Document:

Exhibit 10.49

 

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(b)(4)

And 240.24b-2

 

Commercial Supply Agreement for
Exenatide

 

This Agreement, effective as of December 23,
2003, is made by and among Amylin Pharmaceuticals, Inc. (“Amylin”) having a
principal place of business at 9360 Towne Centre Drive, San Diego, CA 92121, and Bachem, Inc., a California corporation
(“Bachem”), having a principal place
of business at 3132 Kashiwa Street, Torrance, CA 90505. References to any of Amylin or Bachem includes reference to their
respective Affiliates.

 

Whereas,
Bachem previously manufactured for Amylin a compound referred to as Exenatide
(as defined below).

 

Whereas,
Amylin wishes to engage Bachem to manufacture clinical trial, regulatory registration and
commercial supplies of Exenatide on behalf of Amylin.

 

Whereas,
Bachem desires to manufacture for Amylin clinical trial, regulatory
registration and commercial supplies of Exenatide; and

 

Now,
Therefore, in consideration of the premises and the mutual covenants and
agreements contained herein, Bachem and Amylin agree as follows:

 

1.             Definitions

 

As used in this Agreement, the
following words and phrases shall have the following meanings:

 

1.1       “Affiliate” of a party hereto means any entity which
directly or indirectly, through one or more intermediaries, controls, is controlled by or
is under common control with such party where “controlling,” “controlled” and “under common
control” means the direct or indirect beneficial ownership of at least fifty
percent (50%) of the stock, or a fifty percent (50%) or greater interest in the income, of such
party or entity, as applicable.

 

1.2       “Applicable Laws” shall mean all applicable statutes,
ordinances, regulations, rules, or orders of any kind whatsoever of any governmental
authority (including any amendments thereto), applicable to the import, export,
manufacture and distribution of Product, including, without limitation, the
applicable regulations and guidelines of the FDA and all applicable current
good manufacturing
practices, including, without limitation, the cGMPs.

 

1.3       “Bachem Technology” means all technical information,
whether tangible or intangible and whether or not patentable, including
patents, and any method, procedure, process, assay, composition of matter,
trade secret, invention, technology, information or other subject matter, including license
application materials and all supporting documents, specifications for
materials (including
purification techniques), data, information (including information contained in
registration dossiers, drug master files and other documents filed with
Regulatory Authorities), quality control, validation and equipment necessary or
useful for the manufacture, production, scale-up, processing or formulation of
Product, which (a) Bachem conceived, reduced to practice, developed or obtained (or which Bachem
has the ability to license or sublicense), or (b)

 

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is otherwise
necessary or useful in the manufacture of the Product.

 

1.4       “Batch Production Records” means the lot production records for the
Batches manufactured by Bachem pursuant to this Agreement.

 

1.5       “cGMPs” shall mean then-current Good Manufacturing Practices as
specified in ICH Guideline Q7A, the
United States Code of Federal
Regulations, or equivalent laws, rules, or regulations of an applicable
Regulatory Authority at the time of manufacture.

 

1.6       “Collaboration Partner” means Eli Lilly and Company, with whom AMYLIN
has entered into a collaboration arrangement regarding Product.

 

1.7       “Contaminant” means any substance contained in the Product that (A)
causes the Product to fail to meet
any Product Specifications, (B) causes the Product to be adulterated within the
meaning the Act, (C) is present in the Product at a level that exceeds the
level allowed under Applicable Laws.

 

1.8       “DMF” shall mean a drug master file for Product in the United States
(as such term is defined in 21 C.F.R. Part 314.420) or Europe.

 

1.9     “Effective
Date” means the later date of execution written on the execution page of this Agreement.

 

1.10         “Facility” means the facility in Torrance,
California where Product is manufactured by Bachem under this Agreement.

 

1.11         “FDA” means the United States Food and Drug Administration
and any successor entity.

 

1.12         “Hidden Defect” means a defect in any shipment of
Product that could not reasonably be expected
to have been found by diligent and adequate inspection by Amylin pursuant to Section 4.1, such as the presence of any
Contaminant or failure to follow cGMPs.

 

1.13         “Materials” shall mean, collectively, all raw
materials, ingredients and packaging components
required to produce Product in accordance with the Product Specifications.

 

1.14         “NDA” means a New Drug Application to make and/or
sell commercially Product, filed with the FDA (as more fully defined in 21
C.F.R. Part 314.5 et seq.) or
with a Regulatory Authority in any
jurisdiction outside of the United States, and all amendments and supplements
thereto filed therewith.

 

1.15         “Product” means the bulk drug substance,
Exenatide, manufactured under this Agreement.

 

1.16         “Product Specifications” means the written
specifications for Product set forth in Exhibit 1, as amended from time to time
in accordance with the Quality Agreement.

 

1.17         “Purchase Order” means Amylin firm orders for
Product under this Agreement issued on Amylin’s
form of purchase order.

 

1.18         “Quality Agreement” means that certain Quality
Agreement dated as of the Effective Date between Amylin and Bachem containing, identifying and outlining the
specifications, and certain

 

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of the technical and compliance terms and conditions, for the
manufacture of Product under this Agreement. The Quality Agreement is incorporated
into and made a part of this Agreement.

 

1.19         “Regulatory Approval” means (a) in the United
States, approval by the FDA of an NDA for the Product, and satisfaction of any related applicable FDA registration
and notification requirements, if any,
and (b) in any country other than the United States, approval by Regulatory Authorities having jurisdiction over such country
of a single application or set of applications with respect to a Product
comparable to an NDA, and satisfaction of any related applicable regulatory and
notification requirements, if any, including pricing approvals where
applicable, together with any other
approval necessary to make, use, import, package, label, market, and sell
Product commercially in such country.

 

1.20         “Regulatory Authority” means the FDA in the United
States, or the applicable regulatory agency
or entity having the responsibility, jurisdiction, and authority to approve the
manufacture, use, importation,
packaging, labeling, marketing, and sale of Product in any country other than the United States.

 

2.     Purchase and Sale of Product

 

2.1                  Bachem
agrees to manufacture Product using the process described in the Batch
Production Records, subject to the terms and conditions of this Agreement.

 

2.2                  Bachem
agrees to manufacture and supply Exenatide in quantities set forth in Purchase
Orders submitted by Amylin in accordance with this Agreement. The following
table sets forth the quantities of
Product that Amylin estimates, as of the Effective Date, that it will purchase during the period commencing [***] and ending [***].

 

[***]

 

 

[***]

 

Commencing on the Effective
Date Amylin will supply to Bachem rolling [***]
forecasts containing its
estimated requirements of Product, [***]. This may
be a fixed amount or a range of quantities.
Amylin shall update such forecasts every [***].
Amylin shall submit Purchase Orders
specifying the quantity of Product ordered, the required delivery date, and any special instructions. Purchase Orders for
delivery of Product in [***], will
be issued (A) no later than [***],
and (B) at least [***] in advance
of the requested delivery date,
provided that such [***] lead time may be
reduced by [***], if Amylin pre-purchases Materials. The
Purchase Orders issued in accordance with this Section 2.2 will be binding on
both Seller and Buyer.

 

2.3           The price for the Product shall be based on [***] as set forth below and includes the costs of Materials and analytical release
testing. If Materials’ costs or waste disposal costs change by more than [***], the price for the Product may be adjusted, subject to the parties’ mutual written agreement, to reflect
the change in such costs.

 

Prices will be the
following:  [***]

 

 

* Based on
current specifications. The parties agree that changes to the Product Specifications that are set forth in Exhibit 1 as
of the Effective Date to reflect requirements for commercial supply will not
result in any change to the prices set forth

 

* Confidential
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above; provided,
however that, if such changes to the Product Specifications reflect process
capabilities that are outside the process capabilities demonstrated by Bachem
in manufacturing validation
batches, then the parties will discuss whether such prices would require
adjustment as a consequence.

 

If certain process improvements
can be identified post approval, Bachem and Amylin will jointly decide on a course of action, provided that no
change to the manufacturing process for Products may be implemented without
Amylin’s prior written approval. Bachem will quote for the work this
implementation of changes involves. Amylin can then elect to pursue this
option. Any cost savings that ensue
from the implementation of these changes would be [***] between the parties.

 

2.4           Any federal, state, county of municipal sales or use tax,
excise or similar charge, or other tax assessment (other than that assessed against income), license fee or
other charge lawfully assessed or charged on the manufacture, sale or transportation
of Product sold pursuant to this Agreement
shall be paid by Amylin, provided evidence of such charge is provided to Amylin
in writing.

 

3.     Manufacture of Product

 

3.1   Changes in the manufacturing
site or the materials, equipment, process, or procedures used to manufacture the Products shall be handled by the
parties as stated in the Quality Agreement. Bachem shall obtain Amylin’s prior
written approval before it implements any such change. Amylin shall have the
right to raise with Bachem any perceived deficiencies regarding any aspect of Bachem’s manufacture of Product. In the
event that Amylin raises with Bachem any such deficiency both parties will engage in negotiations regarding
remedial action. Upon mutual agreement,
(A) Bachem shall, at its sole cost, promptly submit to Amylin a written plan to
correct any such deficiency and promptly correct any such deficiency to
Amylin’s satisfaction, (B) Amylin shall reimburse Bachem for any reasonable
incremental one-time costs associated with such changes while any ongoing costs
associated with such changes shall be reviewed by the parties and
allocated between Amylin and Bachem as mutually agreed upon by the parties at
such time. If such corrections are required to bring the Facility into
compliance with Applicable Laws, then Bachem shall bear all associated costs.

 

3.2   Product Specifications may be modified from time to
time by written agreement of the parties without the necessity of amending this
Agreement. However, no changes in the Product Specifications will be made
unless made in accordance with the terms and conditions of the Quality Agreement. If
Amylin requests a change in the Product Specifications that would result in a
material increase in Bachem’s cost of manufacture, the parties shall discuss what
impact, if any,
such change should have on the price of Product. If either Bachem agrees to
implement such
change without additional charge, or Amylin agrees in writing to a proposed
price increase to implement such change, the price change shall become effective only
with respect to those orders of Product that are manufactured in accordance with the modified
Product Specifications.  If a Regulatory Authority
requires a change in  the Product Specifications that would result in a material increase in Bachem’s cost of manufacture,
the parties shall discuss what impact, if any, such change should have on the price of Product and Amylin shall bear the
increased cost.

 

3.3   Bachem and Amylin shall comply with the terms and
conditions of the Quality Agreement.  Bachem shall
manufacture, package, label, and supply Product in

 

* Confidential
Treatment Request(ed)

 

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accordance
with the Product Specifications, cGMPs, the NDA, DMF or other applicable
Regulatory Approvals, and all applicable rules and regulations of Regulatory
Authorities with jurisdiction over the manufacture, packaging, labeling,
use or sale of Product, as they may be amended from time to time. Bachem’s
responsibilities and obligations with respect to the manufacture of Products as
set forth in this Section 3.3 are hereinafter referred to as the “Manufacturing
Requirements.”  Bachem shall perform
such quality control testing prior to shipment of Product to Amylin as is
required to ensure that the Products delivered to Amylin under this Agreement
comply with the Manufacturing Requirements and warranties described in Section
8, which testing shall include, without limitation, the performance of all
required release testing and stability testing using the Amylin Test Methods
and other tests designated by Amylin as found in Appendix A of this Agreement. Bachem shall
perform such tests itself or, with Amylin’s prior written consent, cause to be tested by a
third party, each lot of Product before delivery, and shall provide to Amylin (A) a certificate
of analysis containing the quality control test results for each such lot, and confirming that each
such lot of Product conforms to the Product Specifications (the “Certificate of
Analysis”), (B) a Certificate of Conformance confirming that such lot of
Product was made in accordance with cGMPs and the process defined in the
approved master batch record for such Product, and (C) copies of documents
detailing any deviations from any manufacturing processes then in effect (the documents and
information described in (A), (B) and (C), the “Bachem Release Documents”). Upon
completion of the manufacture and testing of each lot of Product ordered by Amylin under this
Agreement, Bachem shall send all the Bachem Release Documents to Amylin. Amylin
is entitled to rely on the Bachem Release Documents for all purposes of this
Agreement.

 

3.4   Bachem shall be responsible for obtaining any
Materials required for the manufacture of Product, in reasonable quantities
consistent with Amylin’s orders for Product and in accordance with the
requirements of Section 8.1(H). Bachem shall use and rotate all stock of
Materials on a first-in, first-out basis as required by cGMPs. Amylin shall assign lot
numbers and retest dates to each lot of Product, and Bachem shall imprint such lot
numbers and retest dates on each unit of Product shipped as required by cGMPs.

 

3.5   Bachem shall keep complete, accurate, and authentic
accounts, notes, data, and records pertaining to its manufacture, processing, testing,
packaging, storage and distribution of Product, including, without limitation,
master production and control records and Product complaint files, in accordance with
Applicable Laws. In addition, Bachem shall retain samples of Products and
isolated intermediates of each lot manufactured pursuant to this Agreement for
a period of five (5) years after Amylin’s acceptance of such lot. The sample size shall
be twice the size necessary to conduct quality control testing. Bachem shall retain such
records and samples for a period of five (5) years following the date of
manufacture, or longer if required by Applicable Laws, and, upon request,
shall make available to Amylin and its Collaboration Partner copies of such records and portions
of the samples. After such time period, Bachem shall notify Amylin prior to destroying such
records and samples and, at Amylin’s request and expense, shall provide such
records and samples to Amylin. Bachem shall permit Amylin and its Collaboration
Partner and
their respective representatives with access during reasonable business hours
and after reasonable notice to those areas of Bachem’s manufacturing facilities
where Product is manufactured, stored and handled and to manufacturing records,
and testing and control records (including without limitation release and stability
records), of Product manufactured by Bachem, so that Amylin and

 

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its
Collaboration Partner and their respective representatives may perform a
quality assurance audit of such facilities and activities. Use of all
information gained in the course of audits is restricted to the purpose of
Quality Assurance. Likewise, Bachem shall grant similar access to
governmental regulatory agencies upon reasonable notice so that such agencies
can perform inspections of its facilities.

 

3.6   Bachem shall
promptly advise Amylin of any notice or request it receives from a Regulatory Authority or other governmental agency regarding
inspection of its facilities relating to its manufacture of Product, and shall
permit Amylin and its Collaboration
Partner and their respective representatives to attend such inspection. Bachem shall provide to Amylin and its Collaboration
Partner all correspondence and reports that it receives from a Regulatory
Authority or other governmental agency in
connection with the manufacture of Product or with respect to the facility(ies)
at which Bachem manufactures Product. Bachem shall retain the right to delete information
from these reports that would breach a confidentiality provision with any third
party.

 

3.7   Bachem shall, at its own expense, obtain and maintain the
necessary permits required for its manufacture and supply of the Products in accordance with
this Agreement, including all required facility licenses.

 

3.8   Bachem further agrees to use its commercially
reasonable efforts to assist Amylin and its Collaboration Partner in obtaining
FDA approval of its NDA with respect to Product, as well as approvals from any
other government or agency which may be required for the marketing of Product in any country. Bachem
specifically agrees to cooperate with any inspection by the FDA or other Regulatory
Authority, including but not limited to any inspection prior to approval of Amylin’s or its
Collaboration Partner’s NDA. Bachem shall, on a timely basis, provide Amylin and its
Collaboration Partner with information in Bachem’s possession relevant to its
role as the manufacturer of Products that is reasonably necessary for and
relevant to Amylin’s and its Collaboration Partner’s efforts to obtain and
maintain Regulatory Approvals for Product. Without limiting the generality of
the foregoing, Bachem agrees to establish and maintain a DMF for the Product in
accordance with the requirements of the FDA and any other applicable Regulatory
Authorities, and to provide Amylin and its Collaboration Partner with letters
of access to, and rights to reference, the DMF and any other comparable files.
Bachem shall file and establish the DMF in a timely manner to support Amylin’s
or its Collaboration Partner’s NDA filing, and shall provide to Amylin and its
Collaboration Partner such documentation, data and other information relating
to Products as Amylin or its Collaboration Partner may require for submission to Regulatory
Authorities. Bachem shall also provide, upon request by Amylin, information
concerning its production processes and quality control procedures with respect
to Products.

 

3.9   Each party shall promptly advise the others of any
safety or toxicity problem of which such party becomes aware regarding the
Product.

 

3.10 Bachem shall promptly notify Amylin of any
problems, supply, or other situations that are likely to adversely affect the production of any Product, or its timely
delivery to Amylin in accordance with the Purchase Order therefor. Amylin may
participate in the resolution of any such
problem or production situation unless Amylin agrees with Bachem that such
participation is unnecessary.

 

6

 

3.11    The conditions under which Product is manufactured
shall be provided to Amylin and its Collaboration Partner for inclusion in Amylin’s or
its Collaboration Partner’s regulatory filings. Bachem further agrees to provide to Amylin and its
Collaboration Partner all information regarding any aspect of manufacture of Product
that is necessary and related to Amylin’s or its  Collaboration Partner’s regulatory filings. Bachem also
agrees to authorize the FDA, or other Regulatory Authorities, to inspect any aspect of
Bachem’s manufacture of Product.

 

3.12 The parties agree that Amylin or its Collaboration
Partner shall be the sole and exclusive owner of all right, title and interest
in and to the NDA filed with the FDA and the other Regulatory Authorities outside of
the United States, and that Amylin or its Collaboration Partner shall be the sole and
exclusive owner of any Regulatory Approvals related to Product. Bachem shall assist Amylin and
its Collaboration Partner in the preparation of all documents necessary to effectuate Amylin’s and
its Collaboration Partner’s rights in each NDA and Amylin’s and its Collaboration Partner’s
rights to such Regulatory Approvals, and agrees to transfer, effect, confirm,
perfect, record, preserve, protect and enforce all rights, title and interests
transferred hereunder,
at the reasonable request and expense of Amylin.

 

3.13 Amylin shall disclose to Bachem, or provide Bachem
with access to, the test methods specified in the Product Specifications
(“Amylin Test Methods”) for Bachem’s use solely to perform its obligations
under this Agreement. Bachem understands and agrees that the Amylin Test Methods shall be
the sole and exclusive property and Confidential Information (as defined in Section 10) of Amylin.
Any and all inventions or discoveries, including without limitation, information,
processes, improvements, innovations, suggestions and ideas, whether or not patentable, conceived or
reduced to practice by Bachem, alone or with others, that are related to any or all Amylin Test
Methods, shall be owned solely and exclusively by Amylin. The terms “conceived”
and “reduced to practice” shall be given the meaning of those terms as used and
interpreted
for 35 U.S.C. § 102 (g). Bachem will promptly notify Amylin of any such
invention or
discovery.

 

3.14 During the term of this Agreement, Bachem shall
not manufacture any products containing exendin-4 and/or its analogues or
derivatives covered by an Amylin patent for any party other than Amylin with
the exception of research-grade materials.

 

4.     Acceptance of
Product

 

Not
later than [***] after Amylin’s receipt
of all Bachem Release Documents, Amylin shall examine the Bachem Release
Documents for the Product’s compliance with the Product Specifications and other
warranties in Section 8. Amylin may reject any shipment of Product (or part
thereof) that does not conform with the Product Specifications or other
warranties in Section 8. If Amylin believes that any such shipment does not
comply with the Product Specifications or other warranties, or is otherwise deficient,
Amylin shall promptly, but not later than [***] after receipt of all Bachem Release Documents, notify Bachem.
Any such notice of rejection shall be in writing and shall indicate the reasons
for such rejection. The invoice for any rejected Product shall be cancelled. If
no such notice of rejection is received, Amylin shall be deemed to have
accepted such shipment upon the expiration of the such [***] period. Notwithstanding
the foregoing, if there is subsequently found to be a Hidden Defect in any
shipment of Product, Amylin and Bachem shall enter into discussions in good
faith as to the handling and disposal of the

 

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defective
shipment, having due regard to where responsibility for such defect lies, with
the understanding
that Bachem shall be responsible with respect to matters existing prior to
delivery of
Product to Amylin.

 

After
any notice of rejection is given, Amylin shall cooperate with Bachem in determining
whether rejection is necessary or justified. Bachem will evaluate process
issues and other reasons for such non-compliance. Bachem shall notify
Amylin as promptly as reasonably possible whether it accepts Amylin’s basis for
any rejection. If Bachem in good faith disagrees with Amylin’s determination that certain Product
does not meet the Product Specifications, such Product shall be submitted to a mutually
acceptable third party laboratory. Such third party shall determine whether
such Product meets the Product Specifications, and the Parties agree that such third party’s
determination shall be final and determinative. The party against whom the
third party
tester rules shall bear all costs of the third party testing. Whether or not
Bachem accepts Amylin’s basis for rejection, promptly on receipt of a notice of
rejection of Product, Bachem shall replace such rejected Product, at its cost,
within [***]. If the third party
tester rules
that the lot meets Product Specifications and the other warranties in Section
8, Amylin shall purchase that lot at the agreed-upon price, irrespective of whether
Bachem has already replaced it. All replacement product shall be invoiced as
well and Amylin is to pay for such product as otherwise provided under the terms of this
Agreement. Amylin may not destroy any lot of Product until it receives written notification from
Bachem that Bachem does not dispute that the lot fails to meet Product Specifications and that
Bachem does not request return of the Product. 
Upon
authorization from Bachem to do so, Amylin shall destroy the Product received
in the rejected delivery promptly at Bachem’s cost and provide Bachem with
certification of such destruction. Amylin shall, upon receipt of Bachem’s request for return,
promptly return said Product or
quality control sample to Bachem, at Bachem’s cost.

 

4.3   In the event Amylin or its
Collaboration Partner shall be required or requested by any Regulatory Authority (or shall voluntarily decide
in good faith) to recall any Product, Amylin or its Collaboration Partner shall coordinate such recall. If a recall
arises due to Bachem’s negligence,
willful misconduct or breach of this Agreement, and does not result from
Amylin’s or its Collaboration Partner’s negligence, willful misconduct or
breach of this Agreement, then Bachem
shall reimburse Amylin and its Collaboration Partner for (i) the purchase price
paid by Amylin to Bachem for such
recalled Product, and (ii) all of Amylin’s and its Collaboration Partner’s
other direct reasonable costs and expenses actually incurred by Amylin or its
Collaboration Partner in connection with the recall including, but not limited
to, costs of retrieving Product already delivered to customers, costs of
replacement Product, costs and expenses Amylin or its Collaboration Partner is
required to pay for notification, shipping and handling charges, and all other costs reasonably related to the recall.
If a recall is due to any reason
other than one that is attributable to Bachem’s negligence, willful misconduct
or breach of this Agreement, Amylin or its Collaboration Partner, as
applicable, shall pay all of the costs and
expenses of the recall.

 

5.      Shipment and Delivery

 

5.1.      Bachem agrees to use its commercially reasonable
efforts to ensure that Product ordered by Amylin hereunder shall be delivered
on the scheduled delivery dates set forth in the relevant purchase orders. Bachem shall prepare Product for
shipment and arrange for shipment of Product
to a location designated in writing by Amylin. Shipment terms are FCA Bachem’s Facility (Incoterms 2000). All shipments must be
accompanied by a packing slip which describes

 

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the articles, states the purchase order number and shows the shipment’s
destination. Bachem agrees to
promptly forward the original bill of lading or other shipping receipt for each
shipment in accordance with Amylin’s
instructions. In accordance with Amylin’s written instructions and at Amylin’s
expense, Bachem will arrange for the shipment of Product by the carrier
designated by Amylin and for
appropriate shipping insurance, and Bachem shall ship Product to Amylin in containers reasonably sufficient for delivery of
Product in accordance with the Product Specifications.

 

5.2.      Each delivery of Product shall be governed by the
terms of this Agreement, and none of the conflicting terms or conditions of Amylin’s purchase order or Bachem’s
purchase order form, acknowledgment
or invoice form shall be applicable, except those specifying special shipping instructions and invoice information consistent
with this Agreement.

 

6.      Invoice

 

6.1   Bachem shall invoice Amylin
with a single invoice concurrently with shipment of all Bachem Release
Documents to Amylin. Product accepted by Amylin shall be shipped by Bachem to Amylin’s designated ship to address immediately upon Amylin’s
acceptance of such Product. Amylin
shall pay Bachem net sixty (60) days from the date of their receipt of invoice.

 

7.         Term and Termination

 

7.1       This Agreement shall commence on the Effective Date
and, unless earlier terminated in accordance with this Article 7, shall continue in effect
for a period of six (6) years thereafter, and shall automatically renew thereafter from year to
year unless terminated by either party upon at least two (2) years prior written notice given to
the other party at any time after the expiry of four (4) years from the
Effective Date.

 

7.2   This Agreement may be terminated as follows:

 

a)     Any party may terminate this Agreement immediately
upon the bankruptcy or insolvency of another party, Any party may terminate this Agreement by giving
the other party one- hundred-twenty (120) days’ prior written notice upon or
after the breach of any material provision of this Agreement by the other party if the
breach is not cured within the one-hundred-twenty (120) day period following
written notice of termination by the non-breaching party. Failure to supply all
quantities of Product ordered on the dates specified in an issued Purchase
Order shall be considered a material breach. The parties acknowledge that the
Collaboration Partner shall have the right, but not the obligation, to cure a
breach of any material provision of this Agreement by Amylin if Amylin does
not do so.

 

b)     Amylin may terminate this Agreement (A) by giving
Bachem sixty (60) days’ prior written notice upon notice by the FDA or other
Regulatory Authority that Bachem is not an approved commercial supplier of
Product or failure of Bachem to successfully complete its Pre-Approval Inspection (PAI) or the
foreign equivalent in applicable jurisdictions outside of the United States where Product may be
distributed, marketed or sold, or (B) by giving Bachem thirty (30) days’ prior
written notice in each of the following situations: (i) the FDA notifies Amylin
that it will not approve the NDA directed to the Product, (ii) Amylin withdraws
the NDA directed to the Product or (iii) Amylin withdraws the Product from the
market. If Amylin terminates this Agreement under any of 7.2 (c)(B)(i), (ii) or
(iii), then Amylin agrees to reimburse Bachem for its reasonable and documented
out-of-pocket costs for Materials

 

9

 

and for
the direct costs associated with all work in progress related to open Purchase
Orders issued by Amylin on or before the effective termination date.

 

7.3   Termination, expiration, cancellation or
abandonment of this Agreement through any means or for any reason shall not relieve the parties of
any obligation accruing prior thereto and shall be without prejudice to the
rights and remedies of either party with respect to any antecedent breach of
any of the provisions of this agreement. The provisions of Sections 3.5, 3.6,
3.12, 7.3, 7.4 and 7.5 and Articles 1, 8, 9, 10, 12, 13, 14 and 15 shall survive termination
or expiration of this Agreement.

 

7.4   In the event that this
Agreement is terminated by Amylin pursuant to Section 7.2(a), 7.2(b) or
7.2(c)(i) following the applicable cure period provided in such sections, or in
the event of a Force Majeure
occurrence that causes Bachem to be unable to supply Products in such
quantities as Amylin shall request and in compliance with the delivery periods
set forth in issued Purchase Orders
and Amylin provides written notice to Bachem of its intent to terminate this
Agreement if this situation is
not remedied within the one hundred twenty (120) day period following such
written notice by Amylin, then Bachem shall provide reasonable assistance to
Amylin, at Bachem’s expense, to implement the transfer of manufacturing and
testing responsibility for Product to Amylin or its designee. Such reasonable
assistance shall include all processes, procedures, know-how and data required to perform all aspects of the
site transfer as defined by the FDA under the Changes to an Approved NDA or
ANDA guidelines, including assistance of Bachem personnel in compiling and
transferring this information, but shall not include the direct efforts of a team of Bachem on-site at the new
manufacturing facility. If such on-site personnel commitments are required by
Amylin to effectuate the transfer of manufacturing responsibility, then Amylin
shall reimburse Bachem for the reasonable and direct expenses of providing such
personnel. For purposes of this
Section 7.4, Bachem grants to Amylin an irrevocable, exclusive, worldwide fully paid-up royalty-free license to
use the Bachem Technology, with the right to grant sublicenses, to make and have made Product, effective upon
termination of this Agreement under
the circumstances described in the first sentence of this Section 7.4.

 

7.5 In the event that this Agreement is terminated by Bachem pursuant
to Section 7.2(a) or 7.2(b), then Bachem shall provide reasonable assistance to
Amylin, at Amylin’s expense, to implement
the transfer of manufacturing responsibility for the Products to Amylin or its
designee as described in the preceding paragraph.

 

8.         Representations and Warranties

 

8.1   Bachem represents and
warrants to Amylin, and agrees that, at the time of delivery to Amylin, all Product delivered hereunder: (A)
shall be manufactured in compliance with cGMPs, relevant Regulatory Approvals
filed by Amylin; (B) shall conform to the Product Specifications in effect at the time of delivery; (C) will not be
adulterated within the meaning of the Federal Food, Drug and Cosmetic Act, as
amended, or within the meaning of any applicable state or municipal law or
other Applicable Law in which the definitions of adulteration are substantially
the same as those contained in the
Federal Food, Drug and Cosmetic Act, as such Act and such laws are constituted and effective at the time of
delivery or contain any Contaminant; (D) will not be an article which may not, under the provisions of Sections 404,
505 of 512 of such Act, be introduced into interstate commerce; (E) shall
conform to all Bachem Release Documents associated with the shipment of the Product; (F) shall be packaged,
labeled and shipped in accordance with the Product Specifications in effect at
the time of delivery and the terms of this Agreement; (G) shall be free and clear of any lien or encumbrance.
Bachem represents and warrants that
it shall comply with all Applicable Laws; and (H) shall be manufactured using
amino acid derivative starting materials that are synthetic or of plant origin,
as confirmed in certification
provided to Amylin by Bachem; provided that Product may be manufactured using
amino acid derivative starting materials that are not synthetic or if plant

 

10

 

origin if Bachem obtains the written approval of Amylin to use such starting materials prior to
their use, and provides Amylin
certification regarding use of such starting materials that contains additional
information regarding extraction,
hydrolysis procedures, organs, type of tissue and country of origin of any animal origin amino acids. In addition, Bachem
represents and warrants that (A) Bachem and its employees, affiliates and agents have never been debarred, or convicted
of a crime for which a person can be
debarred, under subsection (a) or (b) of 21 U.S.C. § 335a, and Bachem agrees
that it does not now and will not in the future use in any capacity the
services of any person debarred under subsection (a) or (b) of 21 U.S.C. § 335a.
If during the term of this Agreement, Bachem or any other person performing services hereunder
becomes debarred or disqualified, or receives notice of an action or threat of
an action with respect to debarment or disqualification, Bachem shall
immediately notify Amylin, and (B) to the best of Bachem knowledge as of the
Effective Date, the use of the Bachem Technology as contemplated herein does
not infringe any intellectual property rights owned by any third party. Except
as set forth in this Agreement, Bachem makes no warranties, expressed or
implied, with respect to Product, and all other warranties, expressed or
implied, including, without limitation, the implied warranties or
merchantability and fitness for a particular purpose, are hereby disclaimed by
Bachem.

 

8.2   Each party hereby represents and warrants to the
other party that: (a) such party is duly organized, validly existing and in
good standing under the laws of the state or other jurisdiction in which it is
organized; (b) such party has the power and authority and the legal right to
enter into this Agreement and to perform its obligations hereunder; (c) this
Agreement has been duly executed and delivered on behalf of such party, and
constitutes a legal, valid, binding obligation, enforceable against such party
in accordance with its terms; (d) all necessary consents, approvals and authorizations of all
governmental authorities and other persons required to be obtained by such party in connection
with this Agreement have been obtained, except for those which cannot be obtained prior to the
filing and approval of the NDA; and (e) the execution and delivery of this
Agreement and the performance of such party’s obligations hereunder (i) do not
conflict with or violate any law, regulation, order or other requirement of any
governmental body, court or administrative or other agency having jurisdiction
over such party and (ii) do not conflict with, or constitute a material default or require any
consent under, any agreement, instrument or understanding, oral or written, to which it is a
party or by which it may be bound.

 

8.3   IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY
INDIRECT, INCIDENTAL,
SPECIAL OR CONSEQUENTIAL DAMAGES INCURRED BY THE OTHER PARTY, WHETHER IN
CONTRACT OR TORT OR BASED ON A WARRANTY, EVEN IF THE OTHER PARTY HAS BEEN ADVISED OF THE POSSIBILITY
OF SUCH DAMAGES. This paragraph shall not be construed to limit a party’s
obligations under Article 9 of this Agreement.

 

9.     Indemnification

 

9.1   Amylin shall defend, indemnify and hold
Bachem and its Affiliates and their respective employees, directors,
officers, shareholders and agents (each, an “Amylin Indemnitee”) harmless against any liability,
judgment, demand, action, suit, loss, damage, cost and other expense (including reasonable
attorney’s fees) (“Liability”) resulting from any third party claims made or proceedings brought
against Bachem to the extent such Liability arises from (i) Amylin’s negligence
or willful act or omission in the possession, use, importation, marketing or
sale of Product,
(ii) Amylin’s material breach of this Agreement, (iii) Amylin’s breach of any representation or
warranty set forth in Article 8, or (iv) any repackaging or use by or on behalf
of

 

11

 

Amylin
of Product after delivery to Amylin by Bachem hereunder, in each case, except
to the extent Bachem is obligated to indemnify any Amylin Indemnitee for such
claim or proceeding under Section 9.2 below.

 

9.2       Bachem shall defend, indemnify and hold Amylin and
its Collaboration Partner and their Affiliates and their respective employees,
directors, officers, shareholders and agents harmless against any Liability
resulting from any third party claims made or proceeding brought against Amylin
to the extent that such liability arises from (i) Bachem’s negligence or
willful act or omission in the manufacture, storage or delivery of Product;
(ii) Bachem’s material breach of this
Agreement; or (iii) Bachem’s breach of any representation or warranty set forth
in Article 8.

 

Each indemnified party agrees to give the indemnifying party prompt
written notice of any matter upon which such indemnified party intends to base
a claim for indemnification (an “Indemnity Claim”) under Article 9. The
indemnifying party shall have the right to participate jointly with the indemnified party in the
indemnified party’s defense, settlement or other disposition of any Indemnity Claim. With respect to any Indemnity Claim relating solely to the payment of money
damages and which could not result in the indemnified party’s becoming subject
to injunctive or other equitable relief or otherwise adversely affect the
business of the indemnified party in any manner, and as to which the
indemnifying party shall have acknowledged in writing the obligation to
indemnify the indemnified party hereunder, the indemnifying party shall have
the sole right to defend, settle or otherwise dispose of such Indemnity Claim,
on such terms as the indemnifying party, in its sole discretion, shall deem appropriate, provided that the indemnifying party
shall provide reasonable evidence of its ability to pay any damages claimed and with respect to any such settlement shall
have obtained the written release of
the indemnified party from the Indemnity Claim. The indemnifying party shall obtain the written consent of the indemnified
party, which shall not be unreasonably withheld, prior to ceasing to defend,
settling or otherwise disposing of any Indemnity Claim if as a result thereof the indemnified party would become
subject to injunctive or other equitable relief or the business of the
indemnified party would be adversely affected in any manner.

 

9.3    Each party shall at all times comply, through
insurance, with all statutory workers’ compensation
and employers’ liability requirements covering any and all employees with
respect to activities performed under
this Agreement. In addition to the foregoing, each party shall obtain and maintain, occurrence-based or claims
made Broad Form Comprehensive General Liability
(“BFCGL”) Insurance with a reputable and financially secure insurance
carrier(s) having at least an
Excellent rating (A- rating or above by A.M. Best). Upon a party’s request, the other party shall provide to such requesting
party written evidence reasonably satisfactory to such requesting party of the sufficiency of such
other party’s insurance program.

 

10.      Confidential Information

 

Confidential Information will be as defined by and treated in
accordance with the Confidential Disclosure
Agreement dated February 15, 2002 between Amylin and Bachem, a copy of which is
attached hereto as Exhibit 2, which
shall remain in full force and effect in accordance with its terms. The
parties, however, agree that the following shall apply to confidential
information disclosed under this
Agreement: (A) each party shall use the other party’s confidential information solely for the purposes contemplated
under this Agreement, (B) the non-disclosure and confidentiality obligations shall remain in effect during the term
of this Agreement and for a period of
five (5) years thereafter, and (C) Amylin shall have the right to disclose
Bachem’s confidential information, without Bachem prior consent, to Regulatory
Authorities in accordance with Article 3 and to Collaboration Partner.

 

12

 

 

11.   Force
Majeure

 

If the
performance by either party of any obligation under this Agreement, other than
the payment of money, is prevented or impaired by Force Majeure for any cause
beyond the reasonable control of the defaulting party, such party shall be excused
from performance so long as such situation continues to prevent or impair
performance, provided the party claiming such excuse shall have promptly
notified the other party of the existence, nature, duration and other details
of such cause and shall at all times use its reasonable efforts consistent with
its normal business practices to resume a complete performance. If either party
anticipates that a Force Majeure may occur, that party shall notify the other
immediately and explain the nature, details and expected duration thereof.

 

The
affected party will advise the other from time to time as to the progress in
remedying the situation and as to the time when the affected party expects to
resume its obligations and shall notify the other as to the expiration of any Force
Majeure as soon as the affected party knows the date thereof.

 

“Force
Majeure” shall mean an event beyond the reasonable control of a party
including, but not limited to, fire, flood, sabotage, shipwreck, embargo,
explosion, accident, riot, act of governmental authority (including, without
limitation, acts relating to raw material or product allocation), acts of
God, acts of war, and acts of terrorism.

 

In the
event of a Force Majeure affecting Bachem, Bachem may prorate and allocate manufacturing
capacity among its Affiliates, Amylin and Bachem’s other customers, in proportion to purchases
of products by such Affiliates, Amylin and other customers during the 12-month
period preceding such Force Majeure event Notwithstanding the occurrence of a Force Majeure
event, if Bachem shall be unable to supply Products in such quantities as
Amylin shall request and in compliance with the delivery periods set forth in
this Agreement, Amylin shall be permitted (with no obligation to Bachem) to exercise
its rights under Section 7.4 and have another source manufacture Product on
Amylin’s behalf using the process described in the master batch records for the
Product, and Amylin shall thereafter have no obligation to purchase Products from
Bachem until any contractual obligations that Amylin has assumed in connection
with obtaining a substitute supply of Products shall have terminated. Amylin shall
have no obligation to affirmatively terminate any such contractual arrangements.

 

12.   Notices

 

All notices hereunder shall be in writing and
shall be delivered personally, mailed by overnight delivery, registered or
certified mail, postage prepaid, or given by facsimile and confirmed by any of the foregoing, as
follows:

 

	
  If to Amylin

  	
  Amylin Pharmaceuticals

  
	
   

  	
  9360 Towne Centre Drive

  
	
   

  	
  San Diego, CA 92121

  
	
   

  	
  Telefax No: (858) 552-2212

  
	
   

  	
  Attn. John Grove

  
	
   

  	
  Senior Director

  
	
   

  	
   

  
	
   

  	
  with a copy to the attention of Lloyd A.
  Rowland, Vice President and General Counsel, at the same address as stated above, Telefax No: 858-552-1936.

  

 

13

 

	
  If to Bachem

  	
  Bachem California

  
	
   

  	
  3132 Kashiwa Street

  
	
   

  	
  Torrance, CA 90505

  
	
   

  	
  Attn. Phillip Ottiger

  
	
   

  	
  Telefax No: 310 530 1571

  
	
   

  	
   

  
	
   

  	
  Bachem Americas

  
	
   

  	
  3132 Kashiwa Street

  
	
   

  	
  Torrance, CA 90505

  
	
   

  	
  Attn. Jose de Chastonay

  
	
   

  	
  TelefaxNo: 310 530 1571

  

 

13.      Binding Effect

 

This Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective assigns and successors in interest. Collaboration Partner is an
intended third party beneficiary of the
provisions of this Agreement specifically referring to Collaboration Partner.

 

14.      Applicable Law

 

This Agreement shall
be construed, interpreted and governed by the laws of California, excluding
its conflicts of laws principles.

 

15.      Assignment

 

Neither party shall assign this Agreement or any part thereof without
the prior written consent of the other party; provided, however, that either
party, without such consent, may assign or sell the same in connection with the transfer or sale of
substantially its entire business to which this Agreement pertains, whether by merger, sale of stock, sale of assets,
consolidation with another company or otherwise. Any permitted assignee shall assume all obligations of its assignor under this Agreement.
No assignment shall relieve any party of responsibility for the performance of
any accrued obligation which such party then has hereunder.

 

16.    Entire Agreement

 

This Agreement
constitutes the entire agreement between the parties concerning the subject matter hereof and supersedes all written or oral
prior agreements or understandings with respect thereto. No subsequent
amendment, modification or addition to this Agreement shall be binding upon the
parties hereto unless reduced to writing and signed by the respective
authorized officers of the parties.

 

17.    Severability

 

This Agreement is subject to the restrictions, limitations, terms and
conditions of all applicable governmental
regulations, approvals and clearances. If
any term or provision of this Agreement shall for any reason be held invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other term or provision hereof, and this Agreement shall be interpreted and construed as if such term or
provision, to the extent the same shall
have been held to be invalid, illegal or unenforceable, had never been
contained herein.

 

14

 

18.      Waiver - Modification of Agreement

 

No waiver or modification of any of the terms of this Agreement shall
be valid unless in writing and signed by authorized representatives of both
parties hereto. Failure by either party to enforce any rights under this Agreement shall not be
construed as a waiver of such rights nor shall a waiver by either party in one or more instances be construed as
constituting a continuing waiver or as a waiver in other instances.

 

19.      Publicity

 

In the absence of
specific agreement between the parties, neither party shall originate any publicity,
news release or other public announcement, written or oral, whether to the
public press, to stockholders or
otherwise, relating to this Agreement or to performance hereunder, save only such announcement as in the opinion of legal
counsel to the party making such announcement
is required by law to be made.

 

20.      Exhibits

 

All Exhibits
referenced herein are hereby made a part of this Agreement.

 

21.      Counterparts

 

This Agreement may
be executed in any number of separate counterparts, each of which shall be deemed to be an original, but which together shall
constitute one and the same instrument.

 

In Witness
whereof, the parties have caused this Agreement to be executed by their duly
authorized representatives on the later date written below.

 

	
  - BACHEM Americas -

  	
  - Bachem, Inc. -

  
	
   

  	
   

  
	
  Jose de Chastonay

  	
   

  	
  Philip Ottiger

  	
   

  
	
   

  	
   

  
	
  Name

  	
  Name

  
	
   

  	
   

  
	
  Signature

  	
  Signature

  
	
   

  	
   

  
	
  President

  	
   

  	
  President &CEO, Bachem, Inc.

  	
   

  
	
   

  	
   

  
	
  Title

  	
  Title

  
	
   

  	
   

  
	
  - Amylin
  Pharmaceuticals, Inc. -

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Title

  	
   

  	
   

  
					

 

15

 

[***]

 

 

* Confidential
Treatment Request(ed)

 

16

 

[***]

 

 

* Confidential
Treatment Request(ed)

 

17

 

[***]

 

 

* Confidential
Treatment Request(ed)

 

18Exhibit 10.50

 

SUBLEASE

 

THIS SUBLEASE is made and entered into this 24th day of November, 2003,
by and between BRISTOL-MYERS SQUIBB COMPANY, a Delaware corporation
(“Sublandlord”) and AMYLIN PHARMACEUTICALS, INC., a Delaware corporation
(“Subtenant”).

 

1.  Basic Lease Provisions.

 

A. Property Address:  4570
Executive Drive, San Diego, California 92121;

 

B. Subtenant’s Address for notices before and after the Commencement
Date: 9360 Towne Centre Drive, Suite 110, San Diego, CA, 92121, Attn: Executive
Director of Operations, with a copy to: Amylin Pharmaceuticals, Inc., 9360
Towne Centre Drive, Suite 110, San Diego, CA, 92121, Attn: Lloyd Rowland, Vice
President and General Counsel;

 

C. Sublandlord’s Address for notices: Bristol-Myers Squibb Company,
Attention: Corporate Real Estate Department, P.O. Box 4000, Princeton, NJ  08543-4000, with a copy to Smith Stratton
Wise Heher & Brennan, LLP, Attention: Christopher S. Tarr, Esq., 600
College Road East, Princeton, NJ  08540;

 

D. Prime Landlord: LMC-Shoreham Investment Company, LLC, and Convoy
Court Investment Company, LLC, as tenants in common;

 

E. Prime Landlord’s Address for notices: LMC-Shoreham Investment
Company, LLC, 4570 Executive Drive, Suite 430, San Diego, CA 92121;

 

F. Identification of Prime Lease: Lease made February 23, 1999, between
CombiChem, Inc., and LMC-Shoreham Investment Company, LLC, and Convoy Court
Investment Company, LLC, as tenants in common;

 

G. Sublease Term: From the Commencement Date through January 31, 2015;

 

H. Commencement Date: The  later
to occur of: (i) the date upon which this Sublease is fully executed by and
delivered to each of the parties; and (ii) the date upon which Prime Landlord’s
executed Consent of Prime Landlord and any lender’s executed Subordination,
Non-Disturbance and Attornment Agreement, each of which shall be in a form
acceptable to Subtenant, are delivered to each of the parties;

 

I. Expiration Date: January 31, 2015;

 

J. Base Rent: $2,577,396.36 per annum, payable in equal monthly
installments of $214,783.03 on the first day of each month during the Term and
subject to escalation as provided in Section 12 of the Schedule of the Prime
Lease; provided, however, that, so long as Subtenant is not in default of any
of its obligations hereunder beyond all applicable cure

 

1

 

periods, (i) 100% of the monthly installments of the Base Rent shall be
abated for the period of one year commencing on the date which is sixty (60)
days after the Commencement Date (the “Rent Commencement Date”); and (ii) 50%
of the monthly installments of the Base Rent shall be abated for the period of
one year commencing on the first anniversary of the Rent Commencement Date;

 

K. Payee of Rent: Sublandlord;

 

L. Address for Payment of Rent: By wire transfer to Bristol Myers
Squibb Company, Chase Manhattan Bank of New York, ABA# 021-0000-21, Account #
323232914;

 

M. Sublease Share: Sixty-two and one-half percent (62.5%);

 

N. Description of Premises: The entire “Premises” as defined in, and
leased pursuant to, the Prime Lease, consisting of  77,539 rentable square feet on second, third and fourth floors of
the building (the “Building”) located at 4570 Executive Drive, San Diego,
California, as depicted on Exhibit A to the Prime Lease;

 

O. Security Deposit: $1,288,698.18 in cash or irrevocable standby
letter of credit in form reasonably satisfactory to Sublandlord; provided,
however, that the amount of the Security Deposit shall be reduced to
$214,783.03 after, and for so long as, Subtenant obtains, and thereafter
maintains, either (i) a credit rating of BBB or better from Standard &
Poor’s or (ii) at least $300,000,000 in annual sales;

 

P. Subtenant’s Use: The Permitted Uses, as such term is defined in
Section 13 of the Prime Lease; and

 

Q. Broker: Phase 3 Properties, Inc., on behalf of Sublandlord, and
Burnham Real Estate Services, on behalf of Subtenant.

 

2. Prime Lease. Sublandlord is the tenant under a lease (the
“Prime Lease”) with the Prime Landlord identified in Section 1(D), bearing the
date specified in Section 1(F).  The
Prime Lease is attached hereto as Exhibit “A” and is hereby incorporated
herein.

 

3. Sublease. Sublandlord, for and in consideration of the rents
herein reserved and of the covenants and agreements herein contained on the
part of the Subtenant to be performed, hereby subleases to the Subtenant, and
the Subtenant accepts from the Sublandlord, certain space described in Section
1(N) (the “Premises”) and shown on Exhibit
A to the Prime Lease.

 

4. Term. Subject to Section 5, the term of this Sublease (the
“Term”) shall commence on the date (hereinafter the “Commencement Date”) which
is the date specified in Section 1(H); and shall expire on the date (the
“Expiration Date”) specified in Section 1(I), unless sooner terminated as
otherwise provided elsewhere in this Sublease.

 

5. Possession. In lieu of Sublandlord cleaning all floors,
ceilings and walls, touching-up the paint and replacing any missing floor tiles
prior to delivery of the Premises to Subtenant, Sublandlord shall provide Subtenant
with a cash allowance of Nine Thousand One Hundred Dollars ($9,100.00) which
shall be due and payable on the Commencement Date.  Except as otherwise

 

2

 

set forth herein, the Premises are to be delivered by Sublandlord to
Subtenant “AS IS,” and shall include all personal property, furniture and
telephones and related equipment located in the Premises on the Commencement
Date.  If the Premises are not delivered
on or before the date specified in Section 1(H) hereof, this Sublease shall
remain in effect, Sublandlord shall have no liability to Subtenant as a result
of any delay in occupancy, but unless the delay is occasioned by any act or
omission of Subtenant, the Commencement Date determined in accordance with
Section 4 hereof shall be delayed to the date on which such work is
substantially completed; in no event shall the Expiration Date be delayed.  Notwithstanding the foregoing or any
provision of this Sublease to the contrary, if for any reason Sublandlord
cannot deliver possession of the Premises to Subtenant by February 29, 2004,
Subtenant may terminate this Sublease at Subtenant’s election upon written
notice to Sublandlord.

 

6. Subtenant’s Use. The Premises shall be used and occupied only
for the Subtenant’s Use set forth in Section 1(P).

 

7. Rent. Beginning on the Rent Commencement Date, Subtenant
agrees to pay the Base Rent as set forth in Section 1(J) to the Payee specified
in Section 1(K), at the address specified in Section 1(L), or to such other
payee or at such other address as may be designated by notice in writing from
Sublandlord to Subtenant, without prior demand therefor and without any
deduction or setoff whatsoever. Base Rent shall be paid in equal monthly
installments in advance on the first day of each month of the Term, commencing
on the Rent Commencement Date, subject, however to the abatement of Base Rent
as set forth in Section 1(J).  Subtenant
shall pay the first installment of Base Rent on the first day of the thirteenth
(13th) month after the Rent Commencement Date, which shall be in the amount of
one-half (1/2) of one month’s Base Rent. 
Base Rent shall be pro-rated for partial months at the beginning and end
of the Term. All charges, costs and sums required to be paid by Subtenant to
Sublandlord under this Sublease in addition to Base Rent shall be deemed
“Additional Rent,” and Base Rent and Additional Rent shall hereinafter
collectively be referred to as “Rent.” Subtenant’s covenant to pay Rent shall
be independent of every other covenant in this Sublease. If Rent is not paid
when due, Subtenant shall pay, relative to the delinquent payment, an amount
equal to the sum which would be payable by Sublandlord to Prime Landlord for an
equivalent default under the Prime Lease.

 

8.  Additional Rent.

 

A.  If and to the extent that
Sublandlord is obligated to pay additional rent under the Prime Lease, whether
such additional rent is to reimburse Prime Landlord for taxes, operating
expenses, common area maintenance charges or other expenses incurred by the
Prime Landlord in connection with the Property, commencing on the Rent
Commencement Date, Subtenant shall pay to Sublandlord, the percentage of such
additional rent (to the extent such additional rent is attributable to events
occurring during the term of this Sublease) which is set forth in Section 1(M)
as the Sublease Share. Such payment shall be due from Subtenant to Sublandlord
no fewer than five (5) days prior to the date upon which Sublandlord’s payment
of such additional rent is due to the Prime Landlord, provided that Subtenant
shall have been billed therefor at least ten (10) days prior to such due date
(which bill shall be accompanied by a copy of Prime Landlord’s bill and other
material furnished to Sublandlord in connection therewith).  Notwithstanding the foregoing, Subtenant
shall make estimated monthly payments of Operating Cost Share Rent, as such
term is defined in, and in the manner set

 

3

 

forth in, Section 2 of the Prime Lease, to Sublandlord on the first day
of each month together with the payment of Base Rent.

 

B. The Sublease Share provided for in Section 1(M) is calculated by
dividing the rentable area of the Premises by the rentable area of the
Building.  In the event the rentable
area of the Premises or the area of the Building shall be changed during the
Term, then the Sublease Share shall be recalculated.

 

9.  Subtenant’s Obligations.
Subtenant shall be responsible, and shall pay, for the following:

 

A. The Sublease Share of all utility consumption costs, including
without limitation, electric and other charges incurred in connection with
lighting, and providing electrical power to the Premises. Subtenant shall hold
Sublandlord harmless from all costs or expenses Sublandlord may incur from
Subtenant’s failure to pay utility bills or to perform any of its obligations
with respect to the purchase of utilities. 
Subtenant shall not be required to install, or pay for the installation
of, a separate meter or submeter.

 

B. All maintenance, repairs and replacements as to the Premises and its
equipment, to the extent Sublandlord is obligated to perform the same under the
Prime Lease.

 

10. Quiet Enjoyment. Sublandlord represents that it has full
power and authority to enter into this Sublease, subject to the consent of the
Prime Landlord, if required under the Prime Lease. So long as Subtenant is not
in default in the performance of its covenants and agreements in this Sublease,
Subtenant’s quiet and peaceable enjoyment of the Premises shall not be
disturbed or interfered with by Sublandlord, or by any person claiming by,
through, or under Sublandlord. 
Sublandlord hereby represents and warrants to Subtenant, that, to the
best of Sublandlord’s knowledge, neither Sublandlord nor Prime Landlord is in
default of its respective obligations under the Prime Lease.

 

11. Subtenant’s Insurance. Subtenant shall procure and maintain,
at its own cost and expense, such liability insurance as is required to be
carried by Sublandlord under the Prime Lease, naming Sublandlord, as well as
Prime Landlord, in the manner required therein, and such property insurance as
is required to be carried by Sublandlord under the Prime Lease to the extent
such property insurance pertains to the Premises. If the Prime Lease requires
Sublandlord to insure leasehold improvements or alterations, then Subtenant
shall insure such leasehold improvements that are located in the Premises, as
well as alterations in the Premises made by Subtenant. Subtenant shall furnish
to Sublandlord a certificate of Subtenant’s insurance required hereunder not
later than ten (10) days prior to Subtenant’s taking possession of the
Premises. Each party hereby waives claims against the other for property damage
provided such waiver shall not invalidate the waiving party’s property
insurance; each party shall attempt to obtain from its insurance carrier a
waiver of its right of subrogation. Subtenant hereby waives only those claims
against Prime Landlord and Sublandlord for business interruption or property
damage to the Premises or its contents, but solely to the extent that
Sublandlord is required to waive such claims against Prime Landlord under
Paragraph 8 of the Prime Lease. Sublandlord hereby waives such claims against
Subtenant for loss of rents or damage to property sustained by Sublandlord to
the same degree that such claims are waived by Prime Landlord under Paragraph 8
of the Prime Lease.  Subject to the
terms herein, Subtenant agrees to use reasonable efforts in

 

4

 

good faith to obtain, for the benefit of Prime Landlord and
Sublandlord, such waivers of subrogation rights from its insurer as are
required of Sublandlord under the Prime Lease. Sublandlord agrees to use
reasonable efforts in good faith to obtain from Prime Landlord a waiver of
claims for insurable property damage losses and an agreement from Prime
Landlord to obtain a waiver of subrogation rights in Prime Landlord’s property
insurance, if and to the extent that Prime Landlord waives such claims against
Sublandlord under the Prime Lease or is required under the Prime Lease to
obtain such waiver of subrogation rights.

 

12. Assignment Or Subletting.

 

A.  Subtenant shall not without
the prior written consent of Sublandlord (i) assign, convey or mortgage this
Sublease or any interest under it; (ii) allow any transfer thereof or any lien
upon Subtenant’s interest by operation of law; (iii) further sublet the
Premises or any part thereof; or (iv) permit the occupancy of the Premises or
any part thereof by anyone other than Subtenant. Sublandlord’s consent to an
assignment of this Sublease or a further sublease of the Premises shall not be
unreasonably withheld, and if Sublandlord consents thereto, Sublandlord shall
use reasonable efforts to obtain the consent of Prime Landlord if such consent
is required to be obtained under the Prime Lease. Any reasonable cost of
obtaining Prime Landlord’s consent shall be borne by Subtenant.

 

B. No permitted assignment shall be effective and no permitted sublease
shall commence unless and until any default by Subtenant hereunder shall have
been cured. No permitted assignment or subletting shall relieve Subtenant from
Subtenant’s obligations and agreements hereunder and Subtenant shall continue
to be liable as a principal and not as a guarantor or surety to the same extent
as though no assignment or subletting had been made.

 

C.  Notwithstanding anything in
Section 12(A) or Section 12(B) to the contrary, Subtenant may assign or
sublease part or all of the Premises without Sublandlord’s consent to: (i) any
corporation or partnership that controls, is controlled by, or is under common
control with, Subtenant; or (ii) any corporation resulting from the merger or
consolidation with Subtenant or to any entity that acquires all of Subtenant’s
assets as a going concern of the business that is being conducted on the
Premises, as long as the assignee or sublessee is a bona fide entity and
assumes all of the obligations of Subtenant under this Sublease.  Sublandlord’s consent also shall not be
required in connection with a public offering of stock by Subtenant.

 

13. Rules. Subtenant agrees to comply with all rules and
regulations that Prime Landlord has made or may hereafter from time to time
make for the building located at 4570 Executive Drive, San Diego,
California  (the “Building”), including
without limitation the Rules and Regulations attached to the Prime Lease as
Exhibit B. Sublandlord shall not be liable in any way for damage caused by the
non-observance by any of the other tenants of such similar covenants in their
leases or of such rules and regulations.

 

14. Repairs and Compliance. Subtenant shall promptly pay for the
repairs set forth in Section 9(B) hereof and shall, at Subtenant’s own expense,
comply with all laws and ordinances, and all orders, rules and regulations of
all governmental authorities and of all insurance bodies and their fire
prevention engineers at any time in force, applicable to the Premises or to
Subtenant’s particular use or manner of use thereof.  Notwithstanding the foregoing, Subtenant shall not be

 

5

 

responsible for compliance with the Americans With Disabilities Act of
1990, as amended (“ADA”) except to the extent that those requirements are based
upon the Subtenant’s occupancy, alteration, improvement or use of the Premises.

 

15. Fire or Casualty or Eminent Domain. In the event Sublandlord
is entitled, under the Prime Lease, to an abatement of rent as a result of a
fire or other casualty or as a result of a taking under the power of eminent
domain, then Subtenant shall be entitled to an equivalent rent abatement
hereunder. If the Prime Lease imposes on Sublandlord the obligation to repair
or restore leasehold improvements or alterations, Subtenant shall be
responsible for repair or restoration of leasehold improvements or alterations;
Subtenant shall make any insurance proceeds resulting from the loss which
Sublandlord is obligated to repair or restore available to Sublandlord and shall
permit Sublandlord to enter the Premises to perform the same, subject to such
conditions as Subtenant may reasonably impose.

 

16. Alterations.

 

A. 
Subtenant shall not make any alterations in or additions to the Premises
(“Alterations”) if to do so would constitute a default under the Prime Lease.
If Subtenant’s proposed Alterations would not constitute a default under the
Prime Lease, Sublandlord’s prior written consent thereto shall nonetheless be
required, but Sublandlord’s consent to such Alterations shall not be
unreasonably withheld, and if Sublandlord consents thereto, Sublandlord shall
use reasonable efforts to obtain the consent of Prime Landlord, if such consent
is required under the Prime Lease. If Alterations by Subtenant are permitted or
consented to as aforesaid, Subtenant shall comply with all of the covenants of
Sublandlord contained in the Prime Lease pertaining to the performance of such
Alterations. In addition, Subtenant shall indemnify, defend and hold harmless
Sublandlord against liability, loss, cost, damage, liens and expense imposed on
Sublandlord arising out of the performance of Alterations by Subtenant.

 

B. 
Notwithstanding anything in this Section 16 to the contrary, if (i)
either Sublandlord or Prime Landlord does not approve or reject Subtenant’s
plans and specifications for Tenant’s Work within thirty (30) days after
submittal thereof to such parties, or (ii) Subtenant is unable to secure all
required licenses, permits and approvals from applicable governmental
authorities necessary for it to perform Tenant’s Work and operate its business
in the Premises (collectively, the “Required Approvals”) within one (1) year
from the date Subtenant submits complete applications for each of the Required
Approvals and despite Subtenant’s good faith and diligent efforts to secure
each of the Required Approvals, then Subtenant may terminate this Sublease upon
written notice to Sublandlord.

 

C. 
Sublandlord hereby grants to Subtenant all of Sublandlord’s rights under
Section 11(B) of the Prime Lease pertaining to signage, subject to the terms of
the Prime Lease and the consent of Prime Landlord.

 

D. 
Sublandlord hereby grants to Subtenant all of Sublandlord’s rights under
the Prime Lease, if any, pertaining to roof access and cable, subject to the
terms of the Prime Lease and the consent of Prime Landlord.

 

6

 

17. Surrender. Upon the expiration of this Sublease, or upon the
termination of the Sublease or of the Subtenant’s right to possession of the
Premises, Subtenant will at once surrender and deliver up the Premises,
together with all improvements thereon, to Sublandlord in good condition and
repair, reasonable wear and tear excepted; conditions existing because of
Subtenant’s failure to perform maintenance, repairs or replacements as required
of Subtenant under this Sublease shall not be deemed “reasonable wear and
tear.” Said improvements shall include all plumbing, lighting, electrical,
heating, cooling and ventilating fixtures and equipment in the Premises.  Any of Subtenant’s removable trade fixtures,
business equipment, inventory, furniture, and other articles of personal
property installed in or on the Premises by Subtenant at its expense, shall
remain the property to Subtenant. Subtenant shall surrender to Sublandlord all
keys to the Premises and make known to Sublandlord the combination of all
combination locks that Subtenant is permitted to leave on the Premises. All
Alterations in or upon the Premises made by Subtenant shall become a part of
and shall remain upon the Premises upon such termination without compensation,
allowance or credit to Subtenant; provided, however, that, to the extent Prime
Landlord notifies Subtenant in writing, at the time Subtenant requests Prime
Landlord’s consent to an Alteration, that Prime Landlord will require the
removal of such Alteration, Sublandlord shall have the right to require
Subtenant to remove such Alterations made by Subtenant, or any portion thereof
as designated by Prime Landlord in such written notice.  In such event, Subtenant shall restore the
Premises to their condition prior to the making of such Alteration, repairing
any damage occasioned by such removal or restoration. If Prime Landlord
requires removal of any Alteration made by Subtenant, or a portion thereof, and
Subtenant does not make such removal in accordance with this Section,
Sublandlord may remove the same (and repair any damage occasioned thereby), and
dispose thereof, or at its election, deliver the same to any other place of business
of Subtenant, or warehouse the same. Subtenant shall pay the costs of such
removal, repair, delivery and warehousing on demand. As between Sublandlord and
Subtenant, Subtenant shall not be required to remove any Alterations performed
by Sublandlord prior to the Commencement Date or to restore the Premises to
their condition prior to the making of such Alterations. If, however, the term
of the Sublease expires at or about the date of the expiration of the Prime
Lease, and if Sublandlord is required under or pursuant to the terms of the
Prime Lease to remove any Alterations performed prior to the Commencement Date,
Subtenant shall permit Sublandlord to enter the Premises for a period of sixty
(60) days prior to the expiration of the Sublease, subject to such conditions
as Subtenant may reasonably impose, for the purpose of removing its Alterations
and restoring the Premises as required.

 

18. Removal of Subtenant’s Property. Upon the expiration of this
Sublease, Subtenant shall remove Subtenant’s articles of personal property
incident to Subtenant’s business (“Trade Fixtures”); provided, however, that
Subtenant shall repair any injury or damage to the Premises which may result
from such removal, and shall restore the Premises to the same condition as prior
to the installation thereof. If Subtenant does not remove Subtenant’s Trade
Fixtures from the Premises prior to the expiration or earlier termination of
the Term, Sublandlord may, at its option, remove the same (and repair any
damage occasioned thereby and restore the Premises as aforesaid) and dispose
thereof or deliver the same to any other place of business of Subtenant, or
warehouse the same, and Subtenant shall pay the cost of such removal, repair,
restoration, delivery or warehousing to Sublandlord on demand, or Sublandlord
may treat said Trade Fixtures as having been conveyed to Sublandlord with this
Lease as a Bill of Sale, without further payment or credit by Sublandlord to
Subtenant.

 

7

 

19. Holding Over. Subtenant shall have no right to occupy the
Premises or any portion thereof after the expiration of this Sublease or after
termination of this Sublease or of Subtenant’s right to possession in
consequence of an Event of Default hereunder. In the event Subtenant or any
party claiming by, through or under Subtenant holds over, Sublandlord may
exercise any and all remedies available to it at law or in equity to recover
possession of the Premises, and to recover damages, including without
limitation, damages payable by Sublandlord to Prime Landlord by reason of such
holdover. For each and every month or partial month that Subtenant or any party
claiming by, through or under Subtenant remains in occupancy of all or any
portion of the Premises after the expiration of this Sublease or after
termination of this Sublease or Subtenant’s right to possession, Subtenant
shall pay, as minimum damages and not as a penalty, monthly rental at a rate
equal to double the rate of Base Rent and Additional Rent payable by Subtenant
hereunder immediately prior to the expiration or other termination of this
Sublease or of Subtenant’s right to possession. The acceptance by Sublandlord
of any lesser sum shall be construed as payment on account and not in
satisfaction of damages for such holding over.

 

20. Encumbering Title. Subtenant shall not do any act which
shall in any way encumber the title of Prime Landlord in and to the Building,
nor shall the interest or estate of Prime Landlord or Sublandlord be in any way
subject to any claim by way of lien or encumbrance, whether by operation of law
by virtue of any express or implied contract by Subtenant, or by reason of any
other act or omission of Subtenant. Any claim to, or lien upon, the Premises or
the Building arising from any act or omission of Subtenant shall accrue only
against the subleasehold estate of Subtenant and shall be subject and
subordinate to the paramount title and rights of Prime Landlord in and to the
Building and the interest of Sublandlord in the premises leased pursuant to the
Prime Lease. Without limiting the generality of the foregoing, Subtenant shall
not permit the Premises or the Building to become subject to any construction,
mechanics’, laborers’ or materialmen’s lien on account of labor or material furnished
to Subtenant or claimed to have been furnished to Subtenant in connection with
work of any character performed or claimed to have been performed on the
Premises by, or at the direction or sufferance of, Subtenant, provided,
however, that if so permitted under the Prime Lease, Subtenant shall have the
right to contest in good faith and with reasonable diligence, the validity of
any such lien or claimed lien if Subtenant shall give to Prime Landlord and
Sublandlord such security as may be deemed satisfactory to each of them to
assure payment thereof and to prevent any sale, foreclosure, or forfeiture of
the Premises or the Building by reason of non-payment thereof, provided
further, however, that on final determination of the lien or claim of lien,
Subtenant shall immediately pay any judgment rendered, with all proper costs
and charges, and shall have the lien released and any judgment satisfied.

 

21. Indemnity.

 

A.  Subtenant agrees to
indemnify Sublandlord and its directors, officers, employees and affiliates
(collectively, the “Sublandlord Indemnified Parties”) and hold the Sublandlord
Indemnified Parties harmless from any and all losses, damages, liabilities and
expenses which the Sublandlord Indemnified Parties may incur, or for which the
Sublandlord Indemnified Parties may be liable to Prime Landlord or any other
party, arising from the acts or omissions of Subtenant which are the subject
matter of any indemnity or hold harmless of Sublandlord to Prime Landlord or
any other party under the Prime Lease.

 

8

 

B.  Sublandlord agrees to
indemnify Subtenant and its directors, officers, employees and affiliates
(collectively, the “Subtenant Indemnified Parties”) and hold the Subtenant
Indemnified Parties harmless from any and all losses, damages, liabilities and
expenses which the Subtenant Indemnified Parties may incur, arising from any
breach or default by Sublandlord of the Prime Lease or this Sublease, except to
the extent caused by the willful misconduct or negligence of Subtenant, which
shall include Subtenant’s failure to pay all sums due under this Sublease as
and when due.  In the event any action
or proceeding shall be brought against Subtenant by reason of any such claim,
Sublandlord shall defend the same at Sublandlord’s expense by counsel
reasonably satisfactory to Subtenant.

 

22. Sublandlord’s Reserved Rights. Sublandlord reserves the
right, on not less than five (5) days’ prior notice, except in the event of an
emergency, to inspect the Premises, or to exhibit the Premises to persons
having a legitimate interest at any time during the Term, during Subtenant’s
customary hours of operation.

 

23. Defaults. Subtenant agrees that any one or more of the
following events shall be considered Events of Default as said term is used
herein:

 

A. Subtenant shall be adjudged an involuntary bankrupt, or a decree or
order approving, as properly filed, a petition or answer filed against
Subtenant asking reorganization of Subtenant under the Federal bankruptcy laws
as now or hereafter amended, or under the laws of any State, shall be entered,
and any such decree or judgment or order shall not have been vacated or stayed
or set aside within sixty (60) days from the date of the entry or granting
thereof; or

 

B. Subtenant shall file, or admit the jurisdiction of the court and the
material allegations contained in, any petition in bankruptcy, or any petition
pursuant or purporting to be pursuant to the Federal bankruptcy laws now or
hereafter amended, or under the laws of any State, or Subtenant shall institute
any proceedings for relief of Subtenant under any bankruptcy or insolvency laws
or any laws relating to the relief of debtors, readjustment of indebtedness,
reorganization, arrangements, composition or extension; or

 

C. Subtenant shall make any assignment for the benefit of creditors or
shall apply for or consent to the appointment of a receiver for Subtenant or
any of the property of Subtenant; or

 

D. Subtenant shall admit in writing its inability to pay its debts as
they become due; or

 

E. The Premises are levied on by any revenue officer or similar
officer; or

 

F. A decree or order appointing a receiver of the property of Subtenant
shall be made and such decree or order shall not have been vacated, stayed or
set aside within sixty (60) days from the date of entry or granting thereof; or

 

G. Subtenant shall abandon the Premises during the Term hereof; or

 

H. Subtenant shall default in any payment of Rent required to be made
by Subtenant hereunder when due as herein provided and such default shall
continue for seven (7) days after the date when due; or

 

9

 

I. Subtenant shall default in securing insurance or in providing
evidence of insurance as set forth in Section 11 of this Sublease or shall
default with respect to lien claims as set forth in Section 20 of this Sublease
and either such default shall continue for five (5) days after notice thereof
in writing to Subtenant; or

 

J. Subtenant shall, by its act or omission to act, cause a default
under the Prime Lease and such default shall not be cured within the time, if
any, permitted for such cure under the Prime Lease; or

 

K. Subtenant shall default in any of the other covenants and agreements
herein contained to be kept, observed and performed by Subtenant, and such
default shall continue for thirty (30) days after notice thereof in writing to
Subtenant.

 

24. Remedies. Upon the occurrence of any one or more Events of
Default, Sublandlord may exercise any remedy against Subtenant that Prime
Landlord may exercise for default by Sublandlord under the Prime Lease.

 

25. Security Deposit. To secure the full and faithful
performance by Subtenant of all the covenants, conditions and agreements in
this Sublease set forth and contained on the part of Subtenant to be fulfilled,
kept, observed and performed including, but not by way of limitation, such
covenants and agreements in this Sublease which become applicable upon the
termination of the same by re-entry or otherwise, Subtenant has deposited with
Sublandlord the Security Deposit as specified in Section 1(O) on the
understanding that: (a) the Security Deposit or any portion thereof not
previously applied, or from time to time, such one or more portions thereof,
may be applied to the curing of any default that may then exist, without
prejudice to any other remedy or remedies which Sublandlord may have on account
thereof, and upon such application Subtenant shall pay Sublandlord on demand
the amount so applied which shall be added to the Security Deposit so the same
may be restored to its original amount; (b) should the Prime Lease be assigned
by Sublandlord, then, provided such assignee agrees to be bound by the terms
and conditions of this Sublease, including without limitation the obligation to
return the Security Deposit to Subtenant as required herein, the Security
Deposit or any portion thereof not previously applied may be turned over to
Sublandlord’s assignee and if the same be turned over as aforesaid, Subtenant
hereby releases Sublandlord from any and all liability with respect to the
Security Deposit and/or its application or return; (c) if permitted by law,
Sublandlord or its successor shall not be obligated to hold the Security
Deposit as a separate fund, but on the contrary may commingle the same with its
other funds; (d) if Subtenant shall faithfully fulfill, keep, perform and
observe all of the covenants, conditions and agreements in this Sublease set
forth and contained on the part of Subtenant to be fulfilled, kept, performed
and observed, the sum deposited or the portion thereof not previously applied,
shall be returned to Subtenant without interest no later than thirty (30) days
after the expiration of the Term of this Sublease, provided Subtenant has
vacated the Premises and surrendered possession thereof to Sublandlord at the
expiration of the Term as provided herein; (e) in the event that Sublandlord
terminates this Sublease or Subtenant’s right to possession by reason of an
Event of Default by Subtenant, Sublandlord may apply the Security Deposit
against damages suffered to the date of such termination and/or may retain the
Security Deposit to apply against such damages as may be suffered or shall
accrue thereafter by reason of Subtenant’s default; (f) in the event any bankruptcy,
insolvency, reorganization or other creditor-debtor proceedings shall be
instituted by

 

10

 

or against Subtenant, or its successors or assigns, the Security
Deposit shall be deemed to be applied first to the payment of any Rent due
Sublandlord for all periods prior to the institution of such proceedings, and
the balance, if any, of the Security Deposit may be retained or paid to
Sublandlord in partial liquidation of Sublandlord’s damages.

 

26. Notices and Consents. All notices, demands, requests,
consents or approvals which may or are required to be given by either party to
the other shall be in writing and shall be deemed given when received or
refused if sent by United States registered or certified mail, postage prepaid,
return receipt requested or if sent by overnight commercial courier service (a)
if to Subtenant, addressed to Subtenant at the address specified in Section
1(B) or at such other place as Subtenant may from time to time designate by
notice in writing to Sublandlord in accordance with this Section 26 or (b) if
for Sublandlord, addressed to Sublandlord at the address specified in Section
1(C) or at such other place as Sublandlord may from time to time designate by
notice in writing to Subtenant in accordance with this Section 26. Each party
agrees promptly to deliver a copy of each notice, demand, request, consent or
approval from such party to Prime Landlord and promptly to deliver to the other
party a copy of any notice, demand, request, consent or approval received from
Prime Landlord. Such copies shall be delivered by overnight commercial courier.

 

27. Provisions Regarding Prime Lease. This Sublease and all the
rights of the parties hereunder are subject and subordinate to the Prime Lease.
Each party agrees that it will not, by its act or omission, cause a default
under the Prime Lease. In furtherance of the foregoing, the parties hereby
confirm, each to the other, that it is not practical in this Sublease agreement
to enumerate all of the rights and obligations of the various parties under the
Prime Lease and specifically to allocate those rights and obligations in this
Sublease. Accordingly, in order to afford to Subtenant the benefits of this
Sublease and of those provisions of the Prime Lease which by their nature are
intended to benefit the party in possession of the Premises, and in order to
protect Sublandlord against a default by Subtenant which might cause a default
or event of default by Sublandlord under the Prime Lease:

 

A. Provided Subtenant shall timely pay all Rent when and as due under
this Sublease, Sublandlord shall pay, when and as due, all base rent,
additional rent and other charges payable by Sublandlord to Prime Landlord
under the Prime Lease;

 

B. Except as otherwise expressly provided herein, Sublandlord shall
perform its covenants and obligations under the Prime Lease which do not
require for their performance possession of the Premises and which are not
otherwise to be performed hereunder by Subtenant on behalf of Sublandlord. For
example, Sublandlord shall at all times keep in full force and effect all
insurance required of Sublandlord as tenant under the Prime Lease.

 

C. Except as otherwise expressly provided herein, Subtenant shall
perform all affirmative covenants and shall refrain from performing any act
which is prohibited by the negative covenants of the Prime Lease, where the
obligation to perform or refrain from performing is by its nature imposed upon
the party in possession of the Premises. If practicable, Subtenant shall
perform affirmative covenants that are also covenants of Sublandlord under the
Prime Lease within ten (10) days after delivery by Sublandlord of written
notice thereof, unless the Prime Lease or this Sublease specifies the date when
performance of such covenant is

 

11

 

required under the Prime Lease. Sublandlord shall have the right to
enter the Premises to cure any default by Subtenant under this Section after
giving Subtenant at least ten (10) days’ prior written notice of such default
and Sublandlord’s intent to cure.

 

D. Sublandlord shall not agree to an amendment to the Prime Lease which
might have an adverse effect on Subtenant’s occupancy of the Premises or its
use of the Premises for their intended purpose, unless Sublandlord shall first
obtain Subtenant’s prior written approval thereof.

 

E. Sublandlord hereby grants to Subtenant the right to receive all of
the services and benefits with respect to the Premises that are to be provided
by Prime Landlord under the Prime Lease. Sublandlord shall have no duty to
perform any obligations of Prime Landlord that Prime Landlord has agreed to
provide under the Prime Lease or that are, by their nature, the obligation of
an owner or manager of real property. For example, Sublandlord shall not be
required to provide the services or repairs that the Prime Landlord is required
to provide under the Prime Lease.

 

F. In the event and solely to the extent that Sublandlord is entitled
to any rent abatement or credit under the Prime Lease, Subtenant shall be
entitled to an equivalent abatement or credit hereunder.

 

28. Additional Services. Sublandlord shall cooperate with
Subtenant to cause Prime Landlord to provide services required by Subtenant in
addition to those otherwise required to be provided by Prime Landlord under the
Prime Lease. Subtenant shall pay Prime Landlord’s charge for such services
promptly after having been billed therefor by Prime Landlord or by Sublandlord.
If at any time a charge for such additional services is attributable to the use
of such services both by Sublandlord and by Subtenant, the cost thereof shall
be equitably divided between Sublandlord and Subtenant.

 

29. Prime Landlord’s Consent. This Sublease and the obligations
of the parties hereunder are expressly conditioned upon Sublandlord’s obtaining
prior written consent hereto by Prime Landlord, if such written consent is
required under the Prime Lease. Subtenant shall promptly deliver to Sublandlord
any information reasonably requested by Prime Landlord (in connection with
Prime Landlord’s consent to this Sublease) with respect to the nature and
operation of Subtenant’s business and/or the financial condition of Subtenant.
Sublandlord and Subtenant hereby agree, for the benefit of Prime Landlord, that
this Sublease and Prime Landlord’s consent hereto shall not (a) create privity
of contract between Prime Landlord and Subtenant; (b) be deemed to have amended
the Prime Lease in any regard (unless Prime Landlord shall have expressly
agreed in writing to such amendment); or (c) be construed as a waiver of Prime
Landlord’s right to consent to any assignment of the Prime Lease by Sublandlord
or any further subletting of premises leased pursuant to the Prime Lease, or as
a waiver of Prime Landlord’s right to consent to any assignment by Subtenant of
this Sublease or any sub-subletting of the Premises or any part thereof. Prime
Landlord’s consent shall, however, be deemed to evidence Prime Landlord’s
agreement that Subtenant may use the Premises for the purpose set forth in
Section 1(R) and that Subtenant shall be entitled to any waiver of claims and
of the right of subrogation for damage to Prime Landlord’s property if and to
the extent that the Prime Lease provides such waivers for the benefit of
Sublandlord. If Prime Landlord fails to consent to this

 

12

 

Sublease within thirty (30) days after the execution and delivery of
this Sublease, either party shall have the right to terminate this Sublease by
giving written notice thereof to the other at any time thereafter, but before
Prime Landlord grants such consent.

 

30. Brokerage. Each party warrants to the other that it has had
no dealings with any broker or agent in connection with this Sublease other
than the Broker as specified in Section 1(Q), whose commission shall be paid by
Sublandlord pursuant to a separate agreement between Sublandlord and Broker,
and covenants to pay, hold harmless and indemnify the other party from and
against any and all costs (including reasonable attorneys’ fees), expense or
liability for any compensation, commissions and charges claimed by any other
broker or other agent with respect to this Sublease or the negotiation thereof
on behalf of such party.

 

31. Force Majeure. Neither party shall be deemed in default with
respect to any of the terms, covenants and conditions of this Sublease on such
party’s part to be performed, with the exception of Subtenant’s obligation to
pay Rent, if such party’s failure to timely perform same is due in whole or in
part to any strike, lockout, labor trouble (whether legal or illegal), civil
disorder, failure of power, restrictive governmental laws and regulations,
riots, insurrections, war, terrorism, shortages, accidents, casualties, acts of
God, acts caused directly by the other party or the other party’s agents,
employees and invitees or any other cause beyond the reasonable control of the
party failing to perform. This Section shall not be applicable, however, if
Sublandlord’s failure timely to perform creates a default by Sublandlord under
the Prime Lease.

 

32.  Estoppel Certificates
and Non-Disturbance Agreement. 
Within ten (10) days following any written request either party may make
to the other from time to time, Sublandlord and Subtenant without any charge
therefor, shall execute, acknowledge, and deliver a statement certifying to the
other the following: (a) the Commencement Date of this Sublease; (b) the fact
that this Sublease is unmodified and in full force and effect or, if there have
been modifications hereto, that this Sublease is in full force and effect, as
modified, and stating the date and nature of such modifications; (c) the date
to which the Rent and other sums payable under this Sublease have been paid;
(d) the fact that there are no current defaults under this Sublease by either
Sublandlord or Subtenant except as specified in the statement; and (e) such
other matters as may be reasonably requested by Sublandlord or Subtenant.  Sublandlord shall also obtain from Prime
Landlord and Landlord’s lender, if any, a subordination, non-disturbance and
attornment agreement with Subtenant in substantially the form attached  hereto.

 

33.                                 Hazardous
Materials.

 

A.                 Sublandlord hereby represents and
warrants to Subtenant that, during its occupancy of the Premises, Sublandlord
conducted all of its activities and operations at the Premises in compliance
with all applicable federal, state and local laws, regulations, statutes and
ordinances pertaining to the protection of land, water, air, health, safety or
the environment (collectively, “Environmental Laws”) and that any handling,
transportation, storage, treatment or use of any hazardous materials or
substances, as such terms are defined by the Environmental Laws (“Hazardous Materials”)
that has occurred in the Premises during Sublandlord’s occupancy thereof was in
compliance with all Environmental Laws. Sublandlord hereby covenants and
agrees, at its sole cost and expense, to indemnify, defend,

 

13

 

protect, save and hold harmless the Subtenant
Indemnified Parties from and against any and all claims, judgments, damages,
losses, penalties, fines, liabilities, encumbrances, liens, costs and expenses
of investigation and defense of any claim, whether or not such claim is
ultimately defeated, and of any good faith settlement, of whatever kind or
nature, contingent or otherwise, matured or unmatured, foreseeable or
unforeseeable, including attorneys’ fees and disbursements and consultants’
fees (including any such fees and disbursements incurred in connection with the
enforcement by Subtenant of its rights under this Section 33(A), any of which
are incurred at any time, arising from or out of or in any way relating to any
contamination, or threatened release of any Hazardous Materials, on, in, under,
affecting or migrating or threatening to migrate to or from all or any portion
of the Premises to the extent such Hazardous Materials are present as the
result of the intentional acts or negligence of Sublandlord, its officers,
employees or agents, and any violation of, or noncompliance with, or alleged
violation of, or noncompliance with, any Environmental Laws, due to any act or
omission of Sublandlord, its employees, invitees, agents or contractors, but in
every case, Sublandlord’s responsibilities herein shall relate only to any such
acts or failure to act after the Commencement Date of the Prime Lease and  prior to the Commencement Date of this
Sublease.  Notwithstanding anything in
this Section 33(A) to the contrary, Sublandlord may not settle or compromise
any claim arising from or out of or in any way relating to the matters
contemplated by this Section 33(A) without the prior written consent of the
Subtenant (such consent not to be unreasonably withheld). This paragraph shall
survive the expiration or earlier termination of this Sublease.

 

B.  Sublandlord, at its sole
cost and expense, has obtained a Phase I environmental site assessment of the
Premises and a copy of the results of that assessment  have been delivered to Subtenant prior to the execution of this
Sublease.  Prior to the Commencement
Date, Sublandlord, at its sole cost and expense, shall conduct a soils test of
the area adjacent to the chemical waste shed and if such test indicates any
contamination, Sublandlord shall remediate and remove any Hazardous Materials
which are present.  If Sublandlord fails
to complete such remediation by the Rent Commencement Date, Subtenant shall
receive an abatement of Base Rent for each day after the Rent Commencement Date
until Sublandlord completes such remediation.

 

C.  Subtenant hereby covenants
and agrees (i) to cause all of its activities at the Premises during the Term
to be conducted in compliance with all Environmental Laws; (ii) to obtain all
permits and file all business plans necessary for the continued operation and
maintenance of the emergency generator located at the Premises; and (iii) to
provide Sublandlord with copies of all: 
(a) correspondence, notices of violation, summons, orders, complaints or
other documents received by the Subtenant pertaining to compliance with any
Environmental Laws; and (b) licenses, certificates and permits required by the
Environmental Laws.

 

D.  Subtenant hereby covenants
and agrees, at its sole cost and expense, to indemnify, defend, protect, save
and hold harmless the Sublandlord Indemnified Parties from and against any and
all claims, judgments, damages, losses, penalties, fines, liabilities,
encumbrances, liens, costs and expenses of investigation and defense of any
claim, whether or not such claim is ultimately defeated, and of any good faith
settlement, of whatever kind or nature, contingent or otherwise, matured or
unmatured, foreseeable or unforeseeable, including attorneys’ fees and
disbursements and consultants’ fees (including any such fees and disbursements
incurred

 

14

 

in connection with the enforcement by Sublandlord of its rights under
this Section 33(D), any of which are incurred at any time, arising from or out
of or in any way relating to any contamination, or threatened release of any
Hazardous Materials, on, in, under, affecting or migrating or threatening to
migrate to or from all or any portion of the Premises to the extent such Hazardous
Materials are present as the result of the intentional acts or negligence of
Subtenant, its officers, employees or agents, and any violation of, or
noncompliance with, or alleged violation of, or noncompliance with, any
Environmental Laws, due to any act or omission of Subtenant, its employees,
invitees, agents or contractors. 
Notwithstanding anything in this Section 33(D) to the contrary,
Subtenant may not settle or compromise any claim arising from or out of or in
any way relating to the matters contemplated by this Section 33(D) without the
prior written consent of the Sublandlord (such consent not to be unreasonably
withheld).  This paragraph shall survive
the expiration or earlier termination of the Term of this Sublease.

 

D.  The parties acknowledge and
agree that the Premises were previously occupied by Sublandlord and
Sublandlord’s predecessors and successors, and as a result thereof, there are
residuals of chemicals existing in the Premises that would be difficult, if not
impossible, to remove; accordingly, Sublandlord shall not be required to remove
such residuals prior to the Commencement Date provided Subtenant shall not be
required to remove any residuals which resulted from either party’s use or
occupancy of the Premises either before or after the expiration or termination
of this Sublease.

 

34. Additional Provisions.

 

A.                 Counterparts.  This Sublease may be executed in
counterparts, each of which shall be deemed to be an original and all of which,
when taken together, shall constitute one and the same agreement.

 

B.                   Entire
Agreement.  This Sublease
constitutes the entire agreement between the parties hereto with respect to the
subject matter hereof and supersedes all prior agreements, understandings and
negotiations of the parties with respect thereto.

 

C.                   Effectiveness.  This Sublease shall become effective on and
only on its execution and delivery by each party hereto.

 

D.                  Amendment.  This Sublease may not be altered, amended,
changed, terminated, modified or supplemented in any respect, unless the same
shall be in writing and signed by each party hereto.

 

E.                    Severability.  No determination by any court that any
provision hereof is invalid or unenforceable in any instance shall affect the
validity or enforceability of any other provision hereof, or such provision in
any circumstance not controlled by such determination.

 

F.                    Successors
and Assigns.  This Sublease shall be
binding on and shall inure to the benefit of the parties hereto and their
respective successors and assigns.

 

15

 

G.                   Headings.  The headings of the Sections of this
Sublease are included solely for convenience of reference and are not intended
to govern, limit or aid in the construction of any of the terms or provisions
hereof.

 

16

 

35. Parking.  Sublandlord
hereby grants to Subtenant all of Sublandlord’s rights under Section 4(G) of
the Prime Lease pertaining to parking, subject to the terms of the Prime Lease.

 

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

 

	
  WITNESS:

  	
  SUBLANDLORD:

  
	
   

  	
   

  
	
   

  	
  BRISTOL-MYERS SQUIBB COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  SUBTENANT:

  
	
   

  	
   

  
	
   

  	
  AMYLIN PHARMACEUTICALS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

17

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