ALZA Plaza
Building One
EXHIBIT 10.11
ALZA CORPORATION
LEASE AGREEMENT DATED SEPTEMBER 1, 1997
(BUILDING ONE)
THIS LEASE, made this 1st day of September, 1997, between
P/A CHARLESTON ROAD LLC, a California limited liability company,
("Landlord"), and ALZA CORPORATION, a Delaware corporation,
("Tenant", with Landlord and Tenant sometimes collectively
referred to herein as the "Parties").
WITNESSETH:
Landlord hereby leases to Tenant and Tenant hereby hires and
takes from Landlord those certain premises (the "Premises") as so
identified on Exhibit A, attached hereto and incorporated herein
by this reference thereto more particularly described as follows:
All of that certain building (hereinafter sometimes referred
to as the "Building" or "Building One") to be constructed in
accordance with the Construction Agreement between Landlord
and Tenant dated as of September 1, 1997 (the "Construction
Agreement") and the land exclusively associated with
Building One as so identified on Exhibit A to be located at
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇. The entire single unsubdivided parcel of
land (the "Parcel"), of which the Premises is a part, is so
identified on Exhibit A. The on and off-site improvements,
building shell and interior improvements shall be
constructed by Tenant in accordance with the shell
specifications, site improvement specifications, and
interior improvement specifications as are now or hereafter
set forth in, attached to, or approved in accordance with
the terms of the Construction Agreement. Upon completion of
the "Shell Improvements" associated with the Premises (as
defined in the Construction Agreement), the Architect for
the Shell Improvements shall measure said Building in
accordance with the applicable provisions of the
Construction Agreement and the square footage shall be shown
on the lease commencement letter in the general form of
Exhibit D to be executed by the parties hereto on or prior
to the Commencement Date of this Lease (the "Lease
Commencement Letter"). Upon construction of the "Interior
Improvements" of the Premises (as defined in the
Construction Agreement), a plan reflecting the configuration
of the same shall be attached as Exhibit B hereto and
incorporated herein by this reference.
It is understood that the formal address for the Building
will be assigned by the City of Mountain View (the "City") some
time after issuance of a building permit for the Building. The
address for the Building as so assigned by the City, shall be
reflected in the Lease Commencement Letter.
As used herein the "Complex" shall mean and include all of
the Parcel as so identified on Exhibit A, attached hereto, and
all of the buildings, improvements, fixtures and equipment now or
hereafter situated on the Parcel. It is currently envisioned by
the Parties that there will be three occupiable multi-story
buildings constructed on the Parcel, which are currently
anticipated to be in the aggregate a minimum of approximately
300,000 square feet and a maximum of approximately 360,000 square
feet (collectively referred to herein as the "Three Buildings"
and individually as "Building One", "Building Two" and "Building
Three"). As neither the specific design or size of any or all of
the Three Buildings has been approved by the City, any
description of the location, size or design of the Building or of
the Three Buildings is necessarily only an approximation, and the
Parties agree to amend this Lease if necessary or appropriate to
reflect the final description of the location, size or design of
the Three Buildings as ultimately approved by the Parties and the
City. Tenant, as provided in the Construction Agreement, is
obligated to exercise due diligence to seek to obtain the
approval by the City for the development of an aggregate of at
least 300,000 square feet for all three Buildings.
Said letting and hiring is upon and subject to the terms,
covenants and conditions hereinafter set forth and as set forth
in the Construction Agreement, and Tenant covenants as a material
part of the consideration for this Lease to perform and observe
each and all of said terms, covenants and conditions. This Lease
is made upon the conditions of such performance and observance.
For convenience, attached hereto is an Index of Defined
Terms which identifies the Paragraph or other location where
various defined terms are defined in this Lease, with all such
defined terms being initially capitalized.
1. USE. ALZA Corporation("ALZA"), or an affiliate of ALZA
("ALZA Affiliate" as further defined in Paragraph 47C hereof), as
Tenant, under this Lease shall have the right to use the Premises
for any lawful use; in the event this Lease is assigned to any
person other than an ALZA Affiliate (an "Unaffiliated Assignee"),
such Unaffiliated Assignee, as Tenant, may use the Premises for
any or all of the following uses: office uses (including
executive, administrative or professional offices), research and
development uses (including laboratories and pilot production),
and any particular uses associated with companies engaged in
biotechnology research or production (including bio-research and
pharmaceutical uses), companies engaged in the design, research
or development (including pilot manufacturing) of computer or
electronics hardware, and companies engaged in the design,
research or development or manufacturing of computer or
electronics software, provided such purpose and/or use is in
conformance with applicable governmental laws, regulations, rules
and ordinances. Landlord will not unreasonably withhold its
approval to any other use requested by Tenant, provided such use
is not inappropriate as a use in the Complex. Tenant shall not
do or permit to be done in or about the Premises (or to the
extent within Tenant's control, the Complex) nor bring or keep or
permit to be brought or kept in or about the Premises (or to the
extent within Tenant's control, the Complex) anything which is
prohibited by or will in any way increase the existing rate of
(or otherwise adversely affect) fire or any insurance covering
the Complex or any part thereof, or any of its contents, or will
cause a cancellation of any insurance covering the Complex or any
part thereof, or any of its contents, except to the extent that
Landlord or Tenant, upon notice thereof, is able to arrange for
the continuation or replacement of such insurance coverage, with
any increased costs of such continued or replacement insurance to
be paid exclusively by Tenant. Tenant shall not do or permit to
be done anything in, on or about the Premises or the Complex
which will in any way unreasonably obstruct or interfere with the
rights of other tenants or occupants of the Complex or injure or
unreasonably annoy them, or use or allow the Premises to be used
for any improper, immoral, or unlawful purpose, nor shall Tenant
cause, maintain or permit any nuisance in, on or about the
Premises or the Complex. No sale by auction shall be permitted
on the Premises. Tenant shall not place any loads upon any
floors, walls, or ceilings of the Building which endanger the
structure, or place any harmful fluids or other materials in the
drainage system of the Building or the Common Area, or overload
the Building's electrical or other mechanical systems without
first obtaining Landlord's consent and, at Tenant's sole cost and
expense, upgrading such electrical and/or mechanical systems to
accommodate such enhanced uses. No waste materials or refuse
shall be dumped upon or permitted to remain upon any part of the
Building or on any portion of the Common Area of the Complex,
except in trash containers placed inside exterior enclosures
approved by Landlord (which approval is waived if ALZA and/or any
ALZA Affiliates is then the Tenant under each of the Three
Leases) for that purpose or inside of the Building proper in
areas designated for such purpose. No materials, supplies,
equipment, finished products or semi-finished products, raw
materials or articles of any nature shall be stored upon or
permitted to remain outside the Building, except in screened
storage areas approved by Landlord (which approval is waived if
ALZA and/or any ALZA Affiliates is then the Tenant under each of
the Three Leases). Tenant may install antennas, satellite
dishes, supplemental air conditioning, emergency generators, and
other equipment on the roof of the Building (or Landlord approved
screened area adjacent to the Building or in the Common Area),
provided (i) if on the roof, Tenant obtains a written statement
from a structural engineer approving the location of such
equipment and stating that the weight of such equipment will not
damage the roof and/or structural aspects of the Building and
(ii) said equipment is properly screened from view and provided
Tenant first obtains, at its expense, all required governmental
approvals for the same and provided Tenant, immediately upon such
installation, repairs any and all such damage resulting from said
installation. Tenant shall not place anything or allow anything
to be placed near the glass of any window, door, partition or
wall which may appear unsightly from outside the Premises. No
loudspeaker or other device, system or apparatus which can be
heard outside the Premises shall be used in or at the Premises
without the prior consent of Landlord (which approval is waived
if ALZA and/or any ALZA Affiliates is then the Tenant under each
of the Three Leases). Tenant shall not commit or suffer to be
committed any waste in or upon the Premises. Tenant shall
indemnify, defend and hold Landlord harmless against any loss,
expense, damage, reasonable attorneys' fees, or liability arising
out of failure of Tenant to comply with any applicable law
relating to Tenant's use of the Premises or with which Tenant is
otherwise obligated to comply under the terms of this Lease.
Tenant shall comply with any covenant, condition, or restriction
("CC&R's") affecting the Premises (if any), with the parties
acknowledging that currently there are no CC&R's, and if Landlord
in the future seeks to adopt any CC&R's, such adoption of CC&R's
shall be subject to the same standards as apply herein to the
adoption by Landlord of Rules and Regulations pursuant to
Paragraph 5 hereof. The provisions of this Paragraph are for the
benefit of Landlord only and shall not be construed to be for the
benefit of any tenant or occupant of the Premises or the Complex.
2. TERM.
A. Initial Term. The initial Term ("Initial Term") of this
Lease shall be for a period of FIFTEEN (15) years (unless
commenced early or sooner terminated or extended as hereinafter
provided) and, as provided in Paragraphs 2B and 2C, shall
commence on the Lease Commencement Date as defined in Paragraph
2B below and terminate fifteen (15) years later following the
Rent Commencement Date as defined in Paragraph 2B below. The
Initial Term, as it may be extended by the subsequent exercise of
the First Option to Extend or the Second Option to Extend as
provided herein, is referred to herein as the "Lease Term".
B. Lease Commencement Date and Rent Commencement Date.
Subject to ▇▇▇▇▇▇▇▇▇ ▇▇ below relating to any Early Occupancy
Period (which may result in the acceleration of the Lease
Commencement Date so as to precede the Rent Commencement Date),
possession of the Premises shall be deemed tendered and the
Initial Term of this Lease shall commence (the "Lease
Commencement Date") on the Rent Commencement Date. The "Rent
Commencement Date" is defined in Section 1.K of the Construction
Agreement and is to be the earlier of:
(i) eighteen (18) months (the "Agreed Construction
Period") following the earlier of the following dates
(regardless of whether or not Tenant has completed the Shell
Improvements or Interior Improvements as set forth in the
Construction Agreement):
(a) the date that Tenant obtains from the City of
Mountain View a Planned Community Permit (the "PCP
Permit") permitting Tenant to proceed generally
thereafter with seeking the issuance of building
permits for the construction of Buildings One, Two and
Three (but the issuance of a building permit is not a
condition to the commencement of the Agreed
Construction Period), or
(b) the date of October 31, 1997 (the "Outside
Date") subject to the right of Landlord to extend such
Outside Date pursuant to Section 2.C of the
Construction Agreement; or
(ii) the Substantial Completion (as defined in Section
1.J of the Construction Agreement) of the Shell Improvements
and Interior Improvements for the Building.
The Agreed Construction Period shall be subject to extension as
provided in the Construction Agreement only for (x) Damage Delays
as defined in Section 1.M of the Construction Agreement (with
Damage Delays being confined therein to delays in construction of
the Shell Improvements or Interior Improvements occasioned by any
damage or destruction occurring during the course of construction
where the estimated cost of repair or restoration equals or
exceeds One Million Dollars per occurrence), (y) Landlord Delays
as defined in Section 1.N of the Construction Agreement (with
Landlord Delays being confined therein to delays in construction
of the Shell Improvements or Interior Improvements caused by the
failure of Landlord either to timely make any payment of the
Improvement Allowance (as defined in the Construction Agreement),
or to timely approve or execute any reasonably appropriate plans
and specifications, working drawings, permits, utility easements
or other related documents which Landlord is responsible for
approving or executing under the provisions of the Construction
Agreement) or (z) Weather Delays as defined in Section 1.O of the
Construction Agreement (with Weather Delays being confined
therein to delays in construction of the Shell Improvements or
Interior Improvements caused by abnormally adverse weather
conditions (compared to the average seasonal weather conditions
experienced in Mountain View, California during the relevant
period of construction) in the nature of abnormal rains (and any
resultant flooding) such as might occur due to an el nino,
provided that there shall not be considered to be any Weather
Delay unless the aggregate affect of all Weather Delays
(excluding average seasonal weather conditions) are reasonably
estimated to have delayed the completion of construction of the
Shell Improvements or Interior Improvements by a period in excess
of thirty (30) calendar days), but the Agreed Construction Period
shall not otherwise be subject to extension regardless of the
status of the completion of the Shell Improvements or Interior
Improvements at the end of the Agreed Construction Period and
regardless of whether the actual construction period exceeded the
Agreed Construction Period. As provided in Section 2.C of the
Construction Agreement, either Landlord or Tenant shall have
certain rights as set forth in the Construction Agreement to
terminate this Lease upon written notice to the other within five
(5) business days after the Outside Date (as such date may be
extended by Landlord pursuant to Section 2.C of the Construction
Agreement), if the City Council of the City of Mountain View,
California fails to finally approve and cause the issuance by the
City of Mountain View of the PCP Permit in satisfaction of the
requirements set forth in Section 1.K of the Construction
Agreement (which Section 1.K sets forth the standards for
acceptability of the PCP Permit) on or before the Outside Date
(as such Outside Date may have been extended by Landlord). The
Lease Commencement Date shall be the earlier of (i) the Rent
Commencement Date or (ii) the date of commencement of any Early
Occupancy Period as provided in ▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇. The Rent
Commencement Date for this Lease is scheduled to be the same as
the respective rent commencement date of the lease for Building
Two (the "Building Two Lease") and the lease for Building Three
(the "Building Three Lease", with this Lease and the Building Two
Lease and the Building Three Lease sometimes referred to herein
as the "Three Leases"). The Rent Commencement Date (and Tenant's
obligation to pay Rent beginning on the Rent Commencement Date)
shall not be extended due to any delay beyond the Outside Date
(as such date may be extended by Landlord pursuant to Section 2.C
of the Construction Agreement), related to the issuance of the
PCP Permit (or any delay in construction emanating therefrom) or
the status of completion of construction as of the Rent
Commencement Date, but the Rent Commencement Date shall in any
instance only remain subject to possible delay as provided in
Section 9 of the Construction Agreement for Damage Delays,
Landlord Delays or Weather Delays. If this Lease is terminated
as provided in the Construction Agreement, Tenant shall have no
further right to the Premises leased hereunder and Landlord shall
be free to lease the Premises to a third party without any
obligation, of any type whatsoever, to Tenant under this Lease.
It is agreed in the event this Lease commences on a date other
than the first day of any calendar month, the Lease Term will be
extended to account for the number of days in the partial month.
The Basic Rent during the resulting partial month will be pro-
rated (for the number of days in the partial month) at the Basic
Rent rate scheduled for the projected first month of the term of
the Lease.
C. Early Occupancy Period. In the event a portion of the
Premises are available for Tenant's occupancy prior to the Rent
Commencement Date, Tenant may occupy such portion of the Premises
and in such event, (i) subject to the terms of this Paragraph,
the Premises shall instead be deemed tendered and the term of the
Lease shall instead begin on such early occupancy date (with such
early occupancy date thereupon becoming the Lease Commencement
Date and the period between such early occupancy date and the
Rent Commencement Date being referred to as the "Early Occupancy
Period"), (ii) Tenant shall be responsible for paying all
Additional Rent expenses for the entire Premises and otherwise
complying with the terms of this Lease during the Early Occupancy
Period, (iii) Tenant shall be responsible for the prorata share
of Basic Rent reasonably allocable on a useable square footage
basis to such portion of the Premises during the Early Occupancy
Period, but the Rent Commencement Date as to the entire Premises
shall remain unchanged, and (iv) the maximum term of the Second
Option to Extend shall be reduced by the number of days of such
Early Occupancy Period. Notwithstanding clause (iii) above, if
Tenant so occupies more than fifty percent of the useable square
footage area of the Building prior to what would otherwise be the
Rent Commencement Date hereunder, then the Rent Commencement Date
shall be deemed to have occurred as to the entire Premises on the
date that Tenant so occupies more than fifty percent of the
useable square footage area of the Building.
3. POSSESSION - NOT APPLICABLE DUE TO FIXED LEASE COMMENCEMENT
DATE
4. RENT. The term Rent or Rental, as either may be used
hereunder, shall consist of (i) Basic Rent, as defined within
▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇, (▇▇) Additional Rent, as defined within
Paragraph 4E below and (iii) any Management Fee to the extent
then applicable hereunder, as defined within Paragraph 4D below.
In any instance where "Rent" or "Rental" is used in place of
"Basic Rent" or "Additional Rent", it shall be understood that
"Rent" or "Rental" includes "Basic Rent", "Additional Rent" and
"Management Fee".
A. Basic Rent. It is understood that Tenant, as of the
Lease Commencement Date, is leasing from Landlord, under three
separate lease agreements, the Three Buildings which are
currently anticipated to be in the aggregate a minimum of
approximately 300,000 square feet and a maximum of approximately
360,000 square foot, but with the exact size of each of the Three
Buildings being undetermined as of this date. The scheduled
monthly Basic Rent during the first year of the Initial Term for
this Lease following the Rent Commencement Date shall be a number
equal to twelve percent (12%) per annum of the total agreed Land
Value of $31,707,000 and the Improvement Allowance (as provided
for in Section 3.F of the Construction Agreement, which provides
for an initial Improvement Allowance of $31,707,000 and an
additional Improvement Allowance of up to $4,000,000,
collectively referred to herein as the "Total Improvement
Allowance"), divided by the total square footage of all Three
Buildings (calculated in the manner provided in the Construction
Agreement), multiplied by the total square footage of the
Building leased hereunder (calculated in the manner provided in
the Construction Agreement), divided by twelve. For example: If
the Total Improvement Allowance is $35,707,000 (the initial
Improvement Allowance of $31,707,000 plus the entire additional
Improvement Allowance of $4,000,000 as provided in the
Construction Agreement) and the total square footage of all Three
Buildings is 360,000 square feet and the Building under this
Lease is 120,000 square feet, the monthly Basic Rent during the
first twelve months of the Initial Term following the Rent
Commencement Date shall be $224,713.33 (31,707,000 + $35,707,000
x 12%/360,000 x 120,000/12). The initial Basic Rent for this
Lease shall be established once the following is determined: (i)
exact size of each of the Three Buildings; and (ii) the exact
amount of the Total Improvement Allowance used by Tenant. After
the information identified in (i) and (ii) above is known and
agreed to by the Parties hereto, the initial Basic Rent for this
Lease shall be memorialized in the Lease Commencement Letter.
Notwithstanding anything to the contrary herein, if the square
footages of the Building or of Building Two or Building Three is
not reasonably determinable as of the Rent Commencement Date,
then in such instance Tenant shall be obligated with respect to
the period from the Rent Commencement Date to the date that such
square footages of the Building and of Building Two and Building
Three are reasonably determinable, to pay estimated Base Rent
under this Lease based on an amount equal to one-third of the
aggregate Base Rent that would become due upon the respective
Rent Commencement Date under all Three Leases, with the Base Rent
to be retroactively recalculated under this Lease once the
respective square footages of the Building and of Building Two
and Building Three are so determined (with any amount of
overpayment or underpayment of Base Rent to be credited by
Landlord to Tenant or paid by Tenant to Landlord promptly
thereafter).
On each anniversary of the Rent Commencement Date during the
Initial Term, the monthly Basic Rent shall increase by the amount
of $0.05 per square foot per month and said increase shall be
shown in the Lease Commencement Letter.
Tenant agrees to pay to Landlord at such place as Landlord
may designate without deduction, offset, prior notice, or demand,
and Landlord agrees to accept as "Basic Rent" for the Lease
Premises the total sum due under the Lease.
B. Time for Payment. Full monthly Basic Rent, Management
Fee and Additional Rent (as scheduled by Landlord) is due in
advance on the first day of each calendar month. In the event
that the Lease Commencement Date occurs on a date other than the
first day of a calendar month, on the Lease Commencement Date
Tenant shall pay to Landlord Management Fee and Additional Rent
for the period from such Lease Commencement Date to the first day
of the next succeeding calendar month that proportion of the
monthly Management Fee and Additional Rent hereunder for the
number of days between the Lease Commencement Date and the first
day of the next succeeding calendar month. In the event that the
Rent Commencement Date occurs on a date other than the first day
of a calendar month, on the Rent Commencement Date Tenant shall
pay to Landlord Basic Rent for the period from such Rent
Commencement Date to the first day of the next succeeding
calendar month that proportion of the monthly Basic Rent
hereunder for the number of days between the Rent Commencement
Date and the first day of the next succeeding calendar month. In
the event that the Lease Term for any reason ends on a date other
than the last day of a calendar month, on the first day of the
last calendar month of the Lease Term, Tenant shall pay to
Landlord as Basic Rent, Management Fee and Additional Rent for
the period from said first day of said last calendar month to and
including the last day of the Lease Term that proportion of the
monthly Basic Rent, Management Fee and Additional Rent hereunder
for the number of days between said first day of said last
calendar month and the last day of the Lease Term.
C. Late Charge and Interest on Rent in Default.
Notwithstanding any other provision of this Lease, if any
installment of Basic Rent, Management Fee and/or Additional Rent
(collectively "Rent") is not received by Landlord from Tenant
within nine (9) calendar days after the same becomes due, Tenant
shall immediately pay to Landlord a late charge in an amount
equal to ten percent (10%) of the amounts due and not so paid.
In no event shall this provision for a late charge be deemed to
grant Tenant a grace period or extension of time within which to
pay any Rent installment as set forth in this Paragraph 4 or to
prevent Landlord from exercising any right or remedy available to
Landlord upon Tenant's failure to pay each Rent installment due
under this Lease when due. If any Rent remains delinquent for a
period in excess of nine (9) calendar days, then, in addition to
such late charge, Tenant shall pay to Landlord interest on any
Rent that is not so paid from said ninth day at the rate of Bank
of America's Prime Rate (or equivalent rate) plus five percent
(5%) per annum on the unpaid amount, but in no event greater then
the maximum rate of interest permitted by applicable law, until
paid in full.
D. Management Fee. Subject to the provisions of this
Paragraph 4D and Paragraph 19, Tenant shall pay to Landlord, in
addition to the Basic Rent and Additional Rent, a management fee
("Management Fee") on a monthly basis equal to three percent (3%)
of the Basic Rent and any scheduled Additional Rent payable to
Landlord for such month, with such Management Fee to be payable
throughout the Lease Term (including during either the First
Extension Term or the Second Extension Term (collectively
referred to as the "Extended Term(s)")).
The above requirement for a Management Fee is waived during
the time ALZA or an ALZA Affiliate is the Tenant under this
Lease, provided, however, that in the event a portion or all of
the Premises is sublet by ALZA or an ALZA Affiliate to an
unaffiliated third party, Tenant as sublandlord shall require the
subtenant to pay to Tenant a Management Fee equal to three
percent (3%) of the rental payable by the subtenant under the
sublease with respect to the sublet Premises (which Management
Fee shall be considered in the calculation of any Excess Rent
payable by Tenant to Landlord pursuant to Paragraph 19 hereof) .
If the Lease is assigned (voluntarily or involuntarily) to any
Unaffiliated Assignee, said Unaffiliated Assignee, as Tenant,
shall be liable for the payment of the Management Fee as noted
above. The Management Fee following an assignment to an
Unaffiliated Assignee shall be calculated as stated in the
preceding paragraph.
E. Additional Rent. Except as provided in the
Construction Agreement relating to the period prior to the Lease
Commencement Date, beginning on the Lease Commencement Date and
continuing throughout the Lease Term, Tenant shall pay to
Landlord or to Landlord's designated agent or, if so directed by
Landlord, to the governmental agency, public utility, or other
third party entitled to receive such payment, in addition to the
Basic Rent and Management Fee and as Additional Rent the
following:
(a) Tenant's proportionate share of all Taxes relating
to the Complex as set forth in Paragraph 12, and
(b) Tenant's proportionate share of all insurance
premiums relating to the Complex, as set forth in Paragraph 15,
and
(c) Tenant's proportionate share (or as otherwise
reasonably determined by Landlord) to the extent applicable, of
expenses for the operation, maintenance and repair of the
Building, and as set forth in Paragraph 10, of the Common Area of
the Complex (including, if this Lease relates to less than all of
the Building, the common areas of the Building), and
(d) All charges, costs and expenses which Tenant is
required to pay hereunder, together with all interest and
penalties, costs and expenses, including reasonable attorneys'
fees and legal expenses, that may accrue thereon in the event of
Tenant's failure to pay such amounts, and all damages, reasonable
costs and expenses which Landlord may incur by reason of default
of Tenant (pursuant to Paragraph 22 of this Lease, i.e. Tenant
has received notice of a default under this Lease and the
applicable cure period has expired and Tenant has not then cured
such default) or failure on Tenant's part to comply with the
terms and conditions of this Lease.
In the event of nonpayment by Tenant of Additional Rent,
Landlord shall have all the rights and remedies with respect
thereto as Landlord has for nonpayment of Basic Rent.
Notwithstanding anything to the contrary in the definition
of Additional Rent as set forth in this Paragraph 4E or Paragraph
10, Additional Rent shall not include any of the following:
(1) Any ground or underlying lease rental;
(2) Bad debt expenses and interest, principal, points
and fees on debts, bad debt expenses or amortization on any
mortgage or other debt instrument encumbering the Building or the
Complex;
(3) Costs incurred by Landlord for repair of damage to
the Complex to the extent Landlord is reimbursed by insurance
proceeds or by third parties (including third party tenants);
(4) Depreciation on the Premises, amortization and
interest (on loans Landlord may have against the Premises),
except on equipment, materials, tools, supplies and vendor-type
equipment purchased by any party to enable that party to supply
services that party might otherwise contract for with a third
party where such depreciation, amortization and interest payments
would otherwise have been included in the charge for such third
party's services, all as determined in accordance with generally
accepted accounting principles;
(5) Subject to Landlord's rights under Paragraph 21,
advertising and promotional expenditures, and costs of signs in
or on the Complex identifying other third party tenants, unless
such expenditure is related to damage caused by Tenant or a
default by Tenant;
(6) Except as otherwise provided in this Lease,
marketing costs, including leasing commissions, attorneys' fees,
space planning costs, and other costs and expenses incurred in
connection with lease negotiations;
(7) Except as otherwise provided in this Lease, costs,
including permit, license and inspection costs, incurred with
respect to the installation of tenant improvements made for other
third party tenants or incurred in renovating or otherwise
improving, decorating, painting or redecorating vacant space for
other third party tenants;
(8) Costs incurred due to the violation by Landlord or
other third party tenants of the terms and conditions of any
lease of space in the Complex which lease is not related to this
Building and which costs incurred are not related to Tenant
hereunder.
The Additional Rent due hereunder shall be paid to Landlord
or Landlord's agent (i) within ten (10) days for Taxes and
Property Insurance (to the extent such Taxes or Property
Insurance shall be payable to the applicable taxing authority
within thirty (30) days after the date of presentation of such
invoice) and within thirty (30) days for all other Additional
Rent items, after presentation of invoice from Landlord or
Landlord's agent setting forth such Additional Rent and/or (ii)
at the option of Landlord (except with respect to Taxes and
Property Insurance), Tenant shall pay to Landlord monthly, in
advance, Tenant's pro rata share of an amount estimated by
Landlord to be Landlord's approximate average monthly expenditure
for such Additional Rent items, which estimated amount shall be
reconciled within one hundred twenty (120) days after the end of
each calendar year, or more frequently if Landlord elects to do
so at Landlord's sole and absolute discretion, as compared to
Landlord's actual expenditure for said Additional Rent items,
with Tenant paying to Landlord, upon demand, any amount of actual
expenses expended by Landlord in excess of said estimated amount,
or Landlord refunding to Tenant (provided Tenant is not in
default in the performance of any of the terms, covenants and
conditions of this Lease) any amount of estimated payments made
by Tenant in excess of Landlord's actual expenditures for said
Additional Rent items. Within sixty (60) days after receipt of
Landlord's written reconciliation together with supporting
documentation, Tenant shall have the right, at Tenant's sole
expense, to commence a review and/or audit, at a mutually
convenient time at Landlord's office, of Landlord's records
relating to the foregoing expenses. Any audit must be conducted
by Tenant or an independent nationally recognized accounting firm
that is not being compensated by Tenant or other third party on a
contingency fee basis. If an audit (not a review) reveals that
Landlord has overcharged Tenant, the amount overcharged shall be
credited to Tenant's account within sixty (60) days after the
audit is concluded.
The respective obligations of Landlord and Tenant under this
Paragraph 4 shall survive the expiration or other termination of
the Lease Term, and if the Lease Term shall expire or shall
otherwise terminate on a day other than the last day of a
calendar year, the actual Additional Rent incurred for the
calendar year in which the Lease Term expires or otherwise
terminates shall be determined and settled on the basis of the
statement of actual Additional Rent for such calendar year and
shall be prorated in the proportion which the number of days in
such calendar year preceding such expiration or termination bears
to 365.
F. Place of Payment of Basic Rent, Management Fee and
Additional Rent. All Rent hereunder and all payments hereunder
for Additional Rent which are to be paid to Landlord shall be
paid to Landlord at a Bank of America Lock Box address to be
designated by written notice from Landlord to Tenant prior to the
Lease Commencement Date (and which address shall be confirmed in
the Lease Commencement Letter) or to such other person or to such
other place as Landlord may from time to time designate in
writing.
G. Security Deposit. Subject to the provisions herein, as
long as ALZA or an ALZA Affiliate is the Tenant under this Lease,
Tenant shall not be required to deposit with Landlord a security
deposit ("Security Deposit") under this Lease; however, Landlord
shall require a Security Deposit in an amount equal to two times
the last month's Basic Rent in this Lease in the event this Lease
is assigned to an Unaffiliated Assignee and ALZA is released from
liability for said Lease, in which case, said sum shall be held
by Landlord as a Security Deposit for the faithful performance by
Tenant of all of the terms, covenants, and conditions of this
Lease to be kept and performed by Tenant during the Lease Term.
If Tenant defaults with respect to any provision of this Lease
and such default is not cured within any applicable cure period,
including, but not limited to, the provisions relating to the
payment of Rent or any other monetary sums due hereunder,
Landlord may (but shall not be required to) use, apply or retain
all or any part of this Security Deposit for the payment of such
amount in default, or any other amount which Landlord may spend
by reason of Tenant's default or to compensate Landlord for any
other loss or damage which Landlord may suffer by reason of
Tenant's default. If any portion of the Security Deposit is so
used or applied, Tenant shall, within ten (10) days after written
demand therefor, deposit cash with Landlord in the amount
sufficient to restore the Security Deposit to its original
amount. Tenant's failure to do so shall be a material breach of
this Lease. Landlord shall not be required to keep this Security
Deposit separate from its general funds, and Tenant shall not be
entitled to interest on such Deposit. If Tenant fully and
faithfully performs every provision of this Lease to be performed
by it, the Security Deposit or any balance thereof shall be
returned to the last party recognized by Landlord as Tenant
hereunder (or at Landlord's option, to the last assignee of
Tenant's interest hereunder) at the expiration of the Lease Term
and after Tenant has vacated the Premises. In the event of
termination of Landlord's interest in this Lease, Landlord shall
transfer the Security Deposit to Landlord's successor in interest
whereupon Tenant agrees to release Landlord from liability for
the return of such Deposit or the accounting therefor.
Notwithstanding the above, Tenant shall have the right, at
Tenant's sole election, to substitute for one-half of the cash
Security Deposit to be held by Landlord, an irrevocable letter of
credit, drawn upon an institutional lender reasonably acceptable
and accessible to Landlord in form and content reasonably
satisfactory to Landlord and for a term equal to at least one
year (with the letter of credit required to be renewed or
replaced by Tenant so as to be available to be drawn on at any
time during the Lease Term plus a period of sixty (60) days).
Said financial institution must agree that the presentment for
demand may be made in at least one of the following locations:
San ▇▇▇▇, Santa ▇▇▇▇▇, San Francisco or Palo Alto, California.
Such irrevocable letter of credit shall be renewed by the issuer
(or replaced with a similarly qualifying letter of credit
reasonably acceptable to Landlord) at least twenty (20) days
prior to the expiration date thereof from time to time during the
Lease Term, and shall be held by Landlord as security for the
faithful performance by Tenant of all the terms, covenants and
conditions of this Lease to be kept and performed by Tenant. If,
for any reason, Tenant fails to cause the irrevocable letter of
credit to be so renewed or replaced at least twenty (20) days
prior to its expiration date, Landlord shall have the right to
immediately draw upon the letter of credit in full and hold the
proceeds thereof as a cash Security Deposit hereunder. If Tenant
has theretofore funded the Security Deposit entirely in cash, one
half of the cash Security Deposit held by Landlord shall be
refunded to Tenant upon Landlord's receipt of an acceptable
irrevocable letter of credit. If Tenant defaults with respect
to any provisions of this Lease and such default is not cured
within any applicable cure period, including but not limited to
provisions relating to the payment of Rent, Landlord may (but
shall not be required to) draw down on the irrevocable letter of
credit for payment of any sum which Landlord may spend or become
obligated to spend by reason of Tenant's default, or to
compensate Landlord for any loss or damage which Landlord may
suffer by reason of Tenant's default. Landlord and Tenant
acknowledge that such irrevocable letter of credit will be
treated as if it were a cash Security Deposit, and such
irrevocable letter of credit may be drawn down upon by Landlord
in the amount then due to Landlord upon demand and presentation
of evidence of the identity of Landlord to the issuing bank, in
the event that Tenant defaults with respect to any provision of
this Lease and such default is not cured within any applicable
cure period. Landlord acknowledges that it is not entitled to
and shall not draw down such irrevocable letter of credit unless
Landlord would have been entitled to draw upon a cash Security
Deposit pursuant to the terms of this Paragraph 4G. Concurrently
with the delivery of the required information to the issuing
bank, Landlord shall deliver to Tenant written evidence of the
default upon which the draw down was based, together with
evidence that Landlord has provided to Tenant the written notice
of such default which was required under the applicable provision
of the Lease, and evidence of the failure of Tenant to cure such
default within the applicable grace period following receipt of
such notice of default. If any portion of the irrevocable letter
of credit is used or applied pursuant hereto, Tenant shall,
within ten (10) days after receipt of a written demand therefor
from Landlord, restore and replace the value of such security by
either (i) depositing cash with Landlord in the amount equal to
the sum drawn down under the irrevocable letter of credit, or
(ii) increasing the irrevocable letter of credit to its value
immediately prior to such application. Tenant's failure to
replace the value of the security as provided in the preceding
sentence shall be a material breach of its obligation under this
Lease. The letter of credit shall further provide to the effect:
(i) that it shall automatically renew for additional periods of
one (1) year each from the expiry date or future expiry date,
unless at least twenty (20) days prior to any expiry date the
issuer notifies Landlord by registered mail of the issuer's
election not to renew the letter of credit and (ii) if the issuer
is unable or unwilling to so renew the letter of credit, the
issuer shall deem such to automatically constitute a draw request
from Landlord upon the letter of credit without further demand,
and with the issuer on or before the expiration of such letter of
credit to deposit for Landlord's account an amount equal to the
amount remaining committed but undrawn under the letter of credit
(unless issuer has sought and obtained from Landlord prior
thereto a written acknowledgment by Landlord of the termination
of the requirement of this Lease for such letter of credit to be
so renewed, in which event issuer shall not be required to make
such a deposit for Landlord's account).
5. RULES AND REGULATIONS AND COMMON AREA. At any time during
the Lease Term that ALZA (and/or any ALZA Affiliates) or an
Unaffiliated Assignee is the tenant under all Three Leases,
Tenant shall have the exclusive right to use all of the Common
Area without any right of Landlord to adopt any rules or
regulations relating to the Common Area. The remainder of this
Paragraph shall only apply to the leasing of the Premises if at
any time during the Lease Term ALZA (and/or any ALZA Affiliates)
or an Unaffiliated Assignee is not the tenant under all Three
Leases. Subject to the terms and conditions of this Lease and
such rules and regulations ("Rules and Regulations") as Landlord
may from time to time prescribe, Tenant and Tenant's employees,
invitees and customers shall, in common with other occupants of
the Complex in which the Premises are located, and their
respective employees, invitees and customers, and others entitled
to the use thereof, have the non-exclusive right to use the
access roads, parking areas, and facilities provided and
designated by Landlord for the general use and convenience of the
occupants of the Complex in which the Premises are located, which
areas and facilities are referred to herein as "Common Area".
This right shall terminate upon the termination of this Lease.
Landlord reserves the right from time to time to make reasonable
changes in the shape, size, location, amount and extent of Common
Area. Landlord further reserves the right to promulgate such
reasonable Rules and Regulations relating to the use of the
Common Area, and any part or parts thereof, as Landlord may deem
appropriate for the best interests of the occupants of the
Complex. The Rules and Regulations shall be binding upon Tenant
upon delivery of a copy of them to Tenant, and Tenant shall abide
by them and cooperate in their observance. Such Rules and
Regulations may be reasonably amended by Landlord from time to
time, with ten (10) days advance notice, and all amendments shall
be effective ten days after delivery of a copy to Tenant.
Landlord shall not be responsible to Tenant for the non-
performance by any other tenant or occupant of the Complex of any
of said Rules and Regulations.
Landlord shall operate, manage and maintain the Common Area
in conformity with a good standard of maintenance and repair, or
replacement, and in good and sanitary condition.
6. PARKING: If at any time during the Lease Term ALZA (and/or
any ALZA Affiliates) or an Unaffiliated Assignee is not the
tenant under all Three Leases, this Paragraph shall apply. Once
the ratio of the square footage size of the Building leased
hereunder is determined in relation to the aggregate square
footage of all Three Buildings, a specific number of non-
exclusive parking spaces shall be assigned to Tenant equating to
such ratio multiplied by all of the parking spaces in the
Complex. Tenant shall have the right to use with the other
tenants or other occupants of the Complex parking spaces so
assigned in the common parking area of the Complex. Tenant
agrees that Tenant, Tenant's employees, agents, representatives,
and/or invitees shall not use parking spaces in excess of said
assigned parking spaces allocated to Tenant hereunder. Landlord
shall have the right, at Landlord's reasonable discretion, to
specifically designate the location of Tenant's parking spaces
within the common parking area of the Complex in the event of a
dispute among the tenants occupying the Building and/or Complex
referred to herein, in which event Tenant agrees that Tenant,
Tenant's employees, agents, representatives and/or invitees shall
not use any parking spaces other than those parking spaces
specifically designated by Landlord for Tenant's use. Said
parking spaces, if specifically designated by Landlord to Tenant,
may be relocated by Landlord at any time, and from time to time.
Landlord reserves the right, at Landlord's reasonable discretion,
to rescind any specific designation of parking spaces, thereby
returning Tenant's parking spaces to the common parking area.
Landlord shall give Tenant written notice of any change in
Tenant's parking spaces. Tenant shall not, at any time, park, or
permit to be parked, any trucks or vehicles adjacent to the
loading area so as to interfere in any way with the use of such
areas, nor shall Tenant, at any time, park or permit the parking
of Tenant's trucks and other vehicles or the trucks and vehicles
of Tenant's suppliers or others, in any portion of the common
areas not designated by Landlord for such use by Tenant. Tenant
shall not park nor permit to be parked, any inoperative vehicles
or equipment on any portion of the common parking area or other
common areas of the building. Tenant agrees to assume
responsibility for compliance by its employees with the parking
provision contained herein. If Tenant or its employees park in
other than designated parking areas, then Landlord may charge
Tenant, as an additional charge, and Tenant agrees to pay Ten
Dollars ($10.00) per day for each day or partial day each such
vehicle is parking in any area other than that designated.
Tenant hereby authorizes Landlord, at Tenant's sole expense, to
tow away from the Complex any vehicle belonging to Tenant or
Tenant's employees parked in violation of these provisions, or to
attach violation stickers or notices to such vehicles. Tenant
shall use the parking area for vehicle parking only and shall not
use the parking areas for storage. During the time ALZA (and/or
any ALZA Affiliates) or an Unaffiliated Assignee is the tenant
under all Three Leases, the tenant under all Three Leases shall
have the right to park in any area designated for parking in the
Common Area and the above terms and conditions shall not apply.
7. ACCEPTANCE AND SURRENDER OF PREMISES. Upon the Lease
Commencement Date, Tenant, as to Landlord (but not necessarily as
to any architect or contractor), accepts the Building and
improvements included in the Premises and the Common Area(s) as
being in good and sanitary order, condition and repair to the
extent of the then status as to construction and accepts the
Building and improvements included in the Premises in their then
present condition and without representation or warranty by
Landlord as to the condition of the Building or as to the use or
occupancy which may be made thereof. Any exceptions to the
foregoing must be by written agreement executed by Landlord and
Tenant. Landlord and Tenant shall cause an appropriate
description of the Interior Improvements as originally installed
by Tenant, once completed, to be attached as Exhibit B to this
Lease. If Tenant desires to make or has made any material
alterations to the initial design of the Interior Improvements
which Tenant would wish not to be required, pursuant to the
provisions of this Paragraph, to remove upon surrender of the
Premises to Landlord, Tenant may request Landlord's approval to
the modification of Exhibit B to reflect such alterations, with
Landlord to have the right in its reasonable discretion to grant
or withhold such approval. Tenant agrees on the last day of the
Lease Term, or on the sooner termination of this Lease, to
surrender the Premises promptly and peaceably to Landlord in good
condition and repair (damage by Acts of God, fire or other causes
for which Tenant is not obligated to repair pursuant to Paragraph
25 ("Destruction"), and normal wear and tear excepted), with all
interior walls painted, or cleaned, and repaired or replaced, if
damaged; all floors cleaned and waxed; all carpets cleaned and
shampooed; all broken, marred or nonconforming acoustical ceiling
tiles replaced; all interior and exterior windows washed; the air
conditioning and heating systems serviced by a reputable and
licensed service firm or by Tenant's in-house maintenance staff
(if approved by Landlord) and in good operating condition and
repair; the plumbing and electrical systems and lighting in good
order and repair, including replacement of any burned out or
broken light bulbs or ballasts; the roof membrane inspected and
any required repairs or replacements completed by a licensed roof
contractor and in good condition and repair; and to the extent
reasonably allocable on an exclusive basis to the Premises: the
lawn and shrubs in good condition including the replacement of
any dead or damaged plantings; the sidewalk, driveways and
parking areas in good order, condition and repair, including the
sealing and striping of the parking lot and asphalt areas (and to
the extent not so allocated on an exclusive basis to the Premises
to instead be the subject of Tenant's obligations under either
Paragraph 9C (Common Area Maintenance) or Paragraph 10 (Expenses
of Operation, Management, and Maintenance of the Common Areas of
the Complex), as applicable); together with all alterations,
additions, and improvements which may have been made, in, to, or
on the Premises (except moveable trade fixtures installed at the
expense of Tenant and such other items that Tenant, under this
Lease, is allowed to remove, if any) except that Tenant shall
ascertain from Landlord within thirty (30) days before the end of
the Lease Term, as to any portion of the Premises which does not
conform to the configuration reflected on Exhibit B, whether
Landlord desires to have such portion of the Premises or any part
or parts thereof restored to their configuration as then
reflected on Exhibit B, and if Landlord shall so desire, then
Tenant shall restore said portion of the Premises or such part or
parts thereof before the end of this Lease at Tenant's sole cost
and expense to the configuration as reflected on Exhibit B.
Notwithstanding the above, Tenant, in lieu of reconfiguring the
Premises to the configuration shown on Exhibit B, may instead
modify any non-conforming areas of such portion of the Premises
to provide an Open Office Area, as defined below. Tenant, on or
before the end of the Lease Term or sooner termination of this
Lease, shall remove all of Tenant's personal property and trade
fixtures from the Premises, and all property not so removed on or
before the end of the Lease Term or sooner termination of this
Lease shall be deemed abandoned by Tenant and title to same shall
thereupon pass to Landlord without compensation to Tenant.
Landlord, may, upon termination of this Lease, remove all
moveable furniture and equipment so abandoned by Tenant, at
Tenant's sole cost, and repair any damage caused by such removal
at Tenant's sole cost. If the Premises be not surrendered at the
end of the Lease Term or sooner termination of this Lease, Tenant
shall indemnify Landlord against loss or liability resulting from
the delay by Tenant in so surrendering the Premises including,
without limitation, any claims made by any succeeding Tenant
founded on such delay. Nothing contained herein shall be
construed as an extension of the Lease Term or as a consent of
Landlord to any holding over by Tenant. The voluntary or other
surrender of this Lease or the Premises by Tenant or a mutual
cancellation of this Lease shall not work as a merger and, at the
option of Landlord, shall either terminate all or any existing
subleases or subtenancies or operate as an assignment to Landlord
of all or any such subleases or subtenancies.
Notwithstanding the above, in the event Tenant installs any
permanently attached lab fixtures and equipment in the Building
or on the roof of the Building, including any electrical,
plumbing, ventilation or air conditioning equipment associated
with supporting the specific requirements of any other lab
equipment (collectively "Lab Equipment"), (i) Landlord shall have
the right to require Tenant to remove any or all Lab Equipment
prior to the end of the Lease Term and (ii) provided ALZA or an
ALZA Affiliate is the Tenant at the time of intended removal at
or near the end of the Lease Term, Tenant shall have the right to
elect to remove any or all Lab Equipment (despite its having been
permanently attached to the Premises), prior to the termination
date of this Lease. Lab Equipment as used herein shall not
include any supplemental HVAC equipment which is installed to
provide general supplemental air-conditioning or ventilation to
any occupied space in the Building. Subject to the terms of this
▇▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇, in removing any such Lab Equipment, shall be
responsible and liable for (i) complying with all permit and
other governmental regulations related to the installation and/or
removal of the Lab Equipment, and (ii) immediately restoring any
and all damage to the Premises resulting from the installation
and/or removal of the Lab Equipment. In the event Tenant elects
or is required by Landlord to remove any of the Lab Equipment
prior to the termination date of this Lease, Tenant shall be
responsible and liable for (i) removing all lab related equipment
and cabinets in the former lab location where such Lab Equipment
is to be removed and (ii) creating an "Open Office Area" in such
former lab location as provided in the following sentence. If
Tenant is obligated to create an "Open Office Area" as provided
above, then Tenant shall, at Landlord's election made prior to
the termination date of this Lease, either (i) cause the
following items to be installed by Tenant at Tenant's sole cost
or (ii) be obligated to reimburse Landlord for any subsequent
cost reasonably incurred by Landlord after expiration of the
Lease in installing any of the following items in conjunction
with Landlord's preparing such portion of the Premises for the
immediately succeeding tenant, with such items being the
following: (a) a dropped ceiling using the same type of ceiling
tiles used throughout the Building in the office areas, (b)
Landlord's standard grade carpet and base board (as used in the
carpeted areas of the Premises), and (c) such re-configuration of
the electrical and HVAC systems and controls and lighting and may
be reasonably required to make it appropriate for open office
use.
8. ALTERATIONS AND ADDITIONS. After the completion of
construction of the Shell Improvements and Interior Improvements
in accordance with the provisions of the Construction Agreement,
Tenant shall not make, or suffer to be made, any alteration or
addition to the Premises, or any part thereof, without the
written consent of Landlord first had and obtained by Tenant
(such consent not to be unreasonably withheld), but at the cost
of Tenant, and (except as otherwise consented to in writing by
Landlord) any addition to, or alteration of, the Premises, except
moveable furniture, trade fixtures and any Lab Equipment which
Tenant is entitled to remove pursuant to Paragraph 7 above,
shall, upon Lease termination, become a part of the Premises and
belong to Landlord. Landlord reserves the right to approve all
contractors and mechanics proposed by Tenant to make such
alterations and additions, which approval shall not be
unreasonably withheld. Tenant shall retain title to all moveable
furniture and trade fixtures placed in the Premises. All office
heating, lighting, electrical, air conditioning, floor to ceiling
partitioning, drapery, carpeting, and floor installations made by
Tenant (but excluding any Lab Equipment installed by ALZA or any
ALZA Affiliate), together with all property that has become an
integral part of the Premises, shall not be deemed trade
fixtures. Tenant agrees that it will not proceed to make any
such alteration or addition, without having obtained consent from
Landlord to do so, and until five (5) days from the receipt of
such consent, in order that Landlord may post appropriate notices
to avoid any liability to contractors or material suppliers for
payment for Tenant's alteration or addition. Tenant will at all
times permit such notices to be posted and to remain posted until
the completion of work. Tenant shall, if required by Landlord,
secure at Tenant's own cost and expense, a completion and lien
indemnity bond, satisfactory to Landlord, for such work. Tenant
further covenants and agrees that any mechanic's lien filed
against the Premises or the Complex 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 ten
(10) days after notice to Tenant of filing thereof, at the cost
and expense of Tenant. Any exceptions to the foregoing must be
made in writing and executed by both Landlord and Tenant.
Notwithstanding the above and provided ALZA or an ALZA
Affiliate is then the Tenant under this Lease, it is agreed that
Tenant may make alterations or additions to the non-structural
portions of the Building without obtaining the prior consent of
Landlord or providing any other notices to Landlord or securing
any bonds as otherwise provided above, provided Tenant (i) gives
Landlord a minimum of five (5) business days written notice of
its intent to make any material modifications to the Building;
(ii) designs any alterations or additions to comply with
Landlord's interior build out specifications as shown on Exhibit
C attached hereto; and (iii) as to any material alteration,
provides to Landlord, upon completion of said construction, a
1/8 inch scale sepia "as built" plan reflecting said alterations
and/or additions. All other terms and conditions of this
Paragraph 8 shall apply.
9. TENANT MAINTENANCE.
A. Tenant's Responsibilities: Subject to Paragraph 25
("Destruction"), Tenant shall, at its sole cost and expense, keep
and maintain the interior and exterior of the Building (including
structural portions and appurtenances thereto) and every part
thereof in a good standard of maintenance and repair, or
replacement, and in good and sanitary condition (collectively
"Tenant's Responsibilities"). Tenant's Responsibilities include,
but are not limited to, janitorization, all windows (interior and
exterior), window frames, plate glass and glazing (destroyed by
accident or act of third parties), truck doors, plumbing systems
(such as water and drain lines, sinks, toilets, faucets, drains,
showers and water fountains), electrical systems (such as panels,
conduits, outlets, lighting fixtures, lamps, bulbs, tubes and
ballasts), heating and air conditioning systems (such as
compressors, fans, air handlers, ducts, mixing boxes,
thermostats, time clocks, boilers, heaters, supply and return
grills), structural elements and exterior surfaces of the
Building (including repainting), store fronts, roofs, downspouts,
all interior improvements within the Building including but not
limited to wall coverings, window coverings, carpet, floor
coverings, partitioning, ceilings, doors (both interior and
exterior), including closing mechanisms, latches, locks,
skylights (if any), automatic fire extinguishing systems, and
elevators and all other interior improvements of any nature
whatsoever, and all exterior improvements to the Building. Areas
of excessive wear shall be replaced at Tenant's sole expense upon
Lease termination. Tenant hereby waives all rights under, and
benefits of, Subsection 1 of Section 1932 and Section 1941 and
1942 of the California Civil Code and under any similar law,
statute or ordinance now or hereafter in effect. In the event
any of the above Tenant's Responsibilities apply to any other
third party tenant(s) of Landlord where there is common usage
with other third party tenant(s), such maintenance
responsibilities shall be undertaken by Landlord and the related
charges shall be allocated to the Premises by square footage or
other equitable basis as reasonably calculated and determined by
Landlord.
B. Interior Common Area Maintenance. If at any time the
Lease has been amended so that Tenant is leasing less than the
entire Building (which amendment Landlord is under no obligation
to agree to or make) and said Building becomes a multi-tenant
building and said multi-tenants are third party tenants, then
Landlord shall maintain the interior portions of the Building
that are considered by Landlord to be common areas to two or more
tenants in the same manner that Tenant would have been obligated
to maintain them under the provisions of Paragraph 9A hereof (had
Tenant continued to lease the entire Building). All costs and
expenses incurred by Landlord in so maintaining said common areas
of the Building shall be allocated among Tenant and each space
that is either unleased or is leased to other third party tenants
in the Building based upon the square footage of the respective
tenants' premises or such other equitable manner as Landlord
reasonably determines.
C. Common Area Maintenance: At all times during the Lease
Term that ALZA (and/or any ALZA Affiliates) or an Unaffiliated
Assignee is the tenant under all Three Leases, the provisions of
this Paragraph 9C shall apply. Tenant shall, at its sole cost
and expense, keep, maintain, repair and replace as required, the
Common Area of the Complex (including appurtenances) and every
part thereof in a good standard of maintenance, repair and
replacement as required, and in good and sanitary condition.
Tenant's maintenance, repair and replacement responsibilities
herein referred to include, but are not limited to,
janitorization, landscaping, sidewalks, driveways, underground
and above ground parking areas, including striping and sealing,
irrigation sprinkler systems, parking lot and exterior Building
lighting, ponds, fountains, waterways, drains, lawns, shrubbery
and other planted areas, plumbing and utility systems within the
Common Area, and electrical systems within the Common Area. If
all Three Leases are terminating substantially simultaneously,
the surrender obligations of Tenant under Paragraph 7 of this
Lease shall extend to the surrender of all of the Common Area of
the Complex.
10. EXPENSES OF OPERATION, MANAGEMENT, AND MAINTENANCE OF THE
COMMON AREAS OF THE COMPLEX. At all times during the Lease Term
that ALZA (and/or any ALZA Affiliates) or an Unaffiliated
Assignee is not the tenant under all Three Leases, this Paragraph
shall apply. As Additional Rent and in accordance with the
requirements and limitations of Paragraphs 4E of this Lease,
Tenant shall pay to Landlord Tenant's proportionate share
(calculated on a square footage or other equitable basis as
reasonably determined by Landlord) of all expenses of operation,
maintenance and repair of the Common Area of the Complex
including, but not limited to, license, permit, and inspection
fees; security; utility charges associated with exterior
landscaping and lighting (including water and sewer charges); all
charges incurred in the maintenance and replacement of landscaped
areas, lakes, parking lots, sidewalks, driveways, maintenance,
repair and replacement of all fixtures and electrical, mechanical
and plumbing systems; structural elements and exterior surfaces
of the Building and any improvements (but excluding any
structural elements or exterior surfaces of the Building to the
extent the maintenance thereof is the obligation of Tenant under
this Lease); salaries and employee benefits of personnel and
payroll taxes applicable thereto; supplies, materials, equipment
and tools; the cost of capital expenditures which have the effect
of reducing operating expenses, provided, however, that in the
event Landlord makes such capital improvements, Landlord may
amortize its investment in said improvements (together with
interest at the rate of Bank of America's Prime Rate (or
equivalent rate) plus five percent (5%) per annum on the
unamortized balance) as an operating expense in accordance with
standard accounting practices, provided, that such amortization
is not at a rate greater than the anticipated savings in the
operating expenses.
"Additional Rent" as used herein shall not include
Landlord's debt repayments; interest on charges, expenses
directly or indirectly incurred by Landlord for the benefit of
any other tenant; cost for the installation of partitioning or
any other tenant improvements; cost of attracting tenants;
depreciation; interest; or executive salaries.
11. UTILITIES
A. This Paragraph is applicable so long as this Lease
pertains to the entire Building. Tenant shall pay promptly, as
the same become due, all charges for water, gas, electricity,
telephone, telex and other electronic communication service,
sewer service, waste pick-up and any other utilities, materials
or services furnished directly to or used by Tenant on or about
the Building and/or the Premises (including the Common Area
allocated to Tenant) during the Lease Term, including, without
limitation, any temporary or permanent utility surcharge or other
exactions whether now or hereafter imposed. In the event the
above charges apply to any other third party tenants of Landlord
where there is common usage with such other third party tenants,
such charges shall be allocated to the Building or Premises by
square footage or other equitable basis as reasonably calculated
and determined by Landlord.
Landlord shall not be liable for and Tenant shall not be
entitled to any abatement or reduction of Rent by reason of any
interruption or failure of utility services to the Premises when
such interruption or failure is caused by accident, breakage,
repair, strikes, lockouts, or other labor disturbances or labor
disputes of any nature, or by any other cause, similar or
dissimilar, beyond the reasonable control of Landlord.
B. This Paragraph 11B is applicable only if and at such
time as the Lease is amended not to include the entire Building
(which amendment Landlord is under no obligation to agree to or
make). As Additional Rent and in accordance with Paragraph 4E of
this Lease, Tenant shall pay its proportionate share (calculated
on a square footage or other equitable basis as reasonably
determined by Landlord) of the cost of all utility charges such
as water, gas, electricity, telephone, telex and other electronic
communications service, if applicable, sewer service, waste pick-
up and any other utilities, materials or services furnished
directly to the Building in which the Premises are located,
including, without limitation, any temporary or permanent utility
surcharge or other exactions whether now or hereafter imposed.
Landlord shall not be liable for and Tenant shall not be
entitled to any abatement or reduction of Rent by reason of any
interruption or failure of utility services to the Premises when
such interruption or failure is caused by accident, breakage,
repair, strikes, lockouts, or other labor disturbances or labor
disputes of any nature, or by any other cause, similar or
dissimilar, beyond the reasonable control of Landlord.
Landlord shall be responsible for causing to be furnished to
the Premises and subject to the Rules and Regulations of the
Common Area hereinbefore referred to, (i) water, gas and
electricity suitable for the permitted use of the Premises and
(ii) between the hours of 8:00 am and 6:00 p.m., Mondays through
Fridays (holidays excepted) heat and air-conditioning required
for the comfortable use and occupation of the Premises for the
uses permitted under this Lease. Tenant agrees that at all times
it will cooperate fully with Landlord and abide by all reasonable
regulations and requirements that Landlord may prescribe for the
proper functioning and protection of the Building heating,
ventilating and air-conditioning systems. Whenever heat
generating machines, equipment, or any other devices (including
exhaust fans) are used in the Premises by Tenant which affect the
temperature maintained by the air-conditioning system beyond the
reasonable handling capacity of the existing system, Landlord
shall have the right to install or require Tenant to install
supplementary air-conditioning units in the Premises and the cost
of installation, operation and maintenance thereof, shall be paid
by Tenant to Landlord upon demand by Landlord. If Tenant uses
any apparatus or device in the Premises (including, without
limitation, electronic data processing machines or machines using
current in excess of 110 Volts) which increase the amount of
electricity, gas, water or air-conditioning consumed in the
Premises on an average per square foot basis above that which
would be furnished or supplied to any other portion of the
Building on an average per square foot basis for general office
use, Landlord shall be entitled to reasonably allocate to Tenant
the cost of any utilities supplied by Landlord to the Building
which are disproportionately consumed by Tenant provided that
Landlord shall correspondingly reasonably allocate any similar
disproportionate consumption by any other tenant(s) in the
Building to such other tenant(s). If Tenant shall require water,
gas, or electric current in excess of that usually furnished or
supplied to any similar sized space in the Building, Landlord may
cause an electric current, gas or water meter to be installed in
the Premises in order to measure the amount of electric current,
gas or water consumed for any such excess use. The cost of any
such meter and of the installation, maintenance and repair
thereof, all charges for such excess water, gas and electric
current consumed (as shown by such meters and at the rates then
charged by the furnishing public utility); and any additional
expense incurred by Landlord in keeping account of electric
current, gas, or water so consumed shall be paid by Tenant, and
Tenant agrees to pay Landlord such amount within ten (10) days
after receipt of a reasonably detailed invoice for the same from
Landlord.
12. TAXES
A. Real Property Taxes. As Additional Rent and in
accordance with Paragraph 4E of this Lease, Tenant shall pay to
Landlord, or if Landlord so directs, directly to the applicable
tax collector ("Tax Collector"), all Real Property Taxes
relating to the Premises accruing with respect to the Premises
commencing on the Lease Commencement Date and throughout the
Lease Term, including any Extended Term. In the event the
Premises leased hereunder consist of only a portion of the entire
tax parcel, Tenant shall pay to Landlord as they become due,
pursuant to statements submitted to Tenant by Landlord, Tenant's
proportionate share of such Real Property Taxes allocated to the
Premises by square footage or other reasonable basis as
calculated and determined by Landlord. If the tax billing
pertains 100% to the Premises, and Landlord chooses to have
Tenant pay said Real Property Taxes directly to the Tax
Collector, then in such event it shall be the responsibility of
Tenant to obtain the bills and pay, prior to delinquency, the
applicable Real Property Taxes pertaining to the Premises, and
failure to receive a ▇▇▇▇ for taxes and/or assessments shall not
provide a basis for cancellation of or non-responsibility for
payment of penalties for nonpayment or late payment by Tenant.
The term "Real Property Taxes", as used herein, shall mean (i)
all taxes, assessments, levies and other charges of any kind or
nature whatsoever, general and special, foreseen and unforeseen
(including all installments of principal and interest required to
pay any general or special assessments for public improvements
and any increases resulting from reassessments caused by any
change in ownership of the Complex) now or hereafter imposed by
any governmental or quasi-governmental authority or special
district having the direct or indirect power to tax or levy
assessments, which are levied or assessed against, or with
respect to the value, occupancy or use of, all or any portion of
the Complex (as now constructed or as may at any time hereafter
be constructed, altered, or otherwise changed) or Landlord's
interest therein; any improvements located within the Complex
(regardless of ownership); the fixtures, equipment and other
property of Landlord, real or personal, that are an integral part
of and located in the Complex; or parking areas, public
utilities, or energy within the Complex; (ii) all area wide
taxes, charges, levies or fees imposed by reason of environmental
regulation or other governmental control, including, but not
limited to, any taxes, charges, levies or fees related to on-site
originated Hazardous Materials contamination caused or
contributed to by Tenant's Hazardous Materials Activities; and
(iii) all costs and fees (including reasonable attorneys' fees)
incurred by Landlord in reasonably contesting any Real Property
Tax and in negotiating with public authorities as to any Real
Property Tax. If at any time during the Lease Term the taxation
or assessment of the Complex prevailing as of the Lease
Commencement Date shall be altered so that in lieu of or in
addition to any Real Property Tax described above there shall be
levied, assessed or imposed (whether by reason of a change in the
method of taxation or assessment, creation of a new tax or
charge, or any other cause) an alternate or additional tax or
charge (i) on the value, use or occupancy of the Complex or
Landlord's interest therein or (ii) on or measured by the gross
receipts, income or rentals from the Complex, on Landlord's
business of leasing the Complex, or computed in any manner with
respect to the operation of the Complex, then any such tax or
charge, however designated, shall be included within the meaning
of the term "Real Property Taxes" for purposes of this Lease. If
any Real Property Tax is based upon property or rents unrelated
to the Complex, then only that part of such Real Property Tax
that is fairly allocable to the Complex shall be included within
the meaning of the term "Real Property Taxes." Notwithstanding
the foregoing, the term "Real Property Taxes" shall not include
estate, inheritance, gift or franchise taxes of Landlord or the
federal or state net income tax imposed on Landlord's income from
all sources or penalties incurred as a result of Landlord's
negligence, inability or unwillingness to make payments of,
and/or to file any tax or informational returns with respect to
any Real Property Taxes when due.
Notwithstanding anything within this Paragraph 12, it is
agreed that if any special assessments for capital improvements
are assessed, and if Landlord has the option to either pay the
entire assessment in cash or go to bond, and if Landlord elects
to pay the entire assessment in cash in lieu of going to bond,
the entire portion of the assessment assigned to Tenant's
Premises will be prorated over the same period that the
assessment would have been prorated had the assessment gone to
bond. It is additionally agreed that Tenant shall have the
right, at Tenant's sole cost and expense, to contest with any
taxing authority or appellate body the imposition or amount of
any Real Property Tax, but any such contest shall not excuse
Tenant from any of its obligations hereunder as to paying any
such Real Property Tax when payable hereunder.
Notwithstanding anything to the contrary in this Lease, in
the event prior to the Lease Commencement Date there is an
interim or supplemental reassessment of the Premises based upon
the added value of the Shell Improvements or Interior
Improvements leased hereunder, then Tenant shall pay no later
than five days prior to its delinquency date, any and all such
interim or supplemental taxes (but no penalties or interest in
connection therewith provided Tenant has prior thereto paid the
applicable Real Property Taxes when required by the terms of this
Lease) that have been levied against the Premises and are
attributable to the added value of the Shell Improvements and
Interior Improvements (as defined in the Construction Agreement)
during the period prior to said Lease Commencement Date.
B. Taxes on Tenant's Property.
(a) Tenant shall be liable for and shall pay five
business days before delinquency, taxes levied against any
personal property or trade fixtures placed by Tenant in or about
the Premises. If any such taxes on Tenant's personal property or
trade fixtures are levied against Landlord or Landlord's property
or if the assessed value of the Premises is increased by the
inclusion therein of a value placed upon such personal property
or trade fixtures of Tenant and if Landlord, after written notice
to Tenant, pays the taxes based on such increased assessment,
which Landlord shall have the right to do regardless of the
validity thereof, but only under proper protest if requested by
Tenant, Tenant shall within ten (10) business days after demand,
as the case may be, repay to Landlord the taxes so levied against
Landlord, or the portion of such taxes resulting from such
increase in the assessment; provided that in any such event
Tenant shall have the right, in the name of Landlord and with
Landlord's full cooperation, but at no cost or responsibility or
liability of any type whatsoever to Landlord, to bring suit in
any court of competent jurisdiction to recover the amount of such
taxes on Tenant's personal property and trade fixtures so paid
under protest, and any net amount so recovered shall belong to
Tenant.
(b) If the Tenant improvements in the Premises,
whether installed, and/or paid for by Landlord or Tenant and
whether or not affixed to the Building so as to become a part
thereof, are assessed for Real Property Tax purposes at a
valuation higher than the valuation at which standard office
improvements in other space in the Complex are assessed, then the
Real Property Taxes levied against Landlord or the Complex by
reason of such excess assessed valuation shall be deemed to be
taxes levied against personal property of Tenant and shall be
governed by the provisions of Paragraph 12B(a) above. If the
records of the County Assessor are available and sufficiently
detailed to serve as a basis for determining whether said Tenant
improvements are assessed at a higher valuation that standard
office improvements in other space in the Complex, such records
shall be binding on both the Landlord and the Tenant. If the
records of the County Assessor are not available or sufficiently
detailed to serve as a basis for making said determination, the
actual cost of construction shall be used. Landlord agrees to
exercise good faith efforts to apply such standards on an
equivalent basis to any other tenants of the Complex whose tenant
improvements may be assessed for Real Property Tax purposes at a
valuation higher than the valuation at which standard office
improvements in other space in the Complex are assessed. As long
as ALZA or any ALZA Affiliate is the Tenant hereunder, Landlord
agrees to consult with Tenant in advance of any contemplated
change in ownership of the Premises or the Complex so as to have
the benefit of Tenant's recommendations, if any, as to any
possible way to avoid any reassessment of the Premises or the
Complex, but regardless of any such consultation Landlord shall
have no obligation to Tenant to follow, or any liability to
Tenant for failing to follow, any recommendations of Tenant.
13. LIABILITY INSURANCE. Tenant, at Tenant's expense, agrees to
keep in force during the Lease Term a policy of commercial
general liability insurance with combined single limit coverage
of not less than Five Million Dollars ($5,000,000) (which amount
may be obtained through primary or umbrella coverage or a
combination of both) per occurrence for bodily injury and
property damage occurring in, on or about the Premises or the
Complex, including parking and landscaped areas. Such insurance
shall be primary and noncontributory as respects any insurance
carried by Landlord, but may be provided under any blanket policy
maintained by Tenant. The policy or polices effecting such
insurance shall name Landlord as an additional insured, and shall
insure any liability of Landlord, contingent or otherwise, as
respects acts or omissions of Tenant, its agents, employees or
invitees or otherwise arising out of any conduct or transactions
of any of said persons in or about or concerning the Premises,
including any failure of Tenant to observe or perform any of its
obligations hereunder; shall be issued by an insurance company
admitted to transact business in the State of California; and
shall provide that the insurance effected thereby shall not be
canceled, except upon thirty (30) days' prior written notice to
Landlord. A certificate of insurance as to said policy shall be
delivered to Landlord. If, during the Lease Term, in the
considered opinion of Landlord's Lender, insurance advisor, or
counsel, the amount of insurance described in this Paragraph 13
is not adequate, Tenant agrees to increase said coverage to such
reasonable amount as Landlord's Lender, insurance advisor, or
counsel shall deem adequate.
14. TENANT'S PERSONAL PROPERTY INSURANCE AND ▇▇▇▇▇▇▇'▇
COMPENSATION INSURANCE. Tenant shall maintain a policy or
policies of fire and property damage insurance in "all risk" form
with a sprinkler leakage endorsement insuring the personal
property, inventory, trade fixtures, and special equipment
installed and paid for by Tenant within the Premises for the full
replacement value thereof. The proceeds from any of such
policies shall be used for the repair or replacement of such
items so insured.
Tenant shall also maintain a policy or policies of ▇▇▇▇▇▇▇'▇
compensation insurance and any other employee benefit insurance
sufficient to comply with all laws.
15. REAL PROPERTY INSURANCE. Landlord shall purchase and keep
in force, and as Additional Rent and in accordance with
provisions of Paragraph 4E of this Lease, Tenant shall pay to
Landlord (or Landlord's agent if so directed by Landlord),
Tenant's proportionate share (allocated to the Premises by square
footage or other equitable basis as calculated and determined by
Landlord) of the deductibles (as provided in such insurance
policies to the extent allocable to damage occurring to the
Premises or the Common Area and subject to the provisions of
Paragraph 25) on insurance claims and the annual cost of the
policy or policies of insurance covering loss or damage to the
Premises and Complex (excluding routine maintenance and repairs
and incidental damage or destruction caused by accidents or
vandalism for which Tenant is responsible under Paragraph 9) in
the amount of the full replacement value thereof, providing
protection against those perils included within the
classification of "all risks" insurance and flood and/or
earthquake insurance, if available, plus a policy of rental
income insurance in the amount of one hundred (100%) percent of
twelve (12) months' (i) Basic Rent and (ii) Additional Rent
(collectively "Insurance Cost"). Tenant understands that (i) the
annual Insurance Cost is subject to change each year (or more
frequently if new policies are added or existing policies are
replaced), and (ii) Tenant shall be responsible for paying its
proportionate share of said total Insurance Cost, including any
such increased rates relating thereto as a result of any Excess
Insurance Cost (as defined below) resulting from Tenant's
particular use of the Premises of Complex. If the Insurance Cost
increases due to Tenant's particular use and/or some other
tenant's particular use of the Premises or Complex ("Excess
Insurance Cost"), (i) Tenant shall be obligated to pay one
hundred percent (100%) of said Excess Insurance Cost related to
Tenant's particular use, (ii) Tenant shall not be obligated to
pay any portion of said Excess Insurance Cost related to some
other tenant's particular use, and (iii) Tenant shall be
obligated to pay its proportionate share of the total Insurance
Cost (excluding any Excess Insurance Cost to be paid by Tenant or
any other tenant(s) pursuant to clauses (i) or (ii) above.
Landlord agrees to exercise good faith efforts to apply such
standards on an equivalent basis to any other tenants of the
Complex whose use causes the total Insurance Cost to be
disproportionately increased. Except as otherwise expressly
provided in this Lease, Tenant shall have no interest in nor any
right to the proceeds of any insurance procured by Landlord for
the Premises. The insurance covering the Premises or the Complex
shall include the Interior Improvements (and any subsequent
alterations, additions or improvements thereto, but excluding any
Lab Equipment or any alterations, additions or improvements that
are particular to using any portion of the Premises as a lab as
distinguished from using it as an office) made to the Building
which are a part of the Building.
Landlord and Tenant do each hereby respectively release the
other, to the extent of insurance coverage of the releasing
party, from any liability for loss or damage caused by fire or
any of the extended coverage casualties included in the releasing
party's insurance policies, irrespective of the cause of such
fire or casualty; provided, however, that if the insurance policy
of either releasing party prohibits such waiver, then this waiver
shall not take effect until consent to such waiver is obtained.
If such waiver is so prohibited, the insured party affected shall
promptly notify the other party thereof. For so long as ALZA or
any ALZA Affiliate is the Tenant, Landlord agrees to consult with
Tenant at the time of any insurance coverage renewal as to the
insurance coverage (including deductibles) to be carried by
Landlord with respect to the Premises and the Complex so as to
have the benefit of Tenant's recommendations, if any, as to any
possible way to reduce the cost of such insurance coverage, but
regardless of any such consultation Landlord shall have no
obligation to Tenant to follow, or any liability to Tenant for
failing to follow, any recommendations of Tenant.
16. INDEMNIFICATION. Landlord shall not be liable to Tenant and
Tenant hereby waives all claims against Landlord for any injury
to or death of any person or damage to or destruction of property
in or about the Premises by or from any cause whatsoever,
including, without limitation, gas, fire, oil electricity or
leakage of any character from the roof, walls, basement or other
portion of the Premises except to the extent that the same
results primarily from the willful misconduct or active
negligence of Landlord, its agents, servants, employees, invitees
or contractors of which negligence Landlord has knowledge and
reasonable time to correct. Except as to injury to persons or
damage to property to the extent arising from the willful
misconduct or the active negligence of Landlord, its agents,
servants, employees, invitees, or contractors, Tenant shall hold
Landlord harmless from and defend Landlord against any and all
expenses, including reasonable attorneys' fees, in connection
therewith, arising out of any injury to or death of any person or
damage to or destruction of property occurring in, on or about
the Premises, or any part thereof, from any cause whatsoever,
occurring during the Lease Term.
17. COMPLIANCE. Tenant, at its sole cost and expense, shall
promptly comply with all laws, statutes, ordinances and
governmental rules, regulations or requirements now or hereafter
in effect relating to the Premises; with the requirements of any
board of fire underwriters or other similar body now or hereafter
constituted; and with any direction or occupancy certificate
issued pursuant to law by any public officer; provided, however,
that no such failure shall be deemed a breach of the provisions
of this Lease if Tenant, immediately upon notification, commences
to remedy or rectify said failure. The judgment of any court of
competent jurisdiction or the admission of Tenant in any action
against Tenant, whether Landlord be a party thereto or not, that
Tenant has violated any such law, statute, ordinance or
governmental rule, regulation, requirement, direction or
provision, shall be conclusive of that fact as between Landlord
and Tenant. Tenant shall, at its sole cost and expense, comply
with any and all requirements pertaining to said Premises, of any
insurance organization or company, necessary for the maintenance
of reasonable fire and public liability insurance covering the
Premises.
18. LIENS. Tenant shall keep the Premises and the Complex free
from any liens arising out of any work performed, materials
furnished or obligations incurred by Tenant. In the event that
Tenant shall not, within ten (10) days following notice of the
imposition of any such lien, cause the same to be released of
record, Landlord shall have, in addition to all other remedies
provided herein and by law, the right, but not the obligation, to
cause the same to be released by such means as it shall deem
proper, including payment of the claim giving rise to such lien.
All sums paid by Landlord for such purpose, and all expenses
incurred by it in connection therewith, shall be payable to
Landlord by Tenant on demand with interest at the Bank of America
Prime Rate (or equivalent thereof) of interest plus five percent
(5%) per annum, but in no event greater then the maximum rate of
interest permitted by applicable law. Notwithstanding anything
to the contrary in this Paragraph 18, Tenant shall have the right
to provide Landlord with a bond in the amount of the Lien in a
form satisfactory to Landlord and to contest the Lien, in which
event Landlord shall not be entitled to pay or discharge the
Lien, provided the Lien is removed within ninety (90) days from
the date the Lien is filed.
19. ASSIGNMENT AND SUBLETTING.
A. Subject only to the provisions of Paragraph D below,
provided that as of the effective date of any proposed assignment
or sublease as described below (i) ALZA or any ALZA Affiliate is
the Tenant under this Lease and (ii) Tenant is not then in
default under this Lease (i.e. Tenant has received notice of a
default under this Lease and the applicable cure period has
expired and Tenant has not then cured such default), Landlord
agrees to the following:
(a) Landlord waives any right hereunder (i) to consent
to any sublease of all or any portion of the Premises (but
Landlord shall have the right to approve any permitted use of the
Premises by any sublessee (other than an ALZA Affiliate) if such
use is beyond that permitted by any Unaffiliated Assignee
pursuant to Paragraph 1 hereof, and Tenant agrees to consult with
Landlord as to Tenant's subleasing activities and to allow
Landlord a ten (10) day period to review the principal terms of
any proposed sublease (other than a sublease to an ALZA
Affiliate) before Tenant enters into such sublease), (ii) to
consent to or to elect to terminate the Lease in the event of any
assignment to an Unaffiliated Assignee if ALZA or any ALZA
Affiliate is to remain liable under this Lease for the
performance by such Unaffiliated Assignee of the obligations of
Tenant under this Lease (but Landlord shall have the right to
approve or disapprove any permitted use of the Premises by any
Unaffiliated Assignee if such use is beyond that permitted by any
Unaffiliated Assignee pursuant to Paragraph 1 hereof and Tenant
agrees to consult with Landlord as to Tenant's assignment
activities and to allow Landlord a ten (10) day period to review
the principal terms of any proposed assignment before Tenant
enters into such assignment); and (iii) to consent to or to elect
to terminate the Lease in the event of any sublease or assignment
to any ALZA Affiliate or to share in any Excess Rent (as defined
below) related to any sublease or assignment to any ALZA
Affiliate. No assignment either to an ALZA Affiliate or to an
Unaffiliated Assignee shall result in the right of ALZA (or any
ALZA Affiliate which succeeds to ALZA's interest as Tenant
hereunder) to be released from any continuing liability for the
performance by such assignee of the obligations of Tenant under
this Lease, unless such assignee (whether an ALZA Affiliate or an
Unaffiliated Assignee) at the time of such assignment satisfies
the financial requirements of Paragraph C below and ALZA (or
such ALZA Affiliate) at the time of such assignment requests that
it be released from any such continuing liability in accordance
with the provisions of Paragraph C below.
(b) Landlord agrees that Tenant may deduct and retain
from any Excess Rent (including any Management Fee) received from
(1) any sublessee (which is not an ALZA Affiliate) or (2) any
Unaffiliated Assignee, the following: (i) if applicable, a third
party brokerage commission not to exceed $100,000 per
transaction, and (ii) with respect to (x) any sublease with a
sublessee which is not an ALZA Affiliate, and (y) any assignment
to an Unaffiliated Assignee if ALZA or any ALZA Affiliate is to
remain liable under this Lease for the performance by such
Unaffiliated Assignee of the obligations of Tenant under this
Lease, an amount equal to twelve percent (12%) per annum on the
portion of the initial improvement costs paid by Tenant for the
Shell Improvements and Interior Improvements made to the Complex,
including all Three Buildings (but excluding any additional cost
attributable to the installation by Tenant of any laboratory
space in any of the Three Buildings), to the extent such amount
exceeds the Improvement Allowance provided by Landlord under the
Construction Agreement (hereinafter referred to as "Tenant's
Excess Costs") to the extent allocable on a pro rata square
footage basis to the space being subleased or assigned. After
any such deductions as provided herein, any Excess Rent shall be
payable when received on a monthly basis by Tenant to Landlord.
For Example:
Example 1 - Excess Costs Allowance due Tenant Under
Sublease. If Tenant subleases 50,000 square feet of this
Building at $3.00 per square foot for a two year period; the
commission fee is $100,000; and Tenant's Excess Costs total
$8,000,000 for the Complex; and the total square feet of all
Three Buildings is 360,000; Tenant's Excess Costs allowance
per square foot would be $0.22 ($8,000,000 x 12% = $960,000/
360,000 s.f. = $2.67 per square foot/12 months = $0.22);
therefore, Tenant would be entitled to deduct from the
monthly Excess Rent as received: (i) the $100,000 commission
fee which would be deducted in full prior to any Excess Rent
being paid to Landlord, and (ii) Tenant's Excess Costs of
$0.22 per square foot per month during the entire term of
said Sublease, prior to paying to Landlord when received on
a monthly basis the balance of the Excess Rent.
Example 2 - Third Party Assignment of this Lease with Three
Years Remaining in the Lease Term with ALZA or any ALZA
Affiliate Remaining Obligated on the Lease: Assume: (i) a
broker fee of $100,000; (ii) Tenant's Excess Costs allowance
as stated above of $0.22 per square foot per month; and
(iii) $5,000,000 consideration received by Tenant for the
assignment of this Lease; Tenant would be entitled to deduct
from the excess consideration a total of $1,050,400 (120,000
s.f. x $0.22 x 36 months + $100,000) prior to paying
Landlord the balance of the Excess Rent, and Landlord would
not be entitled to elect to terminate the Lease.
B. Except as otherwise provided in this ▇▇▇▇▇▇▇▇▇ ▇▇,
▇▇▇▇▇▇ shall not assign, transfer, or hypothecate the leasehold
estate under this Lease, or any interest therein, and shall not
sublet the Premises, or any part thereof, or any right or
privilege appurtenant thereto, or suffer any other person or
entity to occupy or use the Premises, or any portion thereof,
without, in each case, the prior written consent of Landlord
which consent will not be unreasonably withheld. As a condition
for Landlord granting its consent to any assignment, transfer, or
subletting and except as otherwise expressly provided herein,
Landlord shall require Tenant to pay when received to Landlord,
as Additional Rent, one hundred percent (100%) of all excess
rents and/or additional consideration (including any Management
Fee) as and when collected by Tenant from its assignees,
transferees, or subtenants to the extent in excess of the Rent
payable by Tenant to Landlord as allocable to the portion of the
Premises being subleased or assigned (collectively "Excess Rent",
with Excess Rent to be calculated after deducting any Additional
Rent or other payments or expenses being reasonably incurred by
Tenant under this Lease or any items of additional rent payable
by any subtenants under any sublease (and if a gross sublease,
after deducting the reasonable cost of such additional rent items
to the extent included in the base rent under any such sublease),
including by way of example, any payments by Tenant or any
subtenants relating to utility services, janitorial services,
security services and the costs of taxes, insurance, maintenance
and repair); provided, however, that before paying to Landlord
the remainder of such Excess Rent, Tenant shall first be entitled
to recover from such Excess Rent the amount of any reasonable
leasing commissions (not to exceed $100,000 as to any
transaction) paid by Tenant to third parties not affiliated with
Tenant. Tenant shall, by not less than ten (10) days written
notice, advise Landlord of its intent to assign or transfer
Tenant's interest in the Lease or to sublet the Premises or any
portion thereof for all or any part of the Lease Term. Within
ten (10) days after receipt of said written notice, Landlord may,
if an assignment to an Unaffiliated Assignee where neither ALZA
nor any ALZA Affiliate will remain liable for the obligations of
Tenant under this Lease accruing on and after the date of such
assignment, elect to terminate this Lease on the date specified
in Tenant's notice by giving written notice of such election to
terminate. Landlord shall respond to any request for its consent
to any assignment or sublease within ten (10) days following
written request therefore. In the event any proposed assignment
or sublease is approved by Landlord, no such permitted assignee
or sublessee shall assign or transfer this Lease, either in whole
or in part, or sublet the whole or any part of the Premises,
without also having obtained the prior written consent of
Landlord. A consent of Landlord to one assignment, transfer,
hypothecation, subletting, occupation or use by any other person
shall not release Tenant from any of Tenant's obligations
hereunder or be deemed to be a consent to any subsequent similar
or dissimilar assignment, transfer, hypothecation, subletting,
occupation or use by any other person. Any such assignment,
transfer, hypothecation, subletting, occupation or use without
such consent shall be void and shall constitute a breach of this
Lease by Tenant. Except as otherwise expressly provided to the
contrary in this Lease, the leasehold estate under this Lease
shall not, nor shall any interest therein, be assignable for any
purpose by operation of law without the written consent of
Landlord. As a condition to its consent, Landlord shall require
Tenant to pay all reasonable expenses incurred by Landlord in
connection with the assignment, and Landlord shall require
Tenant's assignee or transferee to assume in writing all of the
obligations under this Lease thereafter accruing and, except as
otherwise expressly provided herein, for Tenant to remain liable
to Landlord under the Lease. Any subtenant from Tenant shall
only have the right to enter into a sub-sublease with Landlord's
written approval.
C. Notwithstanding anything to the contrary herein but
subject to the provisions of Paragraph D below, after the later
of the effective date of the proposed assignment or the Rent
Commencement Date, and provided that as of the effective date of
the proposed assignment (i) ALZA or an ALZA Affiliate is the
Tenant under this Lease and (ii) Tenant is not in default under
this Lease (i.e. Tenant has received notice of a default under
this Lease and the applicable cure period has expired and Tenant
has not then cured said default), Landlord agrees that ALZA and
any ALZA Affiliate shall, upon its request, be released from all
thereafter accruing liability under this Lease (except for
Tenant's compliance obligations under Paragraph 17 of this Lease
and Tenant's indemnity obligations to Landlord under Paragraphs
16 and 24 of this Lease, which compliance and indemnity
obligations shall continue in effect in favor of Landlord with
respect to any events or matters which occurred or accrued
thereunder prior to the date of the assignment, and which
compliance and indemnity obligations shall survive the assignment
of this Lease whether the event or matter giving rise to such
compliance obligation or right of indemnification is asserted or
discovered by Landlord before or after such assignment), upon the
assignment of all of its interest as Tenant under this Lease to
any entity which has (i) a net worth at the time of such
assignment (applying generally accepted accounting principles,
consistently applied) equal to or greater than Five Hundred
Million Dollars ($500,000,000) as adjusted as provided below as
reflected on the most recent quarterly or annual audited
financial statements of the assignee preceding the date of such
assignment and (ii) not experienced any known material adverse
changes as of the date of said assignment in said assignee's
financial condition which reasonably calls into question whether
the foregoing net worth standard is then satisfied. The
foregoing net worth standard for release of liability shall apply
with respect to any assignment to an ALZA Affiliate as well as to
an Unaffiliated Assignee. Tenant shall provide Landlord at least
ten (10) days prior to the effective date of any assignment
(whether or not Tenant is seeking to be released of liability as
a result of such assignment) with written notice of said
assignment, which notice shall include the form of written
assignment and assumption to be entered into between Tenant and
the assignee, wherein such assignee shall agree in favor of
Landlord to assume all of the obligations and liabilities of
Tenant under this Lease accruing from and after the Commencement
Date of this Lease. Tenant and assignee shall further execute a
Consent to Assignment substantially in the form of Exhibit G
attached hereto completed as appropriate with respect to the
applicable assignment. Prior to or concurrently with the
assignment occurring, Tenant shall cause such assignment and
assumption agreement so earlier provided to Landlord and the
Consent to Assignment to be duly executed by Tenant and the
assignee and an original of each to be delivered to Landlord.
Landlord shall, within ten days after receipt of any such duly
executed assignment and assumption agreement which fully
satisfies all of the applicable conditions of this Paragraph 19
for obtaining the consent of Landlord thereto (or which otherwise
satisfies the conditions of this Paragraph 19 for the agreed
waiver of any requirement for obtaining the consent of Landlord),
cause the Consent to Assignment to be duly executed by Landlord
and returned to Tenant. Notwithstanding the above, Landlord
shall have the right to elect, by written notice to Tenant within
such ten day period, to terminate this Lease effective as of the
scheduled effective date of such assignment where Tenant is
seeking to be released of continuing liability under this Lease
in conjunction with a proposed assignment to an Unaffiliated
Assignee. The Five Hundred Million Dollars ($500,000,000)
standard set forth above for release of liability shall be
adjusted from on and after the Rent Commencement Date by the
percentage increase in the CPI with respect to the period from
the calendar month preceding the Rent Commencement Date to the
calendar month preceding the effective date of the assignment.
D. Notwithstanding anything to the contrary in this
▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ may not assign its interest as Tenant
hereunder to any Unaffiliated Assignee until the cross default
condition set forth in Section 5.A of the Construction Agreement
relating to the construction of the Shell Improvements and
Interior Improvements for the Complex have been satisfied
pursuant to the terms and conditions of the Construction
Agreement.
20. SUBORDINATION AND MORTGAGES.
A. In the event Landlord's title or leasehold interest is
hereafter encumbered by a deed of trust, upon the interest of
Landlord in the land and buildings upon which the Premises are
located, to secure a loan from a lender (hereinafter referred to
as "Lender") to Landlord, Tenant shall, at the request of
Landlord or Lender, execute in writing an agreement (in form
reasonably acceptable to Tenant), subordinating its rights under
this Lease (subject to customary nondisturbance protection in
favor of Tenant) to the lien of such deed of trust, or, if so
requested, agreeing that the lien of Lender's deed of trust shall
be or remain subject and subordinate to the rights of Tenant
under this Lease. Notwithstanding any such subordination,
Tenant's possession under this Lease shall not be disturbed if
Tenant is not in default beyond any applicable cure period and so
long as Tenant shall pay all Rent and observe and perform all of
the provisions set forth in this Lease, and any subordination
agreement shall reflect the agreement of the Lender to the same
and the Lender's agreement upon any foreclosure to recognize this
Lease. Landlord represents to Tenant that, as of the date of
this Lease, the Premises are not presently encumbered by any
mortgage, deed of trust or other security device in favor of any
Lender.
B. Tenant hereby agrees that during the Initial Term and
the Extended Term(s) of this Lease (if any), Tenant shall not
encumber or pledge (in any manner whatsoever) its leasehold
interest in the Premises, including the Interior Improvements
and/or Tenant's equipment.
21. ENTRY BY LANDLORD. Landlord reserves, and shall at all
reasonable times after at least twenty four (24) hours notice
(except in emergencies) have, the right to enter the Premises to
inspect them; to perform any services to be provided by Landlord
hereunder; to make repairs or provide any services to a
contiguous tenant(s) (if any); to submit the Premises to
prospective purchasers, mortgagees or tenants; to post notices of
non-responsibility; and to alter, improve or repair the Premises
or other parts of the Building and any portion of the Complex,
all without abatement of Rent, and may erect scaffolding and
other necessary structures in or through the Premises where
reasonably required by the character of the work to be performed;
provided, however that the business of Tenant shall be interfered
with to the least extent that is reasonably practical. Any entry
to the Premises by Landlord for the purposes provided for herein
shall not under any circumstances be construed or deemed to be a
forcible or unlawful entry into or a detainer of the Premises or
an eviction, actual or constructive, of Tenant from the Premises
or any portion thereof.
22. BANKRUPTCY AND DEFAULT.
A. Default: The commencement of a bankruptcy action or
liquidation action or reorganization in bankruptcy action or
insolvency action or an assignment of or by Tenant for the
benefit of creditors, or any similar action undertaken by Tenant,
or the insolvency of Tenant, shall, at Landlord's option,
constitute a breach of this Lease by Tenant. If the trustee or
receiver appointed to serve during a bankruptcy, liquidation,
reorganization, insolvency or similar action elects to reject
Tenant's unexpired Lease, the trustee or receiver shall notify
Landlord in writing of its election within thirty (30) days after
any order for relief in any liquidation action or within thirty
(30) days after the commencement of any action.
Within thirty (30) days after the court approval of the
assumption of this Lease, the trustee or receiver shall cure (or
provide adequate assurance to the reasonable satisfaction of
Landlord that the trustee or receiver shall cure) any and all
previous defaults under the unexpired Lease and shall compensate
Landlord for all actual pecuniary loss and shall provide adequate
assurance of future performance under said Lease to the
reasonable satisfaction of Landlord. Adequate assurance of
future performance, as used herein, includes, but shall not be
limited to: (i) assurance of source and payment of Rent, and
other consideration due under this Lease; and (ii) assurance that
the assumption or assignment of this Lease will not breach any
provision in any agreement relating to the above described
Premises.
Nothing contained in this Paragraph shall affect the
exercising of any right of Landlord to refuse to accept an
assignment upon commencement or in connection with a bankruptcy,
liquidation, reorganization or insolvency action or an assignment
of Tenant for the benefit of creditors or other similar act.
Nothing contained in this Lease shall be construed as giving or
granting or creating an equity in the Premises to Tenant. In no
event shall the leasehold estate under this Lease, or any
interest therein, be assigned by voluntary or involuntary
bankruptcy proceeding without the prior written consent of
Landlord. In no event shall this Lease or any rights or
privileges hereunder be an asset of Tenant under any bankruptcy,
insolvency or reorganization proceedings.
The failure of Tenant to perform or honor any covenant,
condition or representation made under this Lease shall
constitute a default hereunder by Tenant upon expiration of the
appropriate grace period hereinafter provided. Tenant shall have
a period of ten (10) days following the date of written notice
from Landlord within which to cure any default in the payment of
Rent when otherwise due hereunder. Tenant shall have a period of
thirty (30) days following the date of written notice from
Landlord within which to cure any other default by Tenant under
this Lease; provided, however, that if the nature of Tenant's
failure is such that more than thirty (30) days is reasonably
required to cure the same, Tenant shall not be in default so long
as Tenant commences performance within such thirty (30) day
period and thereafter prosecutes the same to completion. Upon an
uncured default of this Lease by Tenant, Landlord shall have the
following rights and remedies in addition to any other rights or
remedies available to Landlord at law or in equity:
(a) The rights and remedies provided for by California
Civil Code Section 1951.2 including but not limited to, recovery
of the worth at the time of award of the amount by which the
unpaid Rent for the balance of the Lease Term after the time of
award exceeds the amount of rental loss for the same period that
Tenant proves could be reasonably avoided, as computed pursuant
to subsection (b) of said Section 1951.2.
(b) The rights and remedies provided by California
Civil Code Section 1951.4 which allows Landlord to continue the
Lease in effect and to enforce all of its rights and remedies
under this Lease, including the right to recover Rent as it
becomes due, for so long as Landlord does not terminate Tenant's
right to possession; acts of maintenance or preservation, efforts
to relet the Premises, or the appointment of a receiver upon
Landlord's initiative to protect its interest under this Lease
shall not constitute a termination of Tenant's right to
possession.
(c) The right to terminate this Lease by giving notice
to Tenant in accordance with applicable law.
(d) To the extent provided by law, the right and power
to enter the Premises and remove therefrom all persons and
property, to store such property in a public warehouse or
elsewhere at the cost of and for the account of Tenant, and to
sell such property and apply such proceeds therefrom pursuant to
applicable California law. Landlord may from time to time sublet
the Premises or any part thereof for such term or terms (which
may extend beyond the Lease Term) and at such Rent and such other
terms as Landlord in its reasonable sole discretion may deem
advisable, with the right to make alterations and repairs to the
Premises. Upon each subletting, (i) Tenant shall be immediately
liable to pay Landlord, in addition to any other indebtedness
other than Rent due from Tenant to Landlord hereunder, the
reasonable cost of such subletting (to the extent allocable to
the remaining Lease Term), including, but not limited to,
reasonable attorneys' fees, and any real estate commissions
actually paid, and the cost of such reasonable alterations and
repairs incurred by Landlord and the amount, if any, by which the
Rent hereunder allocable to the subleased premises for the period
of such subletting (to the extent such period does not exceed the
Lease Term) exceeds the amount to be paid as Rent by the
subtenant for the subleased premises for such period or (ii) at
the option of Landlord, rents received from such subletting shall
be applied first to payment of indebtedness other than Rent due
hereunder from Tenant to Landlord; second, to the payment of any
costs of such subletting and of such alterations and repairs;
third, to payment of Rent due and unpaid hereunder; and the
residue, if any, shall be held by Landlord and applied in payment
of future Rent as the same becomes due hereunder. If Tenant has
been credited with any Rent to be received by such subletting
under option (i) and such Rent shall not be promptly paid to
Landlord by the subtenant(s), or if such rentals received from
such subletting under option (ii) during any month be less than
that to be paid during the month by Tenant hereunder, Tenant
shall pay any such deficiency to Landlord. Such deficiency shall
be calculated and paid monthly. No taking possession of the
Premises by Landlord shall be construed as an election on its
part to terminate this Lease unless a written notice of such
intention be given to Tenant. Notwithstanding any such
subletting without termination, Landlord may at any time
thereafter elect to terminate this Lease for such then uncured
previous default.
(e) The right to have a receiver appointed for Tenant
upon application by Landlord in accordance with applicable laws,
to take possession of the Premises and to apply any rental
collected from the Premises and to exercise all other rights and
remedies granted to Landlord pursuant to this Paragraph 22.
B. Cross Default: As provided in Section 5.A of the
Construction Agreement, any uncured default by Tenant under the
Construction Agreement in the construction of the Shell
Improvements and Interior Improvements for Building One, Building
Two and Building Three occurring prior to the satisfaction of the
requirements of such Section, shall entitle Landlord in
accordance with the applicable provisions of the Construction
Agreement to terminate all Three Leases (but in no event shall
Landlord be required to exercise such remedy).
23. ABANDONMENT. Tenant shall not vacate or abandon the
Building at any time during the Lease Term (except that Tenant
may vacate so long as it pays Rent, provides a security service
to check the Premises during normal business hours from Monday to
Friday, and otherwise performs its obligations hereunder) and if
Tenant shall abandon, vacate or surrender said Premises, or be
dispossessed by the process of law, or otherwise, any personal
property belonging to Tenant and left on the Premises shall be
deemed to be abandoned, at the option of Landlord.
24. HAZARDOUS MATERIALS. Landlord and Tenant agree as follows
with respect to the existence or use of "Hazardous Materials" (as
defined herein) on, in, under or about the Premises and the real
property located beneath said Premises and the Common Area
(hereinafter collectively referred to as the "Property"):
A. As used herein, the term "Hazardous Materials" shall
mean any material, waste, chemical, mixture or byproduct which is
or hereafter is defined, listed or designated under Environmental
Laws (defined below) as a pollutant, or as a contaminant, or as a
toxic or hazardous substance, waste or material, or any other
hazardous, toxic, biohazardous, or radioactive material, waste,
chemical, mixture or byproduct, or which is listed, regulated or
restricted by any Environmental Law (including, without
limitation, petroleum hydrocarbons or any distillates or
derivatives or fractions thereof, polychlorinated biphenyls, or
asbestos). As used herein, the term "Environmental Laws" shall
mean any applicable Federal, State of California or local
government law (including common law), statute, regulation, rule,
ordinance, permit, license, order, requirement, agreement, or
approval, or any determination, judgment, directive, or order of
any executive or judicial authority at any level of Federal,
State of California or local government (whether now existing or
subsequently adopted or promulgated) relating to pollution or the
protection of the environment, ecology, natural resources, or
public health and safety.
B. Tenant shall obtain Landlord's written consent, which
shall not be unreasonably withheld, prior to the occurrence of
any Tenant's Hazardous Materials Activities (defined below);
provided, however, that Landlord's consent shall not be required
for normal use in compliance with applicable Environmental Laws
of customary landscaping, cleaning, household and office
supplies, such as mild cleaners and other common janitorial
supplies, lubricants and copier toner and personal use items,
such as cigarettes and/or medicines. As used herein, the term
"Tenant's Hazardous Materials Activities" shall mean any and all
use, handling, generation, storage, disposal, treatment,
transportation, discharge, or emission of any Hazardous Materials
on, in, beneath, to, from, at or about the Property, in
connection with Tenant's use of the Property, or by Tenant or by
any of Tenant's agents, employees, contractors, vendors,
invitees, visitors or its future subtenants or assignees (unless
Tenant is released hereunder as to such assignee, in which event
Tenant shall not be liable for activities of such assignee unless
otherwise stated in any related Consent to Assignment agreement
executed by Landlord and Tenant). Tenant agrees that any and all
Tenant's Hazardous Materials Activities shall be conducted in
strict, full compliance with applicable Environmental Laws at
Tenant's expense, and shall not result in any contamination of
the Property or the environment. Tenant agrees to provide
Landlord with prompt written notice of any spill or release of
Hazardous Materials at the Property during the term of the Lease
of which Tenant becomes aware, and further agrees to provide
Landlord with prompt written notice of any material violation of
Environmental Laws in connection with Tenant's Hazardous
Materials Activities of which Tenant becomes aware. If Tenant's
Hazardous Materials Activities involve Hazardous Materials other
than normal use of customary landscaping, cleaning, household and
office supplies and personal use items, Tenant also agrees at
Tenant's expense: (i) to install such Hazardous Materials
monitoring, storage and containment devices as required by the
governing agencies associated with any Tenant's Hazardous
Materials Activities or otherwise specifically required by any
governing agency of Tenant; (ii) provide Landlord with a written
inventory of such Hazardous Materials (other than customary
landscaping, cleaning, household and office supplies and personal
use items), including an update of same each year upon the
anniversary date of the Lease Commencement Date ("Anniversary
Date"); and (iii) at any time that an Unaffiliated Assignee is
the Tenant hereunder, Tenant shall every five (5) years
thereafter on the respective anniversary of the Lease
Commencement Date, retain a qualified environmental consultant,
reasonably acceptable to Landlord, to evaluate whether Tenant is
in compliance with all applicable Environmental Laws with respect
to Tenant's Hazardous Materials Activities (with Tenant, at its
expense, to submit to Landlord a report from such environmental
consultant which discusses the environmental consultant's
findings within two (2) months following the respective Lease
Commencement Date). Tenant, at its expense, shall promptly
undertake and complete any and all steps necessary, and in full
compliance with applicable Environmental Laws, to fully correct
any and all problems or deficiencies identified by the
environmental consultant relating to Tenant's Hazardous Materials
Activities, and promptly provide Landlord with documentation of
all such corrections.
C. Prior to termination or expiration of the Lease,
Tenant, at its expense, shall (i) properly remove from the
Property all Hazardous Materials which came to be located at the
Property as a result of Tenant's Hazardous Materials Activities,
and (ii) fully comply with and complete all facility closure
requirements of applicable Environmental Laws regarding Tenant's
Hazardous Materials Activities, including but not limited to (x)
properly restoring and repairing the Property to the extent
damaged by such closure activities, and (y) if applicable,
obtaining from the local Fire Department or other appropriate
governmental authority with jurisdiction a written concurrence
that closure has been completed in compliance with applicable
Environmental Laws. Tenant shall promptly provide Landlord with
copies of all claims, notices, work plans, data and reports
prepared, received or submitted in connection with any such
closure activities.
D. If Landlord, in its reasonable discretion, believes
that the Property has become contaminated as a result of Tenant's
Hazardous Materials Activities, Landlord in addition to any other
rights it may have under this Lease or under Environmental Laws
or other laws, may enter upon the Property and conduct
inspection, sampling and analysis, including but not limited to
obtaining and analyzing samples of soil and groundwater, for the
purpose of determining the nature and extent of such
contamination. Tenant shall promptly reimburse Landlord for the
costs of such an investigation, including but not limited to
reasonable attorneys' fees, Landlord incurs with respect to any
such investigation that discloses Hazardous Materials
contamination for which Tenant is liable under this Lease.
Except as may be required of Tenant by applicable Environmental
Laws, Tenant shall not perform any invasive sampling, testing, or
drilling to identify the presence of any Hazardous Materials at
the Property, without Landlord's prior written consent which
shall not be unreasonably withheld. Tenant shall promptly
provide Landlord with copies of any claims, notices, work plans,
data and reports prepared, received or submitted in connection
with any sampling, testing or drilling performed pursuant to the
preceding sentence.
E. Tenant shall indemnify, defend (with legal counsel
acceptable to Landlord, whose consent shall not unreasonably be
withheld) and hold harmless Landlord, its employees, assigns,
successors, members, and agents from and against any and all
claims (including, but not limited to, third party claims from a
private party or a government authority), liabilities,
obligations, losses, causes of action, demands, governmental
proceedings or directives, fines, penalties, expenses, costs
(including but not limited to reasonable attorneys', consultants'
and other experts' fees and costs), and damages, which arise from
or relate to: (i) Tenant's Hazardous Materials Activities; (ii)
releases or discharges of Hazardous Materials at the Property
during the time ALZA or an ALZA Affiliate is the Tenant under all
Three Leases; (and during the time ALZA or an ALZA Affiliate is
not the Tenant under all Three Leases, the reference to
"Property" within this item (ii) shall be deemed changed to
"Premises"); however, Tenant shall continue to be responsible for
any Hazardous Materials contamination of the Common Area caused
by Tenant's Hazardous Materials Activities), which occur during
the Lease Term; (iii) any Hazardous Materials contamination
caused by Tenant prior to the Lease Commencement Date; or (iv)
the breach of any obligation of Tenant under this Paragraph 24
(collectively, "Tenant's Environmental Indemnification").
Tenant's Environmental Indemnification shall include but is not
limited to the obligation to promptly and fully reimburse
Landlord for losses in or reductions to rental income, and
diminution in fair market value of the Property caused by or
resulting from any such indemnified matter. Tenant's
Environmental Indemnification shall further include but is not
limited to the obligation to diligently and properly implement to
completion, at Tenant's expense, any and all environmental
investigation, removal, remediation, monitoring, reporting,
closure activities, or other environmental response action
(collectively, "Response Actions") associated with any such
indemnified matter. Tenant shall promptly provide Landlord with
copies of any claims, notices, work plans, data and reports
prepared, received or submitted in connection with any Response
Actions.
F. It is agreed that the Tenant's responsibilities related
to Hazardous Materials will survive the expiration or termination
of this Lease and that Landlord may obtain specific performance
of Tenant's responsibilities under this Paragraph 24. It is
further acknowledged by the Parties that Exhibit E attached
hereto reflects certain Hazardous Materials that Tenant and its
environmental consultants, during their earlier analysis,
inspection and testing of the Complex and certain adjacent
property, determined existed on or about the Complex ("Existing
Contamination"). The Parties agree that notwithstanding anything
to the contrary in this Lease, Tenant's Environmental
Indemnification shall not extend to, and Tenant shall have no
responsibility, liability or indemnification obligation to
Landlord under this Lease or at law for, any Hazardous Materials
present in, on, under or about the Complex or any adjacent
property as of the date of this Lease Agreement or for any
Hazardous Materials in groundwater that may hereafter migrate to
or under the Complex, including any such Existing Contamination
(including, but not limited to, in the event of any release of
any such Existing Contamination or any migration of any such
Existing Contamination onto or off of the Complex), except to the
extent, and then only to the extent, to which Tenant may
contribute to any such Existing Contamination or may cause any
such Existing Contamination to be released or migrate.
25. DESTRUCTION. In the event the Premises and/or Common Area
is destroyed in whole or in part from any cause, except for
routine maintenance and repairs and incidental damage and from
destruction caused from vandalism and accidents for which Tenant
is responsible under Paragraph 9, neither Landlord nor Tenant
shall have the right to terminate this Lease except upon the
occurrence of limited circumstances provided hereinbelow, and
Landlord shall be obligated to rebuild or restore the Premises
and/or Common Area so damaged or destroyed to its condition prior
to the damage or destruction at Landlord's sole cost and expense,
with the exception that Tenant shall be solely responsible for
all or such portion of the deductible amount of any insurance
coverage as is then reasonably allocable to the rebuilding or
restoration of the Premises under the insurance policies then
being carried by Landlord pursuant to Paragraph 15 hereof. In
the event any other portion of the Complex is damaged or
destroyed (such as either of the other two buildings in the
Complex), Landlord shall not be obligated hereunder to rebuild or
restore the same, but shall be obligated to cause such other
portion of the Complex to be restored to a safe and aesthetically
pleasing condition.
Tenant shall be entitled to a reduction in Rent after the
occurrence of such damage and while such rebuilding or
restoration is being made in the proportion that the area of the
Building rendered untenantable by such damage or destruction
bears to the total area of the Building. Landlord shall within
thirty (30) days after the occurrence of such damage or
destruction, provide Tenant with Landlord's contractor's estimate
of the time required to complete the rebuilding or restoration of
the Premises or the Common Area. If it is reasonably estimated
by Landlord's contractor that the rebuilding or restoration will
exceed thirteen (13) months following the date of the occurrence
of such damage or destruction, then Tenant shall have the right
to terminate this Lease by giving written notice to Landlord
within fifteen (15) days following receipt of Landlord's
estimated time to rebuild or restore the Premises and/or Common
Area. Notwithstanding anything herein to the contrary,
Landlord's obligation to rebuild or restore the Building shall be
limited to the Building and Interior Improvements (and any
subsequent alterations, additions or improvements thereto) as
they existed as of the date of such damage or destruction, but
excluding (i) any Lab Equipment or any alterations, additions or
improvements that are particular to using any portion of the
Premises as a lab as distinguished from using it as an office,
and (ii) any restoration of Tenant's trade fixtures, equipment,
inventory or merchandise (with the items reflected in clauses (i)
and (ii) collectively referred to as the "Excluded Items"). If
Landlord does not complete the rebuilding or restoration within
thirteen (13) months following the date of destruction (such
period of time to be extended for delays caused by the fault or
neglect of Tenant or because of Acts of God, acts of public
agencies, labor disputes, strikes, fires, freight embargoes,
rainy or stormy weather, inability to obtain materials, supplies
or fuels, or other such delays beyond the reasonable control of
Landlord or its contractors or subcontractors), then Tenant shall
have the right to terminate this Lease by giving written notice
to Landlord within fifteen (15) days after the expiration of said
thirteen (13) month period (as such period may be extended by any
of the foregoing enumerated excused delays). Landlord shall,
within twenty (20) days after the occurrence of any matter which
Landlord considers to constitute the basis for an excused delay,
advise Tenant of such occurrence and the estimated excused delay
that has been or will be occasioned thereby.
Notwithstanding anything to the contrary in this Paragraph
25, if the Premises and/or Common Area is to be rebuilt and/or
restored as provided for herein, and ALZA or an ALZA Affiliate is
the Tenant under all Three Leases at the time of said destruction
or damage, then Landlord and Tenant agree that: (a) Tenant shall
(i) enter into contracts with the general contractor(s) for the
restoration or rebuilding and (ii) oversee the construction; (b)
Landlord shall notify Tenant of the amount of the net insurance
proceeds ("Net Insurance Proceeds") available to be applied to
such restoration or rebuilding and provide adequate assurances to
Tenant as to the future availability from Landlord of Landlord's
Share (as hereinafter defined) of any additional amount, if any,
which is required to fund the cost of such restoration or
rebuilding (net of the Excluded Items) to the extent such cost
exceeds the aggregate of such net insurance proceeds and any
insurance deductible to be borne by Tenant (the "Non-Insured
Cost"); (c) Tenant shall provide adequate assurances to Landlord
as to the future availability for payment by Tenant of any
insurance deductible to be borne by Tenant and of Tenant's Share
(as hereinafter defined) of the Non-Insured Cost; (d) the Net
Insurance Proceeds and Landlord's Share of the Non-Insured Cost
shall be funded by Landlord during the course of such restoration
or rebuilding by Tenant on a pro rata basis with Tenant's funding
of any insurance deductible to be borne by Tenant and Tenant's
Share (as hereinafter defined) of the Non-Insured Cost in the
manner set forth below in this Paragraph 25 (with Landlord's
Disbursement Share as used in this Paragraph to equate to the
ratio of (i) the aggregate of the Net Insurance Proceeds and
Landlord's Share of the estimated Non-Insured Cost to (ii) the
aggregate of the Net Insurance Proceeds, the estimated Non-
Insured Cost (both Landlord's Share and Tenant's Share) and the
insurance deductible to be borne by Tenant (which should in all
events equal the total estimated cost of such rebuilding or
restoration); and (e) Tenant's right to terminate this Lease as a
result of subsequent delays in construction shall be
inapplicable. The Net Insurance Proceeds and Landlord's Share of
any estimated Non-Insured Cost shall be disbursed to, or for the
benefit of, Tenant in the following manner. Landlord shall be
obligated, but not more than one time per month, within ten (10)
business days after receipt of (i) an invoice from Tenant for any
amounts then due and payable to Tenant's design and construction
professionals or material suppliers for costs of such rebuilding
or restoration, together with (ii) a detailed accounting
reflecting the full expenditure of said amounts and all other
amounts since paid and to be paid with the current disbursement
from Landlord, to pay Landlord's Disbursement Share of any
amounts properly shown on such invoice. Unless otherwise agreed
by Landlord and Tenant, Landlord shall make its payment jointly
to Tenant and the general contractor (or, if applicable, to the
respective vendor) except in those instances where it is clearly
demonstrated to Landlord that Tenant has already paid the amount
in full for which reimbursement is then being sought (and any
potentially applicable mechanic's liens, if any, have been
released as respects the work to which such reimbursement is
sought), in which event such payment shall be made directly to
Tenant. Upon the completion of the rebuilding or restoration and
determination of the final cost of such rebuilding or
restoration, the amount of the Non-Insured Cost, if any,
respectively funded by Landlord and Tenant shall be adjusted so
as to cause (i) Tenant to fund the entirety of, but no more than,
the amount of any applicable insurance deductible allocable to
such rebuilding or restoration and Tenant's Share of the actual
Non-Insured Cost, (ii) Landlord to fund the entirety of, but no
more than, the amount of the Net Insurance Proceeds and
Landlord's Share of the actual Non-Insured Cost and (iii)
Landlord or Tenant, as applicable, to reimburse the other for any
excess amount funded by the other. As used in this Paragraph,
(i) "Landlord's Share" shall mean a fraction where (a) the
numerator is the Total Improvement Allowance ultimately funded by
Landlord under the Construction Agreement for the design and
construction of the Shell Improvements and Interior Improvements
for the Complex and (b) the denominator is the sum of such Total
Improvement Allowance so funded and Tenant's Excess Costs (as
defined and used in Paragraph 19(A)(b) above) for the design and
construction of the Shell Improvements and Interior Improvements
(net of the Excluded Items) for the Complex, and (ii) "Tenant's
Share" shall mean a fraction where (a) the numerator is Tenant's
Excess Costs (as defined and used in Paragraph 19(A)(b) above)
for the design and construction of the Shell Improvements and
Interior Improvements (net of the Excluded Items) for the Complex
and (b) the denominator is the sum of the Total Improvement
Allowance so funded and Tenant's Excess Costs for the design and
construction of the Shell Improvements and Interior Improvements
(net of the Excluded Items) for the Complex. By way of example
of the foregoing, assume that: (i) the total estimated cost of
repairing the damage to the Improvements is $21,000,000, of which
$1,000,000 relates to the estimated cost of repairing the damage
to the Excluded Items; (ii) the insurance deductible is
$5,000,000; (iii) the Net Insurance Proceeds are $12,000,000;
(iv) the Total Improvement Allowance funded by Landlord for the
Complex was $35,000,000; and (v) the Tenant's Excess Costs for
the design and construction of the Shell Improvements and
Interior Improvements (net of the Excluded Items) was
$17,500,000; then: (a) the Non-Insured Cost would be $3,000,000
(= $21,000,000 -$1,000,000 - $5,000,000 - $12,000,000); (b)
Landlord's Share would be 66.67 % (= $35,000,000 /($35,000,000 +
$17,500,000)), and Landlord's Share of the Non-Insured Cost would
be $2,000,100; (c) Tenant's Share would be 33.33 % (= $17,500,000/
($35,000,000 + $17,500,000)), and Tenant's Share of the Non-
Insured Cost would be $999,900; and (d) Tenant would also be
responsible for funding the insurance deductible of $5,000,000
and the $1,000,000 cost of repairing the Excluded Items.
Notwithstanding anything to the contrary herein, if Landlord
elects to terminate the Lease as provided hereinbelow versus
rebuilding and/or restoring said damage or destruction as
provided for herein and Tenant does not exercise its right to
require Landlord to rebuild or restore as provided for herein,
Tenant shall not be liable for paying any insurance deductible
related to such damage or destruction provided Tenant did not
cause such damage or destruction; if Tenant elects to terminate
the Lease as provided hereinbelow, Tenant shall be obligated to
pay the insurance deductible; and if this Lease is not
terminated, Tenant shall be obligated to pay the insurance
deductible.
Unless this Lease is terminated pursuant to the foregoing
provisions, this Lease shall remain in full force and effect.
The Parties hereby expressly waive the provision of Section 1932,
Subdivision 2, and Section 1933, Subdivision 4 of the California
Civil Code.
Notwithstanding the foregoing, (a) in the event that all or
any portion of the Premises and/or Common Area is damaged or
destroyed (i) within the final twenty four (24) months of the
Initial Term of this Lease, or (ii) within the final twenty four
(24) months of any Extended Term of this Lease, to such an extent
that Tenant cannot reasonably use the Premises for its intended
purpose, then either Landlord or Tenant shall have the right to
terminate this Lease, to be exercised by written notice to the
other, delivered, if at all, within thirty (30) days following
the date of such damage or destruction, provided that if there
then remains any unexercised Option to Extend, Tenant may, within
twenty (20) days following receipt of Landlord's notice of
termination, give notice of its exercise of its Option to Extend
the Lease Term, in which event such termination election by
Landlord shall be rendered null and void, and (b) in the event
that all or any portion of the Premises and/or Common Area is
damaged or destroyed on or after the commencement of the Second
Extended Term of this Lease under circumstances that are
reasonably expected to result in a Non-Insured Cost that would
under the provisions of this Paragraph 25 result in a requirement
of Tenant to fund Tenant's Share of such Non-Insured Cost, then
Tenant shall have the right to terminate this Lease, to be
exercised by written notice to Landlord, delivered, if at all,
prior to or within thirty (30) days following the date of
Landlord's delivery to Tenant of notice of the amount of Net
Insurance Proceeds available for rebuilding, provided that,
Landlord may, within twenty (20) days following receipt of
Tenant's notice of termination, give notice of Landlord's
election to waive any requirement for there to be a Tenant's
Share of such Non-Insured Cost, in which event such termination
election by Tenant shall be rendered null and void and Landlord
shall fund the entirety of the Non-Insured Cost (both Tenant's
Share and Landlord's Share) and Tenant shall fund the amount of
any applicable insurance deductible. Any notice of any election
to terminate under this Paragraph shall be effective ninety (90)
days after the date of the giving of such notice.
26. EMINENT DOMAIN. If all or any part of the Premises shall be
taken by any public or quasi-public authority under the power of
eminent domain or conveyance in lieu thereof, this Lease shall
terminate as to any portion of the Premises so taken or conveyed
on the date when title vests in the condemner, and Landlord shall
be entitled to any and all payment, income, rent, award, or any
interest therein whatsoever which may be paid or made in
connection with such taking or conveyance, and Tenant shall have
no claim against Landlord or otherwise for the value of any
unexpired Lease Term. Notwithstanding the foregoing sentence,
any compensation specifically awarded Tenant for loss of business
(including severance damages associated with Tenant's other
business activities), Tenant's Lab Equipment, trade fixtures,
personal property, moving costs or loss of goodwill, shall be and
remain the property of Tenant.
If (A) (i) any action or proceeding is commenced for the
taking of the Premises or any material part thereof, or if
Landlord is advised in writing by any entity or body having the
right or power of condemnation of its intention to condemn the
Premises or any material part thereof, or (ii) any of the
foregoing events occur with respect to the taking of any material
portion of the Common Area which make it impractical for Landlord
to continue to lease the Building to Tenant with reasonable
Common Area amenities, and (B) Landlord shall decide to
discontinue the use and operation of the Complex, or decide to
demolish or materially redesign and rebuild the Complex, then, in
any of such events Landlord shall have the right to terminate
this Lease by giving Tenant written notice thereof and this Lease
shall then terminate on the date preceding the date of
conveyance.
In the event of such a partial taking or conveyance of the
Premises, if the portion of the Premises taken or conveyed is so
substantial that the Tenant can no longer reasonably conduct its
business, Tenant shall have the privilege of terminating this
Lease within sixty (60) days following the date of such taking or
conveyance, upon written notice to the Landlord of its intention
so to do, and upon giving of such notice this Lease shall
terminate on the last day of the calendar month next following
the month in which such notice is given, upon payment by Tenant
of the Rent (apportioned in such manner as provided in the
following paragraph) from the date of such taking or conveyance
to the date of termination.
If a portion of the Premises and/or Complex be taken by
condemnation or conveyance in lieu thereof and neither Landlord
nor Tenant shall terminate this Lease as provided herein, this
Lease shall continue in full force and effect as to the part of
the Premises not so taken or conveyed and the recipient of the
award shall restore the Premises and/or Complex to the extent
reasonably practicable, and the Rent herein shall be apportioned
as of the date of such taking or conveyance so that thereafter
the Rent to be paid by Tenant shall be in the ratio that the area
of the portion of the Premises not so taken or conveyed bears to
the total area of the Premises prior to such taking.
27. SALE OR CONVEYANCE BY LANDLORD. In the event of a sale or
conveyance of the Premises or the Complex or any interest therein
by any owner of the reversion then constituting Landlord, upon
written assumption by the successor in interest of the
obligations and liabilities under this Lease, the transferor
shall thereby be released from any then current and any further
liability upon any of the terms, covenants or conditions (express
or implied) herein contained in favor of Tenant, and in such
event, insofar as such transfer is concerned, Tenant agrees to
look solely to the responsibility of the successor in interest of
such transferor in and to the Premises and this Lease. This
Lease shall not be affected by any such sale or conveyance, and
Tenant agrees to attorn to the successor in interest of such
transferor. Notwithstanding anything to the contrary above, if
Landlord sells or otherwise conveys its interest in the Premises
or Complex, Landlord shall not be relieved of its obligations
under the Lease, unless Landlord's successor in interest assumes,
in writing, Landlord's obligations under the Lease.
28. ATTORNMENT TO LENDER OR THIRD PARTY. In the event the
interest of Landlord in the Premises and/or Complex is encumbered
by deed of trust, and such interest is acquired by the Lender or
any third party through judicial foreclosure or by exercise of a
power of sale at private trustee's foreclosure sale, Tenant
hereby agrees to attorn to the purchaser at any such judicial
foreclosure or foreclosure sale and to recognize such purchaser
as the Landlord under this Lease. In the event the lien of the
deed of trust securing the loan from a Lender to Landlord is
prior and paramount to this Lease, this Lease shall nonetheless
continue in full force and effect for the remainder of the
unexpired Term, at the same Rental herein reserved and upon all
the other terms, conditions and covenants herein contained.
29. HOLDING OVER. Any holding over by Tenant after expiration
or other termination of the Lease Term with the written consent
of Landlord delivered to Tenant shall not constitute a renewal or
extension of the Lease or give Tenant any rights in or to the
Premises except as expressly provided in this Lease. Any holding
over after the expiration or other termination of the Lease Term,
with the consent of Landlord, shall be construed to be a tenancy
from month to month, on the same terms and conditions herein
specified insofar as applicable except that the monthly Basic
Rent shall be increased to an amount equal to one hundred fifty
(150%) percent of the monthly Basic Rent required during the last
month of the Lease Term.
30. CERTIFICATE OF ESTOPPEL. Tenant and/or Landlord shall at
any time upon not less than ten (10) days prior written notice
from the other party execute, acknowledge and deliver to the
requesting party a statement in writing (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 date to which the Rent and other charges are paid in advance,
if any, and (ii) acknowledging that there are not, to the party's
knowledge, any uncured defaults on the part of the requesting
party hereunder, or specifying such defaults, if any, are
claimed. Any such statement may be conclusively relied upon by
any prospective purchaser or encumbrancer of the Premises, or any
assignee or subtenant of the Premises. A requested party's
failure to deliver such statement within such time shall be
conclusive upon the requested party that this Lease is in full
force and effect, without modification except as may be
represented by the requesting party; that there are no uncured
defaults in the requesting party's performance, and that not more
than one month's Rent has been paid in advance. Landlord and
Tenant further agree to appropriately and timely respond to the
respective reasonable inquiries of the auditors of the other
party, but such response shall be limited to the respective
knowledge of the responding party.
31. CONSTRUCTION CHANGES - NOT APPLICABLE
32. RIGHT OF LANDLORD TO PERFORM. All terms, covenants and
conditions of this Lease to be performed or observed by Tenant
shall be performed or observed by Tenant at Tenant's sole cost
and expense and without any reduction of Rent. If Tenant shall
fail to pay any sum of money, or other Rent, required to be paid
by it hereunder or shall fail to perform any other term of
covenant hereunder on its part to be performed, and such failure
shall continue for twenty (20) days after written notice thereof
by Landlord, Landlord, without waiving or releasing Tenant from
any obligation of Tenant hereunder, may, but shall not be obliged
to, make any such payment or perform any such other term or
covenant on Tenant's part to be performed. All sums so paid by
Landlord and all necessary costs of such performance by Landlord
together with interest thereon at the rate of Bank of America's
Prime Rate (or equivalent rate thereof) of interest plus five
percent (5%) per annum, but in no event greater then the maximum
rate of interest permitted by applicable law, from the date of
such payment or performance by Landlord, shall be paid (and
Tenant covenants to make such payment) to Landlord within ten
(10) business days after demand by Landlord, and Landlord shall
have (in addition to any other right or remedy of Landlord) the
same rights and remedies in the event of nonpayment by Tenant as
in the case of failure by Tenant in the payment of Rent
hereunder.
33. ATTORNEYS' FEES.
A. In the event that either Landlord or Tenant should
bring suit for the possession of the Premises, for the recovery
of any sum due under this Lease, or because of the breach of any
provision of this Lease, or for any other relief against the
other party hereunder, then all costs and expenses, including
reasonable attorneys' fees, incurred by the prevailing party
therein shall be paid by the other party, which obligation on the
part of the other party shall be deemed to have accrued on the
date of the commencement of such action and shall be enforceable
whether or not the action is prosecuted to judgment.
B. In addition to any other rights of Landlord under this
Lease to defense or indemnification by Tenant, should Landlord be
named by a third party as a defendant in any suit brought by such
third party principally against Tenant in connection with or
arising out of Tenant's alleged improper or tortious conduct
associated with the Premises or the Complex, Tenant shall pay to
Landlord Landlord's reasonable costs and expenses incurred in
such suit, including reasonable attorney's fees (but Landlord
agrees to cooperate with Tenant in Tenant's efforts to provide a
joint defense to such suit or otherwise to minimize the costs of
such defense or the settlement of such suit.)
34. WAIVER. The waiver by either party of the other party's
failure to perform or observe any term, covenant or condition
herein contained to be performed or observed by such waiving
party shall not be deemed to be a waiver of such term, covenant
or condition or of any subsequent failure of the party failing to
perform or observe the same or any other such term, covenant or
condition therein contained, and no custom or practice which may
develop between the parties hereto during the Lease Term shall be
deemed a waiver of, or in any way affect, the right of either
party to insist upon performance and observance by the other
party in strict accordance with the terms hereof.
35. NOTICES. All notices, demands, requests, advices or
designations which may be or are required to be given by either
party to the other hereunder shall be in writing. All notices,
demands, requests, advices or designations by Landlord to Tenant
shall be sufficiently given, made or delivered if personally
delivered to or sent to Tenant by United States certified or
registered mail, postage prepaid or by a reputable same day or
overnight courier service addressed to Tenant at ▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, Attn: Manager Corporate Real Estate (
and if such notice constitutes a notice of default under this
Lease, then an additional copy shall be sent to Tenant at ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, Attn: General Counsel, Legal
Department). All notices, demands, requests, advices or
designations by Tenant to Landlord shall be sufficiently given,
made or delivered if personally delivered to or sent to Landlord
by United States certified or registered mail, postage prepaid,
or by a reputable same day or overnight courier service addressed
to Landlord at its offices at c/o Peery/▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Attn: ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇. Each notice, request, demand, advice or designation
referred to in this Paragraph shall be deemed received on the
date of receipt or refusal to accept receipt at the address so
provided for notices if sent in the manner herein provided, as
the case may be. Either party shall have the right, upon ten
(10) days written notice to the other, to change its address for
notices as provided herein; however, Landlord shall send Tenant
notices to only one address (provided that in the event of a
notice of default, Landlord will provide an additional copy of
such notice of default to such one additional addressee as may be
duly notified by Tenant to Landlord in accordance with the
provisions of this Lease).
36. EXAMINATION OF LEASE. Submission of this instrument for
examination or signature by either Tenant or Landlord does not
constitute a reservation of or option for a Lease, and this
instrument is not effective as a lease or otherwise until its
execution and delivery by both Landlord and Tenant.
37. DEFAULT BY LANDLORD. Landlord shall not be in default
unless Landlord fails to perform obligations required of Landlord
within a reasonable time, but in no event earlier than (30) days
after written notice by Tenant to Landlord and to the holder of
any first mortgage or deed of trust covering the Premises whose
name and address shall have theretofore been furnished to Tenant
in writing, specifying wherein Landlord has failed to perform
such obligations; provided, however, that if the nature of
Landlord's obligations is such that more than thirty (30) days
are required for performance, then Landlord shall not be in
default if Landlord commences performance within such thirty (30)
day period and thereafter diligently prosecutes the same to
completion.
38. CORPORATE AUTHORITY. If Tenant is a corporation (or a
partnership), each individual executing this Lease on behalf of
said corporation (or partnership) represents and warrants that he
or she is duly authorized to execute and deliver this Lease on
behalf of said corporation (or partnership) in accordance with
the by-laws of said corporation (or partnership in accordance
with the partnership agreement) and that this Lease is binding
upon said corporation (or partnership) in accordance with its
terms. If Tenant is a corporation, Tenant shall, within thirty
(30) days after execution of this Lease, deliver to Landlord a
certified copy of the resolution of the Board of Directors of
said corporation authorizing or ratifying the specific execution
of this Lease by the individual executing said Lease. In lieu of
said corporate resolution, Tenant may provide Landlord with an
outside legal opinion stating that the parties executing this
Lease on behalf of Tenant are authorized to do so by the Board of
Directors.
39. LIMITATION OF LIABILITY. In consideration of the benefits
accruing hereunder, Tenant and all successors and assigns to
Tenant as respects Tenant's interest under this Lease, covenant
and agree that, in the event of any actual or alleged failure,
breach or default hereunder by Landlord:
(A) the sole and exclusive remedy shall be against
Landlord's interest in the Premises leased herein;
(B) no constituent member and/or no partner of Landlord
shall be sued or named as a party in any suit or action (except
as may be necessary to secure jurisdiction of the limited
liability company or partnership);
(C) no service of process shall be made against any
constituent member or partner of Landlord (except as may be
necessary to secure jurisdiction of the limited liability company
or partnership);
(D) no constituent member or partner of Landlord shall be
required to answer or otherwise plead to any service of process;
(E) no judgment will be taken against any constituent
member or partner of Landlord;
(F) any judgment taken against any constituent member or
partner of Landlord may be vacated and set aside at any time
without hearing;
(G) no writ of execution will ever be levied against the
assets of any constituent member or any partner of Landlord; and
(H) these covenants and agreements are enforceable both by
Landlord and also by any constituent member or any partner of
Landlord.
Tenant agrees that each of the foregoing covenants and
agreements shall be applicable to any covenant or agreement
either expressly contained in this Lease or imposed by statute or
at common law with respect to this Lease or the Construction
Agreement.
40. SIGNS. No sign, placard, picture, advertisement, name or
notice shall be inscribed, displayed or printed or affixed on or
to any part of the outside of the Premises or any exterior
windows of the Premises without the written consent of Landlord
first had and obtained and Landlord shall have the right, if
Tenant shall fail to have obtained such consent, to remove any
such sign, placard, picture, advertisement, name or notice to and
at the expense of Tenant. If Tenant is allowed to print or affix
or in any way place a sign in, on, or about the Premises, upon
expiration or other sooner termination of this Lease, Tenant at
Tenant's sole cost and expense shall both remove such sign and
repair all damage in such a manner as to restore all aspects of
the appearance of the Premises to the condition prior to the
placement of said sign.
All approved signs or lettering on any outside doors or
walls of the Building shall be printed, painted, affixed or
inscribed at the expense of Tenant by a person approved of by
Landlord (provided that such approval shall not be required if
ALZA or an ALZA Affiliate is then the Tenant).
Tenant shall not place anything or allow anything to be
placed near the glass of any window, door partition or wall which
may appear unsightly from outside the Premises.
Notwithstanding anything to the contrary above, at any time
during the Lease Term that ALZA (and/or any ALZA Affiliates) is
the tenant under all Three Leases, Landlord's approval shall not
be required; provided Tenant complies with all governing agency
requirements for said signage.
In addition to the foregoing, at any time during the Lease
Term that ALZA (and/or any ALZA Affiliates) is the tenant under
at least two of the Three Leases, Tenant shall have the exclusive
right, subject to obtaining the prior approval of Landlord
thereto, which approval shall not be unreasonably withheld, to
name the Complex after Tenant's corporate identity or the name or
nature of any business conducted on the Complex (as the name or
nature of its business may change from time to time), such as,
but not limited to, "ALZA Plaza", which name is hereby approved
by Landlord, and Tenant shall have the right to construct an
appropriately sized and tastefully designed monument signage
("Complex Sign") at such location or locations on the Complex
adjoining the dedicated streets as may be reasonably approved by
Landlord and otherwise in compliance with the City's
requirements. Neither Landlord nor Tenant shall cause the
Complex Sign to be named after any business which is then
reasonably considered to be a business competitor of Landlord or
any of its constituent members. In addition, the tenant of each
of the Three Buildings shall be entitled to erect a monument sign
identifying its business conducted in such building ("Building
Sign"), which Building Sign shall be in a location approved by
Landlord and in close proximity to such building. In all events,
any Building Sign shall be smaller in size and in a subservient
location to that of the Complex Sign.
41. CONSENT. Whenever the consent of one party to the other is
required hereunder, such consent shall not be unreasonably
withheld.
42. AUTHORITY TO EXECUTE. The parties executing this Lease
hereby warrant and represent that they are properly authorized to
execute this Lease and bind the parties on behalf of whom they
execute this Lease and to all of the terms, covenants and
conditions of this Lease as they relate to the respective parties
hereto.
43. BROKERS. Upon the Lease Commencement Date and after
Landlord shall have received from Tenant (i) payment in full of
the first month's Rent, (ii) an insurance certificate evidencing
Tenant's liability insurance coverage as required under ▇▇▇▇▇▇▇▇▇
▇▇, (▇▇▇) an acceptable corporate authority as provided in
Paragraph 38, (iv) a copy of the Occupancy Permit for the
Premises and (v) a full, unconditional lien release for the
complete construction of the Premises, Landlord shall pay a
brokerage commission to Catalyst Real Estate Group in the amount
of $100,000.00 respecting Tenant's leasing of the Premises under
the terms of this Lease, pursuant to a separate written agreement
between Landlord and Catalyst Real Estate Group. Nothing herein
shall preclude Tenant from agreeing to pay any supplemental
compensation to Catalyst Real Estate Group for its services
rendered to or on behalf of Tenant. Except as provided above,
each of Landlord and Tenant represents and warrants to the other
that no party is entitled to any real estate brokerage or
salesperson commission or any finders' fee as a result of such
party's action in connection with the leasing of the Premises to
Tenant. Each of Landlord and Tenant shall save, protect, defend,
indemnify and hold the other harmless from and against any claim
to the contrary by any salesperson, broker or finder based upon
such salesperson's, broker's or finder's relationship with such
party.
44. FIRST OPTION TO EXTEND: Landlord hereby grants to Tenant an
Option to Extend ("First Option to Extend") this Lease for an
additional ten (10) year period upon the following terms and
conditions;
A. Tenant shall give Landlord written notice of Tenant's
exercise of this First Option to Extend not later than twelve
months prior to the expiration date of the Initial Term, in which
event this Lease shall be extended for an additional ten (10)
years ("First Extended Term") on all of the terms and conditions
of this Lease except that the Basic Rent shall be adjusted as set
forth below and this Paragraph 44 shall be of no further force
and effect and deemed deleted thereby. In the event that Tenant
fails to timely exercise Tenant's option as set forth herein in
writing, Tenant shall have no further Option to Extend this
Lease, and this Lease shall continue in full force and effect for
the full remaining Term, absent this Paragraph 44 and Paragraph
45 below.
B. It is hereby agreed that (i) the monthly Basic Rent for
the first year of the First Extended Term shall increase by $.05
per square foot per month over the monthly Basic Rent for the
last month in the Initial Term (i.e. if said Building is 120,000
square feet and the monthly Basic Rent for the last month in the
Initial Term is $2.461 per square foot per month); 120,000 x
($2.461 + $0.05) = $301,380.00), and (ii) commencing on the
anniversary following the date of commencement of the First
Extended Term, and on each successive anniversary thereafter, the
monthly Basic Rent (as provided for in Paragraph 4A) for each
succeeding one (1) year period of the First Extended Term, shall
be increased over the monthly Basic Rent in effect immediately
prior to such anniversary by a percentage amount thereof
equivalent to the percentage increase in the CPI (as defined
below) with respect to the period from the calendar month
preceding the date of commencement of the respective one (1) year
period of the Lease Term (including the month preceding the date
of commencement of the First Extended Term) to the calendar month
immediately preceding the date of expiration of the respective
one (1) year period of the Lease Term; For example: if the Rent
Commencement Date is November 1, 1999, then the Basic Rent
adjustment would be based on the increase in the Index from
October 2014 to October 2015; from October 2015 to October 2016;
from October 2016 to October 2017; from October 2017 to October
2018; from October 2018 to October 2019; from October 2019 to
October 2020; from October 2020 to October 2021; from October
2021 to October 2022; and from October 2022 to October 2023;
provided, however, that (i) in no event shall the monthly Basic
Rent for any one (1) year period of the First Extended Term,
after adjustment, be less than the monthly Basic Rent in effect
at the expiration of the one (1) year period of the Lease Term
immediately preceding, and (ii) in the event the CPI declines in
one year from the immediately preceding year CPI and then
escalates the following year, the following year's CPI increase
shall be the net increase over the prior two year period (or such
longer period if the CPI had fallen below its prior level for a
period of two years or more). For Example; if the CPI Index for
October 2013 is 152.1 and the CPI Index for October 2014 is
147.5, the change in the CPI Index is 147.5 / 152.1 = -3%;
therefore no increase shall be due for the year commencing
November 2014; if the CPI index for October 2015 is 154.9, the
net CPI increase from October 2013 to October 2015 shall be
1.84%.
Subject to the terms stated herein, the monthly Basic Rent
shall be subject to a CPI adjustment on the following dates
(assuming a November 1, 1999 Rent Commencement Date): 11/01/15,
11/01/16, 11/01/17, 11/01/18, 11/01/19, 11/01/20, 11/01/21,
11/01/22 and 11/01/23.
The First Extended Term's monthly Basic Rent, as stated
above, shall be adjusted, commencing on the first anniversary
following the date of commencement of the First Extended Term, in
accordance with the following formula based on the Consumer Price
Index for all Urban Consumers, subgroup "All Items", San
Francisco-Oakland-San Jose, California ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ (▇▇▇▇-▇▇
= 100) published by the Bureau of Labor Statistics, U.S.
Department of Labor (the "CPI" or "Index") which is published
for the calendar month which most nearly precedes each and every
adjustment date (the "Beginning Index") and the Index which is
published for the calendar month which most nearly precedes each
and every anniversary of the adjustment date (the "Adjustment
Index"). The initial "CPI" adjusted Basic Rent shall be
calculated by adding to the monthly Basic Rent due for the first
year of the First Extended Term an amount calculated by
multiplying the monthly Basic Rent due for the first year of the
First Extended Term by the percent increase in the Index (to wit:
the percent increase from Beginning Index for the calendar month
which immediately precedes the date of commencement of the First
Extended Term to the Adjustment Index for the calendar month
which immediately precedes the first anniversary of the date of
commencement of the First Extended Term). The Basic Rent for
each succeeding one-year period will be determined by using the
same formula applied to the prior year's adjusted monthly Basic
Rent.
Landlord will as soon as practicable, notify Tenant in
writing of each CPI increase and the adjusted Basic Rent, and
Tenant will make any Basic Rent payments falling due more than
ten (10) days after the receipt of notice of such adjusted Basic
Rent in the adjusted amount (and if such notice shall be delayed
so that Tenant shall have theretofore underpaid the Basic Rent
applicable to the period since the last anniversary of the date
of commencement of the First Extended Term, Tenant shall, within
ten (10) days following receipt from Landlord of notice of the
amount of such underpayment, pay such previously underpaid
amount. If the Index is changed so that the Base Year of the
Index differs from that used as of the month immediately
preceding the month in which the term commences, the Index shall
be converted in accordance with the conversion factor published
by the United States Department of Labor, Bureau of Labor
Statistics. If the Index is discontinued or revised during the
term, such other government index or other computation with which
it is replaced or if not replaced, which most closely resembles
it, shall be used in order to obtain substantially the same
result as would be obtained if the Index had not been
discontinued or revised. If the Index is no longer published on
a monthly basis, and it is no longer published for the respective
calendar month immediately preceding the date of commencement of
the First Extended Term, then the Index for such calendar month
for which the Index is published which most nearly precedes the
date of commencement of the First Extended Term shall instead be
used. Each annual increase in the Basic Rent will be calculated
as shown below in the example displayed (based on the below
reflected Basic Rent and CPI adjustment assumptions):
CPI Calculation Example
CPI ANNUAL
EXAMPLE CPI CHANGE INCREASE %
CPI increase 156.0 * 11/15 2.56%
152.1 * 11/14
(*factors used
for example only)
Basic Rent @ 10/15 $301,380.00
Increase of 2.56% $ 7,715.33
New Adjusted Basic Rent
commencing the second year
of the First Extended Term $309,095.33
C. Increased Security Deposit: Subject to the terms of
Paragraph 4G, in the event the term of Tenant's Lease is extended
pursuant to this Paragraph 44, Tenant's Security Deposit, if then
required under Paragraph 4G, shall be increased to equal twice
the anticipated Basic Rental due for the last month of the First
Extended Term.
45. SECOND OPTION TO EXTEND. Provided Tenant has extended the
Lease for an additional ten (10) year period as set forth in
Paragraph 44 above, Landlord hereby grants to Tenant an Option to
Extend ("Second Option to Extend") this Lease for an additional
term equal to nine (9) years and eleven (11) months reduced day
for day by (i) any Early Occupancy Period as provided in
Paragraph 2C above, and (ii) the period between the date of
execution of this Lease and the Lease Commencement Date (the
"Build-Out Period") except to the extent that legal counsel for
Tenant delivers to Landlord and Tenant prior to the exercise of
the Second Option to Extend, a legal opinion to the effect that
all or some portion of such Build-Out Period is not includible
for Proposition 13 reassessment purposes in the calculation of
the overall maximum term of this Lease (which term was to be in
all events less than 35 years in duration as of the date of
execution of this Lease), in which event such portion of the
Build-Out Period which has been so determined not to be
includible for Proposition 13 purposes shall not be deducted from
such nine year and eleven month term (as so calculated, the
"Second Extended Term") on the following terms and conditions;
A. Tenant shall give Landlord written notice of Tenant's
exercise of this Second Option to Extend not later than twelve
months prior to the expiration date of the First Extended Term,
in which event this Lease shall be extended for the Second
Extended Term on all of the terms and conditions of this Lease,
except that the Basic Rent shall be adjusted as set forth below
and this Paragraph 45 shall be of no further force and effect and
deemed deleted thereby. In the event that Tenant fails to timely
exercise Tenant's option as set forth herein in writing, Tenant
shall have no further Option to Extend this Lease, and this Lease
shall continue in full force and effect for the full remaining
Lease Term, absent this Paragraph 45.
B. The Second Extended Term's monthly Basic Rent shall be
adjusted based on annual adjustments in the CPI in an identical
manner to that provided in Paragraph 44 above with respect to the
First Extended Term, with the first adjustment during the Second
Extended Term to be effective as of the date of commencement of
the Second Extended Term. The initial "CPI" adjusted Basic Rent
for the Second Extended Term shall be calculated by adding to the
monthly Basic Rent during the last month of the First Extended
Term an amount calculated by multiplying the monthly Basic Rent
during the last month of the First Extended Term by the percent
increase in the Index over the last year of the First Extended
Term (to wit: the percent increase from Beginning Index for the
calendar month which immediately preceded the date of
commencement of the last year of the First Extended Term to the
Adjustment Index for the calendar month which immediately
preceded the date of commencement of the Second Extended Term).
The Basic Rent for each succeeding one-year period will be
determined by using the same formula applied to the prior year's
adjusted monthly Basic Rent. Assuming the Initial Term commences
on November 1, 1999, the Second Extended Term would commence on
November 1, 2024 and such CPI adjustments would be determined
with respect to the following annual periods: from October 2023
to October 2024; from October 2024 to October 2025; from October
2025 to October 2026; from October 2026 to October 2027; from
October 2027 to October 2028; from October 2028 to October 2029;
from October 2029 to October 2030; from October 2030 to October
2031; from October 2031 to October 2032 and from October 2032 to
October 2033 provided, however, that (i) in no event shall the
monthly Basic Rent for any one (1) year period of the Second
Extended Term, after adjustment, be less than the monthly Basic
Rent in effect at the expiration of the prior one (1) year
period, and (ii) in the event the CPI declines in one year from
the immediately preceding year CPI and then escalates the
following year, the following year's CPI increase shall be the
net increase over the prior two year period (or such longer
period if the CPI had fallen below its prior level for a period
of two years or more).
Subject to the terms stated herein, the monthly Basic Rent
shall be subject to a CPI adjustment on the following dates
(assuming the Initial Term commences on November 1, 1999):
11/01/24, 11/01/25, 11/01/26, 11/01/27, 11/01/28, 11/01/29,
11/01/30, 11/01/31, 11/01/32 and 11/01/33.
The respective obligations of Landlord and Tenant as to
notice of and payment of any CPI adjustments to Basic Rent shall
be as provided in Paragraph 44 above as to the First Extended
Term, and the provisions thereof relating to any change in the
manner of calculation or publishing of the CPI shall similarly
apply during the Second Extended Term.
C. Increased Security Deposit: Subject to Paragraph 4G, in
the event the term of Tenant's Lease is extended pursuant to this
Paragraph 45, Tenant's Security Deposit shall if then required
under Paragraph 4G, be increased to equal twice the anticipated
Basic Rental due for the last month of the Second Extended Term.
46. FIRST RIGHT OF REFUSAL EXCLUSIVE TO ALZA OR AN ALZA
AFFILIATE. In the event (i) ALZA or an ALZA Affiliate is the
Tenant under this Lease or this Lease has expired and ALZA or an
ALZA Affiliate was the Tenant under this Lease at the time of
such expiration (but the First Right of Refusal granted herein
shall in no event extend to any Unaffiliated Assignee) and (ii)
provided Tenant is not in default pursuant to Paragraph 22
("Bankruptcy and Default") of this Lease (i.e. Tenant has
received notice of a default under this Lease and the applicable
cure period has expired and Tenant has not then cured such
default), in any of the terms, covenants, and conditions of this
Lease (or if this Lease has then terminated, that this Lease was
not terminated as a result of any default of Tenant), and (iii)
the net worth of ALZA or such ALZA Affiliate at such time equals
or exceeds the amount provided in Paragraph 19C related to an
assignment of this Lease, then Tenant, during and after the
expiration of the Lease Term and subject to the provisions
hereinafter contained, shall have the First Right of Refusal to
lease this Building, or any portion of the Building then being
separately offered by Landlord for lease (hereinafter referred to
as "First Right Space") upon the following terms and conditions
(provided that if Landlord is offering this Building for lease
together with all or any portion of Building Two and/or Building
Three, the First Right Space shall include all of the space in
the Complex so offered for lease, but shall not include any space
outside of the Complex, and Tenant, if it exercises such First
Right of Refusal, shall be required to exercise it with respect
to the entirety of the First Right Space):
A. Landlord agrees that in the event Landlord receives an
offer from a third party(s) to lease all or any portion of this
Building at a rental and upon terms and conditions which are
satisfactory to Landlord, Landlord shall, prior to executing a
lease agreement with a third party for said First Right Space,
offer said First Right Space to Tenant at the same rental and
other economic terms and conditions upon which Landlord is
willing to lease said First Right Space to the third party.
Tenant shall have ten days after receipt of written notice of
said rental and other economic terms and conditions in which to
accept said rental and other economic terms and conditions in
writing; provided, however, that if such proposal contains any
unusually restrictive provision (such as a use clause that would
restrict Tenant from the uses permitted by any assignee
hereunder) such provision shall be inapplicable to Tenant in the
event of the acceptance of the rental and other economic terms
and conditions so offered. In the event Tenant rejects or fails
to accept said rental and other economic terms and conditions so
presented by Landlord within such ten day period, and Landlord
proceeds within one hundred eighty days thereafter to lease such
First Right Space to such third party upon terms no more
favorable to the third party than the rental and other economic
terms as presented to Tenant, then Tenant shall have no further
first right of refusal for such First Right Space (but if
Landlord does not so lease the First Right Space, then such first
right of refusal shall be reinstated as to such First Right
Space). In the event Tenant so accepts said rental and other
economic terms and conditions, Tenant must execute a lease
agreement for said First Right Space within twenty (20) days from
receipt of a lease agreement from Landlord which conforms to such
accepted terms and which embodies the terms and conditions which
are then customarily acceptable to landlords in the local
geographic area for leased premises and tenants of the size and
nature of the First Right Space and the then Tenant. Landlord
and Tenant shall act reasonably in considering and deciding
whether and how to incorporate any comments of Landlord or Tenant
as to the terms and conditions of the proposed lease agreement.
If Tenant fails to execute such a lease agreement within such
twenty day period, Tenant shall have no further first right of
refusal for said First Right Space, and Landlord shall be free to
execute a lease with a third party without further obligation to
Tenant with respect to said First Right Space so offered to
Tenant.
B. The first right of refusal of Tenant under this
Paragraph 46 are granted for the benefit of ALZA and any ALZA
Affiliate, and may not be otherwise assigned or transferred by
Tenant. The rights and obligations of Tenant and Landlord under
this Paragraph 46 shall survive the expiration of the Lease Term.
47. MISCELLANEOUS AND GENERAL PROVISIONS.
A. Use of Building Name. Tenant shall not, without the
written consent of Landlord, use the name of the Building for any
purpose other than as the address of the business conducted by
Tenant in the Premises, provided that for so long as the Building
or Complex is bearing the name designated by ALZA or any ALZA
Affiliate pursuant to Paragraph 40 hereof, ALZA or any ALZA
Affiliate may use such name as it considers appropriate.
Conversely, for so long as the Building or Complex is bearing the
name designated by ALZA or any ALZA Affiliate, Landlord shall not
use the name except as a reference to the Building or Complex.
B. Choice of Law; Severability. This Lease shall in all
respects be governed by and construed in accordance with the laws
of the State of California in the jurisdiction of Santa ▇▇▇▇▇
County. If any provision of this Lease shall be invalid,
unenforceable or ineffective for any reason whatsoever, all other
provisions hereof shall be and remain in full force and effect.
C. Definition of Terms. The term "Premises" includes the
space leased hereby and any improvements now or hereinafter
installed therein or attached thereto. The term "Landlord" or
any pronoun used in place thereof includes the plural as well as
the singular and the successors and assigns of Landlord. The
term "Tenant" or any pronoun used in place thereof includes the
plural as well as the singular and individuals, firms,
associations, partnerships and corporations, and their and each
of their respective heirs, executors, administrators, successors
and permitted assigns, according to the context hereof, and the
provisions of this Lease shall inure to the benefit of and bind
such heirs, executors, administrators, successors and permitted
assigns. The term "ALZA Affiliate" shall mean any person or
entity that at such time as it may become the tenant under any of
the Three Leases meets one or more of the following requirements:
(i) is directly, or indirectly through one or more
intermediaries, in control of, or controlled by or under common
control with ALZA; (ii) is the successor to ALZA or any other
ALZA Affiliate by merger, including an acquisition of all or
substantially all of the assets of any such entity or any
division operated by such entity; or (iii) is a corporation,
joint venture, partnership, limited liability company, trust or
other entity in which at least fifty percent of the beneficial
ownership is then held by ALZA or an ALZA Affiliate. As used in
the preceding sentence, the term "control" means holding 50% or
more of (i) the voting stock or (ii) both profits and capital
interests, as applicable, of any entity.
The term "person" includes the plural as well as the
singular and individuals, firms, associations, partnerships and
corporations. The term "including" means including, but not
limited to. Words used in any gender include other genders. If
there be more than one Tenant the obligations of Tenant hereunder
are joint and several. The paragraph headings of this Lease are
for convenience of reference only and shall have no effect upon
the construction or interpretation of any provisions hereof.
D. Time Of Essence. Time is of the essence of this Lease
and of each and all of its provisions.
E. Quitclaim. At the expiration or earlier termination of
this Lease, Tenant shall execute, acknowledge and deliver to
Landlord, within ten (10) days after written demand from Landlord
to Tenant, any quitclaim deed or other document reasonably
required by any reputable title company, licensed to operate in
the State of California, to remove the cloud or encumbrance
created by this Lease on the Property and/or Complex of which
Tenant's Premises are a part.
F. Incorporation of Prior Agreements; Amendments. This
Lease along with any exhibits and attachments hereto and the
related Construction Agreement constitutes the entire agreement
between Landlord and Tenant relative to the leasing by Tenant
from Landlord of the Premises and this Lease and the exhibits and
attachments may be altered, amended or revoked only by an
instrument in writing signed by both Landlord and Tenant.
Landlord and Tenant agree hereby that all prior or
contemporaneous oral agreements between and among themselves and
their agents or representatives relative to the leasing of the
Premises are merged in or revoked by this Lease.
G. Recording. Landlord and Tenant shall record a short
form memorandum hereof in the form attached hereto as Exhibit F.
H. Diminution of Light, Air or View. Tenant covenants and
agrees that no diminution or shutting off of light, air or view
by any structure which may be hereafter erected (whether or not
by Landlord) shall in any way affect this Lease, entitle Tenant
to any reduction of Rent hereunder or result in any liability of
Landlord to Tenant.
48. AGREEMENT NOT TO CAPITALIZE REPAIRS AND/OR REPLACEMENTS TO
PREMISES, ETC. Landlord's willingness to enter into this Lease
with Tenant under the terms stated herein and for the benefit of
Tenant and for valuable consideration, which is hereby
acknowledged, the following agreement between the parties affects
the interpretation of the foregoing provisions of this Lease or
any rights that might otherwise exist in favor of Tenant at law
with respect to the leasing of the Premises from Landlord.
Tenant understands and acknowledges that this Lease shall be
deemed and construed to be a "net lease" and during the Initial
Term, and any Extended Term(s), of this Lease that Tenant shall
pay Landlord, the Rent and other payments due hereunder, free of
any charges, assessments, impositions, expenses or deductions of
any kind and without abatement, deduction or setoff unless
otherwise expressly provided in this Lease, and Landlord shall
not be expected or required as a result of the relationship
between Landlord and Tenant created by this Lease, to be
obligated to make any payment to or on behalf of Tenant or be
under any other obligation to Tenant hereunder except to the
extent specifically provided in this Lease, and Tenant agrees to
pay all costs and expenses of every kind which may arise or
become due from Tenant under the provisions of this Lease during
the Initial Term and any Extended Term(s). Except as expressly
provided in this Lease or the Construction Agreement, Landlord
shall not be liable and/or responsible under the provisions of
this Lease for contributing any money for any maintenance,
repairs and/or replacement of the Premises or any part thereof
and as to the maintenance, repairs or replacement obligations of
Tenant under this Lease, Tenant waives any and all rights it
might otherwise have to assert that such expenditure is more
appropriately a Landlord expenditure which should be treated as a
capital expenditure and/or to be amortized as an item of
Additional Rent hereunder. For example, if during the Lease Term
(including any Extended Term(s)), a portion or the entire roof
membrane and/or HVAC system needs to be repaired or replaced,
such expenditure shall not be treated as a capital expenditure to
be borne by Landlord, but rather Tenant shall be responsible,
upon such occurrence, for bearing the entire cost for such repair
and/or replacement. Nothing herein shall be deemed to relieve
Landlord from its express obligations under this Lease or the
Construction Agreement, including, but not limited to, Landlord's
obligations under Paragraph 25 hereof in the event of damage or
destruction, or under the various provisions herein applicable to
Landlord's maintenance and repair obligations with respect to the
Common Area if the Tenant hereunder is not then the tenant under
all Three Leases or with respect to the Building in the event
this Lease is amended so as not to apply to all of the Premises.
By placing their initials below, both parties acknowledge
their understanding and their agreement with the provisions of
this Paragraph 48.
Initials: __________ Initials:__________
Tenant Landlord
IN WITNESS WHEREOF, Landlord and Tenant have executed and
delivered this Lease as of the day and year last written below.
LANDLORD: TENANT:
P/A CHARLESTON ROAD LLC, ALZA CORPORATION
a California limited liability company a Delaware
corporation
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Trustee, UTA dated 7/20/77
(▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Survivor's Trust, formerly
known as the Arrillaga Family Trust),
as amended
Date: September 12, 1997 Date: September 12, 1997
By /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Trustee, UTA dated
7/20/77 (▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Separate
Property Trust), as amended
Date: September 12, 1997
By ALZA Land Management, Inc.
a Delaware corporation
By: /s/▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Type or Print Name
Date: September 12, 1997