Document:

Exhibit 4.4

 

[FORM OF WARRANT]

 

AASTROM BIOSCIENCES, INC

 

WARRANT TO PURCHASE COMMON STOCK

 

Warrant No.:               

 

Date of Issuance: [                   ], 2013 (“Issuance Date”)

 

Aastrom Biosciences, Inc., a Michigan corporation (the “Company”), hereby certifies that, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, [                   ], the registered holder hereof or its permitted assigns (the “Holder”), is entitled, subject to the terms set forth below, to purchase from the Company, at the Exercise Price (as defined below) then in effect, upon exercise of this Warrant to Purchase Common Stock (including any Warrants to Purchase Common Stock issued in exchange, transfer or replacement hereof, the “Warrant”), at any time or times on or after the Issuance Date, but not after 11:59 p.m., New York time, on the Expiration Date (as defined below), [                            ](subject to adjustment as provided herein) fully paid and nonassessable shares of Common Stock (as defined below) (the “Warrant Shares”). Except as otherwise defined herein, capitalized terms in this Warrant shall have the meanings set forth in Section 16. This Warrant is one of the Warrants to Purchase Common Stock (the “Warrants”) issued pursuant to (i) Section 1.1 of that certain Underwriting Agreement, dated as of [          , 2013] (the “Subscription Date”), by and among the Company and the underwriters referred to therein, as amended from time to time (the “Underwriting Agreement”) and (ii) the Company’s Registration Statement on Form S-1 (File number 333-188186) (the “Registration Statement”).

 

1.                                      EXERCISE OF WARRANT.

 

(a)                                 Mechanics of Exercise.  Subject to the terms and conditions hereof (including, without limitation, the limitations set forth in Section 1(f)), this Warrant may be exercised by the Holder on any day on or after the Issuance Date (each, an “Exercise Date”), in whole or in part, by delivery (whether via facsimile or otherwise) of a written notice, in the form attached hereto as Exhibit A (the “Exercise Notice”), of the Holder’s election to exercise this Warrant.  Within one (1) Trading Day following an exercise of this Warrant as aforesaid, the Holder shall deliver payment to the Company of an amount equal to the Exercise Price in effect on the date of such exercise multiplied by the number of Warrant Shares as to which this Warrant was so exercised (the “Aggregate Exercise Price”) in cash or via wire transfer of immediately available funds if the Holder did not notify the Company in such Exercise Notice that such exercise was made pursuant to a Cashless Exercise (as defined in Section 1(d)).  The Holder shall not be required to deliver the original of this Warrant in order to effect an exercise hereunder.  Execution and delivery of an Exercise Notice with respect to less than all of the Warrant Shares shall have the same effect as cancellation of the original of this Warrant and issuance of a new Warrant evidencing the right to purchase the remaining number of Warrant Shares.  Execution and delivery of an Exercise Notice for all of the then-remaining Warrant Shares shall have the same effect as cancellation of the original of this Warrant after delivery of the Warrant Shares in

 

 

accordance with the terms hereof.  On or before the first (1st) Trading Day following the date on which the Company has received an Exercise Notice, the Company shall transmit by facsimile an acknowledgment of confirmation of receipt of such Exercise Notice, in the form attached hereto as Exhibit B, to the Holder and the Company’s transfer agent (the “Transfer Agent”). On or before the third (3rd) Trading Day following the date on which the Company has received such Exercise Notice, the Company shall (X) provided that the Transfer Agent is participating in The Depository Trust Company (“DTC”) Fast Automated Securities Transfer Program, upon the request of the Holder, credit such aggregate number of shares of Common Stock to which the Holder is entitled pursuant to such exercise to the Holder’s or its designee’s balance account with DTC through its Deposit/Withdrawal at Custodian system, or (Y) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, issue and deliver to the Holder or, at the Holder’s instruction pursuant to the Exercise Notice, the Holder’s agent or designee, in each case, sent by reputable overnight courier to the address as specified in the applicable Exercise Notice, a certificate, registered in the Company’s share register in the name of the Holder or its designee (as indicated in the applicable Exercise Notice), for the number of shares of Common Stock to which the Holder is entitled pursuant to such exercise.  Upon delivery of an Exercise Notice, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date such Warrant Shares are credited to the Holder’s DTC account or the date of delivery of the certificates evidencing such Warrant Shares (as the case may be).  If this Warrant is submitted in connection with any exercise pursuant to this Section 1(a) and the number of Warrant Shares represented by this Warrant submitted for exercise is greater than the number of Warrant Shares being acquired upon an exercise, then, at the request of the Holder, the Company shall as soon as practicable and in no event later than three (3) Business Days after any exercise and at its own expense, issue and deliver to the Holder (or its designee) a new Warrant (in accordance with Section 7(d)) representing the right to purchase the number of Warrant Shares purchasable immediately prior to such exercise under this Warrant, less the number of Warrant Shares with respect to which this Warrant is exercised.  No fractional shares of Common Stock are to be issued upon the exercise of this Warrant, but rather the number of shares of Common Stock to be issued shall be rounded up to the nearest whole number.  The Company shall pay any and all taxes and fees which may be payable with respect to the issuance and delivery of Warrant Shares upon exercise of this Warrant.  Notwithstanding the foregoing, except in the case where an exercise of this Warrant is validly made pursuant to a Cashless Exercise (as defined in Section 1(d)), the Company’s failure to deliver Warrant Shares to the Holder on or prior to the second (2nd) Trading Day after the Company’s receipt of the Aggregate Exercise Price shall not be deemed to be a breach of this Warrant.

 

(b)                                 Exercise Price.  For purposes of this Warrant, “Exercise Price” means $[ ], subject to adjustment as provided herein.

 

(c)                                  Company’s Failure to Timely Deliver Securities.  If the Company shall fail, for any reason or for no reason, to issue to the Holder within the later of (i) three (3) Trading Days after receipt of the applicable Exercise Notice and (ii) two (2) Trading Days after the Company’s receipt of the Aggregate Exercise Price (or valid notice of a Cashless Exercise) (such later date, the “Share Delivery Deadline”), a certificate for the number of shares of Common Stock to which the Holder is entitled and register such shares of Common Stock on the Company’s share register or to credit the Holder’s balance account with DTC for such number of shares of

 

 

Common Stock to which the Holder is entitled upon the Holder’s exercise of this Warrant (as the case may be) (a “Delivery Failure”), and if on or after such Share Delivery Deadline the Holder purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of all or any portion of the number of shares of Common Stock, or a sale of a number of shares of Common Stock equal to all or any portion of the number of shares of Common Stock, issuable upon such exercise that the Holder so anticipated receiving from the Company, then, in addition to all other remedies available to the Holder, the Company shall, within three (3) Business Days after the Holder’s request and in the Holder’s discretion, either (i) pay cash to the Holder in an amount equal to the Holder’s total purchase price (including brokerage commissions and other out-of-pocket expenses, if any) for the shares of Common Stock so purchased (including, without limitation, by any other Person in respect, or on behalf, of the Holder) (the “Buy-In Price”), at which point the Company’s obligation to so issue and deliver such certificate or credit the Holder’s balance account with DTC for the number of shares of Common Stock to which the Holder is entitled upon the Holder’s exercise hereunder (as the case may be) (and to issue such shares of Common Stock) shall terminate, or (ii) promptly honor its obligation to so issue and deliver to the Holder a certificate or certificates representing such shares of Common Stock or credit the Holder’s balance account with DTC for the number of shares of Common Stock to which the Holder is entitled upon the Holder’s exercise hereunder (as the case may be) and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of shares of Common Stock multiplied by (B) the lowest Closing Sale Price of the Common Stock on any Trading Day during the period commencing on the date of the applicable Exercise Notice and ending on the date immediately preceding the date of such issuance and payment under this clause (ii).

 

(d)                                 Cashless Exercise.  Notwithstanding anything contained herein to the contrary (other than Section 1(f) below), if the shares issuable upon the exercise of the Warrants are no longer registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Holder may, in its sole discretion, exercise this Warrant in whole or in part and, in lieu of making the cash payment otherwise contemplated to be made to the Company upon such exercise in payment of the Aggregate Exercise Price, elect instead to receive upon such exercise the “Net Number” of shares of Common Stock (the “Net Number”) determined according to the following formula (a “Cashless Exercise”):

 

	
Net Number = 
    	
(A x B) - (A x C)
    
	
 
    	
D
    

 

For purposes of the foregoing formula:

 

A = the total number of shares with respect to which this Warrant is then being exercised.

 

B =the quotient of (x) the sum of the VWAP of the Common Stock of each of the ten (10) Trading Days ending at the close of business on the Principal Market immediately prior to the time of exercise as set forth in the applicable Exercise Notice, divided by (y) ten (10).

 

 

C = the Exercise Price then in effect for the applicable Warrant Shares at the time of such exercise.

 

D = the lower of (w) as applicable, (i) the Closing Sale Price of the Common Stock on the Trading Day immediately preceding the date of the applicable Exercise Notice if such Exercise Notice is (1) both executed and delivered pursuant to Section 1(a) hereof on a day that is not a Trading Day or (2) both executed and delivered pursuant to Section 1(a) hereof on a Trading Day prior to the opening of “regular trading hours” (as defined in Rule 600(b)(64) of Regulation NMS promulgated under the federal securities laws) on such Trading Day, and (ii) the Closing Sale Price of the Common Stock on the date of the applicable Exercise Notice if the date of such Exercise Notice is a Trading Day and such Exercise Notice is both executed and delivered pursuant to Section 1(a) hereof during such Trading Day or after the close of “regular trading hours” on such Trading Day, (x) the VWAP of the Common Stock at the close of business on the Principal Market on the Trading Day immediately prior to the applicable Exercise Date, (y) the quotient of (A) the sum of the VWAP of the Common Stock of each of the ten (10) Trading Days ending at the close of business on the Principal Market immediately prior to the time of exercise as set forth in the applicable Exercise Notice, divided by (B) ten (10) and (z) the lowest Bid Price of the Common Stock at any time during the Trading Day on the applicable Exercise Date.

 

(e)                                  Disputes.  In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of the number of Warrant Shares to be issued pursuant to the terms hereof, the Company shall promptly issue to the Holder the number of Warrant Shares that are not disputed and resolve such dispute in accordance with Section 13.

 

(f)                                   Limitations on Exercises.  Notwithstanding anything to the contrary contained in this Warrant, this Warrant shall not be exercisable by the Holder hereof to the extent (but only to the extent) that after giving effect to such exercise the Holder (together with any of its affiliates) would beneficially own in excess of 4.99% (the “Maximum Percentage”) of the Common Stock.  To the extent the above limitation applies, the determination of whether this Warrant shall be exercisable (vis-à-vis other convertible, exercisable or exchangeable securities owned by the Holder or any of its affiliates) and of which such securities shall be convertible, exercisable or exchangeable (as the case may be, as among all such securities owned by the Holder) shall, subject to such Maximum Percentage limitation, be determined on the basis of the first submission to the Company for conversion, exercise or exchange (as the case may be).  No prior inability to exercise this Warrant pursuant to this paragraph shall have any effect on the applicability of the provisions of this paragraph with respect to any subsequent determination of exercisability.  For the purposes of this paragraph, beneficial ownership and all determinations and calculations (including, without limitation, with respect to calculations of percentage ownership) shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder.  The provisions of this paragraph shall be implemented in a manner otherwise than in strict conformity with the terms of this paragraph to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Maximum Percentage beneficial ownership limitation herein contained or to make

 

 

changes or supplements necessary or desirable to properly give effect to such Maximum Percentage limitation.  The limitations contained in this paragraph shall apply to a successor Holder of this Warrant.  The holders of Common Stock shall be third party beneficiaries of this paragraph and the Company may not waive this paragraph without the consent of holders of a majority of its Common Stock.  For any reason at any time, upon the written or oral request of the Holder, the Company shall within one (1) Business Day confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding, including by virtue of any prior conversion or exercise of convertible or exercisable securities into Common Stock, including, without limitation, pursuant to this Warrant or securities issued pursuant to the Underwriting Agreement.  By written notice to the Company, any Holder may increase or decrease the Maximum Percentage to any other percentage not in excess of 9.99% specified in such notice; provided that (i) any such increase will not be effective until the 61st day after such notice is delivered to the Company, and (ii) any such increase or decrease will apply only to the Holder sending such notice and not to any other holder of Warrants.

 

(g)                                  Insufficient Authorized Shares.  From and after the Initial Exercisability Date, the Company shall at all times keep reserved for issuance under this Warrant a number of shares of Common Stock at least equal to 100% of the maximum number of shares of Common Stock as shall be necessary to satisfy the Company’s obligation to issue shares of Common Stock hereunder (without regard to any limitation otherwise contained herein with respect to the number of shares of Common Stock that may be acquirable upon exercise of this Warrant).  From and after the Initial Exercisability Date, if, notwithstanding the foregoing, and not in limitation thereof, at any time while any of the Warrants remain outstanding the Company does not have a sufficient number of authorized and unreserved shares of Common Stock to satisfy its obligation to reserve for issuance upon exercise of the Warrants at least a number of shares of Common Stock (the “Required Reserve Amount”) equal to the number of shares of Common Stock as shall from time to time be necessary to effect the exercise of all of the Warrants then outstanding (an “Authorized Share Failure”), then the Company shall immediately take all action reasonably necessary to increase the Company’s authorized shares of Common Stock to an amount sufficient to allow the Company to reserve the Required Reserve Amount for all the Warrants then outstanding.  Without limiting the generality of the foregoing sentence, as soon as practicable after the date of the occurrence of an Authorized Share Failure, but in no event later than sixty (60) days after the occurrence of such Authorized Share Failure, the Company shall hold a meeting of its stockholders for the approval of an increase in the number of authorized shares of Common Stock.  In connection with such meeting, the Company shall provide each stockholder with a proxy statement and shall use its reasonable best efforts to solicit its stockholders’ approval of such increase in authorized shares of Common Stock and to cause its board of directors to recommend to the stockholders that they approve such proposal.  In the event that the Company is prohibited from issuing shares of Common Stock upon an exercise of this Warrant due to the failure by the Company to have sufficient shares of Common Stock available out of the authorized but unissued shares of Common Stock (such unavailable number of shares of Common Stock, the “Authorization Failure Shares”), in lieu of delivering such Authorization Failure Shares to the Holder, the Company shall pay cash in exchange for the cancellation of such portion of this Warrant exercisable into such Authorized Failure Shares at a price equal to the sum of (i) the product of (x) such number of Authorization Failure Shares and (y) the greatest Closing Sale Price of the Common Stock on any Trading Day during the period commencing on the date the Holder delivers the applicable Exercise Notice with respect to such

 

 

Authorization Failure Shares to the Company and ending on the date immediately preceding the date of such issuance and payment under this Section 1(g) and (ii) to the extent the Holder purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of Authorization Failure Shares, any brokerage commissions and other out-of-pocket expenses, if any, of the Holder incurred in connection therewith.

 

2.                                      ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES.  The Exercise Price and number of Warrant Shares issuable upon exercise of this Warrant are subject to adjustment from time to time as set forth in this Section 2.

 

(a)                                 Stock Dividends and Splits.  Without limiting any provision of Section 2(b) or Section 4, if the Company, at any time on or after the date of the Underwriting Agreement, (i) pays a stock dividend on one or more classes of its then outstanding shares of Common Stock or otherwise makes a distribution on any class of capital stock that is payable in shares of Common Stock, (ii) subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its then outstanding shares of Common Stock into a larger number of shares or (iii) combines (by combination, reverse stock split or otherwise) one or more classes of its then outstanding shares of Common Stock into a smaller number of shares, then in each such case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event.  Any adjustment made pursuant to clause (i) of this paragraph shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution, and any adjustment pursuant to clause (ii) or (iii) of this paragraph shall become effective immediately after the effective date of such subdivision or combination.  If any event requiring an adjustment under this paragraph occurs during the period that an Exercise Price is calculated hereunder, then the calculation of such Exercise Price shall be adjusted appropriately to reflect such event.

 

(b)                                 Adjustment Upon Market Price Decrease.  If at any time on or after the date hereof and prior to December 31, 2013, the Company effects a reverse stock split and 120% of the closing Market Price of the Common Stock during any three (3) Trading Days after the effective date of the reverse stock split is less than the Initial Per Share Offering Price, as such amount shall be adjusted for stock splits, stock dividends and other similar events (the “Adjusted Per Share Offering Price”), then the Exercise Price shall be reduced to 125% of the amount of the lowest closing Market Price of the Common Stock during such three-day period; provided, that in no event shall the Exercise Price be reduced to an amount that is less than [         ], 80% of the Adjusted Per Share Offering Price.  This adjustment, if any, shall only be effected after the first reverse stock split effected after the date hereof.

 

(c)                                  Calculations.  All calculations under this Section 2 shall be made by rounding to the nearest cent or the nearest 1/100th of a share, as applicable.  The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for

 

 

the account of the Company, and the disposition of any such shares shall be considered an issue or sale of Common Stock.

 

3.                                      RIGHTS UPON DISTRIBUTION OF ASSETS.  In addition to any adjustments pursuant to Section 2 above, if the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Maximum Percentage) immediately before the date on which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution (provided, however, to the extent that the Holder’s right to participate in any such Distributions would result in the Holder exceeding the Maximum Percentage, then the Holder shall not be entitled to participate in such Distribution to such extent (or the beneficial ownership of any such shares of Common Stock as a result of such Distribution to such extent) and such Distribution to such extent shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Maximum Percentage).

 

4.                                      PURCHASE RIGHTS; FUNDAMENTAL TRANSACTIONS.

 

(a)                                 Purchase Rights.  In addition to any adjustments pursuant to Section 2 above, if at any time the Company grants, issues or sells any options, convertible securities or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the maximum percentage) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Maximum Percentage, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the holder exceeding the Maximum Percentage).

 

(b)                                 Fundamental Transactions.  Upon the consummation of a Fundamental Transaction, the registered holder shall have the right thereafter to receive, upon exercise of the Warrant, the same amount and kind of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction if it had been, immediately prior to such Fundamental Transaction, the holder of the number of Warrant Shares then issuable upon exercise in full of the Warrant without regard to any limitations on exercise contained in the Warrant (the “Alternate Consideration”).  The Company shall not effect any such Fundamental Transaction unless prior to or simultaneously with the consummation thereof, any successor to the Company, surviving entity or the corporation purchasing or otherwise acquiring such assets or other appropriate corporation or person shall assume the Warrant and the obligation to deliver to the registered holder may be entitled to receive, and the other obligations under the Warrant.

 

5.                                      NONCIRCUMVENTION.  The Company hereby covenants and agrees that the Company will not, by amendment of its certificate of incorporation, bylaws or through any

 

 

reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, and will at all times in good faith carry out all the provisions of this Warrant and take all action as may be required to protect the rights of the Holder.  Without limiting the generality of the foregoing, the Company (i) shall not increase the par value of any shares of Common Stock receivable upon the exercise of this Warrant above the Exercise Price then in effect, (ii) shall take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and non-assessable shares of Common Stock upon the exercise of this Warrant, and (iii) shall, so long as any of the Warrants are outstanding, take all action necessary to reserve and keep available out of its authorized and unissued shares of Common Stock, solely for the purpose of effecting the exercise of the Warrants, the maximum number of shares of Common Stock as shall from time to time be necessary to effect the exercise of the Warrants then outstanding (without regard to any limitations on exercise).

 

6.                                      WARRANT HOLDER NOT DEEMED A STOCKHOLDER.  Except as otherwise specifically provided herein, the Holder, solely in its capacity as a holder of this Warrant, shall not be entitled to vote or receive dividends or be deemed the holder of share capital of the Company for any purpose, nor shall anything contained in this Warrant be construed to confer upon the Holder, solely in its capacity as the Holder of this Warrant, any of the rights of a stockholder of the Company or any right to vote, give or withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise, prior to the issuance to the Holder of the Warrant Shares which it is then entitled to receive upon the due exercise of this Warrant.  In addition, nothing contained in this Warrant shall be construed as imposing any liabilities on the Holder to purchase any securities (upon exercise of this Warrant or otherwise) or as a stockholder of the Company, whether such liabilities are asserted by the Company or by creditors of the Company.  Notwithstanding this Section 6, the Company shall provide the Holder with copies of the same notices and other information given to the stockholders of the Company generally, contemporaneously with the giving thereof to the stockholders.

 

7.                                      REISSUANCE OF WARRANTS.

 

(a)                                 Transfer of Warrant.  If this Warrant is to be transferred, the Holder shall surrender this Warrant to the Company, whereupon the Company will forthwith issue and deliver upon the order of the Holder a new Warrant (in accordance with Section 7(d)), registered as the Holder may request, representing the right to purchase the number of Warrant Shares being transferred by the Holder and, if less than the total number of Warrant Shares then underlying this Warrant is being transferred, a new Warrant (in accordance with Section 7(d)) to the Holder representing the right to purchase the number of Warrant Shares not being transferred.

 

(b)                                 Lost, Stolen or Mutilated Warrant.  Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant (as to which a written certification and the indemnification contemplated below shall suffice as such evidence), and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company in customary and reasonable form and, in the case of

 

 

mutilation, upon surrender and cancellation of this Warrant, the Company shall execute and deliver to the Holder a new Warrant (in accordance with Section 7(d)) representing the right to purchase the Warrant Shares then underlying this Warrant.

 

(c)                                  Exchangeable for Multiple Warrants.  This Warrant is exchangeable, upon the surrender hereof by the Holder at the principal office of the Company, for a new Warrant or Warrants (in accordance with Section 7(d)) representing in the aggregate the right to purchase the number of Warrant Shares then underlying this Warrant, and each such new Warrant will represent the right to purchase such portion of such Warrant Shares as is designated by the Holder at the time of such surrender; provided, however, no warrants for fractional shares of Common Stock shall be given.

 

(d)                                 Issuance of New Warrants.  Whenever the Company is required to issue a new Warrant pursuant to the terms of this Warrant, such new Warrant (i) shall be of like tenor with this Warrant, (ii) shall represent, as indicated on the face of such new Warrant, the right to purchase the Warrant Shares then underlying this Warrant (or in the case of a new Warrant being issued pursuant to Section 7(a) or Section 7(c), the Warrant Shares designated by the Holder which, when added to the number of shares of Common Stock underlying the other new Warrants issued in connection with such issuance, does not exceed the number of Warrant Shares then underlying this Warrant), (iii) shall have an issuance date, as indicated on the face of such new Warrant which is the same as the Issuance Date, and (iv) shall have the same rights and conditions as this Warrant.

 

8.                                      NOTICES.  Whenever notice is required to be given under this Warrant, unless otherwise provided herein, such notice shall be given in accordance with Section 9.1 of the Underwriting Agreement.  The Company shall provide the Holder with prompt written notice of all actions taken pursuant to this Warrant, including in reasonable detail a description of such action and the reason therefor.  Without limiting the generality of the foregoing, the Company will give written notice to the Holder (i) promptly upon each adjustment of the Exercise Price and the number of Warrant Shares, setting forth in reasonable detail, and certifying, the calculation of such adjustment(s) and (ii) at least fifteen (15) days prior to the date on which the Company closes its books or takes a record (A) with respect to any dividend or distribution upon the shares of Common Stock, (B) with respect to any grants, issuances or sales of any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property to holders of shares of Common Stock or (C) for determining rights to vote with respect to any Fundamental Transaction, dissolution or liquidation, provided in each case that such information shall be made known to the public prior to or in conjunction with such notice being provided to the Holder and (iii) at least ten (10) Trading Days prior to the consummation of any Fundamental Transaction.  To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any of its Subsidiaries, the Company shall simultaneously file such notice with the SEC pursuant to a Current Report on Form 8-K.  It is expressly understood and agreed that the time of execution specified by the Holder in each Exercise Notice shall be definitive and may not be disputed or challenged by the Company.

 

9.                                      AMENDMENT AND WAIVER.  Except as otherwise provided herein, the provisions of this Warrant (other than Section 1(f)) may be amended and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the

 

 

Company has obtained the written consent of the Holder.  No waiver shall be effective unless it is in writing and signed by an authorized representative of the waiving party.

 

10.                               SEVERABILITY.  If any provision of this Warrant is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions of this Warrant so long as this Warrant as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties.  The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).

 

11.                               GOVERNING LAW.  This Warrant shall be governed by and construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Warrant shall be governed by, the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York.  The Company hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in The City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper.  Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.  Nothing contained herein shall be deemed or operate to preclude the Holder from bringing suit or taking other legal action against the Company in any other jurisdiction to collect on the Company’s obligations to the Holder or to enforce a judgment or other court ruling in favor of the Holder.  THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS WARRANT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

12.                               CONSTRUCTION; HEADINGS.  This Warrant shall be deemed to be jointly drafted by the Company and the Holder and shall not be construed against any Person as the drafter hereof.  The headings of this Warrant are for convenience of reference and shall not form part of, or affect the interpretation of, this Warrant.

 

13.                               DISPUTE RESOLUTION.  In the case of a dispute as to the determination of the Exercise Price, the Closing Bid Price, the Closing Sale Price or fair market value or the arithmetic calculation of the number of Warrant Shares (as the case may be), the Company or the

 

 

Holder (as the case may be) shall submit the disputed determinations or arithmetic calculations (as the case may be) via facsimile (i) within two (2) Business Days after receipt of the applicable notice giving rise to such dispute to the Company or the Holder (as the case may be) or (ii) if no notice gave rise to such dispute, at any time after the Holder learned of the circumstances giving rise to such dispute (including, without limitation, as to whether any issuance or sale or deemed issuance or sale was an issuance or sale or deemed issuance or sale of Excluded Securities).  If the Holder and the Company are unable to agree upon such determination or calculation (as the case may be) of the Exercise Price, the Closing Sale Price or fair market value or the number of Warrant Shares (as the case may be) within three (3) Business Days of such disputed determination or arithmetic calculation being submitted to the Company or the Holder (as the case may be), then the Company shall, within two (2) Business Days submit via facsimile (a) the disputed determination of the Exercise Price, the Closing Bid Price, the Closing Sale Price or fair market value (as the case may be) to an independent, reputable investment bank selected by the Company and approved by the Holder or (b) the disputed arithmetic calculation of the number of Warrant Shares to the Company’s independent, outside accountant.  The Company shall cause at its expense the investment bank or the accountant (as the case may be) to perform the determinations or calculations (as the case may be) and notify the Company and the Holder of the results no later than ten (10) Business Days from the time it receives such disputed determinations or calculations (as the case may be).  Such investment bank’s or accountant’s determination or calculation (as the case may be) shall be binding upon all parties absent demonstrable error.

 

14.          REMEDIES, CHARACTERIZATION, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF.  The remedies provided in this Warrant shall be cumulative and in addition to all other remedies available under this Warrant, at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the right of the Holder to pursue actual and consequential damages for any failure by the Company to comply with the terms of this Warrant.  The Company covenants to the Holder that there shall be no characterization concerning this instrument other than as expressly provided herein.  Amounts set forth or provided for herein with respect to payments, exercises and the like (and the computation thereof) shall be the amounts to be received by the Holder and shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof).  The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate.  The Company therefore agrees that, in the event of any such breach or threatened breach, the holder of this Warrant shall be entitled, in addition to all other available remedies, to an injunction restraining any breach, without the necessity of showing economic loss and without any bond or other security being required.  The Company shall provide all information and documentation to the Holder that is requested by the Holder to enable the Holder to confirm the Company’s compliance with the terms and conditions of this Warrant (including, without limitation, compliance with Section 2 hereof).  The issuance of shares and certificates for shares as contemplated hereby upon the exercise of this Warrant shall be made without charge to the Holder or such shares for any issuance tax or other costs in respect thereof, provided that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name other than the Holder or its agent on its behalf.

 

 

15.          TRANSFER.  This Warrant may be offered for sale, sold, transferred or assigned without the consent of the Company.

 

16.          CERTAIN DEFINITIONS.  For purposes of this Warrant, the following terms shall have the following meanings:

 

(a)           “Approved Stock Plan” means any employee benefit plan which has been approved by the board of directors of the Company prior to or subsequent to the date hereof pursuant to which shares of Common Stock and standard options to purchase Common Stock may be issued to any employee, officer or director for services provided to the Company in their capacity as such.

 

(b)           “Bid Price” means, for any security as of the particular time of determination, the bid price for such security on the Principal Market as reported by Bloomberg as of such time of determination, or, if the Principal Market is not the principal securities exchange or trading market for such security, the bid price of such security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg as of such time of determination, or if the foregoing does not apply, the bid price of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg as of such time of determination, or, if no bid price is reported for such security by Bloomberg as of such time of determination, the average of the bid prices of any market makers for such security as reported in the “pink sheets” by OTC Markets Group Inc. (formerly Pink Sheets LLC) as of such time of determination.  If the Bid Price cannot be calculated for a security as of the particular time of determination on any of the foregoing bases, the Bid Price of such security as of such time of determination shall be the fair market value as mutually determined by the Company and the Holder.  If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved in accordance with the procedures in Section 13.  All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during such period.

 

(c)           “Bloomberg” means Bloomberg, L.P.

 

(d)           “Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized or required by law to remain closed.

 

(e)           “Closing Bid Price” and “Closing Sale Price” means, for any security as of any date, the last closing bid price and last closing trade price, respectively, for such security on the Principal Market, as reported by Bloomberg, or, if the Principal Market begins to operate on an extended hours basis and does not designate the closing bid price or the closing trade price (as

 

 

the case may be) then the last bid price or last trade price, respectively, of such security prior to 4:00:00 p.m., New York City time, as reported by Bloomberg, or, if the Principal Market is not the principal securities exchange or trading market for such security, the last closing bid price or last trade price, respectively, of such security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing bid price or last trade price, respectively, of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, or, if no closing bid price or last trade price, respectively, is reported for such security by Bloomberg, the average of the bid prices, or the ask prices, respectively, of any market makers for such security as reported in the “pink sheets” by OTC Markets Group Inc. (formerly Pink Sheets LLC).  If the Closing Bid Price or the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Bid Price or the Closing Sale Price (as the case may be) of such security on such date shall be the fair market value as mutually determined by the Company and the Holder.  If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved in accordance with the procedures in Section 13.  All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during such period. 

 

(f)            “Common Stock” means (i) the Company’s shares of common stock, no par value per share, and (ii) any capital stock into which such common stock shall have been changed or any share capital resulting from a reclassification of such common stock.

 

(g)           “Convertible Securities” means any stock or other security (other than Options) that is at any time and under any circumstances, directly or indirectly, convertible into, exercisable or exchangeable for, or which otherwise entitles the holder thereof to acquire, any shares of Common Stock.

 

(h)           “Eligible Market” means The New York Stock Exchange, the NYSE MKT, the Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq Capital Market, the OTCQB or the Principal Market.

 

(i)            “Excluded Securities” means (i) shares of Common Stock or standard options to purchase Common Stock issued to directors, officers or employees of the Company in their capacity as such pursuant to an Approved Stock Plan (as defined above), provided that (A) all such issuances (taking into account the shares of Common Stock issuable upon exercise of such options) after the date hereof pursuant to this clause (i) do not, in the aggregate, exceed more than 5% of the Common Stock issued and outstanding immediately prior to the date hereof and (B) the exercise price of any such options is not lowered, none of such options are amended to increase the number of shares issuable thereunder and none of the terms or conditions of any such options are otherwise materially changed in any manner that adversely affects any of the holders of Warrants; (ii) shares of Common Stock issued upon the conversion or exercise of Convertible Securities (other than standard options to purchase Common Stock issued pursuant to an Approved Stock Plan that are covered by clause (i) above) issued prior to the date hereof, provided that the conversion price of any such Convertible Securities (other than standard options to purchase Common Stock issued pursuant to an Approved Stock Plan that are covered by clause (i) above) is not lowered through the amendment or waiver of such Convertible

 

 

Security, none of such Convertible Securities (other than standard options to purchase Common Stock issued pursuant to an Approved Stock Plan that are covered by clause (i) above) are amended to increase the number of shares issuable thereunder and none of the terms or conditions of any such Convertible Securities (other than standard options to purchase Common Stock issued pursuant to an Approved Stock Plan that are covered by clause (i) above) are otherwise materially changed in any manner that adversely affects any of the holders of Warrants; (iv) the shares of Common Stock issuable upon exercise of the Warrants and (v) securities issuable in connection with strategic license agreements and other partnering arrangements where the purchaser or acquirer of the securities in such issuance solely consists of either (x) the actual participants in such strategic license, strategic alliance, strategic partnership or other partnering arrangements, (y) the actual owners of such assets or securities acquired in such acquisition or merger or (z) the stockholders, partners or members of the foregoing Persons and (C) number or amount of securities issued to such Person by the Company shall not be disproportionate (as determined in good faith by the Board of Directors of the Company) to either (x) the fair market value of such Person’s actual contribution to such strategic alliance or strategic partnership or (y) the proportional ownership of such assets or securities to be acquired by the Company, as applicable; provided, that, notwithstanding the foregoing, such purchaser or acquirer of the securities in such issuance shall not include any person regularly engaged in the business of buying or selling securities. 

 

(j)            “Expiration Date” means the date that is [           ](1) or, if such date falls on a day other than a Business Day or on which trading does not take place on the Principal Market (a “Holiday”), the next date that is not a Holiday.

 

(k)           “Fundamental Transaction” means that (i) the Company or any of its Subsidiaries shall, directly or indirectly, in one or more related transactions, (1) consolidate or merge with or into (whether or not the Company or any of its Subsidiaries is the surviving corporation) any other Person, or (2) sell, lease, license, assign, transfer, convey or otherwise dispose of all or substantially all of its respective properties or assets to any other Person, or (3) allow any other Person to make a purchase, tender or exchange offer that is accepted by the holders of more than 50% of the outstanding shares of Voting Stock of the Company (not including any shares of Voting Stock of the Company held by the Person or Persons making or party to, or associated or affiliated with the Persons making or party to, such purchase, tender or exchange offer), or (4) consummate a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with any other Person whereby such other Person acquires more than 50% of the outstanding shares of Voting Stock of the Company (not including any shares of Voting Stock of the Company held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination), or (5) (I) reorganize, recapitalize or reclassify the Common Stock, (II) effect or consummate a stock combination, reverse stock split or other similar transaction involving the Common Stock or (III) make any public announcement or disclosure with respect to any stock combination, reverse stock split or other similar transaction involving the Common Stock (including, without limitation, any public announcement or disclosure of (x) any potential,

 

(1)  Insert fifth anniversary of the initial Issuance Date

 

 

possible or actual stock combination, reverse stock split or other similar transaction involving the Common Stock or (y) board or stockholder approval thereof, or the intention of the Company to seek board or stockholder approval of any stock combination, reverse stock split or other similar transaction involving the Common Stock) (for the avoidance of doubt, this subsection (5) shall not include any forward splits or dividends on the Common Stock), or (ii) any “person” or “group” (as these terms are used for purposes of Sections 13(d) and 14(d) of the Exchange Act and the rules and regulations promulgated thereunder) is or shall become the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 50% of the aggregate ordinary voting power represented by issued and outstanding Voting Stock of the Company. 

 

(l)            “Initial Per Share Offering Price” means $[     ].

 

(m)          “Market Price” means, as of any Exercise Date, the lower of (i) 70% of the VWAP of the Common Stock on the Trading Day immediately prior to such Exercise Date, (ii) the price which shall be computed as 70% of the quotient of (I) the sum of the VWAPs of the Common Stock of each Trading Day during the ten (10) consecutive Trading Day period ending and including the Trading Day immediately prior to such Exercise Date, divided by (II) ten (10) and (iii) the lowest Bid Price of the Common Stock at any time during the Trading Day on such Exercise Date.

 

(n)           “Options” means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible Securities.

 

(o)           “Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity or a government or any department or agency thereof.

 

(p)           “Principal Market” means the OTC Bulletin Board.

 

(q)           “Subsidiary” means any Person in which the Company, directly or indirectly, (i) owns any of the outstanding capital stock or holds any equity or similar interest of such Person or (ii) controls or operates all or any part of the business, operations or administration of such Person, and all of the foregoing.

 

(r)            “Trading Day” means any day on which the Common Stock is traded on the Principal Market, or, if the Principal Market is not the principal trading market for the Common

 

 

Stock, then on the principal securities exchange or securities market on which the Common Stock is then traded, provided that “Trading Day” shall not include any day on which the Common Stock is scheduled to trade on such exchange or market for less than 4.5 hours or any day that the Common Stock is suspended from trading during the final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing time of trading on such exchange or market, then during the hour ending at 4:00:00 p.m., New York time) unless such day is otherwise designated as a Trading Day in writing by the Holder. 

 

(s)            “Voting Stock” of a Person means capital stock of such Person of the class or classes pursuant to which the holders thereof have the general voting power to elect, or the general power to appoint, at least a majority of the board of directors, managers or trustees of such Person (irrespective of whether or not at the time capital stock of any other class or classes shall have or might have voting power by reason of the happening of any contingency).

 

(t)            “VWAP” means, for any security as of any date, the dollar volume-weighted average price for such security on the Principal Market (or, if the Principal Market is not the principal trading market for such security, then on the principal securities exchange or securities market on which such security is then traded) during the period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New York time, as reported by Bloomberg through its “Volume at Price” function or, if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter market on the electronic bulletin board for such security during the period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New York time, as reported by Bloomberg, or, if no dollar volume-weighted average price is reported for such security by Bloomberg for such hours, the average of the highest closing bid price and the lowest closing ask price of any of the market makers for such security as reported in the “pink sheets” by OTC Markets Group Inc. (formerly Pink Sheets LLC).  If VWAP cannot be calculated for such security on such date on any of the foregoing bases, the VWAP of such security on such date shall be the fair market value as mutually determined by the Company and the Holder.  If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved in accordance with the procedures in Section 13.  All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during such period.

 

[signature page follows]

 

 

IN WITNESS WHEREOF, the Company has caused this Warrant to Purchase Common Stock to be duly executed as of the Issuance Date set out above.

 

	
 
    	
AASTROM BIOSCIENCES, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

 

EXHIBIT A

 

EXERCISE NOTICE

 

TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS
 WARRANT TO PURCHASE COMMON STOCK

 

AASTROM BIOSCIENCES, INC.

 

The undersigned holder hereby exercises the right to purchase                                    of the shares of Common Stock (“Warrant Shares”) of Aastrom Biosciences, Inc., a Michigan corporation (the “Company”), evidenced by Warrant to Purchase Common Stock No.                (the “Warrant”).  Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Warrant.

 

1.             Form of Exercise Price.  The Holder intends that payment of the Exercise Price shall be made as:

 

o                                                                                    a “Cash Exercise” with respect to                                    Warrant Shares; and/or

 

o                                                                                    a “Cashless Exercise” with respect to                                Warrant Shares, resulting in a delivery obligation by the Company to the Holder of                      shares of Common Stock representing the applicable Net Number, subject to adjustment.

 

2.             Cashless Exercise Adjustment.  Check if applicable: o

 

The Holder hereby notifies the Company that the Holder has previously delivered the Exercise Notice(s) attached hereto as Schedule I for Cashless Exercise.

 

As the applicable Net Number has changed since the time of delivery of such Exercise Notice(s):

 

Check if applicable:

 

o                                                            The Company’s delivery obligation to the Holder with respect to such Exercise Notice(s), in the aggregate, should be adjusted to                      shares of Common Stock.

 

o                                                            Due to the application of Section 1(f) of the Warrant, the number of Warrant Shares of this Warrant to be exercised, with respect to such Exercise Notice(s), in the aggregate, was automatically reduced to                 , Warrant Shares, resulting in a delivery obligation by the Company to the Holder of                      shares of Common Stock representing the applicable Net Number.

 

3.             Payment of Exercise Price.  In the event that the Holder has elected a Cash Exercise with respect to some or all of the Warrant Shares to be issued pursuant hereto, the Holder shall pay

 

 

the Aggregate Exercise Price in the sum of $                                       to the Company in accordance with the terms of the Warrant.

 

4.             Delivery of Warrant Shares.  The Company shall deliver to Holder, or its designee or agent as specified below,                      Warrant Shares in accordance with the terms of the Warrant.  Delivery shall be made to Holder, or for its benefit, to the following address:

 

	
Date:                                    ,
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Name   of Registered Holder
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

 

EXHIBIT B

 

ACKNOWLEDGMENT

 

The Company hereby acknowledges this Exercise Notice and hereby directs                              to issue the above indicated number of shares of Common Stock in accordance with the Transfer Agent Instructions dated                   , 20    , from the Company and acknowledged and agreed to by                               .

 

 

	
 
    	
AASTROM   BIOSCIENCES, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:Exhibit 10.3

 

SUBLEASE AGREEMENT

 

9363 Towne Centre Drive, San Diego, California 92121

 

This Sublease Agreement (“Sublease”) is made as of the 28th day of May, 2013 (the “Effective Date”) by and between AMYLIN PHARMACEUTICALS, LLC, a Delaware limited liability company (“Sublessor”), and METHYLGENE US, INC., a Delaware corporation (“Sublessee”).

 

Recitals

 

A.                                    Pursuant to that certain Lease Agreement dated November 14, 2003 by and between ARE-9363/9373/9393 TOWNE CENTRE, LLC, a Delaware limited liability company, predecessor-in-interest to ARE-SD REGION NO. 20, LLC, a Delaware limited liability company (“Prime Lessor”), as landlord, and Sublessor’s predecessor-in-interest, as tenant, as amended by the First Amendment thereto dated January 5, 2006, the Second Amendment dated September 7, 2006 and the Third Amendment dated June 1, 2010 (the Lease Agreement, as amended, is referred to herein collectively as the “Prime Lease” and is attached hereto as Exhibit A) Prime Lessor leased and demised to Sublessor certain premises comprised of two separate office buildings (the “Prime Lease Premises”) including the two (2) story building consisting of approximately 45,030 square feet and commonly known as 9363 Towne Centre Drive, San Diego, CA 92121 (“Building”), which building is situated in the City of San Diego, County of San Diego, State of California, in the project commonly known as Alexandria Innovation Center (the “Project”) as depicted on and more fully described in the Prime Lease.

 

B.                                    Sublessor wishes to sublease to Sublessee and Sublessee wishes to sublease from Sublessor a portion of the Building consisting of approximately 5,000 rentable square feet on the second floor of the Building (hereinafter, the “Sublet Premises”) as depicted on Exhibit B attached hereto, under the terms and subject to the conditions hereinafter set forth.  In the event of any discrepancy between the square footage set forth above and the actual square footage of the Sublet Premises, the square footage set forth above shall prevail for all purposes.

 

C.                                    To the extent not defined herein, defined terms used herein shall have the meaning ascribed to them in the Prime Lease.

 

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

 

1.                                      Demise and Premises.  Sublessor hereby grants and demises to Sublessee, and Sublessee hereby accepts from Sublessor, subject to the express terms and conditions of this Sublease and the Prime Lease, for the term set forth in Section 2 below, the Sublet Premises together with the non exclusive right to use parking, driveway areas, roof and all common facilities, if any, available to Sublessor under the Prime Lease, in common with Prime Lessor and other tenants of the Prime Lease Premises, and their invitees, licensees, employees, officers, servants, contractors and visitors.  In the event Sublessor subleases space on the same floor to Sublease Premises to another subtenant, Sublessor shall work with both tenants to achieve a reasonable accommodation of the separation of the separate premises.

 

 

Notwithstanding anything to the contrary contained in this Sublease and subject to Section 20 below, Sublessee shall take delivery of the Sublet Premises in an “AS-IS”, “WHERE-IS” and “WITH ALL FAULTS” condition with no representations or warranties from Sublessor, except as otherwise expressly provided in this Sublease.

 

2.                                      Sublease Term.

 

2.1                               Sublessor shall deliver possession of the Sublet Premises to Sublessee on or about June 1, 2013 or such earlier date that this sublease is executed, approved by the Prime Lessor, and Sublessee has delivered proof of insurance, first month’s rent, and the security deposit (the “Delivery Date”) in that condition defined in Section 1 above.  The term of this Sublease (the “Sublease Term”) shall commence on June 1, 2013 (“Commencement Date”) after Sublessor has received both the consent of the Prime Lessor to this Sublease, Security Deposit and the First Month’s Base Rent (hereinafter defined) and shall end on December 31, 2014 (the “Sublease Expiration Date”).  Notwithstanding anything to the contrary set forth herein, in no event shall the Sublease Expiration Date extend to a date later than the expiration date of the Prime Lease, which is January 31, 2015.  If the Premises cannot be delivered by June 24, 2013 due to delay caused by Master Lessor delivering consent, then Sublessee shall have the option of terminating this Sublease upon written notice to Sublessor, no later than June 28, 2013.  If the sublease is terminated by Sublessee, any rent and security deposit previously paid shall be returned to Sublessee within five (5) business days from such termination and Sublessee shall pay Sublessor a termination fee equal to $1,500.00 within five (5) business days from such termination.

 

3.                                      Rent (as defined in Section 4) shall commence on June 1, 2013 (the “Rent Commencement Date”).  Sublessor shall use commercially reasonable efforts to assist Sublessee in obtaining prompt consent of any approvals including the approval of the Prime Lessor although Sublessor shall not be liable to Sublessee for any loss or damage incurred by Sublessee if Sublessor does not deliver possession of the Sublet Premises to Sublessee on the Delivery Date.  In the event the Prime Lease is terminated for any reason, this Sublease shall also terminate as of the date of termination of the Prime Lease provided such termination occurred in compliance with the terms of the Prime Lease and that Sublessee is given reasonable notice of such termination.  Sublessor shall have no liability to Sublessee due to the termination of this Sublease as a result of the termination of the Prime Lease, provided Sublessor is not in default of its obligation to pay rent as provided in the Prime Lease after the applicable notice and cure period or does not otherwise cause a default which results in the termination of the Prime Lease.  Once the Delivery Date is ascertained, Sublessee shall, upon request by Sublessor, promptly execute a memorandum defining the Delivery Date, the Rent Commencement Date and the Sublease Expiration Date.

 

4.                                      Base Rent.  Commencing on the Rent Commencement Date, Sublessee shall pay to Sublessor, Attn: Real Estate Manager, at 9625 Towne Centre Drive, San Diego, CA 92121, or at such other address or to such other property manager as Sublessor shall notify Sublessee in writing, the gross monthly rent of $10,000 per month (“Base Rent”)

 

Base Rent shall be payable in monthly installments in advance during the Sublease Term on the first day of each month, commencing on the Rent Commencement Date and continuing

 

 

through the end of the Sublease.  Sublessee shall pay the Base Rent for the first full month of the Sublease Term (“First Month’s Base Rent”) to Sublessor on or before the Effective Date concurrently with Sublessee’s execution of this Sublease.  In the event the Rent Commencement Date is a day other than the first day of a calendar month, the monthly installment of Base Rent shall be prorated based on the number of days remaining in such partial month.

 

5.                                      Additional Rent (Utilities, Generator, HVAC, Data Center, CAM, Maintenance).  As used herein, the term “Rent” shall mean and include Base Rent, and any other sums due hereunder or pursuant to the Prime Lease and Sublessor shall have all rights and remedies for additional Rent and any other sums due hereunder that Sublessor has with respect to Base Rent.  Except as expressly set forth herein, all Rent shall be due and payable without prior notice, demand, deduction or offset.

 

5.1                               Janitorial and Maintenance — Pursuant to Section 14 of the Prime Lease, Sublessee is responsible for the janitorial and maintenance in the Sublet Premises from and after the Commencement Date, with the exception of the building HVAC system, at Sublessee’s sole cost and expense.  Sublessee shall provide janitorial and maintenance of the Sublease Common Areas on the second floor (as shown in Exhibit B).Sublessor shall provide janitorial and maintenance of the first floor lobby and elevator.  In the event Sublessor enters into a sublease for another subtenant on the floor with Sublessee, Sublessor shall provide for janitorial and maintenance of the Sublease Common Areas (as shown in Exhibit B).

 

5.2                               Common Area Maintenance, Operating Expenses and Taxes — Base Rent shall include, and Sublessee shall have no obligation to pay, Sublessee’s prorata share of Operating Expenses and Taxes (as defined in Section 5 of the Prime Lease).

 

5.3                               Utilities — Base Rent shall include the cost for ordinary electrical power, water and utility consumption to the Sublet Premises (“Utilities”).  Sublessee acknowledges and understands that Utility usage to the Sublet Premises is not separately metered and Sublessee shall not be required to pay to Sublessor, charges for normal Utility usage in the Sublet Premises.

 

5.4                               HVAC — Sublessee shall pay Sublessor a monthly HVAC fee equal to $0.10 per square foot per month based upon 5,000 square feet over the Term of the Sublease for HVAC use during Standard Operating Hours; Unless separately metered, “Standard Operating Hours” for the Building shall mean Monday through Friday, from 8:00 a.m. to 6:00 p.m. and Saturday from 8:00 a.m. to 1:00 p.m.

 

5.5                               Generators - Sublessee shall have pro-rata access to and use of the existing generator(s) that serve the Building.

 

5.6                               Data Center - Sublessee shall have access to and shared use (with Sublessor and/or other future subtenants or occupants of the second floor) of the Building’s existing second floor data room (“Data Center”).  Sublessee shall, at its sole cost and expense, pay its share of all utilities and janitorial costs and all other costs to maintain and operate the Data Center, including re-locating existing cabling from the Data Center to the Premises, at Sublessee’s sole cost and expense in a location within the Sublet Premises mutually determined by Sublessor and Sublessee.  In the event other subtenants or occupants require access to and use

 

 

of the Date Center after the Commencement Date, Sublessee and Sublessor shall agree, in good faith, on an equitable apportionment of costs for the Data Center use and maintenance.

 

6.                                      Interest and Late Charges on Overdue Payments.  In the event that Sublessee shall fail to pay any installment of Base Rent or Additional Rent or any other sum due hereunder or pursuant to the Prime Lease, Sublessee shall pay Sublessor those amounts defined as the interest Default Rate defined in Section 21(a) and the Late Payment Rent defined in Section 21(b), both as defined in the Prime Lease as Additional Rent, provided that Sublessee shall be entitled to any grace periods provided in the Prime Lease.  The parties agree that the payment of such interest or late payments represents the liability that Sublessor will incur to Prime Lessor by reason of the late payment by Sublessee, and is therefore not a penalty.

 

7.                                      Use.  Sublessee shall use and occupy the Sublet Premises for the uses permitted under the Prime Lease, subject to the express terms and conditions of Section 7 of the Prime Lease, limited to the following uses:  for laboratory research, general office and other related uses expressly permitted under the Prime Lease and applicable law.

 

8.                                      Access to Sublet Premises.  During the period of time from the date hereof until the Delivery Date, Sublessee shall be granted access to the Sublet Premises on a day or days of the week and during such time periods as shall be determined by Sublessor in its sole discretion but during normal business hours, subject to at least forty-eight (48) hours advance notice to Sublessor from Sublessee for the purpose of gathering information, and reasonable general preparation for occupancy.  Notwithstanding the foregoing, the Sublet Premises shall not be deemed delivered to Sublessee, and Sublessee shall not be deemed in possession of the Sublet Premises until the Delivery Date.  In the event Prime Lessor has consented to this Sublease on or before the Delivery Date, Sublessee shall have the right to occupy the Sublet Premises from and after the Delivery Date for construction of Sublessee’s improvements and/or installation of furniture equipment and furnishings in the Sublet Premises.  The obligation to pay Base Rent shall be abated for any such period of early occupancy, but all other terms of this Sublease (including, but not limited to, Sublessee’s obligation to carry the insurance required by Section 10 hereof) shall be in effect during such period, and prior to Sublessee’s early occupancy of the Sublet Premises, Sublessee shall have previously provided Prime Lessor and Sublessor with proof of Sublessee’s insurance as set forth in Section 10 of this Sublease.  Any such early possession shall not affect nor advance the Sublease Expiration Date of the Sublease Term.  Any and all materials, work, installations, equipment and decorations of any nature brought upon the Building or installed by Sublessee in the Sublet Premises prior to the Rent Commencement Date shall be at Sublessee’s sole risk.  Neither Sublessor nor any party acting on Sublessor’s behalf on or about the Building shall be responsible for any claim, damage or loss or destruction of such items brought to the Building or installed in the Sublet Premises prior to the Commencement Date and Sublessee shall indemnify, defend and hold Sublessor harmless from any claim, loss, damage or destruction as a result of such early occupancy.  From and after the Delivery Date, Sublessee shall have access to the Sublet Premises and associated parking seven (7) days per week, twenty-four (24) hours per day, three hundred sixty-five (365) days per year subject to the terms and conditions of this Sublease and the Prime Lease.  Sublessee acknowledges and agrees that Sublessor and its agents, employees, contractors and invitees shall access portions of the second floor depicted on Exhibit B as the Sublease Common Area, during business and non-business hours for such purposes as providing janitorial, security and facilities related purposes

 

 

and for purposes of showing vacant space to potential subtenants and Sublessee understands that it will be solely responsible for maintaining the security of any areas that are not separately demised and the confidentiality of any information visible from the Sublease Common Area.

 

8.1                               Application of Prime Lease.  As applied to this Sublease, the words, “Landlord” and “Tenant” in the Prime Lease will be deemed to refer to Sublessor and Sublessee, respectively under this Sublease.  Except as otherwise provided in this Sublease, or except to the extent inconsistent herewith, the rights and obligations of Prime Lessor and Sublessor under the Prime Lease will be deemed to be the rights and obligations of Sublessor and Sublessee, respectively, under this Sublease, and will inure to the benefit of; and be binding on, Sublessor and Sublessee, respectively.  All provisions of the Prime Lease shall apply to this Sublease unless specifically excluded or modified by this Agreement.  Sublessor represents that it has delivered to Sublessee a true and complete copy of the Prime Lease to Sublessee, and Sublessee acknowledges receipt of a copy of the Prime Lease from Sublessor, which such copy is attached hereto as Exhibit A.  Notwithstanding the foregoing, the parties hereto acknowledge that the following sections of the Prime Lease shall not be incorporated within this Sublease: in the Basic Lease Provisions: Base Rent, Tenant’s Share of Operating Expenses, Security Deposit, Rent Adjustment Percentage, Commencement Date, Tenant’s Notice Address, Exhibits A-2, C, F, G, H and I, Sections 2(a) through 2(f), Section 3(b), Section 4, Section 6 (subject to the express provisions of Section 30 of this Sublease), Section 8 (except as incorporated by reference in Section 33 of this Sublease), Section 10 (excluding only the provisions for payment for parking are defined), Section 22(b), Section 38 (to the extent same conflicts with Section 30 of this Sublease) and Sections 39, 40, 41, 42, 43, 45, 46 and 47.

 

9.                                      Indemnification of Sublessor.  To the extent permitted by law, Sublessee shall and does hereby indemnify Sublessor, its officers, directors, agents, or employees (each a “Sublessor Party” and collectively the “Sublessor Parties”) as a result of or arising out of Sublessee’s breach of this Sublease or the Prime Lease and agrees to save Sublessor harmless and, at Sublessor’s option, defend Sublessor from and against any and all claims, actions, damages, liabilities and expenses (including reasonable attorneys’ and consultants’ fees) judgments, settlement payments, and fines paid, incurred or suffered by Sublessor as a result of or arising out of Sublessee’s breach of this Sublease or the Prime Lease, violations of any law or in connection with loss of life, personal injury and/or damage to the property or environment suffered by third parties arising from or out of the occupancy or use by Sublessee of the Sublet Premises or any part thereof occasioned wholly or in part by any act or omission of Sublessee, its officers, agents, contractors, materialmen, laborers, employees or invitees (each a “Sublessee Party” and collectively, the “Sublessee Parties”), or arising directly or indirectly, wholly or in part, from any conduct, activity, act, omission or operation by any Sublessee Party involving the use, handling, generation, treatment, storage, disposal, other management or Release (hereinafter defined) of any substance or material defined or designated as hazardous or toxic, or other similar term (“Hazardous Materials”), by any present or future local, state or federal environmental statute, regulation or ordinance, in, from or to the Sublet Premises, whether or not Sublessee may have acted negligently with respect to such substance or material.  Sublessee shall be responsible for, and indemnify, defend and hold harmless Sublessor Parties for the presence or Release of any Hazardous Materials in, on or about the Premises to the extent the presence of such Hazardous Materials: (i) is the result of a breach by Sublessee of any of its obligations under this Sublease or the Prime Lease, (ii) was caused by Sublessee or any Sublessee Party, (iii)

 

 

was contributed to by Sublessee or any Sublessee Party, (iii) was exacerbated by Sublessee or any Sublessee Party or (iv) originates from the Sublet Premises during Sublessee’s (or any assignee’s or sublessee’s) occupancy of the Sublet Premises (or any portion thereof).  Sublessee’s obligations pursuant to this Section shall survive any termination of this Sublease with respect to any act, omission, or occurrence which took place prior to such termination.  As used in this Section, the term “Release” shall have the meaning ascribed to such term in the Federal Comprehensive Environmental Response, Compensation and Liability Act, (42 U.S.C. Section 6901 et seq.).  Sublessee acknowledges and agrees that prior to the Delivery Date, Sublessor has provided to Sublessee and Sublessee has reviewed the Environmental Report dated April 5, 2012 (the “Environmental Report”).  Sublessee has reviewed the provisions of the Prime Lease concerning the obligation of the Prime Lessor to supply building services to the Sublet Premises.  Sublessee recognizes that Sublessor is not in a position to render nor is Sublessor obligated to render any of the services or perform any of the obligations required of Prime Lessor by the terms of the Prime Lease, including, without limitation, (i) the furnishing of electrical energy, heat, ventilation, water, air conditioning, elevator service, cleaning, window washing, or rubbish removal services, (ii) making any alterations, repairs or restorations, (iii) complying with any laws or requirements of any governmental authorities, or (iv) taking any action that Prime Lessor has agreed to provide, make, comply with, take or cause to be provided, made, compiled with or taken under the Prime Lease.  Therefore, despite anything to the contrary in this Sublease, Sublessee agrees that performance by Sublessor of its obligations under this Sublease is conditioned on performance by Prime Lessor of its corresponding obligations under the Prime Lease, and Sublessor will not be liable to Sublessee for any default of the Prime Lessor under the Prime Lease unless such default results from Sublessor’s failure to perform its obligations hereunder.

 

10.                               Insurance.

 

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

 

Sublessee shall provide or cause its contractors to provide insurance in the amount and in the form required of Sublessee under the terms of the Prime Lease on or before Sublessee’s

 

 

contractors, materialmen or laborers commence Sublessee’s work for its alterations or any other future alterations to the Sublet Premises.

 

10.2                        Each party shall use its reasonable efforts to cause each insurance policy it obtains to provide that the insurer thereunder waives all right of recovery by way of subrogation under any all-risk property insurance as required herein in connection with any damage covered by the policy.

 

11.                               Sublessee Defaults.  The occurrence of any of the following shall be a default (an “Event of Default”) under this Sublease:

 

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

 

11.2                        Sublessee violates or fails to perform any term, covenant, condition or agreement herein contained or provided for in the Prime Lease and such failure continues for a period of twenty (20) days after written notice thereof is given to Sublessee.  If the default is of such a nature that it cannot be completely remedied within the twenty (20) day period, this provision shall be complied with if Sublessee begins correction of the default within the twentieth (20th) day period and thereafter proceeds with reasonable diligence and in good faith to effect the remedy as soon as practicable and to prosecute the same to completion, or

 

11.3                        Sublessee becomes insolvent, or makes an assignment for the benefit of creditors, or if a petition in bankruptcy is filed by or against Sublessee, or a bill in equity or other proceeding for the appointment of a receiver for Sublessee is filed, or if proceedings for reorganization or for composition with creditors under any state or federal law be instituted by or against Sublessee, or if the subleasehold interest is levied on under execution, or

 

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

 

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

 

13.                               Remedies Cumulative.  All of the remedies hereinbefore given to Sublessor and all rights and remedies given to it by law and equity shall be cumulative and concurrent.  Except as expressly provided herein and in the Prime Lease, no termination of this Sublease or the taking or recovering of the Sublet Premises shall deprive Sublessor of any of its remedies or actions against Sublessee for rent due or other breach hereof at the time or which, under the terms hereof, would in the future become due as if there has been no termination, or for any and all sums due at the time or which, under the terms hereof, would in the future become due as if

 

 

there had been no termination, nor shall the bringing of any action for rent or breach of any covenant, or the resort to any other remedy herein provided for the recovery of rent or other breach be construed as a waiver of the right to obtain possession of the Sublet Premises.

 

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

 

If to Sublessor:

 

Bristol Meyers Squibb

Director Global Real Estate

Bristol-Myers Squibb Company

Route 206 & Province Line Road

Princeton, NJ, 08543

 

With a copy to:

 

Amylin Pharmaceuticals, LLC

Attn: Real Estate Manager

9625 Towne Centre Drive

San Diego, CA 92121

 

Amylin Pharmaceuticals, LLC

Attention: Legal Department

Vice President and Assistant,

General Counsel, Transactions

Contract Center of Excellence

Bristol-Myers Squibb

777 Scudders Mill Road

Plainsboro, NJ 08536

 

and

 

Grant Puleo, Esq.

Procopio, Cory, Hargreaves & Savitch LLP

12544 High Bluff Drive, Suite 300

San Diego, California 92130

 

Address for Payment of Rent:

 

Amylin Pharmaceuticals, LLC

Attn: Accounts Receivable

9625 Towne Centre Drive

San Diego, California 92121

 

 

If to Sublessee at any time:

 

At the Sublet Premises

Attn: Office Manager

 

Copy to:

 

Tom Coll, Partner

Cooley LLP

4401 Eastgate Mall

San Diego, CA 92121

 

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

 

15.                               Assignment and Subletting.  Sublessee shall comply with the express terms and provisions of Section 22 of the Prime Lease with regard to assignment and subletting and in those instances where applicable, shall be subject to the Prime Lessor’s approval as provided in the Prime Lease; provided, however, if Sublessor must first obtain the written consent of Prime Lessor, Sublessor’s consent, which shall not be unreasonably withheld or delayed.  Notwithstanding the foregoing, nothing in this Section shall impose upon Sublessor any obligation to obtain, beyond its reasonable efforts to do so, the consent of Prime Lessor or any other third party.  Sublessee shall, at its sole cost and expense, pay all fees and costs as defined in the Prime Lease to Prime Lessor in connection with the subletting of the Sublet Premises to the party who will become the sub-sublessee, as well as any fees and costs relating to any future assignments or subleases by Sublessee.

 

Notwithstanding anything to the contrary contained in this Section 15, Sublessee shall have the right (i) to sublease or assign all or a portion of the Sublet Premises to any related entity, parent company, affiliate or subsidiary of Sublessee (collectively, “Affiliate”) or (ii) to assign this Sublease as part of a consolidation, merger, reorganization or stock transfer or from a purchase of a substantial portion of Sublessee’s assets; provided that such Affiliate has equal or greater financial strength as Sublessee as reasonably determined by Sublessor and further, provided that such subleasing or assignment is in full compliance with the provisions of the Prime Lease, including, without limitation, the prior written consent of Prime Lessor.

 

To the extent that any request for an assignment or sublease of all or a portion of the Sublet Premises is made by Sublessee and the party who will become the sub-sublessee is not an

 

 

Affiliate, Sublessor shall not unreasonably withhold, condition or delay the approval of any proposed sublease or assignment, provided that such subleasing and assignment rights are in accordance with the provisions of Section 22 of the Prime Lease and this Section 15.

 

In the event of an assignment or a sublease of all or any portion of the Sublet Premises by Sublessee, the original Sublessee shall not be released from its obligations hereunder or under the Prime Lease and the Guaranty by Guarantor shall remain in full force and effect throughout the Sublease Teem.

 

16.                               Access Cards & Parking.  Sublessee shall have the non-exclusive right to use, free of charge for the duration of the Sublease Term, fifteen (15) parking spaces in the Building parking structure and/or surface parking area (“Parking Spaces”) in common with the other tenants, occupants, and visitors of the Project.  Sublessee’s continued right to use the Parking Spaces is conditioned upon Sublessee abiding by the provisions of the Prime Lease, except for payment of monthly rental for such parking spaces, and all commercially reasonable rules and regulations which are prescribed from time to time for the orderly operation and use of the parking facility where the Parking Spaces are located, including any sticker or other identification system established by Prime Lessor, Sublessee’s cooperation in seeing that the Sublessee Parties also comply with such rules and regulations, and Sublessee not being in default under this Sublease.  Sublessor agrees to provide Sublessee at no cost with up to fifteen (15) security access cards and keys for access to the premises.  Any additional access cards requested by Sublessee shall be at Sublessee’s reasonable expense.

 

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

 

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

 

19.                               Security Deposit.  Sublessee shall have no right, title or interest in or with respect to the Sublessor security deposit, or any portion thereof, that is held by Prime Lessor under the Prime Lease.  Concurrently with Sublessee’s execution of this Lease, Sublessee shall deposit with Sublessor cash or a letter of credit reasonably acceptable to Sublessor, in an amount equal to Ten Thousand Dollars ($10,000) (“Security Deposit”).  If Sublessee defaults on any provision of this Sublease, Sublessor may (but shall not be required to), without prejudice to any other remedy it has, apply all or part of the Security Deposit to: (i) any rent or other sum in default; (ii)

 

 

any amount that Sublessor may spend or become obligated to spend in exercising Sublessor’s rights under this Sublease or the Prime Lease; (iii) any expense, loss, or damage that Prime Lessor may suffer because of Sublessee’s default.  Sublessee waives the provisions of California Civil Code § 1950.7, and all other provisions of law now in force or that become in force after the date of execution of this Sublease, that provide that Sublessor may claim from a security deposit only those sums reasonably necessary to remedy defaults in the payment of accrued rent, to repair damage caused by Sublessee, or to clean the Subleased Premises.  Sublessor and Sublessee agree that Sublessor may, in addition, claim those sums reasonably necessary to compensate Sublessor for any other foreseeable or unforeseeable loss or damage caused by the act or omission of Sublessee or Sublessee’s officers, agents, employees, students, teachers, administrators, independent contractors, licensees or invitees, including future rent payments.  If Sublessor disposes of its interest in the Sublet Premises, Sublessor may deliver or credit the Security Deposit to Sublessor’s successor in interest in the Sublet Premises and thereupon be relieved of further responsibility with respect to the Security Deposit.  Sublessee may not assign or encumber the Security Deposit without the prior, written consent of Sublessor; any attempt to do so shall be void and shall not be binding on Sublessor, If Sublessor applies any portion of the Security Deposit, Sublessee shall, within five (5) business days after written demand by Sublessor, deposit with Sublessor an amount sufficient to restore the Security Deposit to its original amount.  Sublessee is not entitled to any interest on the Security Deposit.  If Sublessee performs every provision of this Sublease to be performed by Sublessee, the unused portion of the Security Deposit shall be returned to Sublessee, or the last assignee of Sublessee’s interest under this Sublease, within thirty (30) days following the expiration or termination of the Sublease Term.

 

20.                               Condition of the Sublet Premises.  Sublessee hereby acknowledges that Sublessee has examined the Sublet Premises, the Environment Report incorporate herein by reference and attached as Exhibit F.  Sublessor has let the Sublet Premises without any further improvements or alterations and, without any representations on the part of the Sublessor, its officers, further, servants and/or agents other than set forth herein.

 

21.                               Sublessor’s Duties.

 

21.1                        The obligations of Prime Lessor under the Prime Lease shall remain the obligations of Prime Lessor, and shall not be considered the obligations or responsibility of Sublessor.

 

21.2                        With respect to the obligations of Prime Lessor under the Prime Lease, Sublessor’s only obligation shall be to use commercially reasonable efforts at no cost or expense to Sublessor to cause Prime Lessor to perform such obligations for the benefit of Sublessee.  Such commercially reasonable efforts shall include, without limitation: (i) upon Sublessee’s written request, immediately notify Prime Lessor of its nonperformance under the Prime Lease and request that Prime Lessor perform its obligations under the Prime Lease; and (ii) use commercially reasonable efforts to obtain Prime Lessor’s consent to this Sublease and to other actions requiring Prime Lessor’s consent.  Sublessee shall indemnify and hold Sublessor harmless against all reasonable costs and expenses incurred by Sublessor; provided that for costs and expenses in excess of $1,000, Sublessor shall obtain the pre-approval of Sublessee.  For costs and expenses of less than $1,000, Sublessor shall not need Sublessee’s prior approval.

 

 

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

 

23.                               Alterations and Improvements.  Sublessee shall be permitted to make any Alterations in accordance with Section 12 of the Prime Lease and with Prime Lessor’s and Sublessor’s approval.  Should Prime Lease or Sublessor require restoration of Alterations made by or for Sublessee, Sublessee will be responsible, at its sole cost and expense, to complete such work no later than the expiration or earlier termination of this Sublease.  Sublessor shall inform Sublessee of its (or Prime Lessor’s decision) regarding removal of such Alterations upon approval of the requested improvements of Alterations by Sublessor and Prime Lessor.  If for any reason Sublessor does not provide Sublessee direction with regard to restoration then Sublessee will be required to remove improvements prior to the sublease expiration date

 

24.                               Surrender of the Sublet Premises.  Upon the expiration or sooner termination of this Sublease, Sublessee shall adhere to the terms and conditions set forth in the Prime Lease concerning the condition of the Sublet Premises upon surrender, including but not limited to Section 28 of the Prime Lease.  In addition, Sublessee shall not be required to remove any alterations or improvements made by or for the account of Sublessor.  If the Prime Lessor requires the removal of any alterations or improvements made by or for Sublessor, Sublessor shall, at its sole cost and expense, remove such alterations and improvements.  However, Sublessee at Sublessee’s expense, shall be required at Prime Lessor’s or Sublessor’s discretion to remove alterations or improvements made for the benefit of Sublessee, which requirement to remove alterations or improvements made for the benefit of Sublessee shall be identified for Sublessee at the time that Prime Lessor and Sublessor approve any alteration or improvement plans of Sublessee and further to make such repairs as required to repair any damage to the Sublet Premises or any other portion of the Building affected by such damage.

 

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

 

26.                               Prime Lessor’s Approval.  This Sublease and Sublessor’s liability hereunder are subject to Prime Lessor’s consent hereto, as required under Section 22 of the Prime Lease, on its standard form to be attached hereto as Exhibit D, and this Sublease shall be null and void, and Sublessor shall have no liability to Sublessee hereunder whatsoever, should Prime Lessor fail to give such standard consent to this Sublease.  Notwithstanding the foregoing, Sublessee shall in no event be entitled to claim that any delay or failure in the delivery of the Prime Lessor’s consent relieves Sublessee of its obligations hereunder.

 

 

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

 

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

 

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

 

30.                               Signage.  Subject to the terms and conditions of the Prime Lease and where applicable, Sublessee, at Sublessee’s sole cost, expense and liability, shall have the right to display appropriate signage with its logo and name on entrance doors.  All signage shall be subject to the Prime Lease, the rules, regulations and codes of the City of San Diego, any recorded covenants and restrictions for the Project, if any, the tights of any existing tenants of the Project, and the review and approval of Prime Lessor and Sublessor, which approval of Sublessor shall not be unreasonably withheld, conditioned or delayed.

 

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

 

32.                               Right to Cure Sublessee’s Defaults.  If Sublessee shall at any time fail to make any payment or perform any other obligation of Sublessee hereunder or under the Prime Lease, then Sublessor shall have the right, but not the obligation, after five (5) days notice for monetary defaults and five (5) days notice for non-monetary defaults or the time within which Prime Lessor may act on Sublessor’s behalf under the Prime Lease, or without notice to Sublessee in the case of any emergency, and without waiving or releasing Sublessee from any obligations of Sublessee hereunder, to make such payment or perform such other obligation of Sublessee in such manner and to such extent as Sublessor shall deem necessary, and in exercising any such right, to pay any reasonable and related costs and expenses, employ attorneys and other professionals, and incur and pay attorneys’ fees and other costs reasonably required in connection therewith.  Sublessee shall pay to Sublessor upon demand all sums so paid by Sublessor and all incidental costs and expenses of Sublessor in connection therewith as Sublessee shall indemnify and hold Sublessor harmless against all reasonable costs and expenses incurred by Sublessor in connection therewith.

 

33.                               Holding Over.  Sublessee acknowledges that the Sublease Term must expire on or before the last day of the term of the Prime Lease and that Sublessor will stiffer considerable damage if Sublessee holds over.  Thus, if Sublessee holds over after the expiration of the Sublease Term or earlier termination of this Sublease, with or without the express or implied consent of Sublessor, then at the option of Sublessor, Sublessee will become and be only a

 

 

month-to-month subtenant at a rent equal to the holdover rent payable by Sublessor under the Prime Lease for the Premises (including the amount of any holdover rent payable to Prime Lessor under the Prime Lease, as a result of Sublessee’s failure to timely surrender the Premises at the time and in the condition required by this Sublease, and otherwise upon the terms, covenants and conditions herein specified.  Notwithstanding any provision to the contrary contained herein, (a) Sublessor expressly reserves the right to require Sublessee to surrender possession of the Premises upon the expiration of Sublease Term or upon the earlier termination of this Sublease and the right to assert any remedy at law or in equity to evict Sublessee and/or collect damages in connection with any holding over, and (b) Sublessee shall pay all holdover rent or other amounts Sublessor is obligated to pay under Section 8 of the Prime Lease and shall indemnify, defend and hold Sublessor harmless from and against any and all other liabilities, claims, demands, actions, losses, restoration costs, damages, obligations, costs and expenses, including, without limitation, attorneys’ fees incurred or suffered by Sublessor by reason of Sublessee’s failure to surrender the Premises on the expiration of the Sublease Toil’ or earlier termination of this Sublease.

 

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

 

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

 

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

 

37.                               FF&E.  Sublessee shall purchase all of the furniture, fixtures and equipment (“FF&E”) currently located in the Sublease Premises.  An inventory of the FF&E currently located in the Sublet Premises will be provided by Sublessor and attached hereto prior to the Delivery Date and incorporated herein by reference as Schedule 1 to Exhibit C.  Sublessee shall purchase the FF&E pursuant to the Bill of Sale attached hereto as Exhibit C from Sublessor in its current AS-IS, WHERE-IS and WITH ALL FAULTS condition, without representation, warranty or recourse, pursuant to the Bill of Sale, for the sum of One and 00/100 Dollar ($1.00)

 

 

and Sublessee shall remove such FF&E from the Sublet Premises in accordance with the terms and conditions of Section 24 of this Sublease.  Sublessor agrees that Sublessee may not store any of the unused FF&E in the Sublease Common Areas or in other parts of the Building or Project.

 

38.                               Guaranty.  The obligations of Sublessee under this Sublease shall be guaranteed by METHYLGENE, INC., a Canadian corporation (“Guarantor”), as further provided in the Guaranty, attached hereto and incorporated herein as Exhibit E.

 

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

 

	
 
    	
SUBLESSOR:
    
	
 
    	
 
    
	
 
    	
AMYLIN   PHARMACEUTICALS, LLC,
    
	
 
    	
a   Delaware limited liability company
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Jane Ryskamp
    
	
 
    	
 
    	
Name:   Jane Ryskamp
    
	
 
    	
 
    	
Title:   VP, Global Mfg and Supply at San Diego Site
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
SUBLESSEE:
    
	
 
    	
 
    
	
 
    	
METHYLGENE   US, LLC,
    
	
 
    	
a   Delaware corporation
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Dr. Charles Baum
    
	
 
    	
 
    	
Dr. Charles   Baum
    
	
 
    	
 
    	
Its:   President

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