EXHIBIT 10.56
Confidential Treatment Requested
[LETTERHEAD OF SOBRATO DEVELOPMENT COMPANIES]
Lease between
Sobrato Interests III and Scios Inc.
Section........................................................................................... Page #
Parties........................................................................................... 1
Premises.......................................................................................... 1
Definitions.................................................................................... 1
Description.................................................................................... 2
Use............................................................................................... 2
Permitted Uses................................................................................. 2
Uses Prohibited................................................................................ 2
Advertisements and Signs....................................................................... 3
Covenants, Conditions and Restrictions......................................................... 3
Term and Rental................................................................................... 3
Lease Term..................................................................................... 3
Base Monthly Rent.............................................................................. 3
Late Charges................................................................................... 3
Security Deposit............................................................................... 4
Security Deposit Reduction..................................................................... 5
Acceptance of Possession and Covenants to Surrender............................................... 5
Landlord's Obligations......................................................................... 5
Delivery and Acceptance........................................................................ 5
Condition Upon Surrender....................................................................... 5
Failure to Surrender........................................................................... 6
Alterations and Additions......................................................................... 6
Tenant's Alterations........................................................................... 7
Free From Liens................................................................................ 7
Compliance With Governmental Regulations....................................................... 7
Maintenance of Premises........................................................................... 8
Landlord's Obligations......................................................................... 8
Tenant's Obligations........................................................................... 8
Landlord and ▇▇▇▇▇▇'s Obligations Regarding Reimbursable Operating Costs....................... 8
Reimbursable Operating Costs................................................................... 8
Tenant's Allocable Share....................................................................... 10
Waiver of Liability............................................................................ 10
Waiver of Liability............................................................................ 10
Audit Rights................................................................................... 10
Hazard Insurance.................................................................................. 11
***** Confidential portions of the material have been omitted and filed
separately with the Securities and Exchange Commission.
Page i
Confidential Treatement Requested
Tenant's Use....................................................................................... 11
Landlord's Insurance............................................................................... 11
Tenant's Insurance................................................................................. 11
Waiver............................................................................................. 12
Taxes................................................................................................. 12
Utilities............................................................................................. 13
Toxic Waste and Environmental Damage.................................................................. 13
Use of Hazardous Material.......................................................................... 13
Tenant's Indemnity Regarding Hazardous Material.................................................... 14
Notice of Release or Violation..................................................................... 15
Remediation Obligations............................................................................ 15
Environmental Monitoring........................................................................... 15
Tenant's Default...................................................................................... 16
Remedies........................................................................................... 16
Right to Re-enter.................................................................................. 17
Continuation of Lease.............................................................................. 17
No Termination..................................................................................... 17
Non-Waiver......................................................................................... 17
Performance by Landlord............................................................................ 18
Habitual Default................................................................................... 18
Landlord's Liability................................................................................. 18
Limitation on Landlord's Liability................................................................. 18
Limitation on Tenant's Recourse.................................................................... 19
Indemnification of Landlord........................................................................ 19
Destruction of Premises............................................................................... 19
Landlord's Obligation to Restore................................................................... 19
Limitations on Landlord's Restoration Obligation................................................... 19
Condemnation.......................................................................................... 20
Assignment, Sublease, Hypothecation................................................................... 20
Consent by Landlord................................................................................ 20
Assignment or Subletting Consideration............................................................. 21
No Release......................................................................................... 22
Reorganization of Tenant........................................................................... 22
Permitted Transfers................................................................................ 23
Effect of Default.................................................................................. 23
Effects of Conveyance.............................................................................. 23
Successors and Assigns............................................................................. 24
Option to Extend the Lease Term....................................................................... 24
▇▇▇▇▇ and Exercise of Option....................................................................... 24
Determination of Fair Market Rental................................................................ 24
Resolution of a Disagreement over the Fair Market Rental........................................... 25
Personal to Tenant................................................................................. 25
General Provisions.................................................................................... 25
Attorney's Fees.................................................................................... 25
Authority of Parties............................................................................... 26
Brokers............................................................................................ 26
***** Confidential portions of the material have been omitted and filed
separately with the Securities and Exchange Commission.
Page ii
Confidential Treatement Requested
Choice of Law...................................................................................... 26
Entire Agreement................................................................................... 26
Entry by Landlord.................................................................................. 26
Estoppel Certificates.............................................................................. 26
Exhibits........................................................................................... 27
Interest........................................................................................... 27
Modifications Required by ▇▇▇▇▇▇................................................................... 27
No Presumption Against Drafter..................................................................... 27
Notices............................................................................................ 27
Rent............................................................................................... 28
Representations.................................................................................... 28
Rights and Remedies................................................................................ 28
Severability....................................................................................... 28
Submission of Lease................................................................................ 28
Subordination...................................................................................... 28
Survival of Indemnities............................................................................ 29
Time............................................................................................... 29
Transportation Demand Management Programs.......................................................... 29
Waiver of Right to Jury Trial...................................................................... 29
EXHIBIT 2.A. - Building, Premises & Project
EXHIBIT 3.C. - Tenant's Sign Specifications
EXHIBIT 4.D. - Draft Letter of Credit
EXHIBIT 6.A. - Warranty on Slab Repair
EXHIBIT 7.A. - Movable Furniture and Trade Fixtures
EXHIBIT 21.T. - Draft Subordination, Non Disturbance and Attornment Agreement
***** Confidential portions of the material have been omitted and filed
separately with the Securities and Exchange Commission.
Page iii
Confidential Treatment Requested
[LETTERHEAD OF SOBRATO DEVELOPMENT COMPANIES]
1. PARTIES: THIS LEASE, is entered into on this 16th day of August 2002,
("Effective Date") between Sobrato Interests III, a California Limited
Partnership, whose address is ▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ the Lessee under the ground lease disclosed by
Memorandum of Lease recorded June 19, 1998, Recorders' Series 98207749; and
Scios Inc., a Delaware Corporation, whose address is ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇; hereinafter called respectively Landlord and
Tenant.
2. PREMISES:
A. Definitions.
i. Building 3. The term "Building 3" or "Building" shall mean
that single-story building containing 90,100 rentable square feet and all
improvements therein, in the location labeled as Building 3 on Exhibit 2.A.
attached hereto, commonly known ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇.
ii. Building 1. The term "Building 1" shall mean that 2-story
building containing 100,103 rentable square feet and all improvements therein,
in the location labeled as Building 1 on Exhibit 2.A. attached hereto and
commonly known as 6500 Paseo Padre Parkway, Fremont, California, 94555, and
concurrently leased to Tenant pursuant to that certain lease agreement between
the parties for Building 1 dated currently herewith (the "Building 1 Lease").
iii. Building 2. The term "Building 2" shall mean that 2-story
building containing 100,103 rentable square feet and all improvements therein,
in the location labeled as Building 2 on Exhibit 2.A. attached hereto, commonly
known as ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇.
iv. Building 4. The term "Building 4" shall mean that building
which Landlord may construct in the general location currently labeled as
Building 4 on Exhibit 2.A. attached hereto.
v. Building 5. The term "Building 5" shall mean that 2-story
building which Landlord may construct in the general location currently labeled
as Building 5 on Exhibit 2.A. attached hereto.
vi. Common Area. The term "Common Area" shall initially mean
that certain real property and all improvements thereon (including underground
sewer and water pipes running from the main trunk lines to the Building)
surrounding Building 1, Building 2 and Building 3, including surface parking and
all landscaped areas as shown on Exhibit 2.A. At completion of Building 4 and
Building 5, the term "Common Area" shall mean that certain real property and all
improvements thereon surrounding Building 1, Building 2, Building 3, Building 4,
and Building 5. Tenant shall have the non-exclusive right to utilize the Common
Area along with other tenants of the Project; provided, however, that in the
event Tenant eventually leases Buildings 2 and 4, Tenant shall have the
exclusive right to utilize the Common Area, including, without limitation, the
landscaped quad area shown on Exhibit 2.A.
Tenant covenants and agrees to refrain from doing or causing to be done, or
permitting any thing or act to be done, which would constitute
***** Confidential portions of the material have been omitted and filed
separately with the Securities and Exchange Commission.
Page 1
Confidential Treatement Requested
a default under the CC&R Declaration currently of record, or which would or
might make Landlord liable for any damages, claims or penalty.
vii. Project. The term "Project" shall mean that certain real
property of approximately 17.5 acres at the corner of Paseo Padre Parkway and
Commerce Drive in Fremont, California, and all improvements constructed thereon,
currently consisting of Building 1, Building 2, Building 3, and the Common Area
as outlined in bold on Exhibit 2.A Upon substantial completion of Buildings 4
and 5, the term "Project" shall include Buildings 4 and 5 and the additional
common areas outlined on Exhibit 2.A Tenant acknowledges Landlord's right to and
hereby consents to construction of Building 4, Building 5, and additional
buildings on land owned by Landlord adjacent to the Project so long as such
construction does not diminish the number or size of parking spaces available to
Tenant under this Lease and does not unreasonably interfere with ▇▇▇▇▇▇'s use of
the Premises. Landlord covenants not to construct any building on the central
quad area depicted on Exhibit 2.A Tenant shall ensure that the total number of
vehicles parked in the Project by employees and invitees of Tenant pursuant to
this Lease does not exceed 3.3 spaces per 1,000 rentable square feet of Building
square footage leased by ▇▇▇▇▇▇. Landlord covenants to maintain a parking ratio
for ▇▇▇▇▇▇'s use of at least 3.3 spaces per 1,000 square feet of space leased by
Tenant within the Project.
viii. Premises. The term "Premises" shall mean Building 3, also
referred to herein as "Building", and a non-exclusive right to use the Common
Area. (until such time as Tenant leases Buildings 1, 2, 3 and 4, at which point
Tenant's use of the Common Area shall be exclusive). The back-up generator and
related equipment located outside the Building(s), cooling towers located behind
Building 3, conduits and other infrastructure connecting Buildings 1 and 3, and
all furniture, fixtures and equipment currently in place at the Building are
also included in the Premises.
▇. ▇▇▇▇▇: Landlord hereby leases the Premises to Tenant, and Tenant
hires the Premises from Landlord.
3. USE:
A. Permitted Uses: Tenant may use the Premises as permitted under
applicable zoning laws only for the following purposes and shall not change the
use of the Premises without the prior written consent of Landlord: Office,
pharmaceutical manufacturing and packaging, research and development laboratory
facilities, and any other related lawful uses, with on-site amenities such as
cafeteria, fitness center, day care center, outdoor recreational areas and an
outdoor patio with security fencing (such fencing subject to Landlord's
reasonable approval not to be unreasonably withheld, conditioned or delayed).
Tenant shall use only the number of parking spaces allocated to Tenant under
Section ▇.▇.▇▇. this Lease. All commercial trucks and delivery vehicles shall
(i) be loaded and unloaded in a manner which does not interfere with the
businesses of other occupants of the Project, and (ii) to the extent such trucks
and delivery vehicles are not owned by Tenant, permitted to remain within the
Project only so long as is reasonably necessary to complete the loading and
unloading. Landlord makes no representation or warranty that any specific use of
the Premises desired by Tenant is permitted pursuant to any laws.
B. Uses Prohibited: Tenant shall not commit or suffer to be committed on
the Premises any waste, nuisance, or other act or thing which may disturb the
quiet enjoyment of any other tenant in or around the Premises, nor allow any
sale by auction (except in the normal course of business in connection with
▇▇▇▇▇▇'s disposing of surplus furniture, fixtures or equipment) or any other use
of the Premises for an unlawful purpose. Tenant shall not (i) damage or overload
the electrical, mechanical or plumbing systems of the Premises, (ii) attach,
hang or suspend anything from the ceiling, walls or columns of the building in
excess of the load limits for which such items are designed or
***** Confidential portions of the material have been omitted and filed
separately with the Securities and Exchange Commission.
Page 2
Confidential Treatement Requested
set any load on the floor in excess of the load limits for which such floors are
designed, or (iii) generate dust, fumes or waste products in excess of those
permitted by applicable law which create a fire or health hazard, or generate
dust, fumes or waste products that materially damage the Premises or any portion
of the Project, including without limitation the soils or ground water in or
around the Project. No materials, supplies, equipment, finished products or
semi-finished products, raw materials or articles of any nature, or any waste
materials, refuse, scrap or debris, shall be stored upon or permitted to remain
on any portion of the Premises outside of the Building (other than in designated
storage areas shown on plans approved by Landlord) without Landlord's prior
approval, which approval may be withheld in its sole discretion.
C. Advertisements and Signs: Tenant will not place or permit to be placed,
in, upon or about the Premises any signs not approved by the city and other
governing authority having jurisdiction. Tenant will not place or permit to be
placed outside the Premises any permanent signs, advertisements or notices
without the written consent of Landlord as to type, size, design, lettering,
coloring and location, which consent will not be unreasonably withheld,
conditioned or delayed. Tenant's sign specifications set forth in Exhibit 3.C.
(if attached and initialed by both parties) are hereby approved. Any sign placed
on the Premises shall be removed by Tenant, at its sole cost, prior to the
Expiration Date or promptly following the earlier termination of the Lease, and
Tenant shall repair, at its sole cost, any damage or injury to the Premises
caused thereby, and if not so removed, then Landlord may have same so removed at
Tenant's expense.
D. Covenants, Conditions and Restrictions: This Lease is subject to the
effect of (i) the covenants, conditions, restrictions, easements, mortgages or
deeds of trust, ground leases, rights of way of record and any other matters or
documents of record as set forth on the preliminary title report issued by
Alliance Title (order No. 11025129) dated June 21, 2002 ("Title Report"); and
(ii) any zoning laws of the city, county and state where the Building is
situated (collectively referred to herein as "Restrictions") and Tenant will
conform to and will not violate the terms of any such Restrictions. Landlord
represents and warrants that it has no actual knowledge (without duty to
investigate) of any matters with respect to item (i) hereinabove other than
those listed on the Title Report.
4. TERM AND RENTAL:
A. Lease Term: The term ("Lease Term") shall be for approximately one
hundred eighty (180) months, commencing on the Effective Date (also known as the
"Commencement Date") and ending August 31, 2017, ("Expiration Date"). This Lease
and all of the obligations of Landlord and Tenant shall be binding and in full
force and effect from and after the Effective Date except for Tenant's
obligation to pay Base Monthly Rent, which obligation shall commence on the Rent
Commencement Date defined below.
B. Base Monthly Rent: Commencing on September 1, 2003 (the "Rent
Commencement Date"), in addition to all other sums payable by Tenant under this
Lease, Tenant shall pay base monthly rent ("Base Monthly Rent") for the Premises
according to the following schedule:
[*****]
Commencing on the Rent Commencement Date, Base Monthly Rent shall be due in
advance on or before the first day of each calendar month during the Lease Term.
All sums payable by Tenant under this Lease shall be paid to Landlord in lawful
money of the United States of America, without offset or deduction and without
prior notice or demand, at the address specified in Section 1 of this Lease or
at such place or places as may be designated in writing by Landlord during the
Lease Term. Base Monthly Rent for any period less than a calendar month shall be
a pro rata portion of the monthly installment.
C. Late Charges: Tenant hereby acknowledges that late payment by ▇▇▇▇▇▇
to
***** Confidential portions of the material have been omitted and filed
separately with the Securities and Exchange Commission.
Page 3
Confidential Treatement Requested
Landlord of Base Monthly Rent and other sums due hereunder will cause Landlord
to incur costs not contemplated by this Lease, the exact amount of which is
extremely difficult to ascertain. Such costs include but are not limited to:
administrative, processing, accounting, and late charges which may be imposed on
Landlord by the terms of any contract, revolving credit, mortgage, or trust deed
covering the Premises. Accordingly, if any installment of Base Monthly Rent or
other sum due from Tenant shall not be received by Landlord or its designee
within five (5) days after the rent is due, Tenant shall pay to Landlord a late
charge equal to five (5%) percent of such overdue amount, which late charge
shall be due and payable on the same date that the overdue amount was due. The
parties agree that such late charge represents a fair and reasonable estimate of
the costs Landlord will incur by reason of late payment by ▇▇▇▇▇▇, excluding
interest and attorneys fees and costs. If any rent or other sum due from Tenant
remains delinquent for a period in excess of thirty (30) days after ▇▇▇▇▇▇'s
receipt of Landlord's notice that such rent or other sum was not received, then
in addition to such late charge, Tenant shall pay to Landlord interest on any
rent that is not paid when due at the Agreed Interest Rate specified in Section
21.J following the date such amount became due until paid. Acceptance by
Landlord of such late charge shall not constitute a waiver of Tenant's default
with respect to such overdue amount nor prevent Landlord from exercising any of
the other rights and remedies granted hereunder. In the event that a late charge
is payable hereunder, whether or not collected, for three (3) consecutive
installments of Base Monthly Rent, then the Base Monthly Rent shall
automatically become due and payable quarterly in advance, rather than monthly,
notwithstanding any provision of this Lease to the contrary.
D. Security Deposit: Concurrently with ▇▇▇▇▇▇'s execution of this Lease,
Tenant shall deposit with Landlord the sum of One Million Five Hundred Thousand
Dollars ($1,500,000.00) ("Security "Deposit"). Landlord shall not be deemed a
trustee of the Security Deposit, may use the Security Deposit in business, and
shall not be required to segregate it from its general accounts. Tenant shall
not be entitled to interest on the Security Deposit. If Tenant defaults beyond
any applicable notice and cure period with respect to any provisions of the
Lease, including but not limited to the provisions relating to payment of Base
Monthly Rent or other charges, Landlord may, to the extent reasonably necessary
to remedy Tenant's default, use any or all of the Security Deposit towards
payment of the following: (i) Base Monthly Rent or other charges in default
beyond any applicable notice and cure period; (ii) any other amount which
Landlord may spend or become obligated to spend by reason of Tenant's default
including, but not limited to Tenant's failure to restore or clean the Premises
following vacation thereof. If any portion of the Security Deposit is so used or
applied, Tenant shall, within ten (10) days after written demand from Landlord,
deposit cash with Landlord in an amount sufficient to restore the Security
Deposit to its full original amount, and shall pay to Landlord such other sums
as necessary to reimburse Landlord for any sums paid by Landlord. Tenant may not
assign or encumber the Security Deposit without the consent of Landlord. Any
attempt to do so shall be void and shall not be binding on Landlord. The
Security Deposit shall be returned to Tenant within thirty (30) days after the
Expiration Date and surrender of the Premises to Landlord, less any amount
deducted in accordance with this Section, together with ▇▇▇▇▇▇▇▇'s written
notice itemizing the amounts and purposes for such deduction.
▇▇▇▇▇▇▇▇ agrees that in lieu of a cash Security Deposit, Tenant, at its election
from time to time during the Lease Term may deposit with Landlord a letter of
credit as Security Deposit in a form reasonably acceptable to Landlord as shown
on Exhibit 4.D. attached. Within three (3) business days of such deposit,
Landlord shall return to Tenant any cash Security Deposit replaced by such
letter of credit (or in the event Tenant replaces a letter of credit with cash,
Landlord shall return the letter of credit to Tenant within 3 business days of
Landlord's receipt of the cash Security Deposit). Landlord
***** Confidential portions of the material have been omitted and filed
separately with the Securities and Exchange Commission.
Page 4
Confidential Treatement Requested
shall return to Tenant Landlord shall be entitled to draw the full amount of the
letter of credit at any time provided that Landlord certifies to the issuer of
the letter of credit that Tenant is in default beyond any applicable notice and
cure period under the Lease. Unless Tenant has deposited cash as Security
Deposit, Tenant shall keep the letter of credit in effect during the entire
Lease Term, as the same may be extended, plus a period of four (4) weeks after
expiration of the Lease Term, and at least thirty (30) days prior to expiration
of any letter of credit, the term thereof shall be renewed or extended for a
period of at least one (1) year. Tenant's failure to so renew or extend the
letter of credit shall be a material default of this Lease by Tenant unless
Tenant has deposited a cash Security Deposit with Landlord.
E. Security Deposit Reduction: Provided Tenant has not been in default
beyond any applicable notice and cure period under the Lease during the previous
12-month period, then at the commencement of the 25th month of the Lease Term
and every 12 months thereafter, the amount of the Security Deposit shall be
reduced by $273,000.00 until five (5) such reductions have occurred and the
remaining Security Deposit is $135,000.00.
5. This section intentionally left blank.
6. ACCEPTANCE OF POSSESSION AND COVENANTS TO SURRENDER:
A. Landlord's Obligations: On or before October 31, 2002, Landlord shall
cause the following work ("Landlord's Work") to be completed: (i) the existing
Building systems shall be in good operating condition and repair including the
heating, ventilating and air conditioning ("HVAC"), plumbing, sprinklers,
electrical (including panels and outlets); (ii) the roof, windows, structural
elements, and Building foundation shall be in good condition and repair; (iii)
any failure of the Premises to comply its present condition with applicable
federal, state, and local codes, including current Title 24 and Americans with
Disabilities Act ("ADA") requirements shall be corrected; and (iv) the Buildings
within the Project shall be separately metered and adequate provision made to
ensure that Common Area utilities are able to be fairly pro rated . Landlord
shall warrant the foregoing for one (1) year from the Commencement Date. Such
warranty shall exclude (i) routine maintenance, (ii) damage caused by the
negligence or misuse by Tenant and (iii) acts of God.
With regard to the recent moisture sealing of the first floor slab, Landlord
hereby assigns the existing warranty (attached as Exhibit 6.A.) to Tenant, and
shall secondarily warrant the slab of the first floor against moisture seepage
during the entire Lease Term. In the event moisture seeps through the slab of
the Building at any time during the Lease Term and adversely affects Tenant's
occupancy, Landlord shall be responsible to promptly repair the same and pay all
costs for such repair. During such repair, Tenant shall be entitled to an
abatement of rent for any areas of the Premises that are rendered unusable by
Landlord's repair.
As an inducement to Tenant to enter into this Lease, Landlord has agreed to
provide Tenant a allowance to be utilized by Tenant to offset relocation costs
("Relocation Allowance") in the amount of Four Hundred Fifty Thousand Five
Hundred and No/100 Dollars ($450,500.00). Landlord shall pay the Relocation
Allowance to Tenant upon execution of the Lease.
▇. ▇▇▇▇▇▇▇▇ and Acceptance: On the Effective Date, Landlord shall deliver
and Tenant shall accept possession of the Premises. By accepting possession,
▇▇▇▇▇▇ acknowledges that it has had an opportunity to conduct, and has
conducted, such inspections of the Premises as it deems necessary to evaluate
its condition. Except as otherwise specifically provided in this Lease, ▇▇▇▇▇▇
agrees to accept possession of the Premises in its then existing condition,
subject to all Restrictions and without representation or warranty by Landlord
except as specifically provided in this Lease.
C. Condition Upon Surrender: ▇▇▇▇▇▇ further agrees on the Expiration Date
or on the
***** Confidential portions of the material have been omitted and filed
separately with the Securities and Exchange Commission.
Page 5
Confidential Treatement Requested
sooner termination of this Lease, to surrender the Premises to Landlord in good
condition and repair, normal wear and tear excepted. In this regard, "normal
wear and tear" shall be construed to mean wear and tear caused to the Premises
by the natural aging process which occurs in spite of prudent application of the
best standards for maintenance, repair replacement, and janitorial practices,
and does not include items of neglected or deferred maintenance. In any event,
Tenant shall cause the following to be done prior to the Expiration Date or
sooner termination of this Lease: (i) all interior walls shall be painted or
cleaned so that they appear freshly painted, (ii) all tiled floors shall be
cleaned and waxed, (iii) all carpets shall be cleaned and shampooed, (iv) all
broken, marred, stained or nonconforming acoustical ceiling tiles shall be
replaced, (v) all cabling placed above the ceiling by Tenant or Tenant's
contractors shall be removed, (vi) all windows shall be washed; (vii) the HVAC
system shall be serviced by a reputable and licensed service firm and left in
"good operating condition and repair" as so certified by such firm, (viii) the
plumbing and electrical systems and lighting shall be placed in good order and
repair (including replacement of any burned out, discolored or broken light
bulbs, ballasts, or lenses. On or before the Expiration Date or sooner
termination of this Lease, Tenant shall remove all its personal property and
trade fixtures from the Premises. All property and fixtures not so removed shall
be deemed as abandoned by Tenant. Tenant shall ascertain from Landlord at least
ninety (90) days before the Expiration Date whether Landlord desires to have any
Permitted Alterations (as defined in Section 7) made by Tenant without
Landlord's consent removed and the Premises or any parts thereof restored to the
condition prior to the Permitted Alteration, or to cause Tenant to surrender all
Permitted Alterations in place to Landlord. If Landlord shall so desire, Tenant
shall, at Tenant's sole cost and expense, remove such Permitted Alterations as
Landlord requires and shall repair and restore said Premises or such parts
thereof before the Expiration Date. In addition, if ▇▇▇▇▇▇▇▇ notified Tenant in
writing contemporaneously with consenting to the installation of Alterations
that removal upon expiration would be required, then Tenant shall, at Tenant's
sole cost and expense and prior to the Expiration Date, remove such Alterations,
repair any damage caused by the removal and restore the affected area to its
condition prior to the Alteration. Such repair and restoration associated with
the removal of Alterations and Permitted Alterations shall include causing the
Premises to be brought into compliance with all applicable building codes and
laws in effect at the time of the removal to the extent such compliance is
necessitated by the repair and restoration work.
D. Failure to Surrender: If the Premises are not surrendered at the
Expiration Date or sooner termination of this Lease in the condition required by
this Section 6, Tenant shall be deemed in a holdover tenancy pursuant to this
Section 6.C and Tenant shall indemnify, defend, and hold Landlord harmless
against loss or liability resulting from delay by ▇▇▇▇▇▇ in so surrendering the
Premises including, without limitation, any claims made by any succeeding tenant
founded on such delay and costs incurred by Landlord in returning the Premises
to the required condition, plus interest at the Agreed Interest Rate. If Tenant
remains in possession of the Premises after the Expiration Date or sooner
termination of this Lease without Landlord's consent, ▇▇▇▇▇▇'s continued
possession shall be on the basis of a tenancy at sufferance and Tenant shall pay
as rent during the holdover period an amount equal to one hundred fifty percent
(150%) of the Base Monthly Rent due in the month preceding the earlier
termination or Expiration Date, as applicable, plus all other amounts payable by
Tenant under this Lease. Any holding over shall otherwise be on the terms and
conditions herein specified, except those provisions relating to the Lease Term
and any options to extend or renew, which provisions shall be of no further
force and effect. This provision shall survive the termination or expiration of
the Lease.
7. ALTERATIONS AND ADDITIONS:
***** Confidential portions of the material have been omitted and filed
separately with the Securities and Exchange Commission.
Page 6
Confidential Treatement Requested
▇. ▇▇▇▇▇▇'s Alterations: Tenant shall not make, or suffer to be made,
any alteration or addition to the Premises ("Alterations"), or any part thereof,
without obtaining Landlord's prior written consent, which shall not be
unreasonably withheld, conditioned or delayed, and delivering to Landlord the
proposed architectural and structural plans for all such Alterations at least
fifteen (15) days prior to the start of construction. After obtaining Landlord's
consent, which consent shall state whether or not Landlord will require Tenant
to remove such Alteration at the expiration or earlier termination of this
Lease, Tenant shall not proceed to make such Alterations until Tenant has
obtained all required governmental approvals and permits. Tenant agrees to
provide Landlord (i) written notice of the anticipated and actual start-date of
the work, (ii) a complete set of half-size (15" X 21") vellum as-built drawings,
and (iii) a certificate of occupancy for the work (if applicable) upon
completion of the Alterations. All Alterations shall be constructed in
compliance with all applicable building codes and laws including, without
limitation, the Americans with Disabilities Act of 1990 as amended from time to
time. Prior to the Expiration Date, all Alterations shall remain the property of
Tenant. Upon the Expiration Date, all Alterations, except movable furniture and
trade fixtures of the type described on Exhibit 7.A., shall become a part of the
realty and belong to Landlord but shall nevertheless be subject to removal by
▇▇▇▇▇▇ as provided in Section 6 above. Alterations which are not deemed as trade
fixtures include heating, lighting, electrical systems, air conditioning, walls,
carpeting, or any other installation which has become an integral part of the
Premises. All Alterations shall be maintained, replaced or repaired by Tenant at
its sole cost and expense.
Notwithstanding the foregoing, Tenant shall be entitled, without obtaining
Landlord's consent, to make Alterations which do not affect the Building
structure or mechanical systems and which do not cost more than Two Hundred
Fifty Thousand Dollars ($250,000.00) per Alteration ("Permitted Alterations");
provided, however, that: (i) Tenant shall still be required to comply with all
other provisions of this paragraph; and (ii) Landlord may elect to have Tenant
remove such Permitted Alterations at the expiration or earlier termination of
the Lease, unless ▇▇▇▇▇▇ has notified Landlord of such Permitted Alterations at
least ten (10) days prior to commencing construction and received approval from
Landlord that such Permitted Alterations will not be required to be removed at
the expiration of the Lease.
B. Free From Liens: Tenant shall keep the Premises free from all liens
arising out of work performed, materials furnished, or obligations incurred by
Tenant or claimed to have been performed for Tenant. In the event Tenant fails
to discharge any such lien within twenty (20) days after receiving notice of the
filing, Landlord shall be entitled to discharge the lien at Tenant's expense and
all resulting costs incurred by Landlord, including attorney's fees shall be due
immediately from Tenant as additional rent, unless ▇▇▇▇▇▇ has provided a bond to
release the lien.
C. Compliance With Governmental Regulations: The term Laws or
Governmental Regulations shall include all federal, state, county, city or
governmental agency laws, statutes, ordinances, standards, rules, requirements,
or orders now in force or hereafter enacted, promulgated, or issued. The term
also includes government measures regulating or enforcing public access, traffic
mitigation, occupational, health, or safety standards for employers, employees,
landlords, or tenants. Tenant, at ▇▇▇▇▇▇'s sole expense will comply with all
such Governmental Regulations applicable to the Premises or the Tenant's use of
the Premises and shall make all repairs, replacements, alterations, or
improvements necessary to comply with said Governmental Regulations unless they
are covered by ▇▇▇▇▇▇▇▇'s warranty under Section 6.A. The judgment of any court
of competent jurisdiction or the admission of Tenant in any action or proceeding
against Tenant (whether Landlord be a party thereto or not) that Tenant has
violated any such law, regulation or other requirement in its use of the
Premises shall be
***** Confidential portions of the material have been omitted and filed
separately with the Securities and Exchange Commission.
Page 7
Confidential Treatement Requested
conclusive of that fact as between Landlord and Tenant.
8. MAINTENANCE OF PREMISES:
A. Landlord's Obligations: Landlord at its sole cost and expense (and
not as part of Reimbursable Operating Costs) shall maintain in good condition,
order, and repair, and replace as and when necessary, the foundation pad
(including the existing moisture barrier as warrantied in Lease Section 6.A.
above) exterior load bearing walls and roof structure of the Building Shell.
Landlord shall also maintain, subject to reimbursement by Tenant pursuant to
Sections 8.C. and 8.D. below, the Common Area (including the electrical
transformers and connections running from the transformers to the Building's
electrical panels).
B. Tenant's Obligations: Tenant shall clean, maintain, repair and
replace when necessary the Premises and every part thereof (except for those
portions for which Landlord is responsible pursuant to Section 8.A. above)
through regular inspections and servicing, including but not limited to: (i) all
plumbing and sewage facilities within the Building, (ii) all heating ventilating
and air conditioning facilities and equipment, (iii) all fixtures, interior
walls, floors, carpets and ceilings, (iv) all windows, door entrances, plate
glass and glazing systems including caulking, and skylights, (v) all electrical
facilities and equipment, (vi) all automatic fire extinguisher equipment, (vii)
all elevator equipment, and (viii) the roof membrane system. All wall surfaces
and floor tile are to be maintained in an as good a condition as when ▇▇▇▇▇▇
took possession and holes, gouges, or defacements caused by Tenant shall be
repaired by Tenant.
C. Landlord and ▇▇▇▇▇▇'s Obligations Regarding Reimbursable Operating
Costs: In addition to the direct payment by Tenant of expenses as provided in
Sections 8.B, 9, 10 and 11 of this Lease, ▇▇▇▇▇▇ agrees to reimburse Landlord
for ▇▇▇▇▇▇'s Allocable Share (as defined in Section 8.E below) of Reimbursable
Operating Costs (as defined in Section 8.D below) resulting from Landlord
payment of expenses related to the Building or Project which are not otherwise
paid by Tenant directly. Tenant agrees to pay its Allocable Share of the
Reimbursable Operating Costs as additional rental within ten (10) business days
of written invoice from Landlord.
D. Reimbursable Operating Costs: For purposes of calculating Tenant's
Allocable Share of Building and Project Costs, the term "Reimbursable Operating
Costs" is defined as all costs and expenses of the nature hereinafter described
which are reasonably incurred by Landlord in connection with ownership and
operation of the Building or the Project in which the Premises are located,
together with such additional facilities as may be reasonably determined by
Landlord to be reasonably desirable or necessary to the ownership and operation
of the Building and/or Project. All costs and expenses shall be determined in
accordance with generally accepted accounting principles which shall be
consistently applied, including but not limited to the following: (i) Common
Area utilities, including water, power, telephone, heating, lighting, air
conditioning, ventilating, and Building utilities to the extent not separately
metered; (ii) Common Area maintenance and service agreements and the equipment
therein, including without limitation, Common Area janitorial services, alarm
and security services, exterior window cleaning, and maintenance of the
sidewalks, landscaping, waterscape, roof membrane, parking areas, driveways,
service areas, mechanical rooms, elevators, and the building exterior; (iii)
insurance premiums and costs, including without limitation, the premiums and
cost of fire, casualty and liability coverage and rental abatement and, if
elected by Landlord, earthquake insurance applicable to the Building or Project;
(iv) repairs, replacements and general maintenance (excluding repairs and
general maintenance paid by proceeds of insurance or by Tenant or other third
parties, and repairs or alterations attributable solely to tenants of the
Building or Project other than Tenant); and (v) all real estate taxes and
assessment installments or other impositions or charges which may be
***** Confidential portions of the material have been omitted and filed
separately with the Securities and Exchange Commission.
Page 8
Confidential Treatement Requested
levied on the Building or Project, upon the occupancy of the Building or Project
and including any substitute or additional charges which may be imposed during,
or applicable to the Lease Term including real estate tax increases due to a
sale, transfer or other change of ownership of the Building or Project (subject
to the limitation set forth in Section 10 below), as such taxes are levied or
appear on the City and County tax bills and assessment rolls. Landlord shall
have no obligation to provide guard services or other security measures for the
benefit of the Project. Tenant assumes all responsibility for the protection of
Tenant and ▇▇▇▇▇▇'s Agents from acts of third parties; provided, however, that
nothing contained herein shall prevent Landlord, at its sole option, from
providing security measures for the Project. The provision for payment of
Reimbursable Operating Costs by means of periodic payment of Tenant's Allocable
Share of Building and/or Project Costs is intended to pass on to Tenant and
reimburse Landlord for all costs of operating and managing the Building and/or
Project, except for those costs expressly set forth as Landlord's responsibility
under this Lease.
Notwithstanding anything to the contrary contained in this Lease, the following
shall not be included within Reimbursable Operating Costs: (i) leasing
commissions, attorneys' fees, costs, disbursements, and other expenses incurred
in connection with negotiations or disputes with tenants or in connection with
leasing, renovating, or improving space for tenants or other occupants or
prospective tenants or other occupants of the Building or the Project, or in
connection with a transfer of ownership of the Building or Project; (ii) the
cost of any service sold to any tenant (including Tenant) or other occupant for
which Landlord is entitled to be reimbursed as an additional charge or rental
over and above the basic rent and escalations payable under the lease with that
tenant; (iii) any depreciation on the Building or the Project; (iv) expenses in
connection with services or other benefits of a type that are not provided to
Tenant but which are provided another tenant or occupant of the Building or
Project; (v) costs incurred due to Landlord's violation of any terms or
conditions of this Lease or any other lease relating to the Building or Project;
(vi) overhead profit increments paid to Landlord's subsidiaries or affiliates
for services on or to the Building or Project or for supplies or other materials
to the extent that the cost of the services, supplies, or materials exceeds the
cost that would have been paid had the services, supplies, or materials been
provided by unaffiliated parties on a competitive basis; (vii) all interest,
loan fees, and other carrying costs related to any mortgage or deed of trust or
related to any capital item, and all rental and other payable due under any
ground or underlying lease, or any lease for any equipment ordinarily considered
to be of a capital nature (except janitorial equipment which is not affixed to
the Building); (viii) any compensation paid to clerks, attendants, or other
persons in commercial concessions operated by Landlord; (ix) advertising and
promotional expenditures; (x) costs of repairs and other work occasioned by
fire, windstorm, or other casualty of an insurable nature to the extent such
costs are either insured by Landlord or required under this Lease to be insured
by Landlord; (xi) any costs, fines, or penalties incurred due to violations by
Landlord of any governmental law, permit, regulation or ordinance, this Lease or
any other lease in the Project, or due to Landlord's negligence or willful
misconduct; (xii) costs for sculpture, paintings, or other objects of art (nor
insurance thereon or extraordinary security in connection therewith); (xiii)
wages, salaries, or other compensation paid to any executive employees above the
grade of building manager; (xiv) the cost of correcting any defects, any
building code violations or other violations which were defects or violations
prior to the Commencement Date; (xv) the cost of containing, removing, or
otherwise remediating any contamination of the Project (including the underlying
land and ground water) by any toxic or hazardous materials where such
contamination was not caused by Tenant or its agents, invitees, employees, or
suppliers; (xvi) reserves for any Reimbursable Operating Costs; (xvii) repairs
and maintenance to buildings of the Project in
***** Confidential portions of the material have been omitted and filed
separately with the Securities and Exchange Commission.
Page 9
Confidential Treatement Requested
which Tenant is not an occupant, and (xviii) any property management or similar
fee; (xix) reserves for capital improvements; and (xx) any costs for items which
Landlord is financially responsible under this Lease pursuant to Sections 6.A.
and 8.A. above.
E. Tenant's Allocable Share: For purposes of prorating Reimbursable
Operating Costs which Tenant shall pay, Tenant's Allocable Share of Reimbursable
Operating Costs shall be computed by multiplying the Reimbursable Operating
Costs by a fraction, the numerator of which is the rentable square footage of
the Premises and the denominator of which is either the total rentable square
footage of the Building if the service or cost is allocable only to the
Building, or the total square footage of the Project if the service or cost is
allocable to the entire Project. Tenant's obligation to share in Reimbursable
Operating Costs shall be adjusted to reflect the Lease Commencement and
Expiration dates and is subject to recalculation in the event of expansion of
the Premises, Building or Project.
F. Capital Improvements: If as a part of Tenant's fulfillment of its
maintenance obligations under this Section 8, a capital improvement or
replacement to the Premises is paid for by Tenant which costs in excess of
Twenty Five Thousand Dollars ($25,000.00), Landlord shall reimburse Tenant for
the cost of the replacement less the sum of (i) Twenty Five Thousand Dollars
($25,000.00) plus (ii) that portion of the remaining cost equal to the product
of such total cost multiplied by a fraction, the numerator of which is the
number of years remaining in the Lease Term, the denominator of which is the
useful life (in years) of the replacement, as reasonably determined in
accordance with generally accepted accounting principles. If the capital
improvement is made during the initial Lease Term, Tenant's share shall
initially be based on the initial Lease Term and if Tenant thereafter exercises
its renewal option, then upon the commencement of the Option term, an adjustment
shall be made so that during the Option Term Tenant shall reimburse Landlord an
amount determined by multiplying the cost of the capital improvement by a
fraction, the numerator of which is the sum of the Lease Term remaining at the
time the capital expenditure was made and the Option Term and the denominator of
which is the useful life of the capital improvement.
▇. ▇▇▇▇▇▇ of Liability: Failure by Landlord to perform any defined
services, or any cessation thereof, when such failure is caused by accident,
breakage, repairs, strikes, lockout or other labor disturbances or labor
disputes of any character or by any other cause, similar or dissimilar, shall
not render Landlord liable to Tenant in any respect, including damages to either
person or property, nor be construed as an eviction of Tenant, nor cause an
abatement of rent, nor relieve Tenant from fulfillment of any covenant or
agreement hereof. Should any equipment or machinery utilized in supplying the
services listed herein break down or for any cause cease to function properly,
upon receipt of written notice from Tenant of any deficiency or failure of any
services, Landlord shall use reasonable diligence to repair the same promptly,
but Tenant shall have no right to terminate this Lease and shall have no claim
for rebate of rent or damages on account of any interruptions in service
occasioned thereby or resulting therefrom. Tenant waives the provisions of
California Civil Code Sections 1941 and 1942 concerning the Landlord's
obligation of tenantability and ▇▇▇▇▇▇'s right to make repairs and deduct the
cost of such repairs from the rent. Landlord shall not be liable for a loss of
or injury to person or property, however occurring, through or in connection
with or incidental to furnishing, or its failure to furnish, any of the
foregoing.
H. Audit Rights: Tenant shall have the right, at Tenant's sole cost and
expense, provided Tenant utilizes a Certified Public Accountant ("CPA"), upon at
least thirty (30) days prior notice to Landlord at any time during regular
business hours, and no more frequently than twice per calendar year, to audit
Landlord's records pertaining to Operating Expenses for the immediately previous
calendar year only. Any disputes between Landlord and
***** Confidential portions of the material have been omitted and filed
separately with the Securities and Exchange Commission.
Page 10
Confidential Treatement Requested
Tenant concerning Landlord's accounting of Additional Rent shall be resolved
using generally accepted accounting principles ("GAAP"). If it is determined
from Tenant's audit of such operating expenses that Tenant was overcharged by
more than three percent (3%), such overcharge shall entitle Tenant to credit
against its next payment of Reimbursable Operations Costs the amount of the
overcharge and the costs incurred by Tenant with the audit (and, if such credit
occurs following the expiration of the Term, Landlord shall pay the amount of
such credit to Tenant within thirty (30) days after Landlord's receipt of an
invoice from Tenant). If the audit determines that the Tenant was overcharged
less than three percent (3%), such overcharge shall entitle Tenant to credit
against its next payment of Reimbursable Operations Costs the amount of the
overcharge and Tenant shall pay for all costs incurred by Tenant with the audit.
If the audit shall determine that Tenant was undercharged for the Reimbursable
Operations Costs, Tenant shall promptly pay the amount of such undercharge to
Landlord and Tenant shall pay for all costs incurred by Tenant with the audit.
Permitted Assignees of Tenant may only audit periods for which they occupy the
Premises and subtenants of Tenant are not entitled to any audit rights. ▇▇▇▇▇▇
agrees to keep all information thereby obtained by Tenant confidential.
9. HAZARD INSURANCE:
A. Tenant's Use: Tenant shall not use or permit the Premises, or any
part thereof, to be used for any purpose other than that for which the Premises
are hereby leased; and no use of the Premises shall be made or permitted, nor
acts done, which will cause an increase in premiums or a cancellation of any
insurance policy covering the Premises or any part thereof, nor shall Tenant
sell or permit to be sold, kept, or used in or about the Premises, any article
prohibited by the standard form of fire insurance policies. Tenant shall, at its
sole cost, comply with all requirements of any insurance company or organization
necessary for the maintenance of reasonable fire and public liability insurance
covering the Premises and appurtenances.
▇. ▇▇▇▇▇▇▇▇'s Insurance: Landlord agrees to purchase and keep in force
All Risk and fire insurance in an amount equal to the replacement cost of the
Building (not including any Alterations paid for by Tenant) as determined by
Landlord's insurance company's appraisers. At Landlord's election, such fire and
property damage insurance may be endorsed to cover loss caused by such
additional perils against which Landlord may elect to insure, including
earthquake, flood or terrorist acts, and shall contain reasonable deductibles.
Notwithstanding the foregoing, ▇▇▇▇▇▇'s obligation to pay for the cost of any
earthquake insurance premiums shall be limited to an amount equal to three (3)
times the cost of the All Risk and fire insurance premiums. Additionally
Landlord may maintain a policy of (i) commercial general liability insurance
insuring Landlord (and such others designated by Landlord) against liability for
personal injury, bodily injury, death and damage to property occurring or
resulting from an occurrence in, on or about the Premises or Project in an
amount as Landlord determines is reasonably necessary for its protection, and
(ii) rental loss insurance covering a twelve (12) month period. ▇▇▇▇▇▇ agrees to
pay Landlord as additional rent, on demand, ▇▇▇▇▇▇'s Allocable Share of the full
cost of said insurance as evidenced by insurance ▇▇▇▇▇▇▇▇ to Landlord, and in
the event of damage covered by said insurance, the amount of Tenant's Allocable
Share of any deductible under such policy. Payment shall be due to Landlord
within ten (10) days after written invoice to Tenant. It is understood and
agreed that ▇▇▇▇▇▇'s obligation under this Section will be prorated to reflect
the Lease Commencement and Expiration Dates.
▇. ▇▇▇▇▇▇'s Insurance: Tenant agrees, at its sole cost, to insure its
personal property and Alterations against damage for their full replacement
value (without depreciation). Said insurance shall provide All Risk and fire
coverage equal to the replacement cost of said property. The property casualty
insurance
***** Confidential portions of the material have been omitted and filed
separately with the Securities and Exchange Commission.
Page 11
Confidential Treatement Requested
provided by ▇▇▇▇▇▇ as required by this paragraph shall be carried in favor of
Landlord and ▇▇▇▇▇▇ as their respective interests may appear and shall provide
that any loss to Tenant's Alterations shall be adjusted with and be payable to
both Landlord and Tenant. Tenant shall deliver a copy of the policy and renewal
certificate to Landlord. ▇▇▇▇▇▇ agrees, at its sole cost, and to obtain worker's
compensation and Commercial General Liability insurance for occurrences within
the Premises with a combined single limit of not less than Five Million Dollars
($5,000,000.00). Tenant's liability insurance shall be primary insurance
containing a cross-liability endorsement, and shall provide coverage on an
"occurrence" rather than on a "claims made" basis. All such insurance shall
provide for severability of interests; shall provide that an act or omission of
one of the named (additional) insureds shall not reduce or avoid coverage to the
other named (additional insureds). Tenant shall name Landlord and ▇▇▇▇▇▇▇▇'s
lender as an additional insured and shall deliver a copy of the policies and
renewal certificates to Landlord. All insurance policies required under this
section shall provide for thirty (30) days' prior written notice to Landlord of
any cancellation, termination, or reduction in coverage. Notwithstanding the
above, ▇▇▇▇▇▇▇▇ retains the right to have Tenant provide other forms of
insurance which may be reasonably required to cover future risks.
▇. ▇▇▇▇▇▇: Landlord and Tenant hereby waive all tort, contract or other
rights each may have against the other on account of any loss or damage
sustained by Landlord or Tenant, as the case may be, or to the Premises or its
contents, which may arise from any risk covered by their respective insurance
policies (or which would have been covered had such insurance policies been
maintained in accordance with this Lease) as set forth above. The Parties shall
each obtain from their respective insurance companies a waiver of any right of
subrogation which said insurance company may have against Landlord or Tenant, as
the case may be.
10. TAXES: Tenant shall be liable for and shall pay as additional rental,
prior to delinquency, the following: (i) all taxes and assessments levied
against Tenant's personal property and trade or business fixtures; (ii) all real
estate taxes and assessment installments or other impositions or charges which
may be levied on the Premises or upon the occupancy of the Premises, including
any substitute or additional charges which may be imposed applicable to the
Lease Term; and (iii) real estate tax increases due to an increase in assessed
value resulting from a sale, transfer or other change of ownership of the
Premises as it appears on the City and County tax bills during the Lease Term
provided, however, that if property taxes increase during the first two years of
the initial Lease Term as a result of a reassessment due to a voluntary change
of ownership, Tenant shall not be responsible for payment of any resulting
increase; and thereafter, if property taxes increase as a result of a
reassessment due to a voluntary change of ownership, Tenant shall be responsible
for payment of only fifty percent (50%) of the property tax increase during the
first year after the reassessment, and thereafter Tenant shall be responsible
for payment of the entire tax increase. All real estate taxes shall be prorated
to reflect the Lease Commencement and Expiration Dates. If, at any time during
the Lease Term a tax, excise on rents, business license tax or any other tax,
however described, is levied or assessed against Landlord as a substitute or
addition, in whole or in part, for taxes assessed or imposed on land or
Buildings, Tenant shall pay and discharge its pro rata share of such tax or
excise on rents or other tax before it becomes delinquent; except that this
provision is not intended to cover net income taxes, inheritance, gift or estate
tax imposed upon Landlord. In the event that a tax is placed, levied, or
assessed against Landlord and the taxing authority takes the position that
Tenant cannot pay and discharge its pro rata share of such tax on behalf of
Landlord, then at Landlord's sole election, Landlord may increase the Base
Monthly Rent by the exact amount of such tax and Tenant shall pay such increase.
If by virtue of any application or proceeding brought by Landlord, there results
a reduction
***** Confidential portions of the material have been omitted and filed
separately with the Securities and Exchange Commission.
Page 12
Confidential Treatement Requested
in the assessed value of the Premises during the Lease Term, ▇▇▇▇▇▇ agrees to
pay Landlord a fee consistent with the fees charged by a third party appeal firm
for such services to the extent such fee does not exceed the reduction in the
amount of Taxes owing in the calendar year in which such application or
proceeding is filed. Tenant, at its cost, shall have the right at any time to
seek a reduction in or otherwise contest any Taxes for which it is obligated to
reimburse Landlord pursuant by action or proceeding against the entity with
authority to assess or impose the same. Landlord shall not be required to join
in any proceeding or action brought by Tenant unless the provisions of
applicable laws require that such proceeding or action be brought by or in the
name of Landlord, in which event Landlord shall join in such proceeding or
action or permit it to be brought in Landlord's name, provided that Tenant
protect, indemnify, and hold Landlord free and harmless from and against any
liability, cost or expense in connection with such proceeding or contest. Tenant
shall continue, during the pendency of such proceeding or action, to pay the
Taxes as required under this Lease. If Tenant is successful in such action or
proceeding, Landlord shall reimburse to Tenant ▇▇▇▇▇▇'s Allocable Share of the
reduction in Taxes realized by Tenant in such contest or proceeding within
thirty (30) days after the amount of such reduction has been determined. may be.
11. UTILITIES: Tenant shall pay directly to the providing utility all water,
gas, electric, telephone, and other utilities supplied to the Premises. Landlord
shall not be liable for loss of or injury to person or property, however
occurring, through or in connection with or incidental to furnishing or the
utility company's failure to furnish utilities to the Premises, and in such
event Tenant shall not be entitled to abatement or reduction of any portion of
Base Monthly Rent or any other amount payable under this Lease. Landlord and
Tenant acknowledge that the cooling towers located behind Building 3, which are
a part of the Premises, provide cooling to Buildings 1, 2 and 3. In the event
Building 2 is leased to a third party ("Building 2 Tenant"), Tenant agrees to
provide cooling services to the Building 2 Tenant conditioned upon the
following: Building 2 Tenant's execution and delivery to Tenant of an agreement,
in form and substance reasonably satisfactory to Tenant, which (i) authorizes
Tenant to bill the Building 2 Tenant for its pro rata share of utilities and
maintenance related to the cooling tower at a rate acceptable to Tenant and
Building 2 Tenant, and (ii) provides that Tenant shall not be held liable for
loss of or injury to person or property, however occurring, through or in
connection with or incidental to furnishing or failure to furnish cooling
services to Building 2.
12. TOXIC WASTE AND ENVIRONMENTAL DAMAGE:
A. Use of Hazardous Material: Without the prior written consent of
Landlord, Tenant or Tenant's agents, employees, contractors, subtenants or
invitees ("Tenant's Agents") shall not cause or permit any Hazardous Material,
as defined below, to be generated, brought onto, used, stored, created, released
or disposed of in or about the Premises, except that Tenant may use and store
small quantities of common household cleaners and office supplies on the
Premises and such quantities as are required for the operation of Tenant's
biopharmaceutical business, provided such use and storage is in strict
compliance with all Environmental Laws, as defined below. As used herein, the
term "Hazardous Material" shall mean any substance, material or waste (whether
liquid, solid or gaseous), which is a pollutant or contaminant, or which is
hazardous, toxic, ignitable, reactive, corrosive, dangerous, harmful or
injurious, or which presents a risk to public health or the environment, or
which is or may become regulated by or under the authority of any Environmental
Laws, as defined below, including, without limitation, asbestos or asbestos
containing materials, petroleum products, pesticides, polychlorinated biphenyls,
flammable explosives, radioactive materials and urea formaldehyde. As used
herein, the term "Environmental Laws" shall mean any present or future federal,
state or local law, whether
***** Confidential portions of the material have been omitted and filed
separately with the Securities and Exchange Commission.
Page 13
Confidential Treatement Requested
common law, statute, rule, regulation or ordinance, judgment, order, or other
governmental restriction, guideline, listing or requirement, relating to the
environment or any Hazardous Material, including without limitation, the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
42 U.S.C. (S)9601 et seq., the Resource Conservation and Recovery Act of 1976,
42 U.S.C. (S)6901 et seq., and applicable provisions of the California Health
and Safety Code and the California Water Code, all as heretofore or hereafter
may be amended from time to time. In order to obtain consent, Tenant shall
deliver to Landlord its written proposal describing the Hazardous Material to be
brought onto the Premises, measures to be taken for storage and disposal
thereof, and safety measures to be employed to prevent pollution or
contamination of the air, soil, surface and ground water. Landlord's approval
may be withheld in its reasonable judgment. In the event Landlord consents to
Tenant's use of Hazardous Materials on the Premises or such consent is not
required, Tenant represents and warrants that it shall comply with all
Governmental Regulations applicable to Hazardous Material including doing the
following: (i) adhere to all reporting and inspection requirements imposed by
Federal, State, County or Municipal laws, ordinances or regulations and provide
Landlord a copy of any such reports or agency inspections; (ii) obtain and
provide Landlord copies of all necessary permits required for the use and
handling of Hazardous Material on the Premises; (iii) enforce Hazardous Material
handling and disposal practices consistent with industry standards; (iv)
surrender the Premises free from any Hazardous Materials arising from Tenant's
generating, bringing, using, storing, creating, releasing, or disposing of
Hazardous Material; and (v) properly close the facility with regard to Hazardous
Material including the removal or decontamination of any process piping,
mechanical ducting, storage tanks, containers, or trenches which have come into
contact with Hazardous Material and obtaining a closure certificate from the
local administering agency prior to the Expiration Date.
B. Tenant's Indemnity Regarding Hazardous Material: Tenant shall, at its
sole cost and expense and with counsel reasonably acceptable to Landlord,
indemnify, defend and hold harmless Landlord and Landlord's trustees,
shareholders, directors, officers, employees, partners, affiliates, agents,
successors and assigns from, and against any and all claims, liabilities,
obligations, penalties, fines, actions, costs or expenses incurred or suffered
arising from generating, bringing, using, storing, creating, releasing or
disposing of Hazardous Material by Tenant or Tenant's Agents in or about the
Premises, or the violation of any Governmental Regulation or Environmental Laws
by Tenant or ▇▇▇▇▇▇'s Agents. This indemnification applies whether or not the
concentrations of any such Hazardous Material exceed applicable maximum
contaminant or action levels or any governmental agency has issued a cleanup
order. Tenant's indemnification, defense, and hold harmless obligations include,
without limitation, the following: (i) claims, liabilities, costs or expenses
resulting from or based upon administrative, judicial (civil or criminal) or
other action, legal or equitable, brought by any private or public person under
present or future laws, including Environmental Laws; (ii) claims, liabilities,
costs or expenses pertaining to the identification, monitoring, cleanup,
containment, or removal of Hazardous Material from soils, riverbeds or aquifers
including the provision of an alternative public drinking water source; (iii)
losses attributable to diminution in the value of the Premises or the Building
(iv) loss or restriction of use of rentable space in the Building; (v) adverse
effect on the marketing of any space in the Building; and (vi) all other
liabilities, obligations, penalties, fines, claims, actions (including remedial
or enforcement actions of any kind and administrative or judicial proceedings,
orders or judgments), damages (including consequential and punitive damages),
and costs (including attorney, consultant, and expert fees and expenses)
resulting from the release or violation. This Section 12.B shall survive the
expiration or termination of this Lease.
***** Confidential portions of the material have been omitted and filed
separately with the Securities and Exchange Commission.
Page 14
Confidential Treatement Requested
C. Notice of Release or Violation: If, during the Lease Term (including
any extensions), Tenant becomes aware of (i) any actual or threatened release of
a Hazardous Material on, under or about the Premises or (ii) any inquiry,
investigation, proceeding, claim, notice or order by any private or public
person or entity regarding the presence of Hazardous Material on, under or about
the Premises, including alleged violations of Environmental Laws by Tenant or
Tenant's Agents., Tenant shall give Landlord written notice of the release or
investigation within five (5) days after learning of it and shall simultaneously
and thereafter furnish Landlord with copies of any claims, notices of violation,
reports, or other writings received by ▇▇▇▇▇▇ concerning the release or
investigation. In the event of an actual release of Hazardous Materials, Tenant
shall also give Landlord prompt verbal notice of such release.
In the event of any release on or into the Premises or into the soil
or ground water under the Premises, the Building or the Project of any Hazardous
Materials used, treated, stored or disposed of by Tenant or Tenant's Agents,
▇▇▇▇▇▇ agrees to comply, at its sole cost, with all laws, regulations,
ordinances and orders of any federal, state or local agency relating to the
monitoring or remediation of such Hazardous Materials. In the event of any such
release of Hazardous Materials Tenant shall immediately give verbal and
follow-up written notice of the release to Landlord, and ▇▇▇▇▇▇ agrees to meet
and confer with Landlord and its Lender to attempt to eliminate and mitigate any
financial exposure to such Lender and resultant exposure to Landlord under
California Code of Civil Procedure Section 736(b) as a result of such release,
and promptly to take reasonable monitoring, cleanup and remedial steps given,
inter alia, the historical uses to which the Property has and continues to be
used, the risks to public health posed by the release, the then available
technology and the costs of remediation, cleanup and monitoring, consistent with
acceptable customary practices for the type and severity of such contamination
and all applicable laws. Nothing in the preceding sentence shall eliminate,
modify or reduce the obligation of Tenant under 12.B of this Lease to indemnify,
defend and hold Landlord harmless from any claims liabilities, costs or expenses
incurred or suffered by Landlord. Tenant shall provide Landlord prompt written
notice of Tenant's monitoring, cleanup and remedial steps.
In the absence of an order of any federal, state or local governmental or
quasi-governmental agency relating to the cleanup, remediation or other response
action required by applicable law, any dispute arising between Landlord and
Tenant concerning Tenant's obligation to Landlord under this Section 12.C
concerning the level, method, and manner of cleanup, remediation or response
action required in connection with such a release of Hazardous Materials shall
be resolved by mediation pursuant to this Lease.
D. Remediation Obligations: In the event of any release on, under or
about the Premises of any Hazardous Material generated, brought onto, used,
stored, created or disposed of by Tenant or Tenant's Agents, Tenant shall, at
its sole cost, promptly take all necessary and appropriate actions, in
compliance with applicable Environmental Laws, to remove or remediate such
Hazardous Material, whether or not any governmental agency has issued a cleanup
order, so as to remove (if applicable) and remediate the such Hazardous
Materials and return the Premises to a condition in compliance with applicable
Environmental Laws. Tenant shall obtain Landlord's written consent prior to
implementing any proposed removal or remedial action, provided, however, that
Tenant shall be entitled to respond immediately to an emergency without first
obtaining Landlord's written consent. Nothing in the preceding sentence shall in
any way eliminate, modify or reduce the obligation of Tenant under 12.B of this
Lease to indemnify, defend and hold Landlord harmless from any claims,
liabilities, costs or expenses incurred or suffered by Landlord.
E. Environmental Monitoring: So long
***** Confidential portions of the material have been omitted and filed
separately with the Securities and Exchange Commission.
Page 15
Confidential Treatement Requested
as it does not materially interfere with ▇▇▇▇▇▇'s use of the Premises, Landlord
and its agents shall have the right to inspect, investigate, sample and monitor
the Premises, including any air, soil, water, ground water, or to conduct any
other sampling or testing, digging, drilling or analysis, to determine whether
Tenant is complying with the terms of this Section 12. If Landlord discovers
that ▇▇▇▇▇▇ is not in compliance with the terms of this Section 12, any costs
incurred by Landlord in determining Tenant's non-compliance, including
attorneys', consultants' and experts' fees, shall be due and payable by Tenant
to Landlord within five (5) days following ▇▇▇▇▇▇▇▇'s written demand therefor.
Landlord represents and warrants, to the best of its knowledge, that as of the
Commencement Date there do not exist any Hazardous Materials on the Premises or
the property on which the Premises are a part.
13. TENANT'S DEFAULT: The occurrence of any of the following shall constitute
a material default and breach of this Lease by Tenant: (i) Tenant's failure to
pay the Base Monthly Rent including additional rent or any other payment due
under this Lease by the date such amount is due where such failure continues for
three (3) business days after Tenants receipt of Landlord's notice that Rent was
not received, (ii) the abandonment of the Premises by Tenant; (iii) Tenant's
failure to observe and perform any other required provision of this Lease, where
such failure continues for thirty (30) days after written notice from Landlord
provided however, that if the nature of the default is such that it cannot
reasonably be cured within the 30-day period, Tenant shall not be deemed in
default if it commences within such period to cure, and thereafter diligently
prosecutes the same to completion; (iv) Tenant's making of any general
assignment for the benefit of creditors; (v) the filing by or against Tenant of
a petition to have Tenant adjudged a bankrupt or of a petition for
reorganization or arrangement under any law relating to bankruptcy (unless, in
the case of a petition filed against ▇▇▇▇▇▇, the same is dismissed after the
filing); (vi) the appointment of a trustee or receiver to take possession of
substantially all of Tenant's assets located at the Premises or of Tenant's
interest in this Lease, where possession is not restored to Tenant within thirty
(30) days; (vii) the attachment, execution or other judicial seizure of
substantially all of Tenant's assets located at the Premises or of Tenant's
interest in this Lease, where such seizure is not discharged within thirty (30)
days; (viii) a default by Tenant under the Building 1 Lease; or (ix) the
occurrence of any other event described as a default elsewhere in this Lease or
any amendment thereto regardless of whether such event is defined as a material
default and breach of this Lease in this Paragraph 13.
A. Remedies: In the event of any such default by ▇▇▇▇▇▇, then in
addition to other remedies available to Landlord at law or in equity, Landlord
shall have the immediate option to terminate this Lease and all rights of Tenant
hereunder by giving written notice of such intention to terminate. In the event
Landlord elects to so terminate this Lease, Landlord may recover from Tenant all
the following: (i) the worth at time of award of any unpaid rent which had been
earned at the time of such termination; (ii) the worth at time of award of the
amount by which the unpaid rent which would have been earned after termination
until the time of award exceeds the amount of such rental loss for the same
period that Tenant proves could have been reasonably avoided; (iii) the worth at
time of award of the amount by which the unpaid rent for the balance of the
Lease Term after the time of award exceeds the amount of such rental loss that
Tenant proves could be reasonably avoided; (iv) any other amount necessary to
compensate Landlord for all detriment proximately caused by ▇▇▇▇▇▇'s failure to
perform its obligations under this Lease, or which in the ordinary course of
things would be likely to result therefrom; including the following: (x)
expenses for repairing, altering or remodeling the Premises for purposes of
reletting, (y) broker's fees, advertising costs or other expenses of reletting
the Premises, and (z) costs of carrying the Premises such as taxes, insurance
premiums, utilities and security precautions; and (v) at Landlord's election,
such other amounts in
***** Confidential portions of the material have been omitted and filed
separately with the Securities and Exchange Commission.
Page 16
Confidential Treatement Requested
addition to or in lieu of the foregoing as may be permitted by applicable
California law. The term "rent", as used herein, is defined as the minimum
monthly installments of Base Monthly Rent and all other sums required to be paid
by Tenant pursuant to this Lease, all such other sums being deemed as additional
rent due hereunder. As used in (i) and (ii) above, "worth at the time of award"
shall be computed by allowing interest at a rate equal to the discount rate of
the Federal Reserve Bank of San Francisco plus five (5%) percent per annum. As
used in (iii) above, "worth at the time of award" shall be computed by
discounting such amount at the discount rate of the Federal Reserve Bank of San
Francisco at the time of award plus one (1%) percent.
B. Right to Re-enter: In the event of any such default by Tenant,
Landlord shall have the right, after terminating this Lease, to re-enter the
Premises and remove all persons and property. Such property may be removed and
stored in a public warehouse or elsewhere at the cost of and for the account of
Tenant, and disposed of by Landlord in any manner permitted by law.
C. Continuation of Lease: If Landlord does not elect to terminate this
Lease as provided in Section 13.A or 13.B above, then the provisions of
California Civil Code Section 1951.4, (Landlord may continue the lease in effect
after ▇▇▇▇▇▇'s breach and abandonment and recover rent as it becomes due if
Tenant has a right to sublet and assign, subject only to reasonable limitations)
as amended from time to time, shall apply and Landlord may from time to time,
without terminating this Lease, either recover all rental as it becomes due or
relet the Premises or any part thereof for such term or terms and at such rental
or rentals and upon such other terms and conditions as Landlord in its sole
discretion may deem advisable, with the right to make alterations and repairs to
the Premises. In the event that Landlord elects to so relet, rentals received by
Landlord from such reletting shall be applied in the following order to: (i) the
payment of any indebtedness other than Base Monthly Rent due hereunder from
Tenant to Landlord; (ii) the payment of any cost of such reletting; (iii) the
payment of the cost of any alterations and repairs to the Premises; and (iv) the
payment of Base Monthly Rent and other sums due and unpaid hereunder. The
residual rentals, if any, shall be held by Landlord and applied in payment of
future Base Monthly Rent as the same may become due and payable hereunder.
Landlord shall have the obligation to market the space. In the event the portion
of rentals received from such reletting which is applied to the payment of rent
hereunder during any month be less than the rent payable during that month by
Tenant hereunder, then Tenant shall pay such deficiency to Landlord immediately
upon demand. Such deficiency shall be calculated and paid monthly. Tenant shall
also pay to Landlord, as soon as ascertained, any costs and expenses incurred by
Landlord in such reletting or in making such alterations and repairs not covered
by the rentals received from such reletting.
D. No Termination: ▇▇▇▇▇▇▇▇'s re-entry or taking possession of the
Premises pursuant to 13.B or 13.C shall not be construed as an election to
terminate this Lease unless written notice of such intention is given to Tenant
or unless the termination is decreed by a court of competent jurisdiction.
Notwithstanding any reletting without termination by Landlord because of any
default by ▇▇▇▇▇▇, Landlord may at any time after such reletting elect to
terminate this Lease for any such default.
E. Non-Waiver: Landlord may accept Tenant's payments without waiving any
rights under this Lease, including rights under a previously served notice of
default. No payment by Tenant or receipt by Landlord of a lesser amount than any
installment of rent due shall be deemed as other than payment on account of the
amount due. If Landlord accepts payments after serving a notice of default,
Landlord may nevertheless commence and pursue an action to enforce rights and
remedies under the previously served notice of default without giving Tenant any
further notice or demand. Furthermore, the Landlord's acceptance of rent from
the Tenant when the Tenant is holding
***** Confidential portions of the material have been omitted and filed
separately with the Securities and Exchange Commission.
Page 17
Confidential Treatement Requested
over without express written consent does not convert ▇▇▇▇▇▇'s Tenancy from a
tenancy at sufferance to a month to month tenancy. No waiver of any provision of
this Lease shall be implied by any failure of Landlord to enforce any remedy for
the violation of that provision, even if that violation continues or is
repeated. Any waiver by Landlord of any provision of this Lease must be in
writing. Such waiver shall affect only the provision specified and only for the
time and in the manner stated in the writing. No delay or omission in the
exercise of any right or remedy by Landlord shall impair such right or remedy or
be construed as a waiver thereof by Landlord. No act or conduct of Landlord,
including, without limitation, the acceptance of keys to the Premises, shall
constitute acceptance of the surrender of the Premises by Tenant before the
Expiration Date. Only written notice from Landlord to Tenant of acceptance shall
constitute such acceptance of surrender of the Premises. ▇▇▇▇▇▇▇▇'s consent to
or approval of any act by Tenant which requires ▇▇▇▇▇▇▇▇'s consent or approvals
shall not be deemed to waive or render unnecessary Landlord's consent to or
approval of any subsequent act by ▇▇▇▇▇▇.
F. Performance by Landlord: If Tenant fails to perform any obligation
required under this Lease or by law or governmental regulation, Landlord in its
reasonable discretion may (following notice to Tenant and a 3 business-day
period for Tenant to perform or commence to perform) without waiving any rights
or remedies and without releasing Tenant from its obligations hereunder, perform
such obligation, in which event Tenant shall pay Landlord as additional rent all
sums reasonably paid by Landlord in connection with such substitute performance,
including interest at the Agreed Interest Rate (as defined in Section 21.J)
within ten (10) days of Landlord's written notice for such payment.
G. Habitual Default: The provisions of Section 13 notwithstanding, the
Parties agree that if Tenant shall have defaulted in the performance of any (but
not necessarily the same) term or condition of this Lease for three or more
times during any twelve (12) month period during the Lease Term, then such
conduct shall, at the election of the Landlord, represent a separate event of
default which cannot be cured by Tenant. Tenant acknowledges that the purpose of
this provision is to prevent repetitive defaults by Tenant, which work a
hardship upon Landlord and deprive Landlord of Tenant's timely performance under
this Lease.
14. LANDLORD'S LIABILITY:
A. Limitation on Landlord's Liability: In the event of Landlord's
failure to perform any of its covenants or agreements under this Lease, Tenant
shall give Landlord written notice of such failure and shall give Landlord
thirty (30) days to cure or commence to cure such failure prior to any claim for
breach or resultant damages, provided, however, that if the nature of the
default is such that it cannot reasonably be cured within the 30-day period,
Landlord shall not be deemed in default if it commences within such period to
cure, and thereafter diligently prosecutes the same to completion; provided
further that `Landlord shall promptly commence to cure any failure which
involves life safety issues. In addition, upon any such failure by Landlord,
Tenant shall give notice by registered or certified mail to any person or entity
with a security interest in the Premises ("Mortgagee") that has provided Tenant
with notice of its interest in the Premises, and shall provide Mortgagee a
reasonable opportunity to cure such failure. ▇▇▇▇▇▇ agrees that each of the
Mortgagees to whom this Lease has been assigned is an expressed third-party
beneficiary hereof. Tenant waives any right under California Civil Code Section
1950.7 or any other present or future law to the collection of any payment or
deposit from Mortgagee or any purchaser at a foreclosure sale of Mortgagee's
interest unless Mortgagee or such purchaser shall have actually received and not
refunded the applicable payment or deposit. Tenant further waives any right to
terminate this Lease and to vacate the Premises on Landlord's default under this
Lease except as otherwise specifically set forth in this Lease.
***** Confidential portions of the material have been omitted and filed
separately with the Securities and Exchange Commission.
Page 18
Confidential Treatement Requested
B. Limitation on Tenant's Recourse: If Landlord is a corporation, trust,
partnership, joint venture, unincorporated association or other form of business
entity, then (i) the obligations of Landlord shall not constitute personal
obligations of the officers, directors, trustees, partners, joint venturers,
members, owners, stockholders, or other principals or representatives except to
the extent of their property interest in the Project. Tenant shall have recourse
only to the interest of Landlord in the Project for the satisfaction of the
obligations of Landlord and shall not have recourse to any other assets of
Landlord for the satisfaction of such obligations.
C. Indemnification of Landlord: Except to the extent due to Landlord's
gross negligence, willful misconduct, or breach of this Lease, as a material
part of the consideration rendered to Landlord, Tenant hereby waives all claims
against Landlord for damages to goods, wares and merchandise, and all other
personal property in, upon or about said ▇▇▇▇▇▇▇▇ and for injuries to persons in
or about said ▇▇▇▇▇▇▇▇, from any cause arising at any time to the fullest extent
permitted by law, and ▇▇▇▇▇▇ shall indemnify, defend with counsel reasonably
acceptable to Landlord and hold Landlord, and their shareholders, directors,
officers, trustees, employees, partners, affiliates and agents from any claims,
liabilities, costs or expenses incurred or suffered arising from the use or
occupancy of the Premises or any part of the Project by Tenant or Tenant's
Agents, the acts or omissions of Tenant or Tenant's Agents, ▇▇▇▇▇▇'s breach of
this Lease, or any damage or injury to person or property from any cause (except
to the extent due to the gross negligence or willful misconduct of Landlord)
including but not limited to the use or occupancy of the Premises or any part of
the project by Tenant or ▇▇▇▇▇▇'s Agents, the acts or omissions of Tenant or
Tenant's Agents, ▇▇▇▇▇▇'s breach of this Lease or from the failure of Tenant to
keep the Premises in good condition and repair as herein provided. Further, in
the event Landlord is made party to any litigation due to the acts or omission
of Tenant or ▇▇▇▇▇▇'s Agents, ▇▇▇▇▇▇ will indemnify, defend (with counsel
reasonably acceptable to Landlord) and hold Landlord harmless from any such
claim or liability including ▇▇▇▇▇▇▇▇'s costs and expenses and reasonable
attorney's fees incurred in defending such claims.
15. DESTRUCTION OF PREMISES:
▇. ▇▇▇▇▇▇▇▇'s Obligation to Restore: In the event of a destruction of
the Premises during the Lease Term Landlord and Tenant, to the extent of its
Alterations, shall repair the same to a similar condition to that which existed
prior to such destruction. Such destruction shall not annul or void this Lease;
however, Tenant shall be entitled to a proportionate reduction of Base Monthly
Rent while repairs are being made, such proportionate reduction to be based upon
the extent to which the repairs interfere with Tenant's business in the
Premises. In no event shall Landlord be required to replace or restore
Alterations or Tenant's fixtures or personal property. Tenant shall be obligated
to replace and restore all Alterations paid for by Tenant.
B. Limitations on Landlord's Restoration Obligation: Notwithstanding the
provisions of Section 15.A, Landlord shall have no obligation to repair, or
restore the Premises if any of the following occur: (i) if in the reasonable and
adequately supported view of a reputable architect or engineer selected by
Landlord and Tenant, the repairs cannot be made in four hundred fifty (450) days
from the date of receipt of all governmental approvals necessary under the laws
and regulations of State, Federal, County or Municipal authorities, (ii) if the
damage or destruction is not fully covered by the amount of the deductible and
the insurance required to be maintained by Landlord (unless the casualty is due
to Landlord's gross negligence or willful misconduct, in which case Landlord
shall be obligated to rebuild or restore the same notwithstanding any
insufficiency of insurance proceeds), (iii) the damage or destruction occurs in
the last thirty (30) months of the Lease Term unless Tenant has exercised, or
exercises within ten (10) days of the date of the casualty an option to extend
the Lease Term, (iv) Tenant is in default pursuant to the
***** Confidential portions of the material have been omitted and filed
separately with the Securities and Exchange Commission.
Page 19
Confidential Treatement Requested
provisions of Section 13 beyond any applicable notice and cure period, or (v)
Tenant has vacated the Premises for more than ninety (90) days prior to the
casualty. In any such event Landlord may elect either to (i) complete the repair
or restoration, or (ii) terminate this Lease by providing Tenant written notice
of its election within sixty (60) days following the damage or destruction. If
Landlord elects to repair or restore, this Lease shall continue in full force
and effect. Tenant hereby waives the benefits and rights provided to Tenant by
the provisions of Civil Code Sections 1932 and 1933. Notwithstanding anything to
the contrary contained in this Lease:
Landlord shall give notice to Tenant of its election to rebuild or not to
rebuild the Premises within thirty (30) business days of the casualty to the
Premises and such notice shall specify such architect's or engineer's reasonable
estimate as to the time required to rebuild or restore the Premises;
If Landlord fails to restore the Premises (including reasonable means of
access thereto) within a period which is sixty days longer than the period
stated in Landlord's notice to Tenant as the estimated rebuilding period, Tenant
may terminate this Lease by delivering written notice to Landlord of such
termination within ten (10) business days thereafter, in which event this Lease
shall terminate as of the date of the giving of such notice.
16. CONDEMNATION: If any part of the Premises shall be taken for any public or
quasi-public use, under any statute or by right of eminent domain or private
purchase in lieu thereof, and only a part thereof remains which is susceptible
of occupation hereunder, this Lease shall, as to the part so taken, terminate as
of the day before title vests in the condemner or purchaser ("Vesting Date") and
Base Monthly Rent payable hereunder shall be adjusted so that Tenant is required
to pay for the remainder of the Lease Term only such portion of Base Monthly
Rent as the value of the part remaining after such taking bears to the value of
the entire Premises prior to such taking. Further, in the event of such partial
taking, Landlord shall have the option to terminate this Lease as of the Vesting
Date. If all of the Premises or such part thereof be taken so that there does
not remain a portion susceptible for occupation hereunder, this Lease shall
terminate on the Vesting Date. If part or all of the Premises be taken, all
compensation awarded upon such taking shall go to Landlord, and Tenant shall
have no claim thereto; except Landlord shall cooperate with Tenant, without cost
to Landlord, to recover compensation for damage to or taking of any Alterations
paid for by Tenant, or for Tenant's moving costs. Tenant hereby waives the
provisions of California Code of Civil Procedures Section 1265.130 and any other
similarly enacted statue, and the provisions of this Section 16 shall govern in
the case of a taking.
17. ASSIGNMENT, SUBLEASE, HYPOTHECATION:
A. Consent by Landlord: Except for Permitted Transfers as defined in
Section 17.E, Tenant may not voluntarily, involuntarily or by operation of law,
assign, sell or otherwise transfer all or any part of Tenant's interest in this
Lease or in the Premises, cause or permit any part of the Premises to be sublet,
occupied or used by anyone other than Tenant, or permit any person to succeed to
any interest in this Lease or the Premises (all of the foregoing, excluding any
Permitted Transfer, being referred to herein as a "Transfer") without the
express written consent of Landlord, which consent shall not be unreasonably
withheld, conditioned or delayed. In the event Tenant desires to effectuate a
Transfer, Tenant shall deliver to Landlord (1) executed counterparts of any
agreement and of all ancillary agreements with the proposed transferee, (2)
current financial statements of the transferee covering the preceding three
years (if applicable), (3) the nature of the proposed transferee's business to
be carried on in the Premises, (4) a statement outlining all consideration to be
given on account of the Transfer, and (5) a current financial statement of
Tenant. Landlord may condition its approval of any Transfer on receipt
***** Confidential portions of the material have been omitted and filed
separately with the Securities and Exchange Commission.
Page 20
Confidential Treatement Requested
of a certification from both Tenant and the proposed transferee of all
consideration to be paid to Tenant in connection with such Transfer. At
Landlord's request, Tenant shall also provide additional information reasonably
required by Landlord to determine whether it will consent to the proposed
Transfer. Landlord shall have a fifteen (15) day period following receipt of all
the foregoing within which to notify Tenant in writing that Landlord elects to:
(i) permit Tenant to Transfer such space to the named transferee on the terms
and conditions set forth in the notice; or (ii) refuse consent. If Landlord
should fail to notify Tenant in writing of such election within the 15-day
period, Landlord shall be deemed to have elected option (i) above. ▇▇▇▇▇▇▇▇'s
consent to the proposed Transfer shall not be unreasonably withheld, conditioned
or delayed, provided and upon the condition that: (i) the proposed transferee is
engaged in a business that is limited to a use permitted under this Lease; (ii)
the proposed transfer agreement is in form reasonably satisfactory to Landlord;
(iii) the proposed Transfer will not result in there being greater than three
(3) subtenants or other occupants (not including employees) within the Premises
at any time during the Lease Term; and (iv) Tenant reimburses Landlord on demand
for any costs up to $3,000.00 per Transfer that may be incurred by Landlord in
connection with said Transfer, including the costs of making investigations as
to the acceptability of the proposed transferee and legal costs incurred in
connection with the granting or denial of any requested consent. In the event
all or any one of the foregoing conditions are not satisfied (without limiting
other factors that may be considered by Landlord in connection with a requested
Transfer), Landlord shall be considered to have acted reasonably if it withholds
its consent. Tenant shall not hypothecate, mortgage, pledge or otherwise
encumber Tenant's interest in this Lease or the Premises or otherwise use the
Lease as a security device in any manner without the consent of Landlord, (all
of the foregoing being an "Hypothecation") which consent Landlord may withhold
in its sole discretion. Tenant shall reimburse Landlord on demand for any costs
that may be incurred by Landlord in connection with an Hypothecation, including
legal costs incurred in connection with the granting or denial of any requested
consent. Landlord's consent to one or more Transfers or Hypothecations shall not
operate to exhaust Tenant's obligation to obtain Landlord's consent to other
Transfers or Hypothecations nor constitute consent to an assignment or other
Transfer following foreclosure of any permitted lien, mortgage or other
encumbrance. If Tenant is a corporation, limited liability company,
unincorporated association, partnership or other legal entity, the sale,
assignment, transfer or hypothecation of any stock, membership or other
ownership interest in such entity (whether occurring at one time or over a
period of time) in the aggregate of more than fifty percent (50%) (determined
cumulatively) shall be deemed an assignment of this Lease; in the case of a
partnership, any withdrawal or substitution (whether occurring at one time or
over a period of time) of any partners owning fifty percent (50%) or more
(cumulatively) of the partnership, or the dissolution of the partnership shall
be deemed an assignment of this Lease; provided that, subject to Section 17.D
below, the foregoing provisions of this sentence shall not apply to a transfer
of stock in a corporation whose stock is publicly traded on a public stock
exchange. If Tenant is a corporation whose stock is not publicly traded on a
public stock exchange, any dissolution, merger, consolidation or reorganization
of Tenant shall be deemed a Transfer.
B. Assignment or Subletting Consideration: Landlord and Tenant hereby
agree that fifty percent (50%) of any rent or other economic consideration
(including without limitation, payments for trade fixtures and personal property
in excess of the fair market value thereof, stock, warrants, and options) in
excess of the Base Monthly Rent payable hereunder (after deducting therefrom
Reasonable Transfer Costs (defined below)) (i) realized by Tenant in connection
with any Transfer by Tenant, and/or (ii) realized by a subtenant or any other
person or entity (other than Tenant) (any such subtenant, person or entity being
a "Subsequent Transferor") in
***** Confidential portions of the material have been omitted and filed
separately with the Securities and Exchange Commission.
Page 21
Confidential Treatement Requested
connection with a sublease, assignment or other Transfer by such Subsequent
Transferor, shall be paid by Tenant to Landlord promptly after such amounts are
paid to Tenant or a Subsequent Transferor, regardless of the amount of subrent
the Subsequent Transferor pays to Tenant or any prior Subsequent Transferor. As
used in this Section 17.B, "Reasonable Transfer Costs" shall mean the following
costs, to the extent reasonably incurred in connection with the Transfer in
question: (i) legal fees, advertising costs and brokerage commissions payable to
unaffiliated third parties, and (ii) tenant improvement costs incurred solely in
connection with such Transfer and unamortized costs of Tenant Alterations paid
by Tenant and specifically related to the area affected by the Transfer. In the
case of a Transfer other than an assignment of ▇▇▇▇▇▇'s entire interest in the
Lease and Premises, Reasonable Transfer Costs shall be amortized on a straight
line basis, without interest, over the initial term of the Transfer. ▇▇▇▇▇▇'s
obligation to pay over ▇▇▇▇▇▇▇▇'s portion of the consideration constitutes an
obligation for additional rent hereunder. The above provisions relating to
▇▇▇▇▇▇▇▇'s right to terminate the Lease and relating to the allocation of excess
rent are independently negotiated terms of the Lease which constitute a material
inducement for the Landlord to enter into the Lease, and are agreed by the
Parties to be commercially reasonable. No Transfer by Tenant shall relieve it of
any obligation under this Lease. Any Transfer which conflicts with the
provisions of this Lease shall be void.
C. No Release: Any Transfer shall be made only if and shall not be
effective until the transferee shall execute, acknowledge, and deliver to
Landlord an agreement, in form and substance reasonably satisfactory to
Landlord, whereby the transferee shall assume all the obligations of this Lease
on the part of Tenant to be performed or observed to the extent of the interest
being transferred and shall be subject to all the covenants, agreements, terms,
provisions and conditions in this Lease to the extent applicable to the interest
being transferred. Notwithstanding any Transfer and the acceptance of rent or
other sums by Landlord from any transferee, Tenant shall remain fully liable for
the payment of Base Monthly Rent and additional rent due, and to become due
hereunder, for the performance of all the covenants, agreements, terms,
provisions and conditions contained in this Lease on the part of Tenant to be
performed and for all acts and omissions of any transferee or any other person
claiming under or through any transferee that shall be in violation of any of
the terms and conditions of this Lease, and any such violation shall be deemed a
violation by Tenant. Tenant shall indemnify, defend and hold Landlord harmless
from and against all losses, liabilities, damages, costs and expenses (including
reasonable attorney fees) resulting from any claims that may be made against
Landlord by the proposed transferee or by any real estate brokers or other
persons claiming compensation in connection with the proposed Transfer.
D. Reorganization of Tenant: The provisions of this Section 17.D shall
apply if Tenant is a publicly-held corporation and: (i) there is a dissolution,
merger, consolidation, or other reorganization of or affecting Tenant, where
Tenant is not the surviving corporation, or (ii) there is a sale or transfer of
stock possessing more than 50% of the total combined voting power of all classes
of Tenant's capital stock issued, outstanding and entitled to vote for the
election of directors to one person or entity (or to any group of related
persons or entities) (the "Acquiring Entity"), and after such sale or transfer
of stock Tenant's stock is no longer publicly traded. In a transaction under
clause (i), the surviving corporation shall promptly execute and deliver to
Landlord an agreement in form reasonably satisfactory to Landlord under which
such surviving corporation assumes the obligations of Tenant hereunder. In a
transaction under clause (ii), the Acquiring Entity shall promptly execute and
deliver to Landlord a guaranty of lease in form reasonably satisfactory to
Landlord under which the Acquiring Entity guarantees the full payment and
performance of the obligations of Tenant under the Lease (`Lease Guaranty"). The
foregoing notwithstanding, in the event the
***** Confidential portions of the material have been omitted and filed
separately with the Securities and Exchange Commission.
Page 22
Confidential Treatement Requested
Acquiring Entity is itself not a publicly-traded corporation, but is instead the
subsidiary of a publicly-traded corporation (or a subsidiary of a subsidiary of
a publicly-traded corporation, or a subsidiary in a chain of entities in which a
parent corporation is publicly traded), then the publicly-traded parent
corporation shall be required to execute and deliver to Landlord the Lease
Guaranty. In addition, in the event that after such acquisition Tenant no longer
prepares audited financial statements, then in addition to the financial
statements required to be delivered by Tenant hereunder, the entity required to
execute the Lease Guaranty shall provide Landlord its audited financial
statements at the times and in the manner required of Tenant hereunder. It is
the intent of the parties that after such an acquisition of the stock of Tenant,
Landlord shall be entitled to rely on the creditworthiness of a publicly-traded
corporation and to receive audited financial information from a publicly-traded
corporation.
▇. ▇▇▇▇▇▇▇▇▇ Transfers: Notwithstanding anything contained in this
Section 17, so long as Tenant notifies Landlord promptly following such
Permitted Transfer, Tenant may enter into any of the following Transfers (a
"Permitted Transfer") without Landlord's prior consent, and Landlord shall not
be entitled to receive any part of any subrent resulting therefrom that would
otherwise be due. Tenant may sublease all or part of the Premises or assign its
interest in this Lease to: (i) any entity which controls, is controlled by, or
is under common control with the original Tenant to this Lease by means of an
ownership interest of more than 50%; (ii) an entity which results from a merger,
consolidation or other reorganization in which Tenant is not the surviving
entity, so long as the surviving entity has a net worth at the time of such
assignment that is equal to or greater than the net worth of Tenant immediately
prior to such transaction; and (iii) an entity which purchases or otherwise
acquires all or substantially all of the assets of Tenant so long as such
acquiring entity has a net worth at the time of such assignment that is equal to
or greater than the net worth of Tenant immediately prior to such transaction.
F. Effect of Default: In the event of Tenant's default beyond any
applicable notice and cure period, Tenant hereby assigns all amounts due to
Tenant from any Transfer as security for performance of Tenant's obligations
under this Lease, and Landlord may collect such amounts as Tenant's
Attorney-in-Fact, except that Tenant may collect such amounts unless a default
occurs as described in Section 13 above. A termination of the Lease due to
Tenant's default shall not automatically terminate a Transfer then in existence;
rather at Landlord's election (1) such Transfer shall survive the Lease
termination, (2) the transferee shall attorn to Landlord, and (3) Landlord shall
undertake the obligations of Tenant under the transfer agreement; except that
Landlord shall not be liable for prepaid rent, security deposits or other
defaults of Tenant to the transferee, or for any acts or omissions of Tenant and
Tenant's Agents.
G. Conveyance by Landlord: In the event of any transfer of Landlord's
interest in this Lease, the Landlord herein named (and in case of any subsequent
transfer, the then transferor) shall be automatically freed and relieved from
and after the date of such transfer of all liability for the performance of any
covenants or obligations on the part of Landlord contained in this Lease
thereafter to be performed; provided, however, that any funds in the hands of
Landlord or the then transferor at the time of such transfer, in which Tenant
has an interest shall be turned over to the transferee and any amount then due
and payable to Tenant by Landlord or the then transferor under any provision of
this Lease shall be paid to Tenant; and provided, further, that upon any such
transfer, the transferee shall be deemed to have assumed, subject to the
limitations of this Section 17, all of the agreements, covenants and conditions
in this Lease to be performed on the part of Landlord, it being intended hereby
that the covenants and obligations contained in this Lease to be performed on
the part of Landlord shall, subject as aforesaid, be binding on each Landlord,
its successors and assigns, only during its period of ownership.
***** Confidential portions of the material have been omitted and filed
separately with the Securities and Exchange Commission.
Page 23
Confidential Treatement Requested
H. Successors and Assigns: Subject to the provisions this Section 17,
the covenants and conditions of this Lease shall apply to and bind the heirs,
successors, executors, administrators and assigns of all Parties hereto; and all
parties hereto comprising Tenant shall be jointly and severally liable
hereunder.
18. OPTION TO EXTEND THE LEASE TERM:
▇. ▇▇▇▇▇ and Exercise of Option: Landlord grants to Tenant, subject to
the terms and conditions set forth in this Section 18.A, two (2) options (the
"Options") to extend the Lease Term for an additional term (the "Option Term").
Each Option Term shall be for a period of sixty (60) months and shall be
exercised, if at all, by written notice to Landlord no earlier than fifteen (15)
months prior to the date the Lease Term would expire but for such exercise but
no later than nine (9) months prior to the date the Lease Term would expire but
for such exercise, time being of the essence for the giving of such notice.
Further, Tenant may only exercise the Options provided it concurrently exercises
its options to extend the lease for Building 1. If Tenant exercises the Option,
all of the terms, covenants and conditions of this Lease shall apply except for
the grant of additional Options pursuant to this Section, provided that Base
Monthly Rent for the Premises payable by Tenant during the Option Term shall be
ninety five percent (95%) of the Fair Market Rental as hereinafter defined.
Notwithstanding anything herein to the contrary, if Tenant is in monetary or
material non-monetary default beyond any applicable notice and cure period under
any of the terms, covenants or conditions of this Lease either at the time
Tenant exercises the Option or at any time thereafter prior to the commencement
date of the Option Term, then Landlord shall have, in addition to all of
Landlord's other rights and remedies provided in this Lease, the right to
terminate the Option upon notice to Tenant, in which event the Lease Term shall
not be extended pursuant to this Section 18.A. As used herein, the term "Fair
Market Rental" is defined as the rental and all other monetary payments,
including any escalations and adjustments thereto (including without limitation
Consumer Price Indexing) that Landlord could obtain during the Option Term from
a third party desiring to lease the Premises, based upon the current use and
other potential uses of the Premises, as determined by the rents then obtainable
for new leases of space comparable in age and quality to the Premises in the
same real estate submarket as the Building, excluding the value of Alterations
made by Tenant. The appraisers shall be instructed that the foregoing five
percent (5.0%) discount is intended to offset comparable rents that include the
following costs which Landlord will not incur in the event Tenant exercises its
option (i) brokerage commissions, (ii) tenant improvement allowances, (iii)
building improvement costs, and (iv) vacancy costs.
B. Determination of Fair Market Rental: If Tenant exercises the Option,
Landlord shall send Tenant a notice setting forth the Fair Market Rental for the
Option Term within thirty (30) days following the Exercise Date. If Tenant
disputes Landlord's determination of Fair Market Rental for the Option Term,
Tenant shall, within thirty (30) days after the date of Landlord's notice
setting forth Fair Market Rental for the Option Term, send to Landlord a notice
stating that Tenant either elects to terminate its exercise of the Option, in
which event the Option shall lapse and this Lease shall terminate on the
Expiration Date, or that Tenant disagrees with Landlord's determination of Fair
Market Rental for the Option Term and elects to resolve the disagreement as
provided in Section 18.C below. If Tenant does not send Landlord a notice as
provided in the previous sentence, ▇▇▇▇▇▇▇▇'s determination of Fair Market
Rental shall be the Base Monthly Rent payable by Tenant during the Option Term.
If Tenant elects to resolve the disagreement as provided in Section 18.C and
such procedures are not concluded prior to the commencement date of the Option
Term, Tenant shall pay to Landlord as Base Monthly Rent the Fair Market Rental
as determined by Landlord in the manner provided above. If the Fair Market
Rental as finally determined pursuant to Section 18.C is greater than Landlord's
determination, Tenant
***** Confidential portions of the material have been omitted and filed
separately with the Securities and Exchange Commission.
Page 24
Confidential Treatement Requested
shall pay Landlord the difference between the amount paid by ▇▇▇▇▇▇ and the Fair
Market Rental as so determined in Section 18.C within thirty (30) days after
such determination. If the Fair Market Rental as finally determined in Section
18.C is less than Landlord's determination, the difference between the amount
paid by Tenant and the Fair Market Rental as so determined in Section 18.C shall
be credited against the next installments of Base Monthly Rent due from Tenant
to Landlord hereunder.
C. Resolution of a Disagreement over the Fair Market Rental: Any
disagreement regarding Fair Market Rental shall be resolved as follows:
1. Within thirty (30) days after ▇▇▇▇▇▇'s response to Landlord's
notice setting forth the Fair Market Rental, Landlord and Tenant shall meet at a
mutually agreeable time and place, in an attempt to resolve the disagreement.
2. If within the 30-day period referred to above, Landlord and
Tenant cannot reach agreement as to Fair Market Rental, each party shall select
one appraiser to determine Fair Market Rental. Each such appraiser shall arrive
at a determination of Fair Market Rental and submit their conclusions to
Landlord and Tenant within thirty (30) days after the expiration of the 30-day
consultation period described above.
3. If only one appraisal is submitted within the requisite time
period, it shall be deemed as Fair Market Rental. If both appraisals are
submitted within such time period and the two appraisals so submitted differ by
less than ten percent (10%), the average of the two shall be deemed as Fair
Market Rental. If the two appraisals differ by more than 10%, the appraisers
shall immediately select a third appraiser who shall, within thirty (30) days
after his selection, make and submit to Landlord and Tenant a determination of
Fair Market Rental. This third appraisal will then be averaged with the closer
of the two previous appraisals and the result shall be Fair Market Rental.
4. All appraisers specified pursuant to this Section shall be
members of the American Institute of Real Estate Appraisers with not less than
ten (10) years experience appraising office and industrial properties in the
Santa ▇▇▇▇▇ Valley. Each party shall pay the cost of the appraiser selected by
such party and one-half of the cost of the third appraiser.
D. Personal to Tenant: All Options provided to Tenant in this Lease are
personal and granted to Scios Inc. and any Permitted Transferee and are not
exercisable by any third party should Tenant or any Permitted Transferee assign
or sublet all or a portion of its rights under this Lease, unless Landlord
consents to permit exercise of any option by any assignee or subtenant, in
Landlord's sole and absolute discretion. In the event Tenant has multiple
options to extend this Lease, a later option to extend the Lease cannot be
exercised unless the prior option has been properly exercised.
19. This section intentionally left blank.
20. This section intentionally left blank.
21. General Provisions:
A. Attorney's Fees: In the event a suit or alternative form of dispute
resolution is brought for the possession of the Premises, for the recovery of
any sum due hereunder, to interpret the Lease, or because of the breach of any
other covenant herein; then the losing party shall pay to the prevailing party
reasonable attorney's fees including the expense of expert witnesses,
depositions and court testimony as part of its costs which shall be deemed to
have accrued on the commencement of such action. The prevailing party shall also
be entitled to recover all costs and expenses including reasonable attorney's
fees incurred in enforcing any judgment or award against the other party. The
foregoing provision relating to post-judgment
***** Confidential portions of the material have been omitted and filed
separately with the Securities and Exchange Commission.
Page 25
Confidential Treatement Requested
costs is severable from all other provisions of this Lease.
B. Authority of Parties: Tenant represents and warrants that it is duly
formed and in good standing, and is duly authorized to execute and deliver this
Lease on behalf of said corporation, in accordance with a duly adopted
resolution of the Board of Directors of said corporation or in accordance with
the by-laws of said corporation, and that this Lease is binding upon said
corporation in accordance with its terms. At Landlord's request, Tenant shall
provide Landlord with corporate resolutions or other proof in a form acceptable
to Landlord, authorizing the execution of the Lease. Landlord represents and
warrants that the individual executing this Lease in its behalf is authorized to
do so and by that signature hereby binds Landlord to the terms and conditions of
this Lease.
▇. ▇▇▇▇▇▇▇: Landlord and Tenant each represents that it has not utilized
or contacted a real estate broker or finder with respect to this Lease and
Landlord and ▇▇▇▇▇▇ each agrees to indemnify, defend and hold the other harmless
against any claim, cost, liability or cause of action asserted by any other
broker or finder claiming through such party. ▇▇▇▇▇▇ has utilized the services
of ▇▇▇▇▇ & ▇▇▇▇▇ in the capacity of consultant with respect to this Lease and
▇▇▇▇▇▇ agrees to indemnify, defend and hold Landlord harmless against any claim,
cost, liability or cause of action asserted by ▇▇▇▇▇ & ▇▇▇▇▇.
D. Choice of Law: This Lease shall be governed by and construed in
accordance with California law. Venue shall be Santa ▇▇▇▇▇ County.
E. This section intentionally left blank.
F. Entire Agreement: This Lease and the exhibits attached hereto contain
all of the agreements and conditions made between the Parties hereto and may not
be modified orally or in any other manner other than by written agreement signed
by all parties hereto or their respective successors in interest. This Lease
supersedes and revokes all previous negotiations, letters of intent, lease
proposals, brochures, agreements, representations, promises, warranties, and
understandings, whether oral or in writing, between the parties or their
respective representatives or any other person purporting to represent Landlord
or Tenant.
G. Entry by Landlord: Upon 48 hours' prior notice to Tenant (except in
case of emergency and then with as much prior notice as possible) and subject to
Tenant's reasonable security and safety regulations, Tenant shall permit
Landlord and his agents to enter into and upon the Premises at all reasonable
times provided that Tenant may require them to be accompanied by an employee or
agent of Tenant, and without any rent abatement or reduction or any liability to
Tenant for any loss of occupation or quiet enjoyment of the Premises thereby
occasioned, for the following purposes: (i) inspecting and maintaining the
Premises; (ii) making repairs, alterations or additions to the Premises; (iii)
erecting additional building(s) and improvements on the adjacent land owned by
Landlord; (iv) performing any obligations of Landlord under the Lease including
remediation of Hazardous Materials if determined to be the responsibility of
Landlord, (v) posting and keeping posted thereon notices of non-responsibility
for any construction, alteration or repair thereof, as required or permitted by
any law, and (vi) showing the Premises to Landlord's existing or potential
successors, purchaser, tenants and lenders. Tenant shall permit Landlord and his
agents, at any time within nine (9) months prior to the Expiration Date (or at
any time during the Lease if Tenant is in default hereunder), to place upon the
Premises "For Lease" signs and exhibit the Premises to real estate brokers and
prospective tenants at reasonable hours.
▇. ▇▇▇▇▇▇▇▇ Certificates: At any time during the Lease Term, each party
(the "Responding Party") shall, within ten (10) business days following written
notice from the other party (the "Requesting Party"), execute
***** Confidential portions of the material have been omitted and filed
separately with the Securities and Exchange Commission.
Page 26
Confidential Treatement Requested
and deliver to the Requesting Party a written statement certifying, if true, the
following: (i) that this Lease is unmodified and in full force and effect (or,
if modified, stating the nature of such modification); (ii) the date to which
rent and other charges are paid in advance, if any; (iii) acknowledging that
there are not, to Responding Party's knowledge, any uncured defaults on
Requesting Party's part hereunder (or specifying such defaults if they are
claimed); and (iv) such other information as Requesting Party may reasonably
request. Any such statement may be conclusively relied upon by any prospective
purchaser or encumbrancer of Requesting Party's interest in the Premises, and by
any assignee or subtenant of Tenant. The Responding Party's failure to deliver
such statement within such time shall be conclusive upon the Responding Party
that this Lease is in full force and effect without modification, except as may
be represented by the Requesting Party, and that there are no uncured defaults
in Requesting Party's performance. Tenant agrees to provide, within five (5)
days of Landlord's request, ▇▇▇▇▇▇'s most recent three (3) years of audited
financial statements for Landlord's use in financing or sale of the Premises or
Landlord's interest therein.
I. Exhibits: All exhibits referred to are attached to this Lease and
incorporated by reference.
J. Interest: All rent due hereunder, if not paid when due, shall bear
interest at the rate of the Reference Rate published by Bank of America, San
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, plus two percent (2%) per annum from that date until paid in
full ("Agreed Interest Rate"). This provision shall survive the expiration or
sooner termination of the Lease. Despite any other provision of this Lease, the
total liability for interest payments shall not exceed the limits, if any,
imposed by the usury laws of the State of California. Any interest paid in
excess of those limits shall be refunded to Tenant by application of the amount
of excess interest paid against any sums outstanding in any order that Landlord
requires. If the amount of excess interest paid exceeds the sums outstanding,
the portion exceeding those sums shall be refunded in cash to Tenant by
Landlord. To ascertain whether any interest payable exceeds the limits imposed,
any non-principal payment (including late charges) shall be considered to the
extent permitted by law to be an expense or a fee, premium, or penalty rather
than interest.
K. Modifications Required by Lender: If any lender of Landlord or ground
lessor of the Premises requires a modification of this Lease that will not
increase Tenant's cost or expense or materially or adversely change Tenant's
rights, remedies or obligations, this Lease shall be so modified and Tenant
shall execute whatever documents are required and deliver them to Landlord
within ten (10) days after the request.
L. No Presumption Against Drafter: Landlord and Tenant understand, agree
and acknowledge that this Lease has been freely negotiated by both Parties; and
that in any controversy, dispute, or contest over the meaning, interpretation,
validity, or enforceability of this Lease or any of its terms or conditions,
there shall be no inference, presumption, or conclusion drawn whatsoever against
either party by virtue of that party having drafted this Lease or any portion
thereof.
M. Notices: All notices, demands, requests, or consents required to be
given under this Lease shall be sent in writing by U.S. certified mail, return
receipt requested, or by personal delivery addressed to the party to be notified
at the address for such party specified in Section 1 of this Lease, provided
that following the Rent Commencement Date notices to Tenant shall be addressed
to the Premises or to such other place as the party to be notified may from time
to time designate by at least fifteen (15) days prior notice to the notifying
party. When this Lease requires service of a notice, that notice shall replace
rather than supplement any equivalent or similar statutory notice, including any
notices required by Code of Civil Procedure Section 1161 or any similar or
successor statute.
N. This section intentionally left blank.
***** Confidential portions of the material have been omitted and filed
separately with the Securities and Exchange Commission.
Page 27
Confidential Treatement Requested
▇. ▇▇▇▇: All monetary sums due from Tenant to Landlord under this Lease,
including, without limitation those referred to as "additional rent", shall be
deemed as rent.
P. Representations: Except for the provisions of this Lease, Tenant
acknowledges that neither Landlord nor any of its employees or agents have made
any agreements, representations, warranties or promises with respect to the
Premises or with respect to present or future rents, expenses, operations,
tenancies or any other matter. Except as herein expressly set forth herein,
Tenant relied on no statement of Landlord or its employees or agents for that
purpose.
Q. Rights and Remedies: Subject to Section 14 above, All rights and
remedies hereunder are cumulative and not alternative to the extent permitted by
law, and are in addition to all other rights and remedies in law and in equity.
R. Severability: If any term or provision of this Lease is held
unenforceable or invalid by a court of competent jurisdiction, the remainder of
the Lease shall not be invalidated thereby but shall be enforceable in
accordance with its terms, omitting the invalid or unenforceable term.
S. Submission of Lease: Submission of this document for examination or
signature by the parties does not constitute an option or offer to lease the
Premises on the terms in this document or a reservation of the Premises in favor
of Tenant. This document is not effective as a lease or otherwise until executed
and delivered by both Landlord and ▇▇▇▇▇▇.
T. Subordination: This Lease is subject and subordinate to ground and
underlying leases, mortgages and deeds of trust (collectively "Encumbrances")
which may now affect the Premises, to any covenants, conditions or restrictions
of record, and to all renewals, modifications, consolidations, replacements and
extensions thereof; provided, however, if the holder or holders of any such
Encumbrance ("Holder") require that this Lease be prior and superior thereto,
within seven (7) days after written request of Landlord to Tenant, Tenant shall
execute, have acknowledged and deliver all documents or instruments, in the form
presented to Tenant, which Landlord or Holder deems necessary or desirable for
such purposes. Landlord shall have the right to cause this Lease to be and
become and remain subject and subordinate to any and all Encumbrances which are
now or may hereafter be executed covering the Premises or any renewals,
modifications, consolidations, replacements or extensions thereof, for the full
amount of all advances made or to be made thereunder and without regard to the
time or character of such advances, together with interest thereon and subject
to all the terms and provisions thereof; provided only, that in the event of
termination of any such lease or upon the foreclosure of any such mortgage or
deed of trust, ▇▇▇▇▇▇ agrees to recognize ▇▇▇▇▇▇'s rights under this Lease as
long as Tenant is not then in default beyond any applicable notice and cure
period and continues to pay Base Monthly Rent and additional rent and observes
and performs all required provisions of this Lease. Within ten (10) days after
▇▇▇▇▇▇▇▇'s written request, Tenant shall execute any documents required by
Landlord or the Holder to make this Lease subordinate to any lien of the
Encumbrance that will not increase Tenant's cost or expense or materially or
adversely change Tenant's rights, remedies or obligations under this Lease. If
Tenant fails to do so, then in addition to such failure constituting a default
by Tenant, it shall be deemed that this Lease is so subordinated to such
Encumbrance. Notwithstanding anything to the contrary in this Section, Tenant
hereby attorns and agrees to attorn to any entity purchasing or otherwise
acquiring the Premises at any sale or other proceeding or pursuant to the
exercise of any other rights, powers or remedies under such encumbrance.
Landlord shall cause the fee title owner, Ardenwood Corporate Park Associates
("Owner") and the existing lender, Bank of America, to furnish to Tenant, within
forty (40) days of the date of both parties' execution of this
***** Confidential portions of the material have been omitted and filed
separately with the Securities and Exchange Commission.
Page 28
Confidential Treatement Requested
Lease, with written agreements reasonably satisfactory in substance to Tenant
(and in the case of Bank of America, using the attached Exhibit 20.T. as a first
draft), providing for (i) recognition by the lender and Owner of all of the
terms and conditions of this Lease; and (ii) continuation of this Lease upon
foreclosure of existing lender's security interest in the Premises or
termination of the Ground Lease. In the event that Landlord is unable to provide
such agreements, ▇▇▇▇▇▇'s sole remedy shall be termination of the Lease, which
election shall be made within fourteen (14) days following the expiration of
such 40-day period. In the event of such termination, Landlord shall reimburse
Tenant for costs associated with obtaining the Letter of Credit, and shall
reimburse Tenant fifty percent (50%) of costs actually incurred by Tenant
between the execution date of the Lease and the date of Landlord's notice to
Tenant that it is unable to provide such agreement, in connection with this
Lease; provided, however, that such reimbursement by Landlord shall not exceed
One Hundred Thousand Dollars ($100,000.00). Landlord represents that to the best
of its knowledge, Bank of America is willing to grant the agreement described in
this paragraph.
U. Survival of Indemnities: All indemnification, defense, and hold
harmless obligations of Landlord and Tenant under this Lease shall survive the
expiration or sooner termination of the Lease.
V. Time: Time is of the essence hereunder.
W. Transportation Demand Management Programs: Should a government agency
or municipality require Landlord to institute TDM (Transportation Demand
Management) facilities and/or programs, Tenant agrees that the cost of TDM
imposed facilities and programs required on the Premises, including but not
limited to employee showers, lockers, cafeteria, or lunchroom facilities, shall
be paid by Tenant. Further, any ongoing costs or expenses associated with a TDM
program which are required for the Premises and not provided by Tenant, such as
an on-site TDM coordinator, shall be provided by Landlord with such costs being
included as additional rent and reimbursed to Landlord by Tenant within thirty
(30) days after demand. If TDM facilities and programs are instituted on a
Project wide basis, Tenant shall pay its proportionate share of such costs in
accordance with Section 8 above.
X. Waiver of Right to Jury Trial: Landlord and Tenant waive their
respective rights to trial by jury of any contract or tort claim, counterclaim,
cross-complaint, or cause of action in any action, proceeding, or hearing
brought by either party against the other on any matter arising out of or in any
way connected with this Lease, the relationship of Landlord and Tenant, or
▇▇▇▇▇▇'s use or occupancy of the Premises, including any claim of injury or
damage or the enforcement of any remedy under any current or future law,
statute, regulation, code, or ordinance.
***** Confidential portions of the material have been omitted and filed
separately with the Securities and Exchange Commission.
Page 29
Confidential Treatement Requested
IN WITNESS WHEREOF, ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ have executed this Lease on the day and
year first above written.
Landlord: Sobrato Interests III, Tenant: Scios Inc.
a California Limited Partnership a Delaware Corporation
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------- ------------------------
Its: General Partner Its: President and Chief Executive
Officer
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------
Its: Chief Financial Officer
***** Confidential portions of the material have been omitted and filed
separately with the Securities and Exchange Commission.
Page 30
