LEASE
Dated
November 1, 1996
Between
DM SPECTRUM LLC,
a California limited liability company,
as Landlord
and
MAXIM PHARMACEUTICALS, INC.,
a Delaware corporation,
as Tenant
For
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
TABLE OF CONTENTS
Page
----
DEFINITION OF TERMS............................................. viii
1. Premises.................................................... 1
1.1 Building and Land....................................... 1
1.2 Parking and Other Common Area........................... 1
1.3 CC&Rs and PID Permit.................................... 1
2. Basic Lease Provisions........................................ 1
2.1 Address of the Demised Premises.......................... 1
2.2 Rentable Area............................................ 2
2.3 Initial Basic Rent....................................... 2
2.4 Improvements............................................. 2
2.5 Term..................................................... 2
2.6 Permitted Uses........................................... 2
2.7 Addresses............................................... 2
2.8 Security Deposit......................................... 2
2.9 Tenant's Share........................................... 2
2.10 Exhibits................................................ 3
3. Term.......................................................... 3
3.1 Binding Effect........................................... 3
4. Possession.................................................... 3
4.1 Substantial Completion................................... 3
4.2 Notice................................................... 3
4.3 Cancellation............................................. 4
5. Rent.......................................................... 4
5.1 Basic Rent............................................... 4
5.2 Commencement............................................. 4
5.3 Additional Rent.......................................... 4
5.4 Rent..................................................... 4
5.5 Proration................................................ 5
5.6 Net Lease................................................ 5
5.7 Annual Increase.......................................... 5
5.8 Security Deposit......................................... 5
5.9 Security Interest........................................ 6
6. Common Areas.................................................. 6
6.1 Common Areas - Definition................................ 6
6.2 Common Areas - Rules and Regulations..................... 6
6.3 Common Areas - Changes................................... 6
6.4 Parking.................................................. 7
6.5 Temporary Parking and Access Easement.................... 8
6.6 Vehicular Access......................................... 9
6.7 Interruption of Tenant's Business........................ 9
7. Operating Expenses............................................ 9
7.1 Tenant's Portion......................................... 9
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7.2 Operating Expenses....................................... 10
7.3 Exceptions............................................... 11
7.4 Payment to Landlord and Estimate ........................ 13
7.5 Reconciliation........................................... 13
7.6 Monthly Proration........................................ 13
7.7 Audit.................................................... 14
7.8 Continuation............................................. 14
7.9 Annual Proration......................................... 14
8. Rentable Area................................................. 14
8.1 Rentable Area............................................ 14
8.2 Agreement Regarding Rentable Area........................ 15
9. Use .......................................................... 15
9.1 Use...................................................... 15
9.2 Compliance with Law...................................... 15
9.3 Insurance Requirements .................................. 15
9.4 Key to Premises.......................................... 16
9.5 Load Rating.............................................. 16
9.6 Unlawful Purpose......................................... 16
9.7 Additional Limitations................................... 16
9.8 Access to Demised Premises............................... 17
10. Brokers....................................................... 17
10.1 Tenant's Representation................................. 17
10.2 Landlord's Representation............................... 18
11. Holding Over.................................................. 18
11.1 Holding Over with Consent............................... 18
11.2 Holding Over without Consent............................ 18
11.3 No Renewal.............................................. 18
11.4 No Waiver............................................... 18
12. Taxes on Tenant's Property.................................... 19
12.1 Payment of Taxes........................................ 19
12.2 Advance by Landlord..................................... 19
13. Condition of Demised Premises................................. 19
13.1 Landlord's Work......................................... 19
13.2 As Is Condition......................................... 19
13.3 No Representation....................................... 20
13.4 Disclosure.............................................. 20
13.5 Walk Through Inspection................................. 20
14. Utilities and Services........................................ 21
14.1 Utilities and Services.................................. 21
14.2 No Liability............................................ 21
14.3 No Increase in Requirements............................. 21
15. Alterations................................................... 22
15.1 No Alterations.......................................... 22
15.2 Service Facilities...................................... 22
15.3 Exterior Changes........................................ 22
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15.4 Signs................................................... 23
15.5 Compliance with Law..................................... 23
15.6 Prior Notice............................................ 23
15.7 Property of Landlord.................................... 23
15.8 Removal................................................. 23
15.9 Personal Property....................................... 23
16. Repairs and Maintenance....................................... 24
16.1 Landlord's Obligation................................... 24
16.2 Tenant's Sole Cost...................................... 25
16.3 Notice and Landlord's Right to Repair, Replace and
Maintain the Demised Premises.......................... 26
16.4 No Liability............................................ 26
16.5 Damage or Destruction................................... 27
17. Liens......................................................... 27
17.1 No Liens................................................ 27
17.2 Advance by Landlord..................................... 27
17.3 Financing Statements.................................... 27
18. Indemnification and Exculpation............................... 28
18.1 Indemnification by Tenant............................... 28
18.2 Indemnification by Landlord............................. 28
18.3 No Liability of Landlord................................ 28
18.4 Assumption of Risk...................................... 29
18.5 Security Devices........................................ 29
19. Insurance - Waiver of Subrogation............................. 29
19.1 Landlord's Insurance.................................... 29
19.2 Tenant's Insurance...................................... 30
19.3 Additional Insureds..................................... 30
19.4 Fixtures and Other Items................................ 30
19.5 Lender and Others....................................... 31
19.6 Waiver of Subrogation................................... 31
19.7 Increases in Insurance.................................. 31
20. Damage or Destruction......................................... 32
20.1 Partial Destruction..................................... 32
20.2 Other Destruction....................................... 32
20.3 Uninsured Damage........................................ 32
20.4 Election Not to Repair.................................. 33
20.5 Release................................................. 33
20.6 Abatement of Rent ...................................... 33
20.7 Tenant's Property....................................... 33
20.8 Damage at End of Term................................... 33
21. Eminent Domain................................................ 34
21.1 Taking.................................................. 34
21.2 Restoration............................................. 34
21.3 Award................................................... 34
22. Defaults and Remedies......................................... 34
22.1 Late Charge............................................. 34
22.2 No Waiver............................................... 35
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22.3 Performance by Landlord................................. 35
22.4 Events of Default....................................... 35
22.5 Remedies................................................ 36
22.6 Right of Re-Entry....................................... 37
22.7 Proceeds of Reletting................................... 37
22.8 Non-Exclusive........................................... 38
22.9 No Relief............................................... 38
23. Assignment or Subletting...................................... 38
23.1 Assignment or Subletting................................ 38
23.2 Notice.................................................. 39
23.3 Approval................................................ 39
23.4 Excess Rent............................................. 40
23.5 Transfer Void........................................... 40
23.6 Further Assignment...................................... 40
23.7 No Waiver............................................... 40
23.8 Hazardous Materials Test................................ 40
23.9 Assumption.............................................. 40
24. Attorneys' Fees............................................... 40
24.1 Attorneys' Fees......................................... 40
24.2 Action.................................................. 41
25. Bankruptcy.................................................... 41
26. Landlord...................................................... 41
26.1 Landlord................................................ 41
26.2 Limit on Landlord's Liability........................... 42
26.3 Right to Cure........................................... 42
26.4 Lender's Right to Cure.................................. 42
27. Estoppel Certificate.......................................... 42
28. Joint and Several Obligations................................. 43
29. Limitation of Landlord's Liability............................ 43
29.1 Limitation.............................................. 43
29.2 Applicability........................................... 44
30. Demised Premises Control by Landlord.......................... 44
31. Quiet Enjoyment............................................... 44
32. Quitclaim Deed................................................ 44
33. Subordination and Attornment.................................. 44
33.1 Subordination .......................................... 44
33.2 Additional Instruments.................................. 44
33.3 Attornment.............................................. 45
33.4 Amendment............................................... 45
34. Surrender..................................................... 45
34.1 No Release.............................................. 45
34.2 Assignment.............................................. 45
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34.3 No Merger............................................... 45
35. Waiver and Modification....................................... 45
36. WAIVER OF JURY TRIAL.......................................... 45
37. Hazardous Material............................................ 46
37.1 Prohibition/Compliance.................................. 46
37.2 Termination of Lease.................................... 48
37.3 Assignment and Subletting............................... 49
37.4 Condition............................................... 49
37.5 Perform Tests........................................... 49
37.6 Tenant's Obligations.................................... 50
37.7 Definition of Hazardous Material........................ 50
38. Miscellaneous................................................. 51
38.1 Terms and Headings...................................... 51
38.2 Examination of Lease.................................... 51
38.3 Time.................................................... 51
38.4 Covenants and Conditions................................ 51
38.5 Consents................................................ 51
38.6 Entire Agreement........................................ 51
38.7 Severability............................................ 51
38.8 Recording............................................... 51
38.9 Impartial Construction.................................. 52
38.10 Inurement............................................... 52
38.11 Force Majeure........................................... 52
38.12 Notices................................................. 52
38.13 Exhibits................................................ 52
38.14 Modification............................................ 52
38.15 Periods of Time......................................... 53
38.16 Choice of Law........................................... 53
38.17 Interpretation.......................................... 53
38.18 Merger.................................................. 53
38.19 Financial Statements.................................... 53
39. Contingencies................................................. 53
39.1 Lender.................................................. 53
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EXHIBITS
A-1 Legal Description of Land
A-2 Conceptual Site Plan
A-3 Demised Premises
B Construction Exhibit
C Form of Estoppel Letter from Tenant
D Acknowledgment of Rent Commencement Date
E Form of Subordination Agreement
F Option to Extend Term
G Rules and Regulations for Acid Neutralization System
H-1 List of Personal Property Security
H-2 Form of Initial UCC Financing Statement
I Joint Service Space
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DM SPECTRUM/MAXIM PHARMACEUTICALS LEASE
DEFINITION OF TERMS
Section Location Where
Defined (Letter Preceding
Section Number Refers to
Term Exhibit)
---- -------------------------
Additional Rent 5.3
Arbitrator B:6.1
Assignment Date 23.2
Assignment Notice 23.2
Basic Rent 5.1
Building 1.1
CC&Rs 1.3
City B:1.9.1
City Required Changes B:1.9.1
Common Areas 6.1
Conditional Default 15.9
Construction Delay Termination Date 4.3
Construction Documents B:1.6.2
Construction Exhibit (Exhibit B) 1.1
Default 22.4
Demised Premises 1.1
Development Schedule B:1.3
Documents 37.1.2
Estimated Possession Date 4.1
Extended Term F:2
Extended Term Initial Basic Rent F:2.3
Extension Notice F:2.1(a)
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Section Location Where
Defined (Letter Preceding
Section Number Refers to
Term Exhibit)
---- -------------------------
Fair Rental Value F:2.3 and F:3(d)
Force Majeure Delays B:4.1(d)
Generic Facility Improvements B:1.2.1
Hazardous Material(s) 37.7
Hazardous Materials List 37.1.2
Improvement Plans B:1.2.6
Initial Basic Rent 2.3
Initial Landlord Contribution B:1.6.1
Joint Service Space 7.1
Land 1.1
Landlord Intro.
Landlord's Agents 18.1
Landlord's Arbitration Representatives B:6.1
Landlord's Work B:1.2.4
LJ Spectrum 6.5
Necessary Capital Replacements 16.2
Notice of Intention to Extend F:2.1(a)
Operating Expenses 7.2
PID Improvements 6.5
PID Permit 1.3
Project 1.1
Project Architect B:1.1.1
Project Contractor(s) B:1.1.1
Rent 5.4
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Section Location Where
Defined (Letter Preceding
Section Number Refers to
Term Exhibit)
---- -------------------------
Rentable Area 8.1
Schematic Design Drawings B:1.1.1
Security Deposit 2.8
Specifications B:1.1.1
Subdivision 6.5
Substantially Complete(d) and Substantial Completion 4.1
Temporary Parking and Access Easement 6.5
Tenant Intro.
Tenant-Caused Delays B:4.1(b)
Tenant Changes B:3.1.2
Tenant Equipment B:2.1
Tenant's Agents 18.1
Tenant's Arbitration Representatives B:6.1
Tenant's Capital Operating Expense Threshold 7.2
Tenant's Contribution B:1.8.3
Tenant's Earthquake Insurance Expense Stop 19.1
Tenant's Representative B:5.1
Tenant's Share 2.9
Tenant's Utility Systems 16.2
Tenant's Work B:2.1
Term Expiration Date 2.5
Term Commencement Date 5.2
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LEASE
THIS LEASE is dated for reference purposes as of November 1, 1996, and is
entered into by and between DM Spectrum LLC, a California limited liability
company (hereinafter called "Landlord"), and Maxim Pharmaceuticals, Inc., a
Delaware corporation ("Tenant").
1. PREMISES.
1.1 BUILDING AND LAND. Landlord hereby leases to Tenant and Tenant
hereby leases from Landlord during the term of this Lease, on the terms and
conditions set forth herein, those certain premises (hereinafter referred to
as the "Demised Premises") located in the building (the "Building") at ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ and shown on the floor plan attached
hereto as EXHIBIT A-3. The Building is a two-story steel frame structure
containing 64,800 square feet of Rentable Area (as defined in Section 8.1
below) which includes the Demised Premises. The land upon which the Building
is located is legally described in EXHIBIT A-1 attached hereto and together
with all the improvements thereto, except the Building, is defined as the
"Land." The Land and Building shall hereinafter collectively be referred to
as the "Project." The conceptual site plan for the future Land improvements
to be constructed in conformance with the PID Permit (defined below) and the
current location of the Building is attached hereto as EXHIBIT A-2. Landlord
shall make certain improvements to the Demised Premises, Building, Land and
Common Area as described in the Construction Exhibit which is attached hereto
as EXHIBIT B (the "Construction Exhibit").
1.2 PARKING AND OTHER COMMON AREA. Landlord also grants to Tenant,
subject to the terms of this Lease, non-exclusive rights to use the Common
Area (as defined in Section 6 below), including the parking areas, on the
terms set forth herein.
1.3 CC&RS AND PID PERMIT. This Lease is subject to that certain
Declaration of Protective Covenants for La Jolla Spectrum dated February 1,
1996, and recorded in the Official Records of the County Recorder of San
Diego County, California, as the same may be amended from time to time (the
"CC&Rs") and that certain Planned Industrial Development Permit No. 89-0269
approved by the City of San Diego, as the same may be amended from time to
time (the "PID Permit").
2. BASIC LEASE PROVISIONS. For convenience of the parties, certain
basic provisions of this Lease are set forth herein. The provisions set
forth herein are subject to the remaining terms and conditions of this Lease
and are to be interpreted in light of such remaining terms and conditions.
2.1 ADDRESS OF THE DEMISED PREMISES. The address of the Demised
Premises is: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
2.2 RENTABLE AREA. The Rentable Area of the Building is agreed to
be sixty-four thousand eight hundred (64,800) square feet and the Rentable
Area of the Demised Premises is agreed to be nine thousand one hundred
fifty-seven (9,157) square feet located on the first floor of the Building.
2.3 INITIAL BASIC RENT. The "Initial Basic Rent" shall be Two and
50/100 Dollars ($2.50) per square foot of Rentable Area of the Demised
Premises (9,157) per month.
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2.4 IMPROVEMENTS. Landlord shall provide to Tenant the Generic
Facility Improvements pursuant to the Construction Exhibit attached hereto as
EXHIBIT B.
2.5 TERM. The term of this Lease shall commence on the "Term
Commencement Date" set forth in Section 5.2 below and shall continue through
the Term Expiration Date. As used herein, the "Term Expiration Date" shall
mean November 30, 2001, unless such date is extended pursuant to the terms of
EXHIBIT F of this Lease.
2.6 PERMITTED USES. Biotechnology and/or life sciences laboratory
and administrative space, subject to the provisions of this Lease and all
laws, ordinances, regulations, covenants, conditions and restrictions.
2.7 ADDRESSES.
Address for Rent Payment and Notices to Landlord:
DM Spectrum LLC
c/o Del Mar Partnership, Inc.
Att'n: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Address for Notices to Tenant:
Maxim Pharmaceuticals, Inc.
Att'n: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
2.8 SECURITY DEPOSIT. The "Security Deposit" is equal to Two
Hundred Thousand Dollars ($200,000).
2.9 TENANT'S SHARE. "Tenant's Share" is equal to a fraction with a
numerator equal to the square footage of the Rentable Area of the Demised
Premises (9,157) and a denominator equal to the square footage of the
Rentable Area of the Building (64,800).
2.10 EXHIBITS. The following exhibits are attached hereto and
incorporated herein by this reference, and Landlord and Tenant hereby agree
to the terms of these exhibits:
EXHIBIT TITLE
A-1 Legal Description of Land
A-2 Conceptual Site Plan
A-3 Demised Premises
B Construction Exhibit
C Form of Estoppel Letter from Tenant
D Acknowledgment of Rent Commencement Date
E Form of Subordination Agreement
F Option to Extend Term
G Rules and Regulations for Acid Neutralization System
H-1 List of Personal Property Security
H-2 Form of Initial UCC Financing Statement
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I Joint Service Space
3. TERM.
3.1 BINDING EFFECT. This Lease and each of the provisions hereof
shall be binding upon and inure to the benefit of Landlord and Tenant from
the date of execution hereof by all parties hereto.
4. POSSESSION.
4.1 SUBSTANTIAL COMPLETION. Landlord shall endeavor to tender
possession of the Demised Premises to Tenant on or before December 25, 1996
(the "Estimated Possession Date"), with the work required of Landlord
("Landlord's Work") as described in the Construction Exhibit Substantially
Completed. The terms "Substantially Complete(d)" and "Substantial
Completion" shall mean the date that occupancy of that portion of the Demised
Premises shall be allowed by the City of San Diego, with such premises in
clean condition. Until such time as Landlord tenders to Tenant possession of
the Demised Premises, Tenant shall have no right to occupancy or possession
thereof.
4.2 NOTICE. In the event Landlord reasonably determines that it
will be unable to tender possession of the Demised Premises on or before the
Estimated Possession Date, Landlord shall, not later than ten (10) days prior
to the Estimated Possession Date, give written notice to Tenant of the date
Landlord anticipates being able to tender possession to Tenant.
4.3 CANCELLATION. If the date of Substantial Completion of
Landlord's Work and the tender of possession of the Demised Premises is later
than thirty (30) days after the Estimated Possession Date plus the number of
days of "Tenant-Caused Delays" and "Force Majeure Delays," as the same are
defined in the Construction Exhibit (the "Construction Delay Termination
Date"), then Tenant may, at Tenant's option, exercisable by written notice
delivered to Landlord within ten (10) days of the Construction Delay
Termination Date, terminate this Lease. Such right to terminate shall be
Tenant's only remedy and Landlord shall have no other liability with respect
thereto.
5. RENT.
5.1 BASIC RENT. Tenant agrees to pay Landlord as "Basic Rent,"
commencing as set forth below, the sum per square foot per month of Rentable
Area determined pursuant to Section 2.3, subject to the annual rental
increases provided in Section 5.7 hereof. Basic Rent shall be paid in
advance on the first day of each and every calendar month during the term of
this Lease.
5.2 COMMENCEMENT. Basic Rent for the Demised Premises, calculated
upon the agreed upon Rentable Area, shall commence upon the "Term
Commencement Date," which shall be the earlier of (i) the date Landlord
delivers possession of the Demised Premises to Tenant with Landlord's Work
Substantially Complete; (ii) the date Tenant actually accepts possession of
the Demised Premises; or (iii) the date that Landlord's Work would have been
Substantially Completed but for Tenant-Caused Delays (as set forth in the
Construction Exhibit). Notwithstanding anything to the contrary in this
Lease, Landlord shall provide Tenant with no less than ten (10) days prior
notice in writing that the Demised Premises are, or shortly shall be,
available for occupancy. Landlord shall execute and deliver to Tenant for
its signature written acknowledgement in the form of EXHIBIT D hereto of the
actual date upon which rent commenced
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for the Demised Premises when such is established and shall attach it to this
Lease as EXHIBIT D; provided, however, failure to execute and deliver such
acknowledgement shall not affect Tenant's liability hereunder.
5.3 ADDITIONAL RENT. In addition to Basic Rent, commencing on the
Term Commencement Date and throughout the term of this Lease, Tenant agrees
to pay to Landlord as additional rent ("Additional Rent") (i) Tenant's
portion of all Operating Expenses as provided in Section 7 herein, and (ii)
any other amounts that Tenant is obligated to pay and/or assumes or agrees to
pay under the provisions of this Lease that are owed to Landlord, including,
without limitation, any and all other sums that may become due by reason of
any Default under this Lease or any other failure by Tenant to comply with
the agreements, terms, covenants and conditions of this Lease.
5.4 RENT. Basic Rent and Additional Rent shall together be
denominated "Rent." Except as specifically set forth in this Lease, Rent
shall be paid to Landlord without abatement, deduction or offset, in lawful
money of the United States of America at the office of Landlord as set forth
in Section 2.7, or to such other person or at such other place as Landlord
may from time to time designate in writing.
5.5 PRORATION. In the event that (i) Rent commences on a day other
than the first day of a calendar month or (ii) this Lease terminates on a day
other than the last day of a calendar month for any reason other than a
Default by Tenant, Rent shall be prorated with respect thereto on the basis
of a thirty (30) day month and shall be due and payable for such prorated
portion of the month on the date that Rent commences or the first day of the
month in which this Lease terminates, respectively.
5.6 NET LEASE. This is a net lease and all rent and other monetary
obligations shall be paid without notice or demand and without set-off,
counterclaim, recoupment, abatement, suspension, deferment, diminution,
deduction, reduction or defense except as expressly set forth in this Lease.
5.7 ANNUAL INCREASE. On each anniversary of the Term Commencement
Date, the Basic Rent shall be adjusted upward (to the nearest one hundredth
of one cent per square foot of Rentable Area) to equal one hundred four
percent (104%) of the monthly Basic Rent for the month immediately preceding
the adjustment date.
5.8 SECURITY DEPOSIT. Concurrently herewith Tenant shall deliver
to Landlord, in cash, the Security Deposit as security for Tenant's faithful
performance of Tenant's obligations under this Lease. If Tenant fails to pay
Rent or any other charges due hereunder before the expiration of any
applicable cure period, or otherwise is in Default under this Lease, Landlord
may use, apply or retain all or any portion of the Security Deposit for the
payment of any amount due Landlord or to reimburse or compensate Landlord for
any liability, cost, expense, loss or damage (including reasonable attorneys'
fees) which Landlord may suffer or incur by reason thereof. Any such use or
application shall not cause a waiver or cure of any Default under this Lease.
If Landlord uses or applies all or any portion of the Security Deposit,
Tenant shall within ten (10) days after written request therefor deposit
monies with Landlord sufficient to restore the Security Deposit to the full
amount thereof set forth in Section 2.8 above. Landlord shall not be required
to keep all or any part of the Security Deposit separate from its general
account. Landlord shall, at the expiration or earlier termination of the term
of this Lease, and after Tenant has vacated the Demised Premises in
accordance with the terms of this Lease, return to Tenant (or, at Landlord's
option, to the last assignee, if any, of Tenant's interest herein unless
Tenant has instructed Landlord in writing to return the Security Deposit to
Tenant), that portion of the
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Security Deposit not used or applied by Landlord together with interest on
any portion of the Security Deposit held by Landlord and not applied pursuant
to the terms hereof, at a rate equal to six percent (6%) per annum,
compounded. Unless otherwise expressly agreed in writing by Landlord, no part
of the Security Deposit shall be considered to be held in trust, or to be
prepayment for any monies to be paid by Tenant under this Lease.
5.9 SECURITY INTEREST. Tenant hereby conveys to Landlord a first
priority security interest pursuant to the California Uniform Commercial Code
in all equipment and personal property of Tenant specified in EXHIBIT H-1
hereto (and any and all proceeds, substitutions, additions, accessions,
replacements, increases and products of any such equipment) for the purpose
of securing Tenant's obligations under this Lease, including but not limited
to the payment of Rent. Such security interest shall be a second priority
security interest in any particular items of equipment which are subject only
to a purchase money security interest (including an equipment lease) and
shall be a first priority interest in all other equipment and personal
property described in EXHIBIT H-1. Tenant shall from time to time cause to
be executed, filed and/or recorded, within five (5) business days of request
therefor by Landlord, such financing statements as are reasonably necessary
and/or requested by Landlord to perfect such security interest, including but
not limited to a financing statement in the form of EXHIBIT H-2 hereto to be
filed concurrently with the execution of this Lease.
6. COMMON AREAS.
6.1 COMMON AREAS - DEFINITION. The term "Common Areas" is defined
as all areas and facilities outside the Demised Premises and any other
tenant's demised premises and within the exterior boundary line of the
Project that are provided and designated by Landlord from time to time for
the general non-exclusive use of Landlord, Tenant and other tenant(s) of the
Project and their respective employees, suppliers, shippers, customers and
invitees, including but not limited to common entrances, lobbies, corridors,
stairways and stairwells, public restrooms, elevators, mechanical and
electrical rooms, parking areas to the extent not otherwise prohibited by
this Lease, loading and unloading areas, trash areas, roadways, sidewalks,
walkways, parkways, ramps, driveways, landscaped areas and decorative walls.
6.2 COMMON AREAS - RULES AND REGULATIONS. Tenant agrees to abide
by and conform to the reasonable rules and regulations adopted by Landlord
from time to time with respect to the Building and Common Areas, and to cause
its employees, suppliers, shippers, customers, and invitees to so abide and
conform. Landlord or such other person(s) as Landlord may appoint shall have
the exclusive control and management of the Common Areas and shall have the
right, from time to time, to reasonably modify, amend and enforce such rules
and regulations; provided, however, that any such modifications and
amendments do not unreasonably interfere with Tenant's use and enjoyment of
the Demised Premises and the Common Areas. Landlord shall attempt in good
faith to enforce the rules and regulations in a diligent manner with respect
to all tenants of the Building, but Landlord shall not be responsible to
Tenant for the non-compliance with such rules and regulations by other
lessees, their agents, employees and invitees of the Building.
6.3 COMMON AREAS - CHANGES. Landlord shall have the right, in
Landlord's reasonable discretion, from time to time to take any of the
following actions provided that at all times Landlord shall provide the
parking facilities required hereunder and such actions shall not unreasonably
interfere with Tenant's access to the Demised Premises:
(a) To make changes to the Building interior and exterior and
the other Common Areas, including, without limitation, changes in the
location, size, shape, number, and
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appearance thereof, including but not limited to the lobbies, entries,
windows, stairways, air shafts, elevators, escalators, restrooms, driveways,
entrances, parking spaces, parking areas, loading and unloading areas,
ingress, egress, direction of traffic, decorative walls, landscaped areas and
walkways;
(b) To close temporarily any of the Common Areas for
maintenance and repair and replacement purposes;
(c) To add additional improvements to the Common Areas;
(d) To use the Common Areas while engaged in making
additional improvements, repairs or alterations to the Project, or any
portion thereof;
(e) To do and perform such other acts and make such other
changes in, to or with respect to the Common Areas and Project as Landlord
may, in the exercise of sound business judgment, deem to be appropriate.
Tenant acknowledges that the present parking areas and landscaping associated
with the Project may be relocated and modified as shown on EXHIBIT A-2 in
accordance with the PID Permit or in such other manner consistent with the
PID Permit as the same may be modified from time to time. If the present
parking areas and landscaping associated with the Project are relocated and
modified as shown on EXHIBIT A-2 or in such other manner consistent with the
PID Permit (as the same may be amended from time to time), the initial
improvement costs incurred in connection with such relocation and
modification shall be excluded from Operating Expenses. Any of the foregoing
notwithstanding, Tenant acknowledges that Landlord is under no obligation to
improve the Project in compliance with the PID Permit during the term of this
Lease.
6.4 PARKING.
(a) Tenant shall be entitled to the non-exclusive use of up
to twenty-seven (27) vehicle parking spaces, on an unreserved and unassigned
basis, on those portions of the Common Areas designated by Landlord for
parking purposes from time to time. Such parking shall be provided without
charge by Landlord; provided, however, Landlord may impose a fee or other
charge for such parking if required to do so by any governmental authority,
and nothing contained in this provision shall limit Landlord's right to pass
on all reasonable costs associated with such parking area as Operating
Expenses, including but not limited to maintenance costs and subdivision
assessments imposed on Landlord.
(b) Tenant shall not use more parking spaces than allotted to
Tenant hereunder. Such parking spaces shall be used only for parking by
vehicles no larger than full size passenger automobiles or pickup trucks.
Tenant shall use its best efforts to ensure that any vehicles that belong to
or that are controlled by Tenant or Tenant's employees, suppliers, shippers,
customers or invitees are not loaded, unloaded or parked in areas other than
those designated by Landlord for such activities. If such activities occur
other than in the spaces designated for the same, then Landlord shall notify
Tenant and Tenant shall have twenty-four (24) hours to remove the vehicle
involved, unless such vehicle is in violation of law, in which case the
vehicle shall immediately be removed. If Tenant fails to so timely remove
such vehicle, Landlord shall have the right, without further notice, and in
addition to such other rights and remedies that it might have under this
Lease or at law, to remove or tow away the vehicle involved and charge the
cost thereof to Tenant, which cost shall be immediately payable upon demand
by Landlord as Additional Rent.
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6.5 TEMPORARY PARKING AND ACCESS EASEMENT. Tenant acknowledges that
the existing parking area for the Building, ingress and egress thereto, and
certain other common areas are presently located off the Land pursuant to a
temporary easement between Landlord and the owner of the land upon which such
parking is presently located ("LJ Spectrum"). Landlord, LJ Spectrum or any
other party may, at its option at any time and from time to time during the
term of this Lease, construct all or a part of the improvements which such
party is entitled to construct on the property known as The La Jolla Spectrum
and subject to the PID Permit (which property, including the Land, may be
referred to as the "Subdivision"), provided that any such improvements are
constructed in compliance with the PID Permit and the CC&Rs (the "PID
Improvements"), and provided that the PID Improvements include twenty-seven
(27) parking spaces for use by Tenant on the Land or elsewhere in compliance
with the CC&Rs and all legal requirements. Tenant's right to use the
existing temporary access and parking facilities shall cease upon ten (10)
days prior written notice from Landlord, provided that other temporary or
permanent parking (that provides no less than twenty-seven (27) parking
spaces on or reasonably near the Land unless otherwise agreed to in writing by
Tenant) and access is provided (such temporary parking and access easement
located off the Land now or hereafter existing from time to time is
hereinafter referred to as the "Temporary Parking and Access Easement").
Tenant acknowledges that Landlord has disclosed to it that the construction
of the PID Improvements is by its nature messy, noisy and disruptive and that
such work may interrupt and interfere with Tenant's access to, or use of, the
Demised Premises. During such period of construction of the PID Improvements,
Landlord shall use reasonable efforts not to interfere with Tenant's access
to, or use of, the Demised Premises. In the event Landlord's construction of
the PID Improvements results in an interference with Tenant's access to, or
use of, the Demised Premises such that Tenant is prevented from accessing or
using the Demised Premises for two (2) or more consecutive days, Tenant shall
thereafter be entitled to an offset of Rent for the period of time Tenant is
prevented from accessing or using the Demised Premises.
6.6 VEHICULAR ACCESS. Tenant acknowledges that Landlord or the owner
of the Subdivision may from time to time change the location of the access
road(s) from Torreyana Road to the Land over the Subdivision. Neither
Landlord nor any other party shall have any liability with respect thereto
provided that reasonable access is provided at all times.
6.7 INTERRUPTION OF TENANT'S BUSINESS. Tenant acknowledges that
Landlord has disclosed to it that the construction of improvements to the
Common Area or to another tenant's premises is by its nature messy, noisy and
disruptive and that such work may interrupt and interfere with Tenant's
business in the Demised Premises notwithstanding Landlord's reasonable
efforts not to interrupt and interfere with Tenant's business in the Demised
Premises. Landlord and Landlord's Agents shall have the right to enter the
Demised Premises at all reasonable times with twenty-four (24) hours' notice
(except in the event of an emergency) for the purpose of making alterations,
repairs, improvements or additions to the Building or any part thereof which
Landlord may deem reasonably necessary or desirable, including tenant
improvements for any other tenant in the Building. Any such entry shall be
without abatement of Rent, unless as a result of such entry Tenant is
prevented from accessing or using all of the laboratory portion of the
Demised Premises for more than three (3) consecutive days and Landlord's need
for such entry was not caused by (i) Tenant's failure to satisfy its
obligations under Section 16.2 below, or (ii) any negligent or intentional
act or omission of Tenant or Tenant's Agents, or (iii) any interruption in
utilities or services furnished to the Demised Premises, in which case
Tenant's right to any abatement or reduction of Rent is addressed in Section
14 below. Landlord shall have no liability with respect to any such entry,
except for any damages, liabilities, expenses or costs incurred by Tenant as
a result of the gross negligence or willful misconduct of Landlord or
Landlord's Agents.
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7. OPERATING EXPENSES.
7.1 TENANT'S PORTION. Tenant's portion of Operating Expenses, for
purposes of this Lease, is equal to (i) the total Operating Expenses for the
Project (except as set forth in the remainder of this sentence) multiplied by
Tenant's Share set forth in Section 2.9 above, plus (ii) the utility expenses
associated with the Building's HVAC system multiplied by a fraction, the
numerator of which is equal to the square footage of the Rentable Area of the
Demised Premises and the denominator of which is equal to the square footage
of the Rentable Area of the Building then under lease to, and occupied by,
Tenant or any other tenants, but in no event shall such denominator be less
than fifty percent (50%) of the total square feet of Rentable Area (32,400)
of the Building, plus (iii) one-half (1/2) of all expenses of operating,
maintaining, repairing, replacing and managing those portions of the acid
neutralization system shared with those portions on the second floor of the
Building as shown on EXHIBIT I (the "Joint Service Space") beyond the point
of connection to those portions of the system exclusively serving the Joint
Service Space.
7.2 Operating Expenses. As used herein, the term "Operating Expenses"
shall include all expenses typically included in an absolute net lease,
including but not be limited to:
(a) Government impositions, including, without limitation, property
tax costs consisting of real property taxes (including any increases in such
property taxes for any reason, including increases resulting from a sale or
other transfer of the Project), assessments, including amounts due under any
improvement bond upon the Project or assessments levied in lieu thereof
imposed by any governmental authority or agency, any tax on or measured by
gross rentals received from the rental of space in the Building, or tax based
on the square footage of the Demised Premises or Building (if such tax is
enacted in lieu of presently existing real property taxes),
(b) Any parking charges, surcharges or any other costs levied,
assessed or imposed by, or at the direction of, or resulting from statutes or
regulations, or interpretations thereof, promulgated by any federal, state,
regional, municipal or local government authority in connection with the use
or occupancy of the Building or the parking facilities serving the Building,
(c) Any tax on this transaction or any document to which Tenant is
a party creating or transferring an interest in the Land or the Building,
(d) Any fee for a business license for Landlord to operate the
Project,
(e) Any expenses, including the cost of attorneys or experts,
reasonably incurred by Landlord in seeking reduction by the taxing authority
of the applicable taxes, but only to the extent such savings are realized, and
(f) All other reasonable costs of any kind paid or incurred by
Landlord directly related to the operation, repair, replacement, maintenance
and management of the Project, the Demised Premises and the Common Area and
not separately reimbursed to Landlord by any tenant in the Building,
including, by way of example and not as a limitation upon the generality of
the foregoing: all utility charges for the Project and the Building incurred
by Landlord (including, without limitation, water, gas and electricity costs
for the central mechanical plant, the landscaping and other improvements on
the Land and the Temporary Parking and Access Easement); all costs of repairs
and replacements to improvements incurred by Landlord as appropriate to
maintain the Project in first-class condition (except as set forth in Section
16.1 or caused by the gross negligence of Landlord or Landlord's Agents);
including
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maintenance costs for the Temporary Parking and Access Easement or any
substitution thereof; all costs of any nature to comply with applicable
governmental requirements for the Project; the cost of all service contracts
maintained on the HVAC system and other parts of the Project; special utility
assessments, including sewer fees and trash collection, assessments imposed
pursuant to the CC&Rs or the PID Permit; transportation management assessment
fees, property management fees equal to four percent (4%) of the Rent;
insurance premiums (except Tenant's share of any insurance premium for
earthquake coverage shall not exceed the applicable Tenant's Earthquake
Insurance Expense Stop, as described in Section 19.1 below); uninsured losses
not resulting from Landlord's failure to carry the insurance required by this
Lease unless such loss results from the grossly negligent or willful act or
omission of Landlord or its agents; portions of insured losses paid by
Landlord as part of the deductible portion of any loss by reason of insurance
policy terms unless such loss results from the grossly negligent or willful
act or omission of Landlord or its agents; service contracts and costs of
services of independent contractors retained to do work of the nature
referenced above; all costs of full or part-time personnel responsible for
the maintenance and management of the Project; and reasonable reserves
established by Landlord in its sole good faith discretion for any of the
foregoing.
Any of the foregoing notwithstanding, at any time during any calendar year
that Tenant's portion of Operating Expenses relating to capital improvements
equals or exceeds the sum of Fifteen Thousand Dollars ($15,000) ("Tenant's
Capital Operating Expense Threshold"), all sums payable in excess of Tenant's
Capital Operating Expense Threshold shall not be treated as an expense solely
in that calendar year, but shall be amortized (with interest at the lower of
twelve percent (12%) per annum or the highest rate allowed by law) thereafter
as an Operating Expense over the expected life of each such improvement as
determined by the manufacturer of such improvement (or as reasonably
determined by Landlord, if the manufacturer of such improvement does not
specify an expected life span). Notwithstanding the foregoing, Tenant's
Capital Operating Expense Threshold shall be decreased to Five Thousand
Dollars ($5,000) for the last calendar year of the initial term of this
Lease, unless Tenant exercises its option to extend this Lease for the
Extended Term, in which event this decreased threshold shall apply solely to
the last calendar year of the Extended Term of this Lease.
7.3 EXCEPTIONS. Operating Expenses shall not include any of the
following:
(a) Any net income, franchise, capital stock, estate or
inheritance taxes.
(b) Any payments of interest, loan fees and other financing costs
related to any mortgage or deed of trust encumbering the Project, and any
payments of rent due or required under any ground lease or master lease (but
excluding therefrom common area maintenance expenses, taxes and similar other
costs).
(c) Costs, including building permit, license and inspection
costs,incurred with respect to the installation of improvements made for
other occupants of the Building or incurred in renovating or otherwise
improving, decorating, painting or redecorating vacant tenant space in the
Building for other occupants of the Building. This exclusion shall not
include costs of repair, replacement or renovation of Common Areas in the
Project.
(d) Leasing commissions or other real estate fees, attorneys' fees
and costs incurred in connection with marketing space or leasing space to
tenants or prospective tenants, including, without limitation advertising and
promotional expenditures.
(e) Tax penalties incurred as a result of Landlord's negligent
failure to make payments or to file any tax return when due.
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(f) Landlord's general overhead and administrative expenses other
than all costs of full or part-time personnel responsible for the maintenance
and management of the Project.
(g) Any depreciation on the Building.
(h) Any expenses for services that are of a type not available to
Tenant but which are provided to another tenant or occupant of the Building.
(i) The amount of any overhead profit increment paid to
subsidiaries and affiliates of Landlord for services on or to the Building or
for supplies or other materials to the extent that the cost of such services,
supplies or materials exceeds the cost which would have been paid had the
services, supplies or materials been provided by unaffiliated parties on a
competitive basis.
(j) Wages, salaries or other compensation paid to any executive
employees above the grade of Facilities Manager.
(k) Any attorneys' fees and other expenses incurred by Landlord to
enforce the provisions of this Lease or any other lease of space in the
Building due to a violation by any tenant of its lease.
(l) Costs incurred by Landlord for the repair or damage to the
Project to the extent that Landlord is reimbursed by insurance proceeds.
(m) Costs incurred in correcting any building code violations
existing prior to the Term Commencement Date in accordance with Landlord's
obligations under Section 13.1 below.
(n) Any expenses for services to Tenant or any other tenant in the
Building for which Landlord is entitled to be reimbursed as an additional
charge over and above the Rent payable under this Lease or the basic rent
payable under the lease with any other tenant.
(o) Any compensation paid to clerks, attendants or other persons in
commercial concessions (e.g., newsstand or deli) operated by Landlord within
the Project.
(p) Costs of repairs and other work occasioned by fire or other
casualty required to be insured against pursuant to Section 19.1 below other
than portions of insured losses paid by Landlord as part of the deductible
portion of any loss by reason of the insurance policy terms.
(q) Subject to the limitations described in Section 37 on any
obligation of Landlord to perform an environmental clean up, the costs
incurred by Landlord of cleaning up any contamination of the Building
(including the underlying land and groundwater) by any Hazardous Material (as
defined in Section 37.7 below) where such contamination was not caused by
Tenant or its agents, employees, contractors or invitees.
7.4 PAYMENT TO LANDLORD AND ESTIMATE. Tenant shall pay Tenant's
portion of Operating Expenses to Landlord, monthly in advance, based upon
Landlord's reasonable estimate of such Operating Expenses. Within thirty
(30) days following the commencement of each calendar year, Landlord shall
provide Tenant, in writing, a statement estimating the amount of monthly
Operating Expenses for the coming year. Tenant shall pay to Landlord on the
first day of each calendar month of the term of this Lease, as Additional
Rent, Tenant's portion of
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Landlord's estimate of such Operating Expenses with respect to the Demised
Premises for such month. Additionally, if any extraordinary Operating
Expense occurs which was not included in Landlord's estimate of such
Operating Costs, then Landlord shall give written notice thereof to Tenant
promptly after Landlord learns of the same; and Tenant shall pay Tenant's
portion of such extraordinary Operating Expense on or before its due date.
7.5 RECONCILIATION. Within ninety (90) days after the conclusion of
each calendar year, Landlord shall furnish to Tenant a statement showing in
reasonable detail the actual Operating Expenses for the previous calendar
year. If the amounts paid by Tenant are less than the actual amount of
Operating Expenses for the previous year, any additional sum due from Tenant
to Landlord shall be due and payable within ten (10) business days after
receipt by Tenant of such statement. If the amounts paid by Tenant exceed
the actual Operating Expenses for the previous calendar year, the difference
shall be credited by Landlord against the Rent next due and owing from
Tenant; provided that, if the term of this Lease has expired, Landlord shall
accompany such statement with payment for the amount of such difference.
7.6 MONTHLY PRORATION. Any amount due for Operating Expenses
attributable to any period which is less than a full month shall be prorated
(based on a thirty (30) day month) for such fractional month.
7.7 AUDIT. Tenant shall have the annual right, at Tenant's expense,
upon reasonable notice during reasonable business hours, to have a Certified
Public Accountant or other authorized representative of Tenant inspect the
portion of Landlord's records, invoices, and other data relating to the
Project for the prior calendar year and used in the preparation of the
statement of actual Operating Expenses for such year, provided any request
for such review shall be furnished within one hundred eighty (180) days of
Tenant's receipt of such statement as to the prior year's Operating Expenses.
If the amount of Operating Expenses relating to the Demised Premises
identified on such annual statement are found to exceed the actual Operating
Expenses of the Demised Premises, Landlord shall, within ten (10) days after
Tenant's request therefor, refund to Tenant the amount of overpayment by
Tenant. In addition, if such audit reveals that the Operating Expenses paid
by Tenant in any year exceed one hundred four percent (104%) of the actual
Operating Expenses which should have been paid by Tenant in such year,
Landlord shall reimburse Tenant for the reasonable cost of such audit. Tenant
shall not engage any person or entity to perform such audit for compensation
related to any cost savings resulting from such audit.
7.8 CONTINUATION. The responsibility of Tenant for Operating Expenses
attributable to the Demised Premises shall continue to the latest of (i) the
date of termination of this Lease, or (ii) the date Tenant has fully vacated
the Demised Premises.
7.9 ANNUAL PRORATION. Operating Expenses attributable for any portion
of the Demised Premises for the calendar year in which Tenant's obligation to
reimburse Landlord therefor commences and for the calendar year in which such
obligation ceases shall be prorated. Expenses such as taxes, assessments and
insurance premiums which are incurred for an extended time period shall be
prorated based upon time periods to which such items are applicable, so that
the amounts attributed to the Demised Premises relate in a reasonable manner
to the time period in which Tenant has an obligation to pay for Operating
Expenses.
8. RENTABLE AREA.
8.1 RENTABLE AREA. The term "Rentable Area" refers to the agreed upon
respective square footages upon which Rent shall be charged and Common Area
expenses shall
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be allocated for the Demised Premises and the Building. Such areas include
the floor areas of such portions of the Building measured to (i) the outside
finished surface of permanent outer Building walls, where such walls
intersect or join each floor (or if the floors do not actually intersect or
join such wall, projected to the exterior finished surface of the Building),
and (ii) the center of all interior demising walls separating the Demised
Premises from Common Areas (as shown on EXHIBIT A-3) or spaces to be occupied
by other lessees, plus a portion of the Common Area (as shown on EXHIBIT A-3)
within the Building allocated to Tenant based on Tenant's Share. Such
measurement was made without deduction for columns, projections or vertical
penetrations such as stairs, elevator shafts, flues, pipe shafts, vertical
ducts and the like and their enclosed walls.
8.2 AGREEMENT REGARDING RENTABLE AREA. The number of square feet of
Rentable Area (i) in the total Building is agreed to be sixty-four thousand
eight hundred (64,800) square feet, and (ii) in the Demised Premises is
agreed to be nine thousand one hundred fifty-seven (9,157) square feet.
9. USE.
9.1 USE. Tenant shall at all times use the Demised Premises in
accordance with all of the terms and conditions of this Lease (including but
not limited to the provisions of Section 15) and only for the purpose set
forth in Section 2.6; and Tenant shall not use the Demised Premises, or
permit or suffer the Demised Premises to be used, for any other purpose
without the prior written consent of Landlord. Except as expressly set forth
in this Lease, Tenant shall have twenty-four (24) hour access to the Demised
Premises at all times during the term of this Lease.
9.2 COMPLIANCE WITH LAW. Tenant shall conduct its business operations
and use the Demised Premises in compliance with all current or future
federal, state and local laws and regulations, and all covenants, conditions
and restrictions applicable to the Land, including the CC&Rs and the PID
Permit. Tenant shall not use or occupy the Demised Premises in violation of
any law, regulation or covenant, condition or restriction applicable to the
Land, including the CC&Rs and the PID Permit, or the certificate of occupancy
issued for any portion of the Demised Premises or the Building and shall,
immediately upon written notice from Landlord, discontinue any use of the
Demised Premises which is unlawful whether or not declared by any
governmental authority having jurisdiction to be a violation of law or of
such certificate of occupancy. Tenant shall, at its expense, timely comply
with any directive of any governmental authority having jurisdiction which
shall, by reason of the nature of Tenant's use of the Demised Premises,
impose any duty upon Tenant or Landlord with respect to the Demised Premises
or with respect to the use thereof. Tenant shall not be deemed to be in
breach of the foregoing obligation if it has the right to appeal such
directive and Tenant prosecutes such appeal in a timely fashion and in a
manner that does not impose or threaten to impose any lien, charge or other
obligation on Landlord or any portion of the Project.
9.3 INSURANCE REQUIREMENTS. The insurance to be initially carried by
Landlord and Tenant pursuant to the provisions of Section 19 shall be
consistent with the actual use of the Project. Thereafter, if the use of the
Demised Premises changes to another use permitted under Section 2.6, such
insurance shall, to the extent available, be consistent with such changed
use. Tenant shall not do or permit to be done anything which will invalidate
or increase the cost of any fire, extended coverage or any other insurance
policy covering the Project. Tenant shall comply with all rules, orders,
regulations and requirements of the insurers of the Project. Tenant shall
promptly, upon demand, reimburse Landlord for one hundred percent (100%) of
any additional premium charged for any policy by reason of Tenant's
particular use of the Demised
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Premises or the Common Area, or as a result of Tenant's failure to comply
with the provisions of this Section.
9.4 KEY TO PREMISES. Tenant shall make available to Landlord on a
twenty-four (24) hours per day basis keys to locks to doors in the Demised
Premises for the purpose of emergency access. Additionally, if requested by
Landlord, or required by a governmental agency, Tenant agrees to provide keys
to be maintained in a fire department controlled lock box located on the
Demised Premises.
9.5 LOAD RATING. No equipment weighing in excess of the load per
square foot which such floor was designed to carry, or which is allowed by
law, shall be placed upon the Demised Premises. Tenant shall not make
connection to the utilities except by or through existing outlets. Tenant
shall not install or use machinery or equipment in or about the Demised
Premises that uses water, gas, chilled water or electricity in excess of the
capacity specifications for such utility or service as provided to the
Demised Premises as a part of Landlord's Work, nor may Tenant suffer or
permit any act that causes any use of water, gas, chilled water or
electricity in excess of the capacity specifications for such utility or
service as provided to the Demised Premises as a part of Landlord's Work.
Tenant shall not use the utilities or services provided for the Demised
Premises for any purpose other than their intended use. Tenant shall
reimburse Landlord for any actual excess expenses or costs that may arise out
of a br
9.6 UNLAWFUL PURPOSE. Tenant shall not allow the Demised Premises
to be used for unlawful purposes, nor shall Tenant cause, maintain or permit
any nuisance or waste in or on the Project. Landlord shall attempt in good
faith to prevent any other tenants of the Building from using their
respective premises for unlawful purposes or causing, maintaining or
permitting any nuisance or waste in or on the Project.
9.7 ADDITIONAL LIMITATIONS. Without in any way limiting the
provisions of Section 37 or any other provision of this Lease, Tenant
acknowledges and agrees that:
(a) Tenant acknowledges that the acid neutralization system
serving the Demised Premises will be shared in common with one or more
tenants occupying other portions of the Building. The types and quantities
of materials that may be discharged into the acid neutralization system
servicing the Demised Premises are as set forth in EXHIBIT G attached hereto.
Tenant shall not discharge any materials into the acid neutralization system
which is in violation thereof. Tenant shall indemnify, defend and hold
harmless Landlord from any breach hereunder.
(b) The Demised Premises have been designed as a "B-Occupancy"
under the Uniform Building Code in effect as of the date of commencement
and/or completion of Landlord's Work with Hazardous Material storage capacity
equal to one-half (1/2) of what would be allowed in one "control zone." Tenant
shall not exceed such storage capacity. Tenant shall indemnify, defend and
hold harmless Landlord from any breach hereunder. Upon Tenant's written
request, Landlord shall make available to Tenant (at no cost to Tenant) a
concrete pad of not more than one hundred (100) square feet outside the
Building for Tenant to install, at Tenant's sole cost, a self contained
Hazardous Material storage bunker pursuant to all the provisions of this
Lease, including but not limited to Sections 15, 16 and 37. If installed,
such area upon which the bunker is located shall be deemed to be part of the
Demised Premises. Such bunker shall be constructed and installed by Tenant
in compliance with all laws, the CC&Rs, the PID Permit and sound industry
practices, and shall be of a first class condition and appearance
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and shall not in any way detract from the appearance of the Project.
9.8 ACCESS TO DEMISED PREMISES. Landlord and Landlord's agents
shall have the right to enter the Demised Premises at reasonable times upon
twenty-four (24) hours' notice (except in an emergency) for the purpose of
inspecting the same and showing the same to perspective purchasers, lenders
or tenants. Landlord may at any time place on or about the Demised Premises
or the Building any "for sale" signs, and Landlord may at any time during the
last one hundred fifty (150) days of the term hereof place on or about the
Demised Premises any "for lease" signs. Landlord hereby agrees to use
reasonable efforts not to interfere with Tenant's access to, or use of, the
Demised Premises. All activities of Landlord pursuant to this Section shall
be without abatement of Rent, and Landlord shall have no liability to Tenant
for the same, except for any damages, liabilities, expenses or costs incurred
by Tenant as a result of the gross negligence or willful misconduct of
Landlord or Landlord's Agents.
10. BROKERS.
10.1 TENANT'S REPRESENTATION. Tenant represents, warrants and
covenants that it has had no dealings, and it shall have no dealings, with
any real estate broker or agent who will be entitled to a commission in
connection with (i) procuring or negotiating this Lease, or (ii) the options
to extend the term of this Lease, to lease the Joint Service Space or to
purchase the Project as contained herein, other than The ▇▇▇▇▇▇ ▇▇▇▇▇▇ Group,
Inc. Tenant knows of no real estate broker or agent who is or might now or
in the future be entitled to a commission in connection with this Lease or
such options, other than The ▇▇▇▇▇▇ ▇▇▇▇▇▇ Group, Inc. Tenant shall
indemnify, defend and hold harmless Landlord from any such commission arising
from Tenant's actions or statements, other than the commission due The ▇▇▇▇▇▇
▇▇▇▇▇▇ Group, Inc., which commission shall be paid by Landlord, pursuant to a
separate commission agreement between such broker and Landlord.
10.2 LANDLORD'S REPRESENTATION. Landlord represents, warrants and
covenants that it has had no dealings, and it shall have no dealings, with
any real estate broker or agent to whom Tenant might be liable for a
commission in connection with (i) procuring or negotiating this Lease, or
(ii) the options to extend the term of this Lease, to lease the Joint Service
Space or to purchase the Project. Landlord knows of no real estate broker or
agent, other than The ▇▇▇▇▇▇ ▇▇▇▇▇▇ Group, Inc., who is or might now or in
the future be entitled to a commission from Tenant in connection with this
Lease or the options contained herein. Landlord shall indemnify, defend and
hold harmless Tenant from any such commissions arising from Landlord's
actions or statements.
11. HOLDING OVER.
11.1 HOLDING OVER WITH CONSENT. If Tenant remains in possession of
all or any part of the Demised Premises after the expiration or earlier
termination of this Lease, with Landlord's prior written consent, Tenant
shall be deemed a month-to-month tenant upon the date of such expiration or
earlier termination and, in such case, Tenant shall continue to pay the Basic
Rent (as adjusted from time to time as set forth in this Lease), Operating
Expenses in accordance with Section 7, and any other amount of Rent due
Landlord pursuant to the terms of this Lease, and such month-to-month tenancy
shall be subject to every other term, covenant and agreement contained herein.
11.2 HOLDING OVER WITHOUT CONSENT. If Tenant remains in possession
of the Demised Premises after the expiration or earlier termination of the
term hereof without the express written consent of Landlord, Tenant shall
become a tenant at sufferance upon all the
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terms of this Lease applicable to a tenant at sufferance, except that the
monthly installments of Basic Rent shall be equal to one hundred fifty
percent (150%) of the monthly installment of the Basic Rent in effect during
the immediately preceding thirty (30) days. If at the end of the term of
this Lease Tenant has vacated the Demised Premises but Tenant has not left
the Demised Premises in substantially the condition required by this Lease,
or Landlord is for any reason prevented from allowing another tenant to have
possession of the Demised Premises as a result of any act or omission of
Tenant, Tenant shall be deemed to be holding over without consent and Tenant
shall also be liable for any other damages Landlord may suffer.
11.3 NO RENEWAL. Acceptance by Landlord of Rent after such
expiration or earlier termination of this Lease shall not result in a renewal
or reinstatement of this Lease.
11.4 NO WAIVER. The foregoing provisions of this Section 11 are in
addition to and do not affect Landlord's right to re-entry or any other
rights of Landlord hereunder or as otherwise provided by law.
12. TAXES ON TENANT'S PROPERTY.
12.1 PAYMENT OF TAXES. Tenant shall pay not less than five (5)
days before delinquency, all taxes levied against any personal property or
trade fixtures in or about the Demised Premises.
12.2 ADVANCE BY LANDLORD. If any such taxes on Tenant's personal
property or trade fixtures are levied against Landlord or Landlord's property
or, if the assessed valuation of the Project is increased by the inclusion
therein of a value attributable to Tenant's personal property or trade
fixtures, and if Landlord, after written notice to Tenant, elects to pay the
taxes based upon such increase in assessed value, then Tenant shall, upon
receipt of satisfactory evidence of such tax increase repay to Landlord the
taxes so levied against Landlord.
13. CONDITION OF DEMISED PREMISES.
13.1 LANDLORD'S WORK. Landlord warrants to Tenant that (i) the
Building systems serving the Demised Premises will be in good working order
as of the Lease Commencement Date and (ii) Landlord's Work will be free from
material structural defects. Based solely in reliance upon Landlord's
receipt of a certificate of occupancy for the Demised Premises, Landlord
represents to Tenant that Landlord's Work will as of the Lease Commencement
Date comply with all applicable covenants and restrictions of record,
statutes, ordinances, codes, rules, regulations, orders and regiments,
including Title 24 of the California Administrative Code and the Americans
With Disabilities Act. In the event it is determined that the foregoing
warranties have been violated, then it shall be the obligation of Landlord,
after written notice from Tenant, to promptly rectify any such violation. In
the event Tenant does not give to Landlord written notice of the violation of
any of the foregoing warranties within one (1) year of the Term
13.2 AS IS CONDITION. Except as expressly set forth in this Lease
and in the Construction Exhibit, Tenant is leasing the Demised Premises, and
accepts the condition of the Demised Premises (including Landlord's Work upon
completion thereof), the Project and the Subdivision, in their "as is"
condition. Except as expressly set forth in this Lease and in the
Construction Exhibit, Tenant shall assume all risks with respect to any
defects, liabilities or other matters related to or in any way affecting the
condition of the Demised Premises (including
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Landlord's Work upon completion thereof), the Project or the Subdivision
including, without limitation, (i) latent defects; (ii) all restrictions,
obligations, benefits and burdens whatsoever regarding the occupancy and use
of the Demised Premises; and (iii) the presence of Hazardous Materials.
Tenant acknowledges that Landlord has provided to Tenant (without any
warranty as to accuracy) an environment report prepared by Dames & ▇▇▇▇▇
dated January 17, 1996, whi
13.3 NO REPRESENTATION. Tenant acknowledges that, except as
expressly set forth in this Lease, Landlord and Landlord's agents have not
made any representations or warranties, express or implied, with respect to
(i) the condition of the Demised Premises or the Building and Land, including
Landlord's Work, (ii) the suitability of the Demised Premises for the conduct
of Tenant's business, (iii) the location, use, design, merchantability,
fitness for use for a particular purpose, condition or durability of the
Demised Premises or the Building and Land, including Landlord's Work, (iv)
the existence of Hazardous Materials (as defined in Section 37.7) on the
Demised Premises or in the Project except as set forth in Section 37.4 below,
or (v) the quality of the material or workmanship in the Demised Premises or
the Building and Land; and all risks incidental to the Demised Premises shall
be borne by Tenant. Except as expressly provided in this Lease or in the
Construction Exhibit, in the event of any defect or d
13.4 DISCLOSURE. Without limiting the provisions of Section 13.1
above, Landlord and Tenant acknowledge that (i) the HVAC system which
services another tenant's premises located on the roof of the Building may
violate Coastal Commission Regulations regarding height restrictions, and
(ii) asbestos containing materials may be present in the Building. Tenant
acknowledges that, if such action is allowed by law, any asbestos may be
"encapsulated" in place. Landlord will be responsible for any remedial
action (including such encapsulation) required by law with respect to the
foregoing, including paying the cost thereof, which cost shall not be an
Operating Expense. Except for the foregoing, the cost of any action
necessary to remediate any violations of law, including the foregoing,
relating to the Demised Premises shall be an Operating Expense, and if the
cost of any action is an Operating Expense and constitutes a capital
improvement, the cost shall be a portion of the Operating Expenses relating
to capita
13.5 WALK THROUGH INSPECTION. As specified in the Construction
Exhibit, Landlord and Tenant shall conduct walk through inspections of the
work performed by Landlord to the Demised Premises and prepare a punch list
of those construction items for Landlord's Work which require remedial
action. The taking of possession of the Demised Premises by Tenant shall
establish conclusively that the Demised Premises and the Building existed at
such time in good, sanitary and satisfactory condition and repair, except for
punch list items to be corrected by Landlord.
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14. UTILITIES AND SERVICES.
14.1 UTILITIES AND SERVICES. To the extent reasonably possible,
Tenant shall enter into contracts directly with suppliers of, and pay
directly to such suppliers for, all water, gas, electricity, telephone, trash
removal, janitorial and cleaning services and all other utilities and
services supplied to the Demised Premises, together with any taxes thereon.
To the extent any such services or utilities are not separately metered or
supplied to the Demised Premises by the supplier thereof, Tenant shall pay
Tenant's Share of the cost thereof as an Operating Expense unless Landlord
has installed separate meters or measuring devices for the determination of
Tenant's actual use of such utility or service. In such case, Tenant shall
pay as an Operating Expense the actual cost of that portion of the utility or
service actually used by Tenant, and Landlord shall not otherwise include the
cost paid by Tenant as an Operating Expense.
14.2 NO LIABILITY. Except to the extent caused by Landlord's
grossly negligent or willful acts or omissions (and in such event, only after
written notice to Landlord and the failure of Landlord to correct such
situation within a reasonable time), Landlord shall not be liable for, nor
shall any eviction of Tenant result from, the failure of any such utility or
service to be furnished to the Demised Premises when such failure is caused
by accident, breakage, repairs, civil disturbances, strikes, lockouts or
other labor disturbances or labor disputes of any character, governmental
regulation, moratorium or other governmental action, the inability to furnish
such utility or service despite the exercise of reasonable diligence by
Landlord or by any other cause beyond Landlord's reasonable control,
excluding only interruptions of service caused by Landlord's Default. In the
event of such failure, Tenant shall not be entitled to any abatement or
reduction of Rent, nor shall Tenant be relieved from the operation
14.3 NO INCREASE IN REQUIREMENTS. Tenant shall not, without the
prior written consent of Landlord, use any device in the Demised Premises,
including, without limitation, special equipment or machines, which will in
any way materially increase the amount of heating, air conditioning,
electricity or water available to the Demised Premises over that initially
provided. Tenant shall pay to Landlord as Additional Rent an amount equal to
all actual costs reasonably incurred by Landlord to provide any such excess
services and utilities, which payment shall be made within thirty (30) days
after Tenant receives written evidence that Landlord has incurred such costs.
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15. ALTERATIONS.
15.1 NO ALTERATIONS. Without Landlord's prior written consent,
which consent shall not be unreasonably withheld or delayed, Tenant shall
make no alterations, additions or improvements in or to the Demised Premises,
other than alterations, additions or improvements which satisfy each of the
following criteria: (i) no structural component of the Building is affected;
(ii) no electrical system, plumbing system or mechanical system is affected;
(iii) the total cost for a single alteration, addition or improvement does
not exceed Five Thousand Dollars ($5,000) and the total costs for all
alterations, additions or improvements during any twelve (12) month period do
not exceed Twenty-Five Thousand Dollars ($25,000); (iv) such alterations do
not reduce the fair rental value or fair market value of the Demised
Premises, impair the use thereof or reduce the useful life thereof; (v) such
alterations do not impair the use of the Project as a biotech or biomedical
facility; (vi) such alterations do not alter the floor plan of the Demised
Premises; and (vii) such alterations do not involve the removal of any
biotech related equipment or any equipment installed by Landlord as part of
Landlord's Work, including any fume hoods supplied by Tenant and installed by
Landlord (or any replacement of such equipment) unless, in Landlord's
reasonable judgment, such equipment is replaced with equipment of equal or
greater value and utility to a biotech facility. All such alterations,
additions or improvements, whether or not requiring Landlord's consent, shall
be made only by licensed and qualified contractors or mechanics. Tenant's
contractor for performing any alterations, additions or improvements shall be
subject to Landlord's reasonable approval and shall maintain appropriate
insurance as reasonably approved by Landlord.
15.2 SERVICE FACILITIES. Tenant agrees that there shall be no
construction of partitions or placement of other obstructions within the
Common Areas which might interfere with free access to other areas within the
Project or required exits, including, without limitation, mechanical
installations or service facilities of the Building (including freight
elevators and loading areas) or interfere with the moving of Landlord's
equipment to or from the enclosures containing such installations or
facilities. Furthermore, any work by Tenant shall be accomplished in such a
manner as to permit any fire sprinkler system and fire water supply lines to
remain fully and properly operable at all times.
15.3 EXTERIOR CHANGES. Tenant shall make no changes to the
exterior of the Building without the prior written approval of Landlord,
which approval may be withheld in Landlord's discretion. Further, Tenant
shall make no changes visible from the exterior of the Building without the
prior written approval of Landlord, which approval may not be unreasonably
withheld by Landlord.
15.4 SIGNS. No sign, advertisement or notice which is visible
outside the Building shall be exhibited, painted or affixed by Tenant on any
part of the Demised Premises, or on any part of the exterior of the Building,
without the prior written consent of Landlord, which consent shall not be
unreasonably withheld or delayed. Notwithstanding the foregoing, subject to
Landlord's reasonable approval and all applicable laws, the PID Permit and
the CC&R's, Tenant shall be entitled to display an exterior sign identifying
Tenant on a monument provided by Landlord or, at Landlord's option, on the
Building exterior. Tenant may also install at Tenant's sole cost a sign on
the interior common wall adjacent to the entrance of the Demised Premises.
Such signs shall be installed at Tenant's sole cost, and the cost of removing
such signs and repairing any damage caused by such removal at the end of the
term of this Lease shall be paid by Tenant.
15.5 COMPLIANCE WITH LAW. Tenant covenants and agrees that all
work done by
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Tenant shall be performed in full compliance with all laws, rules, orders,
ordinances, directions, regulations and requirements of all governmental
agencies, offices, departments, bureaus and boards having jurisdiction and in
full compliance with the rules, orders, directions, regulations and
requirements of any applicable fire rating bureau. Tenant shall provide
Landlord with "as-built" plans showing any material changes in the Demised
Premises.
15.6 PRIOR NOTICE. Before commencing any material work, Tenant
shall give Landlord at least ten (10) business days' prior written notice of
the proposed commencement of such work.
15.7 PROPERTY OF LANDLORD. Except as provided in Section 15.4,
all alterations, decorations, fixtures, equipment, additions and improvements
attached to or built into the Demised Premises, made by either party, shall,
unless Landlord elects otherwise at any time, become the property of Landlord
upon the expiration or earlier termination of the term of this Lease and
shall remain upon and be surrendered with the Demised Premises as a part
thereof. If Landlord elects to have such alterations removed (provided
Landlord made such election at the time Landlord consented to such
alterations), Tenant shall do so and shall repair and restore the Demised
Premises to the condition they were in prior to such alterations, all at
Tenant's sole cost. Landlord's consent to any alteration shall not be
implied to be an election hereunder. Any such election must be express and
must be in writing.
15.8 REMOVAL. Tenant shall repair any damage to the Demised
Premises caused by Tenant's removal of any property from the Demised
Premises; and Tenant shall only be entitled to remove property from the
Demised Premises as expressly provided in this Lease. During any such
restoration period, Tenant shall pay Rent to Landlord as provided herein as
if such space were otherwise occupied by Tenant.
15.9 PERSONAL PROPERTY. All articles of Tenant's personal
property which have not been attached to the Demised Premises, including
furniture and movable partitions which are owned by Tenant and installed by
Tenant at its own expense in the Demised Premises, shall be and remain the
property of Tenant and may be removed by Tenant at any time during the term
of this Lease provided that Tenant shall not remove any personal property in
which Landlord has a security interest pursuant to Section 5.9 of this Lease
unless Tenant first obtains Landlord's written consent, which consent
Landlord may withhold in its sole discretion whenever there exists a Default
by Tenant under this Lease or a condition or event which, with the giving of
notice or the passing of time or both, would constitute a Default by Tenant
(a "Conditional Default"). Without limiting the foregoing, under no
circumstances shall Tenant be entitled to remove any equipment, item or
improvement which was provided as part of Landlord's Work. Upon completion
of Landlord's Work, Landlord and Tenant shall prepare a list of personal
property items paid for as part of Landlord's Work and each shall execute the
same. From time to time, Landlord and Tenant may mutually agree to make
additions to such personal property list. If Tenant shall fail to remove all
of its effects from the Demised Premises upon the termination of this Lease,
then Landlord may, at its option, remove the same in any legal manner, and
Landlord may remove and store such effects without liability to Tenant for
loss thereof or damage thereto, except for loss or damage caused by the gross
negligence or willful act of Landlord or Landlord's Agents, and Tenant agrees
to pay Landlord upon demand any reasonable expenses incurred in such removal
and storage or Landlord may, at its option, with notice to Tenant satisfying
the requirements of California Civil Code Section 1983, sell such property or
any of the same, at private sale and without legal process, for such price as
Landlord may obtain; and Landlord may apply the proceeds of such sale against
any amounts due under this Lease from Tenant to Landlord and against any
expenses incident to the removal, storage and sale of such personal property,
with any balance of the sales proceeds to be delivered to Tenant.
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16. REPAIRS AND MAINTENANCE.
16.1 LANDLORD'S OBLIGATION.
(a) Landlord shall repair, replace and maintain the Building
foundation, the structural components of the exterior walls and the
structural components of the roof of the Building. Landlord's costs for such
repair, replacement and maintenance shall not constitute an Operating Expense.
(b) Except as provided in Section 16.2, Landlord shall
repair, maintain and replace all portions of the Common Area, including,
without limitation, all portions of the HVAC, plumbing, mechanical and
electrical supply systems located outside the boundaries of the Demised
Premises which are provided as a part of Landlord's Work as defined in the
Construction Exhibit and all portions of the acid neutralization system
serving the Demised Premises past the point of connection with those portions
of the system exclusively serving other portions of the Building. Landlord's
costs for such repair, replacement and maintenance shall constitute an
Operating Expense unless the need for such repair, replacement or maintenance
was caused by any negligent or intentional act or omission of Tenant or
Tenant's Agents, in which case Tenant shall pay to Landlord on demand the
cost of such repair or replacement. Landlord's obligations shall include
restorations, replacements or renewals, including capital expenditures for
restorations, replacements or renewals which will have a useful life beyond
the term of this Lease, when necessary to keep the Common Area and all
improvements thereon or a part thereof in good order, condition and repair
and in compliance with all applicable laws.
16.2 TENANT'S SOLE COST. Except for Landlord's obligations
pursuant to Section 16.1 above, Tenant shall, at Tenant's sole cost and
expense, keep the Demised Premises and every part thereof (structural and
nonstructural, including capital expenditures and improvements with an
expected life beyond the term of this Lease, whether or not such portion of
the Demised Premises needing repairs, or the means of repairing the same, are
reasonably or readily accessible to Tenant, and whether or not the need for
such repairs occurs as a result of Tenant's use, any prior use, the elements
or the age of such portion of the Demised Premises), together with those
portions of any common acid neutralization system solely serving the Demised
Premises, and all portions of the HVAC, electrical, mechanical, exhaust and
plumbing systems to such point that such item solely serves the Demised
Premises and all portions of all fume hoods and other exhaust systems or
plumbing vents (collectively, "Tenant's Utility Systems"), in a first class
condition. Tenant's obligations shall include restorations, replacements or
renewals, including capital improvements for restorations, replacements or
renewals which will have an expected life beyond the term of this Lease, when
necessary to keep the Demised Premises and all improvements thereon or a part
thereof and Tenant's Utility Systems in good order, condition and repair and
in compliance with all applicable laws (which capital improvements for such
restorations, replacements or renewals when not (i) necessitated by Tenant's
negligence in the maintenance of the Demised Premises or any part thereof or
(ii) arising from the operation of Tenant's business from the Demised
Premises or Tenant's alterations to the Demised Premises, may be collectively
referred to as "Necessary Capital Replacements"); provided, however, any cost
incurred by Tenant for Necessary Capital Replacements in excess of Ten Thousand
Dollars ($10,000) in any calendar year during the initial term of this Lease
(and in excess of Twenty Thousand Dollars ($20,000) in any calendar year
during the Extended Term, if any) shall be shared between Landlord and Tenant
whereby Tenant's share shall be determined based on the ratio of the number
of months remaining in the term of this Lease (including any Extended Term)
to the number of months constituting the expected life of the Necessary
Capital Replacement and Landlord's share shall be the balance of
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the cost not attributable to Tenant. Except as expressly set forth in this
Lease, it is intended by the parties hereto that Landlord shall have no
obligation, in any manner whatsoever, to repair or maintain the Demised
Premises, the improvements located therein or the equipment therein, or
Tenant's Utility Systems whether structural or nonstructural, all of which
obligations are intended to be the expense of Tenant, whether or not such
repairs, maintenance or restoration shall have an expected life extending
beyond the term of this Lease. Tenant's maintenance of the HVAC, mechanical,
plumbing and electrical systems shall comply with the manufacturers'
recommended operating and maintenance procedures. Tenant shall enter into and
pay for maintenance contracts for the HVAC, mechanical, electrical and
plumbing systems, satisfactory to Landlord in its good faith discretion, and
maintaining such systems in accordance with the manufacturers' recommended
operating and maintenance procedures. Tenant shall be solely responsible for
the cost of all alterations to the Demised Premises or Tenant's Utility
Systems required by law to the extent such alterations (i) are necessitated
by Tenant's negligence in the maintenance of the Demised Premises or any part
thereof, or (ii) arise from the operation of Tenant's business from the
Demised Premises or Tenant's alterations to the Demised Premises (regardless
of whether such alterations required hereunder have an expected useful life
beyond the term of this Lease or are of a capital nature), which alterations
shall become the property of Landlord upon the expiration of this Lease.
Tenant shall, upon the expiration or sooner termination of the term hereof,
surrender the Demised Premises and Tenant's Utility Systems to Landlord in a
first class condition.
16.3 NOTICE AND LANDLORD'S RIGHT TO REPAIR, REPLACE AND MAINTAIN
THE DEMISED PREMISES. Prior to making any material repair or replacement to
the Demised Premises or Tenant's Utility Systems, Tenant shall give to
Landlord written notice of the need for such repair or replacement. Landlord
shall have the right, but not the duty, to make all necessary repairs or
replacements to the Demised Premises or Tenant's Utility Systems whether or
not notice of the need for such repair or replacement has been given to
Landlord. If Landlord elects to make such repairs or replacements, the cost
thereof shall be paid by Tenant within ten (10) days of receipt of invoice.
If Landlord does not elect to make such repairs or replacements to the
Demised Premises or Tenant's Utility Systems within a reasonable time of
notice thereof, Tenant shall make such repair or replacement at its own cost
and expense. In addition, if Landlord determines, in its reasonable
discretion that Tenant is not adequately maintaining Tenant's Utility Systems
or any portion of the Demised Premises pursuant to Section 16.2, Landlord may
contract to maintain such system at Tenant's sole cost after providing to
Tenant thirty (30) days prior written notice.
16.4 NO LIABILITY. Landlord shall not be liable for any failure to
make any repairs or replacements or to perform any maintenance which is an
obligation of Landlord unless such failure shall persist for an unreasonable
time after written notice of the need of such repairs or maintenance is given
to Landlord by Tenant. There shall be no abatement of Rent and no liability
of Landlord by reason of any injury to or interference with Tenant's business
arising from the making of any repairs, alterations or improvements in or to
any portion of the Project or the Demised Premises or in or to fixtures,
appurtenances and equipment therein other than a material injury or
interference resulting from Landlord's grossly negligent or willful act or
omission. Tenant waives any rights under Sections 1941 and 1942 of the
California Civil Code or under any law, statute or ordinance now or hereafter
in effect to make repairs at Landlord's expense.
16.5 DAMAGE OR DESTRUCTION. Notwithstanding any of the foregoing,
in the event of fire, earthquake, flood, war or similar cause of damage or
destruction, this Section 16 shall not be applicable and the provisions of
Section 20 entitled "Damage or Destruction" shall apply and control.
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17. LIENS.
17.1 NO LIENS. Tenant shall keep the Demised Premises free from
any liens arising out of work performed, materials furnished and obligations
incurred by Tenant. Tenant covenants and agrees that any mechanic's lien
filed against the Demised Premises for work claimed to have been done for, or
materials claimed to have been furnished to Tenant, will be discharged by
Tenant, by bond or otherwise, within thirty (30) days after the filing
thereof, at the cost and expense of Tenant.
17.2 ADVANCE BY LANDLORD. Should Tenant fail to discharge any such
lien, Landlord may, at Landlord's election, pay such claim or post a bond or
otherwise provide security to eliminate the lien as a claim against title,
and the cost thereof shall be immediately due from Tenant as Additional Rent.
17.3 FINANCING STATEMENTS. In the event Tenant shall lease or
finance the acquisition of equipment or other personal property in which
Landlord has a security interest under Section 5.9 of this Lease and such
equipment or other personal property is of a removable nature utilized by
Tenant in the operation of Tenant's business and which may be removed by
Tenant upon the termination of this Lease as provided herein, Tenant warrants
that any Uniform Commercial Code financing statement executed by Tenant will,
upon its face or by exhibit thereto, indicate that the collateral for such
financing statement is located within the Demised Premises and will clearly
identify the same. In no event shall the address or other description of the
Land or the Building be furnished on the statement without qualifying
language as to applicability of the lien only to removable personal property
therein. Each such financing statement shall be subject to the reasonable
prior approval of Landlord. Should any holder of a financing statement
executed by Tenant record or place of record a financing statement which
appears to constitute a lien against any interest of Landlord, including any
lien against equipment which may not be removed by Tenant under this Lease,
Tenant shall, within ten (10) days after filing such financing statement,
cause (i) copies of the security agreement or other documents to which the
financing statement pertains to be furnished to Landlord to show that such
lien is not applicable to Landlord's interest, and (ii) its lender to amend
documents of record so as to clarify that such lien is not applicable to any
interest of Landlord. Landlord shall execute such documents as are reasonably
required by Tenant or Tenant's lenders or equipment lessors provided the same
do not in any way alter the rights of Landlord under this Lease.
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18. INDEMNIFICATION AND EXCULPATION.
18.1 INDEMNIFICATION BY TENANT. Tenant agrees to indemnify
Landlord and its lenders, partners, members, shareholders, directors,
officers, managers, agents and employees (collectively "Landlord's Agents")
against, and to defend and save them harmless from, all demands, claims,
causes of action or judgments, and all reasonable expenses incurred in
investigating or resisting the same (including reasonable professional fees,
including, without limitation, fees for attorneys, architects, engineers, and
environmental consultants), arising out of Tenant's failure to fully perform
under this Lease or for death of, or injury to, any person or damage to
property, including any injury to any other tenant(s) of the Project or the
property of such tenant(s) occurring in, upon or about the Demised Premises,
the Common Areas or any other portion of the Project, (i) arising from or out
of Tenant's use and/or occupancy of the Demised Premises, the Common Areas or
any other portion of the Project, or (ii) arising from or out of any act or
omission of Tenant, its agents, contractors, employees, servants and
subtenants ("Tenant's Agents") in or about the Demised Premises, the Common
Areas or any other portion of the Project, regardless of whether the same
arises from the passive or active negligence of Landlord or Landlord's Agent
except if such death of or injury to, any person, or damage to property is
caused by the grossly negligent or willful act or omission of Landlord or
Landlord's Agents. Tenant's obligation under this Section 18.1 shall survive
the expiration or earlier termination of this Lease.
18.2 INDEMNIFICATION BY LANDLORD. Except as otherwise provided in
this Section 18, Landlord agrees to indemnify Tenant and its lenders,
partners, members, shareholders, directors, officers, managers, agents and
employees against, and to defend and save them from all demands,
claims, causes of action or judgments, and all reasonable expenses incurred
in investigating or resisting the same (including reasonable professional
fees, including, without limitation, fees for attorneys, architects,
engineers and environmental consultants), arising out of Landlord's default
of its obligations under this Lease or for death of, or injury to, any person
or damage to property, including any injury to any other tenant(s) of the
Project or the property of such tenant(s) occurring in, upon, or about the
Demised Premises, the Common Areas or any other portion of the Project during
the term of this Lease arising from or out of the grossly negligent or
willful acts or omissions of Landlord or Landlord's Agents. Landlord's
obligation under this Section 18.2 shall survive the expiration of earlier
termination of this Lease.
18.3 NO LIABILITY OF LANDLORD. Notwithstanding any provision of
Sections 18.1 and 18.2 to the contrary, except to the extent caused by
Landlord's grossly negligent or willful acts or omissions, (i) Landlord shall
not be liable to Tenant or any other party for, and Tenant assumes all risk
of, damage to personal property, including loss of records kept within the
Demised Premises, and (ii) Tenant further waives any claim for injury to
Tenant's business or loss of income relating to any such damage or
destruction of personal property, including any loss of records.
Furthermore, except to the extent caused by Landlord's grossly negligent or
willful acts or omissions, Landlord shall not be liable to Tenant or any
other party, and Tenant assumes all risk of damage to Tenant, Tenant's Agents
and any of their respective property as a result of any actions of any other
tenants of the Project or their agents, contractors, employees, servants,
invitees or other persons.
18.4 ASSUMPTION OF RISK. Additionally, except to the extent caused
by Landlord's gross negligence or willful acts or omissions, Landlord shall
not be liable to Tenant or any other party for, and Tenant assumes all risk
of, damage and liability (other than as may be covered by insurance or by a
third party) resulting from any defect or malfunction of any
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Building system or component of a Building system (such as HVAC, mechanical,
plumbing, electrical, waste disposal or sewer) other than as set forth in
Section 16.1 above.
18.5 SECURITY DEVICES. Security devices provided for the Building,
while intended to deter crime, may not in given instances prevent theft or
other criminal acts, and it is agreed that Landlord shall not be liable for
injuries or losses caused by criminal acts of third parties unless such
injuries or losses result from the grossly negligent or willful acts or
omissions of Landlord. The risk that any security device may malfunction or
otherwise be circumvented by a criminal is assumed by Tenant. Tenant shall,
at Tenant's cost, obtain applicable insurance coverages to the extent Tenant
desires protection against such criminal acts.
19. INSURANCE - WAIVER OF SUBROGATION.
19.1 LANDLORD'S INSURANCE. Landlord shall carry insurance upon the
Project, in an amount equal to full replacement cost (without reference to
depreciation taken by Landlord upon its books or tax returns), or such
greater insurance Landlord's mortgage lender requires Landlord to maintain.
Such insurance shall provide protection against any peril generally included
within the classification "Fire and Extended Coverage," together with
insurance against sprinkler damage (if applicable), vandalism and malicious
mischief. Landlord shall also obtain rental loss insurance for a period of
up to twelve (12) months. Landlord, subject to availability thereof, may
further insure, as Landlord or its lender reasonably deems appropriate,
against flood and/or earthquake, loss or failure of building equipment,
Hazardous Material risks, workers' compensation insurance and fidelity bonds
for employees employed to perform services. The deductible limits of the
"Fire and Extended Coverage" policy shall not exceed Twenty-Five Thousand
Dollars ($25,000) but may, in Landlord's sole discretion, be less than such
amount. Landlord shall also obtain and keep in force during the term of this
Lease a policy of combined single limit bodily injury and property damage
insurance in an amount satisfactory to Landlord in its sole discretion
insuring Landlord, but not Tenant, against any liability arising out of the
ownership, use, occupancy or maintenance of the Project in an amount
determined by Landlord in its sole discretion. The cost of all such insurance
(including the cost of earthquake coverage) shall be an Operating Expense
which shall be reimbursed by Tenant as Additional Rent, provided, however,
Tenant's Share of Operating Expenses attributable to the insurance premium
for earthquake coverage will not exceed the sum of Ten Thousand Dollars
($10,000) in the first full calendar year of this Lease ("Tenant's Earthquake
Insurance Expense Stop") and in the succeeding calendar years, Tenant's
Earthquake Insurance Expense Stop shall be increased annually by ten percent
(10%) of the prior year's Tenant Earthquake Insurance Expense Stop. Landlord
shall furnish to Tenant a copy of such insurance policy.
19.2 TENANT'S INSURANCE. Tenant, at its own cost, shall procure
and continue in effect, from the date of execution of this Lease by Landlord
and Tenant, and continuing throughout the term of this Lease and thereafter
until Tenant has fully and finally surrendered the Demised Premises to
Landlord, comprehensive public liability insurance with limits of not less
than Two Million Dollars ($2,000,000) per occurrence for death, bodily injury
or property damage, hazardous material insurance in an amount appropriate in
light of Tenant's use of the Demised Premises, insurance on all of its
personal property in an amount not less than the full replacement value
thereof. The deductible amounts of such policy of insurance shall not exceed
Five Thousand Dollars ($5,000). All such policies shall be written on an
"occurrence" and not a "claims made" basis, and shall include specific
coverage of contractual liability, and severability of interests and cross
liability endorsements.
19.3 ADDITIONAL INSUREDS. The aforesaid insurance required of
Tenant shall name as additional insureds Landlord, Landlord's members and
Landlord's property manager,
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construction manager, agents and representatives for the Project. Such
insurance shall be with companies having a policyholder rating of not less
than A and financial category rating of Class IX in "Best's Insurance Guide."
Tenant shall cause any insurance companies issuing policies to Tenant to
furnish certificates evidencing such coverage to Landlord. No such policies
shall be cancelable or subject to reduction of coverage or cancellation
except after thirty (30) days' prior written notice to Landlord from the
insurer. All such policies shall be written as primary policies, not
contributing with and not in excess of the coverage which Landlord may carry.
Any of Tenant's policies may be in the nature of a "blanket policy" which
specifically provides that the amount of insurance shall not be prejudiced by
other losses covered by the policy. Tenant shall, at least twenty (20) days
prior to the expiration of any such policies, furnish Landlord with renewals
or binders. Tenant agrees that if Tenant fails to procure and maintain such
insurance, Landlord may (but shall not be required to) procure such coverage
for and on behalf of Landlord and charge Tenant the premiums for any such
policies payable upon demand.
19.4 FIXTURES AND OTHER ITEMS. Except to the extent caused by the
grossly negligent or willful acts or omissions of Landlord or Landlord's
Agents, Tenant assumes the risk of damage to any fixtures, goods, inventory,
merchandise, equipment and personal property of any kind. Except to the
extent caused by the grossly negligent or willful acts or omissions of
Landlord or Landlord's Agents, Landlord shall not be liable for injury to
Tenant's business or any loss of income therefore relative to damage to such
items.
19.5 LENDER AND OTHERS. If any policy of insurance is to name
Landlord as additional insured, Tenant shall, upon written request of
Landlord, also designate as an additional insured, and furnish certificates
evidencing Landlord as an additional insured to, (i) any lender to Landlord
holding a security interest in the Building or, and/or (ii) Landlord under
any lease wherein Landlord is or shall become a tenant under a ground lease
for the Land rather than that of fee owner, and/or (iii) Landlord's property
manager, construction manager, agents and representatives.
19.6 WAIVER OF SUBROGATION. Landlord and Tenant each hereby waive
any and all rights of recovery against the other, or against the officers,
employees, agents and representatives of the other, on account of loss or
damage occasioned to such waiving party or its property or the property of
others under its control to the extent that such loss or damage is insured
against under any fire and extended coverage insurance policy which either
party may have in force at the time of such loss or damage, such waivers to
continue as long as their respective insurers so permit. Any termination of
such a waiver shall be by written notice of circumstances as hereinafter set
forth. Landlord and Tenant, upon obtaining the policies of insurance
required or permitted under this Lease, shall give notice to the insurance
carrier or carriers that the foregoing mutual waiver of subrogation is
contained in this Lease. If such policies are unobtainable with such waiver
or obtainable only at premium over that chargeable without such waiver, the
party seeking such policy shall notify the other thereof, and the latter shall
have ten (10) days thereafter to either (i) procure such insurance in
companies reasonably satisfactory to the other party or (ii) agree to pay
such additional premium. If neither (i) nor (ii) are done, this Section 19.6
shall have no effect during such time as such policies are unobtainable or
the party in whose factor a waiver of subrogation is desired shall refuse to
pay the additional premium. If such policies shall at any time be
unobtainable, but subsequently shall be obtainable, neither party shall be
subsequently liable for a failure to obtain such insurance until a reasonable
time after notification thereof by the other party. If the release of either
Landlord or Tenant, as set forth in the first sentence of this Section shall
contravene any law with respect to exculpatory agreements, the liability of
the party in question shall be deemed not released but shall be secondary to
the other's insurer.
19.7 INCREASES IN INSURANCE. At reasonable times, Landlord may
require
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insurance policy limits to be raised to conform with reasonable requirements
of Landlord's lender or to bring coverage limits to the level then being
required of similar tenants of similar properties; provided, however, that
Landlord may, in any event, require insurance policy limits to be increased
in proportion to any increase in the Consumer Price Index from the date of
this Lease to the date of the requested adjustments.
20. DAMAGE OR DESTRUCTION.
20.1 PARTIAL DESTRUCTION. In the event of a partial destruction of
the Building by fire or other perils covered by extended coverage insurance,
not exceeding fifteen percent (15%) of the full insurable value thereof, and
the damage is such that the Demised Premises are rendered unusable, and if
the damage is such that Landlord estimates that the Building may be repaired,
reconstructed or restored within a period of one hundred twenty (120) days
from the date of the happening of such casualty, Landlord shall commence and
proceed diligently with the work of repair, reconstruction and restoration
and this Lease shall continue in full force and effect, provided, however, if
such repair, reconstruction and restoration takes longer than one hundred
fifty (150) days from the date of such casualty, Tenant may, upon written
notice to Landlord delivered within fifteen (15) days of the end of such one
hundred fifty (150) day period, terminate this Lease effective as of the date
of such notice and Landlord shall have no liability therefor.
20.2 OTHER DESTRUCTION. In the event of any damage to, or
destruction of, the Building, other than as provided in Section 20.1 above,
such that the cost to repair such damage or destruction is equal to or
greater than fifteen percent (15%) of the insurable value of the Building, or
restoration will, in the opinion of Landlord, require more than one hundred
eighty (180) days, then Landlord may, at its option, elect to repair,
reconstruct and restore the Building, in which case this Lease shall continue
in full force and effect, provided, however, if such repair, reconstruction
and restoration takes longer than two hundred forty (240) days from the date
of such casualty, Tenant may, upon written notice to Landlord delivered
within fifteen (15) days of the end of such two hundred forty (240) day
period, terminate this Lease effective as of the date of such notice and
Landlord shall have no liability therefor. If Landlord elects not to repair,
reconstruct and restore the Building, then this Lease shall terminate as of
the date of destruction.
20.3 UNINSURED DAMAGE. In the event of any uninsured damage to or
destruction of the Building which is not covered by Sections 20.1 or 20.2
above, Landlord may, at its option, by written notice to Tenant within sixty
(60) days of the damage or destruction, elect to repair, reconstruct and
restore the Building, and this Lease shall continue in full force and effect,
provided, however, if such repair, reconstruction and restoration takes
longer than eighteen (18) months from the date of such casualty, Tenant may,
upon written notice to Landlord given within fifteen (15) days of the end of
such eighteen (18) month period, terminate this Lease effective as of the
date of such notice and Landlord shall have no liability therefor. If
Landlord elects not to so repair, reconstruct or restore the Building, then
this Lease shall terminate as of the date of destruction. In the event that
any uninsured damage to or destruction of the Building is caused by the
negligent or willful acts of Tenant or its employees, agents, or invitees,
Tenant shall pay (i) the cost of such repair, reconstruction and restoration,
if Landlord so elects to repair, reconstruct and restore, (ii) the cost to
repair, reconstruct or restore if less than fifty percent (50%) of the
insurable value of the Building has been destroyed and Landlord does not
elect to repair, reconstruct and restore, and (iii) the full replacement
value of the Building in the event that more than 50 percent (50%) of the
insurable value of the Building has been destroyed and Landlord does not so
elect to repair, reconstruct and restore. Notwithstanding the foregoing,
Tenant shall not be liable for any such loss if such loss was not
insured as a result of Landlord's failure to maintain the insurance required
under this Lease.
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20.4 ELECTION NOT TO REPAIR. If Landlord elects not to repair,
reconstruct or restore the Building, Landlord promptly shall give written
notice to Tenant of such election, but in no event shall such notice be given
later than forty-five (45) days after the date of damage or destruction.
20.5 RELEASE. Upon any termination of this Lease under any of the
provisions of this Section 20, the parties each shall be released thereby
without further obligation to the other from the date of damage or
destruction, except for any liabilities or obligations theretofore incurred
or arising from matters which have theretofore occurred (including any
liability related to the damage or destruction).
20.6 ABATEMENT OF RENT. Except for an uninsured casualty under
Section 20.3 caused by Tenant, in the event of repair, reconstruction or
restoration as herein provided, Rent to be paid under this Lease shall be
abated (but shall be paid by the rental loss insurance required pursuant to
this Lease to the extent of proceeds available therefrom). Tenant shall not
be entitled to any compensation or damages from Landlord occasioned by any
such damage, repair, reconstruction or restoration, except to the extent such
damage, repair, reconstruction or restoration results from the grossly
negligent or willful act or omission of Landlord or Landlord's Agents.
20.7 TENANT'S PROPERTY. If Landlord is obligated to or elects to
repair or restore as herein provided, Landlord shall be obligated to repair
or restore only those portions of the Building and the Demised Premises which
were originally provided at Landlord's expense, and, with respect to Sections
20.1 and 20.2, only to the extent insurance proceeds are available to pay the
costs to repair or restore. The repair and restoration of Tenant's personal
property shall be the obligation of Tenant, except to the extent such damage,
repair, reconstruction or restoration results from the grossly negligent or
willful act or omission of Landlord or Landlord's Agents.
20.8 DAMAGE AT END OF TERM. Notwithstanding anything to the
contrary contained in this Section 20, Landlord shall have no obligation
whatsoever to repair, reconstruct or restore the Demised Premises when the
damage resulting from any casualty covered under this Section 20 occurs
during the last twelve (12) months of the initial term of this Lease (or the
last thirty-six (36) months of the term of this Lease, if the initial term of
this Lease is extended as set forth in EXHIBIT F). In the event Landlord
elects not to repair, reconstruct or restore the Demised Premises when the
damage resulting from any casualty covered under this Section 20 occurs
during the last twelve (12) months of the initial term of this Lease (or the
thirty-six (36) months of the term of this Lease, if the initial term of this
Lease is extended as set forth in EXHIBIT F), Tenant may, by written notice
delivered to Landlord within ten (10) business days after receipt by Tenant
of Landlord's notice of its election not to repair, reconstruct or restore
the Demised Premises, elect to terminate this Lease.
21. EMINENT DOMAIN.
21.1 TAKING. In the event the whole of the Demised Premises, or
such critical and essential parts thereof as shall deprive Tenant of the
usefulness of the Demised Premises, be taken for any public or quasi-public
purpose by any lawful power or authority by exercise of the right of
appropriation, condemnation or eminent domain, or sold to prevent such
taking, Tenant or Landlord may terminate this Lease effective as of the date
possession is required to be surrendered to such authority.
21.2 RESTORATION. Upon any taking, if this Lease is not terminated
pursuant to
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Section 21.1 above, then Landlord promptly shall proceed to restore the
Demised Premises to substantially their same condition, to the extent
reasonably possible, prior to such partial taking. After the date of any
taking, Basic Rent shall be abated proportionately based on the Rentable Area
of the Demised Premises after such taking as compared to the Rentable Area of
the Demised Premises prior to such taking.
21.3 AWARD. Tenant shall be entitled to any award which is
specifically awarded as compensation for the taking of Tenant's personal
property and fixtures, including excess tenant improvements which were
installed at Tenant's expense and for costs of Tenant moving to a new
location. All other compensation awarded for such taking shall belong to
Landlord.
22. DEFAULTS AND REMEDIES.
22.1 LATE CHARGE. Late payment by Tenant to Landlord of Rent or
other sums due will cause Landlord to incur costs not contemplated by this
Lease, the exact amount of which is extremely difficult to ascertain. Such
costs include, but are not limited to, processing and accounting charges,
attorneys' charges, late payment charges on a mortgage, and so forth. In the
event that Tenant shall fail to pay within five (5) business days of when due
Rent or any other sums owing under this Lease, Tenant shall pay to Landlord a
service charge in an amount equal to five percent (5%) of the delinquent sum
for each month that a monthly installment of Rent remains unpaid, which
Landlord and Tenant agree is not a penalty but is a reasonable estimate of
the expenses Landlord may incur as a result of such late payment. In the
event of any such late payment, in addition to the foregoing service charge,
the amount unpaid shall bear interest at the higher of (i) Bank of America's
"reference rate" plus three percent (3%) per annum, or (ii) twelve percent
(12%) per annum, but in no event shall such interest exceed the maximum rate
allowed by law. Such interest shall be calculated from the date such amount
was due and payable until the same shall have been fully paid. Further, if
Landlord incurs any reasonable attorneys' fees in excess of Eight Hundred
Dollars ($800) with respect to all Defaults in any calendar year, then Tenant
shall pay as an additional late charge the sum of all such reasonable
attorneys' fees in excess of Eight Hundred Dollars ($800). The foregoing late
payment charges and interest shall accrue without the need for Landlord to
give Tenant any reminder notice or Default notice as to the unpaid amount
owing.
22.2 NO WAIVER. No payment by Tenant or receipt by Landlord of a
lesser amount than that due shall be deemed to be other than on account of
the amount due, nor shall any endorsement or statement on any check or any
letter accompanying any check or payment be deemed an accord and
satisfaction, and Landlord may accept such check or payment without prejudice
to Landlord's right to recover the balance or pursue any other remedy
provided. If at any time a dispute shall arise as to any amount or sum of
money to be paid by Tenant to Landlord, Tenant shall have the right to make
payment "under protest" and such payment shall not be regarded as a voluntary
payment, and Tenant shall have the right to institute suit for recovery of
the payment paid under protest.
22.3 PERFORMANCE BY LANDLORD. If Tenant fails to perform any act
on its part to be performed under this Lease, Landlord may, without waiving
or releasing Tenant from any obligations of Tenant or waiving any Default
hereunder, perform such act on behalf of Tenant after providing Tenant
written notice of Landlord's intent to perform such act and a reasonable
opportunity under the circumstances for Tenant to perform (or such other
period of time as may be expressly set forth elsewhere in this Lease).
22.4 EVENTS OF DEFAULT. The occurrence of any one or more of the
following events shall constitute a "Default" hereunder by Tenant:
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(a) The failure by Tenant to make any payment of Rent, including
any sums due under EXHIBIT B, as and when due where such failure continues
for five (5) calendar days thereafter;
(b) Failure by Tenant to keep and perform any term, covenant,
condition or obligation under Sections 5.8 (as to Tenant's obligation to
restore the Security Deposit within ten (10) days after written request
therefor), 17, 19, 23, 27, 33 or 37 as and when such performance is due;
(c) The failure by Tenant to observe or perform any obligation
under this Lease other than described in Sections 22.4(a) and (b) above, to
be performed by Tenant where such failure shall continue for a period of
thirty (30) days after written notice thereof from Landlord to Tenant. Such
notice shall be in lieu of, and not in addition to, any notice required under
California Code of Civil Procedure Section 1161; provided that, if the nature
of Tenant's failure is such that it reasonably requires more than thirty (30)
days to cure, then such failure shall not be a Default if Tenant shall
commence such cure within such thirty (30) day period and thereafter
diligently prosecute the same to completion within ninety (90) days of such
written notice;
(d) Tenant makes an assignment for the benefit of creditors;
(e) Tenant files a voluntary petition under any chapter of the
Bankruptcy Code;
(f) Tenant makes a voluntary assignment for the benefit of
creditors;
(g) A receiver, trustee or custodian is appointed to, or does,
take title, possession or control of all, or substantially all, of Tenant's
assets, or any involuntary petition if filed against Tenant under any chapter
of the Bankruptcy Code, and such petition or receiver, trustee or custodian
is not dismissed within thirty (30) days; or
(h) Tenant's interest in this Lease is attached, executed
upon or otherwise judicially seized and such action is not released within
thirty (30) days of the action.
Notices given under this Section shall specify the alleged default. No such
notice shall be deemed a forfeiture or a termination of this Lease unless
Landlord elects otherwise in such notice.
22.5 REMEDIES. In the event of a Default and at any time thereafter,
with or without notice or demand and without limiting Landlord in the
exercise of any other right or remedy which Landlord may have at law or in
equity, Landlord shall be entitled to terminate Tenant's right to possession
of the Demised Premises by any lawful means, in which case this Lease shall
terminate and Tenant shall immediately surrender possession of the Demised
Premises to Landlord. In such event, Landlord shall have the immediate right
to re-enter and remove all persons and property, and such property may be
removed and stored in a public warehouse or elsewhere at the cost of and for
the account of Tenant, all without service of notice or resort to legal process
and without being deemed guilty of trespass or becoming liable for any loss
or damage which may be occasioned thereby, unless caused by the gross
negligence or willful misconduct of Landlord or Landlord's Agents. In the
event that Landlord shall elect to so terminate this Lease, then Landlord
shall be entitled to recover from Tenant all damages incurred by Landlord and
proximately caused by reason of Tenant's default, including:
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(a) The worth at the time of award of any unpaid Rent which had
been earned at the time of such termination; plus
(b) The worth at the time of award of the amount by which the
unpaid Rent which would have been earned after termination until the time of
award exceeds the amount of rental loss that Tenant proves could have been
reasonably avoided; plus
(c) The worth at the time of award of the amount by which the
unpaid Rent for the balance of the term after the time of award exceeds the
amount of such rental loss which Tenant proves could have been reasonably
avoided; plus
(d) Any other amount necessary to compensate Landlord for all
the detriment proximately caused by Tenant's failure to perform its
obligations under this Lease or which in the ordinary course of things would
be likely to result therefrom, including but not limited to the cost of
restoring the Premises to the condition required under the terms of this
Lease, tenant improvement costs, building modifications, leasing commissions
and marketing expenses, operating expenses, and debt service obligations
incurred or reasonably anticipated to be incurred by Landlord in re-leasing
of the Demised Premises; plus
(e) At Landlord's election, such other amounts in addition to or
in lieu of the foregoing as may be permitted from time to time by applicable
law.
As used in subsections (a) and (b) above, "worth at the time of award"
shall be computed by allowing interest at the rate specified in Section 22.1
above. As used in subsection (c) above, the "worth at the time of award"
shall be computed by determining the present value of such amount using the
discount rate of the Federal Reserve Bank of San Francisco at the time of
award plus one percentage point.
22.6 RIGHT OF RE-ENTRY. In the event of a Default, and at any time
thereafter, with or without terminating this Lease, and with or without
notice or demand and without limiting Landlord in the exercise of any right
or remedy which Landlord may have, Landlord shall have the immediate right to
re-enter and remove all persons and property (provided such re-entry and
removal is not a breach of the peace), and such property may be removed and
stored in a public warehouse or elsewhere at the cost of and for the account
of Tenant, all without service of notice or resort to legal process and
without being deemed guilty of trespass or becoming liable for any loss or
damage which may be occasioned thereby, unless such loss or damage is caused
by the gross negligence or willful misconduct of Landlord or Landlord's
Agents. No such re-entry shall be considered or construed to be a forcible
entry by Landlord. If Landlord does not elect to terminate this Lease as
provided in this Section, then Landlord may, from time to time, recover all
Rent as it becomes due under this Lease pursuant to California Civil Code
Section 1951.4. At any time thereafter, Landlord may elect to terminate this
Lease and to recover damages to which Landlord is entitled.
22.7 PROCEEDS OF RELETTING. In the event Landlord elects to
terminate this Lease and relet the Premises, it may execute any new lease in
its own name. Tenant hereunder shall have no right or authority whatsoever
to collect any rent or other sums from such tenant. The proceeds of any such
reletting shall be applied as follows:
(a) First, to the payment of any indebtedness other than Rent
due hereunder from Tenant to Landlord, including but not limited to storage
charges or brokerage commissions owing from Tenant to Landlord as the result
of such reletting;
(b) Second, to the payment of the reasonable costs and
expenses of
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reletting the Premises, including alterations and repairs which Landlord
deems reasonably necessary and advisable, and reasonable attorneys' fees
incurred by Landlord in connection with the retaking of the Premises and such
reletting;
(c) Third, to the payment of Rent and other charges due and
unpaid hereunder; and
(d) Fourth, to the payment of future Rent and other damages
payable by Tenant under this Lease.
22.8 NON-EXCLUSIVE. All rights, options and remedies of Landlord
contained in this Lease shall be construed and held to be non-exclusive and
cumulative. Landlord shall have the right to pursue any or all of such
remedies or any other remedy or relief which may be provided by law, whether
or not stated in this Lease. No waiver of any Default hereunder shall be
implied from the acceptance by Landlord of any Rent or other payments due
hereunder or any omission by Landlord to take any action on account of such
Default if such Default persists or is repeated, and no express waiver shall
affect Defaults other than as specified in such waiver.
22.9 NO RELIEF. Termination of this Lease or Tenant's right to
possession by Landlord shall not relieve Tenant from any liability to
Landlord which has theretofore accrued or shall arise based upon events which
occurred prior to the later of (i) the date of Lease termination, or (ii) the
date possession of Demised Premises is surrendered to Landlord.
23. ASSIGNMENT OR SUBLETTING.
23.1 ASSIGNMENT OR SUBLETTING. Except as hereinafter provided,
Tenant shall not, either voluntarily or by operation of law, sell,
hypothecate or transfer this Lease, or sublet the Demised Premises or any
part hereof, or permit or suffer the Demised Premises or any part thereof to
be used or occupied as work space, storage space, mailing privileges,
concession or otherwise by anyone other than Tenant or Tenant's employees,
without the prior written consent of Landlord in each instance, which consent
shall not be unreasonably withheld nor delayed (provided Tenant complies with
the notice requirements described in Section 23.2 below). One or more
transfers, in the aggregate, of more than thirty percent (30%) of the equity
ownership of Tenant shall constitute a prohibited assignment; provided,
however, this provision shall not be applicable if such transfers occurred on
a public stock exchange.
23.2 NOTICE. In the event Tenant desires to assign, sublease,
hypothecate or otherwise transfer this Lease or sublet the Demised Premises,
or part thereof, then at least twenty-five (25) days, but not more than one
hundred twenty (120) days, prior to the date when Tenant desires the
assignment or sublease to be effective (the "Assignment Date"), Tenant shall
give Landlord written notice ("the Assignment Notice") which shall set forth
the name, address and business of the proposed assignee or sublessee,
information (including references) concerning the character of the proposed
assignee or sublessee, the Assignment Date, any ownership or commercial
relationship between Tenant and the proposed assignee or sublessee, the
consideration and all other material terms and conditions of the proposed
assignment or sublease, and a copy of the sublease or assignment documents,
all in such detail as Landlord shall reasonably require. Additionally,
Tenant shall furnish to Landlord a copy of the audited financial statements
for the most recently past fiscal year, as well as the most recent unaudited
quarterly financial statements for Tenant, the proposed assignee or sublessee
and any proposed guarantor associated therewith.
23.3 APPROVAL.
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(a) Landlord, in making its determination as to whether
consent should be given to a proposed assignment or sublease, may give
consideration to, among other things, the reputation in the community of a
proposed successor, the financial strength of such successor (notwithstanding
the assignor or sublessor remaining liable for Tenant's performance), any
proposed material modifications to the Demised Premises and any material
change in use which such successor proposes to make in use of the Demised
Premises. In no event shall Landlord be deemed to be unreasonable hereunder
or under subsection (c) below for declining to consent to a transfer to a
successor of poor reputation, lacking financial qualification or seeking a
modification to the Demised Premises or a change in use, or conditioning its
consent to a proposed assignment upon the proposed assignee or sublessee
delivering to Landlord an additional security deposit in an amount and on
conditions reasonably acceptable to Landlord. Landlord may also withhold
consent pursuant to the terms of Section 37.3 concerning Hazardous Material.
(b) In the event Landlord's withholding of consent to a
proposed assignment or subletting is found to be unreasonable by any court of
competent jurisdiction, Tenant's sole remedy shall be to have the proposed
assignment or subletting declared valid as if Landlord's consent had been
given.
(c) Any of the foregoing notwithstanding, in no event shall
any assignee or subtenant further assign or sublet any portion of the Demised
Premises without the prior written consent of Landlord.
23.4 EXCESS RENT. In the event Tenant assigns or subleases the
Demised Premises or any portion thereof, Tenant shall pay to Landlord, at the
time Tenant receives the same, fifty percent (50%), of all sums received by
Tenant from any such assignee or sublessee (whether such sums are for rent of
the Demised Premises, use of Tenant's personal property or for any other
reason) in excess of the Rent to be paid by Tenant to Landlord for such
portion of the Demised Premises so assigned or sublet, after deducting all
brokers' commissions, attorneys' fees and advertising fees actually incurred
by Tenant in connection with such assignment or sublease.
23.5 TRANSFER VOID. Any sale, assignment, hypothecation or
transfer of this Lease or subletting of Demised Premises, or part thereof,
that is not in compliance with the provisions of this Section 23 shall be
void, and shall, at the option of Landlord, be a breach of this Lease.
23.6 FURTHER ASSIGNMENT. The consent by Landlord to an assignment
or subletting shall not relieve Tenant or any assignee of this Lease or
sublessee of the Demised Premises from obtaining the consent of Landlord to
any further assignment or as releasing Tenant or any assignee or sublessee of
Tenant from full and primary liability.
23.7 NO WAIVER. Notwithstanding any subletting or assignment,
Tenant shall remain fully and primarily liable for the payment of all Rent
and other sums due, or to become due, hereunder, and for the full performance
of all other terms, conditions and covenants to be kept and performed by
Tenant hereunder. The acceptance of Rent or any other sum due hereunder, or
the acceptance of performance of any other term, covenant or condition
hereof, from any other person or entity shall not be deemed to be a waiver of
any of the provisions of this Lease or a consent to any subletting or
assignment of the Demised Premises.
23.8 HAZARDOUS MATERIALS TEST. Upon the commencement and
termination of any
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assignment or sublease, the assignee or subtenant and Tenant shall comply
with the provisions of Sections 37.5.1 and 37.5.2 for the premises assigned
or sublet.
23.9 ASSUMPTION. Any proposed assignee shall execute and deliver
to Landlord an assumption of this Lease in form and content reasonably
acceptable to Landlord. In the event of any assignment, Tenant shall not be
released thereby.
24. ATTORNEYS' FEES.
24.1 ATTORNEYS' FEES. If either party hereto becomes a party to
any litigation with any person or entity which is not a party to this Lease
concerning this Lease (including any bankruptcy proceeding), the Demised
Premises, or the Project, by reason of any act or omission of the other party
to this Lease or its authorized representatives, and not by any act or
omission of the party that becomes a party to that litigation or any act or
omission of its authorized representatives, the party that causes the other
party to become involved in the litigation shall be liable to that party for
reasonable attorneys' fees and court costs incurred by it in the litigation.
24.2 ACTION. If either party hereto commences an action against
the other party arising out of or in connection with this Lease, including
any proceeding in bankruptcy or any arbitration proceeding, the most
prevailing party shall be entitled to have and recover from the losing party
reasonable attorneys' fees and costs of suit or arbitration.
25. BANKRUPTCY. In the event a debtor, trustee or
debtor-in-possession under the Bankruptcy Code, or other person with similar
rights, duties and powers under any other law, proposes to cure any breach of
Tenant under this Lease or to assume or assign this Lease and is obliged to
provide adequate assurance to Landlord that (i) a breach will be cured, (ii)
Landlord will be compensated for its damages arising from any breach of this
Lease, or (iii) future performance under this Lease will occur, then adequate
assurance shall include any or all of the following, as reasonably determined
by Landlord:
(a) Those acts specified in the Bankruptcy Code or other laws
as included within the meaning of adequate assurance, even if this Lease does
not concern a facility described in such laws;
(b) A prompt cash payment to compensate Landlord for any
monetary breaches or damages arising from a breach of this Lease;
(c) A cash deposit in an amount reasonable under the
circumstances for similar properties in ▇▇▇▇▇▇ ▇▇▇▇▇ used for similar
purposes by tenants with a similar credit rating;
(d) The reasonable creditworthiness and desirability, as a
tenant, of the person assuming this Lease or receiving an assignment of this
Lease, at least equal to Landlord's customary and usual creditworthiness
requirements and desirability standards in effect at the time of the
assumption or assignment; and
(e) The assumption or assignment of all of Tenant's interest
and obligations under this Lease.
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26. LANDLORD.
26.1 LANDLORD. The term "Landlord" as used in this Lease, so far
as covenants or obligations on the part of Landlord are concerned, shall be
limited to mean and include only Landlord or the successor-in-interest of
Landlord under this Lease at the time in question. In the event of any
transfer, assignment or the conveyance of Landlord's title or leasehold,
Landlord herein named (and in case of any subsequent transfers or
conveyances, the then grantor) shall be automatically freed and relieved from
and after the date of such transfer, assignment or conveyance of all
liability for the performance of any covenants or obligations contained in
this Lease thereafter to be performed by Landlord and, without further
agreement, the transferee of such title or leasehold shall be deemed to have
assumed and agreed to observe and perform any and all obligations of Landlord
hereunder during its ownership or ground lease of the Demised Premises.
Landlord may transfer its interest in the Demised Premises or this Lease
26.2 LIMIT ON LANDLORD'S LIABILITY. Tenant shall look only to
Landlord's right, title and interest in and to the Project and to the
consideration from the sale or other disposition of all or any part of
Landlord's right, title or interest in the Project for the satisfaction of
Tenant's remedies for the collection of a judgment (or other judicial
process) requiring the payment of money by Landlord in the event of any
default by Landlord under this Lease, and no other property or assets of
Landlord (nor of any member, trustee, officer, employee, shareholder,
partner, tenant in common of or with Landlord or any other person or entity
related to or having an interest in Landlord) shall be subject to any
execution or other enforcement procedure for the satisfaction of Tenant's
remedies under or with respect to this Tenant's use or occupancy of the
Demised Premises or the Project. The provisions of this Section 26.2 shall
not be construed to permit any setoff against Rent or other sums due
hereunder.
26.3 RIGHT TO CURE. Landlord shall not be in default hereunder
unless Landlord fails to perform an obligation required of Landlord within a
reasonable time, but in no event later than fifteen (15) business days after
written notice by Tenant specifically identifying the obligation Landlord has
failed to perform; provided, however, that if the nature of Landlord's
obligation is such that more than fifteen (15) business days are required for
performance, then Landlord shall not be in default if Landlord commences
performance within such fifteen (15) business day period and thereafter
diligently prosecutes the same to completion.
26.4 LENDER'S RIGHT TO CURE. In the event of any default on the
part of Landlord, Tenant shall give notice, by registered or certified mail,
at any address provided to Tenant, to any beneficiary of a deed of trust or
mortgagee of a mortgage covering the Building or Demised Premises whose
address shall have been furnished to Tenant and Tenant shall offer such
beneficiary or mortgagee a reasonable opportunity to cure the default, not to
exceed Landlord's cure period plus thirty (30) days.
27. ESTOPPEL CERTIFICATE. From time to time as reasonably requested by
Landlord, Tenant shall, within ten (10) days of written notice from Landlord,
execute, acknowledge and deliver to Landlord a statement in writing
substantially in the form attached to this Lease as EXHIBIT C with the blanks
filled in, and on any other form reasonably requested by a proposed lender or
purchaser, (i) certifying that this Lease is unmodified and in full force and
effect (or, if modified, stating the nature of such modification and
certifying that this Lease as so modified is in full force and effect) and
the dates to which the Rent and other charges are paid in advance, if any,
(ii) acknowledging that there are not, to Tenant's knowledge, any uncured
Defaults or
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Conditional Defaults on the part of Landlord hereunder or specifying such
Defaults or Conditional Defaults if any are claimed, and (iii) setting forth
such further reasonable information with respect to this Lease or the Demised
Premises as may be requested thereon.
28. JOINT AND SEVERAL OBLIGATIONS. If more than one person executes
this Lease as Tenant:
(a) Each of them is jointly and severally liable for the keeping,
observing and performing all of the terms, covenants, conditions, provisions
and agreements of this Lease to be kept, observed and performed by Tenant; and
(b) The term "Tenant" shall mean and include each of them jointly and
severally. The act of, notice from, notice to, refund to or the signature of
any one or more of them, with respect to this Lease, including but not
limited to any renewal, extension, expiration, termination or modification of
this Lease, shall be binding upon each and all of the persons executing this
Lease as Tenant with the same force and effect as if each and all of them had
so acted, so given or received such notice or refund or so signed.
29. LIMITATION OF LANDLORD'S LIABILITY.
29.1 LIMITATION. If Landlord is a limited partnership or joint
venture, the limited partners of such partnership shall not be personally
liable and no limited partner of Landlord shall be sued individually or named
individually as a party in any suit or action or shall service of process be
made against any limited partner of Landlord. If Landlord is a corporation
or limited liability company, the shareholders, members, directors, officers,
managers, employees and/or agents of such corporation shall not be personally
liable and no shareholder, member, director, officer, manager, employee or
agent of Landlord shall be individually sued or named as a party in any suit
or action arising out of, or in any way connected to, this Lease, including,
without limitation, Landlord's obligations under this Lease or Tenant's
possession of the Demised Premises, or service of process be made against any
shareholder, member, director, officer, officer, manager, employee or agent
of Landlord. No limited partner, shareho
29.2 APPLICABILITY. Each of the covenants and agreements of this
Section 29 shall be applicable to any covenant or agreement either expressly
contained in this Lease or imposed by statute or by common law.
30. DEMISED PREMISES CONTROL BY LANDLORD. Landlord reserves full
control over the Building and the Demised Premises to the extent not
inconsistent with Tenant's quiet enjoyment and use of Demised Premises. This
reservation includes but is not limited to right of Landlord to grant
easements and licenses to others and the right to maintain or establish
ownerships of the Building separate from fee title to the Land, provided any
grant of an easement by Landlord does not interfere with Tenant's quiet
enjoyment and use of the Demised Premises, except to the extent the grant of
any such easement is approved by Tenant, required by law or permitted
pursuant to the terms of this Lease.
31. QUIET ENJOYMENT. So long as there is no uncured Default, Landlord
covenants
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that Landlord or anyone acting through or under Landlord will not
disturb Tenant's occupancy of the Demised Premises, except as permitted by
the provisions of this Lease.
32. QUITCLAIM DEED. Tenant shall execute and deliver to Landlord on the
expiration or termination of this Lease, immediately upon Landlord's request,
a quitclaim deed to the Demised Premises or other document in recordable form
suitable to evidence of record termination of this Lease.
33. SUBORDINATION AND ATTORNMENT.
33.1 SUBORDINATION. This Lease shall be subject and subordinate to
the lien of any mortgage or deed of trust encumbering Landlord's interest in
the Demised Premises or the Project or any lease in which Landlord is the
tenant, now or hereafter in force against the Demised Premises, and to all
advances made or hereafter to be made upon the security thereof without the
necessity of the execution and delivery of any further instruments on the
part of Tenant to effectuate such subordination; provided the holder of any
such mortgage, deed of trust or lease executes, acknowledges and delivers to
Tenant upon Tenant's request a non-disturbance agreement providing that so
long as Tenant performs all of its obligations under this Lease, Tenant's
quiet enjoyment and use of the Demised Premises shall not be disturbed,
except as permitted by the provisions of this Lease.
33.2 ADDITIONAL INSTRUMENTS. Notwithstanding the foregoing, Tenant
shall execute and deliver within ten (10) days of demand a subordination
agreement in the form attached as EXHIBIT E or such further instrument or
instruments evidencing such subordination of this Lease to the lien of any
such mortgages, deeds of trust or leases as may be required by Landlord.
However, if any such mortgagee, beneficiary or landlord under a lease wherein
Landlord is tenant so elects, this Lease shall be deemed prior in lien to any
such lease, mortgage or deed of trust upon or including the Demised Premises,
regardless of date, and Tenant shall execute and deliver within ten (10) days
of demand a statement in writing to such effect at Landlord's request.
33.3 ATTORNMENT. In the event any proceedings are brought for
foreclosure, or in the event of the exercise of the power of sale under any
mortgage or deed of trust covering the Demised Premises, Tenant shall, at the
election of purchaser at such foreclosure or sale, attorn to such purchaser
and recognize such purchaser as Landlord under this Lease, provided such
purchaser provides to Tenant reasonable assurances that its tenancy will not
be disturbed so long as it is not in Default under this Lease.
33.4 AMENDMENT. If Landlord obtains a loan commitment from a
lender for the financing or refinancing of the Demised Premises and/or the
Project, and such loan commitment requires some amendment(s) to this Lease,
then Tenant shall cooperate reasonably with Landlord in executing such
amendment(s), so long as the amendment(s) do not materially adversely affect
any of the material rights or obligations of Tenant under this Lease.
34. SURRENDER.
34.1 NO RELEASE. No surrender of possession of any part of the
Demised Premises shall release Tenant from any of its obligations hereunder
unless accepted by Landlord.
34.2 ASSIGNMENT. The voluntary or other surrender of this Lease by
Tenant shall not work a merger, unless Landlord consents, and shall, at the
option of Landlord, operate as an assignment to it of any or all subleases or
subtenancies.
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34.3 NO MERGER. The voluntary or other surrender of any ground or
underlying lease that now exists or may hereafter be executed affecting the
Building or Demised Premises, or a mutual cancellation thereof or of
Landlord's interest therein, shall not work a merger and shall, at the option
of the successor of Landlord's interest in the Land, the Building or the
Demised Premises, operate as an assignment of this Lease.
35. WAIVER AND MODIFICATION. No provision of this Lease may be
modified, amended or added to except by an agreement in writing executed by
Landlord and Tenant. The waiver by Landlord or Tenant of any breach of any
term, covenant or condition herein contained shall not be deemed to be a
waiver of any subsequent breach of the same or any other term, covenant or
condition herein contained.
36. WAIVER OF JURY TRIAL. THE PARTIES HERETO SHALL AND DO HEREBY WAIVE
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF
THE PARTIES HERETO AGAINST THE OTHER ON ANY MATTERS WHATSOEVER ARISING OUT OF
OR IN ANY WAY CONNECTED WITH THIS LEASE, THE RELATIONSHIP OF LANDLORD AND
TENANT, TENANT'S USE OR OCCUPANCY OF THE DEMISED PREMISES AND/OR ANY CLAIM OF
INJURY OR DAMAGE.
__________ _________
Landlord's Tenant's
Initials Initials
37. HAZARDOUS MATERIAL.
37.1 PROHIBITION/COMPLIANCE. Tenant, at its sole cost, shall
comply with all federal, state and local laws, statutes, ordinances, codes,
regulations and orders relating to Tenant's and its agent's, employee's,
contractor's and invitee's receiving, handling, use, storage, accumulation,
transportation, generation, spillage, migration, discharge, release and
disposal of any Hazardous Material as defined in this Section 37. Tenant
shall not cause or permit any Hazardous Material (as hereinafter defined) to
be brought upon, kept or used in or about the Demised Premises or the Project
by Tenant, its agents, employees, contractors or invitees in a manner or for
a purpose (i) prohibited by any federal, state or local law, rule or
regulation, (ii) in violation of any insurance policies on the Demised
Premises or the Project, (iii) inconsistent with good biotechnology industry
practices, or (iv) inconsistent with the requirements of any lender with a
deed of trust or mortgage on the Project or any part thereof. The disposal of
Hazardous Material shall be in approved cantainers and removed from the
Demised Premises by duly licensed carriers. Tenant shall be immediately
provide Landlord with telephonic notice, which shall promptly be confirmed by
written notice, of any and all spillage, discharge, release and disposal of
Hazardous Material onto or within the Demised Premises of the Project, which
by law must be reported to any federal, state or local agency, and any
injuries or damages resulting directly or indirectly therefrom. A failure of
Tenant to give to Landlord the notices required in this Section 37.1 shall
constitute a Default under this Lease. Further, Tenant shall deliver to
Landlord cach and every notice or order received from any federal, state or
local agency concerning Hazardous Material and the possession, use/or
disposal thereof promptly upon receipt of each such notice or order.
Tenant shall be responsible for, and shall indemnify,
protect, defend and hold harmless Landlord and its agents, employees,
representatives, directors and officers from,
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any and all claims, costs, penalties, fines, losses (including, without
limitation, (i) temporary or permanent diminution in value of the Demised
Premises or the Project, (ii) damages for the temporary or permanent loss or
restriction on use of rentable or usable space or of any amenity of the
Demised Premises or the Project, and (iii) sums paid in settlement of
claims), consultant fees and expert fees, liabilities, attorneys' fees,
damages, injuries, causes of action, judgments and expenses, which arise
during or after the term of this Lease and which directly or indirectly (a)
result from Tenant's use and occupancy of the Demised Premises or any other
portion of the Project, or (b) result from Tenant's or its agent's,
employee's, contractor's and invitee's receiving, handling, use, storage,
accumulation, transportation, generation, spill
37.1.1 The indemnifications of Landlord and indemnities by Tenant
pursuant to Section 37.1 above include, to the extent Tenant is responsible
for such costs and expenses under the provisions of Section 37.1 above, but
without limiting the generalities thereof, reasonable costs incurred in
connection with any investigation of site conditions or any cleanup,
remedial, removal or restoration work lawfully required by any federal, state
or local governmental agency or political subdivision because of any
Hazardous Material present in the soil, subsoil, ground water, or elsewhere
at, on or under the Demised Premises or the Building. Without limiting the
foregoing, if the presence of any Hazardous Material at, on or under the
Demised Premises or the Building caused or permitted by Tenant results in the
Demised Premises or the Building becoming in violation of law, Tenant
promptly shall take all actions at its expense as are necessary to return the
Demised Premises or the Building to the condition existing prio
37.1.2 Landlord acknowledges that it is not the intent of this
Section 37 to prohibit Tenant from operating its business as described in
Section 2.6 above or to unreasonably interfere with the operation of Tenant's
business. Tenant may operate its business according to the custom of the
industry so long as the use, presence and disposal of Hazardous Material is
strictly and properly monitored according to all applicable governmental
requirements. As a material inducement to Landlord to allow Tenant to
lawfully use Hazardous Material in connection with its business, Tenant
agrees to deliver to Landlord prior to the Term Commencement Date a list
identifying each type of Hazardous Material to be present in or upon the
Demised Premises and setting forth any and all governmental approvals or
permits required in connection with the presence of such Hazardous Material
on the Demised Premises ("Hazardous Materials List") and a copy of the
Hazardous Material business plan prepared pursuant to Health and Safety Code
Section 25500, ET SEQ. Tenant shall deliver to Landlord an updated Hazardous
Material List at least once every (12) months. Tenant shall deliver to
Landlord true and correct copies of the following documents (hereinafter
referred to as the "Documents"), relating to handling, storage, disposal and
emission of Hazardous Material prior to the Term Commencement Date or, if
unavailable at that time, concurrent with the receipt from or submission to a
governmental agency: (i)permits; (ii)approvals; (iii)reports and
correspondence; (iv)storage and management plans; (v)notice of violations of
any laws; (vi)plans relating to the installation of any storage tanks or
containers to be installed in the Demised Premises (provided, such
installation of tanks or containers only shall be permitted after
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Landlord has given Tenant its written consent to do so, which consent may be
withheld in Landlord's sole discretion); and (vii) all closure plans or any
other documents required by any and all federal, state and local governmental
agencies and authorities for any storage tanks installed in, on or under the
Demised Premises. Tenant shall not be required, however, to provide Landlord
with that portion of any document which contains information of a proprietary
nature and which, in and of itself, does not contain a reference to any
Hazardous Material or hazardous activities which are not otherwise identified
to Landlord in such documentation, unless any such Document names Landlord as
an "Owner" or "Operator" of the facility in which Tenant is conducting its
business. It is not the intent of this Section 37 to provide Landlord with
information which could be detrimental to Tenant's business should such
information become possessed by Tenant's competitors. Landlord shall treat
all such proprietary information furnished by Tenant to Landlord as
confidential and shall not disclose such information to any person or entity
without Tenant's prior written consent (which consent Tenant shall not
unreasonably withheld), except as required by law, by insurance carriers, or
by applicable governmental agencies.
37.2 TERMINATION OF LEASE.
(a) Notwithstanding the provisions of this Section 37, Landlord
shall have the right to terminate this Lease in this event that (i) Tenant
uses the Demised Premises for the generation, storage, use, treatment or
disposal of Hazardous Material in a manner or for a purpose prohibited by
applicable law (and Tenant fails to diligently pursue and achieve within a
reasonable period compliance therewith) after written notice of such
noncompliance from either Landlord or any federal, state or local
governmental agency or political subdivision, (ii) Tenant has been required
by any governmental authority to take remedial action in connection with
Hazardous Material contaminating the Demised Premises or the Building if the
contamination resulted from Tenant's action or use of the Demised Premises
and such remedial action has a material adverse effect on Landlord, the
Demised Premises or the Building and Tenant fails to commence the remedial
action immediately and diligently prosecute the same to completion within
ninety (90) days, or (iii) Tenant is subject to an enforcement order issued
by any governmental authority in connection with the use, disposal or storage
of a Hazardous Material on the Demised Premises and such enforcement order
has a material adverse effect on Landlord, the Demised Premises or the
Building and Tenant fails to obtain a revocation, rescission or cancellation
of the enforcement order witin sixty (60) days after the date upon which such
enforcement order is issued. Each of the foregoing events shall be deemed to
be a material Default by Tenant under this Lease.
(b) In the event that a portion of the Building or the Project is
contaminated by Hazardous Material such that the Demised Premises may not
lawfully be used by Tenant for a period of longer than ninety (90) days, and
such contamination was caused by Hazardous Material used by Landlord or
another tenant of the Building, Tenant may, upon written notice delivered to
Landlord within fifteen (15) days of the determination that the Demised
Premises may not be used for a period longer than ninety (90) days, terminate
this Lease as of such date of notice. Landlord shall have no liability with
respect to such contamination except to the extent caused by the grossly
negligent or willful acts or omissions of Landlord. Tenant shall have no
other right to ▇▇▇▇▇ Rent or terminate this Lease as a result of any
contamination of the Demised Premises.
37.3 ASSIGNMENT AND SUBLETTING. Notwithstanding the provisions of
Section 23 above, if (i) any anticipated use of the Demised Premises by any
proposed assignee or sublessee involves the generation or storage, use,
treatment or disposal of Hazardous Material in any manner or for a purpose
prohibited hereunder or by any applicable law, (ii) the proposed assignee or
sublessee has been required by any governmental authority to take remedial
action in
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connection with a Hazardous Material if the contamination resulted from such
party's action or use of the property in question and has failed to take such
action, or (iii) the proposed assignee or sublessee is subject to an
enforcement order issued by any governmental authority in connection with the
use, disposal or storage of a Hazardous Material by such proposed assignee or
sublessee and of a type such proposed assignee or sublessee intends to use
in, on or at the Demised Premises and the proposed assignee or sublessee has
failed to fully comply with such enforcement order, it shall not be
unreasonable for Landlord to withold its consent to an assignment or
subletting to such proposed assignee or sublessee.
37.4 CONDITION. Landlord represents and warrants that, to the best of
its knowledge, as of the date of this Lease, except as set forth in Section
13.3 above or as disclosed in that certain Environment Assessment report
prepared by Dames & ▇▇▇▇▇ dated January 17, 1996, a copy of which has been
provided to Tenant, there are no Hazardous Material on the Demised Premises.
If Landlord discovers that any other Hazardous Material exists in, on or
about the Demised Premises, then Landlord promptly shall give Tenant written
notice of such condition and shall, except to the extent Tenant is
responsible therefor, use its best efforts to have such Hazardous Material
cleaned up in conformance with this Lease and brought in compliance with
applicable laws.
37.5 PERFORM TESTS.
37.5.1 At any time prior to the expiration of the term of this
Lease, Landlord shall have the right to enter (no more than twice in any
calendar year unless any contamination in excess of legally permissible
levels has occurred or Landlord reasonably believes that any contamination
may have occurred) upon the Demised Premises at all reasonable times, and at
reasonable intervals, upon forty eight (48) hours' prior notice, and
accompanied by an authorized representative of Tenant, if Tenant so elects,
in order to conduct appropriate tests to determine whether contamination in
excess of permissible levels has occurred as a result of Tenant's use of the
Demised Premises. Landlord shall deliver to Tenant written notice of the
results of such tests. Tenant shall pay the reasonable costs of any test
conducted pursuant to this Section which demonstrates that contamination in
excess of legally permissible levels has occurred and such contamination was
caused by Tenant's use of the Demised Premises. Additionally, Tenant shall
pay for all costs necessary to clean up or remedy any contamination caused by
Tenant's use of the Premises.
37.5.2 Upon the expiration or upon any early termination of this
Lease, Tenant shall furnish to Landlord, at Tenant's sole cost, a report and
certification from a qualified environmental engineer, verifying that the
Demised Premises are free from any Hazardous Material or contamination in
excess of legally permissible levels. If such report indicates that there
are any impermissible levels of Hazardous Material on the Demised Premises,
then Tenant shall pay for all costs necessary to clean up and remedy such
impermissible levels of Hazardous Material; and Tenant shall also continue to
pay Rent for the Demised Premises (including monthly installments of Basic
Rent at a rate equal to one hundred fifty percent (150%) of the monthly
installment of Basic Rent in effect immediately prior to such expiration or
termination of this Lease) less the amount of any rent for the Demised
Premises actually received by Landlord until such time as the impermissible
levels of Hazardous Material are cleaned up and remedied.
37.6 TENANT'S OBLIGATIONS. Tenant's obligations under this Section 37
shall survive the termination of this Lease. During any period of time
employed by Tenant after the termination of this Lease to complete the
removal from the Demised Premises or the Building of any such Hazardous
Material, Tenant shall continue to pay the full Rent in accordance with this
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Lease.
37.7 DEFINITION OF HAZARDOUS MATERIAL. As used herein, the term
"Hazardous Material(s)" means any hazardous or toxic substance, material or
waste which is or becomes regulated by any local governmental authority, the
State of California or the United States Government, and includes, without
limitation, any material or substance which is (i) defined as a "hazardous
waste," "extremely hazardous waste" or "restricted hazardous waste" under
Sections 25115, 25117 or 25122.7 or listed pursuant to Section 25140 of the
California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste
Control Law); (ii) defined as a "hazardous substance" under Section 25316 of
the California Health and Safety Code, Division 2, Chapter 6.8
(▇▇▇▇▇▇▇▇▇-▇▇▇▇▇▇-▇▇▇▇▇▇ Hazardous Substance Account Act); (iii) defined as a
"hazardous material," "hazardous substance" or "hazardous waste" under
Section 25501 of the California Health and Safety Code, Division 20, Chapter
6.95 (Hazardous Substances); (v) petroleum; (vi) asbestos; (vii) listed under
Aritlce 9 and defined as hazardous or extremely hazardous pursuant to Article
11 of Title 22 of the California Administrative Code, Division 4, Chapter 20;
(viii) designated as a "hazardous substance" pursuant to Section 311 of the
Federal Water Pollution Control Act (33 U.S.C. Section 1317); (ix) defined as
a "hazardous waste" pursuant to Section 1004 of the Federal Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901, ET SEQ. (42 U.S.C.
Section 6903); or (x) defined as a "hazardous substance" pursuant to Section
101 of the Comprehensive Environmental Response Compensation Liability Act,
42 U.S.C. Section 9601, ET SEQ. (42 U.S.C. Section 9601).
38. MISCELLANEOUS.
38.1 TERMS AND HEADINGS. Where applicable in this Lease, the
singular includes the plural and the masculine or neuter includes the
masculine, feminine and neuter. The headings used in this Lease are not a
part hereof and shall have no effect upon the construction or interpretation
of any part hereof.
38.2 EXAMINATION OF LEASE. Submission of this Lease for
examination or signature by Tenant does not constitute a reservation of, or
option for, lease, nor is it effective as a lease or otherwise until
execution by, and delivery to, both Landlord and Tenant.
38.3 TIME. Time is of the essence with respect to the performance
of every provision of this Lease in which time of performance is a factor.
38.4 COVENANTS AND CONDITIONS. Each provision of this Lease
performable by Landlord or Tenant shall be deemed both a covenant and a
condition.
38.5 CONSENTS. Whenever consent or approval of either party is
required, that party shall not unreasonably withhold such consent or
approval, except as may be expressly set forth to the contrary.
38.6 ENTIRE AGREEMENT. This Lease (together with its exhibits) is
intended by the parties as a final expression of their agreement with respect
to the terms as are included herein, and all prior agreements,
understandings, representations and statements, oral or written, are merged
herein, excepting only for written agreements signed contemporaneously with
the signing of this Lease.
38.7 SEVERABILITY. Any provision of this Lease which shall be
deemed or prove to be invalid, void or illegal shall in no way affect, impair
or invalidate any other provision hereof,
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and all such other provisions shall remain in full force and effect.
38.8 RECORDING. Tenant shall be permitted to record a memorandum
of this Lease, provided Tenant obtains Landlord's written approval, not to be
unreasonably withheld, of the form and content of any memorandum.
38.9 IMPARTIAL CONSTRUCTION. The language in all parts of this
Lease shall be in all cases construed as a whole according to its fair
meaning and not strictly for or against either Landlord or Tenant. As both
parties participated in the drafting and review of this Lease with separate
and independent legal counsel, any ambiguity in the language will not be
constructed against either Party as the drafter of that language.
38.10 INUREMENT. Each of the covenants, conditions and agreements
herein contained shall inure to the benefit of and shall apply to and be
binding upon the parties hereto and their respective heirs, legatees,
devisees, executors, administrators, successors, assigns, sublessees or any
person who may come into possession of the Demised Premises or any part
thereof in any manner whatsoever. Nothing contained in this Section shall in
any way alter the provisions against assignment or subletting provided in
this Lease.
38.11 FORCE MAJEURE. If either party cannot perform any of its
obligations under any portion of this Lease other than EXHIBIT B due to
events beyond the obligated party's reasonable control (including, without
limitation, Landlord's obligations to repair, reconstruct or restore pursuant
to Sections 20.1, 20.2 or 20.3 but excluding any monetary obligations of
Tenant), the time provided for performing such obligations shall be extended
by a period of time equal to the duration of such events. Events beyond a
party's control include, but are not limited to, acts of God, war, civil
commotion, labor disputes, strikes, fire, flood or other casualty, shortages
of labor or material, government regulation or restriction and weather
conditions. This provision shall not apply to EXHIBIT B, which shall be
governed by its own provision regarding force majeure.
38.12 NOTICES. Any notice, consent, demand, ▇▇▇▇, statement or
other communication required or permitted to be given hereunder shall be in
writing and shall be deemed duly delivered upon personal delivery, or as of
the second business day after mailing by United States mail, postage prepaid,
return receipt requested, or upon the next business day if delivered by
overnight courier or similar overnight delivery system, addressed to Tenant,
or Landlord, at the addresses shown in Section 2.7 herein. Either party may,
by notice to the other given pursuant to this Section, specify additional or
different addresses for notice purposes.
38.13 EXHIBITS. All exhibits and schedules referred to herein and
attached hereto are a part hereof, and incorporated herein by this reference.
Any termination of this Lease shall likewise constitute a termination of any
rights of Tenant under any exhibits or schedules hereto.
38.14 MODIFICATION. No modification, waiver, amendment, discharge
or change of this Lease shall be valid unless the same is in writing and
signed by the party against which the enforcement of such modification,
waiver, amendment, discharge or change is or may be sought.
38.15 PERIODS OF TIME. All periods of time referred to in this
Lease shall include all Saturdays, Sundays and state or United States
holidays, unless the period of time specifies business days, provided that if
the date or last date to perform any act or give any notice with respect to
this Lease shall fall on a Saturday, Sunday or state or national holiday,
such act or notice may be timely performed or given on the next succeeding
day which is not a Saturday,
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Sunday or state or national holiday.
38.16 CHOICE OF LAW. This Lease shall be construed and enforced
in accordance with the laws of the State of California, and venue for any
legal action under this Lease shall be San Diego County, California.
38.17 INTERPRETATION. In the event any conflict exists between
the provisions of this Lease, the order of priority in the interpretation
hereof shall be as follows: (a) any lease amendment or addendum signed
simultaneously with the signing of this Lease, (b) Construction Exhibit, (c)
exhibits (except the Construction Exhibit), (d) Basic Lease provisions, and
(e) the general provisions of this Lease.
38.18 MERGER. There shall be no merger of the leasehold estate
created by this Lease with the fee interest in any of the Demised Premises by
reason of the fact that the same person may acquire or hold or own, directly
or indirectly, (a) the leasehold estate created hereby or any part thereof or
interest therein, and (b) the fee estate in any of the Demised Premises or
any part thereof or interest therein.
38.19 FINANCIAL STATEMENTS. Tenant shall provide to Landlord
within ten (10) days of request, financial statements of Tenant for the most
recent final year or quarter then publicly available. Annual statements
shall be audited by an independent certified public accountant and all other
quarterly statements shall be certified by the chief financial officer of
Tenant, as the case may be, as being complete and accurate in all respects.
Tenant shall not be required to provide such financial information more than
once per quarter.
39.CONTINGENCIES.
39.1 LENDER. The rights and obligations of both Landlord and
Tenant under this Lease are contingent upon (i) Landlord obtaining approval
of this Lease from Landlord's lender holding a deed of trust on the Project
within thirty (30) days after the date of execution of this Lease or such
longer period as the parties may mutually approve in writing and (ii) Tenant
and such lender executing a subordination, non-disturbance and attornment
agreement in substantially the form of EXHIBIT E hereto. If such condition
is not satisfied prior to such date, then either Landlord or Tenant may
terminate this Lease by giving written notice of such party's intention to
terminate this Lease to the other party, and if such contingency has not been
satisfied or waived within five (5) business days thereafter, by thereafter
giving written notice of termination to the other party any time prior to
receiving written notice that such condition has been satisfied or waived.
Neither party shall have any further rights, obligation or liabilities under
this Lease after this Lease is terminated pursuant to this Section.
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IN WITNESS WHEREOF, the parties hereto have executed this Lease as of
the dates set forth below next to their respective signatures.
LANDLORD:
DM SPECTRUM LLC, a California limited
liability company
By: DMSK LLC, a California limited
liability company
Date of Execution: December 6, 1996 By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------
Title: Managing Member
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TENANT:
MAXIM PHARMACEUTICALS, INC., a
Delaware corporation
Date of Execution: December 4, 1996 By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------
Title: CEO
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By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: CFO
---
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