas meter #0945199
(serves both buildings)
	 	Sublandlord to
provide for
Subtenant and pass
through prorated
costs
	 
	 	 	 	 	 	 
	2.

	 	San Diego Municipal Water
	 	Water (handled by
property manager)
	 	Sublandlord to
provide and pass
through prorated
costs to Subtenant
	 
	 	 	 	 	 	 
	3.

	 	Bay City Electric
(preventive
maintenance)
	 	Emergency generator
	 	Sublandlord to
provide and pass
through prorated
costs to Subtenant
	 
	 	 	 	 	 	 
	4.

	 	SDG&E
	 	Electric Meter #1769979

#1675220

#1730133
	 	Sublandlord to
provide and pass
through prorated
costs to Subtenant

Sublandlord to stay
on for outside
lights & emergency
power
	 
	 	 	 	 	 	 
	5.

	 	Biosources (outside
of the buildings
maintenance)
	 	HVAC system (interwoven
between 11404 & 11408)
	 	Sublandlord to
provide and pass
through prorated
costs to Subtenant

Subtenant to do own
HVAC maintenance
inside the building
	 
	 	 	 	 	 	 
	6.

	 	Trident
	 	Water treatment
	 	Sublandlord to
provide and pass
through prorated
costs to Subtenant

 

 

Exhibit E

     This Guaranty of Lease (this “Guaranty”) is made as of                     , 2009, by Halozyme
Therapeutics, Inc., a Delaware corporation (“Guarantor”), in favor of Avanir
Pharmaceuticals, a California corporation (“Lessor”), in connection with that certain Sublease
dated                     , 2009 (the “Lease”), pursuant to which Lessor leases to Halozyme, Inc., a
California corporation (“Lessee”), approximately 9,187 square feet of office space, located at
11408 Sorrento Valley Road, San Diego, California (the “Premises”). As a material inducement to
and in consideration of Lessor’s entering into the Lease, Lessor having indicated that it would not
enter into the Lease without the execution of this Guaranty, Guarantor does hereby agree with
Lessor as follows:

     1. Guarantor does hereby unconditionally guarantee, without deduction by reason of set off,
defense or counterclaim, as a primary obligor and not as a surety, and promises to perform and be
liable for any and all obligations and liabilities of Lessee under the terms of the Lease,
including without implied limitation the Lessee’s obligation to pay such rents, charges, costs and
impositions as are set forth in the Lease. Guarantor further agrees to defend with counsel
acceptable to Lessor, and to indemnify, defend, and save Lessor harmless from and against any and
all loss, cost, damage or liability arising out of any breach by Lessee of any of the terms,
conditions and covenants of the Lease, or out of any breach of warranty or misrepresentation made
by Lessee under or in connection with the Lease, including reasonable attorneys’ fees and any other
costs incurred by Lessor in connection therewith.

     2. The undertakings contained in this Guaranty shall be the personal liability of Guarantor.
Guarantor acknowledges that after any default by Lessee in the performance of any term, condition
or covenant of the Lease, the liability of Guarantor under this Guaranty shall be primary and that,
in the enforcement of its rights, Lessor shall be entitled to look to Guarantor for the performance
of the obligations of Lessee which Guarantor has guaranteed, without first commencing any action or
proceedings against Lessee, and likewise, enforcement of Lessor’s rights against Lessee shall not
impair the right of Lessor to enforce this Guaranty, and any such action by Lessor shall not
operate as a release of the liability of Guarantor under this Guaranty. The liability of Guarantor
under this Guaranty is a guaranty of payment and performance and not of collectibility, is not
conditional upon the pursuit by Lessor of any remedies which it now has or may hereafter have with
respect thereto under the Lease, at law, in equity or otherwise, and will not be diminished or
affected by a claim by Lessee that the Lease was not duly executed and delivered by Lessee or that
the execution, delivery and performance of the Lease was not duly authorized or that the Lease when
executed by Lessee was not the legal, valid and binding obligation of Lessee or not generally
enforceable against Lessee. Except as otherwise expressly provided herein, the obligations of the
Guarantor shall be absolute and unconditional and shall remain in full force and effect until all
amounts due pursuant to the Lease have been paid in full and all of Lessee’s obligations thereunder
have been performed in full.

     3. If Lessee shall at any time default in the performance or observance of any of the terms,
covenants or conditions in the Lease on Lessee’s part to be kept performed or observed, Guarantor
will keep, perform and observe same, as the case may be, in the place and stead of Lessee.

 

 

     4. The obligations of Guarantor hereunder shall not be released by Lessor’s receipt,
application or release of any security given for the performance and observance of any covenant or
condition in the Lease on Lessee’s part to be performed or observed, regardless of whether
Guarantor consents thereto or receives notice thereof.

     5. The liability of Guarantor hereunder shall in no way be affected by (a) the release or
discharge of Lessee or any other party or the release of Lessee in any creditor’s receivership,
bankruptcy or other proceeding; (b) the impairment, limitation or modification of the liability of
Lessee or the estate of Lessee in bankruptcy, or of any remedy for the enforcement of Lessee’s
liability under the Lease resulting from the operation of any present or future provision of the
Bankruptcy Code or other statute or from the decision in any court; (c) the rejection of the Lease
in any such proceedings; (d) the assignment or transfer of the Lease by Lessee; (e) any disability
of Lessee; (f) the cessation from any cause other than as provided under the Lease whatsoever of
the liability of Lessee; (g) the exercise by Lessor of any of its rights or remedies reserved under
the Lease or by law; or (h) any termination of the Lease. As used herein, “Bankruptcy Code” means
Title 11 of the U.S. Code, as applicable, or any similar federal or state laws for the relief of
debtors, each as hereafter amended.

     6. Guarantor agrees that none of its obligations and no right against Guarantor hereunder
shall in any way be discharged, impaired, or otherwise affected by any extension of time by Lessor
for, or by any partial or complete waiver by Lessor of the performance or failure by Lessor to
enforce of any of Lessee’s obligations under the Lease, or by any other alteration, amendment,
assignment, expansion, extension or modification by Lessor in or to the Lease, or by any release or
waiver by Lessor of any term, covenant or condition of the Lease, or by any delay by Lessor in the
enforcement of or waiver of any rights against Lessee, Guarantor or any other person or entity
under the Lease; provided, however, that to the extent Lessee’s obligations under the Lease are
reduced as a result of the foregoing, Guarantor’s obligations under this Guaranty shall likewise be
reduced. Without limitation, Guarantor agrees that the Premises may be subleased or the Lease may
be altered, amended, assigned, expanded, extended or modified from time to time on such terms and
provisions as may be satisfactory to Lessor without notice to or further assent by Guarantor, and
Guarantor hereby waives notice of acceptance of this Guaranty, notice of any obligations guaranteed
hereby or of any action taken or omitted in reliance hereon, and notice of any defaults of Lessee
under the Lease and waives presentment, diligence, demand for payment or performance, protest,
notice of dishonor, nonpayment or nonperformance of any such obligations, suit or taking of other
action by Lessor against, and any other notice to, any party liable thereon and waives suretyship
defenses generally, other than full and timely payment and performance of all obligations hereby
guaranteed, and Guarantor agrees to cause Lessee to preserve the enforceability of all instruments
hereby guaranteed, as modified with Lessor’s consent, and not to cause Lessee to take any act or
make any omission which might be the basis for a claim that Guarantor has any defense to
Guarantor’s obligations hereunder, exclusive only of the defense that Lessee has fully and timely
paid and performed all obligations hereby guaranteed. No insolvency, bankruptcy, liquidation
proceeding or dissolution affecting Lessee or Guarantor shall affect, impair or be a defense to
this Guaranty. The liability of the Guarantor hereunder is primary and, except as otherwise set
forth herein, unconditional and, except as otherwise set forth herein shall not be subject to any
offset, defense or counterclaim of Guarantor. This is a continuing guaranty. Guarantor waives any
other circumstance whatsoever that might otherwise constitute a legal or equitable discharge,
release of defense of a guarantor or

 

 

surety, or that might otherwise limit recourse against Guarantor, except and to the extent
that Lessee is released from its obligations under the Lease other than in the context of a
bankruptcy of Lessee or a claim by Lessee that the Lease was unenforceable against Lessee as of the
date of its execution. Moreover, Guarantor agrees that its obligations shall not be affected by
any circumstances which constitute a legal or equitable discharge of a guarantor or surety, except
and to the extent that Lessee is released from its obligations under the Lease (other than in the
context of a bankruptcy of Lessee or a claim by Lessee that the Lease was unenforceable against
Lessee as of the date of its execution).

     7. Guarantor represents that this Guaranty and the Lease, as originally delivered and as
modified, amended or supplemented, have been duly authorized and are the legal, valid and binding
obligations of Guarantor and Lessee, enforceable in accordance with their respective terms.

     8. Without in any manner limiting the generality of the foregoing, Guarantor hereby waives the
benefits of the provisions of Sections 2809, 2810, 2847 and 2848 of the California Civil Code and
any similar or analogous statutes of California or any other jurisdiction and all principles or
provisions of law or equity which conflict with the terms of this Guaranty. In addition, without
limiting the generality of the foregoing, Guarantor hereby expressly waives any and all benefits
under California Civil Code Sections 2815, 2819, 2845, 2849 and 2850 and the second sentence of CC
Section 2822(a). In addition, each Guarantor agrees that Lessor (not Lessee or any other person or
entity) shall have the sole right to designate the portion of Lessee’s obligations under the Lease
that is satisfied by a partial payment by Lessee. Notwithstanding anything to the contrary
contained herein, other than with respect to the potential duplication of enforcement costs, in no
event shall Guarantor’s liability under this Guaranty exceed the liability which Guarantor would
have incurred (in the absence of a creditor’s receivership, bankruptcy or other proceeding
involving Guarantor or its assignee) if Guarantor had entered into the Lease.

     9. Guarantor further agrees that it may be joined in any action against Lessee in connection
with the obligations of Lessee under the Lease and recovery may be had against Guarantor in any
such action. Lessor may enforce the obligations of Guarantor hereunder without first taking any
action whatsoever against Lessee or its successors and assigns, or pursue any other remedy or apply
any security it may hold.

     10. Guarantor: (a) subordinates any right of subrogation it may have against Lessee to the
obligations of Lessee under, arising out of or related to the Lease or Lessee’s use or occupancy of
the Premises (as defined in the Lease); and (b) until all of Lessee’s obligations under the Lease
are fully performed, unconditionally and irrevocably subordinates any liability or indebtedness of
Lessee now or hereafter held by Guarantor to the obligations of Lessee under, arising out of or
related to the Lease or Lessee’s use of the Premises. Furthermore, from and after the occurrence
of any Event of Default (as defined in the Lease), Guarantor agrees that any payment on account of
any indebtedness from Lessee to Guarantor during such time shall be held in trust for Lessor.

     11. The liability of Guarantor and all rights, powers and remedies of Lessor hereunder and
under any other agreement now or at any time hereafter in force between Lessor and

 

 

Guarantor relating to the Lease shall be cumulative and not alternative and such rights,
powers and remedies shall be in addition to all rights, powers and remedies given to Lessor by law.

     12. This Guaranty applies to, inures to the benefit of and binds all parties hereto, and their
successors and assigns. This Guaranty may be assigned by Lessor voluntarily or by operation of
law.

     13. If Lessor desires to sell, finance or refinance the Premises, or any part thereof,
Guarantor hereby agrees to execute such reasonable documentation as shall be required by Lessor
re-affirming Guarantor’s obligations under this Guaranty.

     14. Notwithstanding any modification, discharge or extension of the guaranteed obligations or
any amendment, modification, stay or cure of Lessor’s rights which may occur in any bankruptcy or
reorganization case or proceeding concerning Lessee, whether permanent or temporary, and whether or
not assented to by Lessor, Guarantor hereby agrees that it shall be obligated hereunder to pay and
perform the guaranteed obligations and discharge its other obligations in accordance with the terms
of the guaranteed obligations and the terms of this Guaranty. Guarantor understands and
acknowledges that by virtue of this Guaranty, it has specifically assumed any and all risks of a
bankruptcy or reorganization case or proceeding with respect to Lessee. Without in any way
limiting the generality of the foregoing, any subsequent modification of the guaranteed obligations
in any reorganization case concerning Lessee shall not affect the obligation of Guarantor to pay
and perform the guaranteed obligations in accordance with their original terms. If Lessor is
required to pay, return or restore to Lessee or any other person any amounts previously paid on
account of any of the guaranteed obligations because of any bankruptcy or other voluntary or
involuntary proceeding involving Lessee, in or out of court, for the adjustment of debtor-creditor
relationships, or because of any stop notice or any other reason, the obligations of Guarantor
shall be reinstated and revived, and the rights of Lessor shall continue, with respect to such
amounts, all as though they had never been paid to Lessor.

     15. This Guaranty shall constitute the entire agreement between Guarantor and the Lessor with
respect to the subject matter hereof. No provision of this Guaranty or right of Lessor hereunder
may be waived nor may any guarantor be released from any obligation hereunder except by a writing
duly executed by an authorized officer of Lessor.

     16. When the context and construction so requires, all words used in the singular herein shall
be deemed to have been used in the plural. The word “person” as used herein shall include an
individual, company, firm, association, partnership, corporation, trust or other legal entity of
any kind whatsoever.

     17. Should any one or more provisions of this Guaranty be determined to be illegal or
unenforceable, all other provisions shall nevertheless be effective.

     18. Guarantor represents that the person signing below is duly authorized to execute this
Guaranty on behalf of Guarantor and to bind Guarantor hereby.

     19. The waiver or failure to enforce any provision of this Guaranty shall not operate as a
waiver of any other breach of such provision or any other provisions hereof.

 

 

     20. If either party hereto participates in an action against the other party arising out of or
in connection with this Guaranty, the prevailing party shall be entitled to have and recover from
the other party reasonable attorneys’ fees, collection costs and other costs incurred in and in
preparation for the action.

     21. Guarantor agrees that this Guaranty shall be governed by and construed in accordance with
the laws of the State of California.

     22. The term “Lessor” whenever used herein refers to and means the Lessor in the foregoing
Lease specifically named and also any assignee of said Lessor, whether by outright assignment or by
assignment for security, and also any successor to the interest of said Lessor or of any assignee
of such Lease or any part thereof whether by assignment or otherwise. The term “Lessee” whenever
used herein refers to and means the Lessee in the foregoing Lease specifically named and also any
assignee of said Lessee or assignee of such Lease or any part thereof, whether by assignment or
otherwise.

     23. Any notice or other communication to be given under this Agreement by either party to the
other will be in writing and delivered personally or mailed by certified mail, postage prepaid and
return receipt requested, or delivered by an express overnight delivery service, charges prepaid,
or transmitted by facsimile, as follows:

	 	 	 
	     If to Lessor:

	 	Avanir Pharmaceuticals

c/o Chief Financial Officer

101 Enterprise, Suite 300

Aliso Viejo, California 92656

Attention: Chief Financial Officer
	 
	 	 
	     With a copy to:

	 	Goodwin Procter llp

4370 La Jolla Village Drive, Suite 400

San Diego, California 92122

Fax: (858) 232-0349

Attention: Ryan Murr, Esq.
	 
	 	 
	     If to Lessee:

	 	Halozyme, Inc.

11388 Sorrento Valley Road

San Diego, California 92121

Fax: (858) 704-8311

Attention: General Counsel
	 
	 	 
	     With a copy to:

	 	Morrison & Foerster llp

425 Market Street

San Francisco, California 94105-2482

Fax: (415) 268-7522

Attention: Derek Boswell, Esq.

     Any address or name specified above may be changed by a notice given by the addressee to the
other party in accordance with this numbered paragraph. Any notice will be deemed given

 

 

and effective (i) if given by personal delivery, as of the date of delivery in person; or (ii)
if given by mail, upon receipt as set forth on the return receipt; or (iii) if given by overnight
courier, one (1) business day after timely deposit with the courier; or (iv) if given by facsimile,
upon receipt of the appropriate confirmation of transmission by facsimile. The inability to
deliver because of a changed address of which no notice was given of the rejection or other refusal
to accept any notice will be deemed to be the receipt of the notice as of the date of such
inability to deliver or the rejection or refusal to accept.

     24. Waiver of Jury Trial. The parties hereto waive trial by jury in any action,
proceeding or counterclaim brought by any party(ies) against any other party(ies) on any matter
arising out of or in any way connected with this Guaranty or the relationship of the parties
created hereunder (each, a “Dispute” and collectively, the “Disputes”).

     25. Consent to Judicial Reference. If and to the extent that paragraph (xxv)
immediately above is determined by a court of competent jurisdiction to be unenforceable or is
otherwise not applied by any such court, each of Landlord and Tenant hereby consents and agrees
that (a) any and all Disputes shall be heard by a referee in accordance with the general reference
provisions of California Code of Civil Procedure Section 638, sitting without a jury in the County
of Los Angeles, California, (b) such referee shall hear and determine all of the issues in any
Dispute (whether of fact or of law), including issues pertaining to a “provisional remedy” as
defined in California Code of Civil Procedure Section 1281.8, including, without limitation,
entering restraining orders, entering temporary restraining orders, issuing temporary and permanent
injunctions and appointing receivers, and shall report a statement of decision, provided that, if
during the course of any Dispute, any party desires to seek such a “provisional remedy” at a time
when a referee has not yet been appointed or is otherwise unavailable to hear the request for such
provisional remedy, then such party may apply to the Los Angeles County Superior Court for such
provisional relief, and (c) pursuant to California Code of Civil Procedure Section 644(a), judgment
may be entered upon the decision of such referee in the same manner as if the Dispute had been
tried directly by a court. The parties shall use their respective commercially reasonable and good
faith efforts to agree upon and select such referee; provided, however, that such referee must be a
retired California state or federal judge; and provided, further, that, if the parties cannot agree
upon a referee, the referee shall be appointed by the Presiding Judge of the Los Angeles County
Superior Court. Each party hereto acknowledges that this consent and agreement is a material
inducement to consummate the transactions contemplated hereby and by the Lease, and that each will
continue to be bound by and to rely on this consent and agreement in their related future dealings.
The parties shall share the cost of the referee and reference proceedings equally, provided that
the referee may award attorneys’ fees and reimbursement of the referee and reference proceeding
fees and costs to the prevailing party, whereupon all referee and reference proceeding fees and
charges will be payable by the non-prevailing party (as so determined by the referee). Each party
hereto further warrants and represents that it has reviewed this consent and agreement with legal
counsel of its own choosing, or has had an opportunity to do so, and that it knowingly and
voluntarily gives this consent and enters into this agreement having had the opportunity to consult
with legal counsel. This consent and agreement is irrevocable, meaning that it may not be modified
either orally or in writing unless agreed to by Lessor, and this consent and agreement shall apply
to any subsequent amendments, renewals, supplements, or modifications to this Guaranty or any other

 

 

agreement or document entered into between the parties in connection with this Guaranty. In
the event of litigation, this Agreement may be filed as evidence of either or both parties’ consent
and agreement to have any and all Disputes heard and determined by a referee under California Code
of Civil Procedure Section 638.

     26. This Guaranty is solely for the benefit of Lessor and its successors and assigns and is
not intended to nor shall it be deemed to be for the benefit of any third party, including, without
limitation, Lessee.

     27. Guarantor shall have no right to assign its obligations under this Guaranty without
obtaining Lessor’s prior written consent which consent may be granted or withheld in Lessor’s sole
and absolute discretion. For purposes of this Guaranty, the following shall not constitute an
assignment necessitating Lessor’s consent (but Guarantor shall notify Lessor of the same): (a) a
change in Guarantor’s name, type of entity and/or state of domicile; and (b) a merger or similar
transaction in which the surviving entity purchases all or substantially all of Guarantor’s stock
and/or assets; provided, however, that the resulting entity in either (a) or (b) shall remain bound
by this Guaranty and will upon request, reaffirm and ratify the obligations of Guarantor under this
Guaranty.

     28. Guarantor hereby consents to the exclusive jurisdiction and venue of any state or federal
court located within Los Angeles County, State of California in any suit, action or proceeding
brought under or arising out of this Guaranty (and further agrees not to assert or claim that such
venue is inconvenient or otherwise inappropriate or unsuitable).

     In Witness Whereof, Guarantor has executed this Guaranty as of the date first above
written.

	 	 	 	 	 
	Guarantor:   
	Halozyme Therapeutics, Inc.,

a Delaware corporation

   	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

 

 

	 	 	 	 	 

Exhibit F

Additional Operating Costs

Locksmith services

Security services

Central Monitoring Services

Armed Response services

Alarm Company & 1118722 (MAINTENANCE ACCESS) & 1118721 (CAMERA MAINTENANCE)

Drain Service

Air filtration repair and maintenance

Air handlers and chiller maintenance services

HVAC Vendor Services

HVAC MAINTENANCE AND REPAIR

EMERGENCY POWER SYSTEMS maintenance and repair

CONSULTING — FACILITY MAINTENANCE

HVAC PM — 11388 SV Rd

HVAC PM — 11404, 11408 SV Rd

Licenses and Permits

Signs

Vendor for automated controls

Maintenance Supplies

Hardware Supplies

FIRE EXTINGUISHER INSPECTION

Sound diverters

HEALTH & SAFETY CONSULTING SVC

Guard Svcs 11388 Sorrento

DATA/SHREDDED & DESTROYED

 

 

Janitorial Services

WATER TREATMENT PROGRAM

San Diego Police Department servicesUnassociated Document

     

    THIRD AMENDED EMPLOYMENT
AGREEMENT

    
      

      THIS THIRD AMENDED EMPLOYMENT AGREEMENT
(the “Agreement”) is made and entered into as of this 21st day of April, 2009 by
and includes the amendments made on December 30, 2008, on January 30, 2008 and
on December 21, 2007, between Home Federal Bank (the “Savings Bank”), and Len E.
Williams (the “Employee”).  References to the “Company” mean Home
Federal Bancorp, Inc., a Maryland corporation.

      

      WHEREAS, the Employee has made and will
continue to make a major contribution to the success of the Savings Bank in the
position of President and Chief Executive Officer;

      

      WHEREAS, the Board of Directors of the
Savings Bank (the “Board of Directors”) recognizes that the possibility of a
change in control of the Savings Bank or the Company may occur and that such
possibility, and the uncertainty and questions which may arise among management,
may result in the departure or distraction of key management to the detriment of
the Savings Bank;

      

      WHEREAS, the Board of Directors
believes that it is in the best interests of the Savings Bank to enter into this
Agreement with the Employee in order to assure continuity of management of the
Savings Bank and its subsidiaries; and

      

      WHEREAS, the Board of Directors has
approved and authorized the execution of this Agreement with the Employee;
and

      

      NOW, THEREFORE, in consideration of the
foregoing and of the respective covenants and agreements of the parties herein,
it is AGREED as follows:

      

      1.  Definitions.

      

      (a)   “Change in
Control” means (i) any “person,” as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)
(other than the Company, any Consolidated Subsidiaries (as hereinafter defined),
any person (as hereinabove defined) acting on behalf of the Company as
underwriter pursuant to an offering who is temporarily holding securities in
connection with such offering, any trustee or other fiduciary holding securities
under an employee benefit plan of the Company, or any corporation owned,
directly or indirectly, by the stockholders of the Company in substantially the
same proportions as their ownership of stock of the Company), is or becomes the
“beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing 25% or more of the
combined voting power of the Company's then outstanding securities; (ii)
individuals who are members of the Board on the Effective Date (the “Incumbent
Board”) cease for any reason to constitute at least a majority thereof, provided that any person
becoming a director subsequent to the Effective Date whose election was approved
by a vote of at least three-quarters of the directors comprising the Incumbent
Board or whose nomination for election by the Company's stockholders was
approved by the nominating  

       

       

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

       

       

      committee
serving under an Incumbent Board or who was appointed as a result of a change at
the direction of the Office of Thrift Supervision (“OTS”) or the Federal Deposit
Insurance Corporation (“FDIC”), shall be considered a member of the Incumbent
Board; (iii) the stockholders of the Company approve a merger or consolidation
of the Company with any other corporation, other than (1) a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 50% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation or (2) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction) in which no
person (as hereinabove defined) acquires more than 25% of the combined voting
power of the Company's then outstanding securities; or (iv) the stockholders of
the Company approve a plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company of all or substantially all
of the Company's assets (or any transaction having a similar effect); provided that the
term “Change in Control” shall not include an acquisition of securities by an
employee benefit plan of the Savings Bank or the Company or a change in the
composition of the Board at the direction of the OTS or the FDIC.

      

      (b)         The
term “Consolidated Subsidiaries” means any subsidiary or subsidiaries of the
Company (or its successors) that are part of the affiliated group (as defined in
Section 1504 of the Internal Revenue Code of 1986, as amended (the “Code”),
without regard to subsection (b) thereof) that includes the Savings Bank,
including but not limited to the Company.

      

      (c)          The
term “Date of Termination” means the date upon which the Employee experiences a
Separation from Service from the Savings Bank, as specified in a notice of
termination pursuant to Section 8 of this Agreement or the date a succession
becomes effective under Section 10.

      

      (d)          The
term “Effective Date” means September 11, 2006, the original effective date of
this Agreement.

      

      (e)          The
term “Involuntary Termination” means the Employee’s Separation from Service (i)
by the Savings Bank without the Employee's express written consent; or (ii) by
the Employee by reason of a material diminution of or interference with his
duties, responsibilities or benefits, including (without limitation), if the
termination of employment occurs within 30 days of  any of the
following actions unless consented to in writing by the Employee:  (1)
a requirement that the Employee be based at any place other than Nampa, Idaho,
or within a radius of 35 miles from the location of the Savings Bank's
administrative offices as of the Effective Date, except for reasonable travel on
Savings Bank business; (2) a material demotion of the Employee; (3) a material
reduction in the number or seniority of personnel reporting to the Employee or a
material reduction in the frequency with which, or in the nature of the matters
with respect to which such personnel are to report to the Employee, other than
as part of a Savings Bank-wide reduction in staff; (4) a reduction in the
Employee's salary or a material adverse change in the Employee's perquisites,
benefits, contingent benefits or vacation, other 

       

       

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

       

      than as
part of an overall program applied uniformly and with equitable effect to all
members of the senior management of the Savings Bank; (5) a material permanent
increase in the required hours of work or the workload of the Employee; or (6)
the failure of the Board of Directors (or a board of directors of a successor of
the Savings Bank) to elect the Employee as President and Chief Executive Officer
of the Savings Bank (or a successor of the Savings Bank) or any action by the
Board of Directors (or a board of directors of a successor of the Savings Bank)
removing the Employee from such office.  The term “Involuntary
Termination” does not include Termination for Cause, Separation from Service due
to death or permanent disability pursuant to Section 7(f) of this Agreement,
retirement or suspension or temporary or permanent prohibition from
participation in the conduct of the Savings Bank's affairs under Section 8 of
the Federal Deposit Insurance Act (“FDIA”).

      

      (f)           The
term “Section 409A” shall mean Section 409A of the Code and the regulations and
guidance of general applicability issued thereunder.

      

      (g)           The
term “Separation from Service” shall have the same meaning as in Section
409A.

      

      (h)           The
terms “Termination for Cause” and “Terminated for Cause” mean the Employee’s
Separation from Service with  the Savings Bank because of the
Employee's personal dishonesty, incompetence, willful misconduct, breach of a
fiduciary duty involving personal profit, intentional failure to perform stated
duties, willful violation of any law, rule, or regulation (other than traffic
violations or similar offenses) or final cease-and-desist order, or material
breach of any provision of this Agreement.   The Employee shall
not be deemed to have been Terminated for Cause unless and until there shall
have been delivered to the Employee a copy of a resolution, duly adopted by the
Board of Directors at a meeting of the Board duly called and held for such
purpose (after reasonable notice to the Employee and an opportunity for the
Employee, together with the Employee's counsel, to be heard before the Board),
stating that in the good faith opinion of the Board of Directors the Employee
has engaged in conduct described in the preceding sentence and specifying the
particulars thereof in detail.

      

      2.  Term.  The
initial term of this Agreement shall be a period of one year, commencing on the
Effective Date, subject to earlier termination as provided herein (the “Initial
Term”). Beginning on the first anniversary of the Effective Date, the term of
this Agreement shall be extended for a period of two years, provided that (i)
neither the Employee nor the Company has given notice to the other in writing at
least 90 days prior to the end of such two-year term that this Agreement shall
not be extended further; and (ii) prior to the end of such two-year term, the
Board of Directors, or a committee of the Board of Directors which has been
delegated authority to act on such matters by the Board of Directors
(“Committee”), explicitly reviews and approves the extension (the “Second
Term”).  Assuming the Employee’s employment has not been previously
terminated pursuant to the preceding sentence, or otherwise under this
Agreement, on the third anniversary of the Effective Date, and on each
anniversary thereafter, the term of this Agreement shall be extended for a
period of one year, provided that (i)
neither the Employee nor the Company has given notice to the other in writing at
least 90 days prior to such anniversary 

       

       

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

       

      that the
term of this Agreement shall not be extended further; and (ii) prior to such
anniversary, the Board of Directors, or the Committee, explicitly reviews and
approves the extension (an “Extended Term”).  Reference herein to the
term of this Agreement shall refer to both such initial term and such extended
terms.

      

      3.  Employment.  The
Employee shall be employed as the President and Chief Executive Officer of the
Savings Bank.  As such, the Employee shall render all services and
possess the powers as are customarily performed by persons situated in similar
executive capacities, and shall have such other powers and duties as the Board
of Directors may prescribe from time to time.  The Employee shall also
render services to the Company or any subsidiary or subsidiaries of the Company
or Savings Bank as requested by the Savings Bank from time to time consistent
with his executive position.  The Employee shall devote his best
efforts and reasonable time and attention to the business and affairs of the
Savings Bank to the extent necessary to discharge his responsibilities
hereunder.  The Employee may (i) serve on charitable or civic boards
or committees and, in addition, on such corporate boards as are approved in a
resolution adopted by a majority of the Board of Directors or the Committee,
which approval shall not be withheld unreasonably and (ii) manage personal
investments, so long as such activities do not interfere materially with
performance of his responsibilities hereunder.

      

      4.  Cash
Compensation.

      

      (a)           Salary.  The
Savings Bank agrees to pay the Employee during the term of this Agreement a base
salary (the “Salary”) in the annualized amount of
$200,000.    The Salary shall be paid no less frequently
than monthly and shall be subject to customary tax withholding.  The
amount of the Employee's Salary shall be increased (but shall not be decreased)
from time to time in accordance with the amounts of salary approved by the Board
of Directors or the Committee or the board of directors or the appropriate
committee of the Savings Bank after the Effective Date.  The amount of
the Salary shall be reviewed by the Board of Directors or the Committee at least
annually during the term of this Agreement.

      

      (b)           Bonuses.   The
Employee shall be entitled to participate in an equitable manner with all other
executive officers of the Savings Bank in such performance-based and
discretionary bonuses, if any, as are authorized and declared by the Board of
Directors or the Committee for executive officers.  Bonuses provided
for under this Agreement shall be paid no later than 21⁄2 months after the end of
the year in which the Employee obtains a legally binding right to such
payments.

      

      (c)           Expenses.  The
Employee shall be entitled to receive prompt reimbursement for all reasonable
expenses incurred by the Employee in performing services under this Agreement in
accordance with the policies and procedures applicable to the executive officers
of the Savings Bank, provided that the
Employee accounts for such expenses as required under such policies and
procedures.

      

      

      
        
           

        

        
          4 

          
            

          

        

        
           

        

      

      5.  Benefits.

      

      (a)           Participation in Benefit
Plans.  The Employee shall be entitled to participate, to the
same extent as executive officers of the Savings Bank generally, in all plans of
the Savings Bank relating to pension, retirement, thrift, profit-sharing,
savings, group or other life insurance, hospitalization, medical and dental
coverage, travel and accident insurance, education, cash bonuses, and other
retirement or employee benefits or combinations thereof.  In addition,
the Employee shall be entitled to be considered for benefits under all of the
stock and stock option related plans in which the Savings Bank's executive
officers are eligible or become eligible to participate.  It is
specifically intended that the Employee will be eligible to participate in Tier
One of the Savings Bank’s executive year-end cash incentive plan, commencing
October 1, 2006.

      

      (b)           Fringe
Benefits.  The Employee shall be eligible to participate in,
and receive benefits under, any other fringe benefit plans or perquisites which
are or may become generally available to the Savings Bank's executive officers,
including but not limited to supplemental retirement, deferred compensation
program, supplemental medical or life insurance plans, company cars, club dues,
physical examinations, financial planning and tax preparation
services.

      

                 6.  Vacations;
Leave.  The Employee shall be entitled to (i) annual paid
vacation in accordance with the policies established by the Board of Directors
or the Committee for executive officers (but not less than four weeks), with
such vacation accruing annually and available beginning after the end of a
90-day orientation period; (ii) voluntary leaves of absence, with or without
pay, from time to time at such times and upon such conditions as the Board of
Directors or the Committee may determine in its discretion; and (iii) six days
of sick leave annually, without carryover, accruing annually beginning with the
Effective Date.

       

      7.   Termination of
Employment.

      

      (a)           Involuntary
Termination.  The Board of Directors may terminate the
Employee's employment at any time, but, except in the case of Termination for
Cause, termination of employment shall not prejudice the Employee's right to
compensation or other benefits under this Agreement.  In the event of
Involuntary Termination other than after a Change in Control which occurs during
the First Term, the Savings Bank shall (i) if the Involuntary Termination occurs
prior to the first anniversary of the Effective Date, pay to the Employee within
25 business days after the Date of Termination a lump-sum severance amount equal
to one year’s Salary as in effect immediately prior to the Date of Termination,
or (ii) if the Involuntary Termination occurs during the Second Term, pay to the
Employee within 25 business days after the Date of Termination a lump-sum
severance amount equal to two times the Employee’s Salary as in effect
immediately prior to the Date of Termination, or (iii) if the Involuntary
Termination occurs during an Extended Term, pay to the Employee within 25
business days after the Date of Termination a lump-sum severance amount equal to
2.99 times the Employee’s Salary as in effect immediately prior to the Date of
Termination,  and (iv) 

       

       

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

       

      provide
to the Employee substantially the same group life insurance, hospitalization,
medical, dental, prescription drug and other health benefits, and long-term
disability insurance (if any) for the benefit of the Employee and his dependents
and beneficiaries who would have been eligible for such benefits if the Employee
had not suffered Involuntary Termination, on terms substantially as favorable to
the Employee, including amounts of coverage and deductibles and other costs to
him, as if he had not suffered Involuntary Termination for (a) one year, if the
Involuntary Termination occurred during the Initial Term, or (b) for two years,
if the Involuntary Termination occurred during the Second Term, or (c) for three
years if the Involuntary Termination occurred during an Extended
Term.  Notwithstanding the foregoing, if the taxable payments under
this Section 7(a) would extend over a period of time sufficient for such
payments not to be considered severance payments under Section 409A, or are of a
large enough amount (and as such considered deferred compensation under Section
409A), then the final payment that could be made without causing the payments to
be considered deferred compensation under Section 409A shall include the present
value of the remaining payments, with such present value determined using the
applicable discount rate used for purposes of determining present value under
Section 280G of the Code.

      

      (b)           Termination for
Cause.    In the event of Termination for Cause, the
Savings Bank shall pay to the Employee the Salary and provide benefits under
this Agreement only through the Date of Termination, and shall have no further
obligation to the Employee under this Agreement.

      

      (c)           Voluntary
Termination.  The Employee's employment may be voluntarily
terminated by the Employee at any time upon at least 90 days' written notice to
the Savings Bank or such shorter period as may be agreed upon between the
Employee and the Board of Directors.  In the event of such voluntary
termination, the Savings Bank shall be obligated to continue to pay to the
Employee the Salary and provide benefits under this Agreement only through the
Date of Termination, at the time such payments are due, and shall have no
further obligation to the Employee under this Agreement.

      

      (d)           Change in
Control.  In the event of the Employee’s Involuntary
Termination within 12 months after a Change in Control, and which occurs at any
time following the first anniversary of the Effective Date while the Employee is
employed under this Agreement, the Savings Bank shall (i) pay to the Employee in
a lump sum in cash within 25 business days after the Date of Termination an
amount equal to 299% of the Employee's “base amount” as defined in Section 280G
of the Code; and (ii) provide to the Employee during the remaining term of this
Agreement substantially the same group life insurance, hospitalization, medical,
dental, prescription drug and other health benefits, and long-term disability
insurance (if any) for the benefit of the Employee and his dependents and
beneficiaries who would have been eligible for such benefits if the Employee had
not suffered Involuntary Termination, on terms substantially as favorable to the
Employee, including amounts of coverage and deductibles and other costs to him,
as if he had not suffered Involuntary Termination; provided, however, that no
payment shall be made under this Section 7(d) that would cause the Savings Bank
to be “undercapitalized” for purposes of 12 C.F.R. 565.4 or any successor
provision.  Notwithstanding 

       

       

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

       

      the
foregoing, if the Employee is a “specified employee” (as defined in Section
409A), then the payment under subparagraph (i) above shall be paid on the sixth
month anniversary of the date of the Employee’s Separation from Service or on
the first day of the month following his death, if earlier.

      

      (e)           Death.  In
the event of the death of the Employee while employed under this Agreement and
prior to any termination of employment, the Savings Bank shall pay to the
Employee's estate, or such person as the Employee may have previously designated
in writing, the Salary which was not previously paid to the Employee and which
he would have earned if he had continued to be employed under this Agreement
through the last day of the calendar month in which the Employee died, together
with the benefits provided hereunder through such date.

      

      (f)           Disability.  If
the Employee becomes entitled to benefits under the terms of the then-current
disability plan, if any, of the Savings Bank (the “Disability Plan”) or becomes
otherwise unable to fulfill his duties under this Agreement, he shall be
entitled to receive such group and other disability benefits, if any, as are
then provided by the Savings Bank for executive employees.  In the
event of such disability, this Agreement shall not be suspended, except that (i)
the obligation to pay the Salary to the Employee shall be reduced in accordance
with the amount of disability income benefits received by the Employee, if any,
pursuant to this paragraph such that, on an after-tax basis, the Employee shall
realize from the sum of disability income benefits and the Salary the same
amount as he would realize on an after-tax basis from the Salary if the
obligation to pay the Salary were not reduced pursuant to this Section 7(f); and
(ii) upon a resolution adopted by a majority of the disinterested members of the
Board of Directors or the Committee, the Savings Bank may discontinue payment of
the Salary beginning six months following a determination that the Employee has
become entitled to benefits under the Disability Plan or otherwise unable to
fulfill his duties under this Agreement. If the Employee’s disability does not
constitute a disability within the meaning of Section 409A, then payments under
this Section 7(f) shall not commence until the earlier of the Employee’s death
or the sixth month anniversary of the Employee’s Separation from Service, with
any delayed payments being made with the first permissible payment.

      

      (g)           Temporary Suspension or
Prohibition.  If the Employee is suspended and/or temporarily
prohibited from participating in the conduct of the Savings Bank's affairs by a
notice served under Section 8(e)(3) or (g)(1) of the FDIA, 12 U.S.C. Section
1818(e)(3) and (g)(1), the Savings Bank's obligations under this Agreement shall
be suspended as of the date of service, unless stayed by appropriate
proceedings.  If the charges in the notice are dismissed, the Savings
Bank may in its discretion (i) pay the Employee all or part of the compensation
withheld while its obligations under this Agreement were suspended and (ii)
reinstate in whole or in part any of its obligations which were
suspended.

      

      (h)           Permanent Suspension or
Prohibition.  If the Employee is removed and/or permanently
prohibited from participating in the conduct of the Savings Bank's affairs by an
order issued under Section 8(e)(4) or (g)(1) of the FDIA, 12 U.S.C. Section
1818(e)(4) and 

       

       

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

       

      (g)(1),
all obligations of the Savings Bank under this Agreement shall terminate as of
the effective date of the order, but vested rights of the contracting parties
shall not be affected.

      

      (i)           Default of the Savings
Bank.  If the Savings Bank is in default (as defined in Section
3(x)(1) of the FDIA), all obligations under this Agreement shall terminate as of
the date of default, but this provision shall not affect any vested rights of
the contracting parties.

      

      (j)           Termination by
Regulators.  All obligations under this Agreement shall be
terminated, except to the extent determined that continuation of this Agreement
is necessary for the continued operation of the Savings Bank:  (1) by
the Director of the OTS (the “Director”) or his or her designee, at the time the
FDIC enters into an agreement to provide assistance to or on behalf of the
Savings Bank under the authority contained in Section 13(c) of the FDIA; or (2)
by the Director or his or her designee, at the time the Director or his or her
designee approves a supervisory merger to resolve problems related to operation
of the Savings Bank or when the Savings Bank is determined by the Director to be
in an unsafe or unsound condition.  Any rights of the parties that
have already vested, however, shall not be affected by any such
action.

      

      (k)           Reductions of
Benefits. Notwithstanding any other provision of this Agreement, if
payments and the value of benefits received or to be received under this
Agreement, together with any other amounts and the value of benefits received or
to be received by the Employee, would cause any amount to be nondeductible by
the Savings Bank or any of the Consolidated Subsidiaries for federal income tax
purposes pursuant to or by reason of Section 280G of the Code, then payments and
benefits under this Agreement shall be reduced (not less than zero) to the
extent necessary so as to maximize the economic present value of benefits to be
received by the Employee, as determined by the Compensation Committee of the
Board of Directors of the Company as of the date of the Change in Control using
the discount rate required by Section 280G(d)(4) of the Code, without causing
any amount to become nondeductible pursuant to or by reason of Section 280G of
the Code.

      

      (l)           Further
Reductions.  Any payments made to the Executive pursuant to
this Agreement, or otherwise, are subject to and conditioned upon their
compliance with 12 U.S.C. Section 1828(k) and FDIC regulation 12 C.F.R. Part
359, Golden Parachute and Indemnification Payments.

      

      8.  Notice of
Termination.  In the event that the Savings Bank desires to
terminate the employment of the Employee during the term of this Agreement, the
Savings Bank shall deliver to the Employee a written notice of termination,
stating whether such termination constitutes Termination for Cause or
Involuntary Termination, setting forth in reasonable detail the facts and
circumstances that are the basis for the termination, and specifying the date
upon which employment shall terminate, which date shall be at least 30 days
after the date upon which the notice is delivered, except in the case of
Termination for Cause.  In the event that the Employee determines in
good faith that he has experienced an Involuntary Termination of his employment,
he shall send a written notice to the Savings Bank stating the circumstances
that constitute such Involuntary Termination and the date upon which his
employment shall have ceased due to such 

       

       

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

       

      Involuntary
Termination.  In the event that the Employee desires to effect a
Voluntary Termination, he shall deliver a written notice to the Savings Bank,
stating the date upon which employment shall terminate, which date shall be at
least 90 days after the date upon which the notice is delivered, unless the
parties agree to a date sooner.

      

      9.  Attorneys'
Fees.  The Savings Bank shall pay all legal fees and related
expenses (including the costs of experts, evidence and counsel) incurred by the
Employee as a result of (i) the Employee's contesting or disputing any
termination of employment, or (ii) the Employee's seeking to obtain or enforce
any right or benefit provided by this Agreement or by any other plan or
arrangement maintained by the Savings Bank (or a successor) or the Consolidated
Subsidiaries under which the Employee is or may be entitled to receive benefits;
provided that
the Savings Bank's obligation to pay such fees and expenses is subject to the
Employee's prevailing with respect to the matters in dispute in any action
initiated by the Employee or the Employee's having been determined to have acted
reasonably and in good faith with respect to any action initiated by the Savings
Bank.

      

      10.  No
Assignments.

      

      (a)           This
Agreement is personal to each of the parties hereto, and no party may assign or
delegate any of its rights or obligations hereunder without first obtaining the
written consent of the other party; provided, however,
that the Savings Bank shall require any successor or assign (whether direct or
indirect, by purchase, merger, consolidation or otherwise) by an assumption
agreement in form and substance satisfactory to the Employee, to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Savings Bank would be required to perform it, if no such
succession or assignment had taken place.  Failure to obtain such an
assumption agreement prior to the effectiveness of any such succession or
assignment shall be a breach of this Agreement and shall entitle the Employee to
compensation and benefits from the Savings Bank in the same amount and on the
same terms as the compensation pursuant to Section 7(d) of this
Agreement.  For purposes of implementing the provisions of this
Section 10(a), the date on which any such succession becomes effective shall be
deemed the Date of Termination.

      

      (b)             This
Agreement and all rights of the Employee hereunder shall inure to the benefit of
and be enforceable by the Employee's personal and legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees.

      

      11.  Notice.  For
the purposes of this Agreement, notices and all other communications provided
for in this Agreement shall be in writing and shall be deemed to have been duly
given when personally delivered or sent by certified mail, return receipt
requested, postage prepaid, to the  Savings Bank at its home office,
to the attention of the Board of Directors with a copy to the Secretary of the
Savings Bank, or, if to the Employee, to such home or other address as the
Employee has most recently provided in writing to the Savings Bank.

       

       

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

      
 

      12.  Amendments.  No
amendments or additions to this Agreement shall be binding unless in writing and
signed by both parties, except as herein otherwise provided.

      

      13.   Headings.  The
headings used in this Agreement are included solely for convenience and shall
not affect, or be used in connection with, the interpretation of this
Agreement.

      

      14.  Severability. The
provisions of this Agreement shall be deemed severable and the invalidity or
unenforceability of any provision shall not affect the validity or
enforceability of the other provisions hereof.

      

      15.  Governing Law. This
Agreement shall be governed by the laws of the State of Idaho.

      

      16.  Arbitration.  Any
dispute or controversy arising under or in connection with this Agreement shall
be settled exclusively by arbitration in accordance with the rules of the
American Arbitration Association then in effect.  Judgment may be
entered on the arbitrator's award in any court having
jurisdiction.  The OTS may appear at any arbitration hearing but the
decision is not binding on the OTS.

      

      17.  Deferral of Non-Deductible
Compensation. In the event that the Employee's aggregate compensation
(including compensatory benefits which are deemed remuneration for purposes of
Section 162(m) of the Code) from the Savings Bank and the Consolidated
Subsidiaries for any calendar year exceeds the maximum amount of compensation
deductible by the Savings Bank or any of the Consolidated Subsidiaries in any
calendar year under Section 162(m) of the Code (the “maximum allowable amount”),
then any such amount in excess of the maximum allowable amount shall be
mandatorily deferred with interest thereon at 8% per annum to a calendar year
such that the amount to be paid to the Employee in such calendar year, including
deferred amounts and interest thereon, does not exceed the maximum allowable
amount.  Subject to the foregoing, deferred amounts including interest
thereon shall be payable at the earliest time permissible.

      

      18.  Knowing and Voluntary
Agreement.  Employee represents and agrees that he has read
this Agreement, understands its terms, and that he has the right to consult
counsel of choice and has either done so or knowingly waives the right to do
so.  Employee also represents that he has had ample time to read and
understand the Agreement before executing it and that he enters into this
Agreement without duress or coercion from any source.

       

      * * * *
*

       

      
        
           

        

        
          10 

          
            

          

        

        
           

        

      

       

       

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

       

      THIS
AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE
PARTIES.

      

      

      
        	
                 

              	
                HOME
      FEDERAL BANK

              
	 	 
	                      
                	 By: 
      ____________________
	 Eric
      S. Nadeau	 
	 Secretary	 Its: 
      ____________________
	 	 
	 	 
	 	 EMPLOYEE
	 	 
	 	 _______________________
	 	 Len
      E. Williams

      

      

      

      

      
        
           

        

        
          11

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00158-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00158-of-00352.parquet"}]]