EXHIBIT 10.54
LEASE BETWEEN
ABGENIX, INC. AND ARDENWOOD CORPORATE PARK ASSOCIATES
SECTION.............................................................................................PAGE #
Parties..................................................................................................1
Premises.................................................................................................1
Use......................................................................................................1
Permitted Uses........................................................................................1
Uses Prohibited.......................................................................................1
Advertisements and Signs..............................................................................1
Covenants, Conditions and Restrictions................................................................1
Term and Rental..........................................................................................2
Base Monthly Rent.....................................................................................2
Late Charges..........................................................................................2
Security Deposit......................................................................................2
Construction.............................................................................................3
Building Shell Construction...........................................................................3
Tenant Improvement Construction.......................................................................3
Building Shell Costs..................................................................................4
Tenant Improvement Costs..............................................................................4
Insurance.............................................................................................4
Punch List & Warranty.................................................................................4
Other Work by Tenant..................................................................................4
Acceptance of Possession and Covenants to Surrender......................................................4
Delivery and Acceptance...............................................................................4
Condition Upon Surrender..............................................................................5
Failure to Surrender..................................................................................5
Alterations and Additions................................................................................6
Tenant's Alterations..................................................................................6
Free From Liens.......................................................................................6
Compliance With Governmental Regulations..............................................................6
Maintenance of Premises..................................................................................6
Landlord's Obligations................................................................................6
Tenant's Obligations..................................................................................6
Waiver of Liability...................................................................................7
Hazard Insurance.........................................................................................7
Tenant's Use..........................................................................................7
Landlord's Insurance..................................................................................7
Tenant's Insurance....................................................................................7
Waiver................................................................................................8
Taxes....................................................................................................8
Utilities................................................................................................8
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Toxic Waste and Environmental Damage.....................................................................8
Tenant's Responsibility...............................................................................8
Tenant's Indemnity Regarding Hazardous Materials......................................................9
Actual Release by Tenant..............................................................................9
Environmental Monitoring.............................................................................10
Landlord's Indemnity Regarding Hazardous Materials...................................................10
Tenant's Default........................................................................................10
Remedies.............................................................................................10
Right to Re-enter....................................................................................11
Abandonment..........................................................................................11
No Termination.......................................................................................11
Non-Waiver...........................................................................................11
Performance by Landlord..............................................................................11
Habitual Default.....................................................................................12
Landlord's Liability...................................................................................12
Limitation on Landlord's Liability...................................................................12
Limitation on Tenant's Recourse......................................................................12
Indemnification of Landlord..........................................................................12
Destruction of Premises.................................................................................12
Landlord's Obligation to Restore.....................................................................12
Limitations on Landlord's Restoration Obligation.....................................................13
Condemnation............................................................................................13
Assignment or Sublease..................................................................................13
Consent by Landlord..................................................................................13
Assignment or Subletting Consideration...............................................................14
No Release...........................................................................................14
Reorganization of Tenant.............................................................................14
Permitted Transfers..................................................................................14
Effect of Default....................................................................................15
Effects of Conveyance................................................................................15
Successors and Assigns...............................................................................15
Option to Extend the Lease Term.........................................................................15
Grant and Exercise of Option.........................................................................15
Determination of Fair Market Rental..................................................................15
Resolution of a Disagreement over the Fair Market Rental.............................................16
Personal to Tenant...................................................................................16
General Provisions......................................................................................16
Attorney's Fees......................................................................................16
Authority of Parties.................................................................................16
Brokers..............................................................................................16
Choice of Law........................................................................................17
Dispute Resolution...................................................................................17
Entire Agreement.....................................................................................18
Entry by Landlord....................................................................................18
Estoppel Certificates................................................................................18
Exhibits.............................................................................................18
Interest.............................................................................................18
Modifications Required by Lender.....................................................................18
No Presumption Against Drafter.......................................................................18
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Notices..............................................................................................19
Property Management..................................................................................19
Rent.................................................................................................19
Representations......................................................................................19
Rights and Remedies..................................................................................19
Severability.........................................................................................19
Submission of Lease..................................................................................19
Subordination........................................................................................19
Survival of Indemnities..............................................................................19
Time.................................................................................................20
Waiver of Right to Jury Trial........................................................................20
EXHIBIT A - Premises & Building.........................................................................22
EXHIBIT B - Draft Letter of Credit......................................................................23
EXHIBIT C - Shell Plans and Specifications..............................................................24
EXHIBIT D - Tenant Improvement Plans and Specifications.................................................25
EXHIBIT E - Hazardous Materials List....................................................................26
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1. PARTIES: THIS LEASE, is entered into on this 24th day of February,
2000, ("Effective Date") between Ardenwood Corporate Park Associates, a
California Limited Partnership, whose address is 10600 North De Anza Blvd.,
# 200, Cupertino, California, 95014, and Abgenix, Inc., a Delaware
Corporation, whose address is 7601 Dumbarton Circle, Fremont, California,
94555, hereinafter called respectively Landlord and Tenant.
2. PREMISES: Landlord hereby leases to Tenant, and Tenant hires from
Landlord those certain Premises with the appurtenances, situated in the City
of Fremont, County of Alameda, State of California, commonly known and
designated as 6701 Kaiser Drive, consisting of 100,103 rentable square feet
("Building") including parking for approximately 370 cars as outlined in red
on EXHIBIT "A" and all improvements located therein including but not limited
to buildings, parking areas and structures, landscaping, loading docks,
sidewalks, service areas and other facilities. Unless expressly provided
otherwise, the term Premises as used herein shall include the Tenant
Improvements (defined in Section 5.B) constructed by Tenant pursuant to
Section 5.B. Tenant acknowledges Landlord's right to and hereby consents to
construction of additional building(s) on adjacent land owned by Landlord.
3. USE:
A. PERMITTED USES: Tenant shall use the Premises only for the
following purposes and shall not change the use of the Premises without the
prior written consent of Landlord: Office, research and development
(including laboratories), marketing, light manufacturing, pharmaceutical
manufacturing (to the extent permitted by governmental authority), ancillary
storage and other incidental uses. Tenant shall use only the number of
parking spaces allocated to Tenant under this Lease. All commercial trucks
and delivery vehicles shall (i) be parked at the rear of the Building, (ii)
loaded and unloaded in a manner which does not interfere with the businesses
of surrounding tenants, and (iii) permitted to remain within the Premises
only so long as is reasonably necessary to complete the loading and
unloading. Landlord makes no representation or warranty that any specific use
of the Premises desired by Tenant is permitted pursuant to any Laws.
B. USES PROHIBITED: Tenant shall not commit or suffer to be committed
on the Premises any waste, nuisance, or other act or thing which may disturb
the quiet enjoyment of any other tenant in or around the Premises, nor allow
any sale by auction or any other use of the Premises for an unlawful purpose.
Tenant shall not (i) damage or overload the electrical, mechanical or
plumbing systems of the Premises as the same may be augmented from time to
time pursuant to Lease Sections 5 and 7 below, (ii) attach, hang or suspend
anything from the ceiling, walls or columns of the building in such a way as
would adversely affect the structure or integrity of the Building, or set any
load on the floor in excess of the load limits for which such items are
designed, or (iii) generate dust, fumes or waste products which create a fire
or health hazard or damage the Premises, including without limitation the
soils or ground water in or around the Premises. No materials, supplies,
equipment, finished products or semi-finished products, raw materials or
articles of any nature, or any waste materials, refuse, scrap or debris,
shall be stored upon or permitted to remain on any portion of the Premises
outside of the Building without Landlord's prior approval, which approval may
be withheld in its sole discretion. The foregoing notwithstanding, Landlord
acknowledges that Tenant intends to construct an enclosed equipment yard with
approximate dimensions of 30' x 60' abutting the rear of the Building 9 (as
generally shown in green on EXHIBIT "A") as part of its Tenant Improvement
construction.
C. ADVERTISEMENTS AND SIGNS: Tenant will not place or permit to be
placed, in, upon or about the Premises any signs not approved by the city and
other governing authority having jurisdiction. Tenant will not place or
permit to be placed upon the Premises any signs, advertisements or notices
without the written consent of Landlord as to type, size, design, lettering,
coloring and location, which consent will not be unreasonably withheld. Any
sign placed on the Premises shall be removed by Tenant, at its sole cost,
prior to the Expiration Date or promptly following the earlier termination of
the Lease, and Tenant shall repair, at its sole cost, any damage or injury to
the Premises caused thereby, and if not so removed, then Landlord may have
same so removed at Tenant's expense.
D. COVENANTS, CONDITIONS AND RESTRICTIONS: This Lease is subject to
the effect of (i) any covenants, conditions, restrictions, easements,
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mortgages or deeds of trust, ground leases, rights of way of record and any
other matters or documents of record; and (ii) any zoning laws of the city,
county and state where the Building is situated (collectively referred to
herein as "Restrictions") and Tenant will conform to and will not violate the
terms of any such Restrictions.
4. TERM AND RENTAL:
A. BASE MONTHLY RENT: The term ("Lease Term") shall be for one
hundred eighty (180) months, commencing on June 1, 2000 (the "Commencement
Date"), and ending one hundred eighty (180) months thereafter, ("Expiration
Date"). Notwithstanding the Parties agreement that the Lease Term begins on
the Commencement Date, this Lease and all of the obligations of Landlord and
Tenant shall be binding and in full force and effect from and after the
Effective Date. In addition to all other sums payable by Tenant under this
Lease, Tenant shall pay base monthly rent ("Base Monthly Rent") for the
Premises according to the following schedule:
Months 01-12: $160,165.00 per month
Months 13-24: $165,771.00 per month
Months 25-36: $171,573.00 per month
Months 37-48: $177,578.00 per month
Months 49-60: $183,793.00 per month
Months 61-72: $190,226.00 per month
Months 73-84: $196,883.00 per month
Months 85-96: $203,774.00 per month
Months 97-108: $210,906.00 per month
Months 109-120: $218,288.00 per month
Months 121-132: $225,928.00 per month
Months 133-144: $233,836.00 per month
Months 145-156: $242,020.00 per month
Months 157-168: $250,491.00 per month
Months 169-180: $259,258.00 per month
Base Monthly Rent shall be due in advance on or before the first day of each
calendar month during the Lease Term. All sums payable by Tenant under this
Lease shall be paid to Landlord in lawful money of the United States of
America, without offset or deduction and without prior notice or demand, at
the address specified in Section 1 of this Lease or at such place or places
as may be designated in writing by Landlord during the Lease Term. Base
Monthly Rent for any period less than a calendar month shall be a pro rata
portion of the monthly installment. Concurrently with Tenant's execution of
this Lease, Tenant shall pay to Landlord the sum of One Hundred Sixty
Thousand One Hundred Sixty Five Dollars ($160,165.00) as prepaid rent for the
first month of the Lease.
B. LATE CHARGES: Tenant hereby acknowledges that late payment by
Tenant to Landlord of Base Monthly Rent and other sums due hereunder will
cause Landlord to incur costs not contemplated by this Lease, the exact
amount of which is extremely difficult to ascertain. Such costs include but
are not limited to: administrative, processing, accounting, and late charges
which may be imposed on Landlord by the terms of any contract, revolving
credit, mortgage, or trust deed covering the Premises. Accordingly, if any
installment of Base Monthly Rent shall not be received by Landlord or its
designee within five (5) business days after the Base Monthly Rent is due, or
any other sum due from Tenant shall not be received by Landlord or its
designee within five (5) business days after written notice from Landlord
that such sum is due, Tenant shall pay to Landlord a late charge equal to
five (5%) percent of such overdue amount, which late charge shall be due and
payable on the same date that the overdue amount was due. The parties agree
that such late charge represents a fair and reasonable estimate of the costs
Landlord will incur by reason of late payment by Tenant, excluding interest
and attorneys fees and costs. If any rent or other sum due from Tenant
remains delinquent for a period in excess of thirty (30) days then, in
addition to such late charge, Tenant shall pay to Landlord interest on any
rent that is not paid when due at the Agreed Interest Rate specified in
Section 19.J following the date such amount became due until paid. Acceptance
by Landlord of such late charge shall not constitute a waiver of Tenant's
default with respect to such overdue amount nor prevent Landlord from
exercising any of the other rights and remedies granted hereunder. In the
event that a late charge is payable hereunder, whether or not collected, for
three (3) consecutive installments of Base Monthly Rent, then the Base
Monthly Rent shall automatically become due and payable quarterly in advance,
rather than monthly, notwithstanding any provision of this Lease to the
contrary.
C. SECURITY DEPOSIT: On or before March 1, 2000, Tenant agrees to
deposit with Landlord the sum of Two Million Dollars ($2,000,000.00)
("Security "Deposit"). Landlord shall not be deemed a trustee of the Security
Deposit, may use the Security Deposit in business, and shall not be required
to segregate it from its general accounts. Tenant shall not be entitled to
interest on the Security Deposit. If Tenant defaults with respect to any
provisions of the Lease, including but not limited to the provisions relating
to: (i) payment of Base Monthly Rent or other charges, (ii) removal of
Tenant's equipment and fixtures (including lab benches, casework and fume
hoods), and (iii) removal of Specialized Improvements as defined in Section
6.B. below; then Landlord may, to the extent reasonably necessary to remedy
Tenant's default, use any or all of the Security Deposit towards payment of
the following: (i) Base Monthly Rent or other charges in default; (ii) any
other amount which Landlord may spend or become obligated to spend by reason
of Tenant's default including, but not limited to Tenant's failure to restore
or clean the Premises following vacation
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thereof. If any portion of the Security Deposit is so used or applied,
Tenant shall, within ten (10) days after written demand from Landlord,
deposit cash with Landlord in an amount sufficient to restore the Security
Deposit to its full original amount, and shall pay to Landlord such other
sums as necessary to reimburse Landlord for any sums paid by Landlord. Tenant
may not assign or encumber the Security Deposit without the consent of
Landlord. Any attempt to do so shall be void and shall not be binding on
Landlord. The Security Deposit shall be returned to Tenant within thirty (30)
days after the Expiration Date and surrender of the Premises to Landlord,
less any amount deducted in accordance with this Section, together with
Landlord's written breakdown itemizing the amounts and purposes for such
deduction. In the event of termination of Landlord's interest in this Lease,
Landlord may deliver or credit the Security Deposit to Landlord's successor
in interest in the Premises and thereupon be relieved of further
responsibility with respect to the Security Deposit.
Landlord agrees that in lieu of a cash Security Deposit, Tenant may deposit a
letter of credit ("Letter of Credit") substantially in the form attached
hereto as EXHIBIT "B". Landlord shall be entitled to draw against the Letter
of Credit at any time provided only that Landlord certifies to the issuer of
the Letter of Credit that Tenant is in default under the Lease. Tenant shall
keep the letter of credit in effect during the entire Lease Term, as the same
may be extended, plus a period of four (4) weeks after expiration of the
Lease Term. At least thirty (30) days prior to expiration of any Letter of
Credit, the term thereof shall be renewed or extended for a period of at
least one (1) year. Tenant's failure to so renew or extend the Letter of
Credit shall be a material default of this Lease by Tenant. In the event
Landlord draws against the Letter of Credit, Tenant shall replenish the
existing Letter of Credit or cause a new Letter of Credit to be issued such
that the aggregate amount of letters of credit available to Landlord at all
times during the Lease Term is the amount of the Security Deposit originally
required.
5. CONSTRUCTION:
A. BUILDING SHELL CONSTRUCTION: Landlord has completed construction
of the Building shell ("Building Shell"), the scope of which improvements are
outlined in the plans and specifications attached as EXHIBIT "C" ("Shell
Plans and Specifications"). Landlord agrees that, on the Commencement Date,
the Building Shell shall be substantially complete and that all elements of
the Building to be maintained by Landlord pursuant to this Lease shall be in
good operating condition and repair.
B. TENANT IMPROVEMENT CONSTRUCTION: Tenant shall contract directly
with a general contractor selected by Tenant, subject to Landlord's approval
("General Contractor"), to cause improvements to the Premises ("Tenant
Improvements") to be constructed in accordance with plans and outline
specifications to be attached as EXHIBIT "D" ("Tenant Improvement Plans and
Specifications"). The General Contractor shall use union labor. For purposes
of this Lease, the "Building Core" means those items typically associated in
the industry with an office building core including elevators, restrooms,
fire sprinklers, HVAC and electrical systems distributed to each floor,
exiting stair finishes, and a finished building lobby. The Tenant
Improvements Plans and Specifications shall be prepared at Tenant's expense
by an architect selected by Tenant ("Tenant's Architect"). The Tenant
Improvement Plans and Specifications shall be completed for all aspects of
the work with all detail necessary for submittal to the city for issuance of
building permits and for construction and shall include any information
required by the relevant agencies regarding Tenant's use of Hazardous
Materials. The Tenant Improvements shall consist of all items not included
within the Building Shell but shall not, in any event, include any of
Tenant's equipment or trade fixtures including lab benches, laboratory
casework, and fume hoods. All Tenant Improvements that materially affect or
are directly related to the Building Core shall be subject to Landlord's
approval, which approval which shall not be unreasonably withheld,
conditioned or delayed. The Tenant Improvement Plans and Specifications shall
provide for a minimum build-out in all areas of the Premises consisting of:
(i) the Building Core, (ii) fire sprinklers, (iii) floor coverings, (iv)
t-bar suspended ceiling (v) distribution of the HVAC system, (vi) 2' x 4'
drop-in florescent lighting, and (vii) any other work required by the City of
Fremont necessary to obtain a Certificate of Occupancy. Prior to commencing
construction of the Tenant Improvements, Tenant shall: (i) obtain all
required governmental approvals and permits; and (ii) provide Landlord ten
(10) business days' prior notice so that Landlord may post a notice of
nonresponsibility. The Tenant Improvement Plans and Specifications shall be
prepared in sufficient detail to allow General Contractor and Tenant to enter
into a construction contract ("Tenant Improvement Budget"), a copy of which
shall be provided to Landlord prior to commencement of construction.
Tenant shall use its best efforts to obtain a building permit from the City
of Fremont as soon as possible and thereafter diligently supervise the
construction of Tenant Improvements until they are substantially complete as
hereinafter defined. The Tenant Improvements shall be deemed substantially
complete ("Substantially Complete" or "Substantial Completion") when the
Tenant Improvements have been substantially completed in accordance with the
Tenant Improvement Plans and Specifications, as
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evidenced by the completion of a final inspection or the issuance of a
certificate of occupancy or its equivalent by the appropriate governmental
authority. Installation of Tenant's data and phone cabling or furniture shall
not be required in order to deem the Premises Substantially Complete. All
Tenant Improvement work shall be conducted at Tenant's risk and in accordance
with all Laws. Tenant shall indemnify and hold Landlord harmless from and
against all costs, damages, claims, liabilities and expenses (including
attorneys' fees) suffered by or claimed against Landlord, directly or
indirectly, based on, arising out of or resulting from Tenant's construction
of the Tenant Improvements. Immediately upon completion of the Tenant
Improvements, Tenant agrees to provide Landlord a complete set of half-size
(15" x 21") vellum as-built drawings for the Tenant Improvements and a
certificate of occupancy for the Premises. The Tenant Improvements shall not
be removed or altered by Tenant except as may be required or permitted by
Landlord pursuant to Sections 6 and 7 below. During the Lease Term, the
Tenant Improvements shall be the property of Tenant and Tenant shall have the
right to depreciate and claim and collect any investment tax credits in the
Tenant Improvements. At the expiration of the Lease Term or any earlier
termination of the Lease, the Tenant Improvements shall become the property
of Landlord and shall remain upon and be surrendered with the Premises
(subject to Landlord's right to require removal pursuant to Section 6 below),
and title thereto shall automatically vest in Landlord without any payment
therefore.
C. BUILDING SHELL COSTS: Landlord shall pay all costs associated with
the Building Shell.
D. TENANT IMPROVEMENT COSTS: As an inducement to Tenant to enter into
this Lease, Landlord has agreed to provide Tenant an allowance ("Work
Allowance") to be utilized by Tenant towards the cost of construction of
Tenant Improvements in the amount of One Million Five Hundred One Thousand
Five Hundred Forty Five and No/100 Dollars ($1,501,545.00). Tenant shall pay
all costs associated with the Tenant Improvements less the Work Allowance
provided herein. The cost of Tenant Improvements shall include the following
to the extent actually incurred by General Contractor in connection with the
construction of Tenant Improvements: construction costs, all permit fees, and
construction taxes or other costs imposed by governmental authorities related
to the Tenant Improvements. The Work Allowance shall be paid by Landlord to
Tenant within fifteen (15) days following Substantial Completion of the
Premises and occupancy by Tenant.
In addition to the Work Allowance, Landlord agrees to reimburse Tenant up to
$100,000.00 towards the cost of either: (i) Tenant's application of a
mutually acceptable sealant to the surface of the concrete slab foundation of
the Building Shell, or (ii) such other mutually acceptable work to mitigate
potential seepage through the Building slab. Tenant shall be obligated to
apply the sealant or perform such other work prior to commencement of
construction of Tenant Improvements.
E. INSURANCE: Landlord shall cause the General Contractor to procure
(as a cost of the Building Shell) a "Broad Form" liability insurance policy
in the amount of Three Million Dollars ($3,000,000.00). Landlord shall also
procure (as a cost of the Building Shell) builder's risk insurance for the
full replacement cost of the Building Shell and Tenant Improvements while the
Building and Tenant Improvements are under construction, up until the date
that the casualty insurance policy described in Section 9 is in full force
and effect.
F. PUNCH LIST & WARRANTY: After the Tenant Improvements are
Substantially Complete, Tenant shall cause the General Contractor to
immediately correct any construction defects or other "punch list" items
which require attention. The General Contractor shall provide a standard
contractor's warranty with respect to the Tenant Improvements for one (1)
year from the Commencement Date.
G. OTHER WORK BY TENANT: All work not described in the Shell Plans
and Specifications or Tenant Improvement Plans and Specifications, such as
furniture, telephone equipment, telephone wiring and office equipment work,
shall be furnished and installed by Tenant at Tenant' cost. Prior to
Substantial Completion, Tenant shall be obligated to (i) provide active phone
lines to any elevators, and (ii) contract with a firm to monitor the fire
system. Any contractor or other authorized representatives used by Tenant in
connection with such entry and installation work prior to Substantial
Completion shall use union labor.
6. ACCEPTANCE OF POSSESSION AND COVENANTS TO SURRENDER:
A. DELIVERY AND ACCEPTANCE: On the Commencement Date, Landlord shall
deliver and Tenant shall accept possession of the Premises and enter into
occupancy of the Premises on the Commencement Date. Immediately after the
Effective Date, Tenant shall be allowed full access to the Premises ("Early
Access") for purposes of designing, installing and/or constructing the Tenant
Improvements. Such Early Access shall be subject to all the terms and
conditions of this Lease, other than the obligations of Tenant to pay Base
Monthly Rent. Tenant acknowledges that it has had an opportunity to conduct,
and has conducted, such inspections of the Premises as it deems necessary to
evaluate its condition. Except as otherwise specifically provided herein,
Tenant agrees to accept
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possession of the Premises in its then existing condition, subject to all
Restrictions and without representation or warranty by Landlord. Landlord
agrees that as of the Commencement Date, all elements of the Building to be
maintained by Landlord pursuant to Section 8.A. below shall be in good
operating condition and repair. At the time Landlord delivers possession of
the Premises to Tenant, Landlord and Tenant shall together execute an
acceptance agreement. Landlord shall have no obligation to deliver
possession, nor shall Tenant be entitled to take occupancy, of the Premises
until such acceptance agreement has been executed, and Tenant's obligation to
pay Base Monthly Rent and Additional Rent shall not be excused or delayed
because of Tenant's failure to execute such acceptance agreement. Within nine
(9) months after the Commencement Date, Tenant agrees to be in occupancy of
at least fifty percent (50%) of the rentable square footage of the Premises.
B. CONDITION UPON SURRENDER: Tenant further agrees on the Expiration
Date or on the sooner termination of this Lease, to surrender the Premises to
Landlord in good condition and repair, normal wear and tear excepted. In this
regard, "normal wear and tear" shall be construed to mean wear and tear
caused to the Premises by the natural aging process which occurs in spite of
prudent application of commercially reasonable standards for maintenance,
repair replacement, and janitorial practices, and does not include items of
neglected or deferred maintenance. In any event, Tenant shall cause the
following to be done prior to the Expiration Date or sooner termination of
this Lease: (i) all interior walls shall be painted or cleaned so that they
appear freshly painted, (ii) all tiled floors shall be cleaned and waxed,
(iii) all carpets shall be cleaned and shampooed, (iv) all broken, marred,
stained or nonconforming acoustical ceiling tiles shall be replaced, (v) all
cabling placed above the ceiling by Tenant or Tenant's contractors shall be
removed, (vi) all windows shall be washed; (vii) the HVAC system shall be
serviced by a reputable and licensed service firm and left in "good operating
condition and repair" as so certified by such firm, (viii) the plumbing and
electrical systems and lighting shall be placed in good order and repair
(including replacement of any burned out, discolored or broken light bulbs,
ballasts, or lenses. On or before the Expiration Date or sooner termination
of this Lease, Tenant shall remove all its personal property and trade
fixtures from the Premises. All property and fixtures not so removed shall be
deemed as abandoned by Tenant. Tenant shall ascertain from Landlord within
ninety (90) days before the Expiration Date whether Landlord desires Tenant
to remove any Alterations not previously consented to by Landlord in
accordance with Section 7, or to cause Tenant to surrender such Alterations
(as defined in Section 7) in place to Landlord. If Landlord shall so desire,
Tenant shall, at Tenant's sole cost and expense, remove such Alterations as
Landlord requires and shall repair and restore said Premises or such parts
thereof before the Expiration Date. Such repair and restoration shall include
causing the Premises to be brought into compliance with all applicable
building codes and laws in effect at the time of the removal to the extent
such compliance is necessitated by the repair and restoration work.
Notwithstanding anything in the Lease to the contrary, Tenant shall be
required at the Expiration Date or earlier termination of this Lease to
remove: (i) all lab benches, fume hoods, and laboratory casework; and (ii) at
Landlord's election, all Tenant Improvements determined by Landlord to be
specialized in nature (items (i) and (ii) above collectively referred to as
"Specialized Improvements"). Such Specialized Improvements may also include,
but shall not be limited to, cold rooms, outdoor utility yard, and other
Tenant Improvements and equipment associated with Tenant's particular use of
the Premises. If Landlord shall so desire, Tenant shall, at Tenant's sole
cost and expense, remove such designated Specialized Improvements and restore
the affected areas of the Premises to either their condition as of the
Effective Date or to an open office layout, whichever is preferred by
Landlord. Such repair and restoration shall further include causing the
Premises to be brought into compliance with all applicable building codes and
laws in effect at the time of the removal to the extent such compliance is
necessitated by removal of the Specialized Improvements.
C. FAILURE TO SURRENDER: If the Premises are not surrendered at the
Expiration Date or sooner termination of this Lease in the condition required
by this Section 6, Tenant shall be deemed in a holdover tenancy pursuant to
this Section 6.C and Tenant shall indemnify, defend, and hold Landlord
harmless against loss or liability resulting from delay by Tenant in so
surrendering the Premises including, without limitation, any losses due to
claims made by any succeeding tenant founded on such delay and costs incurred
by Landlord in returning the Premises to the required condition, plus
interest at the Agreed Interest Rate. Any holding over after the termination
or Expiration Date with Landlord's express written consent, shall be
construed as month-to-month tenancy, terminable on thirty (30) days written
notice from either party, and Tenant shall pay as Base Monthly Rent to
Landlord a rate equal to one hundred twenty five percent (125%) of the Base
Monthly Rent due in the month preceding the termination or Expiration Date,
plus all other amounts payable by Tenant under this Lease. Any holding over
shall otherwise be on the terms and conditions herein specified, except those
provisions relating to the Lease Term and any options to extend or renew,
which provisions shall be of no further force and effect following the
expiration of the applicable exercise period. If Tenant remains in possession
of the Premises after
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the Expiration Date or sooner termination of this Lease without Landlord's
consent, Tenant's continued possession shall be on the basis of a tenancy at
sufferance and Tenant shall pay as rent during the holdover period an amount
equal to one hundred fifty percent (150%) of the Base Monthly Rent due in the
month preceding the termination or Expiration Date, plus all other amounts
payable by Tenant under this Lease. This provision shall survive the
termination or expiration of the Lease.
7. ALTERATIONS AND ADDITIONS:
A. TENANT'S ALTERATIONS: Tenant shall not make, or suffer to be made,
any alteration or addition to the Premises after completion of the initial
Tenant Improvements ("Alterations"), or any part thereof, without obtaining
Landlord's prior written consent and delivering to Landlord the proposed
architectural and structural plans for all such Alterations at least fifteen
(15) days prior to the start of construction. If such Alterations affect the
structure of the Building, Tenant additionally agrees to reimburse Landlord
its reasonable out-of-pocket costs incurred in reviewing Tenant's plans.
After obtaining Landlord's consent, Tenant shall not proceed to make such
Alterations until Tenant has obtained all required governmental approvals and
permits, and provides Landlord reasonable security, in form reasonably
approved by Landlord, to protect Landlord against mechanics' lien claims.
Tenant agrees to provide Landlord (i) written notice of the anticipated and
actual start-date of the work, (ii) a complete set of half-size (15" X 21")
vellum as-built drawings for all Alterations which are material in extent;
and (iii) a certificate of occupancy for the work upon completion of the
Alterations, if required. All Alterations shall be constructed in compliance
with all applicable building codes and laws including, without limitation,
the Americans with Disabilities Act of 1990 as amended from time to time.
Upon the Expiration Date, all Alterations, except movable furniture and trade
fixtures, shall become a part of the realty and belong to Landlord but shall
nevertheless be subject to removal by Tenant as provided in Section 6 above.
Alterations which are not deemed as trade fixtures include heating, lighting,
electrical systems, air conditioning, walls, carpeting, or any other
installation which has become an integral part of the Premises. All
Alterations shall be maintained, replaced or repaired by Tenant at its sole
cost and expense. Notwithstanding the foregoing, Tenant shall be entitled,
without obtaining Landlord's consent, to make Alterations which do not affect
the structure of the Building and which do not cost more than One Hundred
Thousand Dollars ($100,000.00) per Alteration ("Permitted Alteration");
provided, however, that Tenant shall still be required to comply with all
other provisions of this paragraph, and such Permitted Alterations are
subject to removal by Tenant at Landlord's election pursuant to Section 6
above at the expiration or earlier termination of the Lease. Notwithstanding
the foregoing, for purposes of ownership or removal during the Lease Term and
subject to Tenant's surrender obligations contained in Section 6, the term
"Alterations" shall not include, in any case, any of Tenant's equipment or
trade fixtures.
B. FREE FROM LIENS: Tenant shall keep the Premises free from all
liens arising out of work performed, materials furnished, or obligations
incurred by Tenant or claimed to have been performed for Tenant. In the event
Tenant fails to discharge any such lien within ten (10) days after receiving
notice of the filing, Landlord shall be entitled to discharge the lien at
Tenant's expense and all resulting costs incurred by Landlord, including
attorney's fees shall be due from Tenant as additional rent.
C. COMPLIANCE WITH GOVERNMENTAL REGULATIONS: The term Laws or
Governmental Regulations shall include all federal, state, county, city or
governmental agency laws, statutes, ordinances, standards, rules,
requirements, or orders now in force or hereafter enacted, promulgated, or
issued. The term also includes government measures regulating or enforcing
public access, traffic mitigation, occupational, health, or safety standards
for employers, employees, landlords, or tenants. Tenant, at Tenant's sole
expense shall make all repairs, replacements, alterations, or improvements
needed to comply with all Governmental Regulations. The judgment of any court
of competent jurisdiction or the admission of Tenant in any action or
proceeding against Tenant (whether Landlord be a party thereto or not) that
Tenant has violated any such law, regulation or other requirement in its use
of the Premises shall be conclusive of that fact as between Landlord and
Tenant.
8. MAINTENANCE OF PREMISES:
A. LANDLORD'S OBLIGATIONS: Landlord at its sole cost and expense,
shall maintain in good condition, order, and repair, and replace as and when
necessary, the foundation, exterior load bearing walls and roof structure of
the Building Shell.
B. TENANT'S OBLIGATIONS: Tenant shall clean, maintain, repair and
replace when necessary the Premises and every part thereof through regular
inspections and servicing, including but not limited to: (i) all plumbing and
sewage facilities, (ii) all heating ventilating and air conditioning
facilities and equipment, (iii) all fixtures, interior walls floors, carpets
and ceilings, (iv) all windows, door entrances, plate glass and glazing
systems including caulking, and skylights, (v) all electrical facilities and
equipment, (vi) all automatic fire extinguisher equipment, (vii) the parking
lot and all underground
Page 6
utility facilities servicing the Premises, (viii) all elevator equipment,
(ix) the roof membrane system, and (x) all waterscape, landscaping and
shrubbery. All wall surfaces and floor tile are to be maintained in an as
good a condition as when Tenant took possession free of holes, gouges, or
defacements. With respect to items (ii), (viii) and (ix) above, Tenant shall
provide Landlord a copy of a service contract between Tenant and a licensed
service contractor providing for periodic maintenance of all such systems or
equipment in conformance with the manufacturer's recommendations. Tenant
shall provide Landlord a copy of such preventive maintenance contracts and
paid invoices for the recommended work if requested by Landlord.
C. WAIVER OF LIABILITY: Failure by Landlord to perform any defined
services, or any cessation thereof, when such failure is caused by accident,
breakage, repairs, strikes, lockout or other labor disturbances or labor
disputes of any character or by any other cause, similar or dissimilar, shall
not render Landlord liable to Tenant in any respect, including damages to
either person or property, nor be construed as an eviction of Tenant, nor
cause an abatement of rent, nor relieve Tenant from fulfillment of any
covenant or agreement hereof. Should any equipment or machinery utilized in
supplying the services listed herein break down or for any cause cease to
function properly, upon receipt of written notice from Tenant of any
deficiency or failure of any services, Landlord shall use reasonable
diligence to repair the same promptly, but Tenant shall have no right to
terminate this Lease and shall have no claim for rebate of rent or damages on
account of any interruptions in service occasioned thereby or resulting
therefrom. Tenant waives the provisions of California Civil Code Sections
1941 and 1942 concerning the Landlord's obligation of tenantability and
Tenant's right to make repairs and deduct the cost of such repairs from the
rent. Landlord shall not be liable for a loss of or injury to person or
property, however occurring, through or in connection with or incidental to
furnishing, or its failure to furnish, any of the foregoing. Notwithstanding
the foregoing, nothing contained in this Section 8.C. is intended to absolve
Landlord from its gross negligence or willful misconduct under this Lease.
9. HAZARD INSURANCE:
A. TENANT'S USE: Tenant shall not use or permit the Premises, or any
part thereof, to be used for any purpose other than that for which the
Premises are hereby leased; and no use of the Premises shall be made or
permitted, nor acts done, which will cause an increase in premiums or a
cancellation of any insurance policy covering the Premises or any part
thereof, nor shall Tenant sell or permit to be sold, kept, or used in or
about the Premises, any article prohibited by the standard form of fire
insurance policies. Tenant shall, at its sole cost, comply with all
requirements of any insurance company or organization necessary for the
maintenance of reasonable fire and public liability insurance covering the
Premises and appurtenances.
B. LANDLORD'S INSURANCE: Landlord agrees to purchase and keep in
force fire, extended coverage insurance in an amount equal to the replacement
cost of the Building (not including any Tenant Improvements or Alterations
paid for by Tenant from sources other than the Work Allowance) as determined
by Landlord's insurance company's appraisers. If commercially available and
carried by other owners of commercial properties in the area, such fire and
property damage insurance may be endorsed to cover loss caused by such
additional perils against which Landlord may elect to insure, including
earthquake and/or flood, and shall contain reasonable deductibles.
Additionally Landlord may maintain a policy of (i) commercial general
liability insurance insuring Landlord (and such others designated by
Landlord) against liability for personal injury, bodily injury, death and
damage to property occurring or resulting from an occurrence in, on or about
the Premises or Project in an amount as Landlord determines is reasonably
necessary for its protection, and (ii) rental lost insurance covering a
twelve (12) month period. Tenant agrees to pay Landlord as additional rent,
on demand, the full cost of said insurance as evidenced by insurance billings
to Landlord, and in the event of damage covered by said insurance, the amount
of any deductible under such policy; provided, however, that Tenant shall not
be required to pay any deductible amount on earthquake coverage in excess of
ten percent (10%) of the replacement cost of the Premises. Payment shall be
due to Landlord within ten (10) days after written invoice to Tenant. It is
understood and agreed that Tenant's obligation under this Section will be
prorated to reflect the Lease Commencement and Expiration Dates.
C. TENANT'S INSURANCE: Tenant agrees, at its sole cost, to insure its
personal property, Tenant Improvements (for which it has paid from sources
other than the Work Allowance), and Alterations for their full replacement
value (without depreciation) and to obtain worker's compensation and public
liability and property damage insurance for occurrences within the Premises
with a combined single limit of not less than Five Million Dollars
($5,000,000.00). Tenant's liability insurance shall be primary insurance
containing a cross-liability endorsement, and shall provide coverage on an
"occurrence" rather than on a "claims made" basis, except for product
liability. Tenant shall name Landlord and Landlord's lender as an additional
insured and shall deliver a copy of the policies and renewal certificates to
Landlord. All such policies shall provide for thirty (30) days' prior written
notice to Landlord of any cancellation, termination, or reduction in
coverage. Notwithstanding the
Page 7
above, Landlord retains the right to have Tenant provide other forms of
insurance which may be reasonably required to cover future risks.
D. WAIVER: Landlord and Tenant hereby waive all rights each may have
against the other on account of any loss or damage sustained by Landlord or
Tenant, as the case may be, or to the Premises or its contents, which may
arise from any risk covered by their respective insurance policies (or which
would have been covered had such insurance policies been maintained in
accordance with this Lease) as set forth above. The Parties shall use their
reasonable efforts to obtain from their respective insurance companies a
waiver of any right of subrogation which said insurance company may have
against Landlord or Tenant, as the case may be.
10. TAXES: Tenant shall be liable for and shall pay as additional rental,
prior to delinquency, the following: (i) all taxes and assessments levied
against Tenant's personal property and trade or business fixtures; (ii) all
real estate taxes and assessment installments or other impositions or charges
which may be levied on the Premises or upon the occupancy of the Premises,
including any substitute or additional charges which may be imposed
applicable to the Lease Term; and (iii) real estate tax increases due to an
increase in assessed value resulting from a sale, transfer or other change of
ownership of the Premises as it appears on the City and County tax bills
during the Lease Term. All real estate taxes shall be prorated to reflect the
Lease Commencement and Expiration Dates. If, at any time during the Lease
Term a tax, excise on rents, business license tax or any other tax, however
described, is levied or assessed against Landlord as a substitute or
addition, in whole or in part, for taxes assessed or imposed on land or
Buildings, Tenant shall pay and discharge its pro rata share of such tax or
excise on rents or other tax before it becomes delinquent; except that this
provision is not intended to cover net income taxes, inheritance, gift or
estate tax imposed upon Landlord. In the event that a tax is placed, levied,
or assessed against Landlord and the taxing authority takes the position that
Tenant cannot pay and discharge its pro rata share of such tax on behalf of
Landlord, then at Landlord's sole election, Landlord may increase the Base
Monthly Rent by the exact amount of such tax and Tenant shall pay such
increase. If by virtue of any application or proceeding brought by Landlord,
there results a reduction in the assessed value of the Premises during the
Lease Term, Tenant agrees to pay Landlord a fee consistent with the fees
charged by a third party appeal firm for such services, but in no event more
than the reasonable value of such services. Tenant, at its cost, shall have
the right at any time to seek a reduction in or otherwise contest any Taxes
which it is obligated to pay hereunder, by action or proceeding against the
entity with authority to assess or impose the same. Landlord shall not be
required to join in any proceeding or action brought by Tenant unless the
provisions of applicable law or regulations require that such proceeding or
action be brought by or in the name of Landlord, in which event Landlord
shall join in such proceeding or action or permit it to be brought in
Landlord's name, provided that Tenant agrees to protect, indemnify and hold
Landlord free and harmless from and against any liability, cost or expense in
connection with such proceeding or contest.
11. UTILITIES: Tenant shall pay directly to the providing utility all
water, gas, electric, telephone, and other utilities supplied to the
Premises. Landlord shall not be liable for loss of or injury to person or
property, however occurring, through or in connection with or incidental to
furnishing or the utility company's failure to furnish utilities to the
Premises, and in such event Tenant shall not be entitled to abatement or
reduction of any portion of Base Monthly Rent or any other amount payable
under this Lease.
12. TOXIC WASTE AND ENVIRONMENTAL DAMAGE:
A. TENANT'S RESPONSIBILITY: Without the prior written consent of
Landlord, Tenant or Tenant's agents, employees, contractors and invitees
("Tenant's Agents") shall not bring, use, or permit upon the Premises, or
generate, create, release, emit, or dispose (nor permit any of the same) from
the Premises any chemicals, toxic or hazardous gaseous, liquid or solid
materials or waste, including without limitation, material or substance
having characteristics of ignitability, corrosivity, reactivity, or toxicity
or substances or materials which are listed on any of the Environmental
Protection Agency's lists of hazardous wastes or which are identified in
Division 22 Title 26 of the California Code of Regulations as the same may be
amended from time to time or any wastes, materials or substances which are or
may become regulated by or under the authority of any applicable local, state
or federal laws, judgments, ordinances, orders, rules, regulations, codes or
other governmental restrictions, guidelines or requirements. ("Hazardous
Materials") except for those substances customary in typical office uses for
which no consent shall be required. The foregoing does not apply to
underground migration from other sources over which Tenant has no control. In
order to obtain consent, Tenant shall deliver to Landlord its written
proposal describing the toxic material to be brought onto the Premises,
measures to be taken for storage and disposal thereof, safety measures to be
employed to prevent pollution of the air, ground, surface and ground water.
Landlord's approval may be withheld in its reasonable judgment. In the event
Landlord consents to Tenant's use of Hazardous Materials on the Premises or
such consent is not required, Tenant represents and warrants that it shall
comply with all Governmental Regulations
Page 8
applicable to Hazardous Materials including doing the following: (i) adhere
to all reporting and inspection requirements imposed by Federal, State,
County or Municipal laws, ordinances or regulations and will provide Landlord
a copy of any such reports or agency inspections; (ii) obtain and provide
Landlord copies of all necessary permits required for the use and handling of
Hazardous Materials on the Premises; (iii) enforce Hazardous Materials
handling and disposal practices consistent with industry standards; (iv)
surrender the Premises free from any Hazardous Materials arising from
Tenant's bringing, using, permitting, generating, creating, releasing,
emitting or disposing of Hazardous Materials; and (v) properly close the
facility with regard to Hazardous Materials including the removal or
decontamination of any process piping, mechanical ducting, storage tanks,
containers, or trenches which have come into contact with Hazardous Materials
and obtain a closure certificate from the local administering agency prior to
the Expiration Date. Landlord hereby consents to Tenant's use on the Premises
of the Hazardous Materials listed on the attached EXHIBIT "E" in the
approximate quantities listed thereon, subject to the terms and conditions of
this Section 12.
B. TENANT'S INDEMNITY REGARDING HAZARDOUS MATERIALS: Tenant shall, at
its sole cost and expense, comply with all laws pertaining to, and shall with
counsel reasonably acceptable to Landlord, indemnify, defend and hold
harmless Landlord and Landlord's trustees, shareholders, directors, officers,
employees, partners, affiliates, and agents from, any claims, liabilities,
costs or expenses incurred or suffered arising from the bringing, using,
permitting, generating, emitting or disposing of Hazardous Materials by
Tenant, Tenant's Agents or a third party through the surface soils of the
Premises during the Lease Term or the violation of any Governmental
Regulation or environmental law, by Tenant or Tenant's Agents. Tenant's
indemnification, defense, and hold harmless obligations include, without
limitation, the following: (i) claims, liability, costs or expenses resulting
from or based upon administrative, judicial (civil or criminal) or other
action, legal or equitable, brought by any private or public person under
common law or under the Comprehensive Environmental Response, Compensation
and Liability Act of 1980 as amended ("CERCLA"), the Resource Conservation
and Recovery Act of 1980 ("RCRA") or any other Federal, State, County or
Municipal law, ordinance or regulation now or hereafter in effect; (ii)
claims, liabilities, costs or expenses pertaining to the identification,
monitoring, cleanup, containment, or removal of Hazardous Materials from
soils, riverbeds or aquifers including the provision of an alternative public
drinking water source; (iii) all costs of defending such claims; (iv) losses
attributable to diminution in the value of the Premises or the Building; (v)
loss or restriction of use of rentable space in the Building; (vi) Adverse
effect on the marketing of any space in the Building; and (vi) all other
liabilities, obligations, penalties, fines, claims, actions (including
remedial or enforcement actions of any kind and administrative or judicial
proceedings, orders or judgments), damages (including consequential and
punitive damages), and costs (including attorney, consultant, and expert fees
and expenses) resulting from the release or violation. This Section 12.B
shall survive the expiration or termination o this Lease.
C. ACTUAL RELEASE BY TENANT: Tenant agrees to notify Landlord of any
lawsuits or orders known to Tenant which relate to the remedying of or actual
release of Hazardous Materials on or into the soils or ground water at or
under the Premises. Tenant shall also provide Landlord all notices required
by Section 25359.7(b) of the Health and Safety Code and all other notices
required by law to be given to Landlord in connection with Hazardous
Materials. Without limiting the foregoing, Tenant shall also deliver to
Landlord, within twenty (20) days after receipt thereof, any written notices
from any governmental agency alleging a material violation of, or material
failure to comply with, any federal, state or local laws, regulations,
ordinances or orders, the violation of which or failure to comply with poses
a foreseeable and material risk of contamination of the ground water or
injury to humans (other than injury solely to Tenant or Tenant's Agents.
In the event of any release on or into the Premises or into the soil or
ground water under the Premises or the Building of any Hazardous Materials
used, treated, stored or disposed of by Tenant or Tenant's Agents, Tenant
agrees to comply, at its sole cost, with all laws, regulations, ordinances
and orders of any federal, state or local agency relating to the monitoring
or remediation of such Hazardous Materials. In the event of any such release
of Hazardous Materials Tenant shall immediately give verbal and follow-up
written notice of the release to Landlord, and Tenant agrees to meet and
confer with Landlord and its Lender to attempt to eliminate and mitigate any
financial exposure to such Lender and resultant exposure to Landlord under
California Code of Civil Procedure Section 736(b) as a result of such
release, and promptly to take reasonable monitoring, cleanup and remedial
steps given, inter alia, the historical uses to which the Property has and
continues to be used, the risks to public health posed by the release, the
then available technology and the costs of remediation, cleanup and
monitoring, consistent with acceptable customary practices for the type and
severity of such contamination and all applicable laws. Nothing in the
preceding sentence shall eliminate, modify or reduce the obligation of Tenant
under 12.B of this Lease to indemnify, defend and hold Landlord harmless from
any claims liabilities, costs or expenses incurred or suffered by Landlord.
Tenant
Page 9
shall provide Landlord prompt written notice of Tenant's monitoring, cleanup
and remedial steps.
In the absence of an order of any federal, state or local governmental or
quasi-governmental agency relating to the cleanup, remediation or other
response action required by applicable law, any dispute arising between
Landlord and Tenant concerning Tenant's obligation to Landlord under this
Section 12.C concerning the level, method, and manner of cleanup, remediation
or response action required in connection with such a release of Hazardous
Materials shall be resolved by mediation and/or arbitration pursuant to this
Lease.
D. ENVIRONMENTAL MONITORING: Landlord and its agents shall have the
right to inspect, investigate, sample and monitor the Premises including any
air, soil, water, ground water or other sampling or any other testing,
digging, drilling or analysis to determine whether Tenant is complying with
the terms of this Section 12. If Landlord discovers that Tenant is not in
compliance with the terms of this Section 12, any such costs incurred by
Landlord, including attorneys' and consultants' fees, shall be due and
payable by Tenant to Landlord within five (5) days following Landlord's
written demand therefore.
E. LANDLORD'S INDEMNITY REGARDING HAZARDOUS MATERIALS: Landlord shall
indemnify and hold Tenant harmless from any claims, liabilities, costs or
expenses incurred or suffered by Tenant related to the removal,
investigation, monitoring or remediation of Hazardous Materials which are
present at the Premises as of the Effective Date. Landlord's indemnification
and hold harmless obligations include, without limitation, (i) claims,
liability, costs or expenses resulting from or based upon administrative,
judicial (civil or criminal) or other action, legal or equitable, brought by
any private or public person under common law or under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"),
the Resource Conservation and Recovery Act of 1980 ("RCRA") or any other
Federal, State, County or Municipal law, ordinance or regulation, (ii)
claims, liabilities, costs or expenses pertaining to the identification,
monitoring, cleanup, containment, or removal of Hazardous Materials from
soils, riverbeds or aquifers including the provision of an alternative public
drinking water source, and (iii) all costs of defending such claims. In no
event shall Landlord be liable for any consequential damages suffered or
incurred by Tenant as a result of the presence of Hazardous Materials at the
Premises as of the Effective Date.
13. TENANT'S DEFAULT: The occurrence of any of the following shall
constitute a material default and breach of this Lease by Tenant: (i)
Tenant's failure to pay the Base Monthly Rent including additional rent or
any other payment due under this Lease, where such failure continues for five
(5) business days after written notice from Landlord that such amount is due,
(ii) the abandonment of the Premises by Tenant; (iii) Tenant's failure to
observe and perform any other required provision of this Lease, where such
failure continues for thirty (30) days after written notice from Landlord;
(iv) Tenant's making of any general assignment for the benefit of creditors;
(v) the filing by or against Tenant of a petition to have Tenant adjudged a
bankrupt or of a petition for reorganization or arrangement under any law
relating to bankruptcy (unless, in the case of a petition filed against
Tenant, the same is dismissed after the filing); (vi) the appointment of a
trustee or receiver to take possession of substantially all of Tenant's
assets located at the Premises or of Tenant's interest in this Lease, where
possession is not restored to Tenant within sixty (60) days; or (vii) the
attachment, execution or other judicial seizure of substantially all of
Tenant's assets located at the Premises or of Tenant's interest in this
Lease, where such seizure is not discharged within sixty (60) days.
A. REMEDIES: In the event of any such default by Tenant, then in
addition to other remedies available to Landlord at law or in equity,
Landlord shall have the immediate option to terminate this Lease and all
rights of Tenant hereunder by giving written notice of such intention to
terminate. In the event Landlord elects to so terminate this Lease, Landlord
may recover from Tenant all the following: (i) the worth at time of award of
any unpaid rent which had been earned at the time of such termination; (ii)
the worth at time of award of the amount by which the unpaid rent which would
have been earned after termination until the time of award exceeds the amount
of such rental loss for the same period that Tenant proves could have been
reasonably avoided; (iii) the worth at time of award of the amount by which
the unpaid rent for the balance of the Lease Term after the time of award
exceeds the amount of such rental loss that Tenant proves could be reasonably
avoided; (iv) any other amount necessary to compensate Landlord for all
detriment proximately caused by Tenant's failure to perform its obligations
under this Lease, or which in the ordinary course of things would be likely
to result therefrom; including the following: (x) expenses for repairing,
altering or remodeling the Premises for purposes of reletting, (y) broker's
fees, advertising costs or other expenses of reletting the Premises, and (z)
costs of carrying the Premises such as taxes, insurance premiums, utilities
and security precautions; and (v) at Landlord's election, such other amounts
in addition to or in lieu of the foregoing as may be permitted by applicable
California law. The term "rent", as used herein, is defined as the minimum
monthly installments of Base Monthly Rent and all other sums required to be
paid by Tenant pursuant to this Lease, all such other sums being deemed as
additional rent due
Page 10
hereunder. As used in (i) and (ii) above, "worth at the time of award" shall
be computed by allowing interest at a rate equal to the discount rate of the
Federal Reserve Bank of San Francisco plus five (5%) percent per annum. As
used in (iii) above, "worth at the time of award" shall be computed by
discounting such amount at the discount rate of the Federal Reserve Bank of
San Francisco at the time of award plus one (1%) percent.
B. RIGHT TO RE-ENTER: In the event of any such default by Tenant,
Landlord shall have the right, after terminating this Lease, to re-enter the
Premises and remove all persons and property. Such property may be removed
and stored in a public warehouse or elsewhere at the cost of and for the
account of Tenant, and disposed of by Landlord in any manner permitted by law.
C. ABANDONMENT: If Landlord does not elect to terminate this Lease as
provided in Section 13.A or 13.B above, then the provisions of California
Civil Code Section 1951.4, (Landlord may continue the lease in effect after
Tenant's breach and abandonment and recover rent as it becomes due if Tenant
has a right to sublet and assign, subject only to reasonable limitations) as
amended from time to time, shall apply and Landlord may from time to time,
without terminating this Lease, either recover all rental as it becomes due
or relet the Premises or any part thereof for such term or terms and at such
rental or rentals and upon such other terms and conditions as Landlord in its
sole discretion may deem advisable, with the right to make alterations and
repairs to the Premises. In the event that Landlord elects to so relet,
rentals received by Landlord from such reletting shall be applied in the
following order to: (i) the payment of any indebtedness other than Base
Monthly Rent due hereunder from Tenant to Landlord; (ii) the payment of any
reasonable cost of such reletting; (iii) the payment of the cost of any
alterations and repairs to the Premises necessary to relet; and (iv) the
payment of Base Monthly Rent due and unpaid hereunder. The residual rentals,
if any, shall be held by Landlord and applied in payment of future Base
Monthly Rent as the same may become due and payable hereunder. Landlord shall
the obligation to market the space but shall have no obligation to relet the
Premises following a default if Landlord has other comparable available space
within the Building or Project. In the event the portion of rentals received
from such reletting which is applied to the payment of rent hereunder during
any month be less than the rent payable during that month by Tenant
hereunder, then Tenant shall pay such deficiency to Landlord immediately upon
demand. Such deficiency shall be calculated and paid monthly. Tenant shall
also pay to Landlord, as soon as ascertained, any costs and expenses
reasonably incurred by Landlord in such reletting or in making such
alterations and repairs necessary to relet not covered by the rentals
received from such reletting.
D. NO TERMINATION: Landlord's re-entry or taking possession of the
Premises pursuant to 13.B or 13.C shall not be construed as an election to
terminate this Lease unless written notice of such intention is given to
Tenant or unless the termination is decreed by a court of competent
jurisdiction. Notwithstanding any reletting without termination by Landlord
because of any default by Tenant, Landlord may at any time after such
reletting elect to terminate this Lease for any such default.
E. NON-WAIVER: Landlord may accept Tenant's payments without waiving
any rights under this Lease, including rights under a previously served
notice of default. No payment by Tenant or receipt by Landlord of a lesser
amount than any installment of rent due shall be deemed as other than payment
on account of the amount due. If Landlord accepts payments after serving a
notice of default, Landlord may nevertheless commence and pursue an action to
enforce rights and remedies under the previously served notice of default
without giving Tenant any further notice or demand. Furthermore, the
Landlord's acceptance of rent from the Tenant when the Tenant is holding over
without express written consent does not convert Tenant's Tenancy from a
tenancy at sufferance to a month to month tenancy. No waiver of any provision
of this Lease shall be implied by any failure of Landlord to enforce any
remedy for the violation of that provision, even if that violation continues
or is repeated. Any waiver by Landlord of any provision of this Lease must be
in writing. Such waiver shall affect only the provision specified and only
for the time and in the manner stated in the writing. No delay or omission in
the exercise of any right or remedy by Landlord shall impair such right or
remedy or be construed as a waiver thereof by Landlord. No act or conduct of
Landlord, including, without limitation, the acceptance of keys to the
Premises, shall constitute acceptance of the surrender of the Premises by
Tenant before the Expiration Date. Only written notice from Landlord to
Tenant of acceptance shall constitute such acceptance of surrender of the
Premises. Landlord's consent to or approval of any act by Tenant which
requires Landlord's consent or approvals shall not be deemed to waive or
render unnecessary Landlord's consent to or approval of any subsequent act by
Tenant.
F. PERFORMANCE BY LANDLORD: If Tenant fails to perform any obligation
required under this Lease or by law or governmental regulation, Landlord in
its sole discretion may, with prior notice to Tenant, without waiving any
rights or remedies and without releasing Tenant from its obligations
hereunder, perform such obligation, in which event Tenant shall pay Landlord
as additional rent all sums paid by Landlord in connection with such
substitute performance, including interest at the
Page 11
Agreed Interest Rate (as defined in Section 19.J) within ten (10) days of
Landlord's written notice for such payment.
G. HABITUAL DEFAULT: The provisions of Section 13 notwithstanding,
the Parties agree that if Tenant shall have defaulted in the performance of
any (but not necessarily the same) material term or condition of this Lease
for four or more times during any twelve (12) month period during the Lease
Term and Landlord shall have given Tenant notice of such default, then such
conduct shall, at the election of the Landlord, represent a separate event of
default which cannot be cured by Tenant. Tenant acknowledges that the purpose
of this provision is to prevent repetitive defaults by Tenant, which work a
hardship upon Landlord and deprive Landlord of Tenant's timely performance
under this Lease.
14. LANDLORD'S LIABILITY:
A. LIMITATION ON LANDLORD'S LIABILITY: In the event of Landlord's
failure to perform any of its covenants or agreements under this Lease,
Tenant shall give Landlord written notice of such failure and shall give
Landlord thirty (30) days to cure or commence to cure such failure prior to
any claim for breach or resultant damages, provided, however, that if the
nature of the default is such that it cannot reasonably be cured within the
30-day period, Landlord shall not be deemed in default if it commences within
such period to cure, and thereafter diligently prosecutes the same to
completion. In addition, upon any such failure by Landlord, Tenant shall give
notice by registered or certified mail to any person or entity with a
security interest in the Premises ("Mortgagee") that has provided Tenant with
notice of its interest in the Premises, and shall provide Mortgagee a
reasonable opportunity to cure such failure, including such time to obtain
possession of the Premises by power of sale or judicial foreclosure, if such
should prove necessary to effectuate a cure. Tenant agrees that each of the
Mortgagees to whom this Lease has been assigned is an expressed third-party
beneficiary hereof. Tenant waives any right under California Civil Code
Section 1950.7 or any other present or future law to the collection of any
payment or deposit from Mortgagee or any purchaser at a foreclosure sale of
Mortgagee's interest unless Mortgagee or such purchaser shall have actually
received and not refunded the applicable payment or deposit. Tenant Further
waives any right to terminate this Lease and to vacate the Premises on
Landlord's default under this Lease. Tenant's sole remedy on Landlord's
default is an action for damages or injunctive or declaratory relief.
B. LIMITATION ON TENANT'S RECOURSE: If Landlord is a corporation,
trust, partnership, joint venture, unincorporated association or other form
of business entity, then (i) the obligations of Landlord shall not constitute
personal obligations of the officers, directors, trustees, partners, joint
venturers, members, owners, stockholders, or other principals or
representatives except to the extent of their interest in the Premises.
Tenant shall have recourse only to the interest of Landlord in the Premises
or for the satisfaction of the obligations of Landlord and shall not have
recourse to any other assets of Landlord for the satisfaction of such
obligations.
C. INDEMNIFICATION OF LANDLORD: As a material part of the
consideration rendered to Landlord, Tenant hereby waives all claims against
Landlord for damages to goods, wares and merchandise, and all other personal
property in, upon or about said Premises and for injuries to persons in or
about said Premises, from any cause arising at any time to the fullest extent
permitted by law, and Tenant shall indemnify, defend with counsel reasonably
acceptable to Landlord and hold Landlord, and their shareholders, directors,
officers, trustees, employees, partners, affiliates and agents from any
claims, liabilities, costs or expenses incurred or suffered arising from the
use of occupancy of the Premises or any part of the Project by Tenant or
Tenant's Agents, the acts or omissions of Tenant or Tenant's Agents, Tenant's
breach of this Lease, or any damage or injury to person or property from any
cause, except to the extent caused by the willful misconduct or active
negligence of Landlord or from the failure of Tenant to keep the Premises in
good condition and repair as herein provided, except to the extent due to the
gross negligence or willful misconduct of Landlord. Further, in the event
Landlord is made party to any litigation due to the acts or omission of
Tenant and Tenant's Agents, Tenant will indemnify, defend (with counsel
reasonably acceptable to Landlord) and hold Landlord harmless from any such
claim or liability including Landlord's costs and expenses and reasonable
attorney's fees incurred in defending such claims.
15. DESTRUCTION OF PREMISES:
A. LANDLORD'S OBLIGATION TO RESTORE: In the event of a destruction of
the Premises during the Lease Term Landlord shall repair the same to a
similar condition to that which existed prior to such destruction. Such
destruction shall not annul or void this Lease; however, Tenant shall be
entitled to a proportionate reduction of Base Monthly Rent while repairs are
being made, such proportionate reduction to be based upon the extent to which
the repairs interfere with Tenant's business in the Premises, as reasonably
determined by Landlord. In no event shall Landlord be required to replace or
restore Alterations, Tenant Improvements paid for by Tenant from sources
other than the Work Allowance or Tenant's fixtures or personal property. With
respect to a destruction which Landlord is obligated to repair or may elect
to repair
Page 12
under the terms of this Section, Tenant waives the provisions of Section
1932, and Section 1933, Subdivision 4, of the Civil Code of the State of
California, and any other similarly enacted statute, and the provisions of
this Section 15 shall govern in the case of such destruction.
B. LIMITATIONS ON LANDLORD'S RESTORATION OBLIGATION: Notwithstanding
the provisions of Section 15.A, Landlord shall have no obligation to repair,
or restore the Premises if any of the following occur: (i) if the repairs
cannot be made in one hundred eighty (180) days from the date of receipt of
all governmental approvals necessary under the laws and regulations of State,
Federal, County or Municipal authorities, as reasonably determined by
Landlord, (ii) if the holder of the first deed of trust or mortgage
encumbering the Building elects not to permit the insurance proceeds payable
upon damage or destruction to be used for such repair or restoration (unless
Tenant, within 45 days after the casualty, agrees in writing to pay all costs
associated with rebuilding), (iii) the damage or destruction is not fully
covered by the insurance required to be maintained by Landlord hereunder
(unless Tenant, within 45 days after the casualty, agrees in writing to
contribute any shortfall), (iv) the damage or destruction occurs in the last
eighteen (18) months of the Lease Term, (v) Tenant is in default pursuant to
the provisions of Section 13, or (vi) Tenant has vacated the Premises for
more than ninety (90) days. In any such event Landlord may elect either to
(i) complete the repair or restoration, or (ii) terminate this Lease by
providing Tenant written notice of its election within sixty (60) days
following the damage or destruction. Tenant shall also have the right to
terminate this Lease in the event of either (i) or (iv) above, by providing
Landlord with written notice of its election to do so within thirty (30) days
following the damage or destruction.
16. CONDEMNATION: If any part of the Premises shall be taken for any
public or quasi-public use, under any statute or by right of eminent domain
or private purchase in lieu thereof, and only a part thereof remains which is
susceptible of occupation hereunder, this Lease shall, as to the part so
taken, terminate as of the day before title vests in the condemnor or
purchaser ("Vesting Date") and Base Monthly Rent payable hereunder shall be
adjusted so that Tenant is required to pay for the remainder of the Lease
Term only such portion of Base Monthly Rent as the value of the part
remaining after such taking bears to the value of the entire Premises prior
to such taking. Further, in the event of such partial taking, Landlord shall
have the option to terminate this Lease as of the Vesting Date. If all of the
Premises or such part thereof be taken so that there does not remain a
portion susceptible for occupation hereunder, this Lease shall terminate on
the Vesting Date. If part or all of the Premises be taken, all compensation
awarded upon such taking shall go to Landlord, and Tenant shall have no claim
thereto; except Landlord shall cooperate with Tenant, without cost to
Landlord, to recover compensation for damage to or taking of any Alterations,
Tenant Improvements paid for by Tenant from sources other than the Work
Allowance, or for Tenant's moving costs. Tenant hereby waives the provisions
of California Code of Civil Procedures Section 1265.130 and any other
similarly enacted statue, and the provisions of this Section 16 shall govern
in the case of a taking. Nothing contained herein shall be deemed or
construed to prevent Tenant from interposing and prosecuting in any
condemnation proceedings, a claim for the value of any fixtures or
improvements installed in, or made to the Premises by Tenant, or for its
costs of moving or loss of business by reason of such condemnation.
Notwithstanding anything to the contrary set forth in this Section, in the
event that Tenant's leasehold estate only shall be so taken or appropriated,
and the taking or appropriation shall be for a period of less than the
balance of the Lease Term, this Lease shall continue in full force and
effect, Tenant shall receive any award or consideration paid by the
condemning or appropriating authority, and Tenant shall continue to pay
Landlord all sums due under this Lease.
17. ASSIGNMENT OR SUBLEASE:
A. CONSENT BY LANDLORD: Except as specifically provided in this
Section 17.E, Tenant may not assign, sublet, hypothecate, or allow a third
party to use the Premises without the express written consent of Landlord,
which shall not be unreasonably withheld, delayed or conditioned. In the
event Tenant desires to assign this Lease or any interest herein or sublet
the Premises or any part thereof, Tenant shall deliver to Landlord (i)
executed counterparts of any agreement and of all ancillary agreements with
the proposed assignee/subtenant, (ii) current financial statements of the
transferee covering the preceding three years (if available), (iii) the
nature of the proposed transferee's business to be carried on in the
Premises, (iv) a statement outlining all consideration to be given on account
of the Transfer, and (v) a current financial statement of Tenant. Landlord
may condition its approval of any Transfer on receipt of a certification from
both Tenant and the proposed transferee of all consideration to be paid to
Tenant in connection with such Transfer. At Landlord's request, Tenant shall
also provide additional information reasonably required by Landlord to
determine whether it will consent to the proposed assignment or sublease.
Landlord shall have a ten (10) day period following receipt of all the
foregoing within which to notify Tenant in writing that Landlord elects to:
(i) permit Tenant to assign or sublet such space to the named
assignee/subtenant on the terms and conditions set forth in the notice; or
(ii) refuse consent. If Landlord should fail to notify Tenant in writing of
Page 13
such election within the 10-day period, Landlord shall be deemed to have
elected option (ii) above. In the event Landlord elects option (ii) above,
Landlord's written consent to the proposed assignment or sublease shall not
be unreasonably withheld, provided and upon the condition that: (i) the
proposed assignee or subtenant is engaged in a business that is limited to
the use expressly permitted under this Lease; (ii) the proposed assignee or
subtenant is a company with sufficient financial worth and management ability
to undertake the financial obligation of this Lease and Landlord has been
furnished with reasonable proof thereof; (iii) the proposed assignment or
sublease is in form reasonably satisfactory to Landlord; (iv) Tenant
reimburses Landlord on demand for any reasonable costs that may be incurred
by Landlord in connection with said assignment or sublease, including the
costs of making investigations as to the acceptability of the proposed
assignee or subtenant and legal costs incurred in connection with the
granting of any requested consent (not to exceed $6,000.00); and (vi) Tenant
shall not have advertised or publicized in any way the availability of the
Premises without prior notice to Landlord. In the event all or any one of the
foregoing conditions are not satisfied, Landlord shall be considered to have
acted reasonably if it withholds its consent.
B. ASSIGNMENT OR SUBLETTING CONSIDERATION: Any rent or other economic
consideration realized by Tenant under any sublease and assignment, in excess
of the Base Monthly Rent payable hereunder and reasonable subletting and
assignment costs, and after deduction of the unamortized cost of Tenant
Improvements not paid for out of the Work Allowance, shall be divided and
paid fifty percent (50%) to Landlord and fifty percent (50%) to Tenant.
Tenant's obligation to pay over Landlord's portion of the consideration
constitutes an obligation for additional rent hereunder. The above provisions
relating to the allocation of excess rent are independently negotiated terms
of the Lease which constitute a material inducement for the Landlord to enter
into the Lease, and are agreed by the Parties to be commercially reasonable.
No assignment or subletting by Tenant shall relieve it of any obligation
under this Lease. Any assignment or subletting which conflicts with the
provisions hereof shall be void.
C. NO RELEASE: Any assignment or sublease shall be made only if and
shall not be effective until the assignee or subtenant shall execute,
acknowledge, and deliver to Landlord an agreement, in form and substance
reasonably satisfactory to Landlord, whereby the assignee or subtenant shall
assume all the obligations of this Lease on the part of Tenant to be
performed or observed and shall be subject to all the covenants, agreements,
terms, provisions and conditions in this Lease. Notwithstanding any such
sublease or assignment and the acceptance of rent by Landlord from any
subtenant or assignee, Tenant and any guarantor shall remain fully liable for
the payment of Base Monthly Rent and additional rent due, and to become due
hereunder, for the performance of all the covenants, agreements, terms,
provisions and conditions contained in this Lease on the part of Tenant to be
performed and for all acts and omissions of any licensee, subtenant, assignee
or any other person claiming under or through any subtenant or assignee that
shall be in violation of any of the terms and conditions of this Lease, and
any such violation shall be deemed a violation by Tenant. Tenant shall
indemnify, defend and hold Landlord harmless from and against all losses,
liabilities, damages, costs and expenses (including reasonable attorney fees)
resulting from any claims that may be made against Landlord by the proposed
assignee or subtenant or by any real estate brokers or other persons claiming
compensation in connection with the proposed assignment or sublease.
D. REORGANIZATION OF TENANT: The provisions of this Section 17.D
shall apply if Tenant is a corporation and: (i) there is a dissolution,
merger, consolidation, or other reorganization of or affecting Tenant, where
Tenant is not the surviving corporation, or (ii) there is a sale or transfer
to one person or entity (or to any group of related persons or entities) of
stock possessing more than 50% of the total combined voting power of all
classes of Tenant's capital stock issued, outstanding and entitled to vote
for the election of directors, and after such sale or transfer of stock
Tenant's stock is no longer publicly traded. In a transaction under clause
(i) the surviving corporation shall promptly execute and deliver to Landlord
an agreement in form reasonably satisfactory to Landlord under which such
surviving corporation assumes the obligations of Tenant hereunder, and in a
transaction under clause (ii) the transferee or buyer shall promptly execute
and deliver to Landlord an agreement in form reasonably satisfactory to
Landlord under which such transferee or buyer assumes the obligations of
Tenant under the Lease.
E. PERMITTED TRANSFERS: Notwithstanding anything contained in this
Section 17, so long as Tenant otherwise complies with the provisions of this
Article, Tenant may enter into any of the following transfers (a "Permitted
Transfer") without Landlord's prior consent, and Landlord shall not be
entitled to terminate the Lease or to receive any part of any subrent
resulting therefrom that would otherwise be due pursuant to Sections 17.A and
17.B. Tenant may sublease all or part of the Premises or assign its interest
in this Lease to (i) any corporation which controls, is controlled by, or is
under common control with the original Tenant to this Lease by means of an
ownership interest of more than 50%; (ii) a corporation which results from a
merger, consolidation or other reorganization in which Tenant: (a) is the
surviving corporation;
Page 14
or (b) is not the surviving corporation, so long as the surviving corporation
has a net worth at the time of such assignment that is equal to or greater
than the net worth of Tenant immediately prior to such transaction; and (iii)
a corporation which purchases or otherwise acquires all or substantially all
of the assets of Tenant so long as such acquiring corporation has a net worth
at the time of such assignment that is equal to or greater than the net worth
of Tenant immediately prior to such transaction.
F. EFFECT OF DEFAULT: In the event of Tenant's default, Tenant hereby
assigns all rents due from any assignment or subletting to Landlord as
security for performance of its obligations under this Lease, and Landlord
may collect such rents as Tenant's Attorney-in-Fact, except that Tenant may
collect such rents unless a default occurs as described in Section 13 above.
A termination if the Lease due to Tenant's default shall not automatically
terminate an assignment or sublease then in existence; rather at Landlord's
election, such assignment or sublease shall survive the Lease termination,
the assignee or subtenant shall attorn to Landlord, and Landlord shall
undertake the obligations of Tenant under the sublease or assignment; except
that Landlord shall not be liable for prepaid rent, security deposits or
other defaults of Tenant to the subtenant or assignee, or for any acts or
omissions of Tenant and Tenant's Agents.
G. CONVEYANCE BY LANDLORD: As used in this Lease, the term "Landlord"
is defined only as the owner for the time being of the Premises, so that in
the event of any sale or other conveyance of the Premises or in the event of
a master lease of the Premises, Landlord shall be entirely freed and relieved
of all its covenants and obligations hereunder, and it shall be deemed and
construed, without further agreement between the Parties and the purchaser at
any such sale or the master tenant of the Premises, that the purchaser or
master tenant of the Premises has assumed and agreed to carry out any and all
covenants and obligations of Landlord hereunder. Such transferor shall
transfer and deliver Tenant's security deposit and any other prepaid sums to
the purchaser at any such sale or the master tenant of the Premises, and
thereupon the transferor shall be discharged from any further liability in
reference thereto.
F. SUCCESSORS AND ASSIGNS: Subject to the provisions this Section 17,
the covenants and conditions of this Lease shall apply to and bind the heirs,
successors, executors, administrators and assigns of all Parties hereto; and
all Parties hereto comprising Tenant shall be jointly and severally liable
hereunder.
18. OPTION TO EXTEND THE LEASE TERM:
A. GRANT AND EXERCISE OF OPTION: Landlord grants to Tenant, subject
to the terms and conditions set forth in this Section 18.A, two (2) options
(the "Options") to extend the Lease Term for an additional term (each an
"Option Term"). Each Option Term shall be for a period of sixty (60) months
and shall be exercised, if at all, by written notice to Landlord no earlier
than eighteen (18) months prior to the date the Lease Term would expire but
for such exercise but no later than twelve (12) months prior to the date the
Lease Term would expire but for such exercise, time being of the essence for
the giving of such notice. If Tenant exercises the Option, all of the terms,
covenants and conditions of this Lease except for the grant of additional
Options pursuant to this Section, provided that Base Monthly Rent for the
Premises payable by Tenant during the Option Term shall be the greater of (i)
the Base Monthly Rent applicable to the period immediately prior to the
commencement of the Option Term, and (ii) ninety five percent (95%) of the
Fair Market Rental as hereinafter defined. Notwithstanding anything herein to
the contrary, if Tenant is in monetary or material non-monetary default under
any of the terms, covenants or conditions of this Lease either at the time
Tenant exercises the Option or at any time thereafter prior to the
commencement date of the Option Term, Landlord shall have, in addition to all
of Landlord's other rights and remedies provided in this Lease, the right to
terminate the Option upon notice to Tenant, in which event the Lease Term
shall not be extended pursuant to this Section 18.A. As used herein, the term
"Fair Market Rental" is defined as the rental and all other monetary
payments, including any escalations and adjustments thereto (including
without limitation Consumer Price Indexing) that Landlord could obtain during
the Option Term from a third party desiring to lease the Premises, based upon
an office/R&D use of the Premises, as determined by the rents then being
obtained for new leases of space comparable in age and quality to the
Premises in the same real estate submarket in Fremont as the Building. The
appraisers shall be instructed that: (1) the foregoing five percent (5%)
discount is intended to offset comparable rents that include the following
costs which Landlord will not incur in the event Tenant exercises its option
(i) brokerage commissions, (ii) tenant improvement allowances, (iii) building
improvement costs, and (iv) vacancy costs; and (2) no premium shall be
factored in or value attributed for Tenant's specialized laboratory and
manufacturing improvements, but rather those areas of the Premises shall be
assumed as general office improvements for the purposes of appraisal.
B. DETERMINATION OF FAIR MARKET RENTAL: If Tenant exercises the
Option, Landlord shall send Tenant a notice setting forth the Fair Market
Rental for the Option Term within thirty (30) days following the Exercise
Date. If Tenant disputes Landlord's determination of Fair Market Rental for
the Option Term, Tenant shall, within thirty (30)
Page 15
days after the date of Landlord's notice setting forth Fair Market Rental for
the Option Term, send to Landlord a notice stating that Tenant either elects
to terminate its exercise of the Option, in which event the Option shall
lapse and this Lease shall terminate on the Expiration Date, or that Tenant
disagrees with Landlord's determination of Fair Market Rental for the Option
Term and elects to resolve the disagreement as provided in Section 18.C
below. If Tenant does not send Landlord a notice as provided in the previous
sentence, Landlord's determination of Fair Market Rental shall be the Base
Monthly Rent payable by Tenant during the Option Term. If Tenant elects to
resolve the disagreement as provided in Section 18.C and such procedures are
not concluded prior to the commencement date of the Option Term, Tenant shall
pay to Landlord as Base Monthly Rent the Fair Market Rental as determined by
Landlord in the manner provided above. If the Fair Market Rental as finally
determined pursuant to Section 18.C is greater than Landlord's determination,
Tenant shall pay Landlord the difference between the amount paid by Tenant
and the Fair Market Rental as so determined in Section 18.C within thirty
(30) days after such determination. If the Fair Market Rental as finally
determined in Section 18.C is less than Landlord's determination, the
difference between the amount paid by Tenant and the Fair Market Rental as so
determined in Section 18.C shall be credited against the next installments of
Base Monthly Rent due from Tenant to Landlord hereunder.
C. RESOLUTION OF A DISAGREEMENT OVER THE FAIR MARKET RENTAL: Any
disagreement regarding Fair Market Rental shall be resolved as follows:
1. Within thirty (30) days after Tenant's response to Landlord's
notice setting forth the Fair Market Rental, Landlord and Tenant shall meet
at a mutually agreeable time and place, in an attempt to resolve the
disagreement.
2. If within the 30-day period referred to above, Landlord and
Tenant cannot reach agreement as to Fair Market Rental, each party shall
select one appraiser to determine Fair Market Rental. Each such appraiser
shall arrive at a determination of Fair Market Rental and submit their
conclusions to Landlord and Tenant within thirty (30) days after the
expiration of the 30-day consultation period described above.
3. If only one appraisal is submitted within the requisite time
period, it shall be deemed as Fair Market Rental. If both appraisals are
submitted within such time period and the two appraisals so submitted differ
by less than ten percent (10%), the average of the two shall be deemed as
Fair Market Rental. If the two appraisals differ by more than 10%, the
appraisers shall immediately select a third appraiser who shall, within
thirty (30) days after his selection, make and submit to Landlord and Tenant
a determination of Fair Market Rental. This third appraisal will then be
averaged with the closer of the two previous appraisals and the result shall
be Fair Market Rental.
4. All appraisers specified pursuant to this Section shall be
members of the American Institute of Real Estate Appraisers with not less
than ten (10) years experience appraising office and industrial properties in
the Santa Clara Valley. Each party shall pay the cost of the appraiser
selected by such party and one-half of the cost of the third appraiser.
D. PERSONAL TO TENANT: All Options provided to Tenant in this Lease
are personal and granted to Abgenix, Inc. and are not exercisable by any
third party (other than a third party resulting from a Permitted Transfer)
should Tenant assign or sublet all or a portion of its rights under this
Lease, unless Landlord consents to permit exercise of any option by any
assignee or subtenant, in Landlord's sole and absolute discretion. In the
event Tenant has multiple options to extend this Lease, a later option to
extend the Lease cannot be exercised unless the prior option has been
properly exercised.
19. GENERAL PROVISIONS:
A. ATTORNEY'S FEES: In the event a suit or alternative form of
dispute resolution is brought for the possession of the Premises, for the
recovery of any sum due hereunder, to interpret the Lease, or because of the
breach of any other covenant herein; then the losing party shall pay to the
prevailing party reasonable attorney's fees including the expense of expert
witnesses, depositions and court testimony as part of its costs which shall
be deemed to have accrued on the commencement of such action. The prevailing
party shall also be entitled to recover all costs and expenses including
reasonable attorney's fees incurred in enforcing any judgment or award
against the other party. The foregoing provision relating to post-judgment
costs is severable from all other provisions of this Lease.
B. AUTHORITY OF PARTIES: Tenant represents and warrants that it is
duly formed and in good standing, and is duly authorized to execute and
deliver this Lease on behalf of said corporation, in accordance with a duly
adopted resolution of the Board of Directors of said corporation or in
accordance with the by-laws of said corporation, and that this Lease is
binding upon said corporation in accordance with its terms. At Landlord's
request, Tenant shall provide Landlord with corporate resolutions or other
proof in a form acceptable to Landlord, authorizing the execution of the
Lease.
C. BROKERS: Tenant represents it has not utilized or contacted a real
estate broker or finder with respect to this Lease other than CRESA
Page 16
Partners and Tenant agrees to indemnify, defend and hold Landlord harmless
against any claim, cost, liability or cause of action asserted by any other
broker or finder claiming through Tenant. Landlord agrees that it will be
responsible for all real estate fees or commissions due to CRESA Partners
pursuant to a separate agreement between Landlord and CRESA Partners.
Landlord agrees to indemnify, defend and hold Tenant harmless against any
claim, cost, liability or cause of action asserted by any other broker or
finder claiming through Landlord.
D. CHOICE OF LAW: This Lease shall be governed by and construed in
accordance with California law. Except as provided in Section 19.E, venue
shall be Santa Clara County.
E. DISPUTE RESOLUTION: Landlord and Tenant and any other party that
may become a party to this Lease or be deemed a party to this Lease including
any subtenants agree that, except for any claim by Landlord for unlawful
detainer or any claim within the jurisdiction of the small claims court
(which small claims court shall be the sole court of competent jurisdiction),
any controversy, dispute, or claim of whatever nature arising out of, in
connection with or in relation to the interpretation, performance or breach
of this Lease, including any claim based on contract, tort, or statute, shall
be resolved at the request of any party to this agreement through a two-step
dispute resolution process administered by J.A.M.S. or another judicial
mediation service mutually acceptable to the parties located in Santa Clara
County, California. The dispute resolution process shall involve first,
mediation, followed, if necessary, by final and binding arbitration
administered by and in accordance with the then existing rules and practices
of J.A.M.S. or other judicial mediation service selected. In the event of any
dispute subject to this provision, either party may initiate a request for
mediation and the parties shall use reasonable efforts to promptly select a
J.A.M.S. mediator and commence the mediation. In the event the parties are
not able to agree on a mediator within thirty (30) days, J. A. M. S. or
another judicial mediation service mutually acceptable to the parties shall
appoint a mediator. The mediation shall be confidential and in accordance
with California Evidence Code ss. 1119 et. seq. The mediation shall be held
in Santa Clara County, California and in accordance with the existing rules
and practice of J. A. M. S. (or other judicial and mediation service
selected). The parties shall use reasonable efforts to conclude the mediation
within sixty (60) days of the date of either party's request for mediation.
The mediation shall be held prior to any arbitration or court action (other
than a claim by Landlord for unlawful detainer or any claim within the
jurisdiction of the small claims court which are not subject to this
mediation/arbitration provision and may be filed directly with a court of
competent jurisdiction). Should the prevailing party in any dispute subject
to this Section 19.E attempt an arbitration or a court action before
attempting to mediate, the prevailing party shall not be entitled to
attorney's fees that might otherwise be available to them in a court action
or arbitration and in addition thereto, the party who is determined by the
arbitrator to have resisted mediation, shall be sanctioned by the arbitrator
or judge.
IF A MEDIATION IS CONDUCTED BUT IS UNSUCCESSFUL, IT SHALL BE FOLLOWED BY
FINAL AND BINDING ARBITRATION ADMINISTERED BY AND IN ACCORDANCE WITH THE THEN
EXISTING RULES AND PRACTICES OF J.A.M.S. OR THE OTHER JUDICIAL AND MEDIATION
SERVICE SELECTED, AND JUDGMENT UPON ANY AWARD RENDERED BY THE ARBITRATOR(S)
MAY BE ENTERED BY ANY STATE OR FEDERAL COURT HAVING JURISDICTION THEREOF AS
PROVIDED BY CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 1280 ET. SEQ, AS SAID
STATUTES THEN APPEAR, INCLUDING ANY AMENDMENTS TO SAID STATUTES OR SUCCESSORS
TO SAID STATUTES OR AMENDED STATUTES, EXCEPT THAT IN NO EVENT SHALL THE
PARTIES BE ENTITLED TO PROPOUND INTERROGATORIES OR REQUEST FOR ADMISSIONS
DURING THE ARBITRATION PROCESS. THE ARBITRATOR SHALL BE A RETIRED JUDGE OR A
LICENSED CALIFORNIA ATTORNEY. THE VENUE FOR ANY SUCH ARBITRATION OR MEDIATION
SHALL BE IN SANTA CLARA COUNTY, CALIFORNIA.
NOTICE: BY INITIALING IN THE SPACE BELOW YOU ARE AGREEING TO HAVE ANY DISPUTE
ARISING OUT OF THE MATTERS INCLUDED IN THE "MEDIATION AND ARBITRATION OF
DISPUTES" PROVISION DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA
LAW AND YOU ARE GIVING UP ANY RIGHTS YOU MIGHT POSSESS TO HAVE THE DISPUTE
LITIGATED IN A COURT OR fURY TRIAL. BY INITIALING IN THE SPACE BELOW YOU ARE
GIVING UP YOUR JUDICIAL RIGHTS TO DISCOVERY AND APPEAL, UNLESS THOSE RIGHTS
ARE SPECIFICALLY INCLUDED IN THE "MEDIATION AND ARBITRATION OF DISPUTES"
PROVISION. IF YOU REFUSE TO SUBMIT TO ARBITRATION AFTER AGREEING TO THIS
PROVISION, YOU MAY BE COMPELLED TO ARBITRATE UNDER THE AUTHORITY OF THE
CALIFORNIA CODE OF CIVIL PROCEDURE. YOUR AGREEMENT TO THIS ARBITRATION
PROVISION IS VOLUNTARY.
WE HAVE READ AND UNDERSTAND THE
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FOREGOING AND AGREE TO SUBMIT DISPUTES ARISING OUT OF THE MATTERS INCLUDED IN
THE "MEDIATION AND ARBITRATION OF DISPUTES" PROVISION TO NEUTRAL ARBITRATION.
LANDLORD: ______ TENANT: _______
F. ENTIRE AGREEMENT: This Lease and the exhibits attached hereto
contains all of the agreements and conditions made between the Parties hereto
and may not be modified orally or in any other manner other than by written
agreement signed by all parties hereto or their respective successors in
interest. This Lease supersedes and revokes all previous negotiations,
letters of intent, lease proposals, brochures, agreements, representations,
promises, warranties, and understandings, whether oral or in writing, between
the parties or their respective representatives or any other person
purporting to represent Landlord or Tenant.
G. ENTRY BY LANDLORD: Upon prior notice to Tenant and subject to
Tenant's reasonable security regulations, Tenant shall permit Landlord and
his agents to enter into and upon the Premises at all reasonable times, and
without any rent abatement or reduction or any liability to Tenant for any
loss of occupation or quiet enjoyment of the Premises thereby occasioned, for
the following purposes: (i) inspecting and maintaining the Premises; (ii)
making repairs, alterations or additions to the Premises; (iii) erecting
additional building(s) and improvements on the land where the Premises are
situated or on adjacent land owned by Landlord; (iv) performing any
obligations of Landlord under the Lease including remediation of Hazardous
Materials if determined to be the responsibility of Landlord, (v) posting and
keeping posted thereon notices of non-responsibility for any construction,
alteration or repair thereof, as required or permitted by any law, and (vi)
showing the Premises to Landlord's or the Master Landlord's existing or
potential successors, purchaser, tenants and lenders. Tenant shall permit
Landlord and his agents, at any time within one hundred eighty (180) days
prior to the Expiration Date (or at any time during the Lease if Tenant is in
default hereunder), to place upon the Premises "For Lease" signs and exhibit
the Premises to real estate brokers and prospective tenants at reasonable
hours. Landlord's right pursuant to this Paragraph 19.F. shall be subject to
the condition that exercise of any of such rights shall not unreasonably
interfere with Tenant's use of the Premises.
H. ESTOPPEL CERTIFICATES: At any time during the Lease Term, Tenant
shall, within ten (10) days following written notice from Landlord, execute
and deliver to Landlord a written statement certifying, if true, the
following: (i) that this Lease is unmodified and in full force and effect
(or, if modified, stating the nature of such modification); (ii) the date to
which rent and other charges are paid in advance, if any; (iii) acknowledging
that there are not, to Tenant's knowledge, any uncured defaults on Landlord's
part hereunder (or specifying such defaults if they are claimed); and (iv)
such other information as Landlord may reasonably request. Any such statement
may be conclusively relied upon by any prospective purchaser or encumbrancer
of Landlord's interest in the Premises. Tenant's failure to deliver such
statement within such time shall be conclusive upon the Tenant that this
Lease is in full force and effect without modification, except as may be
represented by Landlord, and that there are no uncured defaults in Landlord's
performance. Tenant agrees to provide, within five (5) business days of
Landlord's request, Tenant's most recent three (3) years of audited financial
statements (if available) for Landlord's use in financing or sale of the
Premises or Landlord's interest therein.
I. EXHIBITS: All exhibits referred to are attached to this Lease and
incorporated by reference.
J. INTEREST: All rent due hereunder, if not paid when due, shall bear
interest at the rate of the Reference Rate published by Bank of America, San
Francisco Branch, plus two percent (2%) per annum from that date until paid
in full ("Agreed Interest Rate"). This provision shall survive the expiration
or sooner termination of the Lease. Despite any other provision of this
Lease, the total liability for interest payments shall not exceed the limits,
if any, imposed by the usury laws of the State of California. Any interest
paid in excess of those limits shall be refunded to Tenant by application of
the amount of excess interest paid against any sums outstanding in any order
that Landlord requires. If the amount of excess interest paid exceeds the
sums outstanding, the portion exceeding those sums shall be refunded in cash
to Tenant by Landlord. To ascertain whether any interest payable exceeds the
limits imposed, any non-principal payment (including late charges) shall be
considered to the extent permitted by law to be an expense or a fee, premium,
or penalty rather than interest.
K. MODIFICATIONS REQUIRED BY LENDER: If any lender of Landlord or
ground lessor of the Premises requires a modification of this Lease that will
not increase Tenant's cost or expense or materially or adversely change
Tenant's rights and obligations, this Lease shall be so modified and Tenant
shall execute whatever documents are required and deliver them to Landlord
within ten (10) business days after the request.
L. NO PRESUMPTION AGAINST DRAFTER: Landlord and Tenant understand,
agree and acknowledge that this Lease has been freely negotiated by both
Parties; and that in any controversy, dispute, or contest over the meaning,
interpretation, validity, or enforceability of this
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Lease or any of its terms or conditions, there shall be no inference,
presumption, or conclusion drawn whatsoever against either party by virtue of
that party having drafted this Lease or any portion thereof.
M. NOTICES: All notices, demands, requests, or consents required to
be given under this Lease shall be sent in writing by U.S. certified mail,
return receipt requested, or by personal delivery addressed to the party to
be notified at the address for such party specified in Section 1 of this
Lease, or to such other place as the party to be notified may from time to
time designate by at least fifteen (15) days prior notice to the notifying
party. When this Lease requires service of a notice, that notice shall
replace rather than supplement any equivalent or similar statutory notice,
including any notices required by Code of Civil Procedure Section 1161 or any
similar or successor statute. When a statute requires service of a notice in
a particular manner, service of that notice (or a similar notice required by
this Lease) shall replace and satisfy the statutory service-of-notice
procedures, including those required by Code of Civil Procedure Section 1162
or any similar or successor statute.
N. PROPERTY MANAGEMENT: In addition, Tenant agrees to pay Landlord
along with the expenses to be reimbursed by Tenant a monthly fee for
management services rendered by either Landlord or a third party manager
engaged by Landlord (which may be a party affiliated with Landlord), in the
amount of four percent (4%) of the Base Monthly Rent.
O. RENT: All monetary sums due from Tenant to Landlord under this
Lease, including, without limitation those referred to as "additional rent",
shall be deemed as rent.
P. REPRESENTATIONS: Tenant acknowledges that neither Landlord nor any
of its employees or agents have made any agreements, representations,
warranties or promises with respect to the Premises or with respect to
present or future rents, expenses, operations, tenancies or any other matter.
Except as herein expressly set forth herein, Tenant relied on no statement of
Landlord or its employees or agents for that purpose.
Q. RIGHTS AND REMEDIES: Subject to Section 14 above, All rights and
remedies hereunder are cumulative and not alternative to the extent permitted
by law, and are in addition to all other rights and remedies in law and in
equity.
R. SEVERABILITY: If any term or provision of this Lease is held
unenforceable or invalid by a court of competent jurisdiction, the remainder
of the Lease shall not be invalidated thereby but shall be enforceable in
accordance with its terms, omitting the invalid or unenforceable term.
S. SUBMISSION OF LEASE: Submission of this document for examination
or signature by the parties does not constitute an option or offer to lease
the Premises on the terms in this document or a reservation of the Premises
in favor of Tenant. This document is not effective as a lease or otherwise
until executed and delivered by both Landlord and Tenant.
T. SUBORDINATION: This Lease is subject and subordinate to ground and
underlying leases, mortgages and deeds of trust (collectively "Encumbrances")
which may now affect the Premises, to any covenants, conditions or
restrictions of record, and to all renewals, modifications, consolidations,
replacements and extensions thereof; provided, however, if the holder or
holders of any such Encumbrance ("Holder") require that this Lease be prior
and superior thereto, within seven (7) days after written request of Landlord
to Tenant, Tenant shall execute, have acknowledged and deliver all documents
or instruments, in the form presented to Tenant, which Landlord or Holder
deems necessary or desirable for such purposes. Landlord shall have the right
to cause this Lease to be and become and remain subject and subordinate to
any and all Encumbrances which are now or may hereafter be executed covering
the Premises or any renewals, modifications, consolidations, replacements or
extensions thereof, for the full amount of all advances made or to be made
thereunder and without regard to the time or character of such advances,
together with interest thereon and subject to all the terms and provisions
thereof; provided only, that in the event of termination of any such lease or
upon the foreclosure of any such mortgage or deed of trust, Holder agrees to
recognize Tenant's rights under this Lease as long as Tenant is not then in
default and continues to pay Base Monthly Rent and additional rent and
observes and performs all required provisions of this Lease. Within ten (10)
days after Landlord's written request, Tenant shall execute any documents
reasonably required by Landlord or the Holder to make this Lease subordinate
to any lien of the Encumbrance. If Tenant fails to do so, then in addition to
such failure constituting a default by Tenant, it shall be deemed that this
Lease is so subordinated to such Encumbrance. Notwithstanding anything to the
contrary in this Section, Tenant hereby attorns and agrees to attorn to any
entity purchasing or otherwise acquiring the Premises at any sale or other
proceeding or pursuant to the exercise of any other rights, powers or
remedies under such encumbrance, provided only that such entity agrees to
recognize this Lease. As of the Effective Date, there is no lender on the
Premises.
U. SURVIVAL OF INDEMNITIES: All indemnification, defense, and hold
harmless obligations of Landlord and Tenant under this Lease
Page 19
shall survive the expiration or sooner termination of the Lease.
V. TIME: Time is of the essence hereunder.
W. WAIVER OF RIGHT TO JURY TRIAL: Landlord and Tenant waive their
respective rights to trial by jury of any contract or tort claim,
counterclaim, cross-complaint, or cause of action in any action, proceeding,
or hearing brought by either party against the other on any matter arising
out of or in any way connected with this Lease, the relationship of Landlord
and Tenant, or Tenant's use or occupancy of the Premises, including any claim
of injury or damage or the enforcement of any remedy under any current or
future law, statute, regulation, code, or ordinance.
Page 20
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease on the day
and year first above written.
LANDLORD: Ardenwood Corporate Park Associates, TENANT: Abgenix, Inc.
a California Limited Partnership a Delaware Corporation
By: John Michael Sobrato * By: /s/ Kurt Leutzinger
------------------------------- ------------------------
Its: General Partner Its: Vice President and Chief
------------------------------ Financial Officer
------------------------
* By: /s/ R. Scott Greer
------------------------
Its: President and Chief
Executive Officer
------------------------
* NOTE: THIS LEASE MUST BE SIGNED BY TWO (2) OFFICERS OF SUCH CORPORATION:
ONE BEING THE CHAIRMAN OF THE BOARD, THE PRESIDENT, OR A VICE PRESIDENT, AND
THE OTHER BEING THE SECRETARY, AN ASSISTANT SECRETARY, THE CHIEF FINANCIAL
OFFICER OR AN ASSISTANT TREASURER. IF ONE (1) INDIVIDUAL IS SIGNING IN TWO
(2) OF THE FOREGOING CAPACITIES, THAT INDIVIDUAL MUST SIGN TWICE; ONCE AS ONE
OFFICER AND AGAIN AS THE OTHER OFFICER AND IN SUCH EVENT, TENANT MUST DELIVER
TO LANDLORD A CERTIFIED COPY OF A CORPORATE RESOLUTION AUTHORIZING THE
SIGNATORY TO EXECUTE THIS LEASE.
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EXHIBIT "A" - PREMISES & BUILDING
Page 22
EXHIBIT "B" - DRAFT LETTER OF CREDIT
Page 23
EXHIBIT "C" - SHELL PLANS AND SPECIFICATIONS
(REFERENCE ATTACHED PLANS PREPARED BY ARCTEC DATED 4/15/98)
Page 24
EXHIBIT "D" - TENANT IMPROVEMENT PLANS AND SPECIFICATIONS
(SHEET REFERENCES TO BE ATTACHED)
Page 25
EXHIBIT "E" - HAZARDOUS MATERIALS LIST
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