UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1996
------------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________ to ____________
Commission file number: 0-26642
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MYRIAD GENETICS, INC.
(Exact name of registrant as specified in its charter)
Delaware 87-0494517
-------- ----------
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
320 Wakara Way, Salt Lake City, UT 84108
---------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (801) 584-3600
390 Wakara Way, Salt Lake City, Utah
------------------------------------
(Former address, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
As of November 5, 1996, the registrant had 8,730,725 shares of common
stock outstanding.
MYRIAD GENETICS, INC.
INDEX TO FORM 10-Q
Page
----
PART I - Financial Information
Item 1. Financial Statements.
Condensed Consolidated Balance Sheet as of
September 30, 1996 and June 30, 1996 3
Condensed Consolidated Statements of Operations for
the three months ended September 30, 1996 and 1995 4
Condensed Consolidated Statements of Cash Flows for
the three months ended September 30, 1996 and 1995 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II - Other Information
Item 1. Legal Proceedings 10
Item 2. Changes in Securities 10
Item 3. Defaults Upon Senior Securities 10
Item 4. Submission of Matters to a Vote of Security Holders 10
Item 5. Other Information 10
Item 6. Exhibits and Reports on Form 8-K 10
SIGNATURE(S) 12
2
MYRIAD GENETICS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
Sept. 30, 1996
(Unaudited) June 30, 1996
---------------- ---------------
Assets
------
Current assets:
Cash and cash equivalents $ 14,844,580 $ 13,235,680
Marketable investment securities 37,202,471 37,212,454
Non trade receivables 16,987 79,066
Prepaid expenses 96,478 88,423
--------------- --------------
Total current assets 52,160,516 50,615,623
--------------- --------------
Equipment and leasehold improvements:
Equipment 10,682,763 9,097,484
Leasehold improvements 893,224 863,306
Construction in progress 810,108 810,108
--------------- --------------
12,386,095 10,770,898
Less accumulated depreciation and
amortization 1,739,501 1,375,366
--------------- --------------
Net equipment and leasehold
improvements 10,646,594 9,395,532
Long-term marketable investment securities 14,781,997 19,554,646
Other assets 41,668 41,696
--------------- --------------
$ 77,630,775 $ 79,607,497
=============== ==============
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Accounts payable $ 2,498,770 $ 2,193,285
Accrued liabilities 943,145 786,791
Deferred revenue 5,905,595 5,661,376
Current portion of notes payable 316,860 308,658
--------------- --------------
Total current liabilities 9,664,370 8,950,110
--------------- --------------
Notes payable, less current portion 389,252 471,640
Stockholders' equity
Common stock, $0.01 par value, 15,000,000
shares authorized; issued and outstanding
8,726,498 shares on September 30, 1996 and
8,702,215 shares on June 30, 1996 87,265 87,022
Additional paid-in capital 87,040,930 87,015,215
Fair value adjustment on available-for-sale
marketable investment securities (4,971) (67,865)
Deferred compensation (1,774,880) (1,907,513)
Accumulated deficit (17,771,191) (14,941,112)
--------------- --------------
Net stockholders' equity 67,577,153 70,185,747
--------------- --------------
$ 77,630,775 $ 79,607,497
=============== ==============
See accompanying notes to condensed consolidated financial statements.
3
MYRIAD GENETICS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended
------------------
Sept. 30, 1996 Sept. 30, 1995
(Unaudited) (Unaudited)
--------------- ---------------
Research revenue $ 2,195,781 $ 1,012,900
Expenses:
Research and development expense 4,094,743 2,381,159
Selling, general and administrative expense 1,759,959 408,186
--------------- ---------------
Total expenses 5,854,702 2,789,345
--------------- ---------------
Operating loss (3,658,921) (1,776,445)
Other income (expense):
Interest income 848,494 275,223
Interest expense (19,652) (27,045)
Loss on sale of fixed assets - (74,636)
--------------- ---------------
828,842 173,542
--------------- ---------------
Net loss ($2,830,079) ($1,602,903)
=============== ===============
Net loss per share ($0.32) ($0.32)
=============== ===============
Weighted average shares outstanding 8,712,829 5,067,328
See accompanying notes to condensed consolidated financial statements.
4
MYRIAD GENETICS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended
------------------
Sept. 30, 1996 Sept. 30, 1995
(Unaudited) (Unaudited)
--------------- ---------------
Cash flows from operating activities:
Net loss ($2,830,079) ($1,602,903)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 496,768 445,705
Decrease (increase) in non-trade receivables 62,079 (1,306,343)
Increase in other assets (8,027) (138,470)
Increase (decrease) in accounts payable
and accrued expense 461,839 (473,524)
Increase in deferred revenue 244,219 1,550,000
--------------- ---------------
Net cash used in operating activities (1,573,201) (1,525,535)
--------------- ---------------
Cash flows from investing activities:
Capital expenditures (1,615,197) (460,705)
Net change in marketable investment
securities 4,845,526 (12,638,301)
--------------- ---------------
Net cash provided by (used in)
investing activities 3,230,329 (13,099,006)
--------------- ---------------
Cash flows from financing activities:
Net payments of notes payable (74,186) (66,793)
Net proceeds from issuance of common stock 25,958 -
Net proceeds from issuance of preferred stock - 9,982,723
--------------- ---------------
Net cash (used in) provided by
financing activities (48,228) 9,915,930
--------------- ---------------
Net increase (decrease) in cash and cash
equivalents 1,608,900 (4,708,611)
Cash and cash equivalents at beginning of
period 13,235,680 11,885,736
--------------- ---------------
Cash and cash equivalents at end of period $ 14,844,580 $ 7,177,125
=============== ===============
See accompanying notes to condensed consolidated financial statements.
5
MYRIAD GENETICS, INC. AND SUBSIDIARY
NOTES TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(1) Basis of Presentation
The accompanying condensed unaudited consolidated financial statements
have been prepared by Myriad Genetics, Inc. (the "Company") in
accordance with generally accepted accounting principles for interim
financial information and pursuant to the applicable rules and
regulations of the Securities and Exchange Commission. The condensed
unaudited consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiary. All material intercompany
accounts and transactions have been eliminated in consolidation. In
the opinion of management, the accompanying financial statements
contain all adjustments (consisting of normal and recurring accruals)
necessary to present fairly all financial statements. The financial
statements herein should be read in conjunction with the Company's
audited consolidated financial statements and notes thereto for the
fiscal year ended June 30, 1996, included in the Company's Annual
Report on Form 10-K for the year ended June 30, 1996. Operating
results for the three-month period ended September 30, 1996 may not
necessarily be indicative of the results to be expected for any other
interim period or for the full year.
6
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
Since inception, the Company has devoted substantially all of its resources to
maintaining its research and development programs, establishing a genetic
testing laboratory, and supporting collaborative research agreements. To date,
the Company has not received any revenues from the sale of products. Revenues
received by the Company primarily have been payments pursuant to collaborative
research agreements. The Company has been unprofitable since its inception and,
for the quarter ended September 30, 1996, the Company had a net loss of
$2,830,079 and as of September 30, 1996 had an accumulated deficit of
$17,771,191.
In August 1995, the Company completed a three-year collaborative research and
development agreement with Eli Lilly and Company to locate and sequence the
BRCA1 breast and ovarian cancer gene. This agreement provided the Company with
research funding and may in the future provide certain additional payments upon
the attainment of research and regulatory milestones and royalty payments based
on sales of any products resulting from the collaboration. The Company did not
recognize revenue from this agreement during the quarter ended September 30,
1996.
In April 1995, the Company commenced a five-year collaborative research and
development arrangement with Ciba-Geigy Corporation ("Ciba"). This
collaboration provides the Company with an equity investment, research funding
and potential milestone payments totalling $60,000,000. The Company is entitled
to receive royalties from sales of therapeutic products sold by Ciba. The
Company recognized $1,085,069 in revenue under this agreement for the quarter
ended September 30, 1996.
In September 1995, the Company commenced a five-year collaborative research and
development arrangement with Bayer Corporation ("Bayer"). This collaboration
provides the Company with an equity investment, research funding and potential
milestone payments of up to $71,000,000. The Company is entitled to receive
royalties from sales of therapeutic products sold by Bayer. The Company
recognized $1,170,712 in revenue under this agreement for the quarter ended
September 30, 1996.
The Company intends to enter into additional collaborative relationships to
locate and sequence genes associated with other common diseases as well as
continuing to fund internal research projects. There can be no assurance that
the Company will be able to enter into additional collaborative relationships on
terms acceptable to the Company. The Company expects to incur losses for at
least the next several years, primarily due to expansion of its research and
development programs, increasing staffing costs and expansion of its facilities.
Additionally, the Company expects to incur substantial sales, marketing and
other expenses in connection with launching its genetic predisposition testing
business. The Company expects that losses will fluctuate from quarter to
quarter and that such fluctuations may be substantial.
The Company devoted significant resources during the quarter to the beta testing
and validation of the Company's BRACAnalysis/TM/ genetic predisposition test for
mutations of the BRCA1 and BRCA2 breast and ovarian cancer genes, as well as
building its sales and marketing force in preparation for the commercial launch
of the test. The Company announced the commercial launch of BRACAnalysis/TM/ on
October 30, 1996. There can be no assurance that the Company will succeed in
achieving market acceptance for the BRACAnalysis/TM/ test.
Results of Operations
Three Months Ended September 30, 1996 and 1995
Research revenues for the quarter ended September 30, 1996 increased $1,182,881
from the same quarter of 1995. The increase was attributable to a full quarter
of both the Ciba and Bayer research collaboration agreements providing ongoing
research funding in 1996. For the first fiscal quarter in 1995, both research
collaboration agreements were in their start-up phase. Research revenue from
the research collaboration agreements is recognized as related costs are
incurred.
7
Research and development expenses for the quarter ended September 30, 1996
increased to $4,094,743 from $2,381,159 for the same quarter of 1995. This
increase was primarily due to an increase in third party research programs
funded by the Company, increased depreciation charges due to the purchase of
additional equipment, the hiring of additional personnel and the increased use
of laboratory supplies and reagents to meet the demands of the additional
research collaboration agreements. The Company also incurred increased
development expenses during the quarter related to the beta testing and
validation of the Company's BRACAnalysis/TM/ genetic predisposition test for
mutations of the BRCA1 and BRCA2 breast and ovarian cancer genes. When the
BRCA1 and BRCA2 test moves from the development stage to production, the Company
expects research and development expenses to decrease as expenses related to the
test are classified as cost of sales. There can be no assurance that the
Company will be able to produce the test in a timely fashion or at acceptable
quality levels and prices.
Selling, general and administrative expenses for the quarter ended September 30,
1996 increased $1,351,773 from the same quarter of 1995. The increase was
attributable to additional administrative, marketing and education personnel,
market research activities, education material development, facilities-related
costs and deferred compensation related to grants of stock options and warrants.
The Company expects its general and administrative expenses will continue to
increase in support of its research and development efforts and genetic
predisposition testing business.
Interest income for the quarter ended September 30, 1996 increased to $848,494
from $275,223 for the same quarter of 1995. This increase was primarily due to
the increased funds available for investment, which funds were raised in the
Company's initial public offering in October 1995, and in connection with
entering into the Company's research and development collaborations with Ciba
and Bayer in April 1995 and September 1995, respectively. Interest expense for
the quarter ended September 30, 1996, amounting to $19,652, was due entirely to
borrowings under the Company's equipment financing facility, which are secured
by equipment and have a repayment term of 48 months from the date of funding.
The net loss increased to $2,830,079 for the quarter ended September 30, 1996
from $1,602,903 for the same quarter in 1995.
Liquidity and Capital Resources
Net cash used in operating activities was $1,573,201 during the quarter ended
September 30, 1996 and $1,525,535 during the same quarter of 1995. Non-trade
receivables decreased $62,079 between June 30, 1996 and September 30, 1996
primarily as a result of the write-off an uncollectable receivable. Accounts
payable and accrued expenses increased $461,839 between June 30, 1996 and
September 30, 1996 as a result of the Company's purchase during the quarter of
equipment to be installed in the Company's new genetic testing facility.
The Company's investing activities provided cash of $3,230,329 in the three
months ended September 30, 1996 and used cash of $13,099,006 in the three months
ended September 30, 1995. Investing activities in the quarter ended September
30, 1996 were comprised primarily of capital expenditures for research
equipment, office furniture, and facility improvements and reinvestment of
marketable investment securities from long-term investments to short-term cash
equivalents. During the quarter ended September 30, 1995, the Company had
shifted its investment in marketable securities from short-term cash equivalents
to long-term investments.
Financing activities used $48,228 during the quarter ended September 30, 1996.
The Company reduced the principal on its equipment financing facility by
$74,186. This decrease was offset by proceeds of $25,958 from the exercise of
stock options. Financing activities provided $9,915,930 during the quarter
ended September 30, 1995. The Company reduced the principal on its equipment
financing facility by $66,793 and received an equity investment of approximately
$10,000,000 from Bayer during that time.
The Company anticipates that its existing capital resources, including the net
proceeds of its initial public offering and interest earned thereon, will be
adequate to maintain its current and planned operations for at least the next
two years, although no assurance can be given that changes will not occur that
would consume available capital resources before such time. The Company's
future capital requirements will be substantial and will depend on many factors,
including progress of the Company's research and development programs, the
results and cost of clinical correlation testing of the Company's genetic tests,
the costs of filing, prosecuting and enforcing patent claims, competing
8
technological and market developments, payments received under collaborative
agreements, changes in collaborative research relationships, the costs
associated with potential commercialization of its gene discoveries, if any,
including the development of manufacturing, marketing and sales capabilities,
the cost and availability of third-party financing for capital expenditures and
administrative and legal expenses. Because of the Company's significant long-
term capital requirements, the Company intends to raise funds when conditions
are favorable, even if it does not have an immediate need for additional capital
at such time.
Certain Factors That May Affect Future Results of Operations
The Company believes that this report on Form 10-Q contains certain forward-
looking statements as that term is defined in the Private Securities Litigation
Reform Act of 1995. Such statements are based on management's current
expectations and are subject to a number of factors and uncertainties which
could cause actual results to differ materially from those described in the
forward-looking statements. The Company cautions investors that there can be no
assurance that actual results or business conditions will not differ materially
from those projected or suggested in such forward-looking statements as a result
of various factors, including, but not limited to, the following: intense
competition related to the discovery of disease-related genes and the
possibility that others may discover, and the Company may not be able to gain
rights with respect to, genes important to the establishment of a successful
genetic testing business, difficulties inherent in developing genetic tests once
genes have been discovered; the Company's limited experience in developing a
genetic testing laboratory; the Company's limited marketing and sales experience
and the risk that any tests which the Company develops may not be able to be
marketed at acceptable prices or receive commercial acceptance in the markets
that the Company expects to target; uncertainty as to whether there will exist
adequate reimbursement for the Company's services from government, private
healthcare insurers and third-party payors; and uncertainties as to the extent
of future government regulation of the Company's business. As a result, the
Company's future development efforts involve a high degree of risk. For further
information, refer to the more specific risks and uncertainties disclosed
throughout this Quarterly Report on Form 10-Q.
9
PART II - Other Information
Item 1. Legal Proceedings.
The Company is not a party to any litigation in any court, and management is not
aware of any contemplated proceeding by any governmental authority against the
Company.
Item 2. Changes in Securities.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
--------
The following is a list of exhibits filed as part of this Quarterly
Report on Form 10-Q.
Exhibit
Number Description
- ------ -----------
10.1 Patent and Technology License Agreement dated September 26, 1996
among the Board of Regents of The University of Texas System, The
University of Texas M.D. Anderson Cancer Center and the Company. The
Company has excluded from this Exhibit 10.1 portions of the Patent
and Technology License Agreement for which the Company has requested
confidential treatment from the Securities and Exchange Commission.
The portions of the Patent and Technology License Agreement for
which confidential treatment has been requested are marked "[ ]" and
such confidential portions have been filed separately with the
Securities and Exchange Commission.
10.2 Lease Agreement, dated October 12, 1995, between The Boyer Research
Park Associates V, by its general partner, The Boyer Company and
the Company.
10.3 Amendment to Lease Agreement, dated March 29, 1996, between The
Boyer Research Park Associates V, by its general partner, The Boyer
Company and the Company.
10.4 Letter Agreement, dated March 4, 1996, among The University of Utah,
Genetic Epidemiology and the Company regarding Extension of Standard
Research Agreement and Form of License Agreement between the Company
and The University of Utah, effective January 1, 1993, as amended
(Genes Predisposing to Cancer). The Company has omitted from this
Exhibit 10.4 portions of the Letter Agreement for which the Company
has requested confidential treatment from the Securities and
Exchange Commission. The portions of the Letter Agreement for which
confidential treatment has been requested are marked "[ ]" and such
confidential portions have been filed separately with the Securities
and Exchange Commission.
10
11.1 Statement Regarding Computation of Net Loss Per Share
27.1 Financial Data Schedule
(b) Reports on Form 8-K
-------------------
No reports on Form 8-K were filed during the quarter ended September 30, 1996.
11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MYRIAD GENETICS, INC.
Date: November 8, 1996 By: /s/ Peter D. Meldrum
---------------- --------------------------
Peter D. Meldrum
President and Chief Executive Officer
Date: November 8, 1996 /s/ Jay M. Moyes
---------------- ---------------------------
Jay M. Moyes
Vice President of Finance
(principal financial and accounting officer)
12
MYRIAD GENETICS, INC.
EXHIBIT INDEX
Exhibit
Number Description
- ------ -----------
10.1 Patent and Technology License Agreement dated September 26, 1996
among the Board of Regents of The University of Texas System, The
University of Texas M.D. Anderson Cancer Center and the Company. The
Company has excluded from this Exhibit 10.1 portions of the Patent
and Technology License Agreement for which the Company has requested
confidential treatment from the Securities and Exchange Commission.
The portions of the Patent and Technology License Agreement for
which confidential treatment has been requested are marked "[ ]" and
such confidential portions have been filed separately with the
Securities and Exchange Commission.
10.2 Lease Agreement, dated October 12, 1995, between The Boyer Research
Park Associates V, by its general partner, The Boyer Company L.P.
and the Company.
10.3 Amendment to Lease Agreement, dated March 29, 1996, between The
Boyer Research Park Associates V, by its general partner, The Boyer
Company L.P. and the Company.
10.4 Letter Agreement, dated March 4, 1996, among The University of Utah,
Genetic Epidemiology and the Company regarding Extension of Standard
Research Agreement and Form of License Agreement between the Company
and The University of Utah, effective January 1, 1993, as amended
(Genes Predisposing to Cancer). The Company has omitted from this
Exhibit 10.4 portions of the Letter Agreement for which the Company
has requested confidential treatment from the Securities and
Exchange Commission. The portions of the Letter Agreement for which
confidential treatment has been requested are marked "[ ]" and such
confidential portions have been filed separately with the Securities
and Exchange Commission.
11.1 Statement Regarding Computation of Net Loss Per Share
27.1 Financial Data Schedule
13
Exhibit 10.1
------------
MYRIAD GENETICS, INC. HAS OMITTED FROM THIS EXHIBIT 10.1 PORTIONS OF THE
AGREEMENT FOR WHICH MYRIAD GENETICS, INC. HAS REQUESTED CONFIDENTIAL TREATMENT
FROM THE SECURITIES AND EXCHANGE COMMISSION. THE PORTIONS OF THE AGREEMENT FOR
WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED ARE MARKED "[ ]" AND SUCH
CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.
PATENT AND TECHNOLOGY LICENSE AGREEMENT
This thirteen (13) page AGREEMENT ("AGREEMENT") is made on this 26th day of
September, 1996 by and between the BOARD OF REGENTS ("BOARD") of THE UNIVERSITY
OF TEXAS SYSTEM ("SYSTEM"), an agency of the State of Texas, whose address is
201 West 7th Street, Austin, Texas 78701, THE UNIVERSITY OF TEXAS M. D.
ANDERSON CANCER CENTER ("MDA"), a component Institution of the SYSTEM and Myriad
Genetics, Inc., a Delaware corporation having a principal place of business
located at 390 Wakara Way, Salt Lake City, Utah 84108 ("LICENSEE").
TABLE OF CONTENTS
RECITALS.................................................... 3
I. EFFECTIVE DATE.............................................. 3
II. DEFINITIONS................................................. 3
III. LICENSE..................................................... 4
IV. CONSIDERATION, PAYMENTS AND REPORTS......................... 5
V. PUBLICATION................................................. 8
VI. PATENTS AND INVENTIONS...................................... 8
VII. INFRINGEMENT BY THIRD PARTIES............................... 8
VIII. PATENT MARKING.............................................. 9
IX. INDEMNIFICATION............................................. 9
X. USE OF BOARD AND COMPONENT'S NAME........................... 9
XI. CONFIDENTIAL INFORMATION.................................... 10
XII. ASSIGNMENT.................................................. 10
XIII. TERMS AND TERMINATION....................................... 10
XIV. WARRANTY: SUPERIOR-RIGHTS.................................. 12
XV. GENERAL..................................................... 13
SIGNATURES.................................................. 14
EXHIBIT I................................................... 15
RECITALS
A. BOARD owns certain TECHNOLOGY RIGHTS related to LICENSED SUBJECT MATTER,
which were developed at MDA, a component institution of SYSTEM.
B. BOARD desires to have the LICENSED SUBJECT MATTER developed in the LICENSED
FIELD and used for the benefit of LICENSEE, BOARD, SYSTEM, MDA, the
inventor, and the public as outlined in the Intellectual Property Policy
promulgated by the BOARD.
C. LICENSEE wishes to obtain a license from BOARD to practice LICENSED SUBJECT
MATTER.
NOW, THEREFORE, in consideration of the mutual covenants and premises herein
contained, the parties hereto agree as follows:
I. EFFECTIVE DATE
1.1 Subject to approval by BOARD, this AGREEMENT shall be effective as of the
date written herein above ("EFFECTIVE DATE").
II. DEFINITIONS
As used in this AGREEMENT, the following terms shall have the meanings
indicated:
2.1 AFFILIATE shall mean any business entity more than 50% owned by LICENSEE,
any business entity which owns more than 50% of LICENSEE, or any business
entity that is more than 50% owned by a business entity that owns more than
50% of LICENSEE.
2.2 LICENSED FIELD shall mean [
]
2.3 LICENSED PRODUCTS shall mean any product or service SOLD by LICENSEE
comprising or making use of LICENSED SUBJECT MATTER pursuant to this
AGREEMENT.
2.4 LICENSED SUBJECT MATTER shall mean inventions and discoveries defined
herein as PATENT RIGHTS or as TECHNOLOGY RIGHTS.
2.5 LICENSED TERRITORY shall mean the entire world.
2.6 NET SALES shall mean the gross amounts invoiced by LICENSEE from the SALE
of LICENSED PRODUCTS less sales discounts actually granted in amounts
customary in the trade,
-3-
including but not limited to pharmacy incentive programs and all other
similar sales incentive programs, all governmental and healthcare rebates,
hospital performance incentive program rebates or charge backs, sales
and/or use taxes actually paid, import and/or export duties actually paid,
outbound transportation actually prepaid or allowed, insurance and postage,
amounts actually allowed or credited due to returns (not exceeding the
original billing or invoice amount) and any uncollectable amounts owed to
LICENSEE from SALES of LICENSED PRODUCTS.
2.7 PATENT RIGHTS shall only mean any and all of BOARD'S rights in information
or discoveries claimed in invention disclosures, patents, and/or patent
applications, whether domestic or foreign, and all divisionals,
substitutions, renewals, continuations, continuations-in-part, reissues,
reexaminations or extensions thereof, and any letters patent that issue
thereon as set forth in Exhibit I hereto, subject to the limitations, if
any, set forth therein.
2.8 SALE or SOLD shall mean the transfer or disposition of a LICENSED PRODUCT
for value to a party other than LICENSEE or an AFFILIATE.
2.9 Subject to the limitations, if any, set forth in Exhibit I hereto,
TECHNOLOGY RIGHTS shall mean BOARD'S rights in any technical information,
know-how, process, procedure, composition, device, method, formula,
protocol, technique, software, design, drawing or data created by the
inventors listed in Exhibit I hereto and relating to the subject matter of
PATENT RIGHTS which is not claimed in PATENT RIGHTS but which is necessary
for practicing PATENT RIGHTS.
III. LICENSE
3.1 BOARD, through MDA, hereby grants to LICENSEE [
] This grant shall be
subject to Paragraph 14.2 and 14.3, herein below, the payment by LICENSEE
to BOARD of all consideration as provided in Paragraph 4.2 of this
AGREEMENT, and shall be further subject to rights retained by BOARD and MDA
to:
[
]
-4-
[
]
3.2 LICENSEE shall have the right to extend the license granted herein to any
AFFILIATE provided that such AFFILIATE consents to be bound by all of the
terms and conditions of this AGREEMENT.
3.3 Subject to the Paragraph 3.4 herein below, LICENSEE shall have the right to
grant sublicenses under LICENSED SUBJECT MATTER consistent with the terms
of this AGREEMENT provided that LICENSEE shall be responsible for its
sublicensees relevant to this AGREEMENT, and for diligently collecting all
amounts due LICENSEE from sublicensees. In the event a sublicensee
pursuant hereto becomes bankrupt, insolvent or is placed in the hands of a
receiver or trustee, LICENSEE, to the extent allowed under applicable law
and in a timely manner, agrees to use its best reasonable efforts to
collect any and all consideration owed to LICENSEE and to have the
sublicense agreement confirmed or rejected by a court of proper
jurisdiction.
3.4 LICENSEE agrees to deliver to MDA a true and correct copy of each
sublicense granted by LICENSEE, and any modification or termination
thereof, within thirty (30) days after execution, modification, or
termination.
3.5 Upon termination of this AGREEMENT, BOARD and MDA agree to accept as
successors to LICENSEE, existing sublicensees in good standing at the date
of termination provided that such sublicensees consent in writing to be
bound by all of the terms and conditions of this AGREEMENT.
IV. CONSIDERATION, PAYMENTS AND REPORTS
4.1 In consideration of rights granted by BOARD to LICENSEE under this
AGREEMENT, LICENSEE agrees to pay MDA the following:
[
]
-5-
[
]
-6-
[
]
4.2 During the Term of this AGREEMENT and for one (1) year thereafter, LICENSEE
shall keep complete and accurate records of its and its sublicensees' SALES
and NET SALES of LICENSED PRODUCTS to enable the royalties payable
hereunder to be determined. LICENSEE shall permit MDA or its
representatives, at MDA's expense, to periodically examine its books,
ledgers, and records once annually during regular business hours and with
reasonable advanced notice for the purpose of and to the extent necessary
to verify any report required under this AGREEMENT. In the event that the
amounts due to MDA are determined to have been underpaid in an amount equal
to or greater than five percent (5%) of the total amount due during the
period of time so examined, LICENSEE shall pay the cost of such
examination, and accrued interest at the highest allowable rate.
4.3 Upon the request of MDA but not more often than once per calendar year,
LICENSEE shall deliver to MDA a written report as to LICENSEE'S (and
sublicensees') efforts and accomplishments during the preceding year in
diligently commercializing LICENSED SUBJECT MATTER in the LICENSED
TERRITORY and LICENSEE'S (and sublicensees') commercialization plans for
the upcoming year.
4.4 All amounts payable hereunder by LICENSEE shall be payable in United States
funds without deductions for taxes, assessments, fees, or charges of any
kind. Checks shall be made payable to The University of Texas M. D.
Anderson Cancer Center and mailed by U.S. Mail to Box 297402, Houston,
Texas 77297 Attention: Manager, Sponsored Programs.
-7-
4.5 No payments due or royalty rates under this AGREEMENT shall be reduced as
the result of co-ownership of LICENSED SUBJECT MATTER by BOARD and another
party, including LICENSEE.
V. PUBLICATION
5.1 [
]
5.2 [
]
VI. PATENTS AND INVENTIONS
6.1 If after consultation with LICENSEE it is agreed by MDA and LICENSEE that a
new patent application should be filed for LICENSED SUBJECT MATTER, MDA
will prepare and file appropriate patent applications, and LICENSEE will
pay the cost of searching, preparing, filing, prosecuting and maintaining
same. If LICENSEE notifies MDA that it does not intend to pay the cost of
an application, or the prosecution or maintenance thereof in a national
political jurisdiction, then MDA may file, prosecute or maintain such
application at its own expense and LICENSEE shall have no rights to such
patent application or patent in that national political jurisdiction. MDA
shall provide LICENSEE with a copy of the application for which LICENSEE
has paid the cost of filing, as well as copies of any documents received or
filed during prosecution thereof.
VII. INFRINGEMENT BY THIRD PARTIES
7.1 LICENSEE shall have the obligation of enforcing at its expense any patent
exclusively licensed hereunder against infringement by third parties and
shall be entitled to retain recovery from such enforcement. LICENSEE shall
pay MDA a royalty on any monetary recovery to the extent that such monetary
recovery by LICENSEE is held to be damages or a reasonable royalty in lieu
thereof. In the event that LICENSEE does not file suit against a
substantial infringer of such patents within six (6) months of knowledge
thereof, then BOARD and MDA shall have the right to enforce any
-8-
patent licensed hereunder on behalf of itself and LICENSEE, with MDA
retaining all recoveries from such enforcement.
7.2 In any suit or dispute involving an infringer, the parties shall cooperate
fully, and upon the request and at the expense of the party bringing suit,
the other party shall make available to the party bringing suit at
reasonable times and under appropriate conditions all relevant personnel,
records, papers, information, samples, specimens, and the like which are in
its possession.
7.3 In the event that an action for infringement is brought against LICENSEE,
its AFFILIATES or sublicensees by a third party because of manufacture, use
or sale of LICENSED PRODUCTS, LICENSEE shall defend, at its own cost, any
such third party claim or action. MDA shall cooperate fully in such
defense and furnish to LICENSEE all evidence and assistance.
VIII. PATENT MARKING
8.1 LICENSEE agrees that all packaging containing individual LICENSED
PRODUCT(S), and documentation therefor, sold by LICENSEE, SUBSIDIARIES, and
sublicensees of LICENSEE will be marked permanently and legibly with the
number of the applicable patent(s) licensed hereunder in accordance with
each country's patent law, including Title 35, United States Code.
IX.INDEMNIFICATION
9.1 LICENSEE shall hold harmless and indemnify BOARD, SYSTEM, MDA, its Regents,
officers, employees, students, and agents from and against any claims,
demand, or causes of action whatsoever, costs of suit and reasonable
attorney's fees, including without limitation, those costs arising on
account of any injury or death of persons or damage to property caused by,
or arising out of, or resulting from, the exercise or practice of the
license granted hereunder by LICENSEE or its officers, employees, agents or
representatives.
X. USE OF BOARD AND COMPONENT'S NAME
10.1 LICENSEE shall not use the name of (or the name of any employee of) MDA,
SYSTEM or BOARD without the advance, express written consent of BOARD
secured through:
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The University of Texas
M. D. Anderson Cancer Center
Office of Public Affairs
1515 Holcombe Boulevard
Box 229
Houston, Texas 77030
ATTENTION: Stephen C. Stuyck
XI. CONFIDENTIAL INFORMATION
11.1 MDA and LICENSEE each agree that all information contained in documents
marked "confidential" which are forwarded to one by the other shall be
received in strict confidence, used only for the purposes of this
AGREEMENT, and not disclosed by the recipient party (except as required by
law or court order), its agents or employees without the prior written
consent of the other party, unless such information (a) was in the public
domain at the time of disclosure, (b) later became part of the public
domain through no act or omission of the recipient party, its employees,
agents, successors or assigns, (c) was lawfully disclosed to the recipient
party by a third party having the right to disclose it, (d) was already
known by the recipient party at the time of disclosure, (e) was
independently developed or (f) is required to be submitted to a government
agency pursuant to any preexisting obligation.
11.2 MDA'S and LICENSEE'S obligation of confidence hereunder shall be fulfilled
by using the same degree of care with the other party's confidential
information as it uses to protect its own confidential information. This
obligation shall exist while this AGREEMENT is in force and for a period of
three (3) years thereafter.
XII. ASSIGNMENT
12.1 Except in connection with merger, consolidation or sale of substantially
all of LICENSEE'S assets to a third party, this AGREEMENT may not be
assigned by LICENSEE without the prior written consent of BOARD.
XIII. TERMS AND TERMINATION
13.1 Subject to Articles 13.2, 13.3 and 13.4 herein below, the term of this
AGREEMENT shall extend from the Effective Date set forth herein above to
(i) the full end of the term or terms for which PATENT RIGHTS have not
expired, or (ii) if only TECHNOLOGY RIGHTS are licensed and no PATENT
RIGHTS are applicable, for a term of fifteen (15) years.
-10-
13.2 [
]
13.3 Subject to any rights herein which survive termination, this AGREEMENT will
earlier terminate in its entirety:
(a) automatically if LICENSEE shall become bankrupt or insolvent and/or if
the business of LICENSEE shall be placed in the hands of a receiver or
trustee, whether by voluntary act of LICENSEE or otherwise; or
(b) (i) upon thirty (30) days written notice by MDA if LICENSEE shall
breach or default on the payment obligations of ARTICLE IV, or use of
name obligations of ARTICLE X; or (ii) upon ninety (90) days written
notice by MDA if LICENSEE shall breach or default on any other
obligation under this AGREEMENT; provided, however, LICENSEE may avoid
such termination if before the end of such thirty (30) or ninety (90)
day period if LICENSEE provides notice and accurate, written evidence
satisfactory to MDA that such breach has been cured and the manner of
such cure; or
(c) at any time by mutual written agreement between LICENSEE, MDA and
BOARD, or without cause upon one hundred eighty (180) days written
notice by LICENSEE to MDA and, subject to any terms herein which
survive termination.
13.4 Upon termination of this AGREEMENT for any cause:
(a) nothing herein shall be construed to release either party of any
obligation matured prior to the effective date of such termination.
(b) LICENSEE covenants and agrees to be bound by the provisions of
ARTICLES IX, X AND XI of this AGREEMENT.
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(c) LICENSEE may, after the effective date of such termination, sell all
LICENSED PRODUCTS and parts therefore that it may have on hand at the
date of termination, provided that LICENSEE pays the earned royalty
thereon and any other amounts due pursuant to ARTICLE IV of this
AGREEMENT.
XIV. WARRANTY: SUPERIOR-RIGHTS
14.1 Expect for the rights, if any, of the Government of the Unite States as set
forth herein below, BOARD represents and warrants its belief that it is the
owner of the entire right, title, and interest in and to LICENSED SUBJECT
MATTER, and that it has the sole right to grant licenses thereunder, and
that it has not knowingly granted licenses thereunder to any other entity
that would restrict rights granted hereunder except as stated herein.
14.2 LICENSEE understands that the LICENSED SUBJECT MATTER may have been
developed under a funding agreement with the Government of the United
States of America and, if so, that the Government may have certain rights
relative thereto. This AGREEMENT is explicitly made subject to the
Government's rights under any such agreement and any applicable law or
regulation, including P.L. 96-517 as amended by P.L. 98-620. To the extent
that there is a conflict between any such agreement, applicable law or
regulation and this AGREEMENT, the terms of such Government agreement,
applicable law or regulation shall prevail.
14.3 LICENSEE understands and agrees that BOARD, by this AGREEMENT, makes no
representation as to the operability or fitness for any use, safety,
efficacy, approvability by regulatory authorities, time and cost of
development, patentability, and/or breadth of the LICENSED SUBJECT MATTER.
BOARD, by this AGREEMENT, makes no representation as to whether there are
any patents now held, or which will be held, by others or by BOARD in the
LICENSED FIELD, nor does BOARD make any representation that the inventions
contained in PATENT RIGHTS do not infringe any other patents now held or
that will be held by others or by BOARD.
14.4 LICENSEE, by execution hereof, acknowledges, covenants and agrees that
LICENSEE has not been induced in anyway by BOARD, SYSTEM, MDA or employees
thereof to enter into this Agreement, and further warrants and represents
that (i) LICENSEE has conducted sufficient due diligence with respect to
all items and issues pertaining to Article XIV herein and all other matters
pertaining to this Agreement; and (ii) LICENSEE has adequate knowledge and
expertise, or has utilized knowledgeable and expert consultants, to
adequately
-12-
conduct such due diligence, and agrees to accept all risks inherent herein.
XV. GENERAL
15.1 This AGREEMENT constitutes the entire and only AGREEMENT between the
parties for LICENSED SUBJECT MATTER and all other prior negotiations,
representations, agreements and understandings are superseded hereby. No
agreements altering or supplementing the terms hereof may be made except by
means of a written document signed by the duly authorized representatives
of the parties.
15.2 Any notice required by this AGREEMENT shall be given by prepaid, first
class, certified mail, return receipt requested, and addressed in the case
of BOARD to:
BOARD OF REGENTS
The University of Texas System
201 West Seventh Street
Austin, Texas 78701
ATTENTION: Office of General Counsel
with copy to: The University of Texas
M. D. Andersen Cancer Center
Office of Technology Development
1020 Holcombe Boulevard, Suite 1405
Houston, Texas 77030
ATTENTION: William J. Doty
or in the case of
LICENSEE to: Myriad Genetics, Inc.
390 Wakara Way
Salt Lake City, Utah 84108
ATTENTION: President
or such other address as may be given from time to time under the terms of
this notice provision.
15.3 LICENSEE covenants and agrees to comply with all applicable federal, state
and local laws and regulations in connection with its activities pursuant
to this AGREEMENT.
15.4 This AGREEMENT shall be construed and enforced in accordance with the laws
of the United States of America and of the State of Texas.
15.5 Failure of BOARD to enforce a right under this AGREEMENT shall not act as a
waiver of that right or the ability to
-13-
later assert that right relative to the particular situation involved.
15.6 Headings included herein are for convenience only and shall not be used to
construe this AGREEMENT.
15.7 If any provision of this AGREEMENT shall be found by a court to be void,
invalid or unenforceable, the same shall be reformed to comply with
applicable law or stricken if not so conformable, so as not to affect the
validity or enforceability of this AGREEMENT.
IN WITNESS WHEREOF, parties hereto have caused their duly authorized
representatives to execute this AGREEMENT.
THE UNIVERSITY OF TEXAS BOARD OF REGENTS OF THE
M. D. ANDERSON CANCER CENTER UNIVERSITY OF TEXAS SYSTEM
By /s/ David J. Bachrach By /s/ Ray Farabee
----------------------------- ----------------------------
David J. Bachrach Ray Farabee
Executive Vice President Vice Chancellor and
for Administration and Finance General Counsel
APPROVED AS TO CONTENT: APPROVED AS TO FORM:
By /s/ William J. Doty By /s/ Dudley R. Dobie, Jr.
----------------------------- ----------------------------
William J. Doty Dudley R. Dobie, Jr.
Director, Technology Manager, Intellectual
Development Property
MYRIAD GENETICS, INC.
By /s/ Peter D. Meldrum
-----------------------------
Peter D. Meldrum
President and CEO
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EXHIBIT I
[
]
THE DATA REFERENCED ABOVE IS AGREED TO BE CONFIDENTIAL AND SUBJECT TO THE
CONDITIONS OF ARTICLE XI OF THE AGREEMENT TO WHICH THIS EXHIBIT IS ATTACHED.
-15-
Exhibit 10.2
LEASE AGREEMENT
LANDLORD: BOYER RESEARCH PARK ASSOCIATES V,
BY ITS GENERAL PARTNER, THE BOYER
COMPANY, L. C.
TENANT: MYRIAD GENETICS, INC.
TABLE OF CONTENTS
-----------------
DESCRIPTION PAGE
- ----------- ----
I. PREMISES 1
1.1 Description of Premises 1
1.2 Work of Improvement 1
1.3 Construction of Building 2
II. TERM 2
2.1 Length of Term 2
2.2 Commencement Date; Obligation to Pay Rent 2
2.3 Construction of Leased Premises 2
2.4 Renewal Option 3
2.5 Acknowledgment of Commencement Date 3
III. BASIC RENTAL PAYMENTS 3
3.1 Basic Annual Rent 3
3.2 Additional Monetary Obligations 4
IV. ADDITIONAL RENT 4
4.1 Basic Annual Rent. 4
4.2 Report of Basic Costs and Statement of Estimated Costs 6
4.3 Payment of Additional Rent 6
4.4 Resolution of Disagreement 7
4.5 Limitations 7
V. SECURITY DEPOSIT 7
5.1 Deposit 7
5.2 Default 7
VI. USE 8
6.1 Use of Leased Premises 8
6.2 Prohibition of Certain Activities or Uses 8
6.3 Affirmative Obligations with Respect to Use 8
6.4 Suitability 9
6.5 Taxes 9
VII. UTILITIES AND SERVICE 9
7.1 Obligation of Landlord 9
7.2 Tenant's Obligations 10
7.3 Additional Limitations 10
7.4 Limitation on Landlord's Liability 10
i
DESCRIPTION PAGE
- ----------- ----
VIII. MAINTENANCE AND REPAIRS; ALTERATIONS; ACCESS 10
8.1 Maintenance and Repairs by Landlord 10
8.2 Maintenance and Repairs by Tenant 11
8.3 Tenant Approval of Management and Maintenance Services 11
8.4 Alterations 11
8.5 Landlord's Access to Leased Premises 12
IX. ASSIGNMENT 12
9.1 Assignment Prohibited 12
9.2 Consent Required 13
9.3 Landlord's Right in Event of Assignment 13
X. INDEMNITY 13
10.1 Indemnification By Tenant 13
10.2 Release of Landlord 14
10.3 Notice 14
10.4 Litigation 14
XI. INSURANCE 14
11.1 Fire and "All Risk" Insurance on Tenant's Personal
Property and Fixtures 14
11.2 Liability Insurance 14
11.3 Subrogation 14
11.4 Lender 14
XII. DESTRUCTION 15
XIII. CONDEMNATION 15
13.1 Total Condemnation 15
13.2 Partial Condemnation 15
13.3 Landlord's Option to Terminate 16
13.4 Award 16
13.5 Definition 16
XIV. LANDLORD'S RIGHTS TO CURE 16
14.1 General Right 16
14.2 Mechanic's Lien 17
XV. FINANCING; SUBORDINATION 17
15.1 Subordination 17
15.2 Attornment 17
15.3 Financial Information 17
ii
DESCRIPTION PAGE
- ----------- ----
XVI. EVENTS OF DEFAULT; REMEDIES OF LANDLORD 18
16.1 Default by Tenant 18
16.2 Remedies 18
16.3 Past Due Sums; Penalty 18
XVII. PROVISIONS APPLICABLE AT TERMINATION OF LEASE 19
17.1 Surrender of Premises 19
17.2 Holding Over 19
XVIII. ATTORNEYS' FEES 19
XIX. ESTOPPEL CERTIFICATE 19
19.1 Landlord's Right to Estoppel Certificate 19
19.2 Effect of Failure to Provide Estoppel 20
Certificate
XX. PARKING 20
XXI. SIGNS, AWNINGS, AND CANOPIES 20
XXII. MISCELLANEOUS PROVISIONS 20
22.1 No Partnership 20
22.2 Force Majeure 20
22.3 No Waiver 21
22.4 Notice 21
22.5 Captions; Attachments; Defined Terms 21
22.6 Recording 21
22.7 Partial Invalidity 22
22.8 Broker's Commissions 22
22.9 Tenant Defined: Use of Pronouns 22
22.10 Provisions Binding, Etc. 22
22.11 Entire Agreement, Etc. 22
22.12 Governing Law 23
iii
DESCRIPTION PAGE
- ----------- ----
SIGNATURES 24
NOTARIES 25& 26
RIDER Yes X No
------- -------
GUARANTY Yes No
------ ------
EXHIBIT "A" DESCRIPTION OF REAL PROPERTY
EXHIBIT "B" FLOORPLAN OF LEASED PREMISES
EXHIBIT "C" WORK LETTER-CONSTRUCTION AND/OR FINISH OF
IMPROVEMENTS TO LEASED PREMISES
EXHIBIT "D" ACKNOWLEDGMENT OF COMMENCEMENT DATE &
ESTOPPEL CERTIFICATE
EXHIBIT "E" COST TO CONSTRUCT LEASED PREMISES
EXHIBIT "F" IMPROVEMENT REMOVAL AGREEMENT
iv
LEASE AGREEMENT
RESEARCH PARK BUILDING - PHASE I
THIS LEASE AGREEMENT (the "Lease") is made and entered into as of this 12th
day of October, 1995 by and between BOYER RESEARCH PARK ASSOCIATES V, BY ITS
GENERAL PARTNER, THE BOYER COMPANY, L.C. (the "Landlord"), and MYRIAD GENETICS,
INC. (the "Tenant").
For and in consideration of the rental to be paid by tenant and of the
covenants and agreements herein set forth to be kept and performed by Tenant,
Landlord hereby leases to Tenant and Tenant hereby leases from Landlord, the
Leased Premises (as hereafter defined), at the rental and subject to and upon
all of the terms, covenants and agreements hereinafter set forth.
I. PREMISES
1.1 Description of Premises. Landlord does hereby demise, lease
and let unto Tenant, and Tenant does hereby take and receive from
Landlord the following:
(a) That certain floor area containing approximately 24,476 gross
rentable square feet (the "Leased Premises"), more particularly, 14,043
gross rentable square feet on Floor Two and 10,433 gross rentable
square feet on Floor One, of the 43,726 gross rentable square feet
three story office building (the "Building") located at approximately
350 Wakara Way in Salt Lake City, Utah, on the real property (the
"Property") described on Exhibit "A" attached hereto and by this
reference incorporated herein. The space occupied by Tenant consists of
that certain area crosshatched on Exhibit "B" which is attached hereto
and by this reference incorporated herein.
(b) Such non-exclusive rights-of-way, easements and similar rights
with respect to the Building and Property as may be reasonably
necessary for access to and egress from, the Leased Premises.
(c) The exclusive right to use those areas designated and suitable
for vehicular parking, including the exclusive right to the use of
Eighty-six (86) parking stalls.
1.2 Work of Improvement. The obligation of Landlord and Tenant to
perform the work and supply the necessary materials and labor to
prepare the Leased Premises for occupancy are described in detail on
Exhibit "C". Landlord and Tenant shall expend all funds and do all acts
required of them as described on Exhibit "C" and shall perform or have
the work performed promptly and diligently in a first class and
workmanlike manner.
1.3 Construction of Shell Building. Landlord shall, at its own
cost and expense, construct and complete a three story 43,726 gross
rentable square foot building and cause all of the construction which
is to be performed by it in completing the Building and performing its
work as set forth on Exhibit "C", to be substantially completed as
evidenced by a Certificate
of Occupancy, and the Leased Premises ready for Tenant to install its
fixtures and equipment and to perform its other work as described on
Exhibit "C" as soon as reasonably possible, but in no event later than
November 1, 1996 ("Target Date"). In the event that Landlord's
construction of obligation has not been fulfilled upon the expiration of
the"Target Date", Tenant shall have the right to exercise any right or
remedy available to it under this Lease, including the right to terminate
this Lease and the right to charge Landlord and cause Landlord to pay any
increased costs associated with Tenant's current leases due to holding
over in such space or moving to temporary space; provided that under no
circumstances shall Landlord be liable to Tenant resulting from delay in
construction covered by circumstances beyond Landlord's direct control.
II. TERM
2.1 Length of Term. The term of this Lease shall be for a period of
ten (10) years plus the partial calendar month, if any, occurring after
the Commencement Date (as hereinafter defined) if the Commencement Date
occurs other than on the first day of a calendar month.
2.2 Commencement Date; Obligation to Pay Rent. The term of this
Lease and Tenant's obligation to pay rent hereunder shall commence on the
first to occur of the following dates ("Commencement Date"):
(a) The date Tenant occupies the Premises and conducts business.
(b) The date fifteen (15) days after the Landlord, or Landlord's
supervising contractor, notified Tenant in writing that Landlord's
construction obligations respecting the Leased Premises have been
fulfilled and/or that the Leased Premises are ready for occupancy and/or
performance of Tenant's work. Such notice shall be accompanied by an
occupancy permit and a certificate from the Building Architect stating
that remaining punchlist items can be completed within fifteen (15) days
and will not materially interfere with Tenant's business. Prior to
Commencement Date, it is contemplated that Tenant shall be able to
perform its construction obligation as per Exhibit C II(H).
2.3 Construction of Leased Premises. Landlord shall provide a budget
prior to the commencement of construction of the Leased Premises (see
Exhibit "E"). Landlord shall itemize each part of the construction and
its associated estimated cost. Landlord shall pay an amount equal to
$22.00 per usable square foot (architect shall calculate usable square
foot measurement) of the cost listed (excluding cost to construct Shell
Building) and Tenant shall be obligated for the remaining costs shown on
Exhibit "E". Landlord shall not be obligated to pay for any increase in
the actual cost of construction over and above the construction costs
shown on Exhibit "E". Any special decorator items, equipment, furniture
or furnishings not designated on Exhibit "E", as well as changes
initiated by the Tenant to the Leased Premises, shall be the sole cost of
Tenant and shall include the defined extras on Exhibit "E."
2.4 Renewal Option. If this Lease then remains in full force and
effect, Tenant shall have the option to renew this Lease for two five
year options commencing on the expiration date.
2
Each option must be exercised by written notice to Landlord one hundred
and eighty (180) days from the expiration of the previous term and once
exercised is irrovacable. Base rent during each renewal term shall be
mutually agreed upon between Landlord and Tenant within Sixty (60) days
after Tenant has exercised the respective renewal option.
2.5 Acknowledgment of Commencement Date. Landlord and Tenant
shall execute a written acknowledgment of the commencement Date in the
form attached hereto as Exhibit "D".
III. BASIC RENTAL PAYMENTS
3.1 Basic Annual Rent. Tenant agrees to pay to Landlord as basic
annual rent (the "Basic Annual Rent") at such place as Landlord may
designate, without prior demand therefore and without any deduction or set
off whatsoever, the sum of Three Hundred and Three Thousand Seven Hundred
and Fifty and no/100 Dollars ($330,426.00). Said Basic Annual Rent shall
be due and payable in twelve (12) equal monthly installments to be paid in
advance on or before the first day of each calendar month during the term
of the Lease. Basic Annual Rent shall escalate at the beginning of the 6th
year using a 3% annually compounded rate or the change in the All Urban
Index whichever is less. For purposes of this Lease the term "All Urban
Index" shall mean the Consumer Price Index for All Urban Consumers-U.S.
City Average-all Items (1967 equals 100 base) as published by the United
States Bureau of Labor Statistics or any successor agency or any other
index hereinafter employed by the Bureau of Labor Statistics in lieu of
said index. The price index for the 3rd month preceding the month in which
the Lease commences shall be considered the Basic Price Index. As of the
beginning of the 6th year, the Basic Annual Rental set forth in Section
3.1 shall be adjusted by multiplying such rental by a fraction, the
numerator of which is the Price Index for the 3rd month preceding the
beginning of the 6th year and the denominator of which is the Basic Price
Index. The above not withstanding, the maximum increase at the beginning
of the 6th year shall be no more than 15.9% which is 3% per year
compounded. To the extent that ground lease payments under the Ground
Lease with the University of Utah (i) begin at a rate greater than
Fourteen Thousand Dollars ($14,000.00) per acre per year, the incremental
dollar amount above $14,000.00, if any, shall also be added to Basic
Annual Rent in relation to Tenant's Proportionate Share of Basic Costs as
provided in Paragraph 4.1(d); and (ii) escalate at a rate greater that
three percent (3%) compounded annually, the incremental dollar amount
above the three percent (3%) escalation shall also be added to the Basic
Annual Rent in relation to Tenant's Proportionate Share of Basic Costs as
provided in Paragraph 4.1(d).
In no event shall Basic Annual Rent be reduced. In the event the
Commencement Date occurs on a day other than the first day of a calendar
month, then rent shall be paid on the Commencement Date for the initial
fractional calendar month prorated on a per-diem basis (based upon a
thirty (30) day month).
3.2 Additional Monetary Obligations. Tenant shall also pay as
rental (in addition to the Basic Annual Rent) all other sums of money as
shall become due and payable by Tenant to Landlord under this Lease.
Landlord shall have the same remedies in the case of a default in the
payment of said other sums of money as are available to Landlord in the
case of a default in the payment of one or more installments of Basic
Annual Rent.
3
IV. ADDITIONAL RENT
4.1 Basic Annual Rent. It is the intent of both parties that the
Basic Annual Rent herein specified shall be absolutely net to the Landlord
throughout the term of this Lease, and that all costs, expenses and
obligations relating to Tenant's prorata share of the Building, Property
and/or Building, Property and/or Leased Premises which may arise or become
due during the term shall be paid by Tenant in the manner hereafter
provided.
For purposes of this Part IV and the Lease in general, the following
words and phrases shall have the meanings set forth below:
(a) "Basic Costs" shall mean all actual costs and expenses incurred
by Landlord in connection with the ownership, operation, management and
maintenance of the Building and Property and related improvements located
thereon (the "Improvements"), including, but not limited to, all expenses
incurred by Landlord as a result of Landlord's compliance with any and
all of its obligations under this Lease other than the performance by
Landlord of its work under Sections 1.2, 1.3 and 2.3 of this Lease or
similar provisions of leases with other tenants. In explanation of the
foregoing, and not in limitation thereof, Basic Costs shall include: all
real and personal property taxes and assessments (whether general or
special, known or unknown, foreseen or unforeseen) and any tax or
assessment levied or charged in lieu thereof, whether assessed against
Landlord and/or Tenant and whether collected from Landlord and/or Tenant;
snow removal, trash removal, supplies, insurance, license, permit and
inspection fees, cost of services of independent contractors, cost of
compensation (including employment taxes and fringe benefits) of all
persons who perform regular and recurring duties connected with day-to-
day operation, maintenance, repair, and replacement of the Building, its
equipment and the adjacent walk, and landscaped area (including, but not
limited to janitorial, scavenger, gardening, security, parking, elevator,
painting, plumbing, electrical, mechanical, carpentry, window washing,
structural and roof repairs and reserves (Landlord may collect up to one
percent (1%) of total Basic Costs as a contribution toward reserves),
signing and advertising, and rental expense or a reasonable allowance for
depreciation of personal property used in the maintenance, operation and
repair of the Building. Basic Costs shall not include expenses incurred
in connection with leasing, renovating, or improving space for tenants or
other occupants or prospective tenants or occupants of the Building,
expenses incurred for repairs resulting from damage by fire, windstorm or
other casualty, to the extent such repairs are paid for by insurance
proceeds, expenses paid by any tenant directly to third parties, or as to
which Landlord is otherwise reimbursed by any third party or Tenant;
expenses which, by generally accepted accounting principles, are treated
as capital items except that if, as a result of governmental
requirements, laws or regulations, Landlord shall expend monies directly
or indirectly for improvements, additions or alterations to the Building
which, by generally accepted accounting principles, are treated as a
capital expenditures, the amortization of such capital expenditures based
on a life acceptable to the appropriate taxing authority together with
interest at the rate of 9% per annum shall be considered Basic Costs. The
foregoing notwithstanding, Basic Costs shall not include
4
depreciation on the Building and Tenant Finish; amounts paid
toward principal or interest of loans of Landlord; nor shall Basic Costs
include "Direct Costs" as defined in Section 4.1(b) below.
(b) "Direct Costs" shall mean all actual costs and expense incurred by
Landlord in connection with the operation, management, maintenance,
replacement, and repair of tenants' premises, including but not limited to
janitorial services, maintenance, repairs, supplies, utilities, heating,
ventilation, air conditioning, and property management fees, which property
management fees shall be equal to a percentage of Tenant's Basic Annual
Rent and Estimated Costs including electricity, which percentage shall not
exceed four percent (4%) of the sum of Basic Annual Rent, Estimated Costs
and cost of electricity for the Leased Premises.
Landlord will cause meters to be installed to measure actual
electrical usage by Tenant. When such meters are installed, Tenant shall
pay Landlord monthly, as additional rent, the actual costs of such metered
electrical usage. At least annually, Landlord shall reconcile the
estimated costs of these metered services and shall show the actual costs
and shall apply any appropriate credits or debits from the previous year's
actual usage. All such billings will be computed at the actual kilowatt
hourly rate billed to the Landlord by the public utility companies for each
respective period, including taxes. Tenant shall promptly pay to Landlord
the amount due on each monthly billing received for and throughout the term
of the Lease.
(c) "Estimated Costs" shall mean the projected amount of Tenant's
Direct Costs and Basic Costs, excluding the costs of electricity provided
to Tenant's Leased Premises, if separately metered. The Estimated Costs for
the calendar year in which the Lease commences are $110,142.00, and are not
included in the Basic Annual Rent. If the Estimated Costs as of the date
Tenant takes occupancy are greater than Tenant's Estimated Costs at the
time this Lease is executed, the Estimated Costs shall be increased to
equal the Estimated Costs as of the date of Tenant's occupancy.
(d) "Tenant's Proportionate Share of Basic Costs" shall mean the
percentage derived from the fraction, the numerator of which is the gross
rentable square footage of the Lease premises (24,476), the denominator of
which is the gross rentable square footage of the building (43,726). In
this Lease, Tenant's prorata share initially is 56% subject to increase or
decrease due to increases or decreases in the gross rentable square footage
of the Leased Premises and/or of the Building.
4.2 Report of Basic Costs and Statement of Estimated Costs.
(a) After the expiration of each calendar year occurring during the
term of this Lease, Landlord shall furnish Tenant a written statement of
Tenant's Proportionate Share of Basic Costs (Section 4.1(d)) and the
Tenant's Direct Costs occurring during the previous calendar year. The
written statement shall specify the amount by which Tenant's Direct Costs
and Basic Costs exceed or are less than the amounts paid by Tenant during
the previous calendar year pursuant to Section 4.3(b) below.
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(b) At the same time specified in Section 4.2(a) above, Landlord shall
furnish Tenant a written statement of the Estimated Costs for the then
current calendar year.
4.3 Payment of Additional Rent. Tenant shall pay as additional rent
("Additional Rent") Tenant's Direct Costs and Tenant's Proportionate Share
of Basic Costs. The Additional Rent shall be paid as follows:
(a) With each monthly payment of Basic Annual Rent due pursuant to
Section 3.1 above, Tenant shall pay to Landlord, without offset or
deduction, one-twelfth (l/12th) of the Estimated Costs as defined in
Section 4.1(c).
(b) Within thirty (30) days after delivery of the written statement
referred to in section 4.2(a) above, Tenant shall pay to Landlord the
amount by which Tenant's Direct Costs and Basic Costs, as specified in such
written statements, exceed and aggregate of Estimated Costs actually paid
by Tenant for the year at issue. Tenant shall have the right to audit
Landlord's books upon reasonable notice. Tenant shall pay costs associated
with the audit unless Tenant finds that Landlord has inflated expenses by
more than ten percent (10%), in which case, Landlord will pay audit
charges. Payments by Tenant shall be made pursuant to this Section 4.3(b)
notwithstanding that a statement pursuant to Section 4.2(a) is furnished to
Tenant after the expiration of the term of this Lease.
(c) If the annual statement of costs indicates that the Estimated
Costs paid by Tenant pursuant to subsection (b) above for any year exceeded
Tenant's actual Direct Costs and Basic Costs for the same year, Landlord,
at its election, shall either (i) promptly pay the amount of such excess to
Tenant, or (ii) apply such excess against the next installment of Basic
Annual Rental or Additional Rent due hereunder.
4.4 Resolution of Disagreement. Every statement given by Landlord
pursuant to Section 4.2 shall be conclusive and binding upon Tenant unless
within sixty (60) days after the receipt of such statement Tenant shall
notify Landlord that it disputes the correctness thereof, specifying the
particular respects in which the statement is claimed to be incorrect. If
such dispute shall not have been settled by agreement, the parties hereto
shall submit the dispute to arbitration within ninety (90) days after
Tenant's receipt of statement. Pending the determination of such dispute by
agreement or arbitration as aforesaid, Tenant shall, within thirty (30)
days after receipt of such statement, pay Additional Rent in accordance
with Landlord's statement, and such payment shall be without prejudice to
Tenant's position. If the dispute shall be determined in Tenant's favor,
Landlord shall forthwith pay Tenant the amount of Tenant's overpayment of
rents resulting from compliance with Landlord's statement, including
interest on disputed amounts at prime plus two percent (2%). Landlord
agrees to grant Tenant reasonable access to Landlord's books and records
for the purpose of verifying Basic Costs and Direct Costs for operating
expenses incurred by Landlord.
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4.5 Limitations. Nothing contained in this Part IV shall be construed
at any time so as to reduce the monthly installments of Basic Annual Rent
payable hereunder below the amount set forth in Section 3.1 of this Lease.
V. SECURITY DEPOSIT
5.1 Deposit. Tenant has deposited with Landlord the sum of Twenty
Seven Thousand Five Hundred Thirty Five and 50/100 Dollars ($27,535.50)
(1/12 of Basic Annual Rent) as security for the performance by Tenant of
all of the terms, covenants, and conditions required to be performed by it
hereunder. Such sum shall be returned to Tenant after the expiration of the
term of this Lease and delivery of possession of the Leased Premises to
Landlord if, at such time, Tenant has substantially performed all such
terms, covenants, and conditions of this Lease. Prior to the time when
Tenant is entitled to any return of the security deposit, Landlord may
intermingle such deposit with its own funds and use such sum for such
purposes as Landlord may determine. Tenant shall not be entitled to any
interest on the security deposit.
5.2 Default. In the event of default by Tenant in respect to any of
its obligations under this Lease, including, but not limited to, the
payment of rent or additional rent, Landlord may use, apply, or retain all
or any part of the security deposit for the payment of any unpaid Basic
Annual Rent or Additional Rent, or Landlord may be required to expend by
reason of the default of Tenant, including any damages or deficiency in the
reletting of the Leased Premises, regardless of whether the accrual of such
damages or deficiency occurs before or after an eviction or a portion of
the security deposit is so used or applied, Tenant shall, upon thirty (30)
days written demand, deposit cash with Landlord in an amount sufficient to
restore the security deposit to its original amount.
VI. USE
6.1 Use of Leased Premises. The Leased Premises shall be used and
occupied by Tenant for laboratory and general office purposes only and for
no other purpose whatsoever without the prior written consent of Landlord.
6.2 Prohibition of Certain Activities or Uses. The Tenant shall not do
or permit anything to be done in or about, or bring or keep anything in the
Leased Premises which is prohibited by this Lease or will, in any way or to
any extent:
(a) Adversely affect any fire, liability or other insurance policy
carried with respect to the Building, the Leased Premises or any of the
contents of the Building (except with Landlord's express written
permission, which will not be unreasonably withheld, but which may be
contingent upon Tenant's agreement to bear any additional costs, expenses
or liability for risk that may be involved).
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(b) Conflict with or violate any law, statute, ordinance, rule,
regulation or requirement of any governmental unit, agency or authority
(whether existing or enacted as promulgated in the future, known or
unknown, foreseen or unforeseen).
(c) Adversely overload the floors or otherwise damage the
structural soundness of the Leased Premises or Building, or any part
thereof (except with Landlord's express written permission, which will not
be unreasonably withheld, but which may be contingent upon Tenant's
agreement to bear any additional costs, expenses or liability for risk that
may be involved).
6.3 Affirmative Obligations with Respect to Use.
(a) Tenant will comply with all governmental laws, ordinances,
regulations, and requirements, now in force or which hereafter may be in
force, of any lawful governmental body or authorities having jurisdiction
over the Leased Premises, will keep the Leased Premises and every part
thereof in a clean, neat, and orderly condition, free of objectionable
noise, odors, or nuisances, will in all respects and at all times fully
comply with all applicable health and policy regulations, and will not
suffer, permit, or commit any waste.
(b) At all times during the term hereof, Tenant shall, at Tenant's
sole cost and expense, comply with all statutes, ordinances, laws, orders,
rules, regulations and requirements of all applicable federal, state,
county, municipal and other agencies or authorities, now in effect or which
may hereafter become effective, which shall impose any duty upon Landlord
or Tenant with respect to the use, occupation or alterations of the Leased
Premises (including, without limitation, all applicable requirements of the
Americans with Disabilities Act of 1990 and all other applicable laws
relating to people with disabilities, and all rules and regulations which
may be promulgated thereunder from time to time and whether relating to
barrier removal, providing auxiliary aids and services or otherwise) and
upon request of Landlord shall deliver evidence thereof to Landlord.
6.4 Suitability. The Leased Premises, Building and Improvements
(and each and every part thereof) shall be deemed to be in satisfactory
condition unless, within sixty (60) days after the Commencement Date,
Tenant shall give Landlord written notice specifying, in reasonable detail,
the respects in which the Leased Premises, Building or Improvements are not
in satisfactory condition. Landlord further provides warranties as provided
in Exhibit C II paragraphs C and E.
6.5 Taxes. Tenant shall pay all taxes, assessments, charges, and
fees which during the term hereof may be imposed, assessed or levied by any
governmental or public authority against or upon Tenant's use of the Leased
Premises or any personal property or fixture kept or installed therein by
Tenant and on the value of leasehold improvements to the extent that the
same exceed Building allowances.
8
VII. UTILITIES AND SERVICE
7.1 Obligation of Landlord. During the term of this Lease the Landlord
agrees to cause to be furnished to the Leased Premises during normal
operating hours, the following utilities and services, the cost and
expense of which shall be included in Basic and/or Direct Costs:
(a) Electricity, water, gas and sewer service.
(b) Telephone connection to the building, but not including telephone
stations and equipment (it being expressly understood and agreed that
Tenant shall be responsible for the ordering and installation of
telephone lines and equipment which pertain to the Leased Premises).
(c) Heating and air-conditioning during normal operating hours to such
extent and to such levels as is reasonably required for the comfortable
use and occupancy of the Leased Premises subject however to any
limitations imposed by any government agency.
(d) Janitorial service.
(e) Security (including the lighting of common halls, stairways,
entries and restrooms) to such extent as is usual and customary in
similar buildings in Salt Lake County, Utah.
(f) Snow removal service.
(g) Landscaping and groundskeeping service.
(h) Elevator service.
(i) The normal operating hours for office portion of the Lease
Premises are from 7:00 a.m. to 6:00 p.m., Monday through Friday.
Normal operating hours for the laboratory portion is 7 a.m. to 11
p.m., Monday through Friday.
7.2 Tenant's Obligations. Tenant shall arrange for and shall pay
the entire cost and expense of all telephone stations, equipment and use
charges, electric light bulbs (but not fluorescent bulbs used in
fixtures originally installed in the Leased Premises) and all other
materials and services not expressly required to be provided and paid
for pursuant to the provisions of Section 7.1 above.
7.3 Additional Limitations. If and where heat generating machines
devices are used in the Leased Premises which affect the temperature
otherwise maintained by the air conditioning system, Landlord reserves
the right with Tenant's concurrence to install additional or
supplementary air conditioning units for the Leased premises,
9
and the entire cost of installing, operating, maintaining and
repairing the same shall be paid by Tenant to Landlord promptly after
demand by Landlord.
7.4 Limitation on Landlord's Liability. Landlord shall not be
liable for and Tenant shall not be entitled to terminate this Lease or
to effectuate any abatement or reduction of rent by reason of
Landlord's failure to provide or furnish any of the foregoing
utilities or services if such failure was reasonably beyond the
control of Landlord. In no event shall Landlord be liable for loss or
injury to persons or property, however, arising or occurring in
connection with or attributable to any failure to furnish such
utilities or services even if within the control of Landlord, except
in the event of Landlord's negligence.
VIII. MAINTENANCE AND REPAIRS; ALTERATIONS; ACCESS
8.1 Maintenance and Repairs by Landlord. Landlord shall maintain
in good order, condition and repair the structural components of the
Leased Premises, including without limitation roof, exterior walls and
foundations, as well as all repairs covered under construction
warranties provided if Landlord is required to make structural repairs
by reason of Tenant's negligent acts or omissions, Tenant shall pay
Landlord's costs for making such repairs.
8.2 Maintenance and Repairs by Tenant. Tenant, at Tenant's sole
cost and expense and without prior demand being made, shall maintain
the Leased Premises in good order, condition and repair, and will be
responsible for the painting, carpeting or other interior design work
of the Leased Premises beyond the initial construction phase as
specified in Section 2.3 and Exhibit "C" and "E" of the Lease and
shall maintain all equipment and fixtures installed by Tenant. If
repainting or recarpeting is required and authorized by Tenant, the
cost for such are the sole obligation of Tenant and shall be paid for
by Tenant immediately following the performance of said work and a
presentation of an invoice for payment.
8.3 Tenant Approval of Management and Maintenance Services.
Tenant shall have the right to approve of persons who have or will
contract with Landlord for Building and Property management and
maintenance services. In addition, in the event that Tenant reasonably
believes that another person could (i) provide better property
management or maintenance service at the same or less cost than the
person currently providing such property management or maintenance
service, or (ii) provide equal property management or maintenance
service for less cost, then Tenant shall, at its option, provide to
Landlord the name and address of such person. Landlord agrees to take
reasonable steps to verify that such person referred by Tenant could
better or more economically provide the contracted for management
and/or maintenance services for the Building and/or Property, and
provided that Landlord determines in its reasonable discretion that
making such a change will not be disadvantageous to other tenants of
the Building, then upon such verification, Landlord agrees to contract
with and substitute such person to provide such service. The foregoing
applies to services rendered pursuant to Articles 4, 7 and 8.
8.4 Alterations. Tenant shall not make or cause to be made any
alterations, additions or improvements or install or cause to be
installed any fixtures, signs, floor coverings, interior
10
or exterior lighting, plumbing fixtures, or shades or awnings, or make any
other changes to the Leased Premises without first obtaining Landlord's
written approval, which approval shall not be unreasonably withheld. Tenant
shall present to the Landlord plans and specifications for such work at the
time approval is sought. In the event Landlord consents to the making of
any alterations, additions, or improvements to the Leased Premises by
Tenant, the same shall be made by Tenant at Tenant's sole cost and expense.
All such work with respect to any alterations, additions, and changes shall
be done in a good and workmanlike manner and diligently prosecuted to
completion such that, except as absolutely necessary during the course of
such work, the Leased Premises shall at all times be a complete operating
unit. Any such alterations, additions, or changes shall be performed and
done strictly in accordance with all laws and ordinances relating thereto.
In performing the work or any such alterations, additions, or changes,
Tenant shall have the same performed in such a manner as not to obstruct
access to any portion of the Building. Any alterations, additions, or
improvements to or of the Leased Premises, including, but not limited to,
wallcovering, fume hoods, darkroom, paneling, and built-in cabinet work,
but excepting movable furniture and equipment, shall at once become a part
of the realty and shall be surrendered with the Premises, unless Landlord
and Tenant agree at any time that the specific improvement may be removed
by Tenant at the end of the Term provided Tenant restores the premises to
its original condition, wear and tear excepted. If there is an agreement to
allow removal, such items which are the subject of agreement shall be
listed on Exhibit F which agreement, as may be revised by the parties from
time to time, shall be made a part of this Lease. The parties have agreed
as to the items 1 through 8 listed on Exhibit F.
8.5 Landlord's Access to Leased Premises. Landlord shall have the
right to place, maintain, and repair all utility equipment of any kind in,
upon, and under the Leased Premises as may be necessary for the servicing
of the Leased Premises and other portion of the Building. Landlord shall
upon providing adequate notice to Tenant, also have the right to enter the
Leased Premises at all times to inspect or to exhibit the same to
prospective purchasers, mortgagees, tenants, and lessees, and to make such
repairs, additions, alterations, or improvements as Landlord may deem
desirable. Landlord shall be allowed to take all material upon said Leased
Premises that may be required therefor without the same constituting an
actual or constructive eviction of Tenant in whole or in part and the rents
reserved herein shall in no wise abate while said work is in progress by
reason of loss or interruption of Tenant's business or otherwise, and
Tenant shall have no claim for damages unless due to Landlord negligence.
During the three (3) months prior to expiration of this Lease or of any
renewal term, Landlord may place upon the Leased Premises "For Lease" or
"For Sale" signs which Tenant shall permit to remain thereon.
IX. ASSIGNMENT
9.1 Assignment Prohibited. Tenant shall not transfer, assign,
mortgage, or hypothecate this Lease, in whole or in part, or permit the use
of the Leased Premises by any person or persons other than Tenant, or
sublet the Leased Premises, or any part thereof, without the prior written
consent of Landlord in each instance, which consent shall not be
unreasonably withheld, provided sufficient information is provided to
Landlord to accurately represent the financial condition of those to whom
this Lease will be transferred, assigned, mortgaged, or hypothecated. Such
prohibition against assigning or subletting shall include any assignment or
11
subletting by operation of law. Any transfer of this Lease from the Tenant
by merger, consolidation, transfer of assets, or liquidation shall
constitute an assignment for purposes of this Lease. In the event that
Tenant hereunder is a corporation, an unincorporated association, or a
partnership, the transfer, assignment, or hypothecation of any stock or
interest in such corporation, association, or partnership in the aggregate
in excess of forty-nine percent (49%) shall be deemed an assignment within
the meaning of this Section. The above prohibition of assignment will not
apply in the case of a registered offering of shares by Tenant or the
public trading of registered shares subsequent to an initial offering.
9.2 Consent Required.
(a) Any assignment or subletting without Landlord's consent shall be
void, and shall constitute a default hereunder which, at the option of
Landlord, shall result in the termination of this Lease or exercise of
Landlord's other remedies hereunder. Consent to any assignment or
subletting shall not operate as a waiver of the necessity for consent to
any subsequent assignment or subletting, and the terms of such consent
shall be binding upon any person holding by, under, or through Tenant.
(b) Landlord shall have no obligation to consent to the proposed
sublease or assignment if the proposed sublessee or assignee or its
business is or may be subject to compliance with additional requirements of
the law, including any related rules or regulations, commonly known as the
"Americans with Disabilities Act of l990" or similar state or local laws
relating to persons with disabilities beyond those requirements which are
applicable to the tenant desiring to so sublease or assign".
9.3 Landlord's Right in Event of Assignment. If this Lease is
assigned or if the Leased Premises or any portion thereof are sublet or
occupied by any person other than the Tenant, Landlord may collect rent and
other charges from such assignee or other party, and apply the amount
collected to the rent and other charges reserved hereunder, but such
collection shall not constitute consent or waiver of the necessity of
consent to such assignment, subleasing, or other transfer, nor shall such
collection constitute the recognition of such assignee, sublessee, or other
party as the Tenant hereunder or a release of Tenant from the further
performance of all of the covenants and obligations, including obligation
to pay rent, of Tenant herein contained. In the event that Landlord shall
consent to a sublease or assignment hereunder, Tenant shall pay to Landlord
reasonable fees, not to exceed $100.00, incurred in connection with
processing of documents necessary to the giving of such consent. In the
event Landlord consents to the assignment as provided by paragraph 9.1,
then Tenant shall be released from further performance of any covenant and
obligation under this Lease.
X. INDEMNITY
10.1 Indemnification By Tenant. Tenant and Landlord shall indemnify
each other and save each other harmless from and against any and all suits,
actions, damage and claims, liability and expense in connection with loss
of life, bodily or personal injury, or property damage arising from or out
of any occurrence in, upon, at or from the Leased Premises, or occasioned
wholly
12
or in part by any act or omission of Tenant or Landlord, their agents,
contractors, employees, servants, invitees, licensees or concessionaires.
All insurance policies carried by Tenant and/or Landlord shall include a
waiver of subrogation endorsement which specifies that the insurance
carrier(s) will waive any right of subrogation against Tenant and/or
Landlord arising out of any insurance claim.
10.2 Release of Landlord. Landlord shall not be responsible or
liable at any time for any loss or damage to Tenant's personal property or
to Tenant's business. Tenant shall store its property in and shall use and
enjoy the Leased Premises and all other portions of the Building and
Improvements at its own risk, and hereby releases Landlord, to the full
extent permitted by law, from all claims of every kind resulting in loss of
life, personal or bodily injury, or property damage.
10.3 Notice. Tenant shall give prompt notice to Landlord in case of
fire or accidents in the Leased Premises or in the Building of which the
Leased Premises are a part or of defects therein or in any fixtures or
equipment.
10.4 Litigation. In case Landlord, without fault on its part, shall
be made a party to any litigation commenced against Tenant, then Tenant
shall protect and hold Landlord harmless and shall pay all costs, expenses,
and reasonable attorneys' fees.
XI. INSURANCE
11.1 Fire and "All Risk" Insurance on Tenant's Personal Property
and Fixtures. At all times during the term of this Lease, Tenant shall keep
in force at its sole cost and expense, fire insurance and "All Risk"
(including vandalism and malicious mischief) in companies acceptable to
Landlord, equal to the replacement cost of Tenant's fixtures, furnishings,
equipment, and contents upon the Leased Premises and all improvements or
additions made by Tenant to the Leased Premises. The Landlord shall be
named as an additional insured on all such policies.
11.2 Liability Insurance. Tenant shall, during the entire term
hereof, keep in full force and effect a policy of public liability and
property damage insurance to include contractual coverage with respect to
the Leased Premises and the business operated by Tenant in the Leased
Premises, with a combined single limit for personal or bodily injury and
property damage of not less than $500,000.00. The policy shall name
Landlord, any person, firms, or corporations designated by Landlord, and
Tenant as insureds, and shall contain a clause that the insurer will not
cancel or materially change the insurance pertaining to the Leased Premises
without first giving Landlord ten (10) days written notice. Tenant shall at
all times during the term hereof provide Landlord with evidence of current
insurance coverage. All public liability, property damage, and other
liability policies shall be written as primary policies, not contributing
with coverage which Landlord may carry.
11.3 Subrogation. Tenant and Landlord each waive its right of
subrogation against each other for any reason whatsoever.
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11.4 Lender. Any mortgage lender interest in any part of the
Building or Improvements may, at Landlord's option, be afforded coverage
under any policy required to be secured by Tenant hereunder, by use of a
mortgagee's endorsement to the policy concerned.
XII. DESTRUCTION
If the Leased Premises shall be partially damaged by any casualty insured
against under any insurance policy maintained by Landlord, Landlord shall, upon
receipt of the insurance proceeds, repair the Leased Premises and until repair
is complete the Basic Annual Rent and Additional Rent shall be abated
proportionately as to that portion of the Leased Premises rendered untenantable.
Notwithstanding the foregoing, if: (a) the Leased Premises by reason of such
occurrence are rendered wholly untenantable, or (b) the Leased Premises should
be damaged as a result of a risk which is not covered by insurance, or (c) the
Leased Premises should be damaged in whole or in part during the last six (6)
months of the term or of any renewal hereof, or (d) the Leased Premises or the
Building (whether the Leased Premises are damaged or not) should be damaged to
the extent of fifty percent (50%) or more of the then-monetary value thereof,
then and in any such events, Landlord may either elect to repair the damage or
may cancel this Lease by notice of cancellation within Ninety (90) days after
such event and thereupon this Lease shall expire, and Tenant shall vacate and
surrender the Leased Premises to Landlord. Tenant's liability for rent upon the
termination of this Lease shall cease as of the day following Landlord's giving
notice of cancellation. In the event Landlord elects to repair any damage, any
abatement of rent shall end five (5) days after notice by Landlord to Tenant
that the Leased Premises have been repaired. If the damage is caused by the
negligence of Tenant or its employees, agents, invitees, or concessionaires,
there shall be no abatement of rent. Unless this Lease is terminated by
Landlord, Tenant shall repair and refixture the interior of the Leased Premises
to the extent of the Tenant Finish in a manner and in at least a condition equal
to that existing prior to the destruction or casualty and the proceeds of all
insurance carried by Tenant on its property and fixtures shall be held in trust
by Tenant for the purpose of said repair and replacement.
XIII.CONDEMNATION
13.1 Total Condemnation. If the whole of the Leased Premises shall
be acquired or taken by condemnation proceeding, then this Lease shall
cease and terminate as of the date of title vesting in such proceeding.
13.2 Partial Condemnation. If any part of the Leased Premises shall
be taken as aforesaid, and such partial taking shall render that portion
not so taken unsuitable for the business of Tenant, then this Lease shall
cease and terminate as aforesaid. If such partial taking is not extensive
enough to render the Leased Premises unsuitable for the business of Tenant,
then this Lease shall continue in effect except that the Basic Annual Rent
and Additional Rent shall be reduced in the same proportion that the
portion of the Leased Premises (including basement, if any) taken bears to
the total area initially demised and Landlord shall, upon receipt of the
award in condemnation, make all necessary repairs or alterations to the
Building in which the Leased Premises are located, provided that Landlord
shall not be required to expend for such work an amount in excess of the
amount received by Landlord as damages for the part of the Leased Premises
to taken. "Amount received by Landlord" shall mean that part of the award
in
14
condemnation which is free and clear to Landlord of any collection by
mortgage lenders for the value of the diminished fee.
13.3 Landlord's Option to Terminate. If more than twenty percent
(20%) of the Building shall be taken as aforesaid, Landlord may, by written
notice to Tenant, terminate this Lease. If this Lease is terminated as
provided in this Section, rent shall be paid up to the day that possession
is so taken by public authority and Landlord shall make an equitable refund
of any rent paid by Tenant in advance.
13.4 Award. Tenant shall not be entitled to and expressly waives all
claim to any condemnation award for any taking, whether whole or partial
and whether for diminution in value of the leasehold or to the fee,
although Tenant shall have the right, to the extent that the same shall not
reduce Landlord's award, to claim from the condemnor, but not from the
Landlord, such compensation as may be recoverable by Tenant in its own
right for damages to Tenant's business and fixtures.
13.5 Definition. As used in this Part XIII the term "condemnation
proceeding" means any action or proceeding in which any interest in the
Leased Premises is taken for any public or quasi-public purpose by any
lawful authority through exercise of eminent domain or right of
condemnation or by purchase or otherwise in lieu thereof.
XIV. LANDLORD'S RIGHTS TO CURE
14.1 General Right. In the event of breach, default, or
noncompliance hereunder by Landlord, Tenant shall, before exercising any
right or remedy available to it, give Landlord written notice of the
claimed breach, default, or noncompliance. If prior to its giving such
notice Tenant has been notified in writing (by way of Notice of Assignment
of Rents and Leases, or otherwise) of the address of a lender which has
furnished any of the financing referred to in Part XV hereof, concurrently
with giving the aforesaid notice to Landlord, Tenant shall, by registered
mail, transmit a copy thereof to such lender. For the fifteen (15) days
following the giving of the notice(s) required by the foregoing portion of
this section (or such longer period of time as may be reasonably required
to cure a matter which, due to its nature, cannot reasonably be rectified
within fifteen (15) days), Landlord shall have the right to cure the
breach, default, or noncompliance involved. If Landlord has failed to cure
a default within said period, any such lender shall have an additional
fifteen (15) days within which to cure the same or, if such default cannot
be cured within that period, such additional time as may be necessary if
within such fifteen (15) day period said lender has commenced and is
diligently pursuing the actions or remedies necessary to cure the breach
default, or noncompliance involved (including, but not limited to,
commencement and prosecution of proceedings to foreclose or otherwise
exercise its rights under its mortgage or other security instrument, if
necessary to effect such cure), in which event this Lease shall not be
terminated by Tenant so long as such actions or remedies are being
diligently pursued by said lender.
14.2 Mechanic's Lien. Should any mechanic's or other lien be filed
against the Leased Premises or any part thereof by reason of Tenant's acts
or omissions or because of a
15
claim against Tenant, Tenant shall cause the effect of the same to be
cancelled and discharged or bonded over or otherwise within ten (10) days
after written notice by Landlord.
XV. FINANCING; SUBORDINATION
15.1 Subordination. Tenant acknowledges that it might be
necessary for Landlord or its successors or assigns to secure mortgage
loan financing or refinancing affecting the Leased Premises. Tenant also
acknowledges that the lender interested in any given loan may desire that
Tenant's interest under this Lease be either superior or subordinate to
the mortgage then held or to be taken by said Lender. Accordingly, Tenant
agrees that at the request of Landlord at any time and from time to time
Tenant shall execute and deliver to Landlord an instrument, in form
reasonably acceptable to Landlord, whereby Tenant subordinates its
interest under this Lease and in the Leased Premises to such of the
following encumbrances as may be specified by Landlord: Any mortgage or
trust deed and customary related instruments are herein collectively
referred to merely as a "Mortgage" and securing a loan obtained by
Landlord or its successors or assigns for the purpose of enabling
acquisition of the Building and/or construction of additional
improvements to provide permanent financing for the Building, or for the
purpose of refinancing any such construction, acquisition, standing or
permanent loan. Provided, however, that any such instrument or
subordination executed by Tenant shall provide that so long as Tenant
continues to perform all of its obligations under this Lease its tenancy
shall remain in full force and effect notwithstanding Landlord's default
in connection with the Mortgage concerned or any resulting foreclosure or
sale or transfer in lieu of such proceedings. Tenant shall not
subordinate its interests hereunder or in the Leased Premises to any lien
or encumbrance other than the Mortgages described in and specified
pursuant to this Section 15.1 without the prior written consent of
Landlord and of the lender interested under each mortgage then affecting
the Leased Premises. Any such unauthorized subordination by Tenant shall
be void and of no force or effect whatsoever.
15.2 Attornment. Any sale, assignment, or transfer of Landlord's
interest under this Lease or in the Leased Premises including any such
disposition resulting from Landlord's default under a mortgage, shall be
subject to this Lease and also Tenant shall attorn to Landlord's
successor and assigns and shall recognize such successor or assigns as
Landlord under this Lease, regardless of any rule of law to the contrary
or absence of privity of contract.
15.3 Financial Information. As a condition to Landlord's
acceptance of this Lease, Tenant shall provide financial information
sufficient to verify to Landlord the financial condition of Tenant.
Tenant hereby represents and warrants that none of such information
contains or will contain any untrue statement of material fact, nor will
such information omit any material fact necessary to make the statements
contained therein misleading or unreliable. Any financial information
provided by Tenant shall beheld in confidence and distributed only to
Landlord's investors or lenders for the Leased Premises.
XVI. EVENTS OF DEFAULT; REMEDIES OF LANDLORD
16
16.1 Default by Tenant. Upon the occurrence of any of the
following events, Landlord shall have the remedies set forth in Section
16.2:
(a) Tenant fails to pay any installment of Basic Annual Rent or
Estimated Costs or any other sum due hereunder within ten (10) days
after Tenant receives written notice of rent due.
(b) Tenant fails to perform any other term, condition, or
covenant to be performed by it pursuant to this Lease within ten (10)
days after written notice of such default shall have been given to
Tenant by Landlord or, if cure would reasonably require more than ten
(10) days to complete, if Tenant fails to commence performance within
the ten (10) day period or fails diligently to pursue such cure to
completion.
(c) Tenant shall become bankrupt or insolvent or file any debtor
proceedings or have taken against such party in any court pursuant to
state or federal statute, a petition in bankruptcy or insolvency,
reorganization, or appointment of a receiver or trustee; or Tenant
petitions for or enters into an arrangement; or suffers this Lease to
be taken under a writ of execution.
16.2 Remedies. In the event of any default by Tenant hereunder,
Landlord may at any time, without waiving or limiting any other right
or remedy available to it, terminate Tenant's rights under this Lease
by written notice, reenter and take possession of the Premises by any
lawful means (with or without terminating this Lease), or pursue any
other remedy allowed by law. Tenant agrees to pay to Landlord the cost
of recovering possession of the Premises, all costs of reletting, and
arising out of Tenant's default, including attorneys' fees.
Notwithstanding any reentry, the liability of Tenant for the rent
reserved herein shall not be extinguished for the balance of the Term,
and Tenant agrees to compensate Landlord upon demand for any deficiency
arising from reletting the Premises at a lesser rent than applies under
this Lease.
16.3 Past Due Sums; Penalty. If Tenant fails to pay, when the
same is due and payable, any Basic Annual Rent, Estimated Costs and
electrical charges within ten (10) days after the same is due and
payable, or other sum required to be paid by it hereunder, such unpaid
amounts shall bear interest from the due date thereof to the date of
payment at a fluctuating rate equal to two percent (2%) per annum above
the prime rate of interest charged by First Security Bank of Utah, Salt
Lake City, Utah. In addition thereto, Tenant shall pay a sum of two
percent (2%) of such unpaid amounts as a service fee. Notwithstanding
the foregoing, however, Landlord's right concerning such interest and
service fee shall be limited by the maximum amount which may properly
be charged by Landlord for such purposes under applicable law.
XVII. PROVISIONS APPLICABLE AT TERMINATION OF LEASE
17.1 Surrender of Premises. At the expiration of this Lease,
except for changes made by Tenant that were approved by Landlord,
Tenant shall surrender the Leased Premises in the same condition, less
reasonable wear and tear, as they were in upon delivery of possession
17
thereto under this Lease and shall deliver all keys to Landlord. Before
surrendering the Leased Premises, Tenant shall remove all of its personal
property and trade fixtures and such property or the removal thereof shall
in no way damage the Leased Premises, and Tenant shall be responsible for
all costs, expenses and damages incurred in the removal thereof. If Tenant
fails to remove its personal property and fixtures upon the expiration of
this Lease, the same shall be deemed abandoned and shall become the
property of Landlord.
17.2 Holding Over. Any holding over after the expiration of the term
hereof or of any renewal term shall be construed to be a tenancy from
month to month at such rates as Landlord may designate and on the terms
herein specified so far as possible. Landlord may not in any event raise
the rent above 110% of the last month's rent.
XVIII. ATTORNEYS' FEES
In the event that at any time during the term of this Lease either
Landlord or the Tenant institutes any action or proceeding against the other
relating to the provisions of this Lease or any default hereunder, then the
unsuccessful party in such action or proceeding agrees to reimburse the
successful party for the reasonable expenses of such action including reasonable
attorneys' fees, incurred therein by the successful party.
XIX. ESTOPPEL CERTIFICATE
19.1 Landlord's Right to Estoppel Certificate. Tenant shall, within
fifteen (15) days after Landlord's request, execute and deliver to
Landlord a written declaration, in form and substance similar to Exhibit
"D", in recordable form: (1) ratifying this Lease; (2) expressing the
Commencement Date and termination date hereof; (3) certifying that this
Lease is in full force and effect and has not been assigned, modified,
supplemented or amended (except by such writing as shall be stated); (4)
that, if true, all conditions under this Lease to be performed by
Landlord have been satisfied; (5) that there are no defenses or offsets
against the enforcement of this Lease by the Landlord, or stating those
claimed by Tenant; (6) the amount of advance rental, if any, (or none if
such is the case) paid by Tenant; (7) the date to which rental has been
paid; (8) the amount of security deposited with Landlord; and (9) such
other information as Landlord may reasonably request. Landlord's mortgage
lenders and/or purchasers shall be entitled to rely upon such
declaration.
19.2 Effect of Failure to Provide Estoppel Certificate. Tenant's
failure to furnish any Estoppel Certificate within fifteen (15) days
after request therefor shall be deemed a default hereunder and moreover,
it shall be conclusively presumed that: (a) this Lease is in full force
and effect without modification in accordance with the terms set forth in
the request; (b) that there are no unusual breaches or defaults on the
part of the Landlord; and (c) no more than one (1) month's rent has been
paid in advance.
XX. PARKING
18
Automobiles of Tenant and all visitors associated with Tenant shall be
parked only within parking areas designated by Landlord for parking. Landlord
or its agents shall, without any liability to Tenant or its occupants, have the
right to cause to be removed any automobile that may be wrongfully parked in a
prohibited or reserved parking area, and Tenant agrees to indemnify, defend and
hold Landlord harmless from and against any and all claims, losses, demands,
damages and liabilities asserted or arising with respect to or in connection
with any such removal of an automobile except due to Landlord's negligence.
Tenant shall from time to time, upon request of Landlord, supply Landlord with a
list of license plate numbers of all automobiles owned by Tenant or its day-to-
day occupant.
XXI. SIGNS, AWNINGS, AND CANOPIES
Tenant shall not place or suffer to be placed or maintained on any exterior
door, wall, or window of the Leased Premises, or elsewhere in the Building, any
sign, awning, marquee, decoration, lettering, attachment, or canopy, or
advertising matter or other thing of any kind, and will not place or maintain
any decoration, lettering, or advertising matter on the glass of any window or
door of the Leased Premises without obtaining the proper authorization from
Salt Lake County prior to installing. Tenant will otherwise be free to
install signage of its choice.
XXII.MISCELLANEOUS PROVISIONS
22.1 No Partnership. Landlord does not by this Lease, in any way or
for any purpose, become a partner or joint venturer of Tenant in the
conduct of its business or otherwise.
22.2 Force Majeure. Landlord shall be excused for the period of any
delay in the performance of any obligations hereunder when prevented from
so doing by cause or causes beyond Landlord's control, including labor
disputes, civil commotion, war, governmental regulations or controls, fire
or other casualty, inability to obtain any material or service, or acts of
God.
22.3 No Waiver. Failure of Landlord or Tenant to insist upon the
strict performance of any provision or to exercise any option hereunder
shall not be deemed a waiver of such breach by Landlord or Tenant. No
provision of this Lease shall be deemed to have been waived unless such
waiver be in writing signed by Landlord or Tenant, as the case may be.
22.4 Notice. Any notice, demand, request, or other instrument which
may be or is required to be given under this Lease shall be (i) given by
facsimile, (ii) delivered in person or (iii) sent by United States
certified or registered mail, postage prepaid and shall be addressed (a) if
to Landlord, at the place specified for payment of rent, and (b) if to
Tenant, either at the Leased Premises or at any other current address for
Tenant which is known to Landlord. Either party may designate such other
address as shall be given by written notice or by facsimile transmission.
19
Landlord: BOYER RESEARCH PARK ASSOCIATES V
C/O THE BOYER COMPANY
127 SOUTH 500 EAST, SUITE 310
SALT LAKE CITY, UTAH 84102 (801) 521-4781/FAX (801) 521-4793
ATTENTION: B. GREG GARDNER
Tenant: MYRIAD GENETICS, INC.
390 WAKARA WAY
SALT LAKE CITY, UTAH 84108 (801) 582-3400/FAX (801) 584-3640
ATTENTION: JAY MOYES
PARSONS, BEHLE & LATIMER
201 SOUTH MAIN
SALT LAKE CITY, UTAH 84111 (801) 532-1234/FAX (801) 536-6111
ATTENTION: JON BUTLER
22.5 Captions; Attachments; Defined Terms.
(a) The captions to the section of this Lease are for convenience of
reference only and shall not be deemed relevant in resolving questions of
construction or interpretation under this Lease.
(b) Exhibits referred to in this Lease, and any addendums and attached to
this Lease shall be deemed to be incorporated in this Lease as though part
thereof.
22.6 Recording. Tenant may record this Lease or a memorandum thereof
with the written consent of Landlord, which consent shall not be unreasonably
withheld. Landlord, at its option and at any time, may file this Lease for
record with the Recorder of the County in which the Building is located.
22.7 Partial Invalidity. If any provision of this Lease or the
application thereof to any person or circumstance shall to any extent be
invalid, the remainder of this Lease or the application of such provision to
persons or circumstances other than those as to which it is held invalid shall
not be affected thereby and each provision of this Lease shall be valid and
enforced to the fullest extent permitted by law.
22.8 Broker's Commissions. Tenant represents and warrants that there
are no claims for brokerage commissions or finder's fees in connection with this
Lease and agrees to indemnify Landlord against and hold it harmless from all
liabilities arising from such claim, including any attorneys' fees connected
therewith.
22.9 Tenant Defined: Use of Pronouns. The word "Tenant" shall be
deemed and taken to mean each and every person or party executing this document
as a Tenant herein. If there is more than one person or organization set forth
on the signature line as the Tenant, their liability hereunder shall be joint
and several. If there is more than one Tenant, any notice
20
required or permitted by the terms of this Lease may be given by or to any one
thereof, and shall have the same force and effect as if given by or to all
thereof. The use of the neuter singular pronoun to refer to Landlord or Tenant
shall be deemed a proper reference even though Landlord or Tenant may be an
individual, a partnership, a corporation, or a group of two or more individuals
or corporation. The necessary grammatical changes required to make the
provisions of this Lease apply in the plural sense where there is more than one
Landlord or Tenant and to corporations, associations, partnerships, or
individuals, males or females, shall in all instances be assumed as though in
each case fully expressed.
22.10 Provisions Binding, Etc. Except as otherwise provided, all
provisions herein shall be binding upon and shall inure to the benefit of the
parties, their legal representatives, heirs, successors, and assigns. Each
provision to be performed by Tenant shall be construed to be both a covenant and
a condition, and if there shall be more than one Tenant, they shall all be
bound, jointly and severally, by such provisions. In the event of any sale or
assignment (except for purposes of security or collateral) by Landlord of the
Building, the Leased Premises, or this Lease, Landlord shall, from and after the
Commencement Date (irrespective of when such sale or assignment occurs), be
entirely relieved of all of its obligations hereunder.
22.11 Entire Agreement, Etc. This Lease and the Exhibits, Riders,
and/or Addenda, if any, attached hereto, constitute the entire agreement between
the parties. All Exhibits, riders, or addenda mentioned in this Lease are
incorporated herein by reference. Any prior conversations or writings are
merged herein and extinguished. No subsequent amendment to this Lease shall be
binding upon Landlord or Tenant unless reduced to writing and signed.
Submission of this Lease for examination does not constitute an option for the
Leased Premises and becomes effective as a lease only upon execution and
delivery thereof by Landlord to Tenant. If any provision contained in the rider
or addenda is inconsistent with a provision in the body of this Lease, the
provision contained in said rider or addenda shall control. The captions and
Section numbers appearing herein are inserted only as a matter of convenience
and are not intended to define, limit, construe, or describe the scope or intent
of any section or paragraph.
22.12 Governing Law. The interpretation of this Lease shall be
governed by the laws of the State of Utah. The parties hereto expressly and
irrevocably agree that either party may bring any action or claim to enforce the
provisions of this Lease in the State of Utah, County of Salt Lake, and each
party irrevocably consents to personal jurisdiction in the State of Utah for the
purposes of any such action or claim. Each party further irrevocably consents
to service of process in accordance with the provisions of the laws of the State
of Utah. Nothing herein shall be deemed to preclude or prevent the parties
hereto from bringing any action or claim to enforce the provisions of this Lease
in any other appropriate place or forum.
21
IN WITNESS WHEREOF, the Landlord and Tenant have executed this Lease on the
day first set forth above.
LANDLORD: BOYER RESEARCH PARK ASSOCIATES V, BY
ITS GENERAL PARTNER, THE BOYER
COMPANY, L.C.
By /s/ Ken Gardner
--------------------------------------------------
KEM C. GARDNER
PRESIDENT AND MANAGER
TENANT: MYRIAD GENETICS, INC.
By /s/ Jay M. Moyes
--------------------------------------------------
Its Vice President of Finance
--------------------------------------------------
22
NOTARY
STATE OF UTAH )
) ss
COUNTY OF SALT LAKE )
On this 12th day of October, 1995, personally appeared
before me KEM C. GARDNER, who duly acknowledged to me that he executed the
foregoing Lease as the PRESIDENT AND MANAGER OF BOYER RESEARCH PARK ASSOCIATES
V, BY ITS GENERAL PARTNER, THE BOYER COMPANY, L. C., A UTAH LIMITED LIABILITY
COMPANY.
/s/ Deniese D. Balli
My commission Expires: -----------------------------------
Notary Public
4/28/97 Residing at SALT LAKE COUNTY
23
STATE OF UTAH )
) ss
COUNTY OF SALT LAKE )
On this 12th of October, 1995, personally appeared before me Jay M. Moyes
who being duly sworn, did say that he is the Vice President of Finance of Myriad
Genetics, Inc. a Utah Corporation, and that the foregoing resolution of its
Board of Directors, and said Jay M. Moyes acknowledged to me that said
corporation executed the same.
My Commission Expires: /s/ Deniese D. Balli
April 28, 1997 ----------------------------------------
______________________ Notary Public
Residing at Salt Lake County
24
This Rider is Incorporated into the Lease Agreement and Made a Part Thereof
A. Right to Lease Additional Space
-------------------------------
1. Tenant shall have the exclusive right to lease the approximate 3,610
square feet remaining on Floor One of the building on or before six
months after Lease execution on the same terms and conditions as
contained in the Lease including additional parking at a rate of
3.5/1000. Tenant shall notify Landlord of its intent to exercise this
right by written notice. Landlord shall amend the Lease to reflect the
addition of such space to the Lease Premises together with any other
revisions necessary because of such additional space being added to the
original lease premises. If Tenant fails to notify Landlord before the
three month period has elapsed, then Landlord may be free to lease the
space to a third party.
2. Tenant shall have the exclusive right to lease the Third Floor of the
building containing approximately 14,043 rentable square feet on or
before six months after Lease execution on the same terms and
conditions excepting rent which shall be at $15.00 NNN per rentable
square foot annually. Tenant shall notify Landlord of its intent to
exercise this right by written notice. Landlord shall amend the Lease
to reflect the addition of such space to the Leased Premises together
with any other revisions necessary because of such additional space
being added to the original lease premises. If Tenant fails to notify
Landlord before the six month period has elapsed, then Landlord may be
free to lease the space to a third party.
B. Ongoing Right of First Refusal
------------------------------
If, prior to the expiration or sooner termination of this Lease, any space
in the building becomes vacant and available for lease during this Lease Term,
Landlord shall notify Tenant of its availability in writing and Tenant shall
have seven (7) business days from the receipt date of Landlord's notice to
Tenant to advise Landlord in writing that Tenant accepts such space offered, in
its present condition, and agrees that it shall become a part of the Leased
Premises. The Base Rent for the space offered, and the approximate dates
possession is to be delivered shall be included in Landlord's notice to Tenant.
Tenant's obligation to commence payment of Base Rent shall occur on the earlier
of the date possession is delivered to Tenant by Landlord or Tenant occupies all
or a portion of such space and shall continue until the expiration or sooner
termination of the Lease. Any additional rental obligation of Tenant contained
in the Lease and based upon the relationship of area of the Premises to the
rentable area of the Building pursuant to Section 4.1(d) shall be adjusted to
reflect the increase in the area of the Premises. Prior to delivery of
possession Tenant shall execute an amendment to this Lease reflecting the
addition to the Premises, the additional Base Rental, the change in ratio of the
Leased Premises to the Building area and any other revisions necessary because
of such additional space being added to the original Premises. All other terms
and conditions of this Lease shall apply to the additional Premises.
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C. New Building
------------
1. If Tenant exercises the option set forth in this paragraph, Landlord
hereby agrees to construct an additional building with approximately
43,726 gross rentable square feet and related improvements upon the
additional property which is also the subject of the Ground Lease
between Landlord and the University of Utah (the "Additional Property")
which is the subject of the Ground Lease not occupied by the Building
and related improvements (the "New Building"). Such construction shall
commence after Tenant has exercised such option not earlier than two
(2) years following the date of this Agreement (the "Option Term"),
except as otherwise provided in paragraph 2 hereof. Landlord hereby
grants Tenant an option and right of first refusal to lease, at
Tenant's discretion, not less than 50% but up to 100% of the rentable
space in the New Building (the "Option Space") upon the terms set forth
in this paragraph 1. Within 18 months following the date of this
Agreement, Landlord shall provide Tenant a reasonably detailed written
summary of the proposed size, configuration and placement of the New
Building. Tenant shall have two (2) years from the date of this
Agreement to notify Landlord in writing (the "Option Notice") of its
intent to exercise its option to lease a portion of the Option Space
(the "New Space") specifying the percentage or equivalent square
footage of the Option Space which Tenant wishes to occupy. Upon the
giving of the Option Notice, Landlord and Tenant shall promptly enter
into good faith negotiations to complete a mutually acceptable lease
agreement for the New Space (the "New Lease"). The New Lease shall be
substantially identical in form to this Agreement as of the date of the
Option Notice and shall further provide that Tenant's annual lease rate
per square foot for the New Space shall be equal to 13% of the actual
Total Project Cost (as defined in Section E 3(b) of this Rider) to
build and develop the New Building, multiplied by a fraction, the
numerator of which is the gross rentable square footage of the New
Space, and the denominator of which is the total gross rentable square
footage of the New Building. Pursuant to the New Lease Tenant shall
have a right of first refusal to lease all additional portions of the
New Building not included within the New Space as the same become
available, and according to terms substantially identical to the terms
of the New Lease.
2. Notwithstanding the foregoing, Tenant shall be entitled to extend the
Option Term for one year provided that Tenant agrees to pay that
portion of the monthly ground lease due pursuant to that certain Ground
Lease Agreement between Landlord and the University of Utah which is
attributable to that portion of the Additional Property where the New
Building will be constructed.
D. Tenant's Right of First Refusal to Purchase Building
----------------------------------------------------
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Landlord grants to Tenant the right of first refusal exercisable after the
Commencement Date during the term of the Lease to purchase the Building (the
"Right of First Refusal"). If at any time after the Commencement Date during
the term of this Lease Landlord shall desire to accept an offer from a third
person to purchase the Building, it shall provide written notice of such intent
to Tenant together with a copy of the offer. Tenant shall have twenty (20) days
to elect to purchase the Building strictly upon the terms and conditions,
including price, as set forth in the offer. If Tenant does not timely exercise
the Right of First Refusal, this Right of First Refusal shall expire and
Landlord may thereafter sell the Building upon terms and conditions, including
price, which are not more favorable to the buyer that is set forth in the offer.
This Right of First Refusal shall not apply to a foreclosure sale, trustee's
sale or deed in lieu of foreclosure by or to a mortgage lender in respect of the
Building.
E. Tenant's Option to Purchase Building
------------------------------------
1. Commencing as of the Commencement Date and continuing throughout the
term of the Lease, Tenant shall have the right and option to purchase
all of Landlord's right, title and interest in the Building upon the
terms and conditions set forth in this portion of the Rider (the
"Purchase Option"). To exercise this Purchase Option, tenant shall give
written notice of exercise to Landlord in the manner provided in the
Lease. Tenant may exercise the Purchase Option only if no default, or
circumstance which with the giving of notice and/or the passage of time
would constitute a default, is then existing.
2. The Purchase Price which Tenant shall pay to Landlord for its entire
right, title and interest in the Building (the "Purchase Price") shall
be the sum of the following:
(a) The amount of any prepayment fee, premium or similar charge
incurred by Landlord in discharging any lien or encumbrance which
secures any monetary obligation on the Building.
(b) The greater of:
(i) the Fair Market Value (as defined below); and
(ii) one hundred and six percent (106%) of the Total Project Cost
(as defined below).
3. For purposes of this Purchase Option, the following terms shall have
the meanings set forth:
(a) "Fair Market Value" means the value of the Building as agreed upon
in writing by Landlord and Tenant or, if the Landlord and Tenant
cannot agree upon such value within thirty (30) days after the
Tenant exercises the
R-3
Purchase Option, then either Landlord or Tenant may nominate three
(3) qualified, independent appraisers to appraise the Building,
each of whom shall:
(i) be a member in good standing of the Utah Chapter of the
Appraisal Institute;
(ii) be state certified under the Utah Real Estate Appraiser
Registration and Certification Act; and
(iii) shall have not less than five (5) years of experience
valuing office buildings in Salt Lake County, Utah.
The other party shall then select one (1) of the nominated
appraisers to perform an appraisal to determine the Fair Market
Value of the Building. The costs and fees of the appraiser shall be
paid in equal shares by Landlord and Tenant. In determining the
Fair Market Value it shall be assumed that all liens and
encumbrances securing obligations to pay loans or other fixed or
determinable sums have been discharged.
(b) "Total Project Cost" means any and all "hard" and "soft" direct
costs and expenditures incurred by Landlord at any time in
connection with the acquisition, design or construction of the
Building, including, without limitation:
(i) all payments or obligations incurred to general and other
contractors;
(ii) all architectural, engineering and other professional fees
incurred;
(iii) all permit and license fees and other charges of
governmental authorities incurred;
(iv) all cost and expense of insurance incurred prior to the
Commencement Date;
(v) all cost incurred prior to the Commencement Date in
connection with or arising from the ground lease including,
without limitation, legal fees and survey costs;
(vi) all legal and accounting fees incurred which are
attributable to the development and construction of the
Building;
R-4
(vii) all cost incurred in connection with or arising from or in
connection with construction financing including, without
limitation, legal fees and survey costs; and
(viii) all real estate taxes and assessments (or equivalent
privilege tax), utility charges and similar costs and
expenses in respect of the Building incurred prior to the
Commencement Date.
4. The closing, pursuant to the Purchase Option, shall occur thirty (30)
days after the Purchase Price is determined. At the closing:
(a) Tenant shall pay the Purchase Price in cash.
(b) Landlord shall convey title to the Building to Tenant by special
warranty deed and shall be obligated to provide at Landlord's cost
a standard owner's policy of title insurance.
(c) Landlord shall discharge all liens and encumbrances securing
obligations to pay loans or other fixed or determinable sums or
obligations owing to mechanics or materialmen. Tenant shall take
the Building subject to all other encumbrances and exceptions of
record.
(d) Landlord shall represent and warrant to the best of its knowledge
as to customary matters involving the condition of the Building.
(e) Each of the parties shall bear its costs and attorneys' fees in
connection with the exercise and closing under the Purchase Option;
provided, Landlord shall pay the premium on the policy of title
insurance delivered to Tenant, and Landlord and Tenant shall each
pay one-half ( 1/2) of the fees of the escrow agent.
5. If the Tenant exercises the Purchase Option but timely fails to close
for any reason other than the fault of Landlord, the Purchase Option
shall thereafter expire and shall no longer be enforceable.
6. Landlord and Tenant shall jointly record a notice of this Purchase
Option and of the Right of First Refusal.
R-5
EXHIBIT 10.3
AMENDMENT TO LEASE AGREEMENT
THIS AMENDMENT TO LEASE AGREEMENT is made and entered into this 29th
day of March, 1996, by and between BOYER RESEARCH PARK ASSOCIATES V, by its
general partner, THE BOYER COMPANY, L.C. ("Landlord") and MYRIAD GENETICS, INC.
(the "Tenant").
R E C I T A L S:
WHEREAS, on the first day of October 1995, Landlord and Tenant entered
into that certain Lease Agreement (the "Lease") providing for the lease by
Landlord to Tenant of certain built to suit office space located at 350 Wakara
Way, Salt Lake City, Utah, for the rental and on the terms and conditions more
particularly set forth in said Lease; and
WHEREAS, Landlord and Tenant desire to amend the Lease in certain
respects, all as more particularly set forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree that the
Lease shall be amended as follows:
1. Article 1.1(a): The first sentence of Article 1.1(a) of the Lease
shall be amended and restated in its entirety to read as follows:
(a) That certain floor area consisting of approximately
48,483 gross rentable square feet (the "Leased Premises"),
consisting of 15,361 gross rentable square feet on Floor
One, 16,519 gross rentable square feet on Floor Two, and
16,603 gross rentable square feet on Floor Three, of the
48,483 gross rentable square feet three-story office
building (the "Building") located at approximately 350
Wakara Way in Salt Lake City, Utah on the real property
(the "Property") described on Exhibit "A" attached hereto
and by this reference incorporated herein.
2. Article 1.1(c): Article 1.1 (c) shall be amended and restated in
its entirety to read as follows:
(c) The exclusive right to use all areas designated and
suitable for vehicular parking, including the exclusive
right to the use of not less than 163 parking stalls.
3. Article 2.3 Construction of Leased Premises: The third sentence
-------------------------------
of Article 2.3 shall be amended and restated in its entirety to read as follows:
Landlord shall pay $910,778 ($22.00 per usable square
foot multiplied by 41,399 usable square feet as determined
by architect) of the cost listed (excluding cost to
construct Shell Building) and Tenant shall be obligated
for the remaining costs shown on Exhibit "E".
4. Article 3.1 Basic Annual Rent: The first sentence of Article 3.1
-----------------
shall be amended and restated in its entirety to read as follows:
Tenant has hereby exercised its right contained in the Rider
hereof to lease 100% of the Building now containing 48,483
gross rentable square feet. Tenant agrees to pay to
Landlord as basic annual rent (the "Basic Annual Rent") at
such place as Landlord may designate, without prior demand
therefore and without any deduction or setoff whatsoever,
the sum of Six Hundred Seventy Seven Thousand Six Hundred
Sixty Four Dollars ($677,664.00).
5. Article 3.1: A new sentence is hereby added at the end of the
first paragraph of Article 3.1 to read in its entirety as follows:
Landlord and Tenant understand and agree that the total
incremental dollar amount per year above the projected
ground lease payments under the Ground Lease with the
University of Utah is $10,000 per year.
6. Article 4.1(c): The second sentence of Article 4.1(c) is hereby
amended and restated in its entirety to read as follows:
The Estimated Costs for the calendar year in which the
Lease commences is $218,173.50, and are not included in
the Basic Annual Rent.
7. Article 4.1(d): Article 4.1(d) is hereby amended and restated to
read in its entirety as follows:
"Tenant's Proportionate Share of Basic Costs" shall mean
100% of Basic Costs for the Leased Premises.
8. Article 7.1: A new sentence is hereby added at the end of Article
7.1 to read in its entirety as follows:
In addition to the foregoing, Landlord has implemented
into the design and construction of the Building certain
energy saving devices and equipment the approximate cost
of which is
2
currently contemplated to be $100,000. The cost of such
energy saving devices shall be financed through an energy
service contract with PacifiCorp d/b/a Utah Power & Light
Company (the "Energy Service Contract"). Upon execution
such Energy Service Contract shall be attached as an exhibit
to this Lease. It is currently contemplated that the
monthly service charge under the Energy Service Contract
shall be $1,338, which amount shall be added to Tenant's
monthly utility bill.
9. Article 22.10: The third sentence of Article 22.10 is hereby
amended and restated in its entirety to read as follows:
In the event of a sale or assignment (except for purposes
of security or collateral) by Landlord of all of (i) the
Building, (ii) the Leased Premises, or (iii) this Lease,
to an unrelated third party (the "Buyer") reasonably
acceptable to Tenant, Landlord shall, from and after
the date of such sale or assignment, be entirely relieved
of all of its obligations under this Lease, provided
that (i) such Buyer fully assumes all of the obligations
of Landlord under this Lease, and (ii) Tenant's rights
and benefits under this Lease continue in full force
and effect following the date of such sale or assignment.
10. Exhibit "C" Work Letter, Section I, Paragraph A.: The third
sentence of paragraph I.A. of Exhibit "C" is hereby amended and restated in its
entirety to read as follows:
Without limiting the generality of the foregoing,
preliminary plans shall provide for a three (3) story
building containing 48,483 gross rentable square feet
of space and shall be generally consistent with the
conceptual plans and drawings attached hereto as
Exhibit "B" and incorporated herein (the "Conceptual
Drawings").
11. Exhibit "E": Exhibit "E" is hereby modified by changing the
square footage on the third line of Exhibit "E" from 24,476 to 48,483. A new
revised Exhibit "E" is attached hereto and incorporated herein by this
reference.
The Lease shall remain in full force and effect as herein stated
except as herein modified or amended by this Amendment to Lease Agreement.
IN WITNESS WHEREOF, this Amendment to Lease Agreement has been
executed the day and year first above written.
3
LANDLORD: BOYER RESEARCH PARK ASSOCIATES V,
by its general partner,
THE BOYER COMPANY, L.C.
/s/ Kem C. Gardner
--------------------------
By: Kem C. Gardner
President and Manager
TENANT: MYRIAD GENETICS, INC.
By: /s/ James S. Evans
---------------------
Its: Controller
---------------------
4
Exhibit 10.4
------------
MYRIAD GENETICS, INC. HAS OMITTED FROM THIS EXHIBIT 10.4 PORTIONS OF THE
AGREEMENT FOR WHICH MYRIAD GENETICS, INC. HAS REQUESTED CONFIDENTIAL TREATMENT
FROM THE SECURITIES AND EXCHANGE COMMISSION. THE PORTIONS OF THE AGREEMENT FOR
WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED ARE MARKED "[ ]" AND SUCH
CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.
March 4, 1996
Dr. Lisa Cannon-Albright
Genetic Epidemiology
University of Utah
391 Chipeta Way #D-2
Salt Lake City, Utah 84108
RE: Sub-contract titled: Isolation and Characterization of Genes
Predisposing to Cancer. University Acct. No. 5-20639
Dear Dr. Cannon-Albright:
This modification is made and entered into by and between the University of Utah
and Myriad Genetics, Inc. As the original agreement states, any extension must
be mutually agreed upon in writing between the parties.
The purpose of this modification is to approve an additional [
]
The Principal Investigator will be Lisa Cannon-Albright for this new year
funding.
Approval Signatures: Myriad Genetics, Inc.
/s/ Peter Meldrum
-------------------------------
Peter Meldrum-President
Genetic Epidemiology
/s/ Dr. Lisa Cannon-Albright
-------------------------------
Dr. Lisa Cannon-Albright
University of Utah
/s/ Robert G. Glass
-------------------------------
Acting for
Nancy V. Dyke, Associate Director
Office of Sponsored Projects
-2-
BUDGET FOR [
]
-3-
Exhibit 11.1
------------
MYRIAD GENETICS, INC.
STATEMENT REGARDING COMPUTATION OF NET LOSS PER SHARE
Three Months Ended
September 30, 1996 September 30, 1995
-------------------- --------------------
Net loss ($2,830,079) ($1,602,903)
Weighted average common shares
outstanding 8,712,829 3,560,638
Weighted average preferred shares
outstanding - 1,506,690
-------------------- --------------------
Shares used in computation 8,712,829 5,067,328
==================== ====================
Net loss per share ($0.32) ($0.32)
==================== ====================
5
3-MOS
JUN-30-1996
JUL-01-1996
SEP-30-1996
14,844,580
51,984,468
16,987
0
0
52,160,516
12,386,095
1,739,501
77,630,775
9,664,370
0
0
0
87,265
67,489,888
77,630,775
0
2,195,781
0
5,854,702
0
0
19,652
(2,830,079)
0
(2,830,079)
0
0
0
(2,830,079)
0
0
