EXHIBIT 10.8
OFFICE BUILDING LEASE
Torrey View Associates LP,
a California limited partnership
Landlord
and
Santarus, Inc.,
a California corporation
Tenant
dated as of August 24th, 2001
TABLE OF CONTENTS
Page
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1. Parties..............................................................................1
2. Summary of Basic Terms...............................................................1
3. Demise...............................................................................2
4. Term.................................................................................3
4.1. Term..........................................................................3
4.2. Term Commencement.............................................................3
4.3. Option to Extend Term.........................................................3
4.4. Option Personal...............................................................3
4.5. Fair Market Rental Value......................................................3
4.6. Right of Notice...............................................................5
5. Rent.................................................................................5
6. Security Deposit.....................................................................5
6.1. Security Deposit..............................................................5
6.2. Application of Security.......................................................6
6.3. Transfer......................................................................6
7. Operating Expenses...................................................................7
7.1. Definitions...................................................................7
7.2. Payment for Increases in Real Property Taxes.................................10
7.3. Payment for Increases in Operating Expenses..................................10
7.4. Manner of Payment............................................................11
7.5. Final Statement..............................................................11
7.6. Review Rights................................................................11
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TABLE OF CONTENTS
(continued)
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8. Use of Premises.................................................................... 12
8.1. Permitted Use............................................................... 12
8.2. Restrictions on Use......................................................... 12
8.3. Compliance with Laws........................................................ 12
9. Alterations and Additions.......................................................... 12
9.1. Landlord's Consent.......................................................... 12
9.2. Ownership and Surrender of Alterations...................................... 13
9.3. Liens....................................................................... 14
9.4. Additional Requirements..................................................... 14
10. Repairs............................................................................ 15
10.1. Condition of Premises....................................................... 15
10.2. Landlord's Obligation to Repair............................................. 15
11. Services and Utilities............................................................. 15
11.1. Landlord's Services......................................................... 15
11.2. Restrictions on Use......................................................... 15
11.3. Janitorial Services......................................................... 16
11.4. Hours of Operation.......................................................... 16
11.5. Extra Hours................................................................. 16
12. Entry by Landlord.................................................................. 16
13. Insurance.......................................................................... 16
13.1. Tenant's Casualty Insurance................................................. 16
13.2. Landlord's Insurance........................................................ 17
13.3. Public Liability and Property Damage Insurance.............................. 17
13.4. Policy Requirements......................................................... 17
13.5. Tenant's Failure to Deliver Certificates.................................... 18
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TABLE OF CONTENTS
(continued)
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14. Damage or Destruction; Eminent Domain.............................................. 18
14.1. Landlord's Restoration...................................................... 18
14.2. Rent Abatement.............................................................. 18
14.3. Exception to Abatement...................................................... 19
14.4. Election to Terminate....................................................... 19
14.5. Eminent Domain.............................................................. 19
14.6. Business Interruption....................................................... 20
15. Assignment and Subletting.......................................................... 20
15.1. Landlord's Consent Required................................................. 20
15.2. Landlord's Right to Terminate Lease......................................... 20
15.3. Consent by Landlord......................................................... 20
15.4. Corporate Transaction....................................................... 21
15.5. No Release of Tenant........................................................ 21
15.6. Additional Charges.......................................................... 21
15.7. Additional Terms............................................................ 22
16. Quiet Enjoyment.................................................................... 23
17. Mortgagee Protection............................................................... 23
17.1. Subordination............................................................... 23
17.2. Mortgagee's Liability....................................................... 23
17.3. Mortgagee's Right to Cure................................................... 23
18. Estoppel Certificates.............................................................. 24
19. Default............................................................................ 24
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TABLE OF CONTENTS
(continued)
Page
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20. Remedies for Default............................................................... 25
20.1. General..................................................................... 25
20.2. Redemption.................................................................. 26
20.3. Performance by Landlord..................................................... 26
20.4. Post-Judgment Interest...................................................... 26
21. Holding Over....................................................................... 26
22. Indemnification and Exculpation.................................................... 26
22.1. Definitions................................................................. 26
22.2. Indemnification............................................................. 28
22.3. Damage to Persons or Property............................................... 28
22.4. Satisfaction of Remedies.................................................... 29
23. Rules and Regulations.............................................................. 29
24. Other Taxes........................................................................ 29
25. Brokers.............................................................................29
26. Parking.............................................................................30
27. Authority to Enter into Lease...................................................... 30
28. Tenant Improvements................................................................ 30
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TABLE OF CONTENTS
(continued)
Page
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29. General Provisions................................................................. 31
29.1. Marginal Headings........................................................... 31
29.2. Time........................................................................ 31
29.3. Successors and Assigns...................................................... 31
29.4. Recordation................................................................. 31
29.5. Late Charges................................................................ 31
29.6. Prior Agreements; Amendment, Waiver......................................... 31
29.7. Inability to Perform........................................................ 31
29.8. Legal Proceedings........................................................... 31
29.9. Conveyance of Premises...................................................... 32
29.10. Name........................................................................ 32
29.11. Severability................................................................ 32
29.12. Cumulative Remedies......................................................... 32
29.13. Choice of Law............................................................... 32
29.14. Signs....................................................................... 32
29.15. Landlord's Consent.......................................................... 32
29.16. Presumptions................................................................ 33
29.17. Exhibits.................................................................... 33
29.18. Submission of Lease......................................................... 33
29.19. Meaning of Terms............................................................ 33
29.20. Notices..................................................................... 33
29.21. Trial by Jury............................................................... 33
INDEX OF DEFINED TERMS..................................................................... 35
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TABLE OF CONTENTS
(continued)
Page
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EXHIBIT "A" - LEASE CONFIRMATION........................................................... 36
EXHIBIT "B" - FLOOR PLANS OF PREMISES...................................................... 37
EXHIBIT "C" - BASE BUILDING WORK........................................................... 38
EXHIBIT "D" - RULES AND REGULATIONS........................................................ 40
EXHIBIT "E" - SCHEDULE OF TENANT IMPROVEMENTS.............................................. 44
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OFFICE BUILDING LEASE
1. Parties. This Office Building Lease (this "Lease"), dated for reference
purposes only August 24, 2001, is made by and between Torrey View Associates LP,
a California limited partnership ("Landlord"), and Santarus, Inc., a California
corporation ("Tenant"). Landlord and Tenant may herein individually be called a
"Party" or together "Parties".
2. Summary of Basic Terms. As used in this Lease, the following terms shall have
the meanings set forth below, subject to the qualifications, adjustments and
exceptions set forth elsewhere in this Lease:
(a) ACCESS DATE: The date that (i) this Lease is executed by Landlord
and Tenant, (ii) a Second Amendment to Lease is executed by Landlord and eHelp
Corporation ("eHelp"), and (iii) Landlord and Tenant have received written
confirmation that eHelp has granted to Tenant access to the Premises for the
purpose of construction of the Tenant Improvements.
(b) ADJUSTMENT DATE: April 1, 2001.
(c) BASE YEAR: 2001.
(d) BUILDING: The office building located at ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇.
(e) COMMENCEMENT DATE: shall be the earlier of Tenant's substantial
completion of the Tenant Improvements (as determined in accordance with
paragraph 7 of Exhibit "E" attached hereto and incorporated herein by reference)
or October 18, 2001.
(f) COMMON AREAS: Those areas within the Building, and upon the Land
serving the Building, which are for non-exclusive use by or for the benefit and
convenience of Tenant and other tenants of the Building, including but not
limited to common corridors, hallways, stairwells, elevators, elevator shafts,
rest rooms, telephone and electrical closets, lobbies, plazas, courtyards and
parking areas.
(g) EXPIRATION DATE: March 31, 2008.
(h) LAND: The parcel of land upon which the Building is located.
(i) LANDLORD'S ADDRESS FOR NOTICES:
c/o San Diego Realty Advisors
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With a copy to:
Southland Property (Nevada) Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇
(j) LEASE TERM: That period of time from the Commencement Date to the
Expiration Date, subject to extension as provided in Section 4.4.
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(k) LEASE YEAR: Beginning with the twelve (12) full calendar months
following the Adjustment Date and each successive twelve (12) month period
thereafter.
(l) MONTHLY RENT: $2.38 per Rentable Square Foot per month based upon
the Rentable Square Footage of the Premises set forth in Paragraph 2(p). On the
first and each succeeding anniversary of the Adjustment Date, Monthly Rent shall
be increased to an amount equal to one hundred three and one-half percent (103
1/2%) of the Monthly Rent applicable to the full calendar month next preceding
such anniversary date.
(m) PARKING AREAS: Included within the Common Areas are parking areas
which are available for the non-exclusive use of Tenant, and other tenants in
the Building, their employees, guests and invitees, the number of which is
approximately four (4) parking spaces per one thousand (1,000) Usable Square
Feet within the Building. Of the total number of parking spaces in the Parking
Areas, two (2) shall be reserved and designated for the exclusive use of Tenant
and its employees.
(n) PERMITTED USE: General office and engineering, research and
development uses.
(o) PREMISES: A portion of the second floor of the Building, located
substantially as shown on the floor plans attached hereto as Exhibit "B."
(p) RENTABLE SQUARE FEET AND USABLE SQUARE FEET: For purposes of this
Lease, "Rentable Square Feet" shall be 24,090 square feet and "Usable Square
Feet" shall be 21,235 square feet.
(q) SECURITY DEPOSIT: A cash deposit in an amount of $57,334.00 and a
$950,000 letter of credit (the "Letter of Credit"), reference to which is made
in Article 6.
(r) TENANT IMPROVEMENTS: Those improvements to be made by Tenant as set
forth in Article 28.
(s) TENANT'S ADDRESS FOR NOTICES PRIOR TO COMMENCEMENT:
Santarus, Inc.
▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(t) TENANT'S BROKER:
▇▇▇▇▇▇▇ Real Estate Services
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(u) TENANT'S SHARE: Thirty-Three and Six-tenths Percent (33.6%),
calculated at 24,090 rentable square feet divided by 71,773 rentable square
feet, which rentable square footages have been agreed upon.
3. Demise. Landlord hereby leases the Premises to Tenant and Tenant hereby
leases the Premises from Landlord, subject to all of the terms, covenants and
conditions in this Lease. Tenant acknowledges that eHelp has made certain
improvements to the Premises, Tenant has inspected and approved of such Tenant
Improvements and Tenant is accepting the Premises in their existing condition,
as-is.
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4. Term.
4.1. Term. Landlord and Tenant shall be bound by all terms of this Lease
as of the date of mutual execution and delivery hereof; however, except for any
Monthly Rent payment and the Security Deposit to be made on execution hereof, no
Monthly Rent and Additional Rent (together, the "Rent") shall be due and payable
until the Commencement Date. The Lease Term shall be for the period specified in
the Basic Lease Provisions, commencing on the Commencement Date and ending on
the Expiration Date, as such dates are determined under Section 4.2 below,
unless sooner terminated pursuant to any provision of this Lease.
4.2. Term Commencement. The Commencement Date and the Expiration Date of
the Term are specified in the Basic Lease Provisions. Promptly after the
Commencement Date, Landlord and Tenant shall execute the Lease Confirmation, the
form of which is attached hereto as Exhibit "A" and incorporated herein by
reference (the "Lease Confirmation"), setting forth the Commencement Date.
Notwithstanding the Commencement Date, Tenant shall be allowed to occupy the
Premises upon the Access Date and prior to the Commencement Date in order to
construct the Tenant Improvements. Tenant and Landlord agree that all the terms,
conditions and covenants of the Lease will have full effect as of the date
Tenant has access to and takes possession of the Premises, except that Tenant
will not be obligated to pay Rent, nor shall Tenant be deemed to have accepted
the Premises for purposes of Section 10.1, until the Commencement Date.
4.3. Option to Extend Term. Landlord hereby grants to Tenant one (1)
option (the "Extension Option") to extend the Lease Term for a period of five
(5) years. The Extension Option must be exercised if at all by written notice
("Option Notice") delivered by Tenant to Landlord not more than twelve (12)
months nor less than eight (8) months prior to the end of the initial Lease
Term; provided, however, the Extension Option shall not be exercisable unless as
of the date of the Option Notice and through the commencement of such Extension
Option term Tenant is not in default beyond all applicable notice and cure
periods, nor has Tenant committed more than four (4) cured Events of Default
under the Lease. In the event the Lease Term shall be extended, then all of the
terms, covenants and conditions of the Lease shall remain unmodified and in full
force and effect, excepting during the Extension Option term the Monthly Rent
shall be the then-prevailing Fair Market Rental Value for the Premises (as
defined and determined in Article 4.5), provided that in no event shall the
Monthly Rent during the Extension Option term be less than the Monthly Rent in
effect immediately preceding the commencement date of the Extension Option term.
4.4. Option Personal. The Extension Option is personal to the Tenant and
may not be exercised or assigned, voluntarily or involuntarily, by or to any
person or entity other than the Tenant.
4.5. Fair Market Rental Value.
(a) For the Extension Option term, the term "Fair Market Rental
Value" means the amount of Monthly Rent per Rentable Square Foot, as of the date
three (3) months prior to the date on which the Extension Option term commences,
that a willing, comparable, new, non-expansion, non-renewal, non-equity tenant
would pay and a willing, comparable landlord would accept in an arms' length
bona fide negotiation for a lease during the Extension Option term of space
comparable to the Premises on the terms and conditions set forth in this Lease
and applicable during the Extension Option term. Fair Market Rental Value shall
be determined by Landlord considering the most recent new leases and market
renewal leases for comparable space and for comparable usage in the Building or,
if there are not three (3) or more of such leases in the Building, in comparable
buildings that are in proximity, within the Del Mar Heights market area, to the
Building, whether or not owned or managed by Landlord or other landlords.
Appropriate allowances shall be made for any special terms or conditions
contained in or pertaining to
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such leases, it being recognized that the stated face rental rate in a lease
ordinarily reflects other economic terms contained in the lease and so does not
itself ordinarily reflect an actual market rate, and it being intended that with
respect to the Extension Option term this Lease be economically equivalent, for
both Landlord and Tenant, to the relevant comparable leases. At least six (6)
months prior to the date on which the Extension Option term is to commence,
Landlord shall give Tenant notice of Landlord's determination of the Fair Market
Rental Value and the basis on which Landlord made its determination. In the
event Landlord and Tenant are unable to agree on the Fair Market Rental Value,
after good faith deliberations, by that date (the "Final Date") which is two (2)
months prior to the date on which the Extension Option term is to commence and
Tenant is not then willing to accept Landlord's figure, then Tenant shall on or
before the Final Date give Landlord notice of Tenant's determination of the Fair
Market Rental Value and the basis on which Tenant made its determination. The
Parties' respective figures shall be submitted to the appraisers upon their
appointment as provided below, and the Fair Market Rental Value figure shall be
determined in accordance with Article 4.5(b).
(b) The Fair Market Rental Value shall be determined as follows:
(i) Landlord and Tenant shall each appoint an individual who
shall by profession be a real estate appraiser who shall have been active over
the five (5) year period ending on the date of such appointment in the appraisal
of commercial properties located in San Diego. The determination of the
appraisers shall be limited solely to the issue of whether Landlord's or
Tenant's submitted figure for the Fair Market Rental Value is closer to the
actual value as determined by the appraisers, taking into account the
requirements of this Section. Each such appraiser shall be appointed within
fifteen (15) days after the Final Date.
(ii) The two appraisers so appointed shall within fifteen (15)
days of the date of the appointment of the last appointed appraiser agree upon
and appoint a third appraiser who shall be qualified under the same criteria set
forth above for qualification of the initial two appraisers.
(iii) The three appraisers shall within thirty (30) days of the
appointment of the third appraiser reach a decision as to whether the Parties
shall use Landlord's or Tenant's submitted value and shall notify Landlord and
Tenant thereof.
(iv) The decision of the majority of the three appraisers shall
be binding upon Landlord and Tenant.
(v) If either of the Parties fail to appoint an appraiser, such
appraiser(s) shall be appointed by the Presiding Judge of the San Diego Superior
Court or, if he or she fails to act, by any judge with jurisdiction over the
Parties.
(vi) If the two appraisers fail to agree upon and appoint a
third appraiser, both appraisers shall be dismissed and the matter to be decided
shall be decided by an appraiser qualified under the same criteria set forth
above for qualification of the initial two appraisers and appointed by the
Presiding Judge of the San Diego Superior Court or, if he or she fails to act,
by any judge with jurisdiction over the Parties.
(vii) Each Party shall pay for the costs of their appraiser.
The cost of the third appraisal shall be paid by Landlord and Tenant equally.
4.6 Right of Notice. During the Lease Term, Landlord shall notify Tenant
of any and all space that becomes available for lease on the third floor of the
Building, without any implication that Tenant has any right of first refusal or
option with regard to such available space.
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5. Rent. Tenant shall pay to Landlord as rent for the Premises the Monthly Rent
as set forth in Article 2(l). The Monthly Rent shall be payable in advance on or
before the first day of the first full calendar month of the Lease Term and on
or before the first day of each successive calendar month thereafter during the
Lease Term, except that the Monthly Rent for the first full Month shall be paid
upon the execution of this Lease. The Monthly Rent for any period during the
Lease Term which is for less than one (1) month shall be prorated based on a
thirty (30)-day month. The Monthly Rent and all other rent hereunder shall be
paid without prior notice or demand, without deduction or offset, in lawful
money of the United States of America which shall be legal tender at the time of
payment, at the office of the Building or to another person or at another place
as Landlord may from time to time designate in writing. The term "Additional
Rent" means all other amounts payable by Tenant hereunder (whether or not
designated as Additional Rent).
6. Security Deposit.
6.1 Security Deposit. Tenant shall deposit the cash amount of the
Security Deposit with Landlord and the Letter of Credit upon the execution and
delivery of this Lease as security for the faithful performance and observance
by Tenant of the terms, covenants and conditions of this Lease. Tenant shall
deliver the Letter of Credit portion of the Security Deposit to Landlord in the
form of a clean, irrevocable, non-documentary and unconditional letter of credit
(the "Letter of Credit") issued by and drawable upon any commercial bank which
is a member of the New York Clearing House Association or other bank
satisfactory to Landlord, trust company, national banking association or savings
and loan association with offices for banking purposes in the City of San Diego
(the "Issuing Bank"), which has outstanding unsecured, uninsured and
unguaranteed indebtedness, or shall have issued a letter of credit or other
credit facility that constitutes the primary security for any outstanding
indebtedness (which is otherwise uninsured and unguaranteed), that is then
rated, without regard to qualification of such rating by symbols such as "+" or
"-" or numerical notation, "Aa" or better by ▇▇▇▇▇'▇ Investors Service and "AA"
or better by Standard & Poor's Rating Service, and has combined capital, surplus
and undivided profits of not less than $500,000,000.00. Such Letter of Credit
shall (a) name Landlord as beneficiary, (b) be in the amount of $950,000, (c)
have a term of not less than one year, (d) permit multiple drawings, (e) be
fully transferable by Landlord without the payment of any fees or charges by
Landlord, and (f) otherwise be in form and content satisfactory to Landlord. If
upon any transfer of the Letter of Credit, any fees or charges shall be so
imposed, then such fees or charges shall be payable solely by Tenant and the
Letter of Credit shall so specify. The Letter of Credit shall provide that it
shall be deemed automatically renewed, without amendment, for consecutive
periods of one year each thereafter during the Term (and in no event shall the
Letter of Credit expire prior to the 45th day following the Expiration Date)
unless the Issuing Bank sends a notice (the "Non-Renewal Notice") to Landlord by
certified mail, return receipt requested, not less than 45 days next preceding
the then expiration date of the Letter of Credit stating that the Issuing Bank
has elected not to renew the Letter of Credit. Unless Tenant replaces the Letter
of Credit with a replacement Letter of Credit on the same terms, issued by a
lender meeting the requirements specified herein, within ten (10) business days
following delivery of the Non-Renewal Notice, Landlord shall have the right to
draw the full amount of the Letter of Credit, by sight draft on the Issuing
Bank, and shall thereafter hold or apply the cash proceeds of the Letter of
Credit pursuant to the terms of this Article 6, until Tenant delivers to
Landlord a substitute Letter of Credit which meets the requirements of this
Section 6.1. The Issuing Bank shall agree with all drawers, endorsers and bona
fide holders that drafts drawn under and in compliance with the terms of the
Letter of Credit will be duly honored upon presentation to the Issuing Bank at
an office location in San Diego, California. The Letter of Credit shall be
subject in all respects to the International Standby Practices set by the
International Chamber of Commerce. The Letter of Credit may be reduced by
Tenant, provided that there is no uncured Event of Default outstanding at the
time such reduction is otherwise permitted to be made or any condition or
occurrence pending at that time which with the lapse of time would constitute an
Event of Default, to $700,000 at the end of Lease Year 5 (March 31, 2006),
$400,000 at the end of Lease Year 6 (March 31, 2007) and $100,000 at the end of
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Lease Year 7 (March 31, 2008). Landlord shall reimburse Tenant for the portion
of the annual fee of the Issuing Bank for the Letter of Credit which is
attributable to the increment of the Letter of Credit in excess of $750,000. If,
at any time, Tenant has, among its assets, Forty Million Dollars ($40,000,000)
in cash on hand, and for so long as such liquidity is maintained, the
requirement of the Letter of Credit shall be excused. Such cash on hand must be
demonstrated by delivery to Landlord of Tenant's financial statements prepared
by Tenant's certified public accountant in accordance with generally accepted
accounting principles. Following any such retirement of the Letter of Credit,
Tenant shall furnish Landlord such financial statements not less frequently than
quarterly. If at any time the financial statements disclose less than Forty
Million Dollars ($40,000,000) cash on hand, Tenant shall immediately replace and
restore the Letter of Credit, which shall thereafter be maintained in accordance
with the requirements set forth above.
6.2 Application of Security. If an Event of Default by Tenant occurs
in the payment or performance of any of the terms, covenants or conditions of
this Lease, including the payment of Rent, Landlord may apply or retain the
whole or any part of the cash Security Deposit and, in addition, notify the
Issuing Bank and thereupon receive all or a portion of the Security Deposit
represented by the Letter of Credit and use, apply or retain the whole or any
part of such proceeds, as the case may be, to the extent required for the
payment of any Rent or any other sum as to which Tenant is in default including
(i) any sum which Landlord may expend or may be required to expend by reason of
Tenant's default, and/or (ii) any damages to which Landlord is entitled pursuant
to this Lease, whether such damages accrue before or after summary proceedings
or other reentry by Landlord. Landlord shall hold the proceeds of the Letter of
Credit, to the extent not immediately applied, as an additional cash portion of
the Security Deposit for application, when required, as herein provided. If
Landlord applies any part of the Security Deposit, Tenant, upon demand, shall
deposit with Landlord the amount so applied so that Landlord shall have the full
Security Deposit on hand at all times during the Lease Term. If Tenant shall
fully and faithfully comply with all of the terms, covenants and conditions of
this Lease, the Security Deposit shall be returned to Tenant promptly after the
Expiration Date and after delivery of possession of the Premises to Landlord in
the manner required by this Lease. Any amounts of the Security Deposit held by
Landlord shall be held by Landlord without interest and may be commingled with
Landlord's other funds.
6.3 Transfer. Upon a sale or other transfer of the Building, or any
financing of Landlord's interest therein, Landlord shall have the right to
transfer the Security Deposit to its transferee or lender. With respect to the
Letter of Credit, within 5 days after notice of such transfer or financing,
Tenant at its sole cost, shall arrange for the transfer of the Letter of Credit
to the new landlord or the lender, as designated by Landlord in the foregoing
notice or have the Letter of Credit reissued in the name of the new landlord or
the lender. Provided, however, Tenant shall bear the entire cost of any such
transfer of the Letter of Credit for the first three (3) transfers and
thereafter, Landlord shall bear the cost of any transfer up to $2,500 for each
such transfer, with Tenant to bear, in each case, the cost in excess of $2,500.
Upon such Transfer and Tenant's receipt of the transferees's acknowledgment of
funds received, Tenant shall look solely to the new landlord or lender for the
return of such Security Deposit, cash or Letter of Credit and the provisions
hereof shall apply to every transfer or assignment made of the Security Deposit
to a new landlord. Neither Landlord nor Tenant shall assign or encumber or
attempt to assign or encumber the cash Security Deposit or Letter of Credit to
any person other than a transferee or any such lender under this Section 6.3 and
neither Landlord nor Tenant nor any of their respective successors or assigns
shall be bound by any such unauthorized action or attempted reassignment, or
encumbrance.
7. Operating Expenses.
7.1 Definitions. As used in this Lease, the following terms have the
meanings set forth below:
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(a) Comparison Year: Each calendar year after the Base Year, all or any
portion of which falls within the Lease Term.
(b) Real Property
Taxes: Any fee, license fee, license tax, business license
fee, commercial rental tax, levy, charge, assessment,
penalty or tax imposed by any taxing authority against
the Land or the Building; any tax on Landlord's right
to receive, or the receipt of, rent or income from the
Land or the Building; any assessment levied by a local
landscape or lighting maintenance district; any tax or
charge for fire protection, streets, sidewalks, road
maintenance, refuse or other services provided to the
Land or the Building; any tax imposed on this
transaction; any tax or increase of taxes based on a
reassessment of the Land or the Building due to a
change in ownership or transfer of all or part of the
Building or Landlord's interest in this Lease, the
Land or the Building; and any charge or fee replacing
any tax previously included within this definition.
Real Property Taxes do not include: (i) Landlord's
federal or state net income, franchise, inheritance,
gift or estate taxes, (ii) a special assessment levied
by any governmental authority or as a result of the
removal of any Hazardous Materials caused by Landlord
but not by third parties, (iii) reserves for future
taxes, or (iv) any documentary transfer taxes arising
out of a transfer or sale by Landlord of all or a
portion of the Building. In the case of any assessment
which may be evidenced by improvement or other bonds
or which may be paid in annual or other periodic
installments, Landlord shall elect to cause such
assessment to be paid in installments over the maximum
period permitted by law.
If a reduction in Real Property Taxes is obtained for
any year of the Term during which Tenant paid Real
Property Taxes in excess of the Base Year Real
Property Taxes, then Operating Expenses for such year
shall be retroactively adjusted and Landlord shall
provide Tenant with a credit against Tenant's next due
obligations for Tenant's Share of Operating Expenses,
or, if none, refund such amount to Tenant within
thirty (30) days based on such adjustment. Landlord
agrees to contest increases in the assessed valuation
of the Building, which affect the general real estate
tax component of Real Property taxes or any other
increase in Real Property Taxes customarily protested
by prudent owners of commercial office buildings in
the City of San Diego in a manner appropriate for such
an owner.
(c) Operating
Expenses: All costs and expenses of operating, maintaining and
repairing the Building and the Land, excluding Real
Property Taxes but including (without limitation):
sewer charges; insurance premiums for all insurance
policies as may be provided by Landlord in accordance
with Article 13; deductible amounts under insurance
policies subject to the limitations set forth below;
janitorial services; wages of Landlord's employees
engaged in the operation, maintenance or repair of the
Building or the Land, including all customary employee
benefits, Worker's Compensation and payroll taxes;
management fees, without duplication, reasonably
consistent with the prevailing rates charged by
professional management companies for the operation of
similar buildings in the area, but if a managing agent
is not retained for the Building, a sum in lieu
thereof to Landlord in the amount of three percent
(3%) of
7
gross rental income provided that if the fee of any
such agent subsequently engaged is more than three
percent (3%) of gross rental income an equitable
approximate adjustment shall be made for the amount
attributable to the management fees for the Base Year
for the purpose of determining subsequent increases;
legal, accounting and other consulting fees;
Landlord's cost of condenser water provided for
Tenant's HVAC, and other services and utilities except
for the charges that are billed directly to tenants;
elevator maintenance; capital improvements and
replacements made after completion of the Building
required for the safe and efficient operation of the
Building, including but not limited to those required
by Laws, excluding amounts expended by Landlord in the
performance of its repair and maintenance obligations
under Section 10.2, appropriately amortized over the
useful life of such improvements; all costs and
expenses incurred by Landlord and interest on any
funds borrowed to pay the cost of any capital
improvements as a result of or in order to comply with
any Laws, including, but not limited to, Laws
pertaining to energy, natural resources conservation,
safety or environmental protection; supplies,
materials, equipment and tools; and maintenance and
repair of all parking and common areas. Operating
Expenses do not include depreciation on the existing
Building and improvements or equipment therein, loan
payments (except as expressly provided above), 9
executive salaries or real estate brokers'
commissions. Notwithstanding the provisions of this
Section 7.1(c), the following shall not be included
within Operating Expenses: (i) any ground lease
rental; (ii) costs incurred by the Landlord for the
repair of damage to the Building to the extent that
the Landlord is reimbursed by insurance or
condemnation proceeds or by other tenants of the
Building (other than as a share of their Operating
Expense), guarantors or any third parties (except that
insurance deductibles paid by Landlord are included as
an Operating Expense); (iii) costs, including permit,
license and inspection costs, incurred with respect to
the construction or installation of tenant
improvements for tenants in the Building (including
Landlord improvements to the Building) which are
incurred in renovating or otherwise improving,
decorating, painting or redecorating space for other
occupants of the Building, including space planning
and interior design costs and fees; (iv) brokerage
commissions, finder's fees, attorneys' fees, space
planning costs, advertising costs, and other costs
incurred by Landlord in leasing or attempting to lease
space in the Building; (v) attorneys' fees and other
costs and expenses incurred in connection with
proposals, negotiations or disputes with present or
prospective tenants or other occupants of the
Building; (vi) subject to Landlord's obligations under
Section 10.2, repairs, alterations, additions,
improvements or replacements made to rectify or
correct any defect in the design, materials or
workmanship of the structure or systems of the
Building; (vii) damage and repairs necessitated by the
gross negligence or willful misconduct of Landlord or
Landlord's employees, contractors or agents; (viii)
any personal property taxes payable by Tenant or by
other occupants of the Building; (ix) costs incurred
due to a violation by Landlord or any tenant of the
terms and conditions of any lease of space in the
Building, or costs, penalties or fines arising from
Landlord's violation of any governmental rule or
authority, costs incurred in correcting any building
code violations existing as of the Commencement Date;
(x) Landlord's general corporate overhead and general
administrative expenses; (xi) rentals and other
related
8
expenses incurred in leasing equipment ordinarily
considered to be of a capital nature under generally
accepted accounting principles, except equipment that
is leased for use in, or providing services to the
Building, or that is used in providing security,
operational, and maintenance services, and equipment;
(xii) costs arising from Landlord's charitable or
political contributions or from costs or fees
associated with Landlord's membership in a trade
association; (xiii) legal expenses incurred in order
for Landlord to resolve disputes with contractors
regarding latent defects in the design, materials or
workmanship of the Building; (xiv) costs arising from
the presence of Hazardous Materials existing in, on or
under the Premises or Building as of the date this
Lease is signed or which is otherwise exempted from
Tenant's indemnity requirements under Section 22; (xv)
any late fees, assessments, penalties or similar
charges associated with any Operating Expenses
resulting from Landlord's gross negligence or willful
misconduct; (xvi) expenses incurred by Landlord in
connection with services or other benefits which are
not offered to Tenant or items and services for which
Tenant or any other occupant of the Building
reimburses Landlord (other than through its share of
Operating Expenses), or which Landlord provides
selectively to one or more tenants, other than Tenant,
without reimbursement, and the cost of which is
included as Operating Expenses; (xvii) costs of
maintaining Landlord's existence, either as a
corporation, partnership or other entity;(xviii)
operating reserves for capital items to the extent a
capital cost of replacement of such items are, or are
planned to be, amortized as an Operating Expense; and
(xix) the costs of repairs and/or replacements of the
roof structure, foundations and structural supports of
the Building.
Tenant's liability for any insurance deductible shall
be limited to commercially-reasonable amounts, based
upon deductibles maintained by landlords of similar
buildings in the vicinity of the Building; provided,
however, that in the event of any damage to the
Building by earthquake, Tenant's liability for any
deductible in connection with any such casualty shall
not exceed an amount equal to Tenant's Share of the
amortized portion of the deductible, which shall be
determined as follows: The deductible, up to a maximum
of ten percent (10%) of the full replacement cost of
the Building, shall be amortized over the useful life
of the repaired or replace improvement (determined in
accordance with generally accepted accounting
principles), with interest on the unamortized balance
at the prevailing market rate of interest paid by
Landlord to an institutional lender. For the duration
of the Term, commencing with the date of completion of
such replacement or repair, Tenant shall pay Landlord
monthly, as Additional Rent, Tenant's share of such
amortized portion of the deductible as applicable to
such month.
Notwithstanding the specific itemization elsewhere in
this Lease as to certain components of Operating
Expenses, Landlord shall not be entitled to recover
from all tenants of the Building more than its actual
costs and expenses of Operating Expenses.
7.2 Payment for Increases in Real Property Taxes. If the Real Property
Taxes for any year exceed the Real Property Taxes for the Base Year, Tenant
shall pay, as Additional Rent, Tenant's Share of the increase in the manner set
forth in this Article.
9
7.3 Payment for Increases in Operating Expenses. If the Operating
Expenses paid or incurred by Landlord in any Comparison Year increase over the
Operating Expenses paid or incurred for the Base Year, Tenant shall pay, as
Additional Rent, Tenant's Share of the increase in the manner set forth in this
Article. If in the Base Year less than ninety-five percent (95%) of the rentable
area of the Building is occupied, then the Operating Expenses for the Base Year
shall be adjusted to what the Operating Expenses would have been if ninety-five
percent (95%) of the rentable area of the Building had been occupied throughout
the Base Year. If subsequently to the Base Year any Operating Expenses are
incurred which were not incurred during the Base Year, the amount of such
Operating Expenses shall be factored into the Base Year for the purpose of
determining subsequent increases in the Operating Expenses. If, during any
period in a Comparison Year, less than ninety-five percent (95%) of the rentable
area of the Building is occupied, the Operating Expenses for that Comparison
Year shall be adjusted to what the Operating Expenses would have been if
ninety-five percent (95%) of the rentable area of the Building had been occupied
throughout that Comparison Year. Tenant's Share of increases in Operating
Expenses shall be prorated for any partial Comparison Year which falls within
the Lease Term.
7.4 Manner of Payment. Prior to the beginning of a Comparison Year,
Landlord shall deliver to Tenant a statement showing Landlord's reasonable
estimate of Real Property Taxes and Operating Expenses for each Comparison Year
and the amount of Tenant's Share of any increase in Real Property Taxes and
Operating Expenses based on such estimate. Commencing as of the first day of
each Comparison Year, Tenant shall pay to Landlord, at the times and in the
manner provided herein for the payment of Monthly Rent, one-twelfth (1/12) of
Tenant's Share of any increases as shown by Landlord's statement. If Landlord's
statement is furnished after January 1 of a Comparison Year, then on or before
the first day of the first calendar month following Tenant's receipt of
Landlord's statement, in addition to the monthly installment of Tenant's Share
of any increases due on that date, Tenant shall pay the amount of Tenant's Share
of any increases for each calendar month or fraction thereof that has already
elapsed in such Comparison Year.
7.5 Final Statement. After the end of each Comparison Year (including
the Comparison Year in which the Lease Term terminates), within ninety (90) days
thereafter, Landlord shall deliver to Tenant a final statement ("Final
Statement") of the actual Real Property Taxes and Operating Expenses for such
Comparison Year. Within ten (10) days of delivery of each Final Statement,
Tenant shall pay Landlord the amount due for Tenant's Share of any increases in
the Real Property Taxes and Operating Expenses. Tenant shall have thirty (30)
days after delivery of Landlord's Final Statement to object in writing to the
accuracy of the Final Statement. If Tenant does not object within such thirty
(30)-day period, Landlord's Final Statement shall be conclusive and binding on
Tenant. Objections by Tenant shall not excuse or ▇▇▇▇▇ Tenant's obligation to
make the payments required under this Section 7.5 (or under Section 7.4) pending
the resolution of Tenant's objection. Any credit due Tenant for overpayment of
Tenant's Share of any increases in the Operating Expenses shall be credited
against the installments of Monthly Rent next coming due. However, overpayments
for the Comparison Year in which the Lease Term terminates shall be retained by
Landlord to increase the Security Deposit, and shall be refunded, used, applied
or retained as set forth in Article 6.
7.6 Review Rights. If Tenant makes a written objection to Landlord
within thirty (30) days after the delivery of a Final Statement, as provided in
Section 7.5, the Parties shall make a good faith effort to resolve any dispute
concerning such Tenant's obligation. In the absence of any such Tenant's written
objection, the Final Statement shall be deemed conclusively binding. If the
Parties are unable to resolve any dispute as to the correctness of the Final
Statement within thirty (30) days following such notice of objection, either
Party may refer the issues raised to one of the "Big Five" public accounting
firms selected by Landlord and reasonably acceptable to Tenant, and the decision
of such accountants shall be conclusively binding upon Landlord and Tenant. In
connection therewith, Tenant and such accountants shall execute and deliver to
Landlord a confidentiality agreement, in form and substance
10
reasonably satisfactory to Landlord, whereby such parties agree not to disclose
to any third party any of the information obtained in connection with such
review. Tenant shall pay the fees and expenses relating to such procedure,
unless such accountants determine that Landlord overstated Operating Expenses by
more than five percent (5%) for the period covered by the Final Statement, in
which case Landlord shall pay such fees and expenses.
8. Use of Premises.
8.1 Permitted Use. Tenant shall use the Premises only for the Permitted
Use and shall not use or permit the Premises to be used for any other purpose.
8.2 Restrictions on Use. Tenant shall not do or permit anything to be
done in or about the Premises nor bring or keep anything therein which will: (a)
increase the existing rate of, cause the cancellation of or otherwise adversely
affect any casualty or other insurance for the Building or any part thereof or
any of its contents; (b) impair the proper and economic maintenance, operation
and repair of the Building or any portion thereof; (c) obstruct or interfere
with the rights of other tenants or occupants of the Building or injure or annoy
them; or (d) cause any nuisance in or about the Premises or the Building. Tenant
shall not use or allow any part of the Premises to be used for the storage,
manufacturing or sale of food or beverages, except for vending machines in the
lunch room(s) located within the Premises, or for the manufacture, retail sale
or auction of merchandise, goods or property of any kind, or as a school or
classroom, or for any unlawful or objectionable purpose. Tenant shall not commit
or allow to be committed any waste to the Premises or the Building.
8.3 Compliance with Laws. Tenant shall not use the Premises or permit
anything to be done in or about the Premises, the Building or the Land which
will in any way violate any law, statute, ordinance, code, rule, regulation,
requirement, license, permit, certificate, judgment, decree, order or direction
of any governmental or quasi-governmental authority, agency, department, board,
panel or court (singularly and collectively "Laws"). Tenant shall, at its
expense, promptly comply with all Laws and with the requirements of any board of
fire insurance underwriters or other similar bodies now or hereafter
constituted, relating to or affecting the condition, use or occupancy of the
Premises. Tenant shall not be required to make structural changes to the
Premises unless they arise or are required because of or in connection with
Tenant's specific use of the Premises, or the type of business conducted by
Tenant in the Premises, or Tenant's Alterations or Tenant's acts or omissions.
Tenant shall obtain and maintain in effect during the Lease Term all licenses
and permits required for the proper and lawful conduct of Tenant's business in
the Premises, and shall at all times comply with such licenses and permits. The
judgment of any court of competent jurisdiction or the admission of Tenant in
any action or proceeding (whether Landlord is a party or not) that Tenant has
violated any Laws shall be conclusive of that fact as between Landlord and
Tenant.
9. Alterations and Additions.
9.1 Landlord's Consent.
(a) Other than the Tenant Improvements, Tenant shall not make or
permit to be made any alterations, additions or improvements (singularly and
collectively "Alterations") to or of the Building or the Premises or any part
thereof without the prior written consent of Landlord in each instance. However,
Landlord's consent shall not be required for minor decorations of the Premises
such as wall coverings and wall hangings, built-in cabinetry and movable
partitions, nor for the installation of furnishings, subject to the provisions
of Section 11.2, office equipment and nonstructural lighting and carpeting
improvements and additional electrical outlets.
11
(b) Landlord will not unreasonably withhold, condition or delay its
consent to any Alterations provided and upon the condition that all of the
following conditions shall be satisfied: (i) the Alterations do not adversely
(in Landlord's judgment) affect the outside appearance of the Building; (ii) the
Alterations are nonstructural and do not impair the strength of the Building or
any part thereof; (iii) the Alterations are to the interior of the Premises and
do not affect any part of the Building outside of the Premises; (iv) the
Alterations do not affect the proper functioning of any component of the
heating, ventilating and air conditioning ("HVAC"), mechanical, electrical,
sanitary or other utilities, systems and services of the Building, or increase
the usage thereof by Tenant; (v) all plans and specifications for the
Alterations are prepared by a space planner approved by Landlord and all
Alterations are performed by contractors approved by Landlord; (vi) Landlord
shall have approved the final plans and specifications for the Alterations; (vi)
Tenant pays to Landlord (A) a fee for Landlord's indirect costs, field
supervision or coordination in connection with the Alterations equal to five
percent (5%) of the estimated cost of the Alterations, and (B) the reasonable
costs and expenses actually incurred by Landlord in reviewing Tenant's plans and
specifications and inspecting the Alterations to determine whether they are
being performed in accordance with the approved plans and specifications and in
compliance with Laws, including, without limitation, the fees of any architect
or engineer employed by Landlord for such purpose; (vii) before proceeding with
any Alteration which will cost more than $10,000 (exclusive of the costs of
items constituting Tenant's Property, as defined in Section 9.2), Tenant obtains
and delivers to Landlord, at Tenant's option, either: (C) a performance bond and
a labor and materials payment bond for the benefit of Landlord, issued by a
corporate surety licensed to do business in California, each in an amount equal
to one hundred twenty five percent (125%) of the estimated cost of the
Alterations and in form satisfactory to Landlord, or (D) such other security as
shall be reasonably satisfactory to Landlord. Unless all of the foregoing
conditions are satisfied, Landlord shall have the right to withhold its consent
to the Alterations in Landlord's sole and absolute discretion.
(c) Not less than fifteen (15) days nor more than twenty (20) days
prior to commencement of any Alterations, Tenant shall notify Landlord of the
work commencement date so that Landlord may post notices of nonresponsibility
about the Premises. All Alterations must comply with all Laws, the other terms
of this Lease, and the final plans and specifications approved by Landlord, and
Tenant shall fully and promptly comply with and observe the rules and
regulations of Landlord then in force with respect to the making of Alterations.
Landlord's review and approval of Tenant's plans and specifications are solely
for Landlord's benefit. Landlord shall have no duty toward Tenant, nor shall
Landlord be deemed to have made any representation or warranty to Tenant, with
respect to the safety, adequacy, correctness, efficiency or compliance with Laws
of the design of the Alterations, the plans and specifications therefor, or any
other matter regarding the Alterations.
9.2 Ownership and Surrender of Alterations. Upon their installation, all
Alterations, including, but not limited to, wall covering, paneling and built-in
cabinetry, but excluding movable furniture, trade fixtures and office equipment
("Tenant's Property"), shall become a part of the realty and belong to Landlord
and shall be surrendered with the Premises. However, upon the expiration or
sooner termination of the Lease Term, Tenant shall, upon written demand by
Landlord, at Tenant's expense, immediately remove any Alterations made by Tenant
which are designated by Landlord to be removed and repair any damage to the
Premises caused by such removal. Landlord acknowledges Tenant's right to finance
and to secure under the Uniform Commercial Code, inventory, furnishings,
furniture, equipment, machinery and other personal property located in or at the
Premises, and Landlord agrees to execute waiver forms releasing any Landlord
lien interest in Tenant's personal property in favor of any purchase money
seller, lessor or lender who has financed or may finance in the future such
items. Without limiting the effectiveness of the foregoing, provided that no
default shall have occurred and be continuing, Landlord shall, upon the request
of Tenant, and at the Tenant's sole cost and expense, execute and deliver any
instruments necessary or appropriate to confirm any such lien release to any
person or entity permitted under this Section including landlord waivers with
respect to any of the foregoing, and
12
permitting such purchase money seller, lessor or lender to enter upon the
Premises within a reasonable period and notice following any Tenant default to
remove the personal property in which such entity has a security interest, in
compliance with the obligations of this Lease relating to such removal.
9.3 Liens. Tenant shall pay when due all claims for labor, materials and
services furnished by or at the request of Tenant or Tenant's Affiliates. Tenant
shall keep the Premises, the Building and the Land free from all liens, security
interests and encumbrances (including, without limitation, all mechanic's liens
and stop notices) created as a result of or arising in connection with the
Alterations or any other labor, services or materials provided for or at the
request of Tenant or Tenant's Affiliates, or any other act or omission of Tenant
or Tenant's Affiliates, or persons claiming through or under them. (Such liens,
security interests and encumbrances singularly and collectively are herein
called "Liens.") Tenant shall not use materials in connection with the
Alterations that are subject to any Liens. Tenant shall indemnify Landlord and
Landlord's Affiliates for, and hold Landlord and Landlord's Affiliates harmless
from and against: (a) all Liens; (b) the removal of all Liens and any actions or
proceedings related thereto; and (c) all Liabilities incurred by Landlord or
Landlord's Affiliates in connection with the foregoing. If any such lien is
attached to the Premises and is not discharged (by bonding or otherwise) within
fifteen (15) days after written notice to Tenant, then, in addition to any other
right or remedy of Landlord, Landlord may, but will not be obligated to, take
any action necessary to discharge such Liens, including, but not limited to,
payment to the claimant on whose behalf the Lien was filed. Tenant shall
indemnify Landlord for, and hold Landlord harmless from and against, all
Liabilities so incurred by Landlord, without regard to any defense or offset
that Tenant may have had against the claimant.
9.4 Additional Requirements. Alterations shall comply with all Laws.
Tenant, at its expense, shall obtain all necessary permits and certificates for
the commencement and performance of Alterations and for final approval thereof
upon completion, and shall cause the Alterations to be performed in compliance
therewith and with all applicable insurance requirements, and in a good,
firstclass and workmanlike manner. Tenant, at its expense, shall diligently
cause the cancellation or discharge of all notices of violation arising from or
otherwise connected with Alterations, or any other work, labor, services or
materials done for or supplied to Tenant or Tenant's Affiliates, or by any
person claiming through or under Tenant or Tenant's Affiliates. Alterations
shall be performed so as not to interfere with any other tenant in the Building,
cause labor disharmony therein, or delay or impose any additional expense on
Landlord in the construction, maintenance, repair or operation of the Building.
Throughout the performance of the Alterations, Tenant, at its expense, shall
carry, or cause to be carried, in addition to the insurance described in Article
13, Workers' Compensation insurance in statutory limits and such other insurance
as Landlord may reasonably require, with insurers reasonably satisfactory to
Landlord. Tenant shall furnish Landlord with satisfactory evidence that such
insurance is in effect at or before the commencement of the Alterations and,
upon request, at reasonable intervals thereafter until completion of the
Alterations.
10. Repairs.
10.1 Condition of Premises. The Premises shall be delivered to Tenant in
an "as is" condition and Landlord shall have no obligation whatsoever to alter,
remodel, improve, decorate or paint the Premises or any part thereof either
prior to or during the Lease Term. By accepting possession of the Premises,
Tenant shall be deemed to have acknowledged that the Premises are suitable for
its purposes and in good condition and repair. Subject to Section 10.2, Tenant,
at its expense, shall keep the Premises and every part thereof in good condition
and repair, subject to Landlord's obligations under Section 10.2, and shall,
upon the expiration or sooner termination of the Lease Term, surrender the
Premises to Landlord broom clean and in good condition and repair, subject to
Landlord's obligations under Section 10.2, ordinary wear and tear and
condemnation excepted. Provided, however, Tenant shall have no obligation to
repair, maintain or replace any portion of the Building or Premises identified
as Landlord's
13
responsibility in Section 10.2. Landlord agrees not to unreasonably withhold its
approval of any preventative maintenance contracts or licensed contractors
selected by Tenant with respect to Tenant's maintenance and repair obligations.
Tenant acknowledges and agrees that it has inspected, or prior to the
Commencement Date will inspect, the Premises and that Tenant is not relying on
any representations or warranties made by Landlord or Landlord's Affiliates
regarding the Premises, the Building or the Land except as may be expressly set
forth herein.
10.2 Landlord's Obligation to Repair. Subject to Article 14, Landlord
shall repair and maintain the Common Areas, including all Building systems
serving the Common Areas, and the structural portions of the Building,
including, but not limited to, the roof, the foundations, exterior load-bearing
walls, windows and seals and underground utilities. However, if the repair or
maintenance is caused in whole or in part by the act, neglect, fault or omission
of Tenant or Tenant's Affiliates, or by Tenant's Alterations, then, to the
extent such repair is not covered by insurance maintained by Landlord, Tenant
immediately shall pay for such repair or maintenance and shall indemnify
Landlord for and hold Landlord harmless from and against all other Liabilities
incurred by Landlord in connection therewith. Landlord shall have a reasonable
time after written notice from Tenant to perform necessary repairs or
maintenance. Tenant waives all rights granted under Law to make repairs at
Landlord's expense. In the event that any maintenance, repair or replacement
responsibilities of Landlord are scheduled, pursuant to the manufacturer's
specifications or any existing service agreement, for performance in the Base
Year and are deferred until after the expiration of the Base Year, the Base Year
Operating Expenses shall be adjusted to include the expenses associated with
such deferred maintenance, repair or replacement that Landlord would have paid
had Landlord performed such responsibility during the Base Year.
11. Services and Utilities.
11.1 Landlord's Services. Landlord shall furnish janitorial services to
the Premises as hereinafter provided. Landlord shall also maintain and furnish
utilities to the Common Areas. Tenant shall pay all costs of any utilities
supplied to the Premises. Tenant shall cause such utilities to be separately
metered.
11.2 Restrictions on Use. Other than as set forth and approved on the
initial Tenant Improvement drawings, without the prior written consent of
Landlord in each instance, Tenant shall not use or install any apparatus, device
or equipment in the Premises, including, but not limited to, electronic data
processing machines, punch card machines and machines which will require a
dedicated circuit or which will in any way increase the amount of water,
electricity or HVAC normally furnished for similar space in the Building.
Landlord may condition its consent on, among other things, the installation of
additional risers, feeders and other appropriate equipment. Tenant shall pay to
Landlord on demand the cost of: (a) purchasing, installing, maintaining and
repairing such equipment; (b) any additional expense incurred in connection with
the foregoing. Tenant shall not connect any apparatus, device or equipment
except through standard electrical outlets in the Premises.
11.3 Janitorial Services. The janitorial services to be provided by
Landlord to Tenant shall be provided five (5) days a week, Monday through Friday
(except for holidays). Janitorial services shall be those customarily furnished
for similar buildings in the general vicinity of the Building.
11.4 Hours of Operation. Standard operating hours for the Building shall
be five (5) days a week, Monday through Friday, from 7:00 o'clock a.m. to 7:00
o'clock p.m. (except for legal holidays) and Saturdays from 9:00 o'clock a.m. to
1 o'clock p.m. (except for legal holidays).
11.5 Extra Hours. If during any hours or any days other than those
specified in Section 11.4, Tenant desires to have any services or utilities
supplied to the Premises, and if Landlord is able to provide
14
the same, Tenant shall pay Landlord such reasonable charge as Landlord shall
establish from time to time for providing such services or utilities. Any such
charges which Tenant is obligated to pay shall be deemed to be Additional Rent
hereunder; provided, however, Landlord shall charge $20 per hour for Landlord's
costs related to Tenant's HVAC.
12. Entry by Landlord. Landlord shall at all times have the right to enter the
Premises in order to: inspect the Premises; post notices of non-responsibility;
show the Premises to prospective purchasers, lenders or (during the last twelve
(12) months of the Lease Term) tenants; perform its obligations and exercise its
rights hereunder; and make repairs, improvements, alterations or additions to
the Premises or the Building or any portion thereof as Landlord deems necessary
or desirable and to do all things necessary in connection therewith, including,
but not limited to, erecting scaffolding and other necessary structures.
Landlord shall retain (or be given by Tenant) keys to unlock all of the doors to
or within the Premises, excluding doors to Tenant's vaults and files. Landlord
shall have the right to use any and all means necessary to obtain entry to the
Premises in an emergency. Landlord's entry to the Premises shall not, under any
circumstances, be deemed to be a forcible or unlawful entry into, or a detainer
of, the Premises, or an eviction of Tenant from the Premises or any portion
thereof.
13. Insurance.
13.1 Tenant's Casualty Insurance. At all times during the Lease Term,
Tenant, at its expense, shall maintain in effect policies of casualty insurance
covering all Tenant Improvements and all Alterations made by Tenant. The amount
of such coverages shall be revised from time to time at Landlord's request. Such
policies shall provide for protection against any perils normally included
within the classification of "All Risks", and shall contain endorsements
covering: demolition and increased cost of construction; water damage, vandalism
and malicious mischief; liability for changes in Laws. The proceeds of such
insurance shall be used for the repair or replacement of the property so
insured, except that upon termination of this Lease following a casualty as set
forth herein, the proceeds applicable to Tenant Improvements and Alterations
shall be paid to Landlord and proceeds applicable to any furniture, fixtures and
equipment owned by Tenant shall be paid to Tenant.
13.2 Landlord's Insurance Landlord shall at all times during the Term of
this Lease maintain a policy or policies of insurance with the premiums paid in
advance, issued by and binding upon some solvent insurance company, insuring the
Building covering physical loss or damage in an amount equal to the lesser of:
(A) the full replacement cost of the Building as of the date of the loss
(exclusive of excavation and foundation costs, costs of underground items and
costs of parking lot paving and landscaping), or such lesser amount as is
permitted by any mortgagee of Landlord's interest in the Building, utilizing
Insurance Service Office standard forms, or equivalent, providing protection
against such perils as are included within the classification of fire, extended
coverage, vandalism, malicious mischief, plate glass and such other perils as
Landlord may deem advisable or required by any such mortgagee, provided Landlord
shall not be obligated in any way or manner to insure any personal property
(including, but not limited to, any furniture, machinery, goods or supplies) of
Tenant upon or within the Premises, any fixtures installed or paid for by Tenant
upon or within the Premises, or any improvements which Tenant may construct on
the Premises; and (B) such other policy or policies of insurance as Landlord may
deem necessary, advisable and commercially reasonable. Tenant shall have no
right in or claim to the proceeds of any policy of insurance maintained by
Landlord. In the event that any policy of insurance carried by Landlord pursuant
to this Section 13.2 is not included in the Operating Expenses for the Base
Year, and Landlord elects to procure such insurance after the Base Year, the
Base Year Operating Expenses shall be adjusted to reflect the Operating Expenses
Landlord would have paid had Landlord carried such insurance in the Base Year.
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13.3 Public Liability and Property Damage Insurance. At all times during
the Lease Term, Landlord and Tenant shall each maintain, each at their own
expense, Comprehensive General Liability Insurance (including property damage)
with respect to the ownership, maintenance, use, operation and condition of the
Premises and the business conducted therein. In each case, such insurance shall
at all times have limits of not less than Two Million Dollars ($2,000,000)
combined single limit per occurrence for bodily injury, personal injury and
property damage liability. At Landlord's request, these limits shall be
increased from time to time during the Lease Term (but not more often than once
every two years) to such higher limits as Landlord or its insurance consultant
believe are reasonably necessary to protect Landlord. The amount of such
insurance shall not limit Tenant's liability nor relieve Tenant of any
obligation hereunder. Each policy shall contain cross liability endorsements, if
applicable, and shall insure Tenant's performance of the indemnity provisions
contained in Section 22.2 and elsewhere in this Lease and any other obligations
of Tenant to Landlord hereunder.
13.4 Policy Requirements.
(a) All insurance required to be carried hereunder shall be issued
by responsible insurance companies, qualified to do business in the State of
California, approved by Landlord and, if required, by any Landlord's mortgagee.
Certificates of all Tenant's policies shall be delivered to Landlord at least
ten (10) days prior to Tenant's occupancy of the Premises. Each policy shall
provide that it may not be canceled or modified except after thirty (30) days'
prior written notice to Landlord and Landlord's mortgagee named as an additional
insured or loss payee thereunder. Tenant shall furnish Landlord with renewals or
"binders" of each Tenant's policy, together with evidence of payment of the
premium therefor, at least thirty (30) days prior to expiration. Tenant shall
have the right to provide insurance coverage pursuant to blanket policies
obtained by Tenant if the blanket policies expressly afford coverage as required
18 by this Lease. Each policy provided by Landlord shall provide that all losses
shall be settled in the name of Landlord (or, if required, Landlord's mortgagee)
only.
(b) Landlord and, if required, Landlord's Mortgagee shall be named
as additional insureds in each insurance policy and, if requested by Landlord,
they also shall be named as loss payees. The Tenant's Comprehensive General
Liability Insurance shall: apply severally to Landlord, Landlord's Mortgagee and
Tenant; cover each of them as if separate policies had been issued to each of
them; not contain provisions affecting any rights which any of them would have
had as claimants if not named as insureds; be primary insurance and not
considered contributory, with any other valid and collectible insurance
available to Landlord and Landlord's Mortgagee constituting excess insurance;
and be endorsed as necessary to cover the foregoing requirements.
(c) Each policy of All Risk Coverage which Tenant obtains for the
Premises, and which Landlord obtains for the Building, shall include a clause or
endorsement denying the insurer any right of subrogation against the other Party
hereto to the extent that rights have been waived by the insured party prior to
the occurrence of injury or loss. Landlord and Tenant each waive any rights of
recovery against the other for injury or loss due to hazards covered by its own
insurance, to the extent of the injury or loss covered thereby.
13.5 Tenant's Failure to Deliver Certificates. If Tenant fails to
deliver copies of certificates of Tenant's insurance policies and evidence of
payment therefor within the time required pursuant to Section 13.3, Landlord
may, but shall not be obligated to, obtain the required insurance, and the cost
thereof, together with an administrative fee of Five Hundred Dollars ($500),
shall be payable by Tenant to Landlord on demand. Nothing in this Section shall
be deemed to be a waiver of any rights or remedies available to Landlord under
this Lease or at law or in equity if Tenant fails to obtain and deliver the
required insurance policies and evidence of payment.
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14. Damage or Destruction; Eminent Domain.
14.1 Landlord's Restoration. If the Building or the Premises are
partially damaged or totally destroyed by fire or other casualty, and if this
Lease is not terminated as provided in this Article, Landlord shall repair the
damage and restore or rebuild the Building or the Premises (except for Tenant's
Property and leasehold improvements) after Landlord receives notice of the
damage or destruction and Landlord receives substantially all of the insurance
proceeds receivable on account of the casualty. However, Landlord shall not be
required to spend amounts in excess of the insurance proceeds actually received
for such repair, restoration or rebuilding. Landlord shall attempt to make any
required repairs or restoration promptly and so as not to interfere unreasonably
with Tenant's use and occupancy of the Premises, but Landlord shall not be
obligated to perform such work on an overtime or premium-pay basis, unless
Tenant requests and pays the additional cost associated therewith.
14.2 Rent Abatement. Subject to Section 14.3, if, in Landlord's
reasonable judgment, all or part of the Premises are rendered completely or
partially untenantable on account of fire or other casualty, or if damage by
fire or other casualty to the Building deprives Tenant of access to the Premises
for more than five (5) consecutive days, the Monthly Rent shall be abated in the
proportion that the Rentable Square Feet of the untenantable portion of the
Premises bears to the total Rentable Square Feet of the Premises; provided,
however, if the untenantable area is in excess of fifty percent (50%) of any
floor, the entire floor shall be deemed untenantable. Such abatement shall
commence on the date of the damage or destruction and shall continue until the
Premises have been substantially repaired and Tenant has reasonable access to
the Premises. However, if Tenant reoccupies the damaged portion of the Premises
prior to the date that the Premises are substantially repaired, the Monthly Rent
allocable to the reoccupied portion shall be payable by Tenant from the date of
such occupancy in the proportion that the Rentable Square Feet of the reoccupied
portion of the Premises bears to the total Rentable Square Feet of the Premises.
14.3 Exception to Abatement. Monthly Rent shall not be abated or reduced
if: (a) the Premises or a portion thereof are rendered untenantable due to
damage or loss of access for a period of five (5) consecutive days or less; or
(b) Landlord provides other space in the Building reasonably suited for the
temporary conduct of Tenant's business (but Landlord shall have no obligation to
provide such other space); or (c) because of acts or omissions of Tenant or
Tenant's Affiliates either (i) Landlord (or any Landlord's Mortgagee) is unable
to collect all of the insurance proceeds (including, without limitation, rent
insurance proceeds) for damage or destruction of the Premises or the Building,
or (ii) the Premises or the Building was damaged or destroyed or rendered
completely or partially untenantable. The collection of rent by Landlord under
the circumstances described in clause (c) above shall not preclude Landlord from
seeking damages from Tenant or exercising any other rights and remedies it may
have under this Lease or at law or in equity.
14.4 Election to Terminate. Landlord may terminate this Lease upon
written notice to Tenant if: (a) the Building or the Premises are substantially
or totally destroyed or, in Landlord's reasonable judgment, rendered
untenantable by fire or other casualty or any other cause; or (b) the Building
is damaged or rendered untenantable (whether or not the Premises are damaged or
destroyed or rendered untenantable) so that its repair or restoration requires
the expenditure (as estimated by a reputable contractor or architect designated
by Landlord) of more than twenty percent (20%) of the full insurable value of
the Building immediately prior to the casualty; or (c) less than one (1) year
remains in the Lease Term at the time of the damage or destruction or events
which render the Building or the Premises untenantable and the time necessary to
repair or restore the Building or the Premises would exceed ninety (90) days (as
estimated by a reputable contractor or architect designated by Landlord); or (d)
Landlord would be required under Section 14.2 to ▇▇▇▇▇ or reduce the Monthly
Rent for a period in excess of six (6) months if repairs or restoration were
undertaken. If Landlord elects to terminate this Lease, its notice of
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termination shall be given within one hundred and eighty (180) days after the
date of the damage, destruction or events causing untenantability and this Lease
shall terminate on the date specified in such notice.
14.5 Eminent Domain. Landlord may terminate this Lease upon written
notice to Tenant if twenty-five percent (25%) or more of either the Premises,
the Building or the Land is condemned, taken or appropriated by any public or
quasipublic authority under the power of eminent domain, police power or
otherwise (or in the event of a sale in lieu thereof). Whether or not this Lease
is so terminated, Landlord shall be entitled to any and all income, rent, award,
or interest thereon which may be paid or made in connection with the taking or
appropriation, and Tenant shall have no claim against Landlord for the value of
any unexpired term of this Lease. If Landlord elects to terminate this Lease,
its notice of termination shall be given within sixty (60) days after the taking
or appropriation. If such notice is not given or if Landlord notifies Tenant of
Landlord's election not to terminate, this Lease shall continue in full force
and effect, except that the Monthly Rent shall be reduced in the proportion that
the rentable floor area of the Premises which is taken bears to the total
Rentable Area of the Premises. Nothing contained in this Section shall prevent
Tenant from bringing a separate action or proceeding for compensation for any of
Tenant's Property taken and Tenant's moving expenses and relocation expenses.
14.6 Business Interruption. Landlord shall not incur any Liabilities of
any type to Tenant or Tenant's Affiliates arising from or in connection with any
damage or destruction of the Premises, the Building or the Land, or any taking
or appropriation thereof, or any repairs or restoration in connection therewith,
nor shall Tenant have any right to terminate this Lease as a result thereof.
However, in such event, Monthly Rent shall be abated if and to the extent that
abatement is allowed pursuant to this Article.
15. Assignment and Subletting.
15.1 Landlord's Consent Required. Tenant shall not voluntarily,
involuntarily or by operation of any Laws sell, convey, mortgage, assign, sublet
or otherwise transfer or encumber all or any part of Tenant's interest in this
Lease or the Premises, except as to a Permitted Transferee defined in Section
15.4, without Landlord's prior written consent in each instance which consent
may be withheld in Landlord's sole and absolute discretion except as otherwise
provided in this Article, and any attempt to do so without this consent shall be
null and void.
15.2 Landlord's Right to Terminate Lease. If Tenant desires to assign
its interest in this Lease or to sublease all or any part of the Premises,
Tenant shall notify Landlord in writing. This notice shall be accompanied by:
(a) a statement setting forth the name and business of the proposed assignee or
subtenant; (b) a copy of the proposed assignment or sublease (and any collateral
agreements) setting forth all of the terms and the financial details of the
sublease or assignment (including, without limitation, the term, the rent and
any security deposit, "key money", and amounts payable for Tenant's Property and
the common use of any personnel or equipment); (c) financial statements
certified by an independent certified public accountant and other information
requested by Landlord relating to the proposed assignee or subtenant; and (d)
any other information concerning the proposed assignment or sublease which
Landlord may reasonably request. If Tenant proposes to assign this Lease or
sublet a portion of the Premises exceeding fifty percent (50%) of the total
Rentable Square Footage of the Premises, Landlord shall have the right, in its
sole and absolute discretion, to terminate this Lease, with respect to the
entire Premises in the case of an assignment, or with respect to a sublease, the
portion of the Premises to be sublet, on written notice to Tenant within thirty
(30) days after receipt of Tenant's notice and the information described above
or the receipt of any additional information requested by Landlord. If Landlord
elects to so terminate this Lease as to the Premises, or portion thereof, this
Lease shall terminate as of the effective date of the proposed assignment or
commencement of the term of the proposed sublease as set forth in Tenant's
notice, and Landlord shall have the right (but no obligation) to enter into a
direct lease with the
18
proposed assignee or subtenant. Tenant may withdraw its request for Landlord's
consent at any time prior to, but not after, Landlord delivers a written notice
of termination.
15.3 Consent by Landlord. If Landlord elects not to terminate this Lease
pursuant to Section 15.2, or if a proposed sublease is for less than fifty
percent (50%) of the Rentable Square Feet of the Premises, Landlord shall not
unreasonably withhold its consent to an assignment or subletting. (For purposes
of this Section, an assignment shall not include an assignment for security
purposes, which shall be governed by Section 15.1.) Tenant agrees that the
withholding of Landlord's consent shall be deemed reasonable if all of the
following conditions are not satisfied:
(a) The proposed assignee or subtenant shall use the Premises only
for the Permitted Use, and the business of the proposed assignee or subtenant is
consistent with the other uses and the standards of the Building, in Landlord's
reasonable judgment.
(b) The proposed assignee or subtenant is reputable and has a
reasonable net worth, has a credit rating reasonably acceptable to Landlord, and
otherwise has sufficient financial capabilities to perform all of its
obligations under this Lease or the proposed sublease, in Landlord's reasonable
judgment.
(c) Tenant is not in default.
(d) All of the other terms of this Article are complied with. The
conditions described above are not exclusive and shall not limit or prevent
Landlord from considering additional factors in determining if it should
reasonably withhold its consent.
15.4 Corporate Transaction. A transfer (by one or more transactions) of
a majority of the voting stock of Tenant, other than stock which is publicly
traded on a national exchange, shall be deemed to be an assignment of this Lease
subject to the provisions of this Article. However, these provisions shall not
apply to the transactions with a corporation into or with which Tenant is merged
or consolidated or to which substantially all of Tenant's stock or assets are
transferred or to an affiliate which is an entity which controls, is controlled
by, or is under common control with, Tenant, if the principal purpose of the
merger or transfer is not the assignment of this Lease and Tenant's successor
has a net worth not less than the net worth of Tenant on the execution of this
Lease (the transferee of which shall herein be called a "Permitted Transferee").
Tenant shall cause reasonably satisfactory proof of such net worth to be
delivered at least thirty (30) days prior to the effective date of the
transaction.
15.5 No Release of Tenant. Notwithstanding the granting of Landlord's
consent, no sale, conveyance, mortgage, pledge, subletting, assignment or other
transfer or encumbrance of this Lease or the Premises shall release or alter
Tenant's primary liability to pay rent and perform all of its other obligations
hereunder. The acceptance of rent by Landlord from any person other than Tenant
shall not be a waiver by Landlord of any provision hereof. Consent to one
assignment or subletting shall not be deemed to be consent to any subsequent
assignment or subletting. If any assignee or successor of Tenant defaults in the
performance of any of the terms hereof, Landlord may proceed directly against
Tenant without proceeding against or exhausting its remedies against the
assignee or successor. After any assignment, sublease or other transfer or
encumbrance, Landlord may consent to subsequent assignments, subleases,
transfers or encumbrances, or amendments to this Lease, without notifying Tenant
or any other person, without obtaining consent thereto, and without relieving
Tenant of liability under this Lease.
15.6 Additional Charges. If Landlord consents to any assignment or
sublease, Tenant shall pay the following to Landlord as Additional Rent, after
Tenant has deducted its reasonable expenses associated with any such assignment
or sublease, including, but not limited to, the following: any rental
19
abatement provided as an inducement for an assignment or sublease, any
reasonable tenant improvement allowance, leasing commissions, reasonable
marketing expenses, any lease buy-outs and reasonable legal expenses:
(a) In the case of an assignment, fifty percent (50%) of all amounts
paid or payable to Tenant by the assignee for or by reason of such assignment
(including sums paid or payable for the purchase or rental of all or part of
Tenant's Property).
(b) In the case of a sublease, fifty percent (50%) of the amount by
which the sublease rental exceeds the portion of the Monthly Rent allocable to
the subleased space hereunder throughout the sublease term. In computing this
amount, the sublease rental shall include all rents, charges and other
consideration paid or payable to Tenant under the terms of the sublease and any
collateral agreements. The Monthly Rent hereunder allocable to the subleased
space for any period shall equal the total Monthly Rent accruing during such
period, multiplied by a fraction, the numerator of which is the Rentable Square
Feet of the subleased space and the denominator of which is the Rentable Square
Feet of the Premises.
This Additional Rent shall be paid by Tenant to Landlord as and when received by
Tenant or, at Landlord's option, on written notice to the assignee or subtenant,
Landlord may collect all or any portion of this Additional Rent directly from
the assignee or subtenant. Tenant shall receive a credit against this Additional
Rent in an amount equal to the net unamortized or undepreciated cost of any of
Tenant's Property that is sold to the assignee or sublessee in connection with
such assignment or sublease, determined on the basis of Tenant's federal income
tax returns. This credit shall be prorated over the period during which this
Additional Rent is to be paid, in proportion to the amounts received by Tenant.
Landlord's acceptance or collection of this Additional Rent will not be deemed
to be a consent to any assignment or subletting or a cure of any default under
this Article or the rest of the Lease.
15.7 Additional Terms.
(a) Tenant shall pay the reasonable attorney's fees and other costs
and expenses of Landlord in connection with any request for Landlord's consent
to any sale, conveyance, mortgage, pledge, assignment, sublease or other
transfer or encumbrance, not to exceed $2,500 per consent.
(b) A sublease will be null and void unless it complies with the
rest of this Lease and provides that: (i) it is subject and subordinate to this
Lease and that if there is any conflict or inconsistency between the sublease
and this Lease, this Lease will prevail; (ii) Landlord may enforce all the
provisions of the sublease, including the collection of rent; (iii) it may not
be modified without Landlord's prior written consent and that any modification
without this consent shall be null and void; (iv) if this Lease is terminated or
Landlord reenters or repossesses the Premises, Landlord may, at its option, take
over all of Tenant's right, title and interest as sublessor and, at Landlord's
option, the subtenant shall attorn to Landlord, but Landlord shall not be (x)
liable for any previous act or omission of Tenant under the sublease, (y)
subject to any existing defense or offset against Tenant, or (z) bound by any
previous modification of the sublease made without Landlord's prior written
consent or by any prepayment of more than one month's rent; and (v) it is
ineffective until Landlord gives its written consent thereto.
(c) An assignment will be null and void unless it complies with the
rest of this Lease and provides that: (i) the assignee assumes all of Tenant's
obligations under this Lease and agrees to be bound by all of the terms of this
Lease; and (ii) it is ineffective until Landlord gives its written consent
thereto.
20
(d) The sublease or assignment otherwise must exactly match the
proposed sublease or assignment initially submitted by Tenant. A sublease or
assignment will not be effective until a fully executed counterpart is delivered
to Landlord and Landlord delivers its written consent thereto.
(e) This Article is binding on and shall apply to any purchaser,
mortgagee, pledgee, assignee, subtenant or other transferee or encumbrancer, at
every level.
16. Quiet Enjoyment. So long as Tenant pays all rent and is not in default
hereunder, Tenant shall quietly enjoy the Premises without hindrance or
molestation by Landlord or any person lawfully claiming through or under
Landlord, subject to the terms of this Lease and the terms of any mortgages or
deeds of trust, and all other agreements or matters of record or to which this
Lease is subordinate; provided that Tenant's occupancy and rights under this
Lease shall not be disturbed by any holder of a Superior Mortgage as long as
Tenant is not in default hereunder. As used in this Lease, the term "Superior
Mortgages" means all present and future mortgages, deeds of trust or other
encumbrances, and all renewals, modifications, consolidations, replacements or
extensions thereof or advances made thereunder, affecting all or any portion of
the Premises, the Building or the Land.
17. Mortgagee Protection.
17.1 Subordination. Landlord shall obtain from any Landlord's Mortgagee,
including the existing Landlord's Mortgagee, such Landlord's Mortgagee's written
agreement providing that so long as Tenant is not in default under this Lease,
Tenant's possession of the Premises in accordance with the terms of this Lease
shall not be disturbed. Subject to Landlord providing Tenant such written
nondisturbance agreement from any such Landlord's Mortgagee, this Lease shall be
subordinate to any Superior Mortgage, including any existing Superior Mortgage.
This Section shall be self-operative and no further instrument of subordination
shall be required. However, in confirmation of such subordination, Tenant shall
execute, acknowledge and deliver any instrument in commercially-reasonable form,
acknowledging such subordination and non-disturbance rights of Landlord's
Mortgagee and Tenant, respectively, that Landlord or the lessor, mortgagee or
beneficiary under any of the Superior Mortgages may request, within ten (10)
days after request. (Each of these mortgagees or beneficiaries is called a
"Landlord's Mortgagee"). However, if Landlord, Landlord's Mortgagee or any other
successor to Landlord elects in writing, this Lease shall be deemed superior to
the Superior Mortgages specified, regardless of the date of recording, and
Tenant will execute an agreement confirming this election on request. If
Landlord's Mortgagee or its successor or any successor to Landlord succeeds to
Landlord's interests under this Lease, whether voluntarily or involuntarily,
Tenant shall attorn to such person and recognize such person as Landlord under
this Lease, provided that such person agrees that if Tenant is not in default
under this Lease, Tenant's possession of the Premises in accordance with the
terms of this Lease shall not be disturbed.
17.2 Mortgagee's Liability. The obligations and liabilities of each of
Landlord or Landlord's Mortgagees, or their successors, under this Lease shall
exist only if and for so long as each of these respective parties owns fee title
to the Land and the Building except with respect to the payment of the Tenant
Improvement Allowance which shall remain the obligation of Landlord named herein
until such obligation is assumed in writing by Landlord's successor. No Monthly
Rent or Additional Rent shall be paid more than thirty (30) days prior to the
due date thereof and payments made in violation of this provision shall (except
to the extent that such payments are actually received by a Landlord's
Mortgagee) be a nullity as against Landlord's Mortgagees or their successors and
Tenant shall be liable for the amount of such payments to Landlord's Mortgagees
or their successors.
17.3 Mortgagee's Right to Cure. No act or omission by Landlord which
would entitle Tenant under the terms of this Lease or any Laws to be relieved of
Tenant's obligations hereunder, or to terminate
21
this Lease, shall result in a release or termination of such obligations or this
Lease unless: (a) Tenant first shall have given written notice of Landlord's act
or omission to Landlord and all Landlord's Mortgagees whose names and addresses
shall have been furnished to Tenant; and (b) Landlord's Mortgagees, after
receipt of such notice, fail to correct or cure the act or omission within a
reasonable time thereafter (but in no event less than sixty (60) days). However,
nothing contained in this Section shall impose any obligation on Landlord's
Mortgagees to correct or cure any act or omission.
18. Estoppel Certificates. Tenant shall from time to time, within ten (10) days
after request by Landlord, execute and deliver to Landlord or any other person
designated by Landlord an estoppel certificate, in form satisfactory to
Landlord, which certifies: (a) that this Lease is unmodified and in full force
and effect (or, if there have been modifications, describes them); (b) the
expiration date of the Lease Term and that there are no agreements with Landlord
to extend or renew the Lease Term or to permit any holding over (or if there are
any such agreements, describes them and specifies the periods of extension or
renewal); (c) the date through which the Monthly Rent and additional rent have
been paid; (d) that Landlord is not in default in the performance of any of its
obligations under this Lease (or, if there are any such defaults, describes
them); (e) that Tenant is not entitled to any credits, offsets, defenses or
deductions against payment of the rent hereunder (or, if they exist, describes
them); and (f) such other information concerning this Lease or Tenant as
Landlord or any other person designated by Landlord reasonably shall request. An
estoppel certificate issued by Tenant pursuant to this Article shall be a
representation and warranty by Tenant which may be relied on by Landlord and by
others with whom Landlord may be dealing, regardless of independent
investigation. If Tenant fails to execute and deliver an estoppel certificate as
required hereunder, Landlord's representations concerning the factual matters
covered by such estoppel certificate, as described above, shall be conclusively
presumed to be correct and binding on Tenant.
19. Default. The occurrence of any one or more of the following shall be an
event of default ("Event of Default") and breach under this Lease by Tenant:
(a) The abandonment of the Premises by Tenant.
(b) The failure by Tenant to make any payment of rent or any other
payment required to be made by Tenant hereunder for a period of three (3) days
after such payment is due.
(c) The failure by Tenant to observe or perform any of the
covenants, conditions or provisions of this Lease to be observed or performed by
Tenant, other than those described in subparagraphs (b), (d), (e), (f), (g) and
(h) of this Article 19, where such failure shall continue for a period of
fifteen (15) days after written notice thereof by Landlord to Tenant. However,
if the nature of these defaults is such that more than fifteen (15) days are
reasonably required to cure, then Tenant shall not be deemed to be in default if
Tenant commences such cure within the fifteen (15)-day period and thereafter
diligently completes the cure within sixty (60) days.
(d) The making by Tenant or any guarantor of this Lease of any
general assignment or general arrangement for the benefit of creditors; or the
filing by or against Tenant or any guarantor of this Lease of a petition or
order for relief under any Laws relating to bankruptcy or insolvency (unless, in
the case of a petition filed against Tenant or any guarantor of this Lease, the
petition is dismissed within sixty (60) days); or the appointment of a trustee,
custodian or receiver to take possession of substantially all of Tenant's assets
or the assets of any guarantor of this Lease or of Tenant's interest in this
Lease where possession is not restored to Tenant within thirty (30) days; or the
attachment, execution or judicial seizure of substantially all of Tenant's
assets or of Tenant's interest in this Lease, unless discharged within thirty
(30) days.
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(e) The service by Landlord of a three-day notice under California
Code of Civil Procedure Section 1161 on three or more occasions if the previous
service of the three-day notices did not result in the termination of this
Lease.
(f) A sale, conveyance, mortgage, pledge, assignment, sublease or
other transfer or encumbrance, or any attempt to do so, in violation of Article
15.
(g) Tenant's failure to deliver the estoppel certificate required
under Article 18, or any written instrument required under Section 17 within the
time required.
(h) Tenant's failure to maintain the insurance policies required
hereunder.
The defaults specified in subparagraphs (a), (d), (e) and (f) above shall not be
curable by Tenant, with the default specified in subparagraph (g) uncurable if
not cured within three (3) days after Tenant is given written notice that the
estoppel certificate has not been delivered within the required ten (10) day
period.
20. Remedies for Default.
20.1 General. Upon an Event of Default, Landlord may at any time
thereafter, with or without notice or demand:
(a) Terminate Tenant's right to possession of the Premises by any
lawful means, in which case this Lease shall terminate and Tenant shall
immediately surrender possession of the Premises to Landlord. In such event
Landlord shall be entitled to recover from Tenant all Liabilities incurred by
Landlord or Landlord's Affiliates by reason of Tenant's default, including but
not limited to: (i) the worth at the time of the award of the unpaid Monthly
Rent and Additional Rent which had been earned or was payable at the time of
termination; (ii) the worth at the time of the award of the amount by which the
unpaid Monthly Rent and Additional Rent which would have been earned or payable
after termination until the time of the award exceeds the amount of such rental
loss that Tenant proves could have been reasonably avoided; (iii) the worth at
the time of the award of the amount by which the unpaid Monthly Rent and
Additional Rent which would have been paid for the balance of the term after the
time of award exceeds the amount of such rental loss that Tenant proves could
have been reasonably avoided; and (iv) any other amount necessary to compensate
Landlord for all Liabilities proximately caused by Tenant's failure to perform
its obligations under the Lease or which in the ordinary course of things would
be likely to result therefrom, including, but not limited to, any costs or
expenses incurred by Landlord in maintaining or preserving the Premises, the
Building and the Land after such default, the cost of recovering possession of
the Premises, expenses of reletting, including necessary renovation or
alteration of the Premises, Landlord's attorneys' fees and costs incurred in
connection therewith, and any real estate commissions paid or payable. As used
in subparts (i) and (ii) above, the "worth at the time of the award" is computed
by allowing interest on unpaid amounts at the rate of eighteen percent (18%) per
annum, or such lesser amount as may then be the maximum lawful rate. As used in
subparagraph (iii) above, the "worth at the time of the award" is computed by
discounting such amount at the discount rate of the Federal Reserve Bank of San
Francisco at the time of the award, plus one percent (1%). If Tenant abandons
the Premises, Landlord shall have the option of (x) taking possession of the
Premises and recovering from Tenant the amount specified in this subparagraph,
or (y) proceeding under the provisions of subparagraph (b) below.
(b) Maintain Tenant's right to possession, in which case this Lease
shall continue in effect whether or not Tenant shall have abandoned the
Premises. In such event Landlord shall be entitled to enforce all of Landlord's
rights and remedies under this Lease and at law or in equity, including the
right to recover the rent and other sums and charges as they become due
hereunder.
23
(c) Pursue any other right or remedy now or hereafter available to
Landlord hereunder or at law or in equity.
20.2 Redemption. Tenant waives any and all rights of redemption granted
by or under any Laws if Tenant is evicted or dispossessed for any cause, or if
Landlord obtains possession of the Premises by reason of the violation by Tenant
of any of the terms, covenants or conditions of this Lease, or otherwise.
20.3 Performance by Landlord. If Tenant defaults under this Lease,
Landlord, without waiving or curing the default, may, but shall not be obligated
to, perform Tenant's obligations for the account and at the expense of Tenant.
Notwithstanding Section 19(c), in the case of an emergency, Landlord need not
give any notice prior to performing Tenant's obligations.
20.4 Post-Judgment Interest. The amount of any judgment obtained by
Landlord against Tenant in any legal proceeding arising out of Tenant's default
under this Lease shall bear interest until paid at the maximum rate allowed by
law, or, if no maximum rate prevails, at the rate of eighteen percent (18%) per
annum. Notwithstanding anything to the contrary contained in any Laws, with
respect to any damages that are certain or ascertainable by calculation,
interest shall accrue from the day that the right to the damages vests in
Landlord, and in the case of any unliquidated claim, interest shall accrue from
the day the claim arose.
21. Holding Over. Tenant shall not hold over in the Premises after the
expiration or sooner termination of the Lease Term without the express prior
written consent of Landlord. Tenant shall indemnify Landlord for, and hold
Landlord harmless from and against, any and all Liabilities arising out of or in
connection with any delay by Tenant in surrendering and vacating the Premises,
including, without limitation, any claims made by any succeeding tenant based on
any delay and any Liabilities arising out of or in connection with these claims.
If possession of the Premises is not surrendered to Landlord on the expiration
or sooner termination of the Lease Term, in addition to any other rights and
remedies of Landlord hereunder or at law or in equity, Tenant shall pay to
Landlord for each month or portion thereof during which Tenant holds over in the
Premises a sum equal to one and one-half (1 1/2) times the then-current Monthly
Rent for the first month and thereafter two (2) times the then-current Monthly
Rent in addition to all other rent payable under this Lease. If any tenancy is
created by Tenant's holding over in the Premises, the tenancy shall be on all of
the terms and conditions of this Lease, except that rent shall be increased as
set forth above and the tenancy shall be a month-to-month tenancy. Nothing in
this Article 21 shall be deemed to permit Tenant to retain possession of the
Premises after the expiration or sooner termination of the Lease Term.
22. Indemnification and Exculpation.
22.1 Definitions. As used in this Lease, the following terms have the
meanings set forth below:
(a) Liabilities: all losses, costs, damages, expenses, claims,
injuries, liabilities and judgments, including, but not limited to, attorneys'
fees and costs (whether or not suit is commenced or judgment entered).
(b) Landlord's Affiliates and Tenant's Affiliates: All affiliates,
directors, officers, shareholders, partners, agents, employees, invitees,
customers, successors and assigns of Landlord and Tenant, respectively.
24
(c) Environmental Damages: All claims, judgments, damages, losses,
penalties, fines, liabilities, costs and expenses of defense of any claim and of
any settlement or judgment which are incurred at any time as a result of the
existence of "Hazardous Materials" in, on or about the Premises, or the
existence of a violation of "environmental Requirements" pertaining to the
Premises including, without limitation: (i) damages for personal injury, or
injury to property or natural resources occurring upon or off of the Premises,
foreseeable or unforeseeable; (ii) diminution in the value of the Building;
(iii) reasonable and customary fees incurred for the services of attorneys,
consultants, contractors, experts, laboratories and all other costs incurred in
connection with the investigation or remediation of such Hazardous Materials or
violation of Environmental Requirements including, but not limited to, the
preparation of any feasibility studies or reports or the performance of any
cleanup, remedial, removal, containment, restoration or monitoring work required
by any federal, state or local governmental agency or political subdivision, or
reasonably necessary to make full economic use of the Premises or any other
property or otherwise expended in connection with such conditions, and including
without limitation any reasonable attorneys' fees, costs and expenses incurred
in enforcing this agreement or collecting any sums due hereunder; and (iv)
liability to any third person or governmental agency to indemnify such person or
agency for costs expended in connection with the items referenced in clause
(iii) above.
(d) Environmental Requirements: All applicable present and future
statutes, regulations, rules, ordinances, codes, licenses, permits, orders,
approvals, plans, authorizations, concessions, franchises and similar items, of
all governmental agencies, departments, commissions, boards, bureaus or
instrumentalities of the United States, states and political subdivisions
thereof and all applicable judicial and administrative and regulatory decrees,
judgments and orders relating to the protection of human health, or the
environment, including, without limitation: (i) all requirements pertaining to
reporting, licensing, permitting, investigation and remediation of emissions,
discharges, releases or threatened releases of "Hazardous Materials," chemical
substances, pollutants, contaminants or hazardous or toxic substances, materials
or wastes whether solid, liquid or gaseous in nature, into the air, surface
water, groundwater or land, or relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
chemical substances, pollutants, contaminants or hazardous or toxic substances,
materials or wastes, whether solid, liquid or gaseous in nature; and (ii) all
requirements pertaining to the protection of the health and safety of employees
or the public.
(e) Hazardous Materials: Any substance (i) the presence of which
requires investigation or remediation under any federal, state or local statute,
regulation, ordinance, order, action or policy; or (ii) which is or becomes
defined as a "hazardous waste" or "hazardous substance" under any federal, state
or local statute, regulation or ordinance or amendments thereto; or (iii) which
is toxic, explosive, corrosive, flammable, infectious, radioactive,
carcinogenic, mutagenic or otherwise hazardous and is or becomes regulated by
any governmental authority, agency, department, commission, board, agency or
instrumentality of the United States, the State of California or any political
subdivision thereof; or (iv) the presence of which on the Premises causes or
threatens to cause a nuisance upon the Premises or to adjacent properties or
poses or threatens to pose a hazard to the Premises or the health or safety of
persons on or about the Premises.
22.2 Indemnification.
(a) In addition to any other indemnities required of Tenant
hereunder, Tenant shall indemnify Landlord and Landlord's Affiliates for, and
hold Landlord and Landlord's Affiliates harmless from, any and all Liabilities
arising from or in connection with: (a) the use and occupancy of the Premises by
Tenant or Tenant's Affiliates; (b) the conduct of Tenant's business; (c) any
breach or default under this Lease; (d) claims by any assignee, subtenant,
broker or other person if Landlord declines to consent to any assignment,
sublease or other transfer or encumbrance or terminates this Lease in accordance
with
25
Article 15; and (e) any other acts or omissions of Tenant or Tenant's Affiliates
or persons claiming through or under them.
(b) Tenant shall further indemnify, hold harmless and defend
Landlord from and against any and all claims, actions and liabilities arising
from (i) any Environmental Damages to the extent arising from the presence of
Hazardous Materials upon, within or about the Premises due to any act or
omission of Tenant or any of its agents, tenants, contractors, employees or
subtenants, or (ii) violation of any Environmental Requirements pertaining to
the Premises or the activities therein during the Lease Term, and any extensions
thereof, to the extent not arising from the negligent acts or omissions of
Landlord or Landlord's Affiliates, and (iii) from and against all costs,
attorneys' fees, expenses and liabilities incurred in the defense of any such
claim, action or liability, and any proceeding brought thereon.
(c) If any action or proceeding is brought against Landlord by
reason of any claim described in Subparagraph 22.2(a) or 22.2(b) above, Tenant
shall upon request by Landlord defend the same at Tenant's expense by counsel
reasonably satisfactory to Landlord. However, Tenant shall not be required to
defend, indemnify and hold Landlord harmless to the extent any damage to
property or death or injury to person(s) is occasioned by the negligence or
intentional misconduct of Landlord or its agents, employees, or contractors.
(d) The obligations of Tenant under this Section 22.2 shall not
apply to the extent that a claim referred to therein is covered by insurance
which Landlord is required to maintain under this Lease.
(e) Landlord shall indemnify, hold harmless and defend Tenant from
and against any and all claims, actions and liabilities arising from (i) any
Environmental Damages arising from the presence of Hazardous Materials upon,
within or about the Building or the Land as of the Commencement Date or arising
from the presence of Hazardous Materials upon, within or about the Building due
to any negligent acts or omissions of Landlord or Landlord's Affiliates; or (ii)
violation of any Environmental Requirements pertaining to the Land or the
Building which may have previously occurred or may have occurred as the result
of the negligent acts or omissions of Landlord or Landlord's Affiliates; and
(iii) from and against all costs, attorneys' fees, expenses and liabilities
incurred in the defense of any such claim, action or liability in any proceeding
brought thereon.
22.3 Damage to Persons or Property. Tenant assumes the risk of all
Liabilities it may incur, including, but not limited to, damage or injury to
persons, property and the conduct of Tenant's business (and any loss of revenue
therefrom), the loss of use or occupancy of the Premises, and the items
enumerated below in this Section, and waives all claims against Landlord and
Landlord's Affiliates in connection with: (a) acts or omissions of any tenant of
the Building or any other persons (including, but not limited to, any parking
garage operators or their employees); (b) explosion, fire, steam, electricity,
water, gas or rain, pollution or contamination; (c) the breakage, leakage,
obstruction or other defects of plumbing, HVAC, electrical, sanitary, safety,
elevator or other utilities and systems of the Building or the failure to
furnish any of the foregoing; (d) any work, maintenance, repair, rebuilding or
improvement performed by or at the request of Landlord or Landlord's Affiliates
for the Premises, the Building or the Land; (e) any entry by Landlord or
Landlord's Affiliates on the Premises; (f) any defects in the Premises, the
Building, the Land or any portions thereof; (g) any interference with light or
other incorporeal hereditaments; and (h) any other acts, omissions or causes.
Nothing in this Section exempts Landlord for liability caused solely by its
gross negligence or willful misconduct, but Landlord shall not be liable under
any circumstances for consequential or punitive damages (including, but not
limited to, damage or injury to persons, property and the conduct of Tenant's
business [and any loss of revenue therefrom]). Tenant
26
immediately shall notify Landlord of any defects in the Premises or the Building
or any portion thereof and of any damage or injury thereto or to persons or
property in or about the Premises or the Building.
22.4 Satisfaction of Remedies. Landlord and Landlord's Affiliates shall
not be personally liable for the performance of Landlord's obligations under
this Lease. If Tenant or Tenant's Affiliates acquire any rights or remedies
against Landlord or Landlord's Affiliates (including, but not limited to, the
right to satisfy a judgment), these rights and remedies shall be satisfied
solely from Landlord's estate and interest in the Land and the Building (or the
proceeds therefrom) and not from any other property or assets of Landlord or
Landlord's Affiliates. This Section shall be enforceable by Landlord and
Landlord's Affiliates.
23. Rules and Regulations. Tenant shall faithfully observe and comply with the
reasonable and non-discriminatory rules and regulations that Landlord shall from
time to time promulgate. Landlord reserves the right from time to time in its
sole discretion to make all reasonable additions and modifications to the rules
and regulations, which rules and regulations shall apply to, and be consistent
for, all Tenants of the Building. Any additions and modifications to the rules
and regulations shall be binding on Tenant when delivered to Tenant. Landlord
shall not incur any Liabilities to Tenant or Tenant's Affiliates arising from or
in connection with the nonperformance of any rules and regulations by any other
tenants or occupants of the Building. Landlord's current rules and regulations
are attached hereto as Exhibit "D."
24. Other Taxes. Tenant shall pay, or cause to be paid, before delinquency, any
and all taxes levied or assessed against Tenant's Property. If any or all of
Tenant's Property or any of these leasehold improvements are assessed and taxed
with the Building, Tenant shall pay to Landlord its share of such taxes within
thirty (30) days after delivery to Tenant by Landlord of a statement in writing
setting forth the amount of such taxes.
25. Brokers. Tenant represents and warrants to Landlord that Tenant has had no
dealings with any broker, finder, or similar person who is or might be entitled
to a commission or other fee in connection with introducing Tenant to the
Building or in connection with this Lease, except for Tenant's Broker. Tenant
shall indemnify Landlord for, and hold Landlord harmless from and against, any
and all claims of Tenant's Broker or any other person claiming to have
introduced Tenant to the Building or dealt with Tenant in connection with this
Lease and all Liabilities arising out of or in connection with such claims.
26. Parking. Tenant shall be entitled, at no additional cost, to the use of the
Parking Areas, including the reserved spaces as set forth in Section 2(m)-
"Tenant's Parking" in the Parking Areas. Except as provided in Section 2(m),
unless Landlord elects otherwise, no parking spaces shall be assigned or
reserved for Tenant's parking. Landlord may designate the location of Tenant's
parking, including any spaces reserved for Tenant's parking, and may from time
to time relocate the same. The use of Tenant's parking shall be governed by the
parking rules and regulations adopted from time to time by Landlord. Tenant's
business visitors may park within the Parking Areas on a space-available basis.
Landlord shall not have any Liability or responsibility to Tenant or any other
party parking in the Parking Areas for any loss or damage that may be occasioned
by or may arise out of such parking, including, without limitation, loss of
property or damage to person or property from any cause whatsoever, and Tenant,
in consideration of the parking privileges hereby conferred on Tenant, waives
any and all Liabilities against Landlord, Landlord's Affiliates by reason of
occurrences in the Parking Areas and the driveway exits and entrances thereto;
provided, however, that if any other tenant of the Building is using the Parking
Areas in excess of its proportional share thereof, based on the square footage
of its premises in relation to the square footage of the Building, Landlord
shall exercise its good faith efforts to remedy such excess use. Notwithstanding
anything contained herein to the contrary, Tenant acknowledges that the Premises
provides offices and facilities for a number of employees higher than the number
of parking spaces within the Project which are allocated to Tenant. As such,
Tenant agrees that if Tenant fully utilizes the Premises, Tenant would
27
exceed its permitted usage of the parking facilities and, in such event, Tenant
agrees to take action as required to reduce its usage of the parking facilities
to the permitted number of spaces. Such requirements may include, among other
things, the implementation of a mandatory employee carpooling system, the
renting of additional parking spaces offsite, providing a shuttle system in
conjunction with offsite parking or mass transit facilities or other appropriate
measures.
27. Authority to Enter into Lease. Each individual executing this Lease on
behalf of Tenant represents and warrants that he is duly authorized to execute
and deliver this Lease on behalf of the corporation, in accordance with a duly
adopted resolution of the board of directors of said corporation or in
accordance with the by-laws of said corporation, and that this Lease is binding
on the corporation in accordance with its terms. Tenant shall, within thirty
(30) days of the execution of this Lease, deliver to Landlord a certified copy
of a resolution of the board of directors of the corporation and (c) other
evidence reasonably satisfactory to Landlord authorizing or ratifying the
execution of this Lease. Each individual executing this Lease on behalf of
Landlord represents and warrants that Landlord is a limited partnership duly
formed and validly existing under the laws of the State of California, and is
qualified to do business therein, and that he or she is duly authorized to
execute and deliver this Lease on behalf of the Landlord.
28. Tenant Improvements. Landlord acknowledges that it has reviewed and approved
of Tenant's space plan and proposed improvements to the Premises (the "Tenant
Improvements") to be made by Tenant. All such Tenant Improvements shall be made
at Tenant's sole expense and shall be initiated and completed in accordance with
a duly-executed building permit issued by the City of San Diego. The provisions
of Article 9 shall apply to such tenant improvements. Tenant shall commence
construction of such improvements as soon as practicable following the Access
Date and shall thereafter diligently pursue the same to completion in accordance
with the requirements and provisions of Article 9. Such improvements will
consist of permanent improvements to the Premises required by Tenant, but shall
not include any personal property, trade fixtures or equipment.
29. General Provisions.
29.1 Marginal Headings. The titles to the Articles and Sections of this
Lease are not a part of this Lease and shall have no effect on the construction
or interpretation.
29.2 Time. Time is of the essence for the performance of each and every
provision of this Lease to be performed by Tenant.
29.3 Successors and Assigns. Subject to the restrictions contained in
Article 15 above, this Lease binds the heirs, executors, administrators,
successors and assigns of the Parties hereto.
29.4 Recordation. Tenant shall not record this Lease or a short form
memorandum hereof without the prior written consent of Landlord.
29.5 Late Charges. Tenant acknowledges that late payment of rent will
cause Landlord to incur costs not contemplated by this Lease, the exact amount
of which will be extremely difficult to ascertain. These costs include, but are
not limited to, processing and accounting charges, and late charges which may be
imposed on Landlord by the terms of any Superior Leases and Mortgages.
Accordingly, if any installment of Monthly Rent or payment of additional rent
due from Tenant is not received by Landlord or Landlord's designee within
five(5) days after the amount is due, Tenant shall pay to Landlord a late charge
equal to six percent (6%) of the overdue amount. Acceptance of late charges by
Landlord shall not constitute a waiver of Tenant's default with respect to the
overdue amount, nor prevent Landlord from exercising any of the other rights and
remedies granted hereunder or at law or in equity.
28
29.6 Prior Agreements; Amendment, Waiver. This Lease contains all of the
agreements of the Parties hereto with respect to any matter covered or mentioned
in this Lease, and no prior agreements or understanding pertaining to any such
matters shall be effective for any purpose. No provision of this Lease may be
amended or added to except by an agreement in writing signed by the Parties
hereto or their respective successors in interest. All waivers hereunder must be
in writing and specify the breach, act, omission, term, covenant or condition
waived, and acceptance of rent or other acts or omissions by Landlord shall not
be deemed to be a waiver. The waiver by Landlord of any breach, act, omission,
term, covenant or condition of this Lease shall not be deemed to be a waiver of
any other or subsequent breach, act, omission, term, covenant or condition.
29.7 Inability to Perform. Landlord shall not be in default hereunder
nor shall Landlord be liable to Tenant or Tenant's Affiliates for any
Liabilities if Landlord is unable to fulfill any of its obligations, or is
delayed in doing so, if the inability or delay is caused by reason of accidents,
breakage, strike, labor troubles, acts of God, or any other cause, whether
similar or dissimilar, which is beyond the reasonable control of Landlord.
29.8 Legal Proceedings. In any action or proceeding involving or
relating in any way to this Lease, the court or other person or entity having
jurisdiction in such action or proceeding shall award to the Party in whose
favor judgment is entered the actual attorneys' fees and costs incurred. The
Party in whose favor judgment is entered may, at its election submit proof of
fees and costs as an element of damages before entry of judgment or after entry
of judgment in a postjudgment cost ▇▇▇▇. Tenant also shall indemnify Landlord
for, and hold Landlord harmless from and against, all Liabilities incurred by
Landlord if Landlord becomes or is made a party to any proceeding or action: (a)
instituted by Tenant, or by any third party against Tenant, or by or against any
person holding any interest under or using the Premises by license of or
agreement with Tenant; (b) otherwise arising out of or resulting from any act or
omission of Tenant or such other person; or (c) necessary to protect Landlord's
interest under this Lease in a bankruptcy proceeding, or other proceeding under
Title 11 of the United States Code, as amended, involving Tenant as a debtor. In
any circumstance where Tenant is obligated to indemnify or hold harmless
Landlord or Landlord's Affiliates under this Lease, Tenant also shall defend
Landlord and Landlord's Affiliates with counsel acceptable to Landlord and, to
the extent such defense is covered by Tenant's insurance, by counsel appointed
by Tenant's insurance carrier.
29.9 Conveyance of Premises. As used herein the term "Landlord" means
only the current owner or owners of the fee title to the Building or the lessee
under a ground lease of the Land. Upon each conveyance (whether voluntary or
involuntary) of the Building, the conveying party shall be relieved of all
liability under any and all of its covenants and obligations contained in or
derived from this Lease or arising out of any act, occurrence or omission
occurring after the date of such conveyance. Landlord may sell, assign, convey,
encumber or otherwise transfer all or any portion of its interests in this
Lease, the Premises, the Building or the Land.
29.10 Name. Tenant shall not use the name of the Building or of the
development in which the Building is situated, if any, for any purpose other
than as an address of the business to be conducted by Tenant in the Premises.
29.11 Severability. Any provision of this Lease which shall be held
invalid, void or illegal shall in no way affect, impair or invalidate any of the
other provisions hereof and such other provisions shall remain in full force and
effect.
29.12 Cumulative Remedies. No right, remedy or election hereunder or at
law or in equity shall be deemed exclusive but shall, wherever possible, be
cumulative with all other rights, remedies or elections.
29
29.13 Choice of Law. This Lease shall be governed by the laws of the
State of California applicable to transactions to be performed wholly therein.
29.14 Signs. Tenant shall not place any sign on the Premises, the
Building or the Land, or which is visible from anywhere outside of the Premises,
without Landlord's prior written consent. Subject to Landlord's prior approval
of the color, materials, specifications and a computer-generated presentation of
any such signage, such consent not to be unreasonably withheld if such signage
is tasteful, in keeping with the appearance, style and architecture of the
Building and of appropriate size and dimension, Tenant shall be permitted to
install lobby signage on the second floor and a ground level monument sign,
signage upon which ground level monument sign shall be exclusive to Tenant. The
monument sign shall be located in front of the Building, such location to be
subject to Landlord's prior approval, not to be unreasonably withheld. No other
tenant's monument sign shall be larger than Tenant's in total display area, nor
brighter than Tenant's by reasonably appropriate method of measurement. All the
costs associated with the design, purchase, installation, maintenance and
eventual removal of all such signage shall be borne by Tenant. Landlord, at
Landlord's sole expense, shall provide all building standard lobby directory and
suite identification signage. All signage must conform to all Laws.
29.15 Landlord's Consent. Whenever Landlord's consent or approval is
required hereunder, Landlord shall not unreasonably delay the granting or
withholding of its consent or approval. Except where it is expressly provided
that Landlord will not unreasonably withhold its consent or approval, Landlord
may withhold its consent or approval arbitrarily and in its sole and absolute
discretion.
29.16 Presumptions. This Lease shall be construed without regard to any
presumption or other rule requiring construction against the Party drafting the
document. It shall be construed neither for nor against Landlord or Tenant, but
shall be given reasonable interpretation in accordance with the plain meaning of
its terms and the intent of the Parties.
29.17 Exhibits. All exhibits and any riders annexed to this Lease
including, without limitation, ▇▇▇▇▇▇▇▇ "▇", "▇", "▇","▇" and "E", are
incorporated herein by this reference.
29.18 Submission of Lease. The submission of this Lease to Tenant or its
broker, agent or attorney for review or signature does not constitute an offer
to Tenant to lease the Premises or grant an option to lease the Premises. This
document shall not be binding unless and until it is executed and delivered by
both Landlord and Tenant.
29.19 Meaning of Terms. Whenever required by the context of this Lease,
the singular shall include the plural and the plural shall include the singular,
and the masculine, feminine and neuter genders shall each include the others,
and the word "person" shall include corporations, partnerships or other
entities.
29.20 Notices. All notices, demands or communications required or
permitted under this Lease (the "Notices") shall be in writing and shall be
personally delivered or sent by certified mail, return receipt requested,
postage prepaid. Notices to Tenant shall be delivered to the address set forth
in Section 2(s), except that when Tenant takes possession of the Premises, the
address of the Premises always may be used for the purpose of delivering Notices
to Tenant. Notices to Landlord shall be delivered to the address set forth in
Section 2(h), or such other address as Landlord may specify in writing to
Tenant. Notices shall be effective on the earlier of: delivery; and two (2) days
after they are mailed in accordance with this Section.
30
29.21 Trial by Jury. Tenant hereby waives trial by jury in any action,
proceeding or counterclaim brought by either of the Parties hereto on any
matters whatsoever arising out of or in any way connected with this Lease.
IN WITNESS WHEREOF, the Parties hereto have executed this Lease at the
place and on the dates specified below next to their respective signatures.
"TENANT"
Santarus, Inc., a California
corporation
Executed at San Diego By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
on this 24 day of August, 2001 -------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, MD
Chairman and Chief Executive Officer
Executed at San Diego By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
on this 24 day of August, 2001 -------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Vice President & CFO
"LANDLORD"
Torrey View Associates LP, a
California Limited partnership
By: Torrey View Investment L.P., a
California Limited Partnership
Its General Partner
By: San Diego Realty Advisors, LLC,
a California limited liability
company, its General Partner
Executed at San Diego By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
on this 24 day of August, 2001 ------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
By: Southland Property (Nevada) Inc., a
Nevada corporation which will do
business in the State of California
as Southland Torrey View, Inc.,
Its General Partner
Executed at____________________ By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
on this _____ day of _______, 2001 ---------------------------------
▇▇▇▇▇ ▇▇▇▇▇, President
31
INDEX OF DEFINED TERMS
Term Where Defined
---- -------------
Access Date Article 2
Additional Rent Article 5
Adjustment Date Article 2
Alterations Section 9.1(a)
Base Year Article 2
Building Article 2
Commencement Date Article 2
Common Areas Article 2
Comparison Year Section 7.1(a)
Environmental Damages Section 22.1
Environmental Requirements Section 22.1
Event of Default Article 19
Expiration Date Article 2
Extension Option Section 4.3
Fair Market Rental Value Section 4.5
Final Statement Section 7.5
Hazardous Materials Section 22.1
HVAC Section 9.1(b)
Land Article 2
Landlord Article 1
Landlord's Affiliates Section 22.1(b)
Landlord's Broker Article 2
Landlord's Mortgagee Section 17.1
Laws Section 8.3
Lease Term Article 2
Lease Year Article 2
Letter of Credit Section 6.1
Liabilities Section 22.1(a)
Liens Section 9.3
Monthly Rent Article 2
Operating Expenses Section 7.1(c)
Parking Areas Article 2
Permitted Use Article 2
Premises Article 2
Real Property Taxes Section 7.1(b)
Rent Section 4.1
Rentable Square Feet Article 2
Security Deposit Article 2
Superior Mortgages Article 16
Tenant Article 1
Tenant's Affiliates Section 22.1(b)
Tenant's Broker Article 2
Tenant Improvements Article 2
Tenant's Parking Article 26
Tenant's Share Article 2
Usable Square Feet Article 2
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EXHIBIT "A"
LEASE CONFIRMATION
TO: DATED:
-------------------------
"Tenant"
Re: Office Lease dated ____________________________________, 2000, by and
between _______________, as Landlord, and __________________________________, as
Tenant (the "Lease").
Please acknowledge the following:
(a) The Commencement Date of the Lease is ______, 2000 and the
Expiration Date of the Lease is _____________;
(b) The Rentable Square Feet of the Premises is _________ rentable
square feet, the Usable Square Feet of the Premises is __________ usable square
feet and the Rentable Square Feet of the Building is _________ rentable square
feet;
(c) The Tenant's Share is _________%
Very truly yours,
---------------
By:
------------------------------
Its:
-----------------------------
"Landlord"
Tenant hereby confirms the information set forth above, and further
acknowledges that Landlord has fulfilled its obligations under the
above-referenced Lease.
By:
-----------------------------
Its:
----------------------------
Dated: , 2000
-----------------------------
"Tenant"
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EXHIBIT "B"
FLOOR PLANS OF PREMISES
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EXHIBIT B
[Floor Plan]
EXHIBIT "C"
BASE BUILDING WORK
LANDLORD'S SHELL AND CORE WORK
Landlord shall provide, at its expense and not as a charge against the Tenant
Improvement Allowance, shell and core improvements for the Building, including
the items as outlined below:
1. Flooring. Floors shall be smooth concrete, ready for carpet.
2. Exterior Walls. Exterior walls shall be exposed structure and insulation.
Columns shall also be exposed with no drywall.
3. Ceilings. Ceilings shall be exposed structure.
4. Core Area. The core area on the first floor shall be finished, including main
entrance lobby, exit corridors, and electrical, telephone, mail and janitorial
rooms. The tenant side of the core walls shall be dry walled and fire taped.
Tenant doors into the core area or corridors are not included.
5. Elevators. Two elevators shall be provided with all interior finishes and
elevator doors complete. Finishes on the floors, walls and ceilings of the
elevator lobby on the first floor are part of Landlord's work. Finishes and
elevator lobby doors on the second floor are by Tenant.
6. Washrooms. Men and women's washrooms (including shower and locker facilities
on the first floor) shall be provided by Landlord on both floors with all
plumbing and interior finishes complete. The tenant side of the washroom walls
shall be dry walled and fire taped.
7. HVAC. The Building HVAC is a water source heat pump system. Landlord shall
provide all equipment in the mechanical yard and shall supply condenser water to
the Building and vertical through the Building core to a single point of
connection on each floor. Landlord shall provide heat pumps for the core area on
the first floor. Tenant shall provide heat pumps for washrooms on both floors.
Landlord shall provide make-up air from the roof vertical through the Building
core to a single point of connection on each floor.
8. Electrical. Electrical service to the Building is provided by SDG&E at 2500
Amps, 480Y/277 Volts, 3 Phase, 4 Wire. Landlord shall provide an underground
pull section in the main electrical room and conduit from the main electrical
room to the electrical/telephone rooms on each floor. Landlord shall provide
lighting, electrical outlets and electrical service for the core area on the
first floor. Landlord shall also provide lighting fixtures and outlets in the
washrooms on both floors, but electrical wiring for the washrooms shall be
provided by Landlord to the nearest electrical room only. Service beyond this
point of connection shall be by Tenant.
9. Telephone and Cable. Telephone and Cable conduit from the public street to
the Building is provided to the electrical/telephone room on the first floor.
Landlord shall also provide Tenant with access to a vertical shaft for Tenant's
distribution to the second floor.
10. Fire Sprinklers. Primary fire sprinkler service shall be provided by
Landlord and heads disbursed on floor as required for a shell building.
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11. Security Equipment. Tenant shall, at no additional fee to Landlord, have the
right to in stall security equipment in the Premises. Tenant shall advise
Landlord at least ten (10) days in advance of the planned installation of such
devices. Tenant will be responsible for any damage to the Building caused by
installing such devices.
Tenant acknowledges that Tenant has inspected the Premises and accepts
the Base Building Work as set forth above and the Premises "as-is"
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EXHIBIT "D"
RULES AND REGULATIONS
1. The sidewalks, halls, passages, exits, entrances, elevators and stairways of
the Building shall not be obstructed by any of the tenants or used by them for
any purpose other than for ingress to and egress from their respective premises.
The halls, passages, exits, entrances, malls, elevators and stairways are not
for the general public and Landlord shall in all cases retain the right to
control and prevent access thereto of all persons whose presence in the judgment
of Landlord would be prejudicial to the safety, character, reputation and
interests of the Building and its tenants, provided that nothing herein
contained shall be construed to prevent such access to persons with whom any
tenant normally deals in the ordinary course of its business, unless such
persons are engaged in illegal activities. No tenant and no agent, employee,
contractor, invitee or licensee of any tenant shall go upon the roof of the
Building. Landlord shall have the right at any time, without the same
constituting an actual or constructive eviction and without incurring any
liability to any tenant therefor, to change the arrangement or location of
entrances or passageways, doors or doorways, corridors, elevators, stairs,
toilets and other common areas of the Building.
2. No sign, placard, picture, name, advertisement or notice visible from the
exterior of any tenant's premises shall be inscribed, painted, affixed or
otherwise displayed by any tenant on any part of the Building without the prior
written consent of Landlord.
3. The premises shall not be used for the storage of merchandise held for sale
to the general public or for lodging. No cooking shall be done or permitted on
the premises except that private use by any tenant of Underwriters' Laboratory
approved equipment for brewing coffee, tea, hot chocolate and similar beverages,
for preparation of meals by employees of any such tenant in a manner customary
for an employee lounge or lunchroom, and for catering to serve food in
connection with meetings or receptions will be permitted, provided that such use
is in accordance with all applicable federal, state and municipal laws, codes,
ordinances, rules and regulations.
4. No tenant shall employ any person or persons other than the janitor of
Landlord for the purpose of cleaning its premises unless otherwise agreed to by
Landlord in writing. Landlord shall not be responsible to any tenant for any
loss of property on the premises, however occurring, or for any damage done to
the effects of any tenant by the janitor or any other employee or any other
person. Tenant shall pay to Landlord the cost of removal of any of tenant's
refuse and rubbish, to the extent that the same exceeds the refuse and rubbish
usually attendant upon the use of tenant's premises as offices.
5. Landlord shall designate appropriate entrances and a freight elevator for
deliveries or other movement to or from the premises of equipment, materials,
supplies, furniture or other property, and tenants shall not use any other
entrances or elevators for such purposes. The freight elevator shall be
available for use by all tenants in the Building subject to such reasonable
scheduling as Landlord in its discretion shall deem appropriate. All persons
employed and means or methods used to move equipment, materials, supplies,
furniture or other property in or out of the Building must be approved by
Landlord prior to any such movement. Landlord shall have the right to prescribe
the maximum weight, size and position of all equipment, materials, furniture or
other property brought into the Building. Heavy objects shall, if considered
necessary by Landlord, stand on a platform of such thickness as is necessary
properly to distribute the weight. Landlord will not be responsible for loss of
or damage to any such property from any cause, and all damage done to the
Building by moving or maintaining such property shall be repaired at the expense
of tenants.
6. No tenant shall use or keep in the premises or the Building any kerosene,
gasoline or inflammable or combustible fluid or material. No tenant shall use or
keep or permit to be used or kept any foul or
37
noxious gas or substance in the premises, or permit or suffer the premises to be
occupied or used in a manner offensive or objectionable to Landlord or other
occupants of the Building by reason of noise, odors or vibrations, or interfere
in any way with other tenants or those having business in the Building, nor
shall any animals or birds be brought or kept in the premises or the Building.
7. Landlord shall have the right, exercisable without notice and without
liability to any tenant, to change the name or street address of the Building.
8. Water will be available in public areas for drinking and lavatory purposes
only, but if tenant requests, uses or consumes water for any purpose in addition
to ordinary drinking, dishwashing and lavatory purposes, of which fact tenant
constitutes Landlord to be the sole judge, Landlord may install a water meter
and thereby measure tenant's water consumption for all purposes. Tenant shall
pay Landlord for the cost of the meter and the cost of the installation thereof
and throughout the duration of tenant's occupancy, tenant shall keep said meter
installation equipment in good working order and repair at tenant's own cost and
expense, in default of which Landlord may cause such meter and equipment to be
replaced or repaired and collect the cost thereof from tenant. Tenant agrees to
pay for water consumed, as shown on said meter, as and when bills are rendered,
and on default in making such payment, Landlord may pay such charges and collect
the same from tenant. Any such costs or expenses incurred, or payments made by
Landlord for any of the reasons or purposes hereinabove stated shall be deemed
to be additional rent, payable by tenant, and collectible by Landlord as such.
9. Landlord reserves the right to stop service of the elevator, plumbing,
ventilating, air conditioning and electric systems, when necessary, by reason of
accident or emergency or for repairs, alterations or improvements, in the
judgment of Landlord desirable or necessary to be made, until said repairs,
alterations or improvements shall have been completed, and shall further have no
responsibility or liability for failure to support elevator facilities,
plumbing, ventilating, air conditioning or electric service, when prevented from
doing so by strike or accident or by any cause beyond Landlord's reasonable
control or by laws, rules, orders, ordinances, directions, regulations or
requirements of any federal, state, county or municipal authority or failure of
gas, oil or other suitable fuel supplied or inability by exercise of reasonable
diligence to obtain gas, oil or other suitable fuel. It is expressly understood
and agreed that any covenants on Landlord's part to furnish any service pursuant
to any of the terms, covenants, conditions, provisions or agreements of tenant's
lease or to perform any act or thing for the benefit of tenant, shall not be
deemed breached if Landlord is unable to furnish or perform the same by virtue
of a strike or labor trouble or any other cause whatsoever beyond Landlord's
control.
10. Landlord reserves the right to exclude from the Building between the hours
of 7 P.M. and 7 A.M. Monday through Friday and at all hours on Saturdays,
Sundays and legal holidays all persons who do not present identification
acceptable to Landlord. Landlord shall in no case be liable for damages for any
error with regard to the admission to or exclusion from the Building of any
person. In the case of invasion, mob, riot, public excitement or other
circumstances rendering such action advisable in Landlord's opinion, Landlord
reserves the right to prevent access to the Building during the continuance of
the same by such action as Landlord may deem appropriate, including closing
doors.
11. Each tenant shall ensure that the doors of its premises are closed and
locked and that all water faucets, water apparatus and utilities are shut off
before such tenant or such tenant's employees leave the premises so as to
prevent waste or damage, and for any default or carelessness in this regard,
such tenant shall compensate for all injuries sustained by other tenants or
occupants of the Building or Landlord. On multiple-tenancy floors, all tenants
shall keep the doors to the Building corridors closed at all times except for
ingress and egress.
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12. The toilet rooms, toilets, urinals, wash bowls and other apparatus shall not
be used for any purpose other than that for which they were constructed, no
foreign substance of any kind whatsoever shall be thrown therein, and the
expense of any breakage, stoppage or damage resulting from the violation of this
rule shall be paid by the tenant who, or whose agent, employee, contractor,
invitee or licensee, caused it.
13. No tenant shall install any radio or television antenna, loudspeaker, or
other device on the roof or exterior walls of the Building. No television or
radio or recorder shall be played in such a manner as to cause a nuisance to any
other tenant.
14. Each tenant shall store all its trash and garbage within its premises. No
material shall be placed in the trash boxes or receptacles if such material is
of such nature that it may not be disposed of in the ordinary and customary
manner of removing and disposing of office building trash and garbage in the
City of San Diego without being in violation of any law or ordinance governing
such disposal. All garbage and refuse disposal shall be made only through
entryways and elevators provided for such purposes and at such times as Landlord
shall designate.
15. Canvassing, soliciting, distribution of handbills or any other written
material and peddling in the Building are prohibited, and each tenant shall
cooperate to prevent the same.
16. Landlord may waive any one or more of these Rules and Regulations for the
benefit of any particular tenant or tenants, but no such waiver by Landlord
shall be construed as a waiver of such Rules and Regulations in favor of any
other tenant or tenants, nor prevent Landlord from thereafter enforcing any such
Rules and Regulations against any or all of the tenants of the Building.
17. These Rules and Regulations are in addition to, and shall not be construed
to in any way modify or amend, in whole or in part, the agreements, covenants,
conditions and provisions of any lease of premises in the Building.
39
EXHIBIT "E"
SCHEDULE OF TENANT IMPROVEMENTS
TENANT IMPROVEMENTS
Subject to Landlord's reasonable approval, Tenant shall perform and manage all
work regarding the design, permitting and construction of the Tenant
Improvements. Tenant Improvements include all hard costs of materials, labor,
improvements, costs, fees and expenses, which are in addition to the Landlord's
shell and core work as outlined above, as well as directly related soft costs,
including design and other professional fees, governmental processing costs,
building permit fees, and project management.
Tenant shall engage its own design and construction team, including
architect/space planner, interior designer, engineers, governmental permit
consultant, contractor (based in part on competitive bidding), project manager
and any other consultant or professional necessary to complete the work.
1. Tenant Improvement Drawings. Within thirty (30) days of Lease execution,
Tenant shall select and contract with its architect/space planner.
Within thirty (30) days of Lease execution, Tenant shall complete for
review and approval by Landlord and Tenant a single line drawing of the
Premises (the "Space Plan") which describes the anticipated Tenant
Improvements in sufficient detail to allow for the preparation of the
Tenant Improvement Budget, as described below. Within sixty (60) days of
Lease execution, Tenant shall complete final working drawings and
specification (the "Construction Documents") in substantial conformance
with the Space Plan and in sufficient detail to (i) obtain all required
governmental permits, (ii) obtain a construction contract and (iii)
construct the work described therein.
2. Budget. Upon completion of the Space Plan, Tenant shall obtain from one
or more previously approved contractors an itemized estimate for the
hard cost of constructing the Tenant Improvements. This hard cost shall
be included with all other soft costs regarding Tenant Improvements into
one budget (the "Tenant Improvement Budget").
3. Schedule. Upon completion of the Space Plan, Tenant shall complete an
itemized schedule of design, permitting and construction tasks (the "TI
Schedule") necessary to complete the Tenant Improvements. The TI
Schedule shall include the critical dates of (i) Tenant access to the
Building for commencement of Tenant Improvements and (ii) Tenant move-in
and rent commencement by October 18, 2001.
4. Landlord Approvals. Landlord has approved of the Space Plan. Tenant
shall warrant that the construction of the Tenant Improvements shall be
in substantial conformance with the general quality of tenant
improvements in other comparable office buildings in the Del Mar Heights
market area.
5. Building Permit. Upon completion and approval of the Construction
Documents, Tenant shall complete all necessary forms and applications
and shall apply for and diligently process to completion all required
governmental permits and approvals for construction of the Tenant
Improvements.
6. Construction. Upon completion and approval of the Construction
Documents, Tenant shall obtain from several previously approved
contractors competitive bids for the cost of the Tenant Improvements.
40
Upon approval of the TI Contract and the acquisition of all necessary
governmental permits, Tenant shall proceed with and diligently manage to
completion the construction of the Tenant Improvements in a professional
and workmanlike manner.
7. Substantial Completion. Substantial completion of the Tenant
Improvements shall be evidenced when (i) a certificate of occupancy
(permanent or temporary) has been issued for the Premises, (ii) all
Building systems are in good working order to support the operation of
the Premises, and (iii) the Tenant Improvements are complete excepting
industry standard punchlist items.
41