-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, U2qRZjFdJz0Rn/ZaG/WHbBe1y2BY360X0zTg2mOXGObyVlysaPDMdbiw6nvt4Dhc kmv7abaF7VzCgk8SMKJvKw== 0000891618-97-004480.txt : 19971114 0000891618-97-004480.hdr.sgml : 19971114 ACCESSION NUMBER: 0000891618-97-004480 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971112 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: GENELABS TECHNOLOGIES INC /CA CENTRAL INDEX KEY: 0000874443 STANDARD INDUSTRIAL CLASSIFICATION: IN VITRO & IN VIVO DIAGNOSTIC SUBSTANCES [2835] IRS NUMBER: 943010150 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-19222 FILM NUMBER: 97712362 BUSINESS ADDRESS: STREET 1: 505 PENOBSCOT DR CITY: REDWOOD CITY STATE: CA ZIP: 94063 BUSINESS PHONE: 4153699500 MAIL ADDRESS: STREET 1: 505 PENOBSCOT DR CITY: REDWOOD CITY STATE: CA ZIP: 94063 10-Q 1 FORM 10-Q, PERIOD ENDED SEPTEMBER 30, 1997 1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ----------------------------- FORM 10-Q [X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended September 30, 1997. Or [ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from ________ to _________. COMMISSION FILE NO. 0-19222 GENELABS TECHNOLOGIES, INC. (Exact name of Registrant as specified in its charter) CALIFORNIA 94-3010150 (State or other jurisdiction of (I.R.S. employer identification incorporation or organization) number) 505 PENOBSCOT DRIVE, REDWOOD CITY, CALIFORNIA 94063 (Address of principal executive offices) (Zip code) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (650) 369-9500 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 [ ]. There were 39,409,576 shares of the Registrant's Common Stock issued and outstanding on October 31, 1997. ================================================================================ 1 2 PART I -- FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS GENELABS TECHNOLOGIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands)
SEPTEMBER 30, DECEMBER 31, 1997 1996 ------------- ------------ (Unaudited) (Note) Current Assets: Cash and cash equivalents $ 1,673 $ 4,377 Cash held in escrow -- 6,953 Short-term investments 21,782 19,135 -------- --------- Cash, cash equivalents and short-term investments 23,455 30,465 Accounts receivable 2,163 3,170 Inventories 2,720 3,535 Other current assets 599 726 -------- --------- Total current assets 28,937 37,896 Property and equipment, net 1,257 1,463 Investment in Genelabs Biotechnology, Ltd. 4,285 4,628 Other assets 160 132 -------- --------- $34,639 $44,119 ======== ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable and other accrued liabilites $ 4,050 $ 4,778 Accrued compensation and related expenses 1,729 1,694 Unearned contract revenue 919 1,200 -------- --------- Total current liabilities 6,698 7,672 Long-term obligations 582 523 -------- --------- Shareholders' equity Preferred stock 9,682 9,682 Common stock 137,530 129,591 Common stock to be issued -- 6,953 Accumulated deficit (119,853) (110,302) -------- --------- Total shareholders' equity 27,359 35,924 -------- --------- $ 34,629 $ 44,119 ======== =========
See notes to condensed consolidated financial statements. Note: The condensed consolidated balance sheet at December 31, 1996 has been derived from the audited financial statements at that date but does not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. 2 3 GENELABS TECHNOLOGIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) (Unaudited)
FOR THE THREE FOR THE NINE MONTHS ENDED MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ----------------- ------------------ 1997 1996 1997 1996 ------- ------- -------- ------- Revenues: Product sales $ 2,463 $ 2,863 $ 7,482 $8,576 Contract 786 243 2,342 772 ------- ------- -------- ------- Total revenues 3,249 3,106 9,824 9,348 ------- ------- -------- ------- Operating costs and expenses: Cost of product sales 1,427 1,685 4,489 4,681 Research and development 3,326 2,407 8,966 7,403 Selling, general and administrative 2,073 2,163 6,397 6,759 ------- ------- -------- ------- Total operating costs and expense 6,826 6,255 19,852 18,843 ------- ------- -------- ------- Operating loss (3,577 (3,149) (10,028) (9,495) Interest income, net 354 336 1,048 864 Equity in loss of Genelabs Biotechnology, Ltd. (114) (112) (343) (162) ------- ------- -------- ------- Net loss $(3,337) $(2,925) $ (9,323) $(8,793) ======= ======= ======== ======= Net loss per share $ (0.08) $ (0.08) $ (0.24) $ (0.25) ======= ======= ======== ======= Weighted average shares outstanding 39,329 36,356 38,841 35,438 ======= ======= ======== =======
See notes to condensed consolidated financial statements. 3 4 GENELABS TECHNOLOGIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (increase/(decrease) in cash and cash equivalents) (in thousands) (Unaudited)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, ------------------------- 1997 1996 ---------- ---------- Cash flows from operating activities: Net loss $ (9,323) $ (8,793) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization expense 434 626 Equity in loss of Genelabs Biotechnology, Ltd. 343 162 Changes in assets and liabilities: Receivables 1,007 (462) Inventories 815 39 Accounts payable, accrued liabilities, accrued compensation and long-term obligations (634) (1,006) Unearned contract revenue (281) -- Other current assets 127 (68) --------- --------- Net cash used in operating activities (7,512) (9,502) --------- --------- Cash flows from investing activities: Purchases of securities available-for-sale (12,507) (25,000) Proceeds from sales and maturities of securities available-for-sale 9,860 4,476 Capital expenditures (323) (411) Other (121) 319 --------- --------- Net cash used in investing activities (3,091) (20,616) --------- --------- Cash flows from financing activities: Payments on long-term obligations -- (3,109) Proceeds from issuance of common stock, net 7,939 11,753 --------- --------- Net cash provided by financing activities 7,939 8,644 --------- --------- Effect of exchange rate change on cash (40) 7 --------- --------- Net decrease in cash and cash equivalents (2,704) (21,467) Cash and cash equivalents, beginning of the period 4,377 22,557 --------- --------- Cash and cash equivalents, end of the period 1,673 1,090 Short-term investments, end of the period 21,782 20,524 --------- --------- Cash, cash equivalents, and short-term investments, end of the period $ 23,455 $ 21,614 ========= =========
See notes to condensed consolidated financial statements. 4 5 GENELABS TECHNOLOGIES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) SEPTEMBER 30, 1997 1. BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements include the accounts of Genelabs Technologies, Inc. and its wholly-owned subsidiaries ("Genelabs" or the "Company") after elimination of all significant intercompany accounts and transactions. These financial statements have been prepared in accordance with generally accepted accounting principles ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Certain prior year amounts have been reclassified to conform to the current year presentation. Operating results for the three or nine month periods ended September 30, 1997 are not necessarily indicative of the results that may be expected for the year ending December 31, 1997. These unaudited condensed consolidated financial statements are meant to be read in conjunction with the audited consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 1996. 2. INVENTORIES The components of inventory are as follows:
September 30, December 31, (in thousands) 1997 1996 ------------ ------------ Raw materials $ 1,398 $ 2,126 Work-in-process 623 389 Finished goods 699 1,020 ------------ ------------ $ 2,720 $ 3,535 ============ ===========
3. ISSUANCE OF COMMON STOCK In connection with a 1996 private offering, the Company agreed to issue 1,900,000 shares of Common Stock to Veron International Limited ("Veron") for net proceeds of $7.0 million, which the Company held in escrow at December 31, 1996 pending expiration or early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. In February 1997, upon termination of this waiting period, the funds held in escrow were released to Genelabs and the shares, reported as Common Stock to be Issued at December 31, 1996, were issued to Veron. 4. NET LOSS PER SHARE In February 1997, the Financial Accounting Standards Board issued Statement No. 128, " Earnings Per Share" ("SFAS No. 128"), which is required to be adopted in the Company's December 31, 1997 financial statements. SFAS No. 128 requires a change in the method currently used to compute earnings per share and also requires restatement of prior periods, excluding the dilutive effect of stock options. The requirement is expected to have no effect on Genelabs' net loss per share for the three or nine month periods ended September 30, 1997 and 1996. 5 6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS All statements in Management's Discussion and Analysis of Financial Condition and Results of Operations that are not historical are forward-looking statements which involve a number of risks and uncertainties, including, but not limited to, those statements concerning the Company's ongoing clinical trials, the U.S. Food and Drug Administration ("FDA") regulatory process, the Company's anticipated expenditures and the timing and need for additional funds. Among the factors that could cause actual results of the Company's activities to differ materially are product non-approval or delays by the FDA and foreign regulatory authorities, product development, manufacturing and market acceptance risks, the Company's early stage of development, the impact of competitive products, pricing and intellectual property rights, the results of current and future licensing and other collaborative relationships and other factors and risks detailed under the caption "Risk Factors" in the Company's 1996 Annual Report on Form 10-K and other filings with the U.S. Securities and Exchange Commission. OVERVIEW Genelabs Technologies, Inc. is a global biopharmaceutical and diagnostics company focused on gene-regulating drug discovery, infectious diseases including hepatitis and immunological disorders including lupus. Using Genelabs' core technologies and expertise in drug and viral discovery, the Company is engaged in the research and development of potential new therapeutics, diagnostic tests and vaccines, both internally and through collaborations with academic institutions and corporations. The Company's lead pharmaceutical product, GL701, is in Phase III clinical trials as a new therapy for systemic lupus erythematosus ("lupus"). The lead research program is based on a proprietary enabling technology, Merlin(TM), for creating gene-specific, small organic, DNA-binding molecules. Additional research efforts are underway in the area of genomics for the identification of novel immunomodulatory genes. The Company's wholly-owned subsidiary, Genelabs Diagnostics (Pte.) Ltd. ("GLD"), located in Singapore, sells diagnostic tests for infectious diseases primarily in Europe and Asia. Genelabs has a 40% interest in a Taiwan-based company, Genelabs Biotechnology, Ltd. ("GBL"), which is focused on late-stage development, manufacture and commercialization of newly developed or formulated pharmaceuticals for the rapidly expanding Asian market. On April 25, 1997, the Company announced preliminary results of its first Phase III trial of GL701 for lupus. The results indicated a treatment response in a group of women with clinically active lupus, which constituted a majority of patients enrolled in the study. However, when all patients were included in the analysis the study did not achieve statistical significance, as an unexpectedly high placebo response rate was observed among those patients with minimal or no disease activity at baseline. The Company submitted the data package and study report for this trial to the FDA on September 30, 1997, and has commenced discussions with the FDA concerning the trial results. The Company expects to continue to invest in biopharmaceutical product research and development. Revenue from the sale of biopharmaceutical products is not expected until the launch of its first biopharmaceutical product, which is not expected to occur for several years, if at all. The Company has several collaborations and is seeking additional collaborations with other pharmaceutical companies for some of its technologies to maximize sales of products that may result from those technologies and to obtain funding for a portion of its research and development expenses. However, Genelabs expects to continue to incur operating losses for at least the next several years. 6 7 RESULTS OF OPERATIONS Revenues Total revenues for the quarter ended September 30, 1997 were $3.2 million, compared to $3.1 million for the same period in 1996. For the nine months ended September 30, 1997, total revenues were $9.8 million compared to $9.3 million for the same period in 1996. Total revenues include diagnostic product sales and contract revenue. Diagnostic product sales were $2.5 million for the quarter ended September 30, 1997, compared to $2.9 million for the same period in 1996. For the nine months ended September 30, 1997, diagnostic product sales were $7.5 million compared to $8.6 million for the same period in 1996. The decline in diagnostic product sales for both the three and nine month periods was due mainly to lower sales of the Company's western blot products and reagents across all geographic areas. Contract revenue was $0.8 million for the quarter ended September 30, 1997, compared to $0.2 million for the same period in 1996. For the nine months ended September 30, 1997, contract revenue was $2.3 million compared to $0.8 million for the same period in 1996. Contract revenue includes licensing, milestone and research and development payments. The increase for both the three and nine month periods of 1997, compared to the same periods in 1996, was primarily due to recognition of revenue under a gene-regulating drug discovery collaboration that the Company began in January 1997. Contract revenue recognized in the future will be dependent in part upon the continuation of this agreement, achievement of milestones under this and other existing agreements and establishment of new research, development and/or licensing agreements with corporate collaborators. Cost of Product Sales Cost of product sales were $1.4 million for the quarter ended September 30, 1997, compared to $1.7 million for the same period in 1996. Gross margin increased to 42% for the third quarter of 1997 from 41% for the same period a year ago. For the nine months ended September 30, 1997, cost of product sales were $4.5 million compared to $4.7 million for the same period in 1996. Gross margins decreased to 40% for the first nine months of 1997 from 45% for the same period a year ago. The decline in gross margins was primarily due to a decline in sales of certain higher margin products combined with a lower production yield on other products earlier in the year. Research and Development Expenses The Company's research and development expenses were $3.3 million for the quarter ended September 30, 1997, compared to $2.4 million for the same period in 1996. For the first nine months of 1997, research and development expenses were $9.0 million compared to $7.4 million for the same period in 1996. The increases were primarily due to additional expenditures related to a gene-regulating drug discovery collaboration and higher patient enrollment in the Company's second Phase III trial of GL701 for lupus, partially offset by reduced spending on the hepatitis G virus program. Selling, General and Administrative Expenses Selling, general and administrative expenses were $2.1 million for the quarter ended September 30, 1997, compared to $2.2 million for the same period in 1996. For the first nine months of 1997, selling, general and administrative expenses were $6.4 million compared to $6.8 million for the same period in 1996. Reductions for both the three and nine month periods primarily reflect the Company's continuing efforts to contain operating expenses. 7 8 Net Loss The Company has operated at a loss since its inception and had an accumulated deficit of $119.7 million as of September 30, 1997. The net loss was $3.3 million for the three months ended September 30, 1997, compared to $2.9 million for the same period in 1996. For the first nine months of 1997, net loss was $9.3 million compared to $8.8 million for the same period in 1996. The increase in net loss for both the quarter and the nine months was primarily driven by an increase in research and development expenses combined with a decline in the gross profit of diagnostic products. LIQUIDITY AND CAPITAL RESOURCES The Company had cash and short-term investment balances totaling $23.5 million at September 30, 1997, compared to $30.5 million at December 31, 1996. The decrease in cash and short-term investments was primarily attributable to $7.5 million used in operations, partially offset by funds received upon exercise of stock options. The cash and short-term investments balance at December 31, 1996 included $7.0 million from a 1996 private placement that was held in escrow by the Company pending expiration or early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. These funds were released to the Company in February 1997 and are shown as proceeds from issuance of common stock in the accompanying Condensed Consolidated Statement of Cash Flows. The Company has funded its operations since inception primarily through public and private offerings of its equity securities, contract revenues and product sales. The Company has no bank debt or open credit lines. Genelabs expects to incur substantial additional costs, including costs for clinical trials of product candidates and costs for further research on gene-regulating drug discovery. The amount of the additional costs, as well as increased expenditures necessary for working capital and capital requirements, will depend on numerous factors including the timing and outcome of any clinical trials and regulatory actions related to the Company's products. In addition, funding requirements will depend on the progress of the Company's research and development programs as well as its ability to establish and maintain collaborations with other pharmaceutical companies to fund these programs. The Company anticipates that its current resources and expected revenues from existing collaborative agreements will enable it to maintain its current and planned operations at least through 1998. The Company anticipates realizing a net loss at least through 1998, and profitability thereafter is subject to significant uncertainty. There can be no assurance that revenues from product sales or royalties or from other sources will be sufficient to fund operations or that the Company will achieve profitability or positive cash flow. Additional financing may be required to fund the Company's continuing operations and research and development activities in the form of debt or equity securities, which may result in substantial dilution to existing shareholders. There can be no assurance that such financing will be available on acceptable terms, if at all. The unavailability of such financing could delay or prevent the development, testing, regulatory approval, manufacturing or marketing of some or all of the Company's products and technologies and could have a material adverse effect on the Company's business, financial condition and results of operations. The foregoing are forward looking statements which involve a number of risks and uncertainties. 8 9 CERTAIN BUSINESS RISKS Genelabs is at an early stage of development. The Company has experienced significant operating losses since its inception and expects to incur significant operating losses over the next several years. The development of the Company's proposed products will require a commitment of substantial funds to conduct these costly and time-consuming activities. The Company's technologies, including DNA-binding and gene regulating drug discovery technology, are in many cases new and still under development. All of Genelabs' proposed therapeutic products, including GL701 for the treatment of lupus, are in research or development and will require substantial additional research and development efforts prior to any commercial use, including extensive clinical testing as well as potentially lengthy regulatory approval. Genelabs currently is seeking additional drug discovery research collaborations using its gene regulating technology with various pharmaceutical companies. No assurance can be given as to the ability of the Company to complete an agreement with such a collaborator on a timely basis or at all. On April 25, 1997, the Company announced preliminary results of its first Phase III trial of GL701 for lupus. The results indicated a treatment response in a group of women with clinically active lupus, which constituted a majority of patients enrolled in the study. However, when all patients were included in the analysis the study did not achieve statistical significance, as an unexpectedly high placebo response rate was observed among those patients with minimal or no disease activity at baseline. The Company submitted the data package and study report for this trial to the FDA on September 30, 1997, and has commenced discussions with the FDA concerning the trial results. The Company currently is conducting a second Phase III clinical trial for GL701. No assurance can be given as to the results of these trials, the safety or efficacy of this drug candidate or, in any event, the ability of Genelabs to obtain regulatory approval for the commercialization of the drug candidate. The active ingredient in GL701 is dehydroepiandrosterone ("DHEA"). DHEA is currently being marketed by others as an over the counter dietary supplement. The Company believes that DHEA is a drug that is subject to regulation and approval by the FDA. The Company further believes that in several instances these supplements do not contain true DHEA, but instead contain related substances that are not biologically equivalent. However, to date the FDA has taken no action to limit or regulate the sale of these dietary supplements, and no assurance can be given as to the willingness or ability of the FDA to do so in the future. In the event that clinical trials for GL701 are promising and the drug candidate receives FDA marketing approval, the concurrent sale of these dietary supplements could adversely affect the market for or selling prices of GL701. The Company is continuing limited research and development efforts related to the hepatitis G virus. While the presence of this virus has been detected in blood samples contained in the U.S., Europe, Japan and elsewhere, the Company and its collaborators are still seeking to determine the nature and severity of any diseases specifically caused by HGV. In order to test for HGV generally in the blood banks, the Company and its licensors are continuing efforts to develop a serological assay. To date, no such assay has been introduced. The Company has only limited sales, marketing and distribution capabilities. If the Company successfully develops any new products, Genelabs must either rely on large pharmaceutical companies to market such products or must develop a marketing and sales force with technical expertise and supporting distribution capability in order to market such products directly. Also inherent in the Company's stage of development is a range of additional risks, including competition, uncertainties regarding protection or patents and proprietary rights and the possibility of infringement of the proprietary rights of others, government regulation, and uncertainties regarding health care reform. 9 10 PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) EXHIBITS 10.36 Amendment to Industrial Net Lease Agreement by and between Registrant and Metropolitan Life Insurance Company dated June 17, 1997. 10.37 Amendment to Tenancy Agreement for Research Unit(s) at Singapore Science Park, by and between Technology Parks Private Limited and Genelabs Diagnostics (Pte.) Ltd. dated July 8, 1997. 10.38 Registrant's 1995 Stock Option Plan, as amended to date. 27 Financial Data Schedule. (b) REPORTS ON FORM 8-K During the quarter ended September 30, 1997, the Company filed no current reports on Form 8-K. 10 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. GENELABS TECHNOLOGIES, INC. (Registrant) Chief Executive Officer: /s/ IRENE A. CHOW Date: November 7, 1997 ----------------------------------- IRENE A. CHOW President and Chief Executive Officer Principal Accounting Officer: /s/ MATTHEW M. LOAR Date: November 7, 1997 ----------------------------------- MATTHEW M. LOAR Director of Finance and Controller 11 12 EXHIBIT INDEX EXHIBIT NO. DESCRIPTION - ----------- ----------- 10.36 Amendment to Industrial Net Lease Agreement by and between Registrant and Metropolitan Life Insurance Company dated June 17, 1997. 10.37 Amendment to Tenancy Agreement for Research Unit(s) at Singapore Science Park, by and between Technology Parks Private Limited and Genelabs Diagnostics (Pte.) Ltd. dated July 8, 1997. 10.38 Registrant's 1995 Stock Option Plan, as amended to date. 27 Financial Data Schedule. 12 EX-10.36 2 AMENDMENT TO INDUSTRIAL NET LEASE AGREEMENT 1 Exhibit 10.36 FOURTH AMENDMENT TO LEASE TO GENELABS TECHN0LOGIES, INC. This Fourth Amendment to Office Lease ("Amendment") is entered into, and dated for reference purposes, as of ___/s/ June 17th______, 1997 by and between METROPOLITAN LIFE INSURANCE COMPANY, a New York corporation (herein referred to as "Landlord" or "Met"), as Landlord, and GENELABS TECHN0LOGIES, INC., a California corporation, as Tenant (herein referred to as "Tenant" or "Genelabs"), with reference to the following facts: RECITALS A. Tenant's predecessor in interest as Lessee (Gene Labs, Inc.) and Met's predecessor in interest as Lessor (Seaport Centre Venture Phase II, a California general partnership) entered into that certain written Five-Year Industrial Net Lease Agreement (the "Original Lease"), dated July 29, 1986 naming Lincoln Property Company N.C., Inc., as Manager and Agent for Owner as Lessor, for certain Premises referred to as 505 Penobscot Drive, Redwood City, California, in Phase II of the Project known as Seaport Centre, all as more particularly described in the Original Lease. The Original Lease was amended by that First Amendment to Industrial Net Lease Agreement dated as of March 23, 1987 (the "First Amendment") and by that Second Amendment to Industrial Net Lease Agreement dated as of September 4, 1987 (the "Second Amendment") and by that Third Amendment to Five-Year Industrial Net Lease Agreement dated June 10, 1992 (the "Third Amendment"). The Original Lease, as amended, is referred to herein as the Lease. B. Landlord and Tenant now desire to modify and amend the Lease to provide for an extension of the term and additional matters, all as more particularly provided herein. NOW, THEREFORE, in consideration of the foregoing, and of the mutual covenants set forth herein and of other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: Section I. Defined Terms. All capitalized terms not otherwise defined herein have the meanings set forth in the Lease unless the context clearly requires otherwise. Section 2. Tenant's Interest Under The Lease. Genelabs represents and warrants that it: (a) holds all right, title and interest of Tenant under the Lease; and (b) has not entered into any assignment of the Lease, and no sublease or other agreement for use or occupancy of the Premises or any part thereof is in effect. Tenant's obligations with respect to the representations, warranties and agreements under this Section survive the expiration or sooner termination of the Term of the Lease. Section 3. Extension of Term. Landlord and Tenant acknowledge and agree that notwithstanding any provision of the Lease to the contrary, the current Term of this Lease will expire on November 30, 1997, and that the Term is hereby extended for the "Extended Term" commencing on December 1, 1997 (the "Extended Term Commencement Date"), immediately upon expiration of the current Term, and expiring on November 30, 2002, unless sooner terminated pursuant to the terms of the Lease. This extension is with respect to the entire Premises. This extension is further upon and subject to the same conditions, terms, covenants and agreements contained in the Lease except as otherwise provided in this Amendment. Landlord and Tenant acknowledge and agree as follows: (a) this Amendment provides all rights and obligations of the parties with respect to extension of the Term, whether or not in accordance with the provisions of the Option to Renew granted to Tenant in Section 3 of Addendum II to the Original Lease; (b) upon execution hereof, the Option to Renew and any prior exercise thereof is null, void and of no force or effect; and (c) such Option to Renew is hereby deleted in its entirety from the Lease. Section 4. Condition; Acceptance by Tenant. Tenant hereby accepts the Premises in its "as is" condition and accepts the Premises and the Project as being in satisfactory condition and in the condition in which Landlord is obligated to deliver them in connection with the extension of the Term, and Tenant hereby acknowledges and agrees that Tenant is in occupancy of the Premises and that, except for any ongoing obligations of Landlord to maintain and repair as provided in the Lease, in connection with the extension of the Term Landlord has no obligation to repaint, recarpet, remodel, improve, alter or 1 2 remediate any condition in the Premises or the Project or to provide Tenant any free rent or allowance to repaint, recarpet, remodel, improve, alter, or remediate any condition in the Premises. Section 5. Monthly Base Rent During Extended Term. Notwithstanding any provision of the Lease to the contrary, the amount of base rent due and payable by Tenant monthly for the Premises during the Extended Term is as follows:
Monthly from/to Monthly Monthly Rate/RSF - ----------------------- ---------- ---------------- 12-01-1997 - 11-30-1998 $65,862.45 $1.35 12-01-1998 - 11-30-1999 $68,301.80 $1.40 12-01-1999 - 11-30-2000 $70,741.15 $1.45 12-01-2000 - 11-30-2001 $73,180.50 $1.50 12-01-2001 - 11-30-2002 $78,059.20 $1.60
Section 6. Tenant's Financial Statements. Within ten (10) days after Landlord's written request, Tenant shall deliver to Landlord, or to any actual or prospective mortgagee or beneficiary or purchaser that Landlord designates, audited annual and, if available, quarterly financial statements as are reasonably required by any of them to verify the financial condition of Tenant, or any subtenant or guarantor of Tenant, to facilitate the financing or refinancing of all or part of the Project or the creation, extension or renewal of any underlying or ground lease affecting all or part of the Project. Tenant represents and warrants to Landlord and any such recipient that each financial statement delivered by Tenant shall be accurate in all material respects as of the date of such statement. Landlord shall treat such financial statements as confidential and shall use them only for the purposes stated herein. Section 7. Security Deposit. Notwithstanding any provision of the Lease to the contrary, Landlord and Tenant confirm and agree as follows with respect to the Security Deposit held by Landlord pursuant to the Lease, including, without limitation, Paragraph 6 of the Original Lease, as amended by Paragraph 5 of the First Amendment and Paragraph 6 of the Second Amendment: (a) Landlord currently holds a total of Thirty-five Thousand Four Hundred and Forty-one Dollars ($35,441.00) in the amount deposited by Tenant pursuant to the Second Amendment; (b) the additional amounts set forth pursuant to Paragraph 6 of the Original Lease, as amended by Paragraph 5 of the First Amendment, have been returned by Landlord to Tenant by refund of the cash portion of such amount and by not requiring renewal of the expired letter of credit for the balance of such amount, and Landlord has no further obligation to Tenant for refund or return of any amount in excess of Thirty-five Thousand Four Hundred and Forty-one Dollars ($35,441.00); (c) the Lease is hereby amended to provide that the security deposit required is a total of Thirty-five Thousand Four Hundred and Forty-one Dollars ($35,441.00); and (d) the last grammatical paragraph of Paragraph 6 of the Lease is hereby deleted. Section 8. Amendment of Paragraph 17 of the Original Lease. The last sentence of Paragraph 17 of the Original Lease is hereby amended by deleting the last two lines thereof reading "resulting from the acts or omissions of Lessor or its authorized representatives" and inserting in its place "resulting from the negligent acts or omissions of Lessor or its authorized representatives". Section 9. Amendment of Paragraph 18 of the Original Lease. The last sentence of Paragraph 18 of the Original Lease is hereby amended by deleting the last two lines thereof reading "from the acts or omissions of Lessor or its authorized representatives" and inserting in its place "from the negligent acts or omissions of Lessor or its authorized representatives". Section 10.Change of Address for Notices to Landlord. Notwithstanding any provision of the Lease to the contrary: (a) notices which either party desires or is required to give the other may additionally be sent via reputable overnight national delivery service maintaining records of receipts, delivery and attempts at delivery, and (b) the current addresses for notices to be sent to Landlord under the Lease and for payments to Landlord pursuant to the Lease are changed to the following (the first address being the address for payments): 2 3 Addresses for notices to Landlord: Metropolitan Life Insurance Company c/o Lincoln Property Company 101 Lincoln Centre Drive, Fourth Floor Foster City, CA 94404 Attention: Director of Property Management Seaport Centre with copies to the following: Metropolitan Life Insurance Company 101 Lincoln Centre Drive, Suite 600 Foster City, CA 94404 Attention: Assistant Vice President and Metropolitan Life Insurance Company 101 Lincoln Centre Drive, Suite 600 Foster City, CA 94404 Attention: Associate General Counsel Section 11. Time of Essence. Without limiting the generality of any other provision of the Lease, time is of the essence to each and every term and condition of this Amendment. Section 12. Brokers. Notwithstanding any other provision of the Lease to the contrary, Landlord and Tenant each warrants that it has had no dealings with any real estate broker or agent in connection with this Amendment except for the brokers listed below, and it knows of no other real estate broker or agent who is entitled to a commission in connection with this Amendment. Landlord agrees to pay any commission to which the brokers listed below are entitled in connection with this Amendment pursuant to Landlord's written agreement with such brokers. Tenant agrees to indemnify and defend Landlord and hold Landlord harmless from any claims for brokerage commissions arising out of any discussion allegedly had by Tenant with any broker not listed below. The referenced brokers are Lincoln Property and Cornish & Carey. Section 13. Attorneys' Fees. In the event that either Landlord or Tenant fails to perform any of its obligations under this Amendment or the Lease or in the event a dispute arises concerning the meaning or interpretation of any provision of this Amendment or the Lease, the basis of the dispute shall be settled by judicial proceedings. In the event any party brings any suit or other proceeding with respect to the subject matter or enforcement of this Lease, the prevailing party (as determined by the court, agency or other authority before which such suit or proceeding is commenced) shall, in addition to such other relief as may be awarded, be entitled to recover reasonable attorneys' fees, expenses and costs of investigation as actually incurred, including court costs, expert witness fees, costs and expenses of investigation, and all reasonable attorneys' fees, costs and expenses in any such suit or proceeding (including in any action or participation in or in connection with any case or proceeding under the Bankruptcy Code, 11 United States Code Sections 101 et seq., or any successor statutes, in establishing or enforcing the right to indemnification, in appellate proceedings, or in connection with the enforcement or collection of any judgment obtained in any such suit or proceeding). Section 14. Force and Effect. Except as modified by this Amendment, the terms and provisions of the Lease are hereby ratified and confirmed and shall remain in full force and effect. Should any inconsistency arise between this Amendment and the Lease as to the specific matters which are the subject of this Amendment, the terms and conditions of this Amendment shall control. This Amendment shall be construed to be a part of the Lease and shall be deemed incorporated in the Lease by this reference. Section 15. Entire Agreement; Amendment. The Lease, as amended by this Amendment constitutes the full and complete agreement and understanding between the parties hereto and shall supersede all prior communications, representations, understandings or agreements, if any, whether oral or written, concerning the subject matter contained in the Lease as so amended, and no provision of the Lease as so amended may be modified, amended, waived or discharged, in whole or in part, except by a written instrument executed by all of the parties hereto. 3 4 Section 16. Effect of Headings. The titles or headings of the various Sections hereof are intended solely for convenience and are not intended and shall not be deemed to or in any way be used to modify, explain or place any construction upon any of the provisions of this Amendment. Section 17. Authority. Each person executing this Amendment represents and warrants that he or she is duly authorized and empowered to execute it, and does so as the act of and on behalf of the party indicated below. IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first set forth above. TENANT: GENELABS TECHN0LOGIES, INC., a California corporation By: /s/ James A.D. Smith ---------------------------------- Print Name: James A.D. Smith -------------------------- Its: Chief Operating Officer -------------------------------- (Print Title) LANDLORD: METROPOLITAN LIFE INSURANCE COMPANY, a New York corporation By: /s/ Edward J. Hayes ---------------------------------- Print Name: Edward J. Hayes -------------------------- Its: Assistant Vice President --------------------------------- (Print Title) 4 23 EX-10.37 3 AMENDMENT TO TENACY AGREEMENT W/ TECHNOLOGY PARKS 1 EXHIBIT 10.37 TENANCY AGREEMENT FOR RESEARCH UNITS(S) AT SINGAPORE SCIENCE PARK PARTIES THIS AGREEMENT is made the 8th day of July 1997 Between ARCASIA LAND PTE LTD (formerly known as TECHNOLOGY PARKS PRIVATE LIMITED) a company incorporated under the Companies Act, Chapter 50 and having its registered office at 77 Science Park Drive #04-01/06, CINTECH III, Singapore Science Park, Singapore 118256 (hereinafter called "the Landlord") of the one part and GENELABS DIAGNOSTICS PTE. LTD. a company incorporated in Singapore and having its registered office at 85 Science Park Drive #04-01 The Cavendish, Singapore Science Park Singapore 118259 (hereinafter called "the Tenant" which expression shall where the context so admits include its successors-in-title and permitted assigns) of the other part. WITNESSETH as follows: 1. The Landlord hereby lets and the Tenant hereby takes ALL that portion of the 4th storey(s) of the Building known as The Cavendish (hereinafter called "the Building") within the Singapore Science Park (hereinafter called "the Park") containing an approximate are of 975.10 square metres (which area may be adjusted on completion of survey, if any) as more particularly delineated and edged red on the plan annexed hereto and indicated as #04-05 to #04-08 (which portion is hereinafter called "the Demised Premises") TOGETHER with all the fixtures and fittings therein installed and with the use for the Tenant his servants and visitors of the lifts and the entrances, staircases, corridors and passages and accesses to the Building for the purpose only of ingress and egress to and from the Demised Premises with or without parcels and packages TO HOLD the same UNTO the Tenant for the term of 23 months from the 1st day of May 1997 (hereinafter called "the said term") YIELDING AND PAYING therefore during the said term the rent (hereinafter called "the said rent") of Dollars Thirty Seven Thousand Two Hundred & Cents Seven ($37,200.07) per month or in proportion in the case of any period less than a month calculated at a rate of Dollars Thirty Eight & cents Fifteen ($38.15) per square metre per month to be paid, without any deductions and in advance without 1 2 demand, on the 1st day of each of the calendar months of the year (i.e., the 1st days of January, February, March, etc.) the first of such payments to be made on the 1st day of May 1997. 2. The Tenant hereby covenants with the Landlord as follows: (1) To pay the said rent on the days and in the manner aforesaid by way of GIRO and in other similar manner as prescribed by the Landlord from time to time. (2) To pay in addition to the said rent during the said term the sum of Dollars Two Thousand One Hundred & Forty Five & Cents Twenty Two ($2,145.22) per month calculated at the rate of Dollars Two & Cents Twenty ($2.20) per square metre per month in advance on the same dates and in the same manner as for the said rent as charges (hereinafter called "the service charge") for the maintenance of the areas designated by the Landlord as common areas (hereinafter called "the common area"), PROVIDED THAT if the cost of maintenance and services shall increase, the Landlord may revise the service charge and on serving a notice in writing to the Tenant to this effect such revised service charge shall be payable as from the date specified in the said notice. (3) (i) To pay a cash deposit equivalent to three (3) months' rent and service charge on or before the execution of this Agreement or commencement of the said term whichever is earlier, as security against breach by the Tenant of any of the terms, covenants and stipulations herein contained which cash deposit shall be maintained at this figure during the said term and shall be repayable without interest on the determination of this tenancy subject however to an appropriate deduction as damages in respect of any or all such breach or breaches. (ii) In the event of an increase in the service charge in accordance with Clause 2 (2) hereof, to pay the amount of such increase so that the cash deposit or security stipulated in clause 2(3)(i) shall at all times be equal to three (3) months said rent and service charge. (4)(i) To pay a cash deposit (hereinafter called "the renovation deposit") at the rate of $3.00 per square metre of the Demised Premises subject to a minimum sum of S$500.00 and a maximum sum of S$3000.00 before the commencement of any renovation works to the Demised Premises by the Tenant including any additions or alternations to any existing renovation, as a security against any damages incurred by reason of any damage caused to the Demised Premises or any part of the Building during the course of such 2 3 renovation works and for the costs and expenses incurred by the Landlord in the disposal of all debris and waste materials resulting from the Tenant's renovation works which renovation deposit shall be repayable without interest upon completion of such renovation works and the submission to the Landlord of all plans duly approved by the relevant government authorities. An appropriate deduction will be made for any damages caused to the Demised Premises or any part of the building during the course of such renovation works. (ii) If the renovation deposit is insufficient to cover the damages and costs and expenses incurred, the Landlord may serve upon the Tenant a notice in writing specifying the amount outstanding after such set-off of the renovation deposit and the Tenant shall pay such amount within 7 days from the date of such notice. (5)(i) During the said term or any extension or renewal thereof to pay any increase of property tax which may be imposed whether by way of an increase in the annual value or an increase in the rate per cent. For the purpose of ascertaining the additional amount payable under this clause any such increase in property tax shall be apportioned in the same proportion as the floor area of the Demised Premises bears to the total area of the rentable floor space in the Building. (ii) The Tenant shall pay and indemnify the Landlord against Goods and Services Tax ("GST") or any tax of a similar nature that may be substituted for it or levied in addition to it chargeable in respect of any payment to be made by the Tenant under any of the terms of or in connection with this Agreement or in respect of any payment made by the Landlord where the Tenant agrees in this Agreement to reimburse the Landlord for such payment including any GST levied on any legal costs. (6) To pay all charges and outgoings whatsoever in respect of the supply of electricity, water, gas and any water-borne sewerage system charged by Power Supply Ltd. and other relevant Government and statutory bodies or authorities used by the Tenant at the Demised Premises as shown by the separate meters belonging thereto and also to pay all charges for the use and maintenance of such meters PROVIDED ALWAYS that subject to the prior written consent of the Landlord and to all approvals being obtained by the tenant from the relevant authorities the water sub-meter will be installed in the Demised Premises by Tenant at his own cost. 3 4 (7) At all times to use the Demised Premises for the purpose of PRODUCT DEVELOPMENT OF SEROLOGICAL TESTS FOR VIRUS DETECTION DIAGNOSIS AND POTENTIAL HUMAN VACCINES AND FOR OTHER RELATED PURPOSE ONLY and for no other purpose whatsoever. (8) The Tenant shall accept the Demised Premises in its existing state and condition and shall be deemed to have full knowledge of all structural, mechanical and electrical specification(s) of the Demised Premises as imposed by the Landlord. (9)(i) To submit all information and details on the use of the Demised Premises as stipulated in Clause 2(7) hereof and waste water discharge originating from the Demised Premises, to the Sewerage Department and other relevant Government and statutory bodies or authorities for consideration and clearance in writing before undertaking such use and discharge. (ii) Subject to Clause 2(22) hereof at his own costs and expense to install such additional plumbing and sanitary works including the installation of a water meter for such additional water supply as may be required by him. In connection therewith, the Tenant shall comply with all requirements of the Public Utilities Board including the installation, of constant flow regulators for laboratory operations and self-closing delayed action taps for toilet use rated at not more than: (a) 8 litres per minute at all basins; and (b) 12 litres per minute at all sink taps and shower taps. The timing of the self-closing delayed action taps for toilet use shall be 3 seconds and 15 seconds for all basins and shower taps respectively. The Tenant shall comply with any changes made by the PUB to the above specification from time to time. (iii) In connection with Clause 2(9)(ii), to maintain at his own cost the water supply pipes installed by the Tenant in the Demised Premises. (iv) To recycle at his own cost all water which is used for cooling purposes. (v) To install at his own cost spring loaded nozzles at all rubber hose except the rubber hose for fire fighting purposes. (vi) Not to tap or use or permit to be tapped or used for any purpose whatsoever any water from any source or supply other than that arranged and paid by the Tenant in accordance with Clauses 2(6). 4 5 and 2(9)(ii) hereof and in the event of each default of this covenant, to forthwith pay to the Landlord an administrative fee of Dollars Two Hundred Only ($200/-) and such sums as shall be estimated by the Landlord to be the charges and outgoings attributable to such tappings or usage, and the said sums estimated by the Landlord shall be final and conclusive as to the amount due from the Tenant to the Landlord. (10)(i) Not to place or cause or permit or suffer to be placed any article, machinery or load in excess of 12.5 kiloNewtons per square metre on the floor slab of the Demised Premises. (ii) Not to place or allow to be placed in the lifts of the Building any article machinery or load in excess of 2500 kilograms. (11)(i) To keep the interior of the Demised Premises including but not limited to the drains and sanitary and water apparatus and the Landlord's fixtures and fittings, if any, therein and the doors and windows thereof in good and tenantable repair and condition throughout the said term (fair wear and tear and subject and without prejudice to Clause 2(22), damage by fire alone excepted) PROVIDED THAT the Tenant shall take all reasonable measures and precautions to ensure that any damage, defect or dilapidation which has been or at any time shall be occasioned by fair wear and tear shall not give rise to or cause or contribute to any substantial damage to the Demised Premises. (ii) Without prejudice to Clause 2(7) and subject to Clause 2(12) hereof, to compartmentalise and separate the office from the laboratory and, research areas, if any, to comply with fire safety regulations. (12)(i) Not to erect any structure or to make or cause to be made any alterations in or additions to the internal construction or arrangements or in the external appearance or in the present scheme of design or decoration of the Demised Premises of any kind or description without first submitting lay-out or other plans (prepared by the relevant professional or competant person employed with the Landlord's approval at the Tenant's own cost and expense) as may be required and obtaining the prior written consent of the Landlord and the relevant Governmental and statutory bodies or authorities PROVIDED THAT on the granting of such consent and without prejudice to other terms, covenants, and stipulations which may be imposed: 5 6 (a) Before the commencement of any alteration works to the Demised Premises, the Tenant shall pay the Landlord a cash deposit (hereinafter called "the reinstatement deposit") of such amount as the Landlord may deem sufficient as a security against breach by the Tenant of Clause 2(39) hereof which the reinstatement deposit shall be repayable without interest on the determination of this tenancy subject however to an appropriate deduction for damages and costs and expenses of cleaning restoration or decoration effected by the Landlord; (b) the Tenant shall not use any flammable building materials for internal partitioning; (c) the Tenant shall at all times maintain at his own cost the structures, alterations or additions to the Demised Premises in good order and condition; and (d) the hacking of structural concrete floors, walls or any other structural elements is not permitted except with the prior written consent from the Landlord. (12)(ii) No hacking of openings within the Demised Premises is allowed. The hacking of openings in or about the Demised Premises may be allowed with the prior written consent of the Landlord and the relevant authorities. In applying for the Landlord and the relevant authorities' approval the Tenant shall submit drawings of the openings (together with such information as the Landlord may require) duly certified by a qualified professional engineer, approved by the Landlord, that the structural integrity of the system of the Demised Premises will be maintained. (13)(i) Not to install or use any electrical or mechanical installation, machine or apparatus that may cause or causes heavy power surge, high frequency voltage or current, air borne noise, vibration or any electrical or mechanical interference or disturbance whatsoever which may prevent or prevents in any way the service or use of any communication system or affects the operation of other equipment, installations, machinery, apparatus or plants of other Tenants, licensees or lessees of the Landlord or occupants of adjoining or neighbouring premises or inhabitants of the neighbourhood and in connection therewith, to allow the Landlord or any authorised person at all reasonable times to inspect such installation, machine or apparatus in the Demised Premises to determine the source of the interference or disturbance and 6 7 thereupon, to take suitable measures, at the Tenant's own cost and expense to eliminate or reduce the interference or disturbance to the Landlord's satisfaction, if it is found by the Landlord or such authorised person that the Tenant's electrical or mechanical installation, machine or apparatus is causing or contributing to the said interference or disturbance, notwithstanding that prior written consent has been given by the Landlord for such installation. (ii) Without prejudice to the generality of Clause 2(13)(i) to install at his own expense a power line conditioner or voltage regulator or any additional electrical equipment to reduce or remedy any electrical current surge or voltage fluctuation that may arise. (iii) The Tenant shall fully and effectually indemnify and keep the Landlord indemnified and hold the Landlord harmless against any and all demands claims losses damages injuries liabilities costs expenses actions or proceedings whatsoever (whether based on negligence, strict liability or other grounds) which may be made or taken against the Landlord by any person or which may be suffered by the Landlord or which may become payable by the Landlord to any person including any claims against the Landlord for consequential loss or damage or loss of profits arising from or by reason of a failure on the part of the Tenant to observe or to perform Clause 2 (13)(i) above. person including any claims against the Landlord for consequential loss or damage or loss of profits arising from or by reason of a failure on the part of the Tenant to observe or to perform Clause 2(13)(i) above. (iv) Without prejudice to the generality of Clause 2(13)(iii) above, the Tenant shall fully and effectually indemnify and keep the Landlord indemnified against all costs incurred in any works in the Building arising from or by reason of a failure on the part of the Tenant to observe or to perform Clause 2(13)(i) above. (14) In addition to Clause 2(13), not to install or cause or permit to be installed any air-conditioning, mechanical ventilation, extractor fans, flue or any machinery, apparatus, fixtures or fittings, or extend, supplement, replace or modify the same or any existing machinery, apparatus, fixtures or fittings in or about the Demised Premises without the prior written consent of the Landlord and the relevant Governmental and statutory bodies or authorities having been first obtained PROVIDED THAT: 7 8 (a) prior to the commencement of all such works as shall be permitted the Tenant shall submit to the Landlord and relevant Governmental and statutory bodies for their written approval, appropriate layout and detailed plans, including design calculations, if any, and if so required, separate detailed building envelope plans and calculations on Overall Thermal Transfer Value (OTTV) of the Demised Premises; (b) all such plans and calculations shall be prepared, and all such works as shall be permitted shall be carried out by professional or competent persons as approved by the Landlord and employed by the Tenant at his own cost and expense; and (c) All debris and waste materials of whatever nature resulting from the aforesaid works shall be disposed by the Tenant in a manner prescribed by the Landlord failing which the Landlord reserves the right (without being under any obligation to do so) to dispose of the same and all costs and expenses incurred by the Landlord in this respect shall be a debt due from the Tenant to the Landlord and shall be paid by the Tenant to the Landlord within seven (7) days of the Landlord notifying the Tenant of the amount thereof. (15) To install electrical switch board wirings and equipment to the Demised Premises including the following electrical protective devices, all at the Tenant's own cost and expense, subject to the prior approval in writing of the Landlord: (a) Overcurrent protective devices in the Landlord's Switch Room; (b) Overcurrent and earth-leakage protective devices in the Demised Premises; PROVIDED THAT- (i) the Tenant shall submit 4 sets of electrical singleline diagram of the Demised Premises wirings for the approval in writing of the Landlord prior to the actual installation of the wiring; and (ii) it shall be the responsibility of the Tenant to keep all or any of the aforesaid switch board wirings, equipment and devices installed by the Tenant in good condition at all times. (16) To install where necessary and at the Tenant's own cost and expense to maintain exit lightings and exit signs at staircases, exit passage ways and the exits of the Demised Premises in accordance with the requirements of the Building Control Division and other relevant Governmental and statutory bodies or authorities. 8 9 (17) Subject to Clauses 2(13) and 2(14) and without prejudice to the generality of the same, the Tenant shall, at his own cost and expense to: (i) install an air-conditioning package unit including any wiring fixtures and fittings thereof to air-condition the Demised Premises; (ii) if the whole of the Demised Premises or any part thereof is without prejudice to clause 2(7), permitted to be used as a laboratory, computer/ control room, coldroom or for purposes requiring low temperature or 24 hours air-conditioning with resulting moisture condensation on the external walls, ceilings, or floors, or within the Demised Premises, install adequate thermal insulations to the external walls, floors and ceilings provided that prior to such installation, the Tenant shall obtain the Landlord's approval in writing for the proposed thermal insulation method. (18) Without prejudice to the generality of Clause 2(13) and 2(14), the Tenant shall at his own cost and expenses, carry out such modification work on the existing fire alarm installations, wirings, fixtures, fittings and other fire-fighting equipment in the Demised Premises as shall be necessary to suit the Tenant's operations, including the installation of a 13 Amp. power switch socket outlet immediately adjacent to the charger of the battery of the alarm-system if so required and, additional wirings, fixtures, fittings and other fire-fighting equipment, and connections of the fixtures to the Landlord's common fire-alarm system, to the satisfaction of the Landlord PROVIDED THAT: (a) the Tenant shall, prior to the commencement of the modification work, submit to the Landlord for his approval 4 copies of the fire alarm drawings of the Demised Premises, indicating the existing fixtures, fittings and other fire-fighting equipment, the proposed modifications, and the layout of the Tenant's machinery and apparatus; (b) the Tenant shall ensure that the existing fire-alarm installations, wirings, fixtures, fittings and other fire-fighting equipment and any additional wirings, fixtures, fittings and other fire-fighting equipment installed by the Tenant in the Demised Premises are serviced monthly and are at all times in good condition and in proper working order; 9 10 (c) the Tenant shall pay all fees in connection with such connections, servicing and maintenance works and all fees payable to the Singapore Fire Service in connection therewith including but not limited to fees for the attendance of any false alarm which is traced back to the fire-alarm system in the Demised Premises; (d) any item of replacement required for the effective maintenance of the fire-alarm wirings, fixtures and fittings shall be subject to the prior written approval of the Landlord and the items so replaced shall be of a quality and operational characteristic similar to the existing items approved by the Landlord. The Tenant shall replace any items of dissimilar quality and operational characteristic found in use; (e) the Tenant shall not remove or replace or cause or permit or suffer to be removed or replaced the one-hour fire rated doors leading to the research area(s); (f) the Tenant shall properly seal or cause to be properly sealed with materials approved by the Fire Safety Bureau all accesses or uncovered openings for ducting works. (19) At all times to provide sufficient access passageways to all fire-fighting installations and equipment. (20) Not to do or permit to be done any act, matter or thing in or on the Demised Premises or the Building or any part thereof which may in any way affect or render void any warranties or guarantees provided by specialist contractors to the Landlord for specialist products and works in respect of the Building or any part thereof, copies of which warranties and guarantees are available at the office of the Landlord for the Tenant's information PROVIDED ALWAYS THAT in the event any damage is caused to such specialist products and works by any activities traceable to the Tenant or to the Demised Premises thereby rendering void or otherwise in any way affecting the rights of the Landlord which any warranties or guarantees provided by the specialist contractors, the Tenant shall be solely responsible and liable for all costs and expenses incurred in rectifying, remedying and making good any such damage, including all costs and expenses incurred in the provision of additional warranties, if any. 10 11 (21) To permit the Landlord, his agents, servants and surveyors, with or without workmen or others with all necessary appliances and tools to enter upon the Demised Premises or any part thereof at all reasonable times for the purpose of viewing the Demised Premises, its condition, or state of repair, or of doing such things, works and repairs as the Landlord may consider necessary to or for the Demised Premises or to other portions of the Building not conveniently accessible otherwise than from or through the Demised Premises, including structural or external repairs or works pursuant to Clauses 3(2) and 3(3) hereof PROVIDED THAT the Landlord may serve upon the Tenant notice in writing specifying any thing, work or repairs necessary to be done which are the responsibility of the Tenant under or by virtue of any of the terms, covenants or stipulations of this Agreement and require the Tenant forthwith to execute the same and the Tenant shall pay the Landlord's reasonable costs and expenses of survey and attending the preparation of the notice and, if the Tenant shall not within ten days after the service of such notice or such other time as may be stipulated in the notice proceed diligently and in workmanlike manner with the execution of such thing, work or repairs and things in connection therewith then he shall permit the Landlord (who shall not be under any obligation so to do) to enter upon the Demised Premises and execute such thing, work or repairs and things in connection therewith and the cost and expenses thereof shall be a debt due from the Tenant to the Landlord and be forthwith recoverable AND PROVIDED ALWAYS THAT the Landlord shall not be liable to the Tenant for any loss, damage or inconvenience caused directly or indirectly by any such thing, work or repairs and things in connection therewith and the Tenant shall not hold the Landlord so liable. (22) To be wholly responsible for all losses and damages and to bear the full cost and expenses of repairs and reinstatement of any damaged common area, building, structure, equipment, fixture, fitting, drain, wiring and piping above and below ground level, if the cause or causes of such losses and damages can be traced directly or indirectly back to the Tenant's activities, notwithstanding that such activities are done with the consent of the Landlord. (23) In complying with Clause 2(21) hereof and if so required by the Landlord the Tenant shall remove such installation, machinery or any article as may facilitate or permit the Landlord to execute or cause 11 12 to be executed the said things, repairs and works and if the Tenant shall fail to observe or perform this covenant the Landlord may remove the same or have the same removed and all costs and expenses incurred thereby shall be recoverable from the Tenant as a debt PROVIDED ALWAYS THAT the Landlord shall not be liable to the Tenant or any other person for any loss damage or inconvenience caused directly or indirectly by such removal and the Tenant shall not hold the Landlord so liable. (24) Not to discharge, dump, leave or burn, not to cause or permit the discharging, dumping, leaving or burning of any waste including but not limited to pollutants into surface or other drains or any watercourse or in or upon any part of the Demised Premises and/or the Building and/or the Park or the other estates of the Landlord but a the Tenant's own cost and expense to make good and sufficient provision for the safe and efficient disposal of all waste generated at the Demised Premises and/or the Building and/or the Park to the requirements and satisfaction of the Landlord and/or all relevant Governmental and statutory bodies or authorities and if the Tenant shall fail to observe or perform this covenant the Landlord may (but shall not be under any obligation to do so) without prejudice to any other rights or remedies the Landlord may have against the Tenant carry out or cause to be carried out such remedial measures as he thinks necessary and all costs and expenses incurred thereby shall forthwith be recoverable from the Tenant as a debt PROVIDED ALWAYS THAT the Landlord shall not be liable to the Tenant for any loss, damage or inconvenience directly or indirectly caused thereby and the Tenant shall not hold the Landlord so liable. (25) To provide and maintain refuse receptacles for litter and waste produced at the Demised Premises or in connection with the Tenant's operations, in conformity with the requirements and standards prescribed by the relevant health authorities, to keep the same out of sight of the public at all times, and to transfer or dispose of such litter and waste in suitable receptacles to such area and at such times each day as may be prescribed by the Landlord. (26) At all times to maintain the area, garden, grounds and passage-ways, if any, fronting or surrounding the Demised Premises in good order and condition and to the satisfaction of the Landlord and not to alter the layout thereof without the prior written consent of the Landlord. 12 13 (27) To take adequate measures to prevent air pollution, and to implement at the Tenant's own cost and expense measures for minimising air or other forms of pollution when requested by the Landlord or any relevant Governmental or statutory bodies or authorities. (28)(i) Not to use, load, unload, keep or suffer or permit to be used, loaded, unloaded or stored in the Demised Premises or the Building or the Park or any part thereof, any liquid, goods, material or thing of an offensive or explosive or a dangerous, corrosive, toxic or combustible nature without the prior consent in writing of the Landlord and the relevant Governmental and statutory bodies or authorities and to indemnify and keep indemnified the Landlord against all losses, damages, claims, costs, expenses, actions and proceedings in connection with the loading, unloading, use or storage of such goods, materials and things notwithstanding that the same is done with the consent of the Landlord. (ii) Without prejudice to the generality of Clause 2(28)(i), not to store any toxic materials, liquids or things in the Demised Premises, the common areas or open yards or to carry out any process or experiment with inherent risk of escape or spillage of toxic materials, liquids or things. (iii) Not to use or permit or suffer the Demised Premises or any part thereof to be used for any illegal or immoral purpose. (iv) Not to permit or to keep or allow to be kept livestock or other animals at the Demised Premises but subject to Clause 2(7) and to the prohibitions and indemnity contained in Clauses 2(28)(i) and 2(28)(ii) in so far as they are applicable, the Tenant may keep or allow to be kept in the Demised Premises such small livestock or animals as are required in the laboratory for experimental or research purposes subject to prior written approval from the Landlord and the relevant government authorities, if applicable. (v) Not to effect any sale by auction in the Demised Premises or the Building or the Park. (29) Not to do or permit or suffer to be done on or in the Demised Premises or the Building or the Park anything whereby any insurances of the Demised Premises, the Building or other buildings in the Park or any part thereof effected by the Landlord pursuant to Clause 3(5) hereof or otherwise may be rendered void or voidable or whereby the premium thereon may be increased and to repay to the Landlord on demand all sums paid by the Landlord by way of increased premium and all costs and expenses incurred 13 14 by the Landlord in connection with insurance rendered necessary by a breach or non-observance of this covenant without prejudice to any other rights and remedies available to the Landlord. (30) Not to do or permit or suffer to be done upon the Demised Premises or any part of the Building anything which is or may, or which in the opinion of the Landlord is or may at any time be or become a danger, nuisance or an annoyance to or interference with the operations, business, enjoyment, quiet or comfort of the occupants of adjoining premises or inhabitants of the Building or the Park or the neighbourhood PROVIDED ALWAYS THAT the Landlord shall not be responsible to the Tenant for any loss, damage or inconvenience as a result of any danger, nuisance, annoyance or interference whatsoever caused by the occupants of the adjoining premises or inhabitants of the Park or the neighbourhood and the Tenant shall not hold the Landlord so liable. (31) Not without the prior consent in writing of the Landlord to affix or exhibit or erect or paint or permit or suffer to be affixed or exhibited or erected or painted on or upon any part of the exterior of the Demised Premises or of the interior or exterior of the windows or external walls, rails or fences thereof or in any of the passages, corridors or stairs of the Building or in or around any part of the Park any nameplate, signboard, placard, poster, advertisement, hoarding or other thing whatsoever. (32)(i) Not to obstruct, cause or permit any form of obstruction whatsoever whether by way of depositing or leaving any article item or thing of whatsoever nature movable or otherwise within the Demised Premises, the Building or the Park and in particular: (a) in or on the approaches, private roads or passageways or other accesses adjacent to or leading to the Building or other buildings in the Park and in particular not to leave or park or permit to be left or parked any motor vehicle or other carriages belonging to or used by the Tenant or of his friends, servants or visitors save as is left or parked in accordance with the regulations specified in Clause 2(33) below; (b) in or on the common stairways, corridors and passage-ways in and of the Building or other buildings in the Park; (c) to any fire-fighting installations and equipment in the Demised Premises, the Building or other buildings in the Park. 14 15 PROVIDED ALWAYS THAT if the Tenant shall fail to observe this covenant, the Landlord shall, without prejudice to any other rights and remedies he may have against the Tenant, have full right and liberty and absolute discretion, after having given the Tenant reasonable notice so to do and the Tenant having failed or neglected to comply with the same, to remove and clear any such obstruction, and all costs and expenses incurred thereby shall forthwith be recoverable from the Tenant as a debt AND FURTHER PROVIDED THAT the Landlord shall not be liable to the Tenant or any other person for any loss, damage or inconvenience caused directly or indirectly by such removal and the Tenant hereby indemnifies the Landlord in relation thereto. (ii) Not to carry out any works or activities or other operations of whatever nature in the areas specified in Clause 2(32)(i) above. (33) To observe all regulations made by the Landlord relating to the parking of all and any motor-vehicles or other carriages belonging to or used by the Tenant or his employees, servants, friends or visitors and to pay such parking charges as may be imposed by the Landlord. (34) Not to assign, sublet, grant a license or part with or share the possession or occupation of the Demised Premises or any part thereof or leave the Demised Premises or any part thereof vacant and unoccupied at any time during the said term. (35) Without prejudice to Clause 2(7) not to do or omit or suffer to be done or omitted any act matter or thing in or on the Demised Premises and in respect of the operations, business, trade or industry carried out or conducted therein which shall contravene the provisions of any laws, by-laws, orders, rules or regulations now or hereafter affecting the same but to comply at the Tenant's own cost and expense with all such provisions and at all times g the said term. hereafter to indemnify and keep indemnified the Landlord against all actions, proceedings, costs, expenses, claims, fines, losses, damages, penalties and demands in respect of any act, matter or thing done or omitted to be done in contravention of the said provisions. (36) The tenant shall inform the Landlord in writing immediately of any change of name AND to pay the Landlord a fee for every change in name. 15 16 (37) At all times during the three (3) months immediately preceding the determination of the said term to permit persons with written authority from the Landlord or the Landlord's agent at reasonable times of the day to view the Demised Premises or any part thereof. (38) At the determination (by expiry or otherwise) of the said term or any extension or renewal thereof to yield up the Demised Premises and all the Landlord's fixtures, fittings, fastenings and other things thereto anywhere belonging or appertaining in such good and substantial repair fair wear and tear excepted as shall be in accordance with the terms, covenants and stipulations contained in this Agreement and with the locks and keys complete. (39) In addition to Clause 2 (38) and immediately prior to the determination of the said term or any extension or renewal thereof to cleanse and restore the Demised Premises in all respects to its original state and condition excepting those which have been required by the Landlord to be left intact and in situ and if required by the Landlord, to redecorate, including painting the interior thereof to the satisfaction of the Landlord PROVIDED ALWAYS THAT if the Tenant shall fail to observe or perform this covenant the Landlord may execute or cause to be executed any or all such cleaning, restoration and redecoration works and recover the costs and expenses thereof from the Tenant together with all rent and service charge and other amounts which the Landlord would have been entitled to receive from the Tenant had the period within which such cleaning, restoration and redecoration were effected by the Landlord been added to the said term. (40) Immediately prior to the determination of the said term or any extension or renewal thereof to clean and disinfect the interior of the Demised Premises including but not limited to all walls, the floor, windows fittings and fixtures therein to the satisfaction of the Landlord to ensure that it is in a sanitary and hypergenic condition and that it is free from any harmful contamination by any biological organisms or chemical substances that may have been used produced or stored in or brought into the Demised Premises and to dispose of any such biological organisms or chemical substance safely without causing any health hazards, any danger or injury to any person PROVIDED ALWAYS THAT if the Tenant shall fail to observe this convenant, the Landlord shall without prejudice to other rights and remedies he may have against the Tenant have full right and absolute discretion after having given the Tenant reasonable 16 17 notice to do so and the Tenant having failed or neglected to comply with the same, to proceed to clean and disinfect the Demised Premises. In connection herewith, the Tenant shall permit the Landlord (who shall not be under any obligation so to do) to enter upon the Demised Premises and execute such work in and the cost and expenses thereof shall be a debt due from the Tenant to the Landlord and be recoverable from the Tenant by serving upon the Tenant in writing specifying the amount and the Tenant shall pay such amount within 7 days from the date of such notice. The Landlord shall not be liable to the Tenant for any loss, damage or inconvenience caused directly or indirectly by such work in connection therewith and the Tenant shall not hold the Landlord so liable. (41) If any rent hereby reserved or any monies payable under this Agreement shall be unpaid, the Landlord may immediately prior to the determination of the said term or any renewal thereof require any fittings or fixtures (including Tenant's fixtures) in the Demised Premises to be left intact and in situ and the Landlord shall be empowered to sell or otherwise dispose of the whole or any part of such fittings and fixtures at such price and in such manner as the Landlord deems fit and to apply the proceeds of sale against any indebtedness of the Tenant to the Landlord. (42) To pay interest at the rate of 10% per annum or such higher rate as may be determined from time to time by the Landlord in respect of any outstanding amount payable under this Agreement from the date such amount becomes due until payment in full is received by the Landlord. (43) To perform and observe all the obligations which the Tenant or the Landlord of the Demised Premises may be liable to perform or observe during the said term or any extension or renewal thereof by any law, direction, order, notice or requirement of any Government or statutory bodies or authorities and if the Tenant shall fail to observe or perform this covenant the Landlord may in its absolute discretion perform the same and all expenses and costs incurred thereby shall be recoverable from the Tenant as a debt PROVIDED THAT the Landlord shall not be liable to the Tenant for any loss damage or inconvenience caused directly ALWAYS or indirectly thereby and the Tenant shall not hold the Landlord so liable. (44) To make reasonable provision against and be responsible for all loss, injury or damage to any person or property including that of the Landlord for which the Tenant may be held liable arising out of or in 17 18 connection with the occupation and use of the Demised Premises and to indemnify and keep indemnified the Landlord against all actions, proceedings, claims, fines, losses, damages, penalties, costs and expenses which he may incur or for which he may be held liable as a result of any act neglect or default of the Tenant, his servants, contractors or agents. (45) To pay and to indemnify and keep the Landlord indemnified for all cost, disbursements, fees and charges, legal or otherwise, including stamp and registration fees, penalties, levies, fines and other charges which may be payable or which may be paid by the Landlord in the event that the Tenant fails or refuses to make any of the aforesaid payments in due time in connection with the preparation, stamping and issue of this Agreement and any prior accompanying or future documents or deed supplementary collateral or in any way relating to this Agreement. (46) To pay all costs, disbursements and fees, legal or otherwise, including costs as between Solicitor and Client in connection with the enforcement of the terms, covenants and stipulations of thisAgreements. (47) If any damage of whatsoever nature or description shall at any time occur or be caused to the Demised Premises and/or the Building or any part thereof, to forthwith give to the Landlord written notice of the damage. (48) Not to commence operation at the Demised Premises after the installation(s) of equipment have been completed UNTIL a final inspection of such installation(s) has been carried out and the Landlord's written approval of the same has been given by the Landlord. 3. The Landlord hereby agrees with the Tenant as follows: (1) The Tenant paying the said rent and service charge hereby reserved and observing and performing the terms covenants and stipulations contained in this Agreement shall peacefully hold and enjoy the Demised Premises during the said term without any interruption by the Landlord or any person rightfully claiming under or in trust for him. (2) The Landlord shall subject to the proviso in Clause 2(12)(c), maintain the structure of the Demised Premises PROVIDED THAT any damage thereto other than fair wear and tear and repair arising therefrom shall be charged to the account of and paid by the Tenant AND FURTHER PROVIDED THAT the Landlord shall not be liable for any loss, damage or injury suffered by the Tenant or any other person 18 19 by reason directly or indirectly of the stated of the Demised Premises and the Tenant hereby indemnifies and keep indemnified the Landlord against all claims, damages, actions, proceedings, costs and expenses in any way relating thereto. (3) The Landlord shall keep the exterior and roof of the Building and the lifts, corridors, passages, staircases, and other common conveniences intended for the use of the Tenant and the Landlord's other Tenants in the Building at all times in complete repair and in proper and clean condition and the stairs and passages leading to the Demised Premises well and sufficiently lighted PROVIDED THAT the Landlord shall not be responsible for any loss, damage or inconvenience the Tenant may sustain by reason of any loss, damage or injury caused by or in consequence of any breakage of or defects in any of the pipes, wiring or other apparatus of the Landlord used in or about the Building. (4) The Landlord shall pay the property tax payable in respect of the Demised Premises PROVIDED ALWAYS THAT if the rate of such property tax shall be increased whether by way of an increase in the annual value or an increase in the rate per cent then the Landlord shall not hereunder be liable to pay the said increase but the Tenant shall pay such increase as provided under Clause2(5)(i) hereof. (5) The Landlord shall at all times throughout the said term keep the structure of the Building insured against loss or damage by fire and in the event of such loss or damage (unless resulting directly or indirectly from some act or default of the Tenant) to rebuild and reinstate the damaged part of the Demised Premises PROVIDED THAT it is hereby agreed and understood that the terms "loss or damaged by fire" as used in this clause do not include any loss or damage caused to the Tenant's fixtures or fittings or loss due to the Demised Premises being rendered out of commission and in any such event the Landlord shall not be held liable for any such loss or damage sustained by the Tenant. (6) Intentionally left blank. (7) The Landlord shall on the written request of the Tenant made not less than six (6) months before the expiration of the said term and if there shall not at the time of such request be any existing breach or no-observance or non- performance by the Tenant of any of the terms, covenants and stipulations contained in this Agreement at the cost and expense of the Tenant grant to him a tenancy of the Demised Premises for a further term of two (2) years from the expiration of the said term at a revised rent to be determined by 19 20 the Landlord and upon like terms, covenants and stipulations as are herein contained or with such variations or modifications thereof together with such other terms, covenants and stipulations as may be imposed by the Landlord, but excluding the present covenant for renewal. 4. PROVIDED ALWAYS and it is expressly agreed as follows: (1) If the said rent hereby reserved or any part thereof or the service charge or any other sum payable under this Agreement shall at any time remain unpaid for fourteen (14) days after becoming payable (irrespective of whether formal demand has been made or not) or if any of the terms, covenants or stipulations herein contained on the Tenant's part to be performed or observed shall not be so performed or observed or if the Tenant shall make any assignment for the benefit of its creditors or enter into any arrangement with its creditors by composition or otherwise or suffer any distress or attachment or execution to be levied against his goods or if the Tenant being an individual shall commit any act of bankruptcy or have a receiving order or an adjudicating order made against him or if the Tenant being a Company shall go into liquidation whether voluntary (save for the purpose of amalgamation or reconstruction) or compulsory then and in any of such cases it shall be lawful for the Landlord at any time thereafter to re-enter upon the Demised Premises or any part thereof in the name of the whole and thereupon the tenancy hereby created shall absolutely determine but without prejudice to any right of action or remedy of the Landlord in respect of any breach of any terms, covenants or stipulations herein contained in this Agreement. (2)(i) Any notice requiring to be served hereunder or otherwise in connection with this Agreement or the tenancy hereby created shall be sufficiently served on the Tenant if the same is left addressed to the Tenant at the Demised Premises or if forwarded to the Tenant at the Demised Premises by registered post and any notice shall be sufficiently served on the Landlord if sent to the Landlord's Registered Office by registered post. A Notice sent by registered post shall be deemed to be given at the time when in due course of post it would be delivered at the address to which it is sent. (ii) In the event of any action or proceedings in respect of the tenancy created herein (including any action for the recovery of the said rent or service charge herein reserved) the Tenant agrees and accepts 20 21 that any document which is not required by written law to be served personally shall be sufficiently served on the Tenant if addressed to him at the address specified in this Agreement or if left posted upon conspicuous part of the Demised Premises or forwarded to him by post at the principle or last known place of business of the firm or his registered or principal office or a body corporate or his last known address if an individual. (3) No waiver expressed or implied by the Landlord of any breach of any term, covenant or stipulation on the part of the Tenant to be observed or performed shall be construed as a waiver of any other breach of the same of any other term, covenant or stipulation and shall not prejudice in any way the rights, powers and remedies of the Landlord herein contained. Any acceptance of rent, service charge or other monies shall not be deemed to operate as a waiver by the Landlord of any right to proceed against the Tenant of any of his obligations hereunder. (4) The Landlord shall not be responsible for any loss, damage or inconvenience occasioned by the closing of the lift or lifts for repairs or any other necessary purpose or for any accidents that may occur to the Tenant or any other person using the lift. (5) The Landlord shall not be liable in whatever manner including making good or paying damages to the Tenant in case of: (i) any interruption in the services, if any, provided by the Landlord in the common areas by reason of repairs or maintenance of any installations or apparatus or damage thereto or by reason of mechanical or other defect or breakdown including but not limited to breakdown in electricity and water supply. (ii) any act, omission, default, misconduct or negligence of any servant or employee of the Landlord in or about the performance or purported performance of any duty relating to the provision of the said services or the maintenance of the common areas. (iii) any loss, injury or damage, including electrical or mechanical interference, caused by any act, omission, default misconduct or negligence of any other tenant or occupier of the Building or its servant or employee. (6) The Landlord shall be under no liability either to the Tenant or to others who may be permitted to enter or use the Demised Premises, the Building or the Park or any part thereof for accidents happening or 21 22 injuries sustained or for loss of or damage to property in the Demised Premises the Building or the Park or any part thereof. (7) The Landlord shall be entitled to let any other parts of the Building subject to any terms or conditions the Landlord may think fit and nothing herein contained shall be deemed to create a letting scheme for the Building or any part thereof and neither the Tenant nor the persons deriving title the Tenant shall have the benefit of or the right to enforce or to have enforced or to prevent the release or modification of any covenant, agreement or condition entered into by any present or future Tenant. (8) Letters or parcels whether registered or otherwise and telegrams or keys received by any servants of the Landlord on behalf of the Tenant will be received solely at the risk of the Tenant. (9) This Agreement shall be governed by and construed in all respects in accordance with the laws of the Republic of Singapore. (10)(i) The marginal notes hereto are inserted for convenience of reference only and shall not in any way define, limit, construe or describe the scope of intent of the clauses of this Agreement or in any way affect this Agreement. (ii) In the interpretation of this agreement except to the extent that such interpretation shall be excluded by or be repugnant to the context when used herein: (a) "the Landlord" shall include its successors in title and assigns employees agents representatives person or company for the time being entitled to the reversion immediately expectant on the term hereby created and where the context so admits the Landlord's employees agents and representatives; (b) "person" shall be deemed to include a corporation; (c) "the Tenant" shall include, if the Tenant is an individual, his personal representative and permitted assigns, or if the Tenant is a company, its permitted assigns and successors in title and in either case where the context so admits the Tenant's employees agents licensees invitees visitors independent contractors and servants; 22 23 (d) words importing the singular or plural number shall be deemed to include the plural or singular number respectively and words importing the masculine gender only shall include the feminine or neuter genders and vice versa as the case may require; and (e) where two or more persons are included in the term "the Tenant" all covenants, agreements, terms, conditions and restrictions shall be binding on and applicable to them jointly and each of them severally and shall also be binding on their personal representatives and permitted assigns respectively jointly and severally. IN WITNESS WHEREOF the parties hereto have hereunto set their hands and/or seals the day and year first above written. SIGNED BY NAME: CHONG SIAK CHING (MS.) DESIGNATION: MANAGING DIRECTOR FOR AN ON BEHALF OF THE LANDLORD /s/ Chong Siak Ching ARCASIA LAND PRIVATE LIMITED (FORMERLY KNOWN AS TECHNOLOGY PARKS PRIVATE LIMITED) IN THE PRESENCE OF NAME OF WITNESS: CINDY TAN DESIGNATION: ASSISTANT MANAGER /s/ Cindy Tan SIGNED BY: MUN PING KUEN /s/ Mun Ping Kuen COMPANY STAMP: FOR AN ON BEHALF OF THE TENANT, GENELABS DIAGNOSTICS (PTE.) LTD. IN THE PRESENCE OF NAME OF WITNESS: LOW SOO HUAT /s/ Low Soo Huat 23 EX-10.38 4 REGISTRANTS 1995 STOCK OPTION PLAN 1 EXHIBIT 10.38 GENELABS TECHNOLOGIES, INC. 1995 STOCK OPTION PLAN Adopted April 14, 1995 (As Amended May 30, 1996 and September 17, 1997) 1. PURPOSE. This 1995 Stock Option Plan (this "Plan") is established as a compensatory plan to attract, retain and provide equity incentives to selected persons to promote the financial success of Genelabs Technologies, Inc., a California corporation (the "Company"). Capitalized terms not previously defined herein are defined in Section 17 of this Plan. 2. TYPES OF OPTIONS AND SHARES. Options granted under this Plan (the "Options") may be either (a) incentive stock options ("ISOs") within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), or (b) non-qualified stock options ("NQSOs"), as designated at the time of grant. The shares of stock that may be purchased upon exercise of Options granted under this Plan (the "Shares") are shares of the Common Stock of the Company. 3. NUMBER OF SHARES. Shares of Common Stock remaining available for future grants of stock options under the Company's 1985 Employee Stock Option Plan (the "1985 Plan") and shares of Common Stock issuable upon exercise or currently outstanding pursuant to the 1985 Plan that expire or become unexercisable for any reason without having been exercised in full, will be available for issuance under the Plan, subject to adjustment as provided in this Plan. Upon adoption of the Plan by the Company's shareholders on June 2, 1995, the number of shares of Common Stock reserved for issuance under this Plan was 3,912,889. On May 30, 1996, the Company's shareholders approved an amendment to increase the aggregate number of shares that may be issued pursuant to options granted under this Plan to 4,912,889 shares. At all times during the term of this Plan, the Company shall reserve and keep available such number of Shares as shall be required to satisfy the requirements of outstanding Options under this Plan. 4. ELIGIBILITY. Options may be granted to employees, directors, consultants , officers, independent contractors and advisers (provided such consultants, independent contractors and advisers render bona fide services not in connection with the offer and sale of securities in a capital-raising transaction) of the Company or any Parent, Subsidiary or Affiliate of the Company. ISOs may be granted only to employees (including officers and directors who are also employees) of the Company or a Parent or Subsidiary of the Company. Non-Employee Directors shall only be eligible for grants of NQSOs pursuant to Section 7. The Committee (as defined in Section 14) in its sole discretion shall select the recipients of Options ("Optionees"). An Optionee may be granted more than one Option under this Plan. No one Optionee shall be eligible to receive more than 800,000 Shares at any time during the term of this Plan pursuant to the grant of Options hereunder. 5. TERMS AND CONDITIONS OF OPTIONS. For grants other than to Non-Employee Directors pursuant to Section 7, the Committee shall determine whether each Option is to be an ISO or an NQSO, the number of Shares subject to the Option, the exercise price of the Option, the period during which the Option may be exercised, and all other terms and conditions of the Option, subject to the following: -1 2 (a) Form of Option Grant. Each Option granted under this Plan shall be evidenced by a written Stock Option Grant (the "Grant") in such form (which need not be the same for each Optionee) as the Committee shall from time to time approve, which Grant shall comply with and be subject to the terms and conditions of this Plan. (b) Date of Grant. The date of grant of an Option shall be the date on which the Committee makes the determination to grant such Option unless otherwise specified by the Committee. The Grant representing the Option will be delivered to Optionee with a copy of this Plan within a reasonable time after the granting of the Option. (c) Exercise Price. The exercise price of an Option shall be determined by the Committee on the date the Option is granted; provided that (i) the exercise price of an NQSO shall be not less than 85% of the Fair Market Value of the Shares on the date the Option is granted; (ii) the exercise price of an ISO shall be not less than 100% of the Fair Market Value of the Shares on the date the Option is granted; and (iii) the exercise price of any ISO granted to a person owning more than l0% of the total combined voting power of all classes of stock of the Company or any Parent or Subsidiary of the Company ("Ten Percent Shareholder") shall not be less than 110% of the Fair Market Value of the Shares on the date the Option is granted. (d) Exercise Period. Options shall be exercisable within the times or upon the events determined by the Committee as set forth in the Grant; provided, however, that no Option shall be exercisable after the expiration of ten (10) years from the date the Option is granted, and provided further that no ISO granted to a Ten Percent Shareholder shall be exercisable after the expiration of five (5) years from the date the Option is granted. (e) Limitations on ISOs. The aggregate Fair Market Value (determined as of the time an Option is granted) of stock with respect to which ISOs are exercisable for the first time by an Optionee during any calendar year (under this Plan or under any other incentive stock option plan of the Company or any Parent or Subsidiary of the Company) shall not exceed $100,000. If the Fair Market Value of Shares with respect to which ISOs are exercisable for the first time by an Optionee during any calendar year exceeds $100,000, the Options for the first $100,000 worth of Shares to become exercisable in such year shall be ISOs and the Options for the amount in excess of $100,000 that become exercisable in that year shall be NQSOs. In the event that the Code or the regulations promulgated thereunder are amended after the effective date of this Plan to provide for a different limit on the Fair Market Value of Shares permitted to be subject to ISOs, such different limit shall be incorporated herein and shall apply to any Options granted after the effective date of such amendment. (f) Options Non-Transferable. Options granted under this Plan, and any interest therein, shall not be transferable or assignable by Optionee, and may not be made subject to execution, attachment or similar process, otherwise than by will or by the laws of descent and distribution, and shall be exercisable during the lifetime of Optionee only by Optionee; provided, however, that NQSOs may be transferred to such family members, trusts and charitable institutions as the Committee, in its sole discretion, shall approve at the time of the grant of such Option. -2 3 (g) Assumed Options. In the event the Company assumes an option granted by another company, the terms and conditions of such option shall remain unchanged (except the exercise price and the number and nature of shares issuable upon exercise, which will be adjusted appropriately pursuant to Section 424(a) of the Code). In the event the Company elects to grant a new option rather than assuming an existing option, such new option may be granted with a similarly adjusted exercise price. 6. EXERCISE OF OPTIONS. (a) Notice. Options may be exercised only by delivery to the Company of a written stock option exercise agreement (the "Exercise Agreement") in a form approved by the Committee (which need not be the same for each Optionee), stating the number of Shares being purchased, the restrictions imposed on the Shares, if any, and such representations and agreements regarding Optionee's investment intent and access to information, if any, as may be required by the Company to comply with applicable securities laws, together with payment in full of the exercise price for the number of Shares being purchased. (b) Payment. Payment for the Shares may be made in cash (by check) or, where approved by the Committee in its sole discretion at the time of grant and where permitted by law: (i) by cancellation of indebtedness of the Company to the Optionee; (ii) by surrender of shares of Common Stock of the Company having a Fair Market Value equal to the applicable exercise price of the Options, that have been owned by Optionee for more than six (6) months (and which have been paid for within the meaning of Securities and Exchange Commission ("SEC") Rule 144 and, if such Shares were purchased from the Company by use of a promissory note, such note has been fully paid with respect to such shares), or were obtained by Optionee in the open public market; (iii) by tender of a full recourse promissory note having such terms as may be approved by the Committee and bearing interest at a rate sufficient to avoid imputation of income under Sections 483 and 1274 of the Code; (iv) by waiver of compensation due or accrued to Optionee for services rendered; (v) provided that a public market for the Company's stock exists, through a "same day sale" commitment from Optionee and a broker-dealer that is a member of the National Association of Securities Dealers (an "NASD Dealer") whereby Optionee irrevocably elects to exercise the Option and to sell a portion of the Shares so purchased to pay for the exercise price and whereby the NASD Dealer irrevocably commits upon receipt of such Shares to forward the exercise price directly to the Company; (vi) provided that a public market for the Company's stock exists, through a "margin" commitment from Optionee and an NASD Dealer whereby Optionee irrevocably elects to exercise the Option and to pledge the Shares so purchased to the NASD Dealer in a margin account as security for a loan from the NASD Dealer in the amount of the exercise price, and whereby the NASD Dealer irrevocably commits upon receipt of such Shares to forward the exercise price directly to the Company; or (vii) by any combination of the foregoing. Optionees who are not employees of the Company shall not be entitled to purchase Shares with a promissory note unless the note is adequately secured by collateral other than the Shares. (c) Withholding Taxes. Prior to issuance of the Shares upon exercise of an Option, Optionee shall pay or make adequate provision for any federal or state withholding obligations of the Company, if applicable. -3 4 (d) Limitations on Exercise. Notwithstanding the exercise periods set forth in the Grant, exercise of an Option shall always be subject to the following: (i) If Optionee ceases to be employed or retained by the Company or any Parent, Subsidiary or Affiliate of the Company for any reason except death or disability, Optionee may exercise such Optionee's ISOs or NQSOs to the extent (and only to the extent) that they would have been exercisable upon the date of termination, within three (3) months after the date of termination (or such shorter time period as may be specified in the Grant). (ii) If Optionee's employment or retention with the Company or any Parent, Subsidiary or Affiliate of the Company is terminated because of the death of Optionee or disability of Optionee within the meaning of Section 22(e)(3) of the Code, Optionee's ISOs or NQSOs may be exercised to the extent (and only to the extent) that they would have been exercisable by Optionee on the date of termination, by Optionee (or Optionee's legal representative) within twelve (12) months after the date of termination (or such shorter time period as may be specified in the Grant), but in any event no later than the expiration date of the ISOs. (iii) The Committee shall have discretion to determine whether Optionee has ceased to be employed or retained by the Company or any Parent, Subsidiary or Affiliate of the Company and the effective date on which such employment terminated. (iv) In the case of an Optionee who is a director, consultant, independent contractor or adviser, the Committee will have the discretion to determine whether Optionee is employed or retained by the Company or any Parent, Subsidiary or Affiliate of the Company pursuant to the foregoing Sections. (v) The Committee may specify a reasonable minimum number of Shares that may be purchased on any exercise of an Option, provided that such minimum number will not prevent Optionee from exercising the full number of Shares as to which the Option is then exercisable. (vi) An Option shall not be exercisable unless such exercise is in compliance with the Securities Act of 1933, as amended (the "Securities Act"), all applicable state securities laws and the requirements of any stock exchange or national market system upon which the Shares may then be listed, as they are in effect on the date of exercise. The Company shall be under no obligation to register the Shares with the SEC or to effect compliance with the registration, qualification or listing requirements of any state securities laws, stock exchange or national market system, and the Company shall have no liability for any inability or failure to do so. 7. OPTION GRANTS FOR NON-EMPLOYEE DIRECTORS (a)Eligibility and Award Formula. Options may be granted only to such Non-Employee Directors of the Company or any Parent, Subsidiary or Affiliate of the Company as the Committee shall select from time to time in its sole discretion. Directors may be granted more than one option under the Plan. -4 5 Each director, upon his or her first election to the Board, will be granted an option to purchase 20,000 shares of the Company's Common Stock. At the Company's Annual Meeting of Shareholders following the second anniversary of his or her election to the Board, and at each subsequent Annual Meeting of Shareholders, each director will be granted an additional option to purchase 5,000 shares. (b) Terms and Conditions of Options. The Committee shall determine the exercise price of the Option, the period during which the Option may be exercised, and all other terms and conditions of the Option, subject to the following: (i) Date of Grant. The date of grant of an Option shall be the dates described in Section 7 (a) above. The Grant representing the Option will be delivered to the Optionee within a reasonable time after the granting of the Option. (ii) Exercise Price. The exercise price of an Option shall be not less than the Fair Market Value of the Shares at the time that the Option is granted. (iii) Exercise Period. Options shall be exercisable as to 50% of the Shares on the first anniversary of the date of grant and the remaining 50% on the second anniversary thereof; provided however, that no Option shall be exercisable after the expiration of five years from the date the Option is granted. (iv) Limitation on Exercise. If the Optionee ceases to be a director for any reason except death or disability, Optionee may exercise his or her options to the extent (and only to the extent) that they would have been exercisable upon the date of termination, within six (6) months after the date of termination. If the Optionee ceases to be a director because of death or disability, Optionee (or Optionee's legal representative) may exercise his or her options to the extent (and only to the extent) that they would have been exercisable upon the date of termination, within twelve (12) months after the date of termination. 8. MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS. The Committee shall have the power to modify, extend or renew outstanding Options and to authorize the grant of new Options in substitution therefor, provided that any such action may not, without the written consent of Optionee, impair any rights under any Option previously granted. Any outstanding ISO that is modified, extended, renewed or otherwise altered shall be treated in accordance with Section 424(h) of the Code. The Committee shall have the power to reduce the -5 6 exercise price of outstanding Options without the consent of Optionees by a written notice to the Optionees affected; provided, however, that the exercise price per Share may not be reduced below the minimum exercise price that would be permitted under Section 5(c) of this Plan for Options granted on the date the action is taken to reduce the exercise price. 9. PRIVILEGES OF STOCK OWNERSHIP. No Optionee shall have any of the rights of a shareholder with respect to any Shares subject to an Option until such Option is properly exercised. No adjustment shall be made for dividends or distributions or other rights for which the record date is prior to such date, except as provided in this Plan. Upon written request, the Company shall provide to each Optionee a copy of the annual financial statements of the Company at such time after the close of each fiscal year of the Company as such statements are released by the Company to its common shareholders generally. 10. NO OBLIGATION TO EMPLOY. Nothing in this Plan or any Option granted under this Plan shall confer on any Optionee any right to continue in the employ of, as a director of, or other relationship with, the Company or any Parent, Subsidiary or Affiliate of the Company or limit in any way the right of the Company or any Parent, Subsidiary or Affiliate of the Company to terminate Optionee's employment or other relationship at any time, with or without cause. 11. ADJUSTMENT OF OPTION SHARES. In the event that the number of outstanding shares of Common Stock of the Company is changed by a stock dividend, stock split, reverse stock split, combination, reclassification or similar change in the capital structure of the Company without consideration, or if a substantial portion of the assets of the Company are distributed, without consideration in a spin-off or similar transaction, to the shareholders of the Company, the number of Shares available under this Plan and the number of Shares subject to outstanding Options and the exercise price per Share of such Options shall be proportionately adjusted, subject to any required action by the Board of Directors (the "Board") or shareholders of the Company and compliance with applicable securities laws; provided, however, that a fractional share shall not be issued upon exercise of any Option and any fractions of a Share that would have resulted shall either be cashed out at Fair Market Value or the number of Shares issuable under the Option shall be rounded up to the nearest whole number, as determined by the Committee; and provided further that the exercise price may not be decreased to below the par value, if any, for the Shares. 12. ASSUMPTION OF OPTIONS BY SUCCESSORS. In the event of a dissolution or liquidation of the Company, a merger in which the Company is not the surviving corporation, a transaction in which 100% of the then-outstanding voting stock is sold or otherwise transferred or the sale of substantially all of the assets of the Company any or all outstanding Options shall, notwithstanding any contrary terms of the Grant, accelerate and become exercisable in full at least 10 days prior to (and shall expire on) the consummation of such dissolution, liquidation, merger or sale of assets on such conditions as the Committee shall determine unless the successor corporation assume the outstanding options or substitutes substantially equivalent options. The aggregate Fair Market Value of ISOs which first become exercisable in the year of such dissolution, liquidation, merger or sale of assets cannot exceed $100,000. Any remaining accelerated options shall be treated as NQSOs. -6 7 13. ADOPTION AND SHAREHOLDER APPROVAL. This Plan shall become effective on the date that it is adopted by the Board of the Company. This Plan shall be approved by the shareholders of the Company, in any manner permitted by applicable corporate law, within twelve months before or after the date this Plan is adopted by the Board. Upon the effective date of the Plan, the Board may grant Options pursuant to this Plan; provided that, in the event that shareholder approval is not obtained within the time period provided herein, all Options granted hereunder shall terminate. No Option that is issued as a result of any increase in the number of shares authorized to be issued under this Plan shall be exercised prior to the time such increase has been approved by the shareholders of the Company and all such Options granted pursuant to such increase shall similarly terminate if such Shareholder approval is not obtained. 14. ADMINISTRATION. This Plan may be administered by the Board or a committee appointed by the Board (the "Committee"). As used in this Plan, references to the "Committee" shall mean either such Committee or the Board if no Committee has been established. If the Company is registered under the Exchange Act and two or more members of the Board are Non-Employee Directors, the Committee shall be comprised of at least two members of the Board, all of whom are Non-Employee Directors. The interpretation by the Committee of any of the provisions of this Plan or any Option granted under this Plan shall be final and binding upon the Company and all persons having an interest in any Option or any Shares purchased pursuant to an Option. The Committee may delegate to officers of the Company the authority to grant Options under this Plan to Optionees who are not officers or directors of the Company whose transactions in the Company's Common Stock are subject to Section 16(b) of the Exchange Act. 15. TERM OF PLAN. Options may be granted pursuant to this Plan from time to time within a period of ten (10) years from the date on which this Plan is adopted by the Board. 16. AMENDMENT OR TERMINATION OF PLAN. The Committee may at any time terminate or amend this Plan in any respect including (but not limited to) amendment of any form of grant, exercise agreement or instrument to be executed pursuant to this Plan; provided, however, that the Committee shall not, without the approval of the shareholders of the Company, amend this Plan in any manner that requires such shareholder approval pursuant to the Code or the regulations promulgated thereunder as such provisions apply to ISO plans or pursuant to the Exchange Act or Rule 16b-3 (or its successor) promulgated thereunder.17. 17. CERTAIN DEFINITIONS. As used in this Plan, the following terms shall have the following meanings: (a) "Parent" means any corporation (other than the Company) in an unbroken chain of corporations ending with the Company if, at the time of the granting of the Option, each of such corporations other than the Company owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. -7 8 (b) "Subsidiary" means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if, at the time of granting of the Option, each of the corporations other than the last corporation in the unbroken chain owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. (c) "Affiliate" means any corporation that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, another corporation, where "control" (including the terms "controlled by" and "under common control with") means the possession, direct or indirect, of the power to cause the direction of the management and policies of the corporation, whether through the ownership of voting securities, by contract or otherwise. (d) "Fair Market Value" shall mean the fair market value of the Shares as determined by the Committee from time to time in good faith. If a public market exists for the Shares, the Fair Market Value shall be the average of the last reported bid and asked prices for common stock of the Company on the last trading day prior to the date of determination, or in the event the common stock of the Company is listed on the Nasdaq National Market, the Fair Market Value shall be the average of the high and low prices of the common stock on the option grant date as quoted on the Nasdaq National Market and reported in the Wall Street Journal. (e) "Non-Employee Director" means a Director who either (i) is not a current Employee or Officer of the Company or its parent or subsidiary, does not receive compensation (directly or indirectly) from the Company or its parent or subsidiary for services rendered as a consultant or in any capacity other than as a Director (except for an amount as to which disclosure would not be required under Item 404(a) of Regulation S-K promulgated pursuant to the Securities Act ("Regulation S-K")), does not possess an interest in any other transaction as to which disclosure would be required under Item 404(a) of Regulation S-K, and is not engaged in a business relationship as to which disclosure would be required under Item 404(b) of Regulation S-K; or (ii) is otherwise considered a "non-employee director" for purposes of Rule 16b-3. -8 EX-27 5 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED FINANCIAL STATEMENTS OF GENELABS TECHNOLOGIES, INC. FOR THE PERIOD ENDED SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 9-MOS DEC-31-1997 JAN-01-1997 SEP-30-1997 1,673 21,782 2,163 0 2,720 28,937 11,638 10,381 34,639 6,698 0 0 9,682 137,350 (119,853) 34,639 7,482 9,824 4,489 4,489 15,706 0 (1,048) (9,323) 0 (9,323) 0 0 0 (9,323) (0.24) (0.24)
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