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Commitments and Contingencies
3 Months Ended
Mar. 31, 2021
Commitments And Contingencies Disclosure [Abstract]  
Commitments and Contingencies

Note 10—Commitments and Contingencies

Litigation

The Company is not a party to any material legal proceedings and is not aware of any pending or threatened claims. From time to time, the Company may be subject to various legal proceedings and claims that arise in the ordinary course of its business activities.

Commitments

In the normal course of business, the Company enters into contracts that contain a variety of indemnifications with its employees, licensors, suppliers and service providers. The Company’s maximum exposure under these arrangements is unknown at March 31, 2021. The Company does not anticipate recognizing any significant losses relating to these arrangements.

Durham Lease

On December 17, 2020, the Company entered into a lease agreement (the “Durham Lease”) with Patriot Park Partners II, LLC, a Delaware limited liability company (the “Durham Landlord”), pursuant to which the Company agreed to lease approximately 187,500 square feet of a manufacturing facility located at 5 National Way, Durham, North Carolina (the “Facility”). The Durham Lease commenced on April 1, 2021 and is expected to have a term of approximately fifteen years and six months. The Company has two options to extend the term of the Durham Lease, each for a period of an additional five years.

The Company was not required to provide a security deposit in connection with its entry into the Durham Lease. The Company will be responsible for constructing interior improvements within the Facility. The Durham Landlord has the right to terminate the Durham Lease upon specified events of default, including the Company’s failure to pay rent in a timely manner and upon the occurrence of certain events of insolvency with respect to the Company.

The Company may terminate the Durham Lease if construction of the base building shell of the Facility is not complete by May 16, 2021. The Company incurred initial direct costs to enter into the Durham Lease of approximately $0.8 million. The costs have been recorded on the consolidated balance sheets as a deferred lease asset and will be amortized into earnings over the term of the Durham Lease.

Dallas Lease

On January 11, 2021, the Company entered into a lease agreement (the “Dallas Lease”) with Pegasus Park, LLC, a Delaware limited liability company (the “Dallas Landlord”), pursuant to which the Company will lease approximately 15,000 square feet of office space at 3000 Pegasus Park Drive, Dallas, Texas 75247 (the “Office Space”).

 

The Lease commences on the date on which certain improvements to the Office Space have been made and the Office Space is tendered to the Company for possession, which the Company and the Dallas Landlord presently anticipate to be delivered on or about May 15, 2021, and will have a term of approximately ten years. The Company has an option to extend the term of the Lease for one additional period of five years. The Company’s obligation for the payment of base rent for the Office Space will initially be approximately $32,500 per month and will increase annually, up to an estimated monthly base rent of $50,000 during the term of the Lease. The Company is obligated to pay operating costs and utilities applicable to the Office Space. The Company was required to provide a security deposit of $32,500 in connection with its entry into the Lease. Total future minimum lease payments under the Dallas Lease over the initial 10 year term are approximately $4.9 million. The Company will be responsible for costs of constructing interior improvements within the Office Space that exceed a construction allowance provided by the Dallas Landlord not to exceed $40.00 per rentable square foot.

The Company has a right of first refusal with respect to certain additional adjacent office space before the Dallas Landlord accepts any offer for such space.

The Landlord has the right to terminate the Lease, or the Company’s right to possess the Office Space without terminating the Lease, upon specified events of default, including the Company’s failure to pay rent in a timely manner and upon the occurrence of certain events of insolvency with respect to the Company. The Company may terminate the Lease if the Office Space is not delivered will all improvements to be made by the Landlord pursuant to the Lease substantially completed by May 31, 2021.

As of March 31, 2021, the Company recognized approximately $0.6 million of lease construction incentive based on the construction allowance provided. The construction incentive has been recorded on the consolidated balance sheets as a deferred lease incentive obligation and will be amortized into earnings as a deduction of rent expense over the term of the Dallas Lease.