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EXHIBIT 10.1
October 15, 1998
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LEASE AGREEMENT
by and between
605 EAST ▇▇▇▇▇▇▇▇▇ ASSOCIATES, L.P.,
a California limited partnership
("LANDLORD")
and
CALIPER TECHNOLOGIES CORP.,
a Delaware corporation
("TENANT")
Dated as of October 15, 1998
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BASIC LEASE INFORMATION
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Lease Date: October 15, 1998
LANDLORD: 605 East ▇▇▇▇▇▇▇▇▇ Associates, L.P.,
a California limited partnership
Managing Agent: The Mozart Development Company
Landlord's and c/o The Mozart Development Company
Managing Agent's Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
TENANT: Caliper Technologies Corp.,
a Delaware corporation
Tenant's Address: FOR NOTICE:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Chief Operating Officer
FOR BILLING:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Accounts Payable
Premises: An existing two-story building located on
the Land (the "Building"), as shown on
Exhibit "A" attached hereto.
Building Address: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇
Land: The real property described on Exhibit "A-1"
attached hereto.
Project: The Building, Land and other improvements
located in the area shown on Exhibit "A"
attached hereto.
Rentable Area of the Premises: 53,361 Rentable Square Feet ("Rentable
Area").
Tenant's Use of the Premises: Tenant may use the Premises for general
office, administration, light distribution,
and research and development, and may use an
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BASIC LEASE INFORMATION
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area shown on Exhibit "H" attached hereto,
not to exceed 7,000 square feet of the
Premises, for light manufacturing that is
incidental to the other permitted uses
(excluding uses which involve the use of
Hazardous Substances as defined in Paragraph
40 [Hazardous Substance Liability] beyond
the levels and types allowed by Paragraph
40(d), and for no other purposes; provided,
however, any proposed use which involves the
use of Hazardous Substances beyond the
levels and types allowed by Paragraph 40(d)
shall be subject to Landlord's prior written
approval, which shall not be unreasonably
withheld so long as (i) the proposed use
does not involve any of the chemical
substances which have been associated with
the investigation and remediation of those
Hazardous Substances currently existing in
the soil and/or groundwater within the
general area of the Premises, and (ii)
Landlord is provided an indemnity from an
entity (which may include Tenant, a
subtenant of Tenant, or an affiliate of
either of the foregoing) acceptable to
Landlord and any mortgagees, and in all
other respects satisfactory to Landlord and
any mortgagees, indemnifying and defending
Landlord, its mortgagees, and all of their
successors and assigns, agents,
representatives, and affiliates from and
against any and all loss, cost, claim,
liability, or suit arising directly or
indirectly in connection with the use of
such Hazardous Substances.
Lease Term: Commencing on the Occupancy Date and ending
on the Expiration Date, with the right to
extend for an additional term of five (5)
years in accordance with Paragraph 43
[Option to Renew].
Scheduled Rent Commencement Date: December 1, 1998.
Outside Delivery Date: January 31, 1999.
Expiration Date: Ten (10) years after the Rent Commencement
Date.
Rent: Base Rent plus Additional Charges.
Monthly Base Rent: $2.35 per Rentable Square Foot of the
Rentable Area of the Premises.
Base Rent Adjustment: On each anniversary of the Rent Commencement
Date, the Monthly Base Rent shall increase
by three percent (3%) of the
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BASIC LEASE INFORMATION
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Monthly Base Rent applicable to the month
immediately prior to the applicable
anniversary.
Security Deposit: Tenant shall provide and maintain a letter
of credit or cash collateral in the initial
amount of One Million Dollars ($1,000,000),
which amount may be reduced during the Term
in accordance with Paragraph 34 [Security
Deposit].
Guarantor of Lease: None
Landlord's Broker: None
Tenant's Broker: Cornish & ▇▇▇▇▇ Commercial - ▇▇▇▇▇ ▇▇▇▇▇
Broker's Fee or Commission Paid By: Landlord, in accordance with Paragraph 39.
The foregoing Basic Lease Information is hereby incorporated into and made a
part of this Lease. Each reference in this Lease to any of the Basic Lease
Information shall mean the information hereinabove set forth and shall be
construed to incorporate all of the terms provided under the particular
paragraph pertaining to such information. In the event of any conflict between
any Basic Lease Information and any other portion of the Lease, the latter shall
control.
LANDLORD: 605 EAST ▇▇▇▇▇▇▇▇▇ ASSOCIATES, L.P.,
a California limited partnership
By: M-D Ventures, Inc.,
a California corporation,
Its General Partner
By: /s/
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▇▇▇▇▇ ▇▇▇▇▇▇▇
Its Vice President
TENANT: CALIPER TECHNOLOGIES CORP.,
a Delaware corporation
By: /s/
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▇▇▇▇▇▇ ▇.▇. ▇▇▇▇
Its Chief Operating Officer
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LEASE AGREEMENT
THIS LEASE AGREEMENT is made and entered into as of October 15, 1998, by
and between 605 East ▇▇▇▇▇▇▇▇▇ Associates, L.P., a California limited
partnership (herein called "Landlord"), and Caliper Technologies Corp., a
Delaware corporation (herein called "Tenant").
1. LEASED PREMISES.
(a) PREMISES. Upon and subject to the terms, covenants and
conditions hereinafter set forth, Landlord agrees to lease to Tenant and Tenant
agrees to hire from Landlord those premises (the "Premises") comprising the
entire two-story building shown on Exhibit "A" attached hereto (the "Building").
The Building is located on the parcel or parcels of real property described on
Exhibit "A-1" (the "Land"). The Building, together with the Land and associated
improvements located on the Land, are collectively referred to as the "Project".
On the Occupancy Date, the Building will include certain interior improvements,
which shall be defined, collectively with the Building shell and core, as the
"Base Building".
(b) USE OF PROJECT. Tenant is hereby granted the
non-exclusive use of certain areas and facilities within the Project that are
not included in the Premises, including landscaped areas, service areas, parking
areas, recreation areas, trash enclosures, plaza, walkways, driveways,
sidewalks, access and perimeter roads, and the like, all subject to the Rules
and Regulations described in Paragraph 18.
2. OCCUPANCY AND USE. Tenant may use and occupy the Premises for
the purpose specified in the Basic Lease Information and for no other use or
purpose without the prior written consent of Landlord. Landlord may grant or
withhold consent to a proposed change of use in its sole discretion, except in
circumstances described in the Basic Lease Information where Landlord may not
unreasonably withhold its consent.
3. TERM AND POSSESSION.
(a) TERM; OCCUPANCY DATE; EXPIRATION DATE. The term of this
Lease (the "Term") shall commence on the Occupancy Date and, unless sooner
terminated pursuant to Paragraphs 3(d), 11(c), 20, 21(b), 22, or 23, shall
expire on the Expiration Date, provided that Tenant shall have an option to
extend the Term in accordance with the terms and conditions of Paragraph 43
[Option to Renew]. "Occupancy Date" shall mean the date on which Landlord has
tendered possession of the Premises to Tenant. Tenant shall accept the Premises
in an "as-is" condition. Landlord shall have been deemed to tender possession of
the Premises to Tenant if Landlord meets the following conditions: (a) Landlord
provides at least three (3) days advance written notice to Tenant of the date
that the Premises will be so tendered and (b) the Premises have been vacated by
any prior tenant and any such tenant?s personal property (eg. furniture systems,
furniture, trade fixtures, etc.) have been removed, subject to Tenant?s separate
agreement(s) with Vivus, Inc. concerning a sublease of a portion of the Premises
and purchase of
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personal property. However, in no case shall Tenant be required to accept
occupancy of the Premises prior to December 1, 1998. All of the rights and
obligations of the parties under this Lease shall commence on the Occupancy
Date. The dates upon which the Term shall actually commence and terminate with
respect to the entire Premises pursuant to this Paragraph 3(a) are herein called
the "Occupancy Date" and the "Expiration Date," respectively.
(b) OCCUPANCY BY TENANT. Tenant shall be deemed to occupy
the Premises from and after the Occupancy Date. This Paragraph 3(c) shall not be
construed as an obligation of Tenant to continuously occupy the Premises. Within
five (5) days after the Occupancy Date, Landlord shall deliver to Tenant a
certificate confirming the Occupancy Date and the Rent Commencement Date, in the
form of Exhibit "B" hereto. If Tenant does not agree with Landlord's
determination of the Occupancy Date, Tenant may submit such matter to
arbitration in accordance with Paragraph 41 [Arbitration of Disputes], provided
that prior to the resolution of such matter by arbitration, the parties shall
proceed under this Lease as if the Occupancy Date is the date designated by
Landlord, with any required adjustments to the Rent Commencement Date made after
the matter is ultimately determined by arbitration.
(c) RENT COMMENCEMENT DATE; CERTIFICATE OF OCCUPANCY.
Tenant's obligation to pay Base Rent and Additional Charges hereunder shall
commence on the later to occur of (i) the Scheduled Rent Commencement Date set
forth in the Basic Lease Information, or (ii) the Occupancy Date (such date
being defined as the "Rent Commencement Date").
(d) EXCLUSIVE REMEDIES FOR FAILURE OF LANDLORD TO DELIVER
POSSESSION. If Landlord has not delivered possession of the Premises to Tenant
by the "Outside Delivery Date" as specified in the Basic Lease Information,
Tenant shall have the right to terminate this Lease by written notice to
Landlord at any time within five (5) business days after Landlord's failure to
so deliver possession of the Premises. If Tenant does not exercise such right to
terminate within such five (5) business day period, Tenant shall waive such
right and this Lease shall continue in full force and effect. If Tenant
exercises this termination right, Tenant shall be entitled to the remedy
hereinbelow described, which shall be Tenant's sole and exclusive remedy with
respect to Landlord's failure to deliver the Premises. If Tenant exercises its
termination right pursuant to this Paragraph 3(d) and Landlord believes that
possession of the Premises had been delivered to Tenant prior to the Outside
Delivery Date, the parties agree to submit the dispute concerning Landlord's
failure to deliver possession of the Premises, and Tenant's resulting right to
terminate the Lease, to binding arbitration pursuant to the provisions of
Paragraph 41 [Arbitration of Disputes]. Notwithstanding any other provision of
this Lease, if Landlord fails to deliver possession of the Premises by the
Outside Delivery Date, Tenant's sole and exclusive remedy shall be to terminate
this Lease.
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4. RENT; RENT ADJUSTMENTS; ADDITIONAL CHARGES FOR EXPENSES AND
TAXES.
(a) MONTHLY BASE RENT.
(i) Commencing on the Rent Commencement Date, Tenant
shall pay to Landlord throughout the Term Base Rent in an amount equal to the
Monthly Base Rent rate specified in the Basic Lease Information multiplied by
the Rentable Area of the Premises, as specified in the Basic Lease Information
("Base Rent").
(ii) Base Rent shall be payable by Tenant in equal
monthly installments on or, at Tenant's election, before the first day of each
month, in advance, in lawful money of the United States (without any prior
demand therefor and without deduction or offset whatsoever, except for abatement
as may be expressly and specifically provided for in Paragraphs 22 [Damage and
Destruction] and 23 [Eminent Domain]), to Landlord at the address specified in
the Basic Lease Information or to such other firm or to such other place as
Landlord may from time to time designate in writing. Tenant shall pay all
charges and other amounts whatsoever as provided in this Lease ("Additional
Charges") to Landlord at the place where the Base Rent is payable, and Landlord
shall have the same remedies for a default in the payment of Additional Charges
as for a default in the payment of Base Rent. If the Rent Commencement Date
occurs on a day other than the first day of a calendar month, or the Expiration
Date occurs on a day other than the last day of a calendar month, then the Base
Rent and Additional Charges for such fractional month shall be prorated on a
daily basis. As used herein, the term "Rent" shall include all Base Rent and
Additional Charges (including, without limitation, Additional Charges pursuant
to Paragraph 25 [Right of Landlord to Perform]).
(b) ADJUSTMENTS IN BASE RENT. The Monthly Base Rent under
Paragraph 4(a) [Monthly Base Rent] shall be adjusted as provided in the Basic
Lease Information.
(c) ADDITIONAL CHARGES FOR EXPENSES AND TAXES.
(1) DEFINITIONS OF ADDITIONAL CHARGES: For purposes
of this Paragraph 4(c), the following terms shall have the meanings hereinafter
set forth:
(A) "TAX YEAR" shall mean each twelve (12)
consecutive month period commencing January 1st of the calendar year during
which the Rent Commencement Date of this Lease occurs.
(B) "REAL ESTATE TAXES" shall mean all
taxes, assessments and charges levied upon or with respect to the Project or any
personal property of Landlord used in the operation thereof, or Landlord's
interest in the Project or such personal property. Real Estate Taxes shall
include, without limitation, all general real property taxes and general and
special
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assessments, charges, fees or assessments for transit (including, without
limitation, shuttle fees and roadways), housing, police, fire, utilities,
sewers, emergency response or other governmental services or purported benefits
to the Project (provided, however, that any refunds of Real Estate Taxes paid by
Tenant shall be credited against Tenant's further obligation to pay Real Estate
Taxes during the Term or refunded to Tenant at the end of the Term), service
payments in lieu of taxes, and any tax, fee or excise on the act of entering
into this Lease, or any other lease of space in the Project, or on the use or
occupancy of the Project or any part thereof, or on the rent payable under any
lease or in connection with the business of renting space in the Project, that
are now or hereafter levied or assessed against Landlord by the United States of
America, the State of California, or any political subdivision, public
corporation, district or any other political or public entity, and shall also
include any other tax, fee or other excise, however described, that may be
levied or assessed as a substitute for, or as an addition to, in whole or in
part, any other Real Estate Taxes, whether or not now customary or in the
contemplation of the parties on the date of this Lease. Real Estate Taxes shall
not include franchise, transfer, inheritance or capital stock taxes or income
taxes measured by the net income of Landlord from all sources unless, due to a
change in the method of taxation, any of such taxes is levied or assessed
against Landlord as a substitute for, or as an addition to, in whole or in part,
any other tax that would otherwise constitute a Real Estate Tax. Additionally,
Real Estate Taxes shall not include any assessments or like charges to pay for
any remediation of contamination from any Hazardous Substances. Real Estate
Taxes shall also include reasonable legal fees, costs and disbursements incurred
in connection with proceedings to contest, determine or reduce Real Estate
Taxes. If any assessments are levied on the Project, Tenant shall have no
obligation to pay more than that amount of annual installments of principal and
interest that would become due during the Lease Term had Landlord elected to pay
the assessment in installment payments, even if Landlord pays the assessment in
full.
(C) "EXPENSES" shall mean the total costs
and reasonable expenses paid or incurred by Landlord in connection with the
management, operation, maintenance and repair of the Project, including, without
limitation, (i) the cost of fire, extended coverage, boiler, sprinkler,
commercial general liability, property, rent, earthquake, flood, and all other
insurance described in Paragraph 12(e) [Landlord's Insurance Obligations] or
otherwise obtained by Landlord in connection with the Project, including,
without limitation, insurance premiums and any deductible amounts paid by
Landlord; (ii) the cost of air conditioning, electricity, steam, heating,
mechanical, ventilating, water, gas, elevator systems and all other utilities,
the cost of supplies and equipment and maintenance and service contracts in
connection therewith, and the cost of refuse service, landscaping, parking lot
sweeping and similar maintenance services; (iii) the cost of repairs and general
maintenance and cleaning; (iv) fees, charges and other costs, including
consulting fees, legal fees and accounting fees, fees for any project engineer
for the Project, and fees of all independent contractors, engaged by Tenant and
related solely to the operation of the Project (or, if any such costs, fees or
charges are attributable to other property managed by Landlord, the portion of
such costs, fees and charges allocable to the Project, as reasonably determined
by Landlord); (v) the cost of any capital improvements made to the Building or
Project as permitted or required by this Lease; provided that any such
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capital improvement costs in excess of $12,807 per calendar year in the
aggregate shall be amortized over the useful life of the capital item in
question as determined in accordance with generally accepted accounting
principles ("GAAP"), together with interest on the unamortized balance at the
rate paid by Landlord on funds borrowed for the purpose of constructing such
capital improvements, or, if Landlord does not elect to borrow funds, at the
"prime rate" of interest announced by the Wall Street Journal for Union Bank
(or, if Union Bank ceases to exist, by another bank mutually acceptable to
Landlord and Tenant) (the "Interest Rate"), as reflected over the period the
funds are advanced, plus two percent (2%); (vi) a management fee for Landlord's
management and administrative services in connection with the Project in the
amount of two percent (2.0%) of Base Rent and Additional Charges (excluding the
management fee); and (vii) any other expenses of any other kind whatsoever
incurred in managing, operating, maintaining and repairing the Premises and/or
Project. Notwithstanding anything to the contrary herein contained, Expenses
shall not include, and in no event shall Tenant have any obligation to pay for
pursuant to this Paragraph 4(c) or Paragraph 9(b) [Repair and Maintenance;
Tenant's Obligations], (aa) the initial costs of constructing the Base Building
which were paid by Landlord; (bb) the cost of providing tenant improvements to
any other tenant in the Project; (cc) debt service (including, but without
limitation, interest and principal) required to be made on debt incurred by
Landlord and relating to the Project other than debt service and financing
charges imposed pursuant to Paragraph 4(c)(1)(C)(v) above; (dd) the portion of a
management fee paid to Landlord or an affiliate in excess of two percent (2.0%)
of the sum of Base Rent and Additional Charges (excluding the management fee);
(ee) the cost of special services, goods or materials provided to any other
tenant; (ff) depreciation; (gg) costs for which Landlord has a right to receive
reimbursement from others; (hh) costs occasioned by Landlord' fraud or willful
misconduct under applicable Laws; (ii) costs to correct any construction defects
in the original construction of the Base Building; (jj) costs arising from a
disproportionate use of any utility or service supplied by Landlord to any other
occupant of the Project to the extent that Landlord has the ability to charge
such other tenant for said costs under the terms of a lease comparable to terms
governing said costs in this Lease; (kk) environmental pollution related costs
(other than costs for which Tenant has indemnified Landlord pursuant to
Paragraph 40 [Hazardous Substance Liability]); (ll) any maintenance, repair or
replacement costs for which Landlord is responsible pursuant to Paragraph 9(a)
[Repair and Maintenance; Landlord's Obligations]; (mm) advertising or
promotional costs; (nn) leasing commissions; and (oo) reserves for expenses. All
costs and expenses shall be determined in accordance with generally accepted
accounting principles which shall be consistently applied (with accruals
appropriate to Landlord's business). Expenses shall not include specific costs
incurred for the account of, separately billed to and paid by specific tenants
in the Project.
(D) "EXPENSE YEAR" shall mean each twelve
(12) consecutive month period commencing January 1 of the calendar year during
which the Rent Commencement Date of the Lease occurs. Landlord, upon notice to
Tenant, may change the Expense Year from time to time to any other twelve (12)
consecutive month period, and, in the event of any such change, Expenses shall
be equitably adjusted for the Expense Years involved in any such change.
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(2) PAYMENT OF REAL ESTATE TAXES
(A) PAYMENT AS DUE: With reasonable
promptness after Landlord has received the tax bills for any Tax Year, Landlord
shall furnish Tenant with a statement (herein called "Landlord's Tax Statement")
setting forth the amount of Real Estate Taxes for such Tax Year. Unless
otherwise required pursuant to clause (B) below, Tenant shall pay to Landlord
actual Real Estate Taxes in installments, twice each Tax Year, no later than
fifteen (15) business days prior to the due date of each Real Estate Tax
installment.
(B) IMPOUNDS: Notwithstanding clause (A)
above, if required by any Mortgagee or, at Landlord's election, after any
default by Tenant in the timely payment of Real Estate Taxes, Tenant shall pay
to Landlord as Additional Charges one-twelfth (1/12th) of Real Estate Taxes for
each Tax Year on or before the first day of each month during such Tax Year, in
advance, in an amount reasonably estimated by Landlord and billed by Landlord to
Tenant. Landlord shall have the right initially to determine monthly estimates
and to revise such estimates from time to time. If the actual Real Estate Taxes
for such Tax Year (as shown on Landlord's Tax Statement) exceed the estimated
Real Estate Taxes paid by Tenant for such Tax Year, Tenant shall pay to Landlord
the difference between the amount paid by Tenant and the actual Real Estate
Taxes within fifteen (15) days after the receipt of Landlord's Tax Statement,
and if the total amount paid by Tenant for any such Tax Year shall exceed the
actual Real Estate Taxes for such Tax Year, such excess shall be credited
against the next installment of Real Estate Taxes due from Tenant to Landlord
hereunder. If it has been determined that Tenant has overpaid Real Estate Taxes
during the last year of the Lease Term, then Landlord shall reimburse Tenant for
such overage on or before the thirtieth (30th) day following the Expiration
Date.
(3) PAYMENT OF EXPENSES: Tenant shall pay to
Landlord as Additional Charges one-twelfth (1/12th) of the Expenses for each
Expense Year on or before the first day of each month of such Expense Year, in
advance, in an amount reasonably estimated by Landlord and billed by Landlord to
Tenant; provided, however, that all insurance premiums which are included in
Expenses shall be payable annually, in advance, by Tenant within twenty (20)
days after Tenant's receipt from Landlord of a copy of the invoice with respect
to such premiums. Landlord shall have the right initially to determine monthly
estimates and to revise such estimates from time to time. With reasonable
promptness after the expiration of each Expense Year, Landlord shall furnish
Tenant with a statement (herein called "Landlord's Expense Statement"), setting
forth in reasonable detail the Expenses for such Expense Year. If the actual
Expenses for such Expense Year exceed the estimated Expenses paid by Tenant for
such Expense Year, Tenant shall pay to Landlord the difference between the
amount paid by Tenant and the actual Expenses within thirty (30) days after the
receipt of Landlord's Expense Statement, and if the total amount paid by Tenant
for any such Expense Year shall exceed the actual Expenses for such Expense
Year, such excess shall be credited against the next installment of the
estimated Expenses due from Tenant to Landlord hereunder or if the Term has
ended it shall be returned to Tenant within thirty (30) days. If Tenant has
overpaid Expenses during the last year of the Lease Term, then Landlord shall
reimburse Tenant for such overage on or before the thirtieth (30th) day
following
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the later of the Expiration Date or the end of the last Expense Year. To the
extent any item of Expenses is payable by Landlord in advance of the period to
which it is applicable (e.g. insurance and tax escrows required by any
Mortgagee), or to the extent that prepayment is customary for the service or
matter, Landlord may (aa) include such items in Landlord's estimate for periods
prior to the date such item is to be paid by Landlord, and (bb) to the extent
Landlord has not collected the full amount of such item prior to the date such
item is to be paid by Landlord, Landlord may include the balance of such full
amount in a revised monthly estimate for Additional Charges.
(4) AUDIT RIGHTS: Within ninety (90) days after
receipt of any Landlord's Expense Statement or Landlord's Tax Statement, Tenant
shall have the right to audit, at Landlord's office located in the San Francisco
Bay Area, at Tenant's expense, Landlord's accounts and records relating to
Expenses and Real Estate Taxes. Such audit shall be conducted by a certified
public accountant approved by Landlord, which approval shall not be unreasonably
withheld. If such audit reveals that Landlord has overcharged Tenant, Tenant
shall notify Landlord within one hundred twenty (120) days after the date the
applicable Landlord's Expense Statement or Landlord's Tax Statement was received
by Tenant. Landlord may dispute such audit by arbitration pursuant to Paragraph
41 [Arbitration of Disputes]. If Landlord does not dispute such amount, or if
Tenant prevails in any such arbitration, the amount overcharged shall be paid to
Tenant within thirty (30) days thereafter, together with interest thereon at the
Interest Rate, from the date Landlord's Expense Statement or Landlord's Tax
Statement, as applicable, was delivered to Tenant until payment of the
overcharge is made to Tenant. In addition, if Landlord's Expense Statement or
Landlord's Tax Statement, as applicable, exceeds the actual Expenses and Real
Estate Taxes which should have been charged to Tenant by more than five percent
(5%), the cost of the audit, up to a maximum cost of Ten Thousand Dollars
($10,000), shall be paid by Landlord. If Tenant fails to object to any
Landlord's Expense Statement or Landlord's Tax Statement within one hundred
twenty (120) days after receipt thereof, such statement shall be final and shall
not be subject to any audit, challenge or adjustment.
(5) OTHER: If either the Rent Commencement Date or
the Expiration Date shall occur on a date other than the first day of a Tax Year
and/or Expense Year, Real Estate Taxes and Expenses for the Tax Year and/or
Expense Year in which the Rent Commencement Date or the Expiration Date occurs
shall be prorated.
(d) LATE CHARGES; DEFAULT RATE. Tenant recognizes that late
payment of any Base Rent or Additional Charges will result in administrative
expenses to Landlord, the extent of which additional expense is extremely
difficult and economically impractical to ascertain. Tenant therefore agrees
that if any Base Rent or Additional Charges remain unpaid ten (10) days after
such amount is due, the amount of such unpaid Base Rent or Additional Charges
shall be increased by a late charge to be paid to Landlord by Tenant in an
amount equal to five percent (5%) (or such greater amount not to exceed six
percent (6%) as may be charged by any Mortgagee for a late payment of a monthly
mortgage payment) of the amount of the delinquent Base Rent or Additional
Charges. In addition, any outstanding Base Rent, Additional Charges,
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late charges and other outstanding amounts shall accrue interest at an
annualized rate of the greater of 10% or The Ninth Circuit Federal Reserve
Discount Rate plus 5% (the "Default Rate"), until paid to Landlord. Tenant
agrees that such amount is a reasonable estimate of the loss and expense to be
suffered by Landlord as a result of such late payment by Tenant and may be
charged by Landlord to defray such loss and expense. The provisions of this
Paragraph 4(d) shall not relieve Tenant of the obligation to pay Base Rent or
Additional Charges on or before the date they are due, or affect Landlord's
remedies pursuant to Paragraph 21(b) [Landlord's Remedies] if any Base Rent or
Additional Charges are unpaid after they are due.
5. INTENTIONALLY DELETED.
6. RESTRICTIONS ON USE. Tenant shall not use or allow the Premises
or Project to be used for any unlawful purpose, nor shall Tenant cause or
maintain or permit any nuisance in, on or about the Premises or Project. Tenant
shall not commit or suffer the commission of any waste in, on or about the
Premises or Project.
7. COMPLIANCE WITH LAWS.
(a) TENANT'S COMPLIANCE OBLIGATIONS. Tenant shall promptly,
at its sole expense, maintain the Premises, any Alterations (as defined in
Paragraph 8(b) [Landlord's Consent to Tenant's Alterations]) permitted hereunder
and Tenant's use and operations thereon in strict compliance at all times with
all present and future laws, statutes, ordinances, resolutions, regulations,
proclamations, orders or decrees of any municipal, county, state or federal
government or other governmental or regulatory authority with jurisdiction over
the Project, or any portion thereof, whether currently in effect or adopted in
the future and whether or not in the contemplation of the parties hereto
(collectively, "Laws"). Such Laws shall include, without limitation, all Laws
relating to health and safety and disabled accessibility including, without
limitation, the Americans with Disabilities Act, 42 U.S.C. section 12101 et
seq., Hazardous Substances, and all present and future life safety, fire,
sprinkler, seismic retrofit, building code and municipal code requirements;
provided however, that Tenant's obligation to comply with Laws relating to
Hazardous Substances is subject to the terms and conditions of Paragraph 40
[Hazardous Substances Liability], and Tenant shall not be responsible for
compliance with clean-up provisions of any Laws with respect to Hazardous
Substances except to the extent of any release caused or permitted by the Tenant
Parties (as defined in Paragraph 12(b) [Tenant Indemnity]). Notwithstanding the
foregoing, Tenant shall not be required to make any structural alterations to
the Base Building in order to comply with Laws unless the requirement that such
alterations be made is triggered by any of the following (or if such requirement
results from the cumulative effect of any of the following when added to other
acts, omissions, negligence or events, to the extent such alterations are
required by any of the following): (i) the installation, use or operation of any
Alterations, or any of Tenant's trade fixtures or personal property; (ii) the
acts, omissions or negligence of Tenant, or any of its servants, employees,
contractors, agents or licensees; or (iii) the particular use or particular
occupancy or manner of use or occupancy of the Premises by Tenant, or any of its
servants, employees, contractors, agents or licensees. The
13
parties acknowledge and agree that Tenant's obligation to comply with all Laws
as provided in this paragraph (subject to the limitations contained herein) is a
material part of the bargained-for consideration under this Lease. Tenant's
obligations under this Paragraph shall include, without limitation, the
responsibility of Tenant to make substantial or structural repairs and
alterations to the Premises (including the Base Building and any Alterations) to
the extent provided above, regardless of, among other factors, the relationship
of the cost of curative action to the Rent under this Lease, the length of the
then remaining Term hereof, the relative benefit of the repairs to Tenant or
Landlord, the degree to which the curative action may interfere with Tenant's
use or enjoyment of the Premises, and the likelihood that the parties
contemplated the particular Law involved. Tenant waives any rights now or
hereafter conferred upon it by any existing or future Law to terminate this
Lease, to receive any abatement, diminution, reduction or suspension of payment
of Rent, or to compel Landlord to make any repairs to comply with any such Laws,
on account of any occurrence or situation arising during the Term.
(b) INSURANCE REQUIREMENTS. Tenant shall not do or permit
anything to be done in or about the Project or bring or keep anything therein
which will cause a cancellation of any insurance on the Project or otherwise
violate any requirements, guidelines, conditions, rules or orders with respect
to such insurance. Tenant shall at its sole cost and expense promptly comply
with the requirements of the board of fire underwriters or other similar body
now or hereafter constituted relating to or affecting the condition, use or
occupancy of the Premises or Project (other than in situations where compliance
involves repair, maintenance or replacement of items that Landlord is expressly
required to repair, maintain or replace under this Lease).
(c) NO LIMITATION ON OBLIGATIONS. The provisions of this
Paragraph 7 shall in no way limit Tenant's maintenance, repair and replacement
obligations under Paragraph 9 [Repair and Maintenance], or Tenant's obligation
to pay Expenses under Paragraph 4(c) [Additional Charges for Expenses and
Taxes]. The judgment of any court of competent jurisdiction or the admission of
Tenant in an action against Tenant, whether Landlord is a party thereto or not,
that Tenant has so violated any such Law shall be conclusive of such violation
as between Landlord and Tenant.
8. ADDITIONAL ALTERATIONS.
(a) LANDLORD'S ALTERATIONS. Landlord shall not make or
suffer to be made any additional alterations, additions or improvements in, on
or to the Base Building or any part thereof without the prior written consent of
Tenant, except as may be required by Law or as expressly required or permitted
by this Lease.
(b) LANDLORD'S CONSENT TO TENANT'S ALTERATIONS. Tenant may
install a clean room, neutralizing facility, and related facilities, within the
area outlined on Exhibit H attached hereto (such improvements, the "Approved
Alterations"), without Landlord's prior consent, provided that upon the
expiration or sooner termination of the Term Tenant shall remove the Approved
Alterations and restore the Premises in accordance with Paragraph 9(e). Tenant
shall
14
not make or suffer to be made any additional alterations, additions or
improvements ("Alterations") in, on or to the Premises or any part thereof,
without the prior written consent of Landlord. Failure of Landlord to give its
disapproval to any Alterations within ten (10) business days after receipt of
Tenant's written request for approval shall constitute approval by Landlord of
such Alterations so long as Tenant's request includes the following statement in
capitalized and boldfaced letters: BY FAILING TO RESPOND TO THIS REQUEST, YOU
WILL BE DEEMED TO HAVE APPROVED THE TENANT'S INSTALLATION OF THE ALTERATIONS
DESCRIBED IN THIS REQUEST. Any Alterations in, on or to the Premises, except for
Tenant's movable furniture and equipment, trade fixtures and Alterations which
may be removed without damage to the Premises, shall become the property of
Landlord upon their completion without compensation to Tenant. Landlord shall
not unreasonably withhold its consent to Alterations that (i) do not materially
affect the structure of the Building, the Building Systems (as defined in
Paragraph 9(b) below) or the Building's security or other systems, (ii) are not
visible from the exterior of the Building, (iii) are consistent with Tenant's
permitted use hereunder, (iv) comply with the CC&Rs and any Mortgage, and (v) do
not adversely affect the value or marketability of Landlord's reversionary
interest upon termination or expiration of this Lease.
(c) PERMITTED ALTERATIONS. Notwithstanding Paragraph 8(b),
Tenant may make Alterations to the Premises without Landlord's prior consent so
long as (x) such Alterations comply with items (i) through (v) in Paragraph 8(b)
[Landlord's Consent to Tenant's Alterations], and (y) the cost of each such
Alteration (or group of Alterations, if occurring substantially at the same time
and as part of a single project) does not exceed Fifty Thousand Dollars
($50,000) (with no more than thirty percent (30%) of such cost being for
demolition), and the cost of all such Alterations in any twelve (12) month
period during the Term in the aggregate does not exceed One Hundred Thousand
Dollars ($100,000) (any such Alterations being defined herein as "Permitted
Alterations").
(d) REQUIREMENTS FOR TENANT ALTERATIONS. Tenant shall make
any Alterations consented to or permitted under this Paragraph 8 at Tenant's
sole cost and expense, in compliance with the following requirements: (i)
Alterations (other than the Approved Alternations and Permitted Alterations)
shall be made in accordance with plans and specifications reasonably approved by
Landlord, and all Alterations shall be made in accordance with the requirements
of ▇▇▇▇▇▇▇▇▇ ▇▇ [▇▇▇▇▇], (▇▇) any contractor or person selected by Tenant to
make Alterations (other than the Approved Alterations and Permitted Alterations)
must first be approved in writing by Landlord, in its reasonable discretion,
(iii) Alterations shall be made in compliance with all applicable Laws; and (iv)
Alterations shall not alter or interfere with the ceiling of the Building (all
partitions being below the ceiling grid, except in areas designated by Landlord
on plans and specifications), unless approved by Landlord in its sole
discretion; provided, however, that Tenant may make Alterations that do not
comply with the standards set forth in item (iv) above (subject to any other
applicable Landlord consent requirement) if Tenant agrees to reconfigure the
affected floor to such standard upon expiration or earlier termination of this
Lease. By making Alterations which do not comply with the standards set forth in
item (iv)
15
above, Tenant shall be deemed to have agreed to reconfigure the Premises upon
expiration or termination of the Lease as provided above unless Landlord
specifically agrees otherwise in writing. Upon completion of any Alterations,
Tenant shall furnish Landlord with a complete set of final as-built plans and
specifications, at Tenant's cost and expense. With respect to items (i) and (ii)
above, failure of Landlord to give its disapproval to any plans and
specifications or general contractor within ten (10) business days after receipt
of Tenant's written request for approval shall constitute approval by Landlord
of such matters so long as Tenant's request includes the following statement in
capitalized and boldfaced letters: BY FAILING TO RESPOND TO THIS REQUEST, YOU
WILL BE DEEMED TO HAVE APPROVED THE PLANS AND SPECIFICATIONS AND/OR GENERAL
CONTRACTOR FOR TENANT'S ALTERATIONS DESCRIBED IN THIS REQUEST.
(e) REMOVAL OF ALTERATIONS AND RESTORATION. Upon the
expiration or sooner termination of the Term, Tenant shall upon demand by
Landlord, at Landlord's election and at Tenant's sole cost and expense,
forthwith and with all due diligence remove any Alterations made by or for the
account of Tenant that are designated by Landlord to be removed and restore the
Premises as required by Paragraph 26(b) [Delivery and Restoration of the
Premises]. Upon the written request of Tenant prior to installation of any
Alterations, Landlord shall notify Tenant of its election to require that such
Alterations be removed upon the expiration or sooner termination of this Lease,
so long as such written request clearly requests Landlord's election regarding
the removal of such Alterations. Landlord's failure to specifically notify
Tenant of Landlord's election shall be deemed Landlord's election to require
removal of the Alterations upon expiration of the Term, notwithstanding any
deemed approval by Landlord of the Alterations pursuant to this paragraph.
(f) REIMBURSEMENT OF LANDLORD'S REVIEW COSTS. Tenant shall
reimburse Landlord upon demand for any reasonable out-of-pocket expenses
incurred by Landlord in connection with the review of any Alterations made by
Tenant, including reasonable fees charged by Landlord's contractors or
consultants to review plans and specifications prepared by Tenant.
9. REPAIR AND MAINTENANCE.
(a) LANDLORD'S OBLIGATIONS. Landlord shall maintain, repair
and replace, at its sole cost and expense, the following, except as provided in
Paragraph 9(c) [Tenant's Obligations for Structural Maintenance]: (i) the
structural portions of the exterior, roof structure and structural portions of
the Building (including load bearing walls and foundations); and (ii) plumbing
and electricity (located on the Project and owned by Landlord) to the point of
entry into the Building. Landlord shall maintain, repair and replace, such costs
to be borne as specified in Paragraph 4(c)1(C), the parking areas, courtyards,
sidewalks, entry ways, lawns, landscaping and other similar facilities of the
Project. Landlord's obligations under Paragraph 9(a)(i) and (ii) with respect to
any particular repair, replacement or maintenance requirement, and its
obligations under Paragraph 9(a)(iii) with respect to any specific repair, shall
not commence until Tenant notifies Landlord in writing of any circumstances
which Tenant believes may trigger Landlord's
16
obligations.
(b) TENANT'S OBLIGATIONS. Tenant shall maintain, repair and
replace, at its sole cost and expense, all portions of the Premises included in
the Project which are not Landlord's obligations under Section 9(a) [Landlord's
Obligations], including, without limitation, (i) the building systems for
electrical, mechanical, HVAC and plumbing and all controls appurtenant thereto
(collectively, "Building Systems"); and (ii) the interior portion of the
Building and any Alterations. At Tenant's election, Tenant may, by written
notice to Landlord delivered at any time after the tenth (10th) anniversary of
the Rent Commencement Date, cause Landlord to assume Tenant's maintenance
obligations with respect to the Building Systems under clause (i) above, which
assumption by Landlord shall be effective thirty (30) days after Landlord's
receipt of such notice. If Landlord assumes such obligations, all costs incurred
by Landlord in connection therewith shall be deemed Additional Charges payable
by Tenant in accordance with Paragraph 4(c) [Additional Charges for Expenses and
Taxes]. The Building shall at all times be maintained by Tenant in the condition
of a first-class office building. Tenant's obligations under this Paragraph 9
include, without limitation, the replacement, at Tenant's sole cost and expense,
of any portions of the Building which are not Landlord's express responsibility
under Paragraph 9(a) [Landlord's Obligations], if it would be commercially
prudent to replace, rather than repair, such portions of the Building,
regardless of whether such replacement would be considered a capital
expenditure; provided, however, that if Landlord has assumed Tenant's
maintenance obligations for Building Systems pursuant to this Paragraph 9(b),
any replacement of any portion of the Building Systems which would be considered
a capital expenditure and which is made at least one (1) year after Landlord
assumes such obligations shall be amortized over the useful life of the capital
item in question in accordance with Paragraph 4(c)(1)(C) [Expenses]. Tenant
hereby waives and releases its right to make repairs at Landlord's expense under
Sections 1941 and 1942 of the California Civil Code or under any similar law,
statute or ordinance now or hereafter in effect. In addition, Tenant hereby
waives and releases its right to terminate this Lease under Section 1932(1) of
the California Civil Code or under any similar law, statute or ordinance now or
hereafter in effect.
(c) TENANT'S OBLIGATIONS FOR STRUCTURAL MAINTENANCE.
Notwithstanding the provisions of Paragraph 9(a) [Landlord's Obligations] and
without limiting Tenant's other obligations hereunder, Tenant shall bear the
full cost of structural repairs or maintenance to preserve the Building in good
working order and condition, to the extent such structural repair and/or
maintenance is required due to the following (except to the extent any claims
arising from any of the following are reimbursed by insurance carried by
Landlord, are covered by the waiver of subrogation in Paragraph 13 [Waiver of
Subrogation] or are otherwise provided for in Paragraph 22 [Damage and
Destruction]): (i) the installation, use or operation of any Alterations or
other modification to the Premises made by Tenant; (ii) the installation, use or
operation of Tenant's property or fixtures; (iii) the moving of Tenant's
property or fixtures in or out of the Building or in and about the Project; or
(iv) the acts, omissions or negligence of Tenant, or any of its servants,
employees, contractors, agents or licensees, or the particular use or particular
occupancy or manner of use or occupancy of the Premises or Project by Tenant or
any such
17
person. In addition, if at any time during the Term Hazardous Substances are
released, discharged, or disposed of on any portion of the Premises, or on any
portion of the Project, by any of the Tenant Parties, in violation of Tenant's
obligations hereunder, repairs of the plumbing to the point of entry into the
Building shall be excluded from Landlord's obligations under Section 9(a).
Tenant shall not cause or permit any disposal or release of Hazardous Substances
into the plumbing systems at the Project. Any Alterations required for Tenant to
comply with this Paragraph 9(c) shall be made in accordance with the provisions
of Paragraph 8(d) [Requirements for Tenant Alterations].
(d) MAINTENANCE SERVICE CONTRACTS. In connection with
Tenant's maintenance and repair obligations contained in this ▇▇▇▇▇▇▇▇▇ ▇,
▇▇▇▇▇▇ shall, at its own cost and expense, enter into regularly scheduled
preventive maintenance service contracts with maintenance contractors approved
by Landlord, in its reasonable discretion, for servicing all hot and cold water,
heating, air conditioning and electrical systems, elevators and equipment within
the Building, and shall provide copies of such contracts to Landlord. At
Landlord's option at any time in which Tenant is in default hereunder,
maintenance service contracts shall be prepaid on an annual basis. Tenant will
use commercially reasonable efforts to ensure that each maintenance service
contract shall specifically name Landlord as a third party beneficiary, with the
right to receive copies of all notices delivered under such contract and the
ability to exercise Tenant's rights thereunder upon Tenant's default under this
Section 9 or upon Landlord's assumption of Tenant's maintenance obligations with
respect to Building Systems pursuant to Paragraph 9(e) [Cure Rights], at
Landlord's election.
(e) CURE RIGHTS. Tenant shall have a period of thirty (30)
days from the date of written notice from Landlord within which to cure any
failure to fulfill any of its obligations under this Paragraph 9; provided,
however, that if such failure is curable but cannot be cured within such thirty
(30) day period, Tenant shall have such additional time as may be reasonably
required to cure (not to exceed sixty (60) additional days, subject to delay by
casualty, natural disaster, acts of the Government, labor strikes, or other
similar causes outside the reasonable control of Landlord or Tenant, as
applicable ("Force Majeure Events")) so long as Tenant commences such cure
within the initial thirty (30) day period and diligently prosecutes such cure to
completion. If Tenant fails to cure such failure as provided above, or in the
event of an emergency which materially adversely affects the Project, Landlord
may, at Landlord's election, cure such failure, at Tenant's cost and expense,
and the expenses thereof incurred by Landlord shall be reimbursed as Additional
Charges within thirty (30) days after submission of a ▇▇▇▇ or statement
therefor. In addition, Landlord may elect, by delivery of written notice to
Tenant, to assume Tenant's maintenance obligations with respect to the Building
Systems under Paragraph 9(b)(i) [Tenant's Obligations] if Tenant does not cure
any breach of such obligations. If Landlord assumes such obligations, all costs
incurred by Landlord in connection therewith shall be deemed Additional Charges
payable by Tenant in accordance with Paragraph 4(c) [Additional Charges for
Expenses and Taxes]. The remedies described in this paragraph are cumulative and
in addition to any other remedies Landlord may have at law or under this Lease.
18
(f) NO LIABILITY OF LANDLORD. There shall be no abatement of
Rent with respect to, and Landlord shall not be liable for any injury to or
interference with Tenant's business arising from, any repairs, maintenance,
alteration or improvement in or to any portion of the Project by any party,
except as expressly and specifically provided in Paragraph 22; provided,
however, that (i) Base Rent and Additional Charges may be abated during the
period of any interference to Tenant's business which exceeds ninety (90) days,
in proportion to the portion of the Premises Tenant is unable to use, only if
such interruption results from an insured casualty such that proceeds are
payable to Landlord under the rental interruption insurance carried by Landlord
pursuant to Paragraph 12(e) [Landlord's Insurance Obligations] and only to the
extent of such proceeds actually received by Landlord, and (ii) subject to the
limitations on Tenant's recourse against Landlord contained in Paragraph 21(d)
[Tenant's Remedies], Landlord shall be liable for any actual damage to Tenant to
the extent caused by Landlord's gross negligence or willful misconduct in
connection with any such repairs, maintenance, alteration or improvement.
10. LIENS. Tenant shall keep the Premises and Project free from any
liens arising out of any work performed, material furnished or obligations
incurred by Tenant. If Tenant does not, within thirty (30) days following the
imposition of any such lien, cause it to be released of record by payment or
posting of a proper bond (or such shorter period of time as may be required to
avoid a default under any Mortgage), Landlord shall have, in addition to all
other remedies provided herein and by law, the right, but not the obligation, to
cause it to be released by such means as Landlord deems proper, including
payment of the claim giving rise to such lien. All sums paid and expenses
incurred by Landlord in connection therewith shall be considered Additional
Charges and shall be payable to Landlord by Tenant on demand, with interest at
the Default Rate. Landlord shall have the right at all times to post and keep
posted on the Premises and Project any notices permitted or required by law or
by any Mortgagee, for the protection of Landlord, any Mortgagee, the Premises,
the Building, the Land, the Project, and any other party having an interest
therein, from mechanics' and materialmen's liens. Tenant shall give Landlord at
least five (5) business days' prior notice of commencement of any construction
on the Premises. This Paragraph 10 shall survive any termination of this Lease.
11. ASSIGNMENT AND SUBLETTING.
(a) RESTRICTION ON ASSIGNMENT AND SUBLEASING. Tenant shall
not directly or indirectly, voluntarily or by operation of law, sell, assign,
encumber, pledge or otherwise transfer or hypothecate all or any part of the
Premises or Tenant's leasehold estate hereunder (collectively, "Assignment"), or
permit the Premises to be occupied by anyone other than Tenant or sublet the
Premises or any portion thereof (collectively, "Sublease"), without Landlord's
prior written consent in each instance, which consent shall not be unreasonably
withheld or delayed by Landlord; provided, however, that Landlord may withhold
its consent, in its sole discretion, to any assignment of less than the entire
Lease, or any sublease which would result in more than two (2) occupants
(including Tenant and any subtenants or other occupants) on any floor in the
Building. Without otherwise limiting the criteria upon which Landlord may
withhold its consent
19
to any proposed Sublease or Assignment, if Landlord withholds its consent where
either (i) the creditworthiness of the proposed Sublessee or Assignee is not
reasonably acceptable to Landlord or any Mortgagee, or (ii) the proposed
Sublessee's or Assignee's use of the Premises is not in compliance with the
allowed Tenant's Use of the Premises as described in the Basic Lease Information
or, in Landlord's judgment, would require or result in presence of Hazardous
Substances on the Premises and/or Project in excess of those described in
Paragraph 40(d) [Hazardous Substance Liability; Tenant's Covenants], such
withholding of consent shall be presumptively reasonable. If Landlord consents
to the Sublease or Assignment, Tenant may thereafter enter into a valid Sublease
or Assignment upon the terms and conditions set forth in this Paragraph 11.
(b) REQUIRED NOTICE. If Tenant desires at any time to enter
into an Assignment of this Lease or a Sublease of the Premises or any portion
thereof, it shall first give written notice to Landlord containing (i) the name
of the proposed assignee, subtenant or occupant; (ii) a description of the
proposed assignee's, subtenant's, or occupant's business to be carried on in the
Premises; (iii) the terms and provisions of the proposed Assignment or Sublease;
and (iv) such financial information as Landlord may reasonably request
concerning the proposed assignee, subtenant or occupant.
(c) LANDLORD'S RESPONSE TO PROPOSED ASSIGNMENT. Within ten
(10) business days after Landlord's receipt of the notice specified in Paragraph
11(b) [Required Notice] with respect to an Assignment of Tenant's interest under
this Lease, Landlord may by written notice to Tenant elect to (i) terminate this
Lease, (ii) consent to the Assignment, or (iii) disapprove the Assignment.
Notwithstanding anything in this Paragraph 11(c) to the contrary, Landlord shall
not have the right to terminate this Lease in connection with any "Permitted
Transfer" (as defined below).
(d) LANDLORD'S RESPONSE TO PROPOSED SUBLEASE. Within ten
(10) business days after Landlord's receipt of the notice specified in Paragraph
11(b) [Required Notice] with respect to a Sublease, Landlord may by written
notice to Tenant elect to (i) consent to the Sublease; or (ii) disapprove the
Sublease. Notwithstanding anything in this Paragraph 11(d) to the contrary,
Landlord shall not have the rights set forth in (i) and (ii) of this Paragraph
11(d) in connection with any Sublease to a "Strategic Partner" (as defined
below) in compliance with Paragraph 11(h) [Strategic Partners].
(e) BONUS RENT. If Landlord consents to any Assignment or
Sublease pursuant to Paragraph 11(c) [Landlord's Response To Proposed
Assignment] or Paragraph 11(d) [Landlord's Response To Proposed Sublease],
Tenant may within one hundred twenty (120) days after Landlord's consent, but
not later than the expiration of said one hundred twenty (120) days, enter into
such Assignment or Sublease of the Premises or portion thereof upon the terms
and conditions set forth in the notice furnished by Tenant to Landlord pursuant
to Paragraph 11(b) [Required Notice]. However, fifty percent (50%) of any rent
or other consideration realized by Tenant under any such Assignment or Sublease
in excess of the Base Rent and Additional
20
Charges payable hereunder (or the amount thereof proportionate to the portion of
the Premises subject to such Sublease or Assignment) shall be paid to Landlord,
after deducting therefrom the unamortized value of Alterations installed by
Tenant which are located on the portion of the Premises subject to such Sublease
or Assignment as of the effective date of such Assignment or Sublease which are
attributable to and allocated in equal installments over the term of the
Sublease or Assignment, determined by assuming a useful life equal to fifteen
(15) years and amortization on a straight line basis (without interest), and
after deducting therefrom any customary brokers' commissions that Tenant has
incurred in connection with such Assignment or Sublease amortized on a straight
line basis (without interest) over the term of the Sublease or Assignment. In
such event, Tenant shall deliver evidence of the cost of the Alterations, which
shall be acceptable to Landlord in its reasonable discretion, for Landlord's use
as the basis for calculating the value of the Alterations for purposes of this
Paragraph 11(e). Failure by Landlord to either consent or refuse such consent to
a proposed Assignment or Sublease within the fifteen (15) day time period
specified above shall be deemed to be Landlord's consent thereto.
(f) EFFECT OF TRANSFER. Landlord's consent to any Assignment
or Sublease shall not relieve Tenant of any obligation to be performed by Tenant
under this Lease, whether arising before or after the Assignment or Sublease.
Landlord's consent to any Assignment or Sublease shall not relieve Tenant from
the obligation to obtain Landlord's express written consent to any other
Assignment or Sublease. Any Assignment or Sublease that is not in compliance
with this Paragraph 11 shall be void and, at the option of Landlord, shall
constitute a material default by Tenant under this Lease. The acceptance of Base
Rent or Additional Charges by Landlord from a proposed assignee or sublessee
shall not constitute the consent to such Assignment or Sublease by Landlord.
(g) PERMITTED TRANSFER. The following shall be deemed a
voluntary Assignment of Tenant's interest in this Lease: (i) any dissolution,
merger, consolidation, or other reorganization of Tenant; and (ii) if the
capital stock of Tenant is not publicly traded, the sale or transfer of stock to
one person or entity possessing more than fifty percent (50%) of the total
combined voting power of all classes of Tenant's stock issued, outstanding and
entitled to vote for the election of directors. Notwithstanding anything to the
contrary contained in this ▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ may enter into any of the
following transfers (a "Permitted Transfer") without Landlord's prior written
consent: (1) Tenant may assign its interest in the Lease to a corporation which
results from a merger, consolidation or other reorganization, so long as
immediately following such transaction the surviving corporation has a net
worth, and cash, cash equivalents or third party marketable securities with
liquidity of 90 to 360 days (collectively, "Liquid Assets"), equal to or greater
than the net worth and Liquid Assets of Tenant as of both the execution of this
Lease and the Occupancy Date; (2) Tenant may assign this Lease to a corporation
which purchases or otherwise acquires all or substantially all of the assets of
Tenant, so long as immediately following such transaction such acquiring
corporation has a net worth and Liquid Assets that are equal to or greater than
the net worth and Liquid Assets of Tenant as of both the date of execution of
this Lease and the Occupancy Date; and (3) Tenant may sublet a portion of the
Premises to Vivus, Inc.
21
(h) STRATEGIC PARTNERS. Tenant may Sublease portions of the
Premises to Tenant's Strategic Partners (as defined below) without Landlord's
prior consent, subject to the following conditions: (1) after any such Sublease,
Tenant shall continue to directly occupy at least eighty percent (80%) of the
Rentable Area in the Premises; and (2) Tenant shall provide Landlord with
written notice at least thirty (30) days' prior to any such Sublease including
the name of the Strategic Partner, the location of the subleased space, the name
and address of the Strategic Partner's agent for service of process and delivery
of notices under this Lease, and a certification by an officer of Tenant that
the subtenant is a "Strategic Partner" as defined in this Paragraph 11(h). Any
Strategic Partner subleasing a portion of the Premises shall maintain an agent
for service of process and notice, and notify Landlord of any changes in such
agent, at all times during the term of such sublease. The term "Strategic
Partner" shall refer to any entity (i) in which Tenant holds an ownership
interest of at least ten percent (10%), (ii) that is engaged in a business which
Tenant believes to be of strategic importance to its own business, and (iii)
that Tenant determines, in its reasonable business judgment, would benefit
Tenant's business by conducting its own business within Tenant's Premises.
(i) ASSUMPTION BY TRANSFEREE. Each assignee, sublessee or
other transferee, other than Landlord, shall assume all obligations of Tenant
arising after the date of the transfer under this Lease, as provided in this
Paragraph 11(i), and shall be and remain liable jointly and severally with
Tenant for the payment of Base Rent and Additional Charges, and for the
performance of all the terms, covenants, conditions and agreements herein
contained on Tenant's part to be performed for the Term; provided, however, that
the assignee, sublessee, mortgagee, pledgee or other transferee shall be liable
to Landlord for rent only in the amount set forth in the Assignment or Sublease
and shall only be required to perform those obligations under the Lease to the
extent that they relate to the portion of the Premises subleased or interest in
the Lease assigned. Any Sublease or Assignment shall expressly provide that if
this Lease terminates, the subtenant or assignee will attorn to and become the
tenant of the Landlord at the option of Landlord if Landlord elects to recognize
such assignment or sublease upon such termination. No Assignment shall be
binding on Landlord unless the assignee or Tenant delivers to Landlord a
counterpart of the Assignment and an instrument that contains a covenant of
assumption by the assignee satisfactory in substance and form to Landlord,
consistent with the requirements of this Paragraph 11(i), but the failure or
refusal of the assignee to execute such instrument of assumption shall not
release or discharge the assignee from its liability as set forth above.
(j) EFFECT ON EXTENSION OPTION. Notwithstanding any other
provision of this Lease, Tenant may not enter into any Sublease (including,
without limitation, a Sublease to a Strategic Partner or an affiliate) with a
term which exceeds the Expiration Date unless (i) the conditions to Tenant's
right to extend the Term contained in Paragraph 43 [Option to Renew] have been
met at the commencement of such Sublease, and (ii) Tenant delivers its Exercise
Notice pursuant to Paragraph 43 [Option to Renew] at or prior to the
commencement of the Sublease.
22
(k) ASSIGNMENT TO AFFILIATES. Tenant shall have the right,
without Landlord's consent but with written notice to Landlord at least thirty
(30) days prior thereto, to enter into an Assignment of Tenant's interest in the
Lease or a Sublease of all or any portion of the Premises to an Affiliate (as
defined below) of Tenant, and any such Assignment or Sublease shall be a
"Permitted Transfer", provided that (i) the Affiliate delivers to the Landlord
concurrent with such Assignment a written notice of the Assignment and an
assumption agreement whereby the affiliate assumes and agrees to perform,
observe and abide by the terms, conditions, obligations, and provisions of this
Lease, (ii) the entity remains an Affiliate throughout the term of this Lease,
and (iii) on the effective date of the Sublease or Assignment, such Affiliate
has a net worth and Liquid Assets that are equal to or greater than the net
worth and Liquid Assets of Tenant as of both the date of execution of this Lease
and the Occupancy Date. No Sublease or Assignment by Tenant made pursuant to
this Paragraph shall relieve Tenant of Tenant's obligations under this Lease. As
used in this paragraph, the term "Affiliate" shall mean and collectively refer
to a corporation or other entity which controls, is controlled by or is under
common control with Tenant, by means of an ownership of either (aa) more than
fifty percent (50%) of the outstanding voting shares of stock or (bb) stock or
partnership interests which provide the right to control the operations,
transactions and activities of the applicable entity.
12. INSURANCE AND INDEMNIFICATION.
(a) RELEASE OF LANDLORD. Landlord shall not be liable to
Tenant, and Tenant hereby waives all claims against Landlord Parties for any
injury or damage to any person or property in or about the Premises or Project
by or from any cause whatsoever (other than the gross negligence or willful
misconduct of Landlord or its agents, servants, contractors or employees
(collectively, including Landlord, "Landlord Parties")), and without limiting
the generality of the foregoing, whether caused by water leakage of any
character from the roof, walls, or other portion of the Building, or caused by
gas, fire, oil, electricity, or any cause whatsoever, in, on, or about the
Project or any part thereof (other than that caused by the gross negligence or
willful misconduct of Landlord Parties). Tenant acknowledges that any casualty
insurance carried by Landlord will not cover, and Landlord shall not be
responsible for, loss of income to Tenant or damage to the Alterations in the
Premises installed by Tenant or Tenant's personal property located within the
Premises. Tenant shall be required to maintain the insurance described in
Paragraph 12(c) [Tenant's Insurance Requirements] below during the Term. In the
event of a discrepancy between the terms of this paragraph and the terms of
Paragraph 40 [Hazardous Substance Liability], the later shall control. Nothing
in this Paragraph is intended to nor shall it be deemed to override the
provisions of Paragraph 13 [Waiver of Subrogation].
(b) TENANT INDEMNITY. Except to the extent caused by the
gross negligence or willful misconduct of the Landlord Parties, Tenant shall
indemnify and hold the Landlord Parties harmless from and defend the Landlord
Parties against any and all claims or liability for any injury or damage to any
person or property whatsoever occurring in or on the Premises. Tenant further
agrees to indemnify and hold the Landlord Parties harmless from, and defend the
Landlord Parties against, any and all claims, losses, or liabilities (including
damage to Landlord's
23
property) arising from (x) any breach of this Lease by Tenant and/or (y) the
conduct of any work or business of Tenant, its agents, servants, employees, or
invitees (collectively, including Tenant, "Tenant Parties"), in or about the
Project.
(c) TENANT'S INSURANCE REQUIREMENTS. Tenant shall procure at
its cost and expense and keep in effect during the Term the following insurance:
(i) A policy of Commercial General Liability
insurance written on an occurrence form insuring Landlord, any Mortgagee and
Tenant against any liability arising out of the ownership, use, occupancy,
maintenance, repair or improvement of the Premises and as appurtenant thereto.
Such insurance shall provide $3,000,000 combined single limit for bodily injury
and property damage. The limits of said insurance shall not, however, limit the
liability of the Tenant hereunder, and Tenant is responsible for ensuring that
the amount of liability insurance carried by Tenant is sufficient for Tenant's
purposes. Tenant may carry said insurance under a blanket policy so long as "per
location" liability aggregate limit is maintained, satisfactory to Landlord. If
Tenant shall fail to procure and maintain said insurance, Landlord may, but
shall not be required to, procure and maintain same, but at the expense of
Tenant. Tenant shall deliver to Landlord prior to occupancy of the Premises
copies of policies of liability insurance required herein and certificates
evidencing the existence and amounts of such insurance which name Landlord and
any Mortgagee as additional insured with evidence satisfactory to Landlord of
payment of premiums. No policy shall be cancelable or subject to reduction of
coverage except after thirty (30) days' prior written notice to Landlord. Tenant
acknowledges and agrees that insurance coverage carried by Landlord will not
cover Tenant's property within the Premises and that Tenant shall be
responsible, at Tenant's sole cost and expense, for providing insurance coverage
for Tenant's movable equipment, furnishing, trade fixtures and other personal
property in or upon the Premises and for any alterations, additions or
improvements to or of the Premises or any part thereof made by Tenant, in the
event of damage or loss thereto from any cause whatsoever.
(ii) Business interruption and extra expense
insurance, insuring Tenant against losses arising from the interruption of
Tenant's business, and for lost profits, and charges and expenses which continue
but would have been earned if the business had gone on without interruption,
insuring against such perils, in such form as is reasonably satisfactory to
Landlord, in an amount up to One Million Dollars ($1,000,000). Such insurance
should be on an agreed amount basis with no coinsurance payable.
(iii) Tenant shall maintain a policy or policies of
fire and property damage insurance in "special" (also known as "all risk") form
with a sprinkler leakage endorsement insuring the personal property, inventory,
trade fixtures, and if applicable boiler and machinery, within the Premises for
the full replacement value thereof. The proceeds from any of such policies shall
be used for the repair or replacement of such items so insured.
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(iv) Tenant shall also maintain a policy or policies
of workers' compensation insurance and any other employee benefit insurance
sufficient to comply with all Laws.
Insurance required under this Paragraph 12(c) shall be in companies rated "A" X
or better in "Best's Insurance Guide." Tenant shall deliver policies of such
insurance or certificates thereof to Landlord on or before the Occupancy Date,
and thereafter at least thirty (30) days before the expiration dates of expiring
policies; and, in the event Tenant shall fail to procure such insurance, or to
deliver such policies or certificates, Landlord may, at its option, procure same
for the account of Tenant, and the cost thereof shall be paid to Landlord as
Additional Charges within fifteen (15) days after delivery to Tenant of bills
therefor.
(d) SURVIVAL. The provisions of this Paragraph 12 shall
survive the expiration or termination of this Lease with respect to any claims
or liability arising out of events occurring prior to such expiration or
termination.
(e) LANDLORD'S INSURANCE OBLIGATIONS. Landlord shall
purchase and keep in force a policy or policies of liability, fire and property
damage insurance including provision for the payment of deductibles and
pre-payment for coverage, up to one year, covering loss or damage to the
Premises and Project in the amount of the full replacement value thereof,
insuring direct physical loss or damage included within the "special form"
classification of coverage and flood and earthquake insurance, if available,
plus a policy of rental income insurance in the amount of twelve (12) months
Base Rent and Additional Charges (or such longer time as any Mortgagee may
require). Tenant shall pay to Landlord the cost of such policy or policies of
insurance pursuant to Paragraph 4(c) [Additional Charges for Expenses and
Taxes]. If such insurance cost is increased due to Tenant's use of the Premises,
Tenant agrees to pay to Landlord the full cost of such increase. Tenant shall
have no interest in nor any right to the proceeds of any insurance procured by
Landlord for the Premises or the Project. Notwithstanding the foregoing
obligations of Landlord to carry insurance, Landlord may modify the foregoing
coverages if and to the extent it is commercially reasonable to do so; provided,
however, that such coverages shall not be voluntarily reduced by Landlord
without Tenant's prior consent.
13. WAIVER OF SUBROGATION. Notwithstanding anything to the contrary
in this Lease, to the extent that this waiver does not invalidate or impair
their respective insurance policies, the parties hereto release each other and
their respective agents, employees, successors, contractors, subcontractors,
assignees and subtenants from all liability for injury to any person or damage
to any property that is caused by or results from a risk (i) which is actually
insured against, to the extent of receipt of payment under such policy (unless
the failure to receive payment under any such policy results from a failure of
the insured party to comply with or observe the terms and conditions of the
insurance policy covering such liability, in which event, such release shall not
be so limited), (ii) which is required to be insured against under this Lease,
or (iii) which would normally be covered by the standard ISO "special" form of
casualty insurance, without regard to the negligence or willful misconduct of
the entity so released. Landlord and Tenant shall each obtain, and shall cause
their respective contractors and
25
subcontractors to obtain, from their respective insurers under all policies of
fire, theft and other property insurance maintained by either of them at any
time during the Term insuring or covering the Project or any portion thereof of
its contents therein, a waiver of all rights of subrogation which the insurer of
one party might otherwise, if at all, have against the other party, and Landlord
and Tenant shall each indemnify the other against any loss or expense, including
reasonable attorneys' fees, resulting from the failure to obtain such waiver.
14. SERVICES AND UTILITIES.
(a) LANDLORD'S RESPONSIBILITY. Landlord shall provide the
maintenance and repairs described in Paragraph 9(a) [Maintenance and Repairs;
Landlord's Obligations], except for damage caused by the acts or omissions of
the Tenant Parties, which damage shall be repaired by Landlord at Tenant's
expense.
(b) TENANT'S RESPONSIBILITY. Subject to the provisions
elsewhere herein contained and to the Rules and Regulations, Tenant shall be
responsible for arranging for, and direct payment of any and all cost of,
garbage pickup, recycling, janitorial, security, landscape maintenance within
the Premises, transportation management programs (including any commuter shuttle
program required under the City of Mountain View Transit Zone), water,
electricity, gas, telephone, cable and digital communications equipment, and any
and all other utilities and services, and Tenant shall provide the maintenance,
repair and replacement of Building Systems in connection with such utilities and
services as described in Section 9(b) [Repair and Maintenance; Tenant's
Obligations]. Landlord shall cooperate with Tenant's efforts to arrange all such
services. If Landlord assumes Tenant's maintenance obligations with respect to
the Building Systems pursuant to Paragraph 9(e) [Cure Rights], Tenant shall
cooperate fully with Landlord and abide by all the reasonable regulations and
requirements that Landlord may prescribe for the proper functioning and
protection of the Building Systems.
(c) NO EXCESSIVE LOAD. Tenant will not without the prior
written consent of Landlord, which consent shall not be unreasonably withheld or
delayed, use any apparatus or device in the Premises which, when used, puts an
excessive load on any Building or its structure or systems.
(d) NO LIABILITY OF LANDLORD. Landlord shall not be in
default hereunder or be liable for any damages directly or indirectly resulting
from, nor shall Rent be abated by reason of, (i) the installation, use or
interruption of use of any equipment in connection with the foregoing utilities
and services; (ii) failure to furnish or delay in furnishing any services to be
provided by Landlord when such failure or delay is caused by Force Majeure
Events, or by the making of repairs or improvements to the Project or any
portion thereof which are the responsibility of Landlord under this Lease; or
(iii) the limitation, curtailment, rationing or restriction on use of water or
electricity, gas or any other form of energy or any other service or utility
whatsoever serving the Project; provided, however, that (aa) Base Rent and
Additional Charges may be abated during the period of any total interruption of
utilities or services to the
26
Premises which exceeds thirty (30) days only if such interruption results from
an insured casualty such that proceeds are payable to Landlord under the rental
interruption insurance carried by Landlord pursuant to Paragraph 12(e)
[Landlord's Insurance Obligations] and only to the extent of such proceeds
actually received by Landlord, and (bb) subject to the limitations on Tenant's
recourse against Landlord contained in Paragraph 21(d) [Tenant's Remedies],
Landlord shall be liable for any actual damage to Tenant's property to the
extent caused by Landlord's gross negligence or willful misconduct in connection
with the failure to furnish or delay in furnishing any services to be provided
by Landlord. Furthermore, Landlord shall be entitled to cooperate voluntarily in
a reasonable manner with the efforts of national, state or local governmental
agencies or utilities suppliers in reducing consumption of energy or other
resources, so long as Tenant's use of the Premises is not unreasonably impaired
thereby.
15. TENANT'S CERTIFICATES. Tenant, at any time and from time to
time, within ten (10) days after written request from Landlord, will execute,
acknowledge and deliver to Landlord and, at Landlord's request, to any
prospective purchaser, ground or underlying lessor or Mortgagee of any part of
the Project or any other party acquiring an interest in Landlord, a certificate
of Tenant substantially in the form attached as Exhibit "C", or in such other
commercially reasonable form as may be requested by any Mortgagee, prospective
purchaser or lessor. The certificate may also contain any other information
reasonably required by any such persons. It is intended that any certificate of
Tenant delivered pursuant to this Paragraph 15 may be relied upon by Landlord
and any prospective purchaser, ground or underlying lessor or Mortgagee of any
part of the Project or such other party. If requested by Tenant, Landlord shall
provide Tenant with a similar certificate.
16. HOLDING OVER. If Tenant (directly or through any
successor-in-interest of Tenant) remains in possession of all or any portion of
the Premises after the expiration or termination of this Lease without the
consent of Landlord, Tenant's continued possession shall be on the basis of a
tenancy at the sufferance of Landlord. In such event, Tenant shall continue to
comply with or perform all the terms and obligations of Tenant under this Lease,
except that the Monthly Base Rent during Tenant's holding over shall be the
greater of the then-fair market rent for the Premises (as reasonably determined
by Landlord) or one hundred twenty-five percent (125%) of the Monthly Base Rent
payable in the last full month prior to the termination hereof (and shall be
increased in accordance with Paragraph 4(b) [Adjustments in Base Rent]). In
addition to Rent, Tenant shall pay Landlord for all damages proximately caused
by reason of the Tenant's retention of possession. Landlord's acceptance of Rent
after such termination shall not constitute a renewal of this Lease, and nothing
contained in this provision shall be deemed to waive Landlord's right of
re-entry or any other right hereunder or at law. Tenant acknowledges that, in
Landlord's marketing and re-leasing efforts for the Premises, Landlord is
relying on Tenant's vacation of the Premises on the Expiration Date.
Accordingly, Tenant shall indemnify, defend and hold Landlord harmless from and
against all claims, liabilities, losses, costs, expenses and damages arising or
resulting directly or indirectly from Tenant's failure to timely surrender the
Premises, including (i) any loss, cost or damages suffered by any prospective
tenant of all or any part of the Premises, and (ii) Landlord's damages as a
result of such prospective tenant
27
rescinding or refusing to enter into the prospective lease of all or any portion
of the Premises by reason of such failure of Tenant to timely surrender the
Premises.
17. SUBORDINATION. Without the necessity of any additional document,
this Lease shall be subject and subordinate at all times to: (i) all ground
leases or underlying leases that may now exist or hereafter be executed
affecting any portion of the Premises or Project; and (ii) the lien of any
mortgage or deed of trust that may now exist or hereafter be executed in any
amount for which any portion of the Premises or Project or any ground leases or
underlying leases, or Landlord's interest or estate in any of said items, is
specified as security (any such lien being herein defined as a "Mortgage" and
the holder of any Mortgage being a "Mortgagee"). Notwithstanding the foregoing,
Landlord shall have the right to subordinate or cause to be subordinated any
such ground leases or underlying leases or any Mortgage to this Lease. If any
ground lease or underlying lease terminates, or any Mortgage is foreclosed or a
conveyance in lieu of foreclosure is made, for any reason, Tenant shall,
notwithstanding any subordination, attorn to and become the Tenant of the
successor in interest to Landlord at the option of such successor in interest.
Notwithstanding anything to the contrary contained herein, this Lease shall not
be subject or subordinate to any ground or underlying lease or to any lien,
Mortgage, or other security interest affecting the Premises, and Tenant shall
not attorn to the ground lessor, Mortgagee or other holder of the interest to
which this Lease would be subordinated unless such ground lessor, Mortgagee or
holder executes a reasonable recognition and non-disturbance agreement which
provides that Tenant shall be entitled to continue in possession of the Premises
on the terms and conditions of this Lease if and for so long as Tenant fully
performs all of its obligations hereunder. Tenant shall execute and deliver upon
demand by Landlord, and in the form attached hereto as Exhibit "I", or in such
other form as may be requested by Landlord or any Mortgagee and reasonably
acceptable to Tenant, any additional documents evidencing the priority or
subordination of this Lease with respect to any such ground leases or underlying
leases or the lien of any such Mortgage. Tenant shall execute, deliver and
authorize recordation of any such documents within twenty (20) days after
Landlord's written request.
18. RULES AND REGULATIONS. Tenant shall faithfully observe and
comply with the rules and regulations attached to this Lease as Exhibit "D" and
all reasonable nondiscriminatory modifications thereof and additions thereto
from time to time put into effect by Landlord (the "Rules and Regulations"),
provided such rules and regulations do not unreasonably interfere with Tenant's
use of the Premises as contemplated by this Lease. In the event of an express
and direct conflict between the terms, covenants, agreements and conditions of
this Lease and those set forth in the rules and regulations, as modified and
amended from time to time by Landlord, this Lease shall control.
19. RE-ENTRY BY LANDLORD. Landlord reserves and shall at all
reasonable times have the right to re-enter the Premises upon reasonable prior
notice (except in the case of an emergency), and subject to Tenant's reasonable
security precautions and the right of Tenant to accompany Landlord at all times,
to inspect the same; to supply any service to be provided by Landlord to Tenant
hereunder (unless Tenant is supplying such service); to show the Premises to
28
prospective purchasers, Mortgagees or tenants (as to prospective tenants other
than prospective tenants of any recaptured space, only during the last eighteen
(18) months of the initial Term or the last twenty-four (24) months of any
Extension Term); to post notices of nonresponsibility; to alter, improve or
repair the Premises and any portion thereof as required or allowed by this Lease
or by law (and Landlord may for that purpose erect, use, and maintain
scaffolding, pipes, conduits, and other necessary structures in and through the
Premises where reasonably required by the character of the work to be
performed); and to take, or allow other parties to take, any actions
contemplated by the CC&Rs. Landlord shall not be liable in any manner for any
inconvenience, disturbance, loss of business, nuisance or other damage arising
from Landlord's or any third party's (including without limitation pursuant to
the CC&Rs) entry and acts pursuant to this Paragraph 19 unless caused by
Landlord's gross negligence or willful misconduct. Tenant shall not be entitled
to an abatement or reduction of Base Rent or Additional Charges if Landlord
exercises any rights reserved in this paragraph. Tenant hereby waives any claim
for damages for any injury or inconvenience to or interference with Tenant's
business, any loss of occupancy or quiet enjoyment of the Premises, and any
other loss occasioned thereby, except to the extent caused by Landlord's gross
negligence or willful misconduct. For each of the aforesaid purposes, Landlord
shall have the right to use any and all means which Landlord reasonably
determines are necessary or proper to open doors on the Premises in an emergency
in order to obtain entry to any portion of the Premises. Any entry to the
Premises, or portion thereof obtained by Landlord by any of said means, or
otherwise, shall not under any emergency circumstances be construed or deemed to
be a forcible or unlawful entry into, or a detainer of, the Premises, or an
eviction, actual or constructive, of Tenant from the Premises or any portions
thereof. Landlord shall use best efforts during re-entry to not unreasonably
interfere with Tenant's use of the Premises or its business conducted therein.
20. INSOLVENCY OR BANKRUPTCY. The appointment of a receiver to take
possession of all or substantially all of the assets of Tenant, or an assignment
by Tenant for the benefit of creditors, or any action taken or suffered by
Tenant under any insolvency, bankruptcy, reorganization or other debtor relief
proceedings (each of the foregoing, an "Insolvency Proceeding"), whether now
existing or hereafter amended or enacted, shall, at Landlord's option,
constitute a breach of this Lease by Tenant, unless a petition in bankruptcy,
receiver attachment, or other remedy pursued by a third party is discharged
within sixty (60) days. Upon the happening of any such event (including the
expiration of such 60 day period, if applicable) or at any time thereafter, this
Lease shall terminate five (5) days after written notice of termination from
Landlord to Tenant. In no event shall this Lease be assigned or assignable by
operation of law (except as provided in Paragraph 11 [Assignment and
Subletting]) or by voluntary or involuntary bankruptcy proceedings or otherwise.
In no event shall this Lease or any rights or privileges hereunder be an asset
of Tenant under any bankruptcy, insolvency, reorganization or other debtor
relief proceedings.
21. DEFAULT.
(a) TENANT'S DEFAULT. The failure to perform or honor any
covenant,
29
condition or representation made under this Lease shall constitute a "default"
hereunder by Tenant upon expiration of the appropriate grace period hereinafter
provided. Tenant shall have a period of three (3) business days from the date of
written notice from Landlord (which notice shall be in lieu of and not in
addition to the notice required by Section 1161 of the California Code of Civil
Procedure) within which to cure any default in the payment of Base Rent or
Additional Charges; provided, however, that Landlord shall not be required to
provide such notice more than twice during any four (4) year period during the
Term with respect to non-payment of Base Rent or Additional Charges, the third
such non-payment constituting default without requirement of notice. Tenant
shall have a period of thirty (30) days from the date of written notice from
Landlord (which notice shall be in lieu of and not in addition to the notice
required by Section 1161 of the California Code of Civil Procedure) within which
to cure any other curable default under this Lease; provided, however, that with
respect to any curable default other than the payment of Base Rent or Additional
Charges that cannot reasonably be cured within thirty (30) days, the default
shall not be deemed to be uncured if Tenant commences to cure within thirty (30)
days from Landlord's notice and continues to prosecute diligently the curing
thereof; provided that such cure period shall in no event extend beyond ninety
(90) days (subject to delay by Force Majeure Events) after Landlord's notice.
Notwithstanding the foregoing, if a shorter cure period is specified elsewhere
in this Lease with respect to any specific obligation of Tenant, such shorter
cure period shall apply with respect to a default of such obligation.
(b) LANDLORD'S REMEDIES. Upon an uncured default of this
Lease by Tenant, Landlord shall have the following rights and remedies in
addition to any other rights or remedies available to Landlord at law or in
equity:
(1) The rights and remedies provided by California
Civil Code, Section 1951.2, including but not limited to, recovery of the worth
at the time of award of the amount by which the unpaid Base Rent and Additional
Charges for the balance of the Term after the time of award exceeds the amount
of rental loss for the same period that the Tenant proves could be reasonably
avoided, as computed pursuant to subsection (b) of said Section 1951.2;
(2) The rights and remedies provided by California
Civil Code, Section 1951.4, that allows Landlord to continue this Lease in
effect and to enforce all of its rights and remedies under this Lease, including
the right to recover Base Rent and Additional Charges as they become due, for so
long as Landlord does not terminate Tenant's right to possession. Acts of
maintenance or preservation, efforts to relet the Premises or the appointment of
a receiver upon Landlord's initiative to protect its interest under this Lease
shall not constitute a termination of Tenant's rights to possession;
(3) The right to terminate this Lease by giving
notice to Tenant in accordance with applicable law;
(4) If Landlord elects to terminate this Lease, the
right and power to
30
enter the Premises and remove therefrom all persons and property, and to store
such property in a public warehouse or elsewhere at the cost of and for the
account of Tenant, and to sell such property and apply such proceeds therefrom
pursuant to applicable California law.
(c) LANDLORD'S DEFAULT. Landlord shall have a period of
thirty (30) days from the date of written notice from Tenant to cure any default
by Landlord under this Lease; provided, however, that with respect to any
default that cannot reasonably be cured within thirty (30) days, the default
shall not be deemed to be uncured if Landlord commences to cure within thirty
(30) days from Tenant's notice and continues to prosecute diligently the curing
thereof. Tenant agrees to give any Mortgagee, by registered or certified mail, a
copy of any Notice of Default served upon the Landlord, provided that prior to
such notice Tenant has been notified in writing of the address of such
Mortgagee. If Landlord fails to cure such default within the time provided for
in this Lease, then the Mortgagee shall have an additional thirty (30) days
(provided that Tenant notifies Mortgagee concurrently with Tenant's notice to
Landlord at the beginning of Landlord's thirty (30) day period; otherwise
Mortgagee shall have thirty (30) days from the later of the date on which it is
noticed and the expiration of Landlord's cure period) within which to cure such
default. If such default cannot be cured by Mortgagee within the cure period,
Tenant may not exercise any of its remedies so long as Mortgagee has commenced
and is diligently pursuing the remedies necessary to cure such default
(including, but not limited to, commencement of foreclosure proceedings, if
necessary to effect such cure).
(d) TENANT'S REMEDIES. Subject to Paragraph 3(f) [Exclusive
Remedies], if any default hereunder by Landlord is not cured within the
applicable cure period provided in Paragraph 21(c) [Landlord's Default],
Tenant's exclusive remedies shall be an action for specific performance or
action for actual damages. Tenant hereby waives the benefit of any laws granting
it (A) the right to perform Landlord's obligation, or (B) the right to terminate
this Lease or withhold Rent on account of any Landlord default. Tenant shall
look solely to Landlord's interest in the Project for the recovery of any
judgment from Landlord. Landlord, or if Landlord is a partnership, its partners
whether general or limited, or if Landlord is a corporation, its directors,
officers or shareholders, shall never be personally liable for any such
judgment. Any lien obtained to enforce such judgment and any levy of execution
thereon shall be subject and subordinate to any Mortgage (excluding any Mortgage
which was created as part of an effort to defraud creditors, i.e. a fraudulent
conveyance); provided, however that any such judgement and any such levy of
execution thereon shall not be subject or subordinated to any Mortgage that is
created or recorded in the Official Records of Santa ▇▇▇▇▇ County after the date
of the judgement giving rise to such lien.
22. DAMAGE AND DESTRUCTION
(a) RESTORATION. Subject to the termination rights set forth
in Paragraphs 22(c) [Casualty at End of Term] and Paragraph 22(d) [Mutual
Termination Option], if the Premises or any portion thereof are damaged or
destroyed by fire or other casualty, Tenant will promptly give written notice
thereof to Landlord, and:
31
(1) Tenant, at Tenant's sole cost and expense, and
pursuant to the provisions of Paragraph 8 [Alterations], as applicable, will
promptly repair, restore and rebuild any Alterations as nearly as possible to
the condition they were in immediately prior to such damage or destruction or
with such changes or alterations as may be made pursuant to Paragraph 8
[Alterations]; and
(2) to the extent that any such damage or
destruction affects the Base Building, Landlord shall repair the same at
Landlord's cost.
(b) INSURANCE PROCEEDS. Subject to the provisions of
Paragraphs 22(e) [Destruction Where No Proceeds Are Available] and 22(f)
[Proceeds Upon Termination], all insurance proceeds recovered by the Landlord on
account of such damage or destruction, less the cost, if any, to the Landlord of
such recovery shall be applied by Landlord toward any repair to the Base
Building as may be required hereunder. The amount of available insurance
proceeds shall not limit Tenant's or Landlord's obligation to repair, restore
and rebuild any Alterations and the Base Building, respectively, in accordance
with this Paragraph 22.
(c) CASUALTY AT END OF TERM. Notwithstanding anything to the
contrary contained in this Lease, if, during the twelve (12) months prior to the
expiration of the Term, the entire Building or a substantial portion thereof is
damaged or destroyed by fire or other casualty, either Tenant or Landlord shall
have the option to terminate this Lease as of the date of such damage or
destruction by written notice to the other party given within thirty (30) days
after such damage or destruction, in which event the Landlord shall make a
proportionate refund to the Tenant of such Rent as may have been paid in
advance. For the purposes of this paragraph, a "substantial portion" of the
Building shall mean twenty percent (20%) or more of the Rentable Area thereof.
If neither party elects to terminate this Lease, Landlord and/or Tenant shall
repair, restore and rebuild the Premises in accordance with Paragraph 22(a)
[Restoration].
(d) MUTUAL TERMINATION OPTION; INSURED CASUALTY.
Notwithstanding anything to the contrary contained herein (but subject to
Paragraph 22(e) below), if at any time during the Term the Base Building shall
be damaged or destroyed to the extent that it cannot be reconstructed within
twelve (12) months following the date such reconstruction is commenced, either
Landlord or Tenant shall have the right to terminate this Lease as of the date
of such damage or destruction by written notice to the other party. Within
forty-five (45) days after any damage or destruction described in this Paragraph
22(d), Landlord shall notify Tenant whether or not in Landlord's reasonable
opinion (supported by reasonable written confirmation from a third party
architect or general contractor) such reconstruction can be made within twelve
(12) months after the date of such damage, and if reconstruction cannot be made
within twelve (12) months, whether or not Landlord elects to terminate the
Lease. If Tenant is so notified, but Landlord does not elect to terminate,
Tenant may terminate this Lease as of the date of such damage or destruction by
written notice to Landlord given within forty-five (45) days after receipt of
Landlord's notice. If Tenant disputes Landlord's determination that such
reconstruction can be
32
completed within twelve (12) months, Tenant shall so notify Landlord within
forty-five (45) days after receipt of Landlord's notice (supported by reasonable
written confirmation from a third party architect or general contractor backing
Tenant's assertions), and if the parties are unable to reach agreement within
the ten (10) day period after Landlord's receipt of Tenant's notice, either
party may submit such dispute to arbitration pursuant to Paragraph 41
[Arbitration of Disputes], provided that Landlord may, at its sole election (but
shall not be obligated to), commence reconstruction of the Base Building while
such arbitration proceedings are pending. If neither party elects to terminate
this Lease, Landlord and/or Tenant shall repair, restore and rebuild the
Premises in accordance with Paragraph 22(a) [Restoration].
(e) DESTRUCTION WHERE NO PROCEEDS ARE AVAILABLE. In the
event of a total or partial destruction of the Building (i) by a casualty of a
type not required to be insured against by Landlord under the terms of this
Lease, or (ii) under circumstances where Landlord has been required by any
Mortgagee to utilize substantially all of the insurance proceeds to pay down the
Mortgage, which destruction exceeds five percent (5%) of the replacement cost of
the Base Building, this Lease shall automatically terminate, unless (x) Landlord
elects to reconstruct the Base Building, and (y) the damage can be reconstructed
within twelve (12) months following commencement of reconstruction (determined
as provided above). If Landlord elects to reconstruct, the cost incurred by
Landlord for such reconstruction shall be amortized over the useful life of the
Base Building and such amortization shall be reimbursed by Tenant to Landlord as
an Additional Charge together with interest at the Interest Rate; provided,
however, that Tenant shall not be obligated to pay for any portion of the useful
life of the Base Building which extends beyond the Expiration Date.
(f) PROCEEDS AND PAYMENTS UPON TERMINATION. If this Lease is
terminated under Paragraph 22(c) [Casualty at End of Term] or Paragraph 22(d)
[Mutual Termination Option; Insured Casualty], Landlord shall be entitled to
retain any and all insurance proceeds arising out of the damage or destruction,
except for proceeds of any policies carried by Tenant and specifically covering
its Alterations, personal property, equipment and trade fixtures. Upon any
termination, Tenant shall assign all of its rights to any insurance proceeds to
which it is entitled (except any portion specifically compensating Tenant for
the loss of its Alterations, personal property, equipment and trade fixtures) to
Landlord and shall pay to Landlord the amount of any deductible under any
insurance policy attributable to the casualty resulting in such termination.
(g) RENT ABATEMENT. In the event of an insured casualty, the
Base Rent and Additional Charges during the period from the date of the damage
or destruction until completion of the restoration, repair, replacement or
rebuilding shall be abated by an amount that is in the same ratio to the Base
Rent and Additional Charges as the area of the Premises rendered unusable for
the permitted use hereunder bears to the area of the Premises prior to the
damage or destruction, but only to the extent of the amount of proceeds payable
to Landlord (taking into account any applicable waiting period or deductibles)
under the rental interruption insurance required to be carried by Landlord
pursuant to Paragraph 12(e) [Landlord's Insurance
33
Obligations].
(h) WAIVER OF STATUTORY PROVISIONS. Tenant hereby waives the
provisions of Section 1932.2, and Section 1933.4, of the Civil Code of
California, or any similar laws now or hereafter in effect, that would relieve
the Tenant from any obligation to pay Rent under this Lease due to any damage or
destruction.
23. EMINENT DOMAIN.
(a) ENTIRE BUILDING. If the entire Building is taken or
appropriated under the power of eminent domain or conveyed in lieu thereof (any
such event, a "Taking"), (i) this Lease and all right, title and interest of the
Tenant hereunder shall cease and come to an end on the date of vesting of title
pursuant to such Taking, and (ii) the Base Rent and Additional Charges payable
shall be apportioned as of the date of such vesting.
(b) PARTIAL BUILDING; TERMINATION. If there is a Taking of
less than the entire Building, this Lease shall terminate as to the portion of
the Building so taken upon vesting of title pursuant to such Taking, and if, but
only if, such Taking is so extensive that it renders the remaining portion of
the Building unsuitable for the use being made of the Building on the date
immediately preceding such Taking, either the Tenant or the Landlord may
terminate this Lease by written notice to the other party not later than thirty
(30) days after the date of such vesting, specifying as the date for termination
a date not later than thirty (30) days after such notice. On the date specified
in such notice, (i) the term of this Lease and all right, title and interest of
Tenant hereunder shall cease, and (ii) the Base Rent and Additional Charges
shall be apportioned as of the date of such termination.
(c) PARTIAL BUILDING; RESTORATION. If there is a Taking of
less than the entire Building and this Lease is not terminated with respect to
the Building as provided in (b) above, this Lease shall terminate as to the
portion of the Building so taken upon vesting of title pursuant to such Taking.
In any such case, Landlord shall restore the Base Building Improvements for the
portion of the Building continuing under this Lease at Landlord's cost and
expense; provided, however, that Landlord shall not be required to repair or
restore any injury or damage to the property of Tenant or to make any repairs or
restoration of any Alterations installed on the Premises by or at the expense of
Tenant. Tenant shall, at Tenant's sole cost and expense, promptly and pursuant
to the provisions of Paragraph 8 [Alterations], restore those portions of the
Alterations not so taken. Thereafter, the Base Rent and Additional Charges to be
paid under this Lease for the remainder of the Term shall be proportionately
reduced, such that thereafter the amounts to be paid by Tenant shall be in the
ratio that the portion of the Building not so taken bears to the total area of
the Building prior to such Taking.
(d) END OF TERM TAKING. If, during the twelve (12) months
prior to the expiration of the Term, there is a Taking of a portion of the
Building, both Landlord and Tenant shall have the option, exercisable by written
notice to the other party given within thirty (30) days
34
after such vesting of title, of terminating this Lease as of the date of vesting
of title pursuant to the Taking, in which event Landlord shall make a
proportionate refund to Tenant of any Base Rent and Additional Rent that has
been paid in advance.
(e) TAKING OF PROJECT. If there is a Taking of any portion
of the Project other than the Premises which causes the Premises to violate
parking requirements, building setbacks or access requirements under any
applicable Laws, Landlord shall cure such non-compliance by any reasonable
means. If Landlord determines that such violation is not curable by reasonable
means, or if Landlord fails to commence such cure within sixty (60) days after
such Taking, both Landlord and Tenant shall have the option, exercisable by
written notice to the other party, of terminating this Lease as of the date of
vesting of title pursuant to the Taking, in which event Landlord shall make a
proportionate refund to Tenant of any Base Rent and Additional Rent that has
been paid in advance.
(f) AWARD. Landlord shall receive (and Tenant shall assign
to Landlord upon demand from Landlord) any income, rent, award or any interest
therein which may be paid in connection with any Taking, whether partial or
total, and whether or not either Landlord or Tenant exercises any right it may
have to terminate this Lease. Tenant shall have no claim against Landlord for
any part of such sum paid by virtue of the Taking, whether or not attributable
to the value of the unexpired term of this Lease, except that Tenant shall be
entitled to petition the condemning authority for the following: (i) the then
unamortized cost of any Alterations paid for by Tenant which Tenant is required
to remove upon termination of the Lease; (ii) the value of Tenant's trade
fixtures; (iii) Tenant's relocation costs; and (iv) Tenant's goodwill, loss of
business and business interruption.
(g) TEMPORARY TAKING. Notwithstanding anything to the
contrary contained in this Paragraph 23, if there is a Taking of the temporary
use or occupancy of any part of the Premises during the Term, this Lease shall
be and remain unaffected by such Taking and Tenant shall continue to pay in full
all Base Rent and Additional Charges payable hereunder by Tenant during the
Term. In such event, Tenant shall be entitled to receive that portion of any
award which represents compensation for the use or occupancy of the Premises
during the Term, and Landlord shall be entitled to receive that portion of any
award which represents the cost of restoration of the Premises and the use and
occupancy of the Premises after the end of the Term. Notwithstanding the
foregoing, if Landlord determines in its reasonable judgment that any Taking of
the temporary use or occupancy of any part of the Premises will continue until
the end of the Term, either party may elect to terminate this Lease by written
notice to the other party at any time after Landlord has made such determination
and delivered written notice thereof to Tenant, and Landlord shall be entitled
to receive the entire award for the Taking, except for that portion which
represents compensation for the use or occupancy of the Premises during the
period of time prior to such termination.
(h) WAIVER OF STATUTORY PROVISIONS. Landlord and Tenant
understand and agree that the provisions of this Paragraph 23 are intended to
govern fully the rights and
35
obligations of the parties in the event of a Taking of all or any portion of the
Premises. Accordingly, the parties each hereby waives any right to terminate
this Lease in whole or in part under Sections 1265.120 and 1265.130 of the
California Code of Civil Procedure or under any similar Law now or hereafter in
effect.
24. SALE BY LANDLORD. If Landlord sells or otherwise conveys its
interest in all or any portion of the Premises, Landlord shall be relieved of
its obligations under the Lease with respect to the conveyed portion from and
after the date of sale or conveyance only when Landlord transfers the
proportionate amount of any security deposit of Tenant to its successor and the
successor assumes in writing the obligations to be performed by Landlord on and
after the effective date of the transfer, whereupon Tenant shall attorn to such
successor.
25. RIGHT OF LANDLORD TO PERFORM. All covenants and agreements to be
performed by Tenant under any of the terms of this Lease shall be performed by
Tenant at Tenant's sole cost and expense and without any abatement of Base Rent
or Additional Charges. If Tenant defaults in the payment of any sum of money,
other than Base Rent or Additional Charges, required to be paid by it hereunder
or fails to perform any other act on its part to be performed hereunder, and
such failure continues for ten (10) days after notice thereof by Landlord (or
such longer period as noted in Paragraph 9(e)[Cure Rights] or Paragraph 21(a)
[Tenant's Default], except in the event of emergency), Landlord may, but shall
not be obligated to, make any such payment or perform any such act on Tenant's
part to be made or performed as provided in this Lease without waiving or
releasing Tenant from any obligations of Tenant. All sums so paid by Landlord
and all reasonable and necessary incidental costs incurred by Landlord in
connection therewith, together with interest thereon at the Default Rate from
the date of such payment by Landlord, shall be payable to Landlord on demand as
Additional Charges.
26. OWNERSHIP OF IMPROVEMENTS; SURRENDER OF PREMISES.
(a) OWNERSHIP OF ALTERATIONS. Any Alterations constructed on
or affixed to the Premises by or on behalf of Tenant pursuant to the terms and
conditions of this Lease, except for Tenant's movable furniture and equipment,
trade fixtures and Alterations which can be removed without damage to the
Premises, shall become Tenant's property upon their completion, shall remain
Tenant's property throughout the Term of this Lease and shall become Landlord's
property upon the expiration or earlier termination of this Lease to the extent
they are not required or permitted to be removed by Tenant pursuant to the terms
of this Lease.
(b) DELIVERY AND RESTORATION OF PREMISES. At the end of the
Term or any renewal thereof or other sooner termination of this Lease, Tenant
will peaceably deliver to Landlord possession of the Premises, together with all
improvements or additions thereon (including, without limitation, the
Alterations which Landlord does not require Tenant to remove pursuant to
Paragraph 8 [Alterations]), in the same condition as received or first installed
subject to normal wear and tear but in the condition described on Exhibit "E"
attached hereto, subject to the terms of Paragraph 23 [Eminent Domain] and the
rights and obligations of Landlord and
36
Tenant concerning casualty damage pursuant to Paragraph 22 [Damage and
Destruction]. Tenant may, upon the termination of this Lease, remove all movable
furniture, trade fixtures and equipment belonging to Tenant which is not an
integral part of any Building System, at Tenant's sole cost, provided that
Tenant repairs any damage caused by such removal. Property not so removed shall
be deemed abandoned by Tenant, and title to the same shall thereupon pass to
Landlord. In addition, Tenant shall remove and/or reconfigure, at Tenant's sole
cost and with all due diligence, any or all Alterations to the Premises
installed by or at the expense of Tenant which Tenant is required to remove
and/or reconfigure under Paragraph 8 [Alterations] of this Lease.
(c) NO MERGER. The voluntary or other surrender of this
Lease by Tenant, or a mutual cancellation thereof, shall not work a merger, and
shall, at the option of Landlord, terminate all or any existing subleases or
subtenancies, or may, at the option of Landlord, operate as an assignment to it
of any or all such subleases or subtenancies.
27. WAIVER. If either Landlord or Tenant waives the performance of
any term, covenant or condition contained in this Lease, such waiver shall not
be deemed to be a waiver of any subsequent breach of the same or any other term,
covenant or condition contained herein. Furthermore, the acceptance of Base Rent
or Additional Charges by Landlord shall not constitute a waiver of any preceding
breach by Tenant of any term, covenant or condition of this Lease, regardless of
Landlord's knowledge of such preceding breach at the time Landlord accepted such
Base Rent or Additional Charges. Failure by Landlord to enforce any of the
terms, covenants or conditions of this Lease for any length of time shall not be
deemed to waive or to decrease the right of Landlord to insist thereafter upon
strict performance by Tenant. Waiver by Landlord of any term, covenant or
condition contained in this Lease may only be made by a written document signed
by Landlord.
28. NOTICES. Except as otherwise expressly provided in this Lease,
any bills, statements, notices, demands, requests or other communications given
or required to be given under this Lease shall be effective only if rendered or
given in writing, sent by certified mail (return receipt requested), reputable
overnight carrier, or delivered personally, (i) to Tenant at Tenant's address
set forth in the Basic Lease Information; or (ii) to Landlord at Landlord's
address set forth in the Basic Lease Information; or (iii) to such other address
as either Landlord or Tenant may designate as its new address for such purpose
by notice given to the other in accordance with the provisions of this Paragraph
28. Any ▇▇▇▇, statement, notice, demand, request or other communication shall be
deemed to have been rendered or given on the date the return receipt indicates
delivery of or refusal of delivery if sent by certified mail, the day upon which
recipient accepts and signs for delivery from a reputable overnight carrier or
on the date a reputable overnight carrier indicates refusal of delivery, or upon
the date personal delivery is made.
29. TAXES PAYABLE BY TENANT. Prior to delinquency Tenant shall pay
all taxes levied or assessed upon Tenant's equipment, furniture, fixtures and
other personal property
37
located in or about the Premises. If the assessed value of Landlord's property
is increased by the inclusion therein of a value placed upon Tenant's equipment,
furniture, fixtures or other personal property, Tenant shall pay to Landlord,
upon written demand, the taxes so levied against Landlord, or the proportion
thereof resulting from said increase in assessment.
30. ABANDONMENT. Tenant shall not abandon the Premises and cease
performing its financial and maintenance obligations under this Lease at any
time during the Term. If Tenant abandons and ceases performing its financial and
maintenance obligations under this Lease, or surrenders the Premises or is
dispossessed by process of law or otherwise, any personal property belonging to
Tenant and left on the Premises shall, at the option of Landlord, be deemed to
be abandoned and title thereto shall thereupon pass to Landlord. Notwithstanding
anything to the contrary contained herein, Tenant may not vacate the Premises if
such would result in a termination of Landlord's insurance. Upon Tenant's
request, Landlord will ask its insurer if such vacation of the Premises would
result in termination of its current insurance policy. Solely for purposes of
this Paragraph 30, Tenant shall not be deemed to have abandoned the Premises
solely because Tenant is not occupying the Premises.
31. SUCCESSORS AND ASSIGNS. Subject to the provisions of Paragraphs
11 [Assignment and Subletting] and 24 [Sale by Landlord], the terms, covenants
and conditions contained herein shall be binding upon and inure to the benefit
of the parties hereto and their respective legal and personal representatives,
successors and assigns.
32. ATTORNEY'S FEES. If Tenant or Landlord brings any action for any
relief against the other, declaratory or otherwise, arising out of this Lease,
including any suit by Landlord for the recovery of Base Rent or Additional
Charges or possession of the Premises, the losing party shall pay to the
prevailing party a reasonable sum for attorney's fees, which shall be deemed to
have accrued on the commencement of such action and shall be paid whether or not
the action is prosecuted to judgment.
33. LIGHT AND AIR. Tenant covenants and agrees that no diminution of
light, air or view by any structure which may hereafter be erected (whether or
not by Landlord) shall entitle Tenant to any reduction of Rent under this Lease,
result in any liability of Landlord to Tenant, or in any other way affect this
Lease or Tenant's obligations hereunder.
34. SECURITY DEPOSIT.
(a) LETTER OF CREDIT. Concurrently with Tenant's execution
of this Lease, Tenant shall deliver to Landlord an unconditional, irrevocable,
transferable letter of credit, in the amount of One Million Dollars
($1,000,000), issued by a financial institution acceptable to Landlord in the
form attached hereto as Exhibit "F", with an original term of no less than one
year and automatic extensions through the end of the Term of this Lease and
sixty (60) days thereafter (the "Letter of Credit"). Tenant shall keep the
Letter of Credit, at its expense, in full force and effect until the sixtieth
(60th) day after the Expiration Date or other termination of this
38
Lease, to insure the faithful performance by Tenant of all of the covenants,
terms and conditions of this Lease, including, without limitation, Tenant's
obligations to repair, replace or maintain the Premises. The Letter of Credit
shall provide thirty (30) days' prior written notice to Landlord of cancellation
or material change thereof, and shall further provide that, in the event of any
nonextension of the Letter of Credit at least thirty (30) days prior to its
expiration, the entire face amount shall automatically be paid to Landlord, and
Landlord shall hold the funds so obtained as the security deposit required under
this Lease. If for any reason such automatic payment does not occur in the event
of a nonextension at least thirty (30) days prior to expiration, Landlord shall
be entitled to present its written demand for payment of the entire face amount
of the Letter of Credit, and the funds so obtained shall be held as provided
above. Any unused portion of the funds so obtained by Landlord shall be returned
to Tenant upon replacement of the Letter of Credit or deposit of cash security
in the full amount required hereunder. If Landlord uses any portion of the cash
security deposit to cure any default by Tenant hereunder, Tenant shall replenish
the security deposit to the original amount within ten (10) days of notice from
Landlord. Tenant's failure to do so shall be a material breach of this Lease.
Landlord shall keep any cash security funds separate from its general funds, and
shall invest such cash security at Tenant's reasonable direction, and any
interest actually earned by Landlord on such cash security shall be paid to
Tenant quarterly. If an event of default occurs under this Lease, or if Tenant
is the subject of an Insolvency Proceeding, Landlord may present its written
demand for payment of the entire face amount of the Letter of Credit and the
funds so obtained shall become due and payable to Landlord. Landlord may retain
such funds to the extent required to compensate Landlord for damages incurred,
or to reimburse Landlord as provided herein, in connection with any such event
of default, and any remaining funds shall be held as a cash security deposit.
(b) ANNUAL REDUCTION OF LETTER OF CREDIT. The face amount of
the Letter of Credit may be reduced on each of the third through eighth
anniversaries of the Rent Commencement Date in the amount of One Hundred
Forty-Three Thousand Dollars ($143,000), and on the ninth anniversary of the
Rent Commencement Date in the amount of One Hundred Forty-Two Dollars
($142,000), so long as (i) Tenant is not in default (and no event has occurred
which, with the passage of time or giving of notice or both, would constitute a
default) under the Lease on such anniversary date, and (ii) Landlord has not
delivered a notice of default to Tenant hereunder during the previous calendar
year, regardless of whether such default was cured by Tenant within any
applicable grace or cure period; provided, however, that any such notice of
default relating to a non-monetary default which was disputed, in good faith, by
Tenant and ultimately determined (by agreement of the parties, arbitration or
judicial action) not to be a default shall not be considered for purposes of
determining whether such condition has been met.
(c) RETURN OF LETTER OF CREDIT. The Letter of Credit shall
be returned to Tenant, and Tenant's obligation to provide a security deposit to
Landlord under this Paragraph 34 shall terminate, at any time after the third
(3rd) anniversary of the Rent Commencement Date when Tenant can establish to
Landlord's reasonable satisfaction that as of the end of any fiscal
39
year of Tenant following the third anniversary of the Rent Commencement Date,
Tenant has (i) annual net income in excess of Twenty-Five Million Dollars
($25,000,000) for the previous two consecutive years, (ii) shareholder equity in
excess of One Hundred Fifty Million Dollars ($150,000,000), and (iii) cash and
cash equivalents in excess of Fifty Million Dollars ($50,000,000), all as
determined in accordance with GAAP and as reflected on certified, audited
financial statements.
(d) SUBSTITUTION OF CASH COLLATERAL. In lieu of, or in
replacement of, the Letter of Credit, Tenant may deliver to Landlord at any time
during the Term a cash deposit in the face amount required of the Letter of
Credit, provided that Landlord shall have no additional liability or reduced
benefits from that which Landlord would have if Tenant provided a Letter of
Credit. All terms, conditions and requirements with respect to the Letter of
Credit contained in this Paragraph 34, including, without limitation,
application of proceeds, reduction of amount, return of deposit, and investment
requirements for cash collateral, shall apply to any such cash collateral.
(e) CONVERSION OF DEPOSIT TO LOAN. Landlord and Tenant
acknowledge and agree that, if Tenant defaults under this Lease and fails to
fully cure such default within the applicable cure period and Landlord elects to
pursue its remedies under California Civil Code Section 1951.2 or under this
Lease to terminate this Lease (any such event, a "Landlord Action"), (i)
Landlord will incur certain damages, costs and expenses, including, without
limitation, marketing costs, commissions, relocation costs, tenant improvement
costs, and carrying costs in connection with releasing the Premises, in addition
to the other damages, costs and expenses Landlord may incur as a result of such
default and/or other defaults under this Lease (all of the foregoing
collectively, "Default Damages"); (ii) Landlord has no assurance of a source of
funds to cover such Default Damages other than the proceeds of the Letter of
Credit (or cash collateral); and (iii) the proceeds of the Letter of Credit (or
cash collateral) should be available to Landlord to apply to Default Damages,
even if the amount thereof exceeds that amount to which Landlord is ultimately
determined to be entitled under this Lease and pursuant to applicable law.
Accordingly, at Landlord's sole election, Landlord shall be entitled to draw the
full amount of the Letter of Credit (or the full amount of cash collateral shall
be released to Landlord) which is then existing (after any previous application
of funds by Landlord and/or replenishment by Tenant pursuant to Paragraph 34(a)
above), simultaneously with commencement of a Landlord Action or at any time
thereafter. All proceeds thereof in excess of amounts applied (pursuant to
Paragraph 34(a)) to Default Damages incurred by Landlord prior to commencement
of the Landlord Action shall be deemed a loan from Tenant to Landlord (the
"Default Loan"). The Default Loan shall be unsecured and shall not bear
interest, and repayment thereof shall be limited to the terms and conditions set
forth in this paragraph. Any sums to which Landlord from time to time becomes
entitled hereunder and pursuant to law as a result of Tenant's default and any
previous defaults of the Lease, to which the Letter of Credit (or cash
collateral) has not previously been applied pursuant to Paragraph 34(a), shall
be offset against the principal balance of the Loan. The amount of the Default
Loan remaining, if any, after such offset shall be referred to herein as the
"Excess Amount". The Excess Amount shall be payable
40
by Landlord to Tenant from, and only from, first any proceeds from the Letter of
Credit (or cash collateral) which have not been applied to Default Damages
incurred by Landlord after the same are finally determined (the "Remaining
Proceeds"), and then Excess Rent. The Remaining Proceeds shall be paid by
Landlord to Tenant promptly upon final determination after the entire Premises
are leased to a third party or parties. If Tenant disputes the amount of
Remaining Proceeds paid by Landlord, Tenant may submit such dispute to
arbitration in accordance with Paragraph 41 [Arbitration of Disputes] of this
Lease. "Excess Rent" shall mean the amount by which (x) rent received by
Landlord (from the tenant or tenants leasing all or any portion of the Premises
after Tenant's default) in any month exceeds (y) the amount of rent that would
have been payable under this Lease for such month if this Lease had not been
terminated. Landlord shall pay Tenant one-half of the Excess Rent until the
earlier of (A) the date the Excess Amount is fully repaid or (B) the date that
would have been the Expiration Date (excluding any Renewal Term) of this Lease.
Any remaining balance of the Default Loan on such date shall be deemed forgiven.
If the Default Loan is insufficient to cover all Default Damages, Tenant shall
pay Landlord any such shortfall immediately upon demand by Landlord, and
Landlord shall have all rights and remedies available at law or elsewhere in the
Lease with respect to such shortfall.
35. FINANCIAL INFORMATION. Tenant will furnish to the Landlord
within one hundred twenty (120) days after the end of each calendar year, copies
of audited, consolidated financial statements, which shall include, without
limitation, balance sheets, statements of income and expenses and sources and
uses of funds of the Tenant and its subsidiaries for such calendar year, all in
reasonable detail and stating in comparative form the figures as of the end of
and for the previous calendar year and including appropriate footnotes, prepared
in accordance with generally accepted accounting principles, and certified and
audited by independent public accountants of recognized standing reasonably
satisfactory to the Landlord; provided, however, that so long as Tenant is a
publicly traded corporation, in lieu of the foregoing Tenant shall provide
Landlord with copies of Tenant's annual report and 10K Filing when such
documents are released to the public. Tenant hereby covenants and warrants to
Landlord that all financial information and other descriptive information
regarding Tenant's business, which has been or shall be furnished to Landlord,
is and shall be accurate and complete at the time of delivery to Landlord.
36. PARKING. Subject to the Rules and Regulations, Tenant shall have
the exclusive right to use the parking situated on the Land; provided, however,
that other than marking parking spaces situated on the Land as designated for
Tenant's use (at Tenant's request), Landlord shall not be obligated to enforce
such exclusive right.
37. MISCELLANEOUS.
(a) DEFINED TERMS. The paragraph headings herein are for
convenience of reference and shall in no way define, increase, limit or describe
the scope or intent of any provision of this Lease. The term "Landlord" shall
include Landlord and its successors and assigns. In any case where this Lease is
signed by more than one person, the obligations
41
hereunder shall be joint and several. The term "Tenant" shall include Tenant and
its successors and assigns.
(b) OTHER TERMS. Time is of the essence of this Lease and
all of its provisions. This Lease shall in all respects be governed by the laws
of the State of California. This Lease, together with its exhibits, contains all
the agreements of the parties hereto and supersedes any previous negotiations.
There have been no representations made by the Landlord or understandings made
between the parties other than those set forth in this Lease and its exhibits.
This Lease may not be modified except by a written instrument by the parties
hereto.
(c) QUIET ENJOYMENT. Upon Tenant paying the Base Rent and
Additional Charges and performing all of Tenant's obligations under this Lease,
Tenant may peacefully and quietly enjoy the Premises during the Term as against
all persons or entities lawfully claiming by or through Landlord; subject,
however, to the provisions of this Lease.
(d) SURVIVAL OF INDEMNITIES; IMMEDIATE OBLIGATION TO DEFEND.
All indemnities contained herein shall survive the expiration or earlier
termination of this Lease. With respect to each of the indemnities contained in
this Lease, the indemnitor has an immediate and independent obligation to defend
the indemnitee from any claim which actually or potentially falls within the
indemnity provision, which obligation arises at the time such claim is tendered
to the indemnitor by the indemnitee and continues at all times thereafter.
38. REPRESENTATIONS AND WARRANTIES.
(a) LANDLORD'S REPRESENTATIONS AND WARRANTIES. Landlord
represents and warrants to Tenant that, to Landlord's best knowledge, (i) the
Premises are not now in violation of any applicable Laws other than Laws with
respect to Hazardous Substances; and (ii) the zoning requirements currently
applicable to the Premises permit the permitted use under this Lease. For
purposes of this Section 38, the term "to Landlord's best knowledge" shall mean
the current actual conscious knowledge of ▇▇▇▇▇ ▇▇▇▇▇▇▇ after reasonably
appropriate and diligent inquiry. Landlord hereby represents that ▇▇▇▇▇ ▇▇▇▇▇▇▇
is the representative of Landlord with supervisory responsibilities concerning
the Premises who would, in the ordinary course of his responsibilities, receive
notice from persons or entities of any of the matters described in the
representations and warranties in this Lease.
(b) TENANT'S REPRESENTATIONS AND WARRANTIES. Tenant
represents and warrants to Landlord that, to Tenant's best knowledge, Tenant's
use of the Premises will not be in violation of any applicable Laws. For
purposes of this Section 38, the term "to Tenant's best knowledge" shall mean
the current actual conscious knowledge of Tenant's Vice President of Operations
after reasonably appropriate and diligent inquiry. Tenant hereby represents that
Tenant's Vice President of Operations is the representative of Tenant with
supervisory responsibilities concerning the Premises and this Lease who would,
in the ordinary course of his responsibilities, receive notice from persons or
entities of any of the matters described in the
42
representations and warranties in this Lease.
39. REAL ESTATE BROKERS.
(a) LANDLORD'S PAYMENT OBLIGATION. Landlord shall pay a
brokerage fee, in the total amount of $4.50 per rentable square foot of the
Premises to the party identified as "Tenant's Broker" in the Basic Lease
Information, in accordance with the terms and conditions of separate
agreement(s) with such parties.
(b) NO OTHER BROKERS. Each party represents that it has not
had dealings with any real estate broker, finder or other person with respect to
this Lease in any manner, except for Tenant's Broker named in the Basic Lease
Information, whose fees or commission, if earned, shall be paid as provided in
Paragraph 39(a). Each party shall hold harmless the other party from all damages
resulting from any claims that may be asserted against the other party by any
other broker, finder or other person with whom the other party has or
purportedly has dealt, or for any amounts in excess of the amount for which
Landlord is responsible under Paragraph 39(a) which are claimed by any broker,
finder or other person with whom the other party has or purportedly has dealt.
40. HAZARDOUS SUBSTANCE LIABILITY. Tenant has received from Landlord
a copy of the following reports: (the "Environmental Reports"): Phase I and
Phase II Environmental Assessment, Former RMC ▇▇▇▇▇▇▇▇ Facility, ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, dated December 26, 1996 by McLaren ▇▇▇▇
Environmental Engineering Corporation.
(a) DEFINITION OF HAZARDOUS SUBSTANCES. For the purposes of
this Lease, "Hazardous Substances" shall be defined, collectively, as oil,
flammable explosives, asbestos, radioactive materials, hazardous wastes, toxic
or contaminated substances or similar materials, including, without limitation,
any substances which are "hazardous substances," "hazardous wastes," "hazardous
materials" or "toxic substances" under applicable environmental laws, ordinances
or regulations.
(b) TENANT INDEMNITY. Tenant releases Landlord from any
liability for, waives all claims against Landlord and shall indemnify, defend
and hold harmless Landlord, its employees, partners, agents, subsidiaries and
affiliate organizations against any and all claims, suits, loss, costs
(including costs of investigation, clean up, monitoring, restoration and
reasonably attorney fees), damage or liability, whether foreseeable or
unforeseeable, by reason of property damage (including diminution in the value
of the property of Landlord), personal injury or death directly arising from or
related to Hazardous Substances released, manufactured, discharged, disposed,
used or stored on, in, or under the Land or Premises during the initial Term and
any extensions of this Lease by Tenant or its employees, agents or contractors.
The provisions of this Tenant Indemnity regarding Hazardous Substances shall
survive the termination of the Lease.
43
(c) LANDLORD INDEMNITY. Landlord releases Tenant from any
liability for, waives all claims against Tenant and shall indemnify, defend and
hold harmless Tenant, its officers, employees, and agents to the extent of
Landlord's interest in the Project, against any and all actions by any
governmental agency for clean up of Hazardous Substances on or under the Land
(including, without limitation, any groundwater contamination) including costs
of legal proceedings, investigation, clean up, monitoring, and restoration,
including reasonable attorney fees, and Landlord also releases Tenant from any
liability for, waives all claims against Tenant and shall indemnify, defend and
hold harmless Tenant, its officers, employees and agents from and against any
and all actions for damages to property instituted by any third parties, if, and
to the extent, in either case, arising from the presence of Hazardous Substances
on, in or under the Land or Premises, except to the extent caused by the
release, disposal, use or storage of Hazardous Substances in, on or about the
Premises by Tenant, its employees, agents, sublessees, assignees, or
contractors. The provisions of this Landlord Indemnity regarding Hazardous
Substances shall survive the termination of the Lease.
(d) TENANT COVENANTS. Tenant has informed Landlord that,
except for very immaterial amounts of toxic materials incidental to office use
(e.g. copier toner, typical janitorial cleaning materials, petroleum products in
cars) and those materials listed on Exhibit "G" in substantially the amounts
indicated on such Exhibit, as such exhibit may be revised from time to time by
Tenant as provided in this Paragraph 40(d) below, Tenant will not use or store
any Hazardous Substances within the Premises without Landlord's prior written
consent, and shall comply with any applicable Laws to the extent that it does
use any Hazardous Substances. Without limiting the foregoing, with respect to
the Hazardous Substances listed on Exhibit "G" or any other Hazardous Substances
that may be used or stored on the Premises upon Landlord's consent, (i) Tenant
shall provide to Landlord a copy of Tenant's Hazardous Materials Management Plan
("HMMP"), as approved by the local fire department and any other appropriate
regulatory agencies, and any amendments thereto, (ii) Tenant shall provide
Landlord with a revised Exhibit "G" upon any significant change in the types
and/or quantities of Hazardous Substances used at the Premises, but in any event
on each anniversary of the Rent Commencement Date, for Landlord's review and
approval (not to be unreasonably withheld or delayed); and (iii) Landlord
reserves the right at any time, and from time to time, to conduct site audits of
the Premises to verify the information contained in Exhibit "G" and Tenant's
HMMP. Tenant shall immediately notify Landlord if and when Tenant learns or has
reason to believe there has been any release of Hazardous Substances in, on or
about the Project during the Term.
41. ARBITRATION OF DISPUTES.
ANY CONTROVERSY OR CLAIM ARISING OUT OF PARAGRAPHS 3(b) [OCCUPANCY DATE], 3(d)
[EXCLUSIVE REMEDIES], 4(c)(2)(4) [AUDIT], 7 [COMPLIANCE WITH LAWS], 8
[ALTERATIONS], 9 [REPAIRS AND MAINTENANCE], 14 [SERVICES AND UTILITIES], 22(d)
[MUTUAL TERMINATION RIGHT; INSURED CASUALTY] WITH RESPECT TO LENGTH OF TIME TO
44
RESTORE, 26 [DELIVERY AND RESTORATION OF PREMISES], AND 43(e) [CONVERSION OF
DEPOSIT TO LOAN] WITH RESPECT TO THE AMOUNT OF REMAINING PROCEEDS, OF THIS
LEASE, OR A BREACH OF SUCH PARAGRAPHS SOLELY BETWEEN LANDLORD AND TENANT, BUT
NOT INCLUDING A DEFAULT WITH RESPECT TO THE TIMELY PAYMENT OF BASE RENT AND
ADDITIONAL CHARGES, SHALL BE SETTLED BY ARBITRATION IN ACCORDANCE WITH THE RULES
OF THE AMERICAN ARBITRATION ASSOCIATION, AND JUDGMENT ON THE AWARD RENDERED BY
THE ARBITRATOR(S) MAY BE ENTERED IN ANY COURT HAVING JURISDICTION. THE
PREVAILING PARTY IN SUCH ARBITRATION SHALL BE ENTITLED TO ATTORNEYS' FEES AND
COSTS.
NOTICE: BY INITIALING IN THE SPACE BELOW YOU ARE AGREEING TO HAVE ANY
DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THE "ARBITRATION OF DISPUTES"
PROVISION DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA LAW AND YOU
ARE GIVING UP ANY RIGHTS YOU MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED IN A
COURT OR JURY TRIAL. BY INITIALING IN THE SPACE BELOW YOU ARE GIVING UP YOUR
JUDICIAL RIGHTS TO DISCOVERY AND APPEAL, UNLESS THOSE RIGHTS ARE SPECIFICALLY
INCLUDED IN THE "ARBITRATION OF DISPUTES" PROVISION. IF YOU REFUSE TO SUBMIT TO
ARBITRATION AFTER AGREEING TO THIS PROVISION, YOU MAY BE COMPELLED TO ARBITRATE
UNDER THE AUTHORITY OF THE CALIFORNIA CODE OF CIVIL PROCEDURE. YOUR AGREEMENT TO
THIS ARBITRATION PROVISION IS VOLUNTARY.
WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES
ARISING OUT OF THE MATTERS INCLUDED IN THE "ARBITRATION OF DISPUTES" PROVISION
TO NEUTRAL ARBITRATION.
CONSENT TO NEUTRAL ARBITRATION BY:
/s/ (LANDLORD): /s/ (TENANT):
--------------------------------- ----------------------------------------
42. SIGNAGE. Subject to (a) compliance with all applicable
governmental requirements and subject to (b) Landlord's approval of the exact
size, location and materials thereof (which approval shall not be unreasonably
withheld, conditioned or delayed, and with the understanding that Tenant's logo
is approved), Tenant shall have the right to install exterior monument signage
adjacent to entrances to the Building and the Project and on the exterior of the
Building, but in not more than two (2) locations on the exterior of the
Building. Tenant shall be responsible for the costs related to such signage.
43. OPTION TO RENEW. Tenant shall have the right to extend the Term
for one (1) period of five (5) years ("Extension Term") following the initial
Expiration Date, by giving written notice ("Exercise Notice") to Landlord at
least eighteen (18) months prior to the
45
Expiration Date, subject to the following conditions: (i) no event of default is
continuing under this Lease at the time of the Exercise Notice or at the
commencement of the Extension Term; and (ii) Landlord has not delivered a notice
of default to Tenant hereunder during the twenty-four (24) month period
immediately preceding the Exercise Notice, regardless of whether any such
default was cured by Tenant within any applicable grace or cure period;
provided, however, that any such notice of default relating to a non-monetary
default which was disputed, in good faith, by Tenant and ultimately determined
(by agreement of the parties, arbitration or judicial action) not to be a
default shall not be considered for purposes of determining whether such
condition has been met.
44. RENT DURING EXTENSION TERM. The Monthly Base Rent during the
seven-year Extension Term shall be the greater of the Base Rent paid during the
last month of the immediately preceding Term or the Fair Market Rental Value for
the Premises as of the commencement of the option term as determined below:
(a) Within the later of thirty (30) days after receipt of
Tenant's Exercise Notice or eleven (11) months prior to the Expiration Date,
Landlord shall notify Tenant of Landlord's estimate of the Fair Market Rental
Value for the Premises, as determined below, for determining Monthly Base Rent
during the ensuing Extension Term. Within fifteen (15) days after receipt of
such notice from Landlord, Tenant shall notify Landlord in writing that it (i)
agrees with such Fair Market Rental Value or (ii) disagrees with such Fair
Market Rental Value. No response shall constitute disagreement. If Tenant
disagrees with Landlord's estimate of Fair Market Rental Value for the Premises,
then the parties shall meet and endeavor to agree within fifteen (15) business
days after Landlord receives Tenant's notice described in the immediately
preceding sentence. If the parties cannot agree upon the Fair Market Rental
Value within said fifteen (15) day period, Tenant may make written demand upon
Landlord for arbitration in accordance with the following paragraph. The
judgment or the award rendered in any such arbitration may be entered in any
court having jurisdiction and shall be final and binding between the parties.
The arbitration shall be conducted and determined in the City of Palo Alto in
accordance with the then prevailing rules of the American Arbitration
Association or its successor for arbitration or commercial disputes, except to
the extent the procedures mandated by said rules shall be modified as follows:
(i) Tenant shall, by the applicable date specified
therefor in this Lease, make written demand upon Landlord pursuant to this Lease
for arbitration, specifying therein the name and address of the person to act as
the arbitrator on Tenant's behalf. The arbitrator shall be qualified as a real
estate appraiser, with at least five (5) years experience in appraising major
commercial property in Santa ▇▇▇▇▇ County and a member of a recognized society
of real estate appraisers, who would qualify as an expert witness over objection
to give opinion testimony addressed to the issue in a court of competent
jurisdiction. Failure on the part of Tenant to make a timely and proper demand
for such arbitration (specifying the arbitrator to act on Tenant's behalf, as
aforesaid) shall constitute a waiver of the right thereto. Within ten (10)
business days after receipt of Tenant's demand for arbitration, Landlord shall
give written notice to Tenant
46
pursuant to this Lease, specifying the name and address of the person designated
by Landlord to act as arbitrator on its behalf who shall be similarly qualified.
If Landlord fails to notify Tenant of the appointment of its arbitrator, within
or by the time above specified, then the arbitrator appointed by Tenant shall be
the arbitrator to determine the issue. Notwithstanding the foregoing, upon
receipt of Tenant's demand for arbitration Landlord may, in its sole discretion,
deliver a revised estimate of the Fair Market Value of the Premises, and within
fifteen (15) days after receipt of such notice from Landlord, Tenant shall
notify Landlord in writing that it (i) agrees with such revised Fair Market
Rental Value, or (ii) disagrees with such revised Fair Market Rental Value, with
no response constituting agreement. If Tenant disagrees with Landlord's Fair
Market Value, then within ten (10) business days after receipt of Tenant's
notice of such disagreement Landlord shall give Tenant written notice specifying
Landlord's designated arbitrator as provided in this paragraph above.
(ii) If two (2) arbitrators are chosen pursuant to
paragraph (1) above, the arbitrators so chosen shall meet within ten (10)
business days after Landlord notifies Tenant of the appointment of Landlord's
arbitrator as aforesaid. If the two appraisers reach agreement on the Fair
Market Rental Value, that value shall be binding and conclusive upon the
parties. If within ten (10) business days after such first meeting the two
arbitrators shall be unable to agree upon a determination of Fair Market Rental
Value, they, themselves, shall appoint a third arbitrator, who shall be a
competent and impartial person with qualifications similar to those required of
the first two arbitrators pursuant to Paragraph (1). If the first two
arbitrators are unable to agree upon such appointment within five (5) business
days after expiration of said ten (10) days period, the third arbitrator shall
be selected by Landlord and Tenant, if they can agree thereon, within a further
period of ten (10) business days. If Landlord and Tenant do not so agree, then
either party, on behalf of both, may request appointment of such a qualified
person by the then Chief Judge of the United States District Court having
jurisdiction over the City and county of San Francisco, and the other party
shall not raise any question as to such Judge's full power and jurisdiction to
entertain the application for and make the appointment. The three (3)
arbitrators shall decide the dispute if it has not previously been resolved by
following the procedure set forth in the following paragraph.
(iii) If an issue cannot be resolved by agreement
between the two arbitrators selected by Landlord and Tenant or settlement
between Landlord and Tenant during the course of arbitration, the issue shall be
resolved by the three arbitrators in accordance with the following procedures.
Within ten (10) business days after appointment of the third arbitrator, each of
the two arbitrators selected by Landlord and Tenant shall state in writing his
determination of the Fair Market Rental Value supported by the reasons therefor
with counterpart copies to each party. The arbitrators shall arrange for a
simultaneous exchange of such proposed resolutions. The role of the third
arbitrator shall be to select, within ten (10) business days after submission to
the third arbitrator of the two proposed resolutions, which of the two proposed
resolutions most closely approximates the third arbitrator's determination of
Fair Market Rental Value. The third arbitrator shall have no right to propose a
middle ground or any modification of either of the two proposed resolutions. The
resolution he chooses as most closely approximating
47
his determination shall constitute the decision of the arbitrators and be final
and binding upon the parties.
(iv) If any arbitrator fails, refuses or is unable to
act, his successor shall be appointed by the party who originally appointed him,
but in the case of the third arbitrator, his successor shall be appointed in the
same manner as provided for appointment of the third arbitrator. Landlord and
Tenant shall each pay the fees and expenses of its respective arbitrator, if
any, and shall each pay half of the fees and expenses of the third arbitrator,
if any. The attorneys' fees and expenses of counsel for the respective parties
and of witnesses shall be paid by the respective party engaging such counsel or
calling such witnesses.
(v) The arbitrators shall have the right to consult
experts and competent authorities with factual information or evidence
pertaining to a determination of Fair Market Rental Value, but any such
consultation shall be made in the presence of both Landlord and Tenant with full
right on their part to cross-examine. The arbitrators shall render their
decision and award in writing with counterpart copies to Landlord and Tenant.
The arbitrators shall have no power to modify the provisions of this Lease.
(b) Wherever used throughout this Paragraph 44 [Rent during
Extension Term] the term "Fair Market Rental Value" shall mean the fair market
rental value of the Premises, using as a guide the rate of monthly base rent
which would be charged during the Extension Term (including periodic increases
during the Extension Term, if any) in the South Bay Area for comparable
commercial space in comparable condition, of comparable quality, as of the time
that the Extension Term commences, with appropriate adjustments regarding taxes,
insurance and operating expenses as necessary to insure comparability to this
Lease, as the case may be, and also taking into consideration amount and type of
parking, location, existing leasehold improvements (regardless of who paid for
them and assuming they are useful to Tenant), proposed term of lease, amount of
space leased, extent of service provided or to be provided, and any other
relevant terms or conditions.
(c) If binding arbitration has not been completed prior to
the expiration of any preceding period for which Monthly Base Rent has been
determined, Tenant shall pay Monthly Base Rent at the greater of the Base Rent
paid during the last month of the immediately preceding Term or the Fair Market
Rental Value estimated by Landlord, with an adjustment to be made once Fair
Market Rental Value is ultimately determined by binding arbitration. Such
adjustment shall not result in a decrease of the Monthly Base Rent for the
Premises below the amount payable by Tenant as of the period immediately
preceding the ensuing Extension Term.
(d) From and after the commencement of the Extension Term,
all of the other terms, covenants and conditions of the Lease shall also apply;
provided, however, that Tenant shall have no further rights to extend the Term.
45. SATELLITE ANTENNAS. During the Term, Tenant shall have the
right,
48
subject to relevant regulatory approvals and Landlord's consent, such consent
not to be unreasonably withheld or delayed, to install one or more satellite
antennas (each, an "Antenna") on the roof of the Building in a location
satisfactory to both Landlord and Tenant. Without otherwise limiting the
criteria upon which Landlord may withhold its consent to any proposed Antenna,
if Landlord withholds its consent due to concerns regarding the appearance of
the Antenna or the impact on structural aspects of the Building, such
withholding of consent shall be presumptively reasonable. Tenant shall not be
charged any rent for roof space. Prior to submitting any plans to the City of
Mountain View or proceeding with any installation of an Antenna, Tenant shall
submit to Landlord elevations and specifications for the Antenna. Tenant shall
install any approved Antennas at its sole expense and shall be responsible for
any damage caused by the installation of the Antennas or related to the
Antennas. At the end of the Term, Tenant shall remove the Antennas from their
locations and repair any damage caused by such removal.
IN WITNESS WHEREOF, the parties hereto have executed this Lease as of
the date first above written.
LANDLORD: 605 EAST ▇▇▇▇▇▇▇▇▇ ASSOCIATES, L.P.,
a California limited partnership
By: M-D Ventures, Inc.,
a California corporation,
Its General Partner
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇
Its Vice President
TENANT: CALIPER TECHNOLOGIES CORP.,
a Delaware corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
-------------------------------------
▇▇▇▇▇▇ ▇▇▇▇
Its Chief Operating Officer
49
LIST OF EXHIBITS
EXHIBIT "A" MAP OF PROJECT (INCLUDING THE BUILDING)
EXHIBIT "A-1" DESCRIPTION OF LAND
EXHIBIT "B" CERTIFICATE ESTABLISHING OCCUPANCY DATE AND RENT COMMENCEMENT DATE
EXHIBIT "C" ESTOPPEL CERTIFICATE
EXHIBIT "D" RULES & REGULATIONS
EXHIBIT "E" REQUIRED CONDITION OF PREMISES UPON SURRENDER
EXHIBIT "F" FORM OF LETTER OF CREDIT
EXHIBIT "G" TENANT'S HAZARDOUS SUBSTANCES DISCLOSURES
EXHIBIT "H" APPROVED ALTERATIONS AREA
EXHIBIT "I" SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT
50
INDEX OF DEFINED TERMS
Defined Term Paragraph
----------------------
Additional Charges.....................................................4(a)(ii)
Affiliate.................................................................11(k)
Alterations................................................................8(b)
Approved Alterations.......................................................8(b)
Assignment................................................................11(a)
Antenna......................................................................45
Base Building..............................................................1(a)
Base Rent...............................................................4(a)(i)
Building.........................................Basic Lease Information & 1(a)
Building Systems...........................................................9(b)
Default Damages...........................................................34(e)
Default Loan..............................................................34(e)
Default Rate...............................................................4(d)
Environmental Reports........................................................40
Excess Amount.............................................................34(e)
Expenses.............................................................4(c)(1)(C)
Expense Year.........................................................4(c)(1)(D)
51
Defined Term Paragraph
----------------------
Exercise Notice..............................................................43
Expiration Date............................................................3(a)
Extension Term...............................................................43
Fair Market Rental Value..................................................44(b)
Force Majeure Events.......................................................9(e)
GAAP..............................................................3(c)(1)(C)(v)
Hazardous Substances......................................................40(a)
Insolvency Proceeding........................................................20
Interest Rate........................................................3(c)(1)(C)
Land.............................................Basic Lease Information & 1(a)
Landlord.......................................................Recitals & 37(a)
Landlord Action...........................................................34(e)
Landlord Parties..........................................................12(a)
Landlord's Expense Statement............................................4(c)(3)
Landlord's Tax Statement.............................................4(c)(2)(A)
Laws.......................................................................7(a)
Letter of Credit..........................................................34(a)
Liquid Assets.............................................................11(g)
Monthly Base Rent.......................................Basic Lease Information
Mortgage.....................................................................17
Mortgagee....................................................................17
52
Defined Term Paragraph
----------------------
Occupancy Date.............................................................3(a)
Permitted Alterations......................................................8(c)
Permitted Transfer........................................................11(g)
Premises...................................................................1(a)
Project....................................................................1(a)
Real Estate Taxes....................................................4(c)(1)(B)
Rent...................................................................4(a)(ii)
Rent Commencement Date.....................................................3(c)
Rentable Area...........................................Basic Lease Information
Rules & Regulations..........................................................18
Strategic Partner.........................................................11(h)
Sublease..................................................................11(a)
Taking....................................................................23(a)
Tax Year.............................................................4(c)(1)(A)
Tenant.........................................................Recitals & 37(a)
Tenant Parties............................................................12(b)
Tenant's Broker.........................................Basic Lease Information
Term.......................................................................3(a)