EXHIBIT 10.13
SFO OFFICE COMPLEX
OFFICE LEASE
SFO OFFICE ASSOCIATES LLC,
A CALIFORNIA LIMITED LIABILITY COMPANY
"LANDLORD"
AND
MEGABIOS CORP.,
A CALIFORNIA CORPORATION
"TENANT"
DATED: MARCH 18, 1997
SFO OFFICE COMPLEX
BASIC LEASE INFORMATION
(Notwithstanding this Basic Lease Information, the express terms of the Lease
shall be controlling over this Basic Lease Information.)
Lease Section
Introductory Section: Date: March 18, 1997
Landlord: SFO OFFICE ASSOCIATES LLC,
a California limited liability company
Tenant: MEGABIOS CORP.,
a California corporation
1. Premises: All of Building E, comprising
approximately 10,646 rentable square feet
(initial estimate)
Building: 866 Malcolm Road, Building E,
Burlingame, California 94010
Complex: 819-863 Mitten Road, 866 Malcolm Road,
Burlingame, California 94010, which shall
be deemed to consist of 152,297 rentable
square feet
2. Purpose: laboratory, offices and small-scale
manufacturing
3. Projected Commencement Date: September 29, 1997
Term: l0 years
4. Option Term: One (1) five (5) year option
5. Projected Delivery Date: August 1, 1997
Interim Rent: During Early Occupancy Period the
Interim Rent is equal to $.60 per
rentable square foot per month
Base Rent: From and after the Commencement Date
MONTHS RATE/r.s.f./MONTH
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1-18 $1.48
19-36 $1.57
37-60 $1.665
61-84 $1.801
85-108 $1.948
109-120 $2.026
6. Tenants Share: 6.990%
Taxes and Operating Expenses Base Year: 1997
8. Security Deposit: $22,118
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43. Tenant's Address for Notices:
MEGABIOS CORP.
863A Mitten Road
Burlingame, CA 94010
Attn: Mr. Patrick Enright
Telephone: 415-697-1900
Facsimile: 415-652-1990
Copy to:
HELLER, EHRMAN, WHITE & McAULIFFE
333 Bush Street, 30th Floor
San Francisco, CA 94104
Ann: K. William Neuman, Esq.
Telephone: 415-772-6064
Facsimile: 415-772-6268
Landlord's Address for Notices:
SFO OFFICE ASSOCIATES LLC
2269 Chestnut Street, #336
San Francisco, CA 94123
Attn: Mr. Michael Halper
Telephone: 415-652-9650
Facsimile: 415-652-6951
49. Broker: William R. Beckman
The sections of the Lease identified above in the margin are those sections
where references to particular Basic Lease information appear. Each such
reference shall incorporate the applicable Basic Lease Information.
/s/ P.E.
Initials: ________ Initials: ________
LANDLORD TENANT
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TABLE OF CONTENTS
Page
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1. PREMISES.................................................... 1
2. PURPOSE..................................................... 1
3. TERM........................................................ 1
4. POSSESSION.................................................. 2
5. RENT........................................................ 3
6. TAXES....................................................... 4
7. OPERATING EXPENSES.......................................... 6
8. SECURITY DEPOSIT............................................ 9
9. USES PROHIBITED............................................. 9
10. COMPLIANCE WITH LAWS........................................10
11. USE OF HAZARDOUS MATERIALS..................................10
12. ALTERATIONS AND IMPROVEMENTS................................13
13. EQUIPMENT AREA, CORRIDOR AND ROOF PLATFORMS.................14
14. MAINTENANCE AND REPAIRS.....................................17
15. ABANDONMENT.................................................19
16. LIENS.......................................................19
17. ASSIGNMENT AND SUBLETTING...................................19
18. INDEMNIFICATION.............................................21
19. INSURANCE...................................................22
20. MUTUAL WAIVER OF SUBROGATION RIGHTS.........................23
21. UTILITIES...................................................24
22. PERSONAL PROPERTY AND OTHER TAXES...........................24
23. RULES AND REGULATIONS.......................................24
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24. HOLDING OVER................................................25
25. SUBORDINATION...............................................25
26. ENTRY BY LANDLORD...........................................26
27. INSOLVENCY OR BANKRUPTCY....................................27
28. DEFAULT.....................................................27
29. DAMAGE OR DESTRUCTION.......................................28
30. EMINENT DOMAIN..............................................30
31. CLAUSES, PLATS AND RIDERS...................................30
32. BOMA MEASUREMENTS...........................................30
33. EXISTING TENANTS............................................31
34. SALE BY LANDLORD............................................33
35. LIMITATION OF LIABILITY.....................................33
36. ESTOPPEL CERTIFICATES.......................................34
37. RIGHT OF LANDLORD TO PERFORM................................34
38. LANDLORD'S DEFAULT AND TENANT'S REMEDIES....................34
39. MORTGAGEE PROTECTIONS.......................................35
40. ATTORNEY FEES...............................................35
41. SURRENDER OF POSSESSION.....................................35
42. WAIVER......................................................36
43. NOTICES.....................................................36
44. DEFINED TERMS AND MARGINAL HEADINGS.........................36
45. TIME AND APPLICABLE LAW.....................................36
46. SUCCESSORS..................................................36
47. ENTIRE AGREEMENT............................................37
48. LATE CHARGE; INTEREST.......................................37
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49. BROKERS.....................................................37
50. NO DISCRIMINATION...........................................38
51. PARKING AND COMMON AREAS....................................38
52. SIGNAGE.....................................................38
53. TELEPHONE SERVICE...........................................39
54. HAZARDOUS SUBSTANCE DISCLOSURE..............................40
55. AUTHORITY...................................................40
56. EXECUTION OF LEASE..........................................41
57. COUNTERPARTS................................................41
58. RECORDING...................................................41
59. SEVERABILITY................................................41
60. COVENANTS AND CONDITIONS....................................41
61. QUIET ENJOYMENT.............................................41
62. CUMULATIVE REMEDIES.........................................41
63. REASONABLE APPROVAL STANDARD................................41
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EXHIBIT A - Legal Description
EXHIBIT A-1 - Equipment Area
EXHIBIT B - Site Plan of Complex
EXHIBIT C - Description of Small-Scale Manufacturing Uses
EXHIBIT D-l - Lease Commencement Date Memorandum
EXHIBIT D-2 - Premises Acceptance Date Memorandum
EXHIBIT E - Work Letter Agreement
EXHIBIT F - Rules and Regulations of the Building
EXHIBIT F-1 - Amendment to Rules and Regulations of the Building
EXHIBIT G - Non-Disturbance Agreement
EXHIBIT H - Environmental Reports
SCHEDULE 1 - Renewal Options
SCHEDULE 1-A - Form of Option Exercise Notice
SCHEDULE 2 - Limitations on Operating Expenses
SCHEDULE 2-A - Expense Distribution
SCHEDULE 3 - Leasehold Mortgage Provisions
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OFFICE LEASE
This Lease, made this 18th day of March, 1997, is by and between SFO OFFICE
ASSOCIATES LLC, a California limited liability company ("Landlord"), and
MEGABIOS CORP., a California corporation ("Tenant").
WITNESSETH:
1. Premises
Landlord hereby leases to Tenant, and Tenant hereby hires from Landlord,
certain premises ("Premises") consisting of the entire rentable area within that
certain building known as Building E (the "Building") and by the street address
of 866 Malcolm Road, Burlingame, California. The Building is part of an office
complex (the "Complex") owned by Landlord and located on certain land situated
in the City of Burlingame, County of San Mateo, California, which land is more
particularly described in Exhibit A attached hereto. The Building and the
Complex are generally depicted in the site plan attached hereto as Exhibit B
(the "Site Plan"). Tenant also leases from Landlord, pursuant to that certain
Lease dated December 21, 1993 as amended ("863 Mitten Lease"), certain space in
Buildings A and C of the Complex ("Current Space") as depicted on Exhibit B.
Said letting and hiring under this Lease is upon and subject to the terms,
covenants, and conditions herein set forth, and Tenant covenants as a material
part of the consideration for this Lease to keep and perform each and all of
said terms, covenants and conditions by it to be kept and performed. Tenant and
Landlord agree that the rentable area of the Premises set forth in the Basic
Lease Information above are the best estimates as of the date of this Lease. The
rentable area shall be recalculated as provided in Section 32 below.
2. Purpose
The Premises shall be used for a laboratory, offices, and small-scale
manufacturing facilities as more particularly described on Exhibit C hereto, and
for no other use or purpose without the prior written consent of Landlord, which
consent may be granted or denied in Landlord's sole discretion.
3. Term
(a) The initial term of this Lease shall commence on the date
("Commencement Date") which is sixty (60) days after the date the last Existing
Tenant (as defined in Section 33 below) in the Premises vacates its unit and
Landlord tenders the Premises vacant to Tenant. Unless earlier terminated in
accordance with the terms of this Lease, the Lease term shall extend for the
period specified in the Basic Lease Information. Notwithstanding the foregoing,
if the Commencement Date occurs on the first day of a calendar month, then the
initial Term shall be ten (10) years, but if the Commencement Date occurs on any
day other than the first day of a calendar month, then the initial Term shall be
the period from the Commencement Date to the first day of the first full
calendar month thereafter, plus the following one hundred twenty (120) full
calendar months ("Term"). The date upon which this Lease is to expire is
referred to as the "Expiration Date."
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(b) The term of this Lease for the Equipment Area (as defined in Section 13
below) shall commence on the Commencement Date, and unless earlier terminated in
accordance with the terms of this Lease, shall continue until the earlier to
occur of the following: (i) the expiration or termination date for the 863
Mitten Lease, or (ii) the Expiration Date, as the same may be extended
hereunder.
(c) Upon determination of the actual Commencement Date, the parties shall
sign a commencement date memorandum in the form attached hereto as EXHIBIT D-1,
which shall become a part of this Lease. Tenant's failure to execute the
commencement date memorandum shall not affect the actual Commencement Date or
the Expiration Date of this Lease.
(d) Tenant shall have the right to extend the term of this Lease for the
period set forth in the Basic Lease Information and on the terms and conditions
set forth on Schedule 1 attached hereto.
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4. Possession
(a) Commencing on the date this Lease is executed by Landlord and Tenant,
Landlord shall deliver vacant possession of the Premises to Tenant in increments
as they become free of Existing Tenants pursuant to Section 33 below. Landlord
shall exercise commercially reasonable efforts to deliver possession of the
entire Premises free of Existing Tenants (as defined in Section 33 below) on or
before August 1, 1997 (the "Projected Delivery Date"). If Landlord, despite the
exercise of commercially reasonable efforts, cannot deliver possession of the
entire Premises to Tenant on or prior to the Projected Delivery Date, (i)
Landlord shall remain obligated to exercise commercially reasonable efforts to
deliver possession of the entire Premises to Tenant as soon as possible
thereafter and (ii) this Lease shall not be void or voidable, nor shall Landlord
be liable to Tenant for any loss or damage resulting therefrom; provided
however, that if Landlord does not deliver the entire Premises (other than the
Orkin Space as defined in Section 33 below) to Tenant on or before that date
which is one hundred twenty (120) days after the Projected Delivery Date (with
such one hundred twenty (120) -day period to be extended day by day for any
delay caused by the acts or omissions of Tenant or any of Tenant's agents,
employees, invitees, consultants or contractors), Tenant shall have the right no
later than ten (10) days thereafter to terminate this Lease by notifying
Landlord thereof at any time within that time period and before Landlord tenders
possession of the entire Premises (other than the Orkin Space) to Tenant free of
Existing Tenants. In the event of any such termination, Landlord shall promptly
reimburse Tenant for one-half of any Interim Rent or Relocation Costs (as
defined in Section 33 below) previously paid by Tenant to Landlord. As an
alternative to terminating this Lease, Tenant may instead elect no later than
ten (10) days thereafter to reduce the size of the Premises to be leased
hereunder by electing to proceed with leasing in accordance with the terms of
this Lease (reduced on a pro rata basis where appropriate in light of the
reduced square footage area of the Premises being leased) as to all of the
portions of the Premises as to which Landlord has then already delivered
possession to Tenant. In the event of any election by Tenant pursuant to the
preceding sentence to lease a reduced portion of the Premises, the Commencement
Date of the Lease shall be sixty (60) days after the date of Tenant's notice of
its election to so proceed.
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(b) Tenant confirms and agrees that it is leasing the Premises in their "as
is" state and condition, including patent and latent defects. Tenant also
confirms and agrees that other than as set forth herein Landlord shall have no
obligation whatsoever to make improvements or renovations in the Premises to
prepare the same for Tenant's occupancy. Landlord shall provide a Tenant
Improvement Allowance as provided in Section 12 of this Lease. By taking
possession of the Premises, Tenant shall be deemed to have accepted the Premises
in the condition in which Landlord was required to deliver them to Tenant.
(c) Before the Commencement Date, Tenant shall be entitled to enter the
vacant portions of the Premises which are tendered to Tenant by Landlord as
provided in Section 33 hereof for the purposes of using such portion for storage
purposes or to perform demolition in preparation for construction and
construction of the Tenant Improvements (as defined in Section 12 below) or for
any other work on the Premises which Tenant desires to perform and which is in
conformity with the provisions of this Lease, provided that Tenant may at any
time beginning sixty (60) days or more after the Projected Delivery Date begin
to use any portion of the Premises that has been tendered to Tenant for the
conducting of any of the business uses permitted under this Lease; provided,
however, if Tenant uses any portion of the Premises for conducting any of the
business uses permitted hereunder, Tenant shall be subject to all the terms and
provisions of this Lease, including payment of Base Rent and all additional rent
on a pro rata basis as to all portions of the Premises so used. As used herein
with respect to each portion of the Premises which is tendered to Tenant
pursuant to Section 33, the term "Early Occupancy Period" shall mean the period
commencing on the date such portion is tendered to Tenant and ending on the
Commencement Date of this Lease.
5. Rent
(a) During the Early Occupancy Period and continuing until the Commencement
Date, Tenant shall pay to Landlord for the Premises, or so much thereof as is
tendered to Tenant, Interim Rent of sixty cents (60 cents) per rentable square
foot per month.
(b) During the Term, Tenant shall pay to Landlord for the Premises, the
Base Rent set forth in the Basic Lease Information. The Base Rent for any
partial month shall be prorated at the rate of one-thirtieth (1/30th) of the
Base Rent per day. Simultaneously with the execution of this Lease, Tenant shall
pay to Landlord the Base Rent for the first full calendar month for which Base
Rent is payable .
(c) Interim Rent, Equipment Area Base Rent (as defined in Section 13 below)
and all charges and other amounts of any kind payable by Tenant to Landlord
pursuant to this Lease shall be deemed additional rent. Additional rent for any
partial month shall be prorated in the same manner as Base Rent. Landlord shall
have the same remedies for default in the payment of additional rent as for
default in the payment of Base Rent. Base Rent and additional rent are
collectively sometimes hereinafter referred to as rent. The Base Rent shall be
subject to adjustment in the months and in the amounts shown in the Basic Lease
Information.
(d) All rent shall be paid by Tenant to Landlord monthly, in advance, on or
before the first day of each calendar month without prior demand, deduction or
offset, in lawful money of
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the United States of America at SFO OFFICE ASSOCIATES LLC, 849 MITTEN ROAD,
SUITE 1, BURLINGAME, CA 94010 or to such other person or at such other place as
Landlord may from time to time designate in writing. Payments made by check must
be drawn either on a California financial institution or on a financial
institution that is a member of the federal reserve system.
(e) The parties agree that the rentable area of the Premises, the rent and
all other sums calculated based upon the rentable area under this Lease shall be
recalculated as provided in Section 32 below prior to the Projected Delivery
Date.
6. TAXES
(a) Tenant shall pay to Landlord an amount equal to Tenant's Share (as set
forth in the Basic Lease Information) of any increase in Taxes (applicable to
the term of this Lease occurring after the Base Year) above the amount of Taxes
levied and assessed for the fiscal tax year specified in the Basic Lease
Information. The total amounts due hereunder (as respects the applicable Tax)
shall be paid to Landlord on or before the date full payment of the applicable
Tax would be delinquent or, if payable in installments, the date payment of the
respective installment of such Tax would be delinquent. Notwithstanding anything
in the foregoing to the contrary, at Landlord's sole election, at any time or
times Landlord may in good faith estimate in advance the amount of Taxes for any
next ensuing twelve (12)-month period and, upon Landlord's written notice,
Tenant shall pay to Landlord on the first day of each calendar month of such
twelve (12)-month period, with Base Rent as provided for in Section 5 hereof,
one-twelfth (1/12th) of Tenant's Share of such estimated Taxes. If during any
such twelve (12)-month period Landlord shall in good faith revise its estimate
of Tenant's share of said taxes for such twelve (12)-month period, Landlord
shall advise Tenant and commencing on the date the next Base Rent payment is due
which date is more than ten (10) business days after Tenant's receipt of such
revised estimate, Tenant shall pay all additional Taxes on such revised estimate
for the portion of the twelve (12)-month period already elapsed and shall
commence paying the additional Taxes based on such revised estimate for the
remainder of such twelve (12) -month period. Within ninety (90) days following
the conclusion of such twelve (12)-month period, Landlord shall deliver to
Tenant a reasonably detailed statement of Tenant's Share of the actual Taxes for
such period accompanied by a reasonably detailed listing of the Taxes for the
Base Year, and the year which immediately preceded the year to which such
increase applies (if other than the Base Year). If the amounts theretofore paid
by Tenant on account of Landlord's estimate shall exceed the amount of Tenant's
Share of such actual Taxes, Landlord shall pay to Tenant the amount of such
excess within fifteen (15) days after date of delivery of such statement to
Tenant. If the amounts theretofore paid by Tenant on account of Landlord's
estimate shall be less than the amount of Tenant's Share of such actual Taxes,
Tenant shall pay to Landlord the amount of such deficiency within fifteen (15)
days after date of delivery of such statement to Tenant. Landlord, at its
election, may estimate Taxes on a calendar year basis, in which event Tenant
shall pay one-twelfth (1/12th) of such estimated Taxes as hereinbefore provided
and, if this Lease shall commence on a day other than the first day of a
calendar year and/or shall end on a day other than the last day of a calendar
year, Tenant's Share of such Taxes, as applicable to such first and last
calendar years of the term hereof, shall be computed on a pro rata basis.
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(b) For the purposes of this Section 6, "Taxes" shall mean all real and
personal property taxes, assessments, and reassessments, special or otherwise,
foreseen or unforeseen, levied or assessed upon the Complex, including, without
limitation, any increases in taxes resulting from any change in ownership of the
Complex or any portion thereof, and any taxes levied and assessed in lieu of or
in substitution for existing or additional real or personal property taxes as
well as any form of assessment, license, fee, levy, penalty, or tax (other than
inheritance or estate taxes), imposed by any authority having the direct or
indirect power to tax, including any city, county, state, or federal government,
or any school, agricultural, lighting, drainage, or other improvement district,
as against any legal or equitable interest of Landlord in the Premises or in the
real property of which the Premises are a part, or as against Landlord's right
to rent or other income therefrom, or as against Landlord's business of leasing
the Premises. In addition, Tenant shall pay one hundred percent (100%) of any
increase in taxes or assessments of whatsoever kind and nature (including,
without limitation, all personal property taxes) caused by improvements
(including, without limitation, the Tenant Improvements) or installations made
by Tenant to the Premises at any time during the term hereof. If Landlord has
the right to elect to pay any Taxes in installments, it shall be obligated to
make such an election, and only the amount of each such installment payable
during such twelve (12) -month period shall be deemed to be Taxes applicable to
such twelve-month period. Taxes shall not be deemed to include (i) any federal,
state or local income tax, (ii) any taxes computed or otherwise based upon the
net income of Landlord from the Complex (as opposed to rents, receipts or income
attributable to operations at the Complex), (iii) any taxes computed or
otherwise based upon the gross income of Landlord from sources other than the
rental income from the Complex, (iv) any taxes applicable to Landlord because of
any foreign ownership, and (v) any taxes attributable to any personal property
or tenant improvements owned by or installed for any other tenants or occupants
of the Complex. If at any time (including after the expiration of the term of
this Lease) Landlord receives a refund of any Taxes from the taxing authority as
a result of an appeal or otherwise, Landlord shall promptly pay to Tenant
Tenant's Share (or such other portion) of the net refunded amount (deducting
from the gross amount of the refund the cost borne by Landlord in pursuing any
appeal if such expense was not already included as a part of Taxes or Operating
Expenses) as appropriately equates to the amount which Tenant earlier paid
hereunder as any increase in Taxes.
(c) For purposes of this Section 6, "Tenant's Share" shall be in the same
proportion that the rentable square footage of the Premises bears from time to
time to the aggregate rentable square footage of all buildings then situated in
the Complex. At the inception of this Lease, Tenant's Share for purposes of this
Section 6 shall be that percentage specified as Tenant's Share in the Basic
Lease Information (which may be adjusted from time to time by Landlord, upon
written notice to Tenant accompanied with appropriate documentation of the same,
in event of changes in the aggregate rentable building square footage in the
Complex). Tenant, at its expense, shall have the right from time to time to
recalculate Tenant's Share in view of any apparent changes in the aggregate
rentable building square footage in the Complex, subject to Landlord's approval
of such recalculation of Tenant's Share.
(d) For any period (including the Base Year) during which at least ninety-
five percent (95%) of the rentable square footage comprising the Complex is not
leased, Taxes shall be
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adjusted to equal Landlord's reasonable estimate of what Taxes would be had
ninety-five percent (95%) of the total rentable area of the Complex been
occupied during such period.
7. Operating Expenses
(a) Tenant shall pay to Landlord, at the times hereinafter set forth, an
amount equal to Tenant's Share of any increase in Operating Expenses for the
Complex (applicable to the term of this Lease occurring after the Base Year)
above the Operating Expenses for the Complex for the Base Year specified in the
Basic Lease Information. Statements of the amount of Operating Expenses for the
preceding calendar year and the amount of such increase payable by Tenant shall
be determined by Landlord and shall be payable by Tenant fifteen (15) days after
demand by Landlord accompanied by a reasonably detailed listing of the Operating
Expenses by category for the Base Year, the preceding year to which such
increase applies and the year which immediately preceded the year to which such
increase applies (if other than the Base Year).
(b) Notwithstanding the foregoing, at Landlord's sole election, at any time
or times Landlord may in good faith estimate in advance Landlord's Operating
Expenses for any next ensuing 12-month period and, upon Landlord's written
notice, Tenant shall pay to Landlord on the first day of each calendar month of
such 12-month period, with Base Rent as provided for in sections hereof, one-
twelfth (1/12th) of Tenant's Share of such estimated Operating Expenses. If
during any such twelve (12)-month period Landlord shall in good faith revise its
estimate of Tenant's Share of said expenses for such twelve (12)-month period,
Landlord shall advise Tenant and commencing on the date the next Base Rent
payment is due which date is more than ten (10) business days after Tenant's
receipt of such revised estimate, Tenant shall pay all additional Operating
Expenses on such revised estimate for the portion of the twelve (12)-month
period already elapsed and shall commence paying the additional Operating
Expenses based on such revised estimate for the remainder of such twelve (12)-
month period. Within ninety (90) days following the conclusion of such twelve
(12)-month period, Landlord shall deliver to Tenant an itemized statement in
reasonable detail of Tenant's Share of Landlord's actual Operating Expenses for
such period accompanied by a reasonably detailed statement of the Operating
Expenses for the Base Year and the year which immediately preceded the year to
which such increase applies (if other than the Base Year). If the amounts
theretofore paid by Tenant on account of Landlord's estimate shall exceed the
amount of Tenant's Share of such actual costs, Landlord shall pay to Tenant the
amount of such excess within fifteen (15) days after date of delivery of such
statement to Tenant. If the amounts theretofore paid by Tenant on account of
Landlord's estimate shall be less than the amount of Tenant's Share of such
actual costs, Tenant shall pay to Landlord the amount of such deficiency within
fifteen (15) days after date of delivery of such statement to Tenant. Landlord,
at its election, may estimate Operating Expenses on a calendar year basis, in
which event if this Lease shall commence on a day other than the first day of a
calendar year and/or shall end on a day other than the last day of a calendar
year, Tenant's Share of such estimated costs, as applicable to such first and
last calendar years of the term hereof, shall be computed on a pro rata basis.
(c) For purposes of this Section 7, "Tenants Share" shall be in the same
proportion that the rentable square footage of the Premises bears from time to
time to the aggregate rentable
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square footage of all buildings then situated in the Complex. At the inception
of this Lease Tenant's Share for purposes of this Section 7 shall be that
percentage specified as Tenant's Share in the Basic Lease Information (which may
be adjusted from time to time by Landlord, upon written notice to Tenant
accompanied with appropriate documentation of the same, in event of changes in
the aggregate rentable building square footage in the Complex). Tenant shall
have the right from time to time, at Tenant's sole cost and expense, to
recalculate Tenant's Share (which shall be confirmed by Landlord) in view of any
apparent changes in the aggregate rentable building square footage in the
Complex, subject to Landlord's approval of such recalculation of Tenant's Share.
(d) As used in this Section 7, "Operating Expenses" shall mean any and all
sums expended by Landlord directly or indirectly for the maintenance,
management, and operation of the Complex, such as the following: wages,
salaries, employee benefits, and payroll burden of personnel engaged in
management, operation and maintenance of the Complex (but if any such personnel
perform any other functions such as management or leasing of any other
properties or any investment entities, then such expenses shall be included as
Operating Expenses only to the extent reasonably allocable to the management,
operation and maintenance of the Complex), including, without limitation, those
categories of costs of operation and maintenance as reflected on Schedule 2-A
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which indicate they are to be "Reimbursed to Landlord by Tenant," subject to the
other limitations set forth in this Lease; Complex management office rent or
rental value (similarly limited to the proportion reasonably allocable to the
management, operation and maintenance of the Complex); costs of power, heat,
light, steam, air conditioning, gas, water, garbage, sewage and waste disposal
and other utilities to the extent used for the common areas of the Complex or
supplied without separate metering or charge to Tenant as well as other tenants
of the Complex; costs of equipment, tools, materials and supplies; insurance
premiums for insurance of the nature and general amount carried by Landlord
throughout the Base Year (including premiums for earthquake and flood insurance)
and deductibles incurred by Landlord in repairing the Complex (excluding any
tenant improvements of any other tenants) in the event of an otherwise insured
loss (but in no event shall any such deductible exceed $10,000 per occurrence);
any annual operating licenses or permits for the Complex generally, amounts paid
under maintenance contracts and for general services for the benefit of the
Complex as a whole; depreciation on, or rental of, personal property used in the
maintenance of the Complex; the costs of resurfacing, repainting, re-striping,
cleaning, sweeping and repairing the parking lot areas; costs of repairing or
replacement of debris receptacles; landscaping costs including maintenance,
watering and the replacement of plants; cost of directional signs, other
markers, and car stops; costs of keeping the exterior walls, foundations, down
spouts, roofs, plumbing, sewage systems, electrical, and heating and air
conditioning systems of the buildings in the Complex in good order, condition
and repair; any and all parking charges, surcharges or any other costs levied by
any governmental authority on the Complex, or the rents generated therefrom, or
the utilities consumed therein or similar matters; reasonable management fees
(not to exceed the amount that would be charged by an independent management
company providing substantially the same services as Landlord); and the cost
(hereinafter "capital cost") of any capital improvements made to the Complex by
Landlord that (i) reduce Operating Expenses or that reduce or conserve the
amount of utilities consumed (but with any annual charge not to exceed the
annual estimated savings from such capital improvement), or (ii) are required
under any legal requirements that
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were not applicable to the Complex at the time this Lease was entered into, with
each of the foregoing capital costs to be amortized over such reasonable period
as Landlord shall determine together with interest on the unamortized balance at
the rate of ten percent (10%) per year or such higher rate as may have been paid
by Landlord on funds borrowed for the purpose of constructing such capital
improvements. Operating Expenses shall not include depreciation on the Complex,
real estate broker's commissions, tenant improvements, interest and capital
items other than those referred to above. Notwithstanding the foregoing,
Operating Expenses also shall not include (a) the costs for the following
services to the Premises or to other portions of the Complex (other than common
areas): costs of power, heat, light, steam, air conditioning, sewer and water,
gas and other utilities, or janitorial or other maintenance expenses which
Tenant shall pay for directly pursuant to Section 21 below; and (b) any expenses
of the nature listed on Schedule 2 hereto. If at any time (including after the
----------
expiration of the term of this Lease) Landlord receives a refund or
reimbursement of any Operating Expenses as a result of any insurance payment,
any recovery from any tenant or otherwise, Landlord shall promptly pay to Tenant
Tenant's Share (or such other portion) of the net refunded or reimbursed amount
(deducting from the gross amount of the refund or reimbursement the cost
reasonably borne by Landlord in pursuing the recovery of any such refund or
reimbursement if such expense was not already included as a part of Taxes or
Operating Expenses) as appropriately equates to the amount which Tenant earlier
paid hereunder as any increase in Operating Expenses.
(e) For any period (including the Base Year) during which at least ninety-
five percent (95%) of the rentable square footage comprising the Complex is not
leased, Operating Expenses shall be adjusted to equal Landlord's reasonable
estimate of what Operating Expenses would be had ninety-five percent (95%) of
the total rentable area of the Complex been occupied during such period.
(f) This shall be a modified full service lease and Base Rent shall be paid
to Landlord absolutely net of all increases in Operating Expenses and Taxes in
excess of the Base Year, except as specifically provided to the contrary in this
Lease.
(g) If in Landlord's reasonable determination Tenant's demand for or use of
the common area facilities and services for the Complex is or becomes excessive
or sufficiently frequent as to warrant the same, Landlord may separately charge
Tenant for Landlord's additional maintenance or service costs related thereto,
which additional charges shall be due and payable within ten (10) days after
demand therefor.
(h) At Tenant's sole cost and expense, Tenant shall have the right, not
later than one hundred twenty (120) days following the receipt of a statement as
provided in Section 7(a), and upon the condition that Tenant shall have paid in
full Tenant's Share, at Landlord's office where books and records for the
Complex are maintained, and upon reasonable notice to Landlord, to review or
audit any Operating Expenses, Taxes or other additional rent charges. Any audit
of such books and records must be performed by a certified public accountant
selected by Tenant. Landlord shall fully cooperate with Tenant or Tenant's
certified public accountant with respect to the same and shall maintain
reasonably detailed records of such expenses for at least two (2) years after
the submission of its year-end statement of Operating Expenses for such
calendar year
Page 8
to Tenant. If Tenant's review or audit shall demonstrate any overpayment or
underpayment by Tenant, either Landlord shall, within ten (10) business days
after receiving reasonably detailed documentation of the same, credit such
amount so overpaid against the next installment(s) of additional rent falling
due hereunder, or Tenant shall pay to Landlord, within that 10-business day
period, the amount of such underpayment. Tenant's audit rights and the
obligation of Landlord and Tenant to correct any overpayment or underpayment
shall survive the termination of this Lease. If Tenant shall not request an
audit within one hundred twenty (120) days after receipt of Landlord's
statement, such statement shall be final and binding for all purposes hereof.
8. Security Deposit
(a) Simultaneously with the execution of this Lease, Tenant shall deposit
with Landlord the sum specified as the Security Deposit in the Basic Lease
Information (said sum, as may be augmented as hereinafter provided, is referred
to herein as the "Security Deposit"). The Security Deposit shall be held by
Landlord as security for the faithful performance by Tenant of all the terms,
covenants and conditions of this Lease. No interest shall be payable on the
Security Deposit, and Landlord shall not be required to keep said sum in a
separate account. If Tenant fails to pay any rent or other charges due
hereunder, or otherwise defaults with respect to any provision of this Lease,
Landlord may at its option apply or retain all or any portion of the Security
Deposit for the payment of any rent or other charge in default or the payment of
any other sum to which Landlord may become obligated by Tenant's default, or to
compensate Landlord for any loss or damage which Landlord may suffer thereby. If
Landlord so uses or applies all or any portion of the Security Deposit, then
within ten (10) days after demand therefor, Tenant shall deposit cash with
Landlord in an amount sufficient to restore the Security Deposit to the full
amount thereof; and Tenant's failure to do so shall be a material breach of this
Lease. Landlord's application or retention of the Security Deposit shall not
constitute a waiver of Tenant's default to the extent that the Security Deposit
does not fully compensate Landlord for all losses or damages incurred by
Landlord in connection with such default and shall not prejudice any other
rights or remedies available to Landlord under this Lease or by law. At the end
of the Term, Tenant shall deliver the Premises to Landlord, broom clean, and in
the same condition as at the Commencement Date, reasonable wear and tear and
damage Tenant is not obligated to repair under this Lease excepted. The Security
Deposit, or portion thereof then held by Landlord after all applications on
account of Tenant's defaults, shall be returned to Tenant.
(b) No security or guaranty which may now or hereafter be furnished
Landlord for the payment of the rent herein reserved or for performance by
Tenant of the other covenants or conditions of this Lease shall in any way be a
bar or defense to any action in unlawful detainer, or for the recovery of the
Premises, or to any action which Landlord may at any time commence for a breach
of any of the covenants or conditions of this Lease.
9. Uses Prohibited
Except for such uses as are permitted to be made of the Premises under the
terms of this Lease, Tenant shall not do or permit anything to be done in or
about the Premises nor bring or keep anything therein which will in any way
increase the rate of or affect any fire or other
Page 9
insurance upon the Premises or Complex or any of its contents or cause a
cancellation of any insurance policy covering said Premises or Complex or its
contents. Tenant shall not do or permit anything to be done in or about the
Premises which will in any way obstruct or materially interfere with the rights
of other tenants or occupants of the Premises or Complex or injure or
unreasonably annoy them, or use or allow the Premises to be used for any
residential, immoral, unlawful or objectionable purpose, nor shall Tenant cause,
maintain or permit any nuisance in, on or about the Premises. Tenant shall not
commit or suffer to be committed any waste in or upon the Premises.
10. COMPLIANCE WITH LAWS
Tenant shall not use or permit anything to be done in or about the Premises
which will in any way conflict with any law, statute, ordinance or governmental
rule, regulation or requirement now in force or which may hereafter be enacted
or promulgated. Tenant, at its sole cost and expense, shall promptly comply with
all laws, statutes, ordinances and governmental rules, regulations or
requirements now in force, including without limitation, the Americans With
Disabilities Act ("ADA"), or which may hereafter be in force and with the
requirements of any board of fire underwriters or other similar body now or
hereafter constituted relating to or affecting the condition, use or occupancy
of the Premises by Tenant for its permitted uses, excluding structural changes
not related to or affected by Tenant's improvements or acts. The judgment of any
court of competent jurisdiction, or the admission of Tenant in any action or
proceeding against Tenant, whether Landlord is a party thereto or not, that
Tenant has violated any law, statute, ordinance or governmental rule, regulation
or requirement, shall be conclusive of that fact as between Landlord and Tenant.
11. USE OF HAZARDOUS MATERIALS
(a) Tenant shall keep and maintain the Premises in compliance with and
shall not cause or permit the Premises or the Complex to be in violation of any
Environmental Laws (as defined below), provided that Tenant hereby does not
assume any responsibility for any Hazardous Materials that may exist on or about
the Premises prior to the Commencement Date or may migrate from other property
onto the Premises after the Commencement Date unless introduced into the
Premises or such other property by Tenant or its employees, agents, contractors,
or invitees or Tenant's or its employees', agents', contractors', or invitees'
acts otherwise contribute to the existence of or migration of Hazardous
Materials. Tenant shall not use, generate, manufacture, produce, store, release,
discharge, or dispose of, on, under or about the Premises or the Complex or
transport to or from the Premises or the Complex any Hazardous Materials (as
defined below) or allow its employees, agents, contractors, or invitees to do
so, except that Tenant shall be permitted to transport to and from the Premises,
and to use, store, maintain and handle within the Premises reasonable and
customary quantities of ordinary office products, janitorial materials and
cleaning supplies such as inks, household cleansers, and the like. However, the
foregoing provisions shall not prohibit the transportation to and from, and the
use, storage, maintenance and handling within the Premises of substances
customarily used in connection with Tenant's permitted uses (as currently set
forth in Section 2 above or as otherwise approved by Landlord), including
biotechnical research and production, provided: (1) such
Page 10
substances shall be used and maintained only in such quantities as are
reasonably necessary for the permitted uses of the Premises, strictly in
accordance with Environmental Laws and the manufacturers' instructions therefor;
(2) such substances shall not be disposed of, released or discharged in the
Complex, and shall be transported to and from the Premises in compliance with
all applicable laws; (3) if any applicable law or Landlord's trash removal
contractor requires that any such substances be disposed of separately from
ordinary trash, Tenant shall make arrangements at Tenant's expense for such
disposal directly with a qualified and licensed disposal company (with insurance
listing Landlord as an additional insured) at a lawful disposal site and shall
ensure that disposal occurs frequently enough to prevent unnecessary storage of
such substances in the Premises; and (4) any Hazardous Materials introduced into
the Premises by Tenant or its employees, agents, contractors, or invitees shall
be properly and lawfully removed from the Complex upon expiration or earlier
termination of this Lease;
(b) Without limiting the generality of Section 26 of the Lease, Landlord
shall have the right to enter the Premises in order to inspect same and to
conduct any testing, monitoring or analysis reasonably required in connection
therewith (collectively, "Inspection"). If Tenant is violating the use
restrictions of this Lease or is not in material compliance with the
regulations, rules or procedures of the applicable governmental entity, then all
reasonable costs and expenses reasonably incurred by Landlord in connection with
any related Inspection shall become due and payable by Tenant as additional
rent, within ten (10) days of presentation by Landlord of an invoice therefor.
(c) Tenant, upon learning of the same, shall promptly notify Landlord of:
(1) any enforcement, cleanup or other regulatory action taken or threatened by
any governmental or regulatory authority with respect to the presence of any
Hazardous Materials on the Premises or the migration thereof from or to other
property; (2) any demands or claims made or threatened by any party against
Tenant or the Premises relating to any loss or injury resulting from any
Hazardous Materials; (3) any release, discharge or non-routine, improper or
unlawful disposal or transportation of any Hazardous Materials on or from the
Premises; and (4) any matters where Tenant is required by law to give a notice
to any governmental or regulatory authority respecting any Hazardous Materials
on the Premises. At such times as Landlord may reasonably request, Tenant shall
provide Landlord with a copy of Tenant's Hazardous Materials Management Plan and
a copy of any changes made to the plan as a result of any change in Tenant's
mode of operations or use of Hazardous Materials resulting in increased risk and
with a written list identifying any Hazardous Materials then used, stored, or
maintained upon the Premises other than common office supplies, the use and
approximate quantity of each such material, a copy of any material safety data
sheet ("MSDS") issued by the manufacturer thereof, written information
concerning the removal, transportation and disposal of the same, and such other
information as Landlord may reasonably require or as may be required by
applicable law.
(d) If any Hazardous Materials are released, discharged or disposed of by
Tenant or Tenant's employees, agents, contractors or invitees, on or about the
Complex in violation of the foregoing provisions, Tenant shall immediately,
properly and in compliance with all Environmental Laws clean up and remove the
Hazardous Materials from the Complex and any other affected property and clean
or replace any affected personal property (whether or not
Page 11
owned by Landlord), at Tenant's expense. Such clean-up and removal work shall be
subject to Landlord's prior written approval (except in emergencies), and shall
include, without limitation, any testing, investigation, and the preparation and
implementation of any remedial action plan required by any governmental body
having jurisdiction or reasonably required by Landlord. If Tenant shall fail to
comply with the provisions of this Section 11(d) within five (5) days after
written notice by Landlord, or such shorter time as may be required by
applicable Environmental Laws or in order to minimize any hazard to persons or
property, Landlord may (but shall not be obligated to) arrange for such
compliance directly or as Tenant's agent through contractors or other parties
selected by Landlord, at Tenant's expense (without limiting Landlord's other
remedies under this Lease or applicable law).
(e) Tenant shall protect, defend, indemnify and hold harmless Landlord, the
holder(s) of any mortgage or deed of trust encumbering the Complex, and their
respective partners, agents, employees, officers, directors, and shareholders,
from and against any and all liabilities, losses, damages, costs, and expenses
(including attorneys' and consultants' fees and costs) directly or indirectly
arising out of the presence, due to the acts or omissions of Tenant (or its
employees, agents, contractors or invitees) with respect to the Premises, of any
Hazardous Materials in, under or about the Premises or the Complex, whether
resulting from Tenant's activities with respect to the Premises prior to or
after the Commencement Date. This indemnity shall survive the expiration or
termination of this Lease. Landlord shall have the right to join and participate
in, as a party if it so elects, any legal proceedings or actions affecting the
Premises or the Complex initiated in connection with any Environmental Law
violated by Tenant and shall have its attorneys' and consultants' fees in
connection therewith paid by Tenant.
(f) "Hazardous Materials" means any substance, chemical, material or waste
which is now or hereafter defined or listed as "hazardous substances,"
"hazardous materials," "toxic substances," "petroleum," "pollutant," "asbestos,"
"asbestos materials" or "hazardous wastes" in any federal, state or local laws,
rules or regulations (whether now existing or hereafter enacted or promulgated)
including, without limitation, the Federal Water Pollution Control Act (33
U.S.C. Section 1251 et seq.), Hazardous Materials Transportation Act (49 U.S.C.
Section 180l et seq.), Resource Conservation and Recovery Act (42 U.S.C. Section
6901 et seq.), Safe Drinking Water Act (42 U.S.C. Section 3000(f) et seq.),
Toxic Substances Control Act (15 U.S.C. Section 2601 et seq.), Clean Air Act (42
U.S.C. Section 7401 et seq.), Comprehensive Environmental Response, Compensation
and Liability Act (42 U.S.C. Section 9601 et seq.), United States Department of
Transportation Hazardous Materials Table (49 C.F.R 172.101), California Health &
Safety Code (Section 25100 et seq., Section 25300 et seq., Section 3900 et seq.
), California Water Code (Section 1300 et seq.), California Labor Code (Section
6501.7 and Section 9004), California Civil Code (Section 2929.5), all as
heretofore and hereafter amended, or any judicial or administrative
interpretation of such laws, rules or regulations.
(g) "Environmental Laws" shall mean any federal, state or local law,
statute, ordinance, or regulation now or hereafter pertaining to health,
industrial hygiene, or the environmental conditions on, under or about the
Premises, or the Complex, including, without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA") as
amended, 42 U.S.C. Section 9601 et seq., and the Resource Conservation and
Recovery Act of 1976 ("RCRA"), 42 U.S.C. Sections 6901 et seq.
Page 12
12. ALTERATIONS AND IMPROVEMENTS
(a) Tenant, at its sole cost and expense, will make all alterations and
improvements to the Premises ("Tenant Improvements") as more particularly
described in the Work Letter ("Work Letter") attached hereto as EXHIBIT E on the
terms and conditions contained therein. Landlord shall provide Tenant with an
allowance ("Tenant Improvement Allowance") of Ten Dollars ($10.00) per rentable
square foot toward the costs of all Tenant Improvements in the Premises,
including but not limited to, costs for: (i) bringing the Premises into
compliance under the Americans with Disabilities Act of 1990, and (ii) abatement
or removal of asbestos or other Hazardous Materials, subject to reduction of the
Tenant Improvement Allowance as provided in the Work Letter.
(b) Except for the Tenant improvements and any other alterations, additions or
improvements expressly permitted by paragraph (c) below to be made by Tenant
without Landlord's prior consent, Tenant shall not make, or cause to be made,
any alterations, additions or improvements to the Premises or any part thereof
without the prior written consent of Landlord. Any alterations, additions, or
Tenant Improvements to the Premises, including without limitation any
permanently mounted partitions and all carpeting and HVAC units, shall upon the
expiration or earlier termination of the term of the Lease become a part of the
realty and belong to Landlord. Movable furniture, equipment and trade fixtures
(including, but not limited to, any roof mounted ventilation equipment other
than the HVAC units installed for office use and HVAC equipment installed by
Landlord) shall remain the property of Tenant. If Landlord consents to the
making of any alterations, additions or improvements to the Premises by Tenant,
the same shall be made by Tenant at Tenant's sole cost and expense, and any
contractor or person selected by Tenant to make the same must first be approved
of in writing by Landlord.
(c) Other than for the Tenant Improvements, Tenant shall pay Landlord, as
additional rent, the reasonable cost of professional services and costs (but in
no event more than Two Thousand Five Dollars ($2,500) for any particular
alteration) for any fees of third party consultants used by Landlord for review
of any plans, specifications and working drawings of any alterations. The
payment shall be made within ten (10) days after Tenant's receipt of invoices
either from Landlord or its consultants.
(d) Subject to the provisions of this Section 12, Tenant may, without
Landlord's prior consent, make alterations, additions or improvements to the
Premises ("Minor Alterations"), but not the Equipment Area or the Roof
Platforms, at Tenant's expense, including, without limitation, laboratory
benchwork, cabinetry and laboratory equipment so long as: (a) the cost thereof
in any instance is in good faith estimated to be less than $25,000; (b) such
alterations, additions or improvements do not affect the structural portions of
the Premises or the Building; and (c) Tenant delivers to Landlord notice of such
Minor Alterations and a copy of the final plans, specifications and working
drawings for the Minor Alterations prior to commencement of such Minor
Alterations.
(e) All alterations and Tenant Improvements made by or on behalf of Tenant or
any of Tenant's agents shall be made and performed (i) except for Minor
Alterations, in accordance with
Page 13
drawings and specifications approved in advance in writing by Landlord, (ii) at
Tenant's cost and expenses and at such time and in such manner as Landlord may
reasonably designate, (iii) except for Minor Alterations, by contractors or
mechanics reasonably approved by Landlord, (iv) in such manner as to be at least
equal in quality of materials and workmanship to the original work or
installation, (v) except for Minor Alterations, in accordance with such
reasonable requirements as Landlord may impose with respect to insurance and
bonds to be obtained by Tenant in connection with the proposed work (but if any
bonds are required, the amount thereof shall in no event exceed 125% of the
estimated cost of the proposed alteration, addition or improvement), (vi) in
accordance with this Lease and the Rules and Regulations adopted by Landlord
from time to time and in accordance with all applicable laws and regulations of
governmental authorities having jurisdiction over the Premises, (vii) so as not
to materially and unreasonably interfere with the use and enjoyment of the
Complex by Landlord, other tenants or any other person, and (viii) in compliance
with such other requirements as Landlord may reasonably impose (including
without limitation a requirement that Tenant shall furnish Landlord with
certified as-built drawings upon completion of the work).
(f) Tenant shall, at its own expense, demolish any and all improvements to the
Premises (including, without limitation, the Tenant Improvements, the Corridor,
Roof Platforms and Equipment Area) immediately following the termination or
expiration of the Lease, if Landlord so requests. Tenant shall notify Landlord
in writing no less than sixty (60) days prior to the Expiration Date, as the
same may be accelerated or extended, to request from Landlord notice of
Landlord's desire to have the Tenant Improvements or other improvements or any
portion thereof demolished. Landlord shall provide such notice within ten (10)
days after receipt of Tenant's notice. Tenant shall with all due diligence
remove any alterations, additions or improvements made by Tenant and properly
designated by Landlord to be removed, and Tenant, forthwith and with all due
diligence, at its sole cost and expense, shall repair any damage to the Premises
caused by such removal. Tenant's obligation to remove any alterations,
additions, improvements, trade fixtures and/or personal property and to repair
any damage from such removal shall survive the termination of this Lease
provided that Tenant breached the same, and as to the removal of any
alterations, additions or improvements, timely notice to remove was given by
Landlord in accordance with the provisions of this Paragraph (e).
13. Equipment Area, Corridor and Roof Platforms
(a) Tenant shall have the option to lease additional space in the courtyard
area between the Premises and the Current Space in Building C, up to
approximately five thousand six hundred (5,600) rentable square feet, shown on
Exhibit A-1 hereto ("Equipment Area"), solely for the storage and operation of
Tenant's equipment, subject to the following:
(i) Tenant shall exercise the option to lease the Equipment Area, or any
portion thereof, by giving thirty (30) days' prior written notice of exercise
each time it exercises its option until the total rentable square footage set
forth in (a) has been leased, and shall provide Landlord with the approximate
rentable square feet it desires at each time.
Page 14
(ii) Tenant shall comply with all applicable federal, state and local
laws and regulations in the construction and maintenance of the Equipment Area.
Landlord, without delay, shall cooperate with Tenant at no expense to Landlord
in obtaining the applicable approvals and permits.
(iii) Tenant shall obtain Landlord's prior approval, which approval
shall not be unreasonably withheld, of Tenant's proposed plans and
specifications, including, without limitation, Landlord's approval of the
equipment to be stored and operated as applicable, the location for storage and
operation as applicable, and the plans for landscaping and for screening the
equipment from view. Tenant hereby agrees that any landscaping or screening of
the Equipment Area shall be of a design and quality compatible with the
surrounding Complex and maintained in a neat and orderly condition.
(iv) Tenant shall pay all costs of installing, maintaining,
operating, repairing and removing, if requested by Landlord in accordance with
Section 12(f) above, the Equipment Area and cause all work to be carried out in
a good and workmanlike manner and in accordance with the terms of this Lease.
(v) Tenant shall pay no additional rent for the Equipment Area so long
as the Equipment Area rentable square footage does not exceed one thousand four
hundred (1,400) rentable square feet. Once the Equipment Area rentable square
footage exceeds one thousand four hundred (1,400) rentable square feet,
thereafter Tenant shall pay Landlord as additional rent twenty cents (20(cents))
per square foot per month ("Equipment Area Base Rental Rate") for that portion
of the entire Equipment Area occupied by Tenant ("Equipment Area Base Rent"),
subject to adjustment beginning on the first anniversary date after the
Commencement Date and on each anniversary date thereafter during the Term
("Adjustment Date"). Equipment Area Base Rental Rate shall be increased by one-
hundred percent (100%) of the percentage of increase, shown by the Consumer
Price Index, All Items Indexes, Urban Wage Earners and Clerical Workers, San
Francisco-Oakland-San Jose Area SMSA ("Index"), published by the U.S. Department
of Labor, Bureau of Labor Statistics (1967 = 100), for the month immediately
preceding the Adjustment Date as compared with the Index for the month
immediately preceding the Commencement Date. Landlord shall calculate the amount
of this increase in Equipment Area Base Rental Rate and in the Equipment Area
Base Rent after the United States Department of Labor publishes the statistics
on which the amount of the increase will be based. Landlord shall give written
notice of the amount of the increase, multiplied by the number of installments
of Equipment Area Base Rent due since the respective Adjustment Date. Tenant
shall pay this amount, together with the first installment of Base Rent which
comes due under this Lease more than ten (10) business days after Tenant's
receipt of such notice from Landlord, and Tenant shall thereafter pay the
monthly Equipment Area Base Rent at this increased rate, which shall constitute
Equipment Area Base Rent. Landlord's failure to make the required calculations
promptly shall not be considered a waiver of Landlord's rights to adjust the
Equipment Area Base Rent, nor shall it affect Tenant's obligations to pay the
increased Equipment Area Base Rent following receipt of appropriate notice from
Landlord. If for any reason the Index is not published for any month referenced
above, then the Index applicable for the month which most immediately precedes
the month referenced above for which an Index is published shall instead be
used. If the Index changes so
Page 15
that the base year differs from that in effect on the Commencement Date, the
Index shall be converted in accordance with the conversion factor published by
the United States Department of Labor, Bureau of Labor Statistics. If the Index
is discontinued or revised during the Term, the government index or computation
with which it is replaced shall be used to obtain substantially the same result
as if the Index had not been discontinued or revised. Notwithstanding the
foregoing, in no event shall the adjusted Equipment Area Base Rental Rate
increase in any year be less then two percent (2%) nor more than five percent
(5%) over the prior year's Equipment Area Base Rental Rate. Any Equipment Area
Base Rent shall be subject to abatement in the same manner and proportion as
Base Rent in the event of the occurrence of any event giving rise to a right to
abatement of Base Rent under this Lease.
(b) Tenant shall have the right, at any time during the Term and without the
obligation to pay additional rent in connection therewith, to erect and use an
enclosed corridor between the Premises and the Current Space in Building C (the
"Corridor"), subject to the following:
(i) Tenant shall comply with all applicable federal, state and local
laws and regulations in the construction and maintenance of the Corridor,
including, without limitation, constructing any required exits or making other
alterations to the Complex as may be required by applicable federal, state or
local law as a result of the construction of the Corridor. Landlord, without
delay, shall cooperate with Tenant at no expense to Landlord in obtaining the
applicable approvals and permits.
(ii) Tenant shall obtain Landlord's prior approval, which approval
shall not be unreasonably withheld, of Tenant's proposed plans and
specifications.
(iii) Tenant shall pay all costs of installing, maintaining, operating
and repairing the Corridor and removing the Corridor by the earlier of the
Expiration Date or the date of expiration of the 863 Mitten Lease if requested
by Landlord in accordance with Section 12(f) above. Tenant shall cause all work
to be completed in a good and workmanlike manner and in accordance with the
terms of this Lease.
(c) Tenant shall have the right, at any time during the Term and without
the obligation to pay rent in connection therewith, to construct one or more
equipment platforms on the roof of the Premises for Tenant's equipment
(collectively "Roof Platforms"), subject to the following:
(i) Tenant shall comply with all applicable federal, state and local
laws and regulations in the construction and maintenance of the Roof Platforms.
Landlord, without delay, shall cooperate with Tenant at no expense to Landlord
in obtaining the applicable approvals and permits.
(ii) Tenant shall obtain Landlord's prior approval, which approval
shall not be unreasonably withheld, of Tenant's proposed plans and
specifications, including, without limitation, Landlord's approval of the
equipment to be stored and operated, the location for storage and operation, and
the plans for screening the equipment from view.
Page 16
(iii) Tenant shall pay all costs of installing, maintaining,
operating and repairing the Roof Platforms and removing the Roof Platforms by
the Expiration Date, if requested by Landlord in accordance with Section 12(f)
above. Tenant shall cause all work to be carried out in a good and workmanlike
manner. In addition, Tenant shall pay to Landlord within fifteen (15) days after
notice (together with reasonable accompanying documentation of the same) of any
increase in the cost of roofing that Landlord incurs over the amount that
Landlord would otherwise have paid for roofing such Building without Roof
Platforms.
(iv) Tenant shall not make any penetrations in the roof without the
prior written consent of Landlord. Any roof penetrations contemplated in the
plans for the Tenant Improvements (as reviewed and approved by Landlord pursuant
to the Work Letter Agreement) shall be deemed to have received such consent of
Landlord .
14. Maintenance and Repairs
(a) Tenant, at Tenant's sole cost and expense, shall keep the Premises, the
Equipment Area, the Corridor, the Roof Platforms and all equipment installed
thereon and every part thereof in good order, condition and repair, ordinary
wear and tear and any damage or destruction for which Tenant is not obligated to
repair pursuant to Section 29 excepted. All maintenance, repairs and
replacements by Tenant shall be made and performed: (a) at Tenant's cost and
expense, (b) by reputable licensed contractors or mechanics which have
experience in the type of work to be completed, are insured (with insurance
certificates to be provided to Landlord prior to commencement of such
maintenance or repair) and are one of the contractors or mechanics listed on a
schedule to be provided to Landlord by Tenant from time to time and which
contractors and mechanics on the schedule are subject to Landlord's reasonable
approval, (c) in such manner as to be at least equal in quality of materials and
workmanship to the original work or installation, (d) in accordance with this
Lease and the Rules and Regulations adopted by Landlord from time to time and in
accordance with all applicable laws and regulations of governmental authorities
having jurisdiction over the Premises, (e) so as not to unreasonably interfere
with the use and enjoyment of the Complex by Landlord, other tenants or any
other person, (f) if involving any material changes to the design of the
Premises or any operating system or utility service, then Tenant shall furnish
Landlord with an as-built drawing within a reasonable period of time following
completion of the work and (g) such that no maintenance will be deferred or
delayed, ordinary wear and tear excepted.
(b) Tenants repair and maintenance obligations in connection with the
Premises, the Corridor, the Equipment Area and the Roof Platforms shall include:
all plumbing and sewage facilities within the Premises, fixtures, interior walls
and ceiling, floors, windows, doors, entrances, plateglass, showcases,
skylights, all electrical facilities and equipment, including lighting fixtures,
lamps, fans and any exhaust equipment and systems, any automatic fire
extinguisher equipment within the Premises, electrical motors and all other
appliances and equipment of every kind and nature located in, upon or about the
Premises. Tenant shall continuously maintain at its expense an HVAC systems
preventive maintenance contract providing services appropriate to properly
maintain the HVAC equipment in accordance with manufacturer recommendations,
which shall be subject to the reasonable approval of Landlord,
Page 17
and which shall provide for and include replacement of filters, oiling and
lubricating of machinery, parts replacement, adjustment of drive belts, oil
changes and other preventive maintenance, including maintenance of duct work,
interior unit drains and caulking of sheet metal, and recaulking of jacks and
vents as needed, but in no event shall any preventative maintenance contract
contain reduced requirements for preventative maintenance than those
requirements set forth in the current contract with Western Allied. Tenant shall
have the benefit of all warranties available to Landlord regarding the equipment
in such HVAC systems. Landlord hereby approves Western Allied as the
contractor/mechanic to perform HVAC maintenance for Tenant.
(c) In conjunction with any repairs of any portion of the Premises of a
magnitude which would constitute an alteration, addition or improvement which
would require the consent of Landlord pursuant to Section 12, Tenant shall
comply with the requirements of Section 12.
(d) To the extent not covered by any insurance carried (or required to be
carried by Landlord pursuant to the terms of this Lease), Tenant shall either
cause to be repaired or pay upon demand the entire cost of repairing any damage
to any portion of the Premises, the Building or the Complex caused by the
negligence or willful misconduct of Tenant or its agents, employees,
contractors, or invitees, or by Tenant's failure to comply with the terms of
this Lease.
(e) Landlord shall maintain and repair the structural elements and the roof
of the Building, the public and common areas of the Building and of the Complex
(including all parking areas, landscaping [other than the landscaping in the
Equipment Area as installed by Tenant] and trash collection areas other than
those trash collection areas dedicated to Tenant's use), and all utility lines,
pipes and equipment (other than Tenant's equipment or utility lines, pipes or
equipment to be maintained by a public utility) outside of the Premises, as the
same may exist from time to time, except for wear and tear which is the result
of a negligent or willful act or omission of Tenant or its officers, directors,
shareholders, partners, agents, employees, contractors, invitees, licensees,
subtenants or assignees. Landlord shall have no obligation to make repairs under
this Section until a reasonable time after receipt of written notice of the need
for such repairs.
(f) It is specifically understood and agreed that Landlord has no
obligation and has made no promises to alter, remodel, improve, repair, decorate
or paint the Premises or any part thereof and that no representations respecting
the condition of the Premises, the Building or the Complex have been made by
Landlord to Tenant, except as specifically set forth in this Lease. Tenant
hereby waives all rights to make repairs at the expense of the Landlord as
provided by law, statute or ordinance now or hereafter in effect. Upon the
expiration or sooner termination of the Lease, Tenant shall surrender the
Premises to Landlord in shell condition as improved with such alterations,
additions and improvements as have theretofore been made to the Premises by
Tenant to the extent Tenant is not then obligated to remove the same pursuant to
the other provisions of this Lease, ordinary wear and tear and damage or
destruction for which Tenant is not obligated under this Lease to repair
excepted. Tenant hereby waives all rights to make repairs at the expense of
Landlord as provided by law, statute or ordinance now or hereafter in
Page 18
effect or to deduct the cost of repairs from the rent and all rights under
Sections 1941 and 1942 of the California Civil Code.
15. Abandonment
Tenant shall not abandon the Premises at any time during the term hereof,
and if Tenant shall abandon or surrender the Premises or be dispossessed by
process of law, or otherwise, any personal property belonging to Tenant and left
on the Premises shall be deemed to be abandoned, at the option of Landlord.
16. Liens
Tenant shall keep the Premises and the Building and the land upon which the
Building is situated free from any liens arising out of any work performed,
materials furnished or obligations incurred by Tenant. Tenant shall in the event
of the filing of any such lien, post any bond required to release the Premises
therefrom. Should Tenant fail to remove any such lien within twenty (20) days
after notice to do so from Landlord, Landlord may, in addition to any other
remedies, record a bond pursuant to California Civil Code Section 3143 and all
amounts incurred by Landlord in so doing shall become immediately due and
payable by Tenant to Landlord as additional rent. Landlord shall have the right
to post and keep posted on the Premises any notices that may be provided by law
or which Landlord may deem to be proper for the protection of Landlord, the
Premises and the Building from such liens. Tenant shall provide written notice
to Landlord of any work (other than minor repairs or Minor Alterations) to be
commenced on the Premises at least ten (10) days prior to commencement of any
work by Tenant.
17. Assignment and Subletting
(a) Except upon Landlord's prior written consent, which consent shall not
be unreasonably withheld, delayed or conditioned, and except as otherwise
expressly permitted herein, neither this Lease nor all or any part of the
Premises shall, directly or indirectly, voluntarily or involuntarily, by
operation of law or otherwise, be assigned, mortgaged, pledged, encumbered or
otherwise transferred by Tenant or Tenant's legal representatives or successors
in interest (collectively an "assignment") and neither the Premises nor any part
thereof shall be sublet or be used or occupied for any purpose by anyone other
than Tenant (collectively, a "sublease"). Notwithstanding the foregoing, the
issuance or transfer of any voting or non-voting stock of Tenant shall not
constitute an assignment hereunder for which any consent is required and Tenant
may assign this Lease or sublet the Premises or any portion thereof to any
corporation which controls, is controlled by or is under common control with
Tenant, or to any corporation resulting from merger or consolidation with Tenant
provided that the net worth of Tenant after such assignment or subletting or
after such merger or consolidation with Tenant is equal to or greater than the
net worth of Tenant at the date of this Lease), or to any person or entity which
acquires all the assets as a going concern of the business of Tenant that is
being conducted on the Premises, without Landlord's consent (collectively a
"Permitted Transfer"), but no assignment or subletting shall relieve the
original Tenant hereunder from its continuing liability for the performance of
the obligations of Tenant hereunder.
Page 19
In no event shall Tenant assign this Lease or sublet the Premises or any
portion thereof to any then-existing tenant or any prospective tenant of the
Complex, with whom Landlord is engaged in active negotiations for alternative
space in the Complex, provided Landlord so indicates the same to Tenant in
writing promptly upon request by Tenant as to names of existing or prospective
tenants with whom Landlord is then involved in negotiations.
(b) Any assignment or subletting without Landlord's prior written consent
shall, at Landlord's option, be void and shall entitle Landlord to exercise the
remedies provided in Section 28 of this Lease. Landlord's consent to one
assignment or sublease shall not be deemed to be a consent to any subsequent
assignment or sublease.
(i) If Tenant desires to assign this Lease or any interest therein or
sublet all or part of the Premises (each hereinafter a "transfer") other than
for a Permitted Transfer, Tenant shall first give Landlord written notice
("Transfer Notice") at least twenty (20) days in advance of the proposed
transfer date. In the event of a Permitted Transfer, Tenant shall first give
Landlord a Transfer Notice at least ten (10) days in advance of the proposed
transfer date. Tenant shall pay Landlord's reasonable costs incurred in
reviewing the Transfer Notice (other than for a Permitted Transfer) and
accompanying information in an amount not to exceed One Thousand Dollars
($1,000), regardless of whether the Landlord consents to the proposed transfer.
Tenant shall deliver with the Tenant Notice the following: (i) the proposed
sublease or assignment, designating the space proposed to be transferred and the
terms proposed, (ii) the nature of the proposed subtenant's or assignee's
business, and (iii) such financial information as Landlord may reasonably
request concerning the proposed subtenant or assignee thereof. Other than for a
Permitted Transfer, Landlord shall by written notice to Tenant given within
twenty (20) days after receipt of the Tenant Notice and information specified
above approve or disapprove the proposed assignment or sublease, and if
disapproved, stating with particularity the basis for such disapproval. No
approval of any assignment or sublease shall constitute any release of Tenant of
its liability for the performance of all its obligations under this Lease.
(c) In the event Tenant assigns or sublets to anyone (other than a
Permitted Transfer), with the consent of Landlord, fifty percent (50%) of any
"excess rent" received by Tenant shall be paid to Landlord. Excess rent, as
herein defined, is the amount of rent and additional monetary consideration paid
by the assignee or sublessee for such assignment or sublease over and above the
Base Rent, additional rent and any other additional charges payable by Tenant
under this Lease for the Premises or a portion thereof affected, less the
reasonable expenses incurred by Tenant in entering into such assignment or
sublease, e.g., broker leasing commissions, required retrofit (including any
alterations or improvements for the successor occupant) and reasonable
attorneys' fees. Such excess thereof shall be paid monthly as received by
Tenant. Landlord shall have the right upon ten (10) days' written request, to
inspect the books and records of Tenant relating to the receipt of excess rents
which books and records shall be made available at the Tenant's principal
corporate office.
(d) Without limiting any other conditions stated in this Section 17, no
permitted subletting or assignment by Tenant (including a Permitted Transfer)
shall be effective until there has been delivered to Landlord a counterpart of
the sublease or assignment in which: (i) if an
Page 20
assignment, the assignee assumes the obligations of Tenant under this Lease;
(ii) Tenant acknowledges that it shall remain liable for the performance of all
of the terms and provisions of this Lease; (iii) if a sublease, the subtenant
acknowledges that the Landlord may enforce the provisions of the Sublease
directly against the subtenant, including any violation by subtenant of any of
the provisions of this Lease; provided, however, that the subtenant shall be
liable to Landlord for rent only in the amount set forth in the sublease; (iv)
if a sublease, the subtenant may not further assign or sublet the sublet space
without Landlord's prior written consent; (iv) if an assignment, that the
assignee will comply with all of the provisions of this Lease; and (v) if an
assignment, that Landlord may enforce the Lease provisions directly against such
assignee. No permitted sublease or assignment shall be effective unless and
until there has been delivered to Landlord a counterpart thereof. The failure or
refusal of a subtenant or assignee to execute any such instrument shall not
release or discharge the subtenant or assignee from its liability as set forth
above.
18. Indemnification
Tenant agrees to indemnify and defend against and hold harmless Landlord
and the holders of any mortgage or deed of trust encumbering the Complex, and
each of their respective constituent shareholders, partners, members or other
owners, and all of their respective agents, contractors, servants, officers,
directors, managers, employees and licensees (hereinafter collectively called
the "Indemnitees") from and against any and all loss, cost, liability, claim,
cause of action, proceeding, investigation, damage and expense, including
without limitation penalties, fines and reasonable attorneys fees and costs
(collectively "Losses"), incurred in connection with or arising from any of the
following: (i) any default by Tenant in the observance or performance of any of
the terms, covenants or conditions of this Lease on Tenants part to be observed
or performed; or (ii) the use of occupancy or manner of the use or occupancy of
the Premises by Tenant or any other person or entity claiming through or under
Tenant, including without limitation, the presence, release, removal,
remediation, abatement, use, generation, storage, transportation or disposal of
any Hazardous Materials by Tenant or any other person or entity claiming through
or under Tenant (excluding the existence or migration of any Hazardous Materials
that exist on or about the Premises or the Complex before the Commencement Date
of this Lease, or any Hazardous Materials used or installed on or about the
Complex by any person other than Tenant); or (iii) the condition of the Premises
or the occurrence or happening of any event in the Premises from any cause
whatsoever during the Term of this Lease; or (iv) any wrongful or negligent acts
or omissions (both active and passive) of Tenant or of Tenant's agents,
contractors, employees, subtenants, licensees, invitees or visitors with respect
to the Premises, in, on or about the Premises or the Building, either prior to
the commencement of, during, or after the expiration of the Term, including,
without limitation, any acts, omissions or negligence in the making or
performing of any alterations. Tenant further agrees to indemnify, defend and
save harmless Landlord and each Indemnitee from and against any and all loss,
cost, liability, damage and expense, incurred in connection with or arising from
any claims by any persons by reason of injury to persons or damage to property
occasioned by any use, occupancy, condition, occurrence, happening, act,
omission or negligence referred to in the preceding sentence. In the event any
action or proceeding is brought against Landlord or any Indemnitee for any claim
against which Tenant is obligated to indemnify hereunder, Tenant upon notice
from Landlord
Page 21
shall defend such action or proceeding at Tenant's sole expense by counsel
approved by Landlord, which approval shall not be unreasonably withheld. The
provisions of this Section 18 shall survive the expiration or earlier
termination of this Lease. Notwithstanding the foregoing, Tenant's indemnity
obligations under this Section shall not extend to any Losses to the extent
reasonably arising solely from the active negligence or willful acts or
omissions of Landlord or any other Indemnitee or any other tenants of the
Building, or from any breach by Landlord of its obligations under this Lease.
19. Insurance
(a) Tenant shall, at Tenant's expense, maintain during the term of this
Lease (and, if Tenant shall occupy or conduct activities in or about the
Premises prior to or after the Term, then also during such pre-term or post-term
period): (i) Comprehensive General Liability insurance including contractual
liability coverage on an occurrence and not on a claims-made basis except as
provided below, with a minimum combined single limit of liability of at least
S2,000,000, for injuries to, or illness or death of, persons and damage to
property occurring in or about the Premises or otherwise resulting from Tenant's
operations in the Complex; (ii) property insurance protecting Tenant against
loss or damage by fire and such other risks as are insurable under then
available standard forms of "all risk" insurance policies (excluding earthquake
and flood but including water damage), covering Tenant's property in or about
the Premises and also covering any fixtures that may belong to Tenant, the
Tenant Improvements (including any subsequent alterations, additions or
improvements to the Tenant Improvements), for the full replacement value thereof
without deduction for depreciation; and (iii) workers' compensation insurance in
statutory limits. The above described liability insurance shall protect Tenant,
as named insured, and Landlord and its agent and any other parties designated by
Landlord, as additional insureds by endorsement to the policy, shall insure
Landlord's, its agent and such other parties' contingent liability with regard
to acts or omissions of Tenant. The contractual liability coverage afforded by
such insurance shall not limit or be deemed to satisfy Tenant's indemnity
obligations under this Lease. Landlord reserves the right to increase the
foregoing amount of liability coverage from time to time (but not more
frequently than once every two (2) years) as Landlord reasonably determines is
required to adequately protect Landlord and the other parties designated by
Landlord from the matters insured thereby. Tenant may elect to carry such
Comprehensive General Liability insurance on a claims-made basis, in which event
Tenant shall be obligated upon the expiration or earlier termination of the Term
of this Lease to continue to carry such claims-made liability insurance coverage
for a period of four (4) full additional years thereafter with such insurance
coverage so carried by Tenant to continue to provide the liability insurance
coverage described herein with respect to Tenant's prior operations at the
Complex and reflecting Landlord as an additional insured. The obligation of
Tenant under the foregoing sentence shall survive any termination of this Lease.
(b) Each insurance policy required pursuant to this Section 19 shall be
issued by an insurance company licensed to do business in the State of
California, with a financial rating of at least an A:XIII status for any
property insurance and B+:IX for any liability insurance as rated in the most
recent edition of "Best's Insurance Guide." Each insurance policy, other than
Tenant's workers' compensation insurance, shall (i) provide that it may not be
materially reduced in
Page 22
coverage, canceled or allowed to lapse unless thirty (30) days' prior written
notice to Landlord and any other insureds designated by Landlord is first given;
(ii) provide for severability of interests and cross-liability and that no act
or omission of Tenant shall affect or limit the obligations of the insurer with
respect to any other insured; (iii) provide that their respective coverages
shall in all respects be primary and that any insurance maintained by Landlord
shall be excess insurance only; (iv) in the case of insurance against loss or
damage to the Premises, be endorsed to provide that such loss shall be adjusted
with and be payable to Landlord to the extent that Landlord then has the
obligation under this Lease to rebuild such Premises; and (v) shall have
deductible amounts, if any, as to property coverage not in excess of One
Thousand Dollars ($1,000), and as to liability coverage not in excess of Two
Thousand Five Hundred Dollars ($2,500). Tenant shall be responsible for the
satisfaction of all deductibles on the policies Tenant is required to carry in
this Lease. Each such insurance policy or a certificate thereof shall be
delivered to Landlord by Tenant on or before the effective date of such policy
and thereafter Tenant shall deliver to Landlord renewal policies or certificates
at least ten (10) days prior to the expiration dates of expiring policies. If
Tenant fails to procure such insurance or to deliver such policies or
certificates, Landlord may, at its option, procure the same for Tenant's
account, and the cost thereof shall be paid to Landlord by Tenant upon demand.
(c) Landlord shall maintain in effect at all times fire and hazard "all
risk" insurance covering one hundred percent (100%) of the full replacement
cost valuation of the Building, the Complex and Landlord's personal property
including its business papers, furniture, fixtures and equipment, subject to
commercially reasonable deductibles, in the event of fire, lightning, windstorm,
vandalism, malicious mischief and all other risks normally covered by "all risk"
policies, but excluding coverage for any tenant improvements (including the
Tenant Improvements). Landlord shall also obtain and keep in full force (a) a
policy of commercial general liability and property damage insurance, (b) loss
of rent insurance and (c) workers' compensation insurance, all as deemed
commercially reasonable in Landlord's reasonable discretion.
20. Mutual Waiver of Subrogation Rights
Each party hereto hereby releases the other party and the respective partners,
shareholders, agents, employees, officers, directors and authorized
representatives of such released party (and, in the case of Tenant as the
releasing party, the holders of any mortgage or deed of trust encumbering the
Complex), from any claims such releasing party may have for damage to the
Premises, the building or any of such releasing party's fixtures, personal
property, improvements and alterations in or about the Premises or the Building
or the Complex that is caused by or results from risks insured against under any
fire and extended coverage insurance policies actually carried by such releasing
party or deemed or required hereunder to be carried by such releasing party;
provided, however, that such waiver shall be limited to the extent of the net
insurance proceeds payable by the relevant insurance company with respect to
such loss or damage. For purposes of this Section 20, Tenant shall be deemed to
be carrying the fire and extended coverage insurance policies required pursuant
to clause (ii) of Section 19(a), above and Landlord shall be deemed to be
carrying fire and extended coverage insurance policies required pursuant to
Section 19(c) above. Each party hereto shall cause each such fire and extended
Page 23
coverage insurance policy obtained by it to provide that the insurance company
waives all rights of recovery by way of subrogation against the other respective
party and the other aforesaid released parties in connection with any matter
covered by such policy.
21. Utilities
(a) Tenant shall be responsible for and shall pay promptly all charges for
water/sewer, gas, electricity, including HVAC and HVAC maintenance, telephone,
janitorial service and all other utilities, materials and services directly
furnished by contract or meter to Tenant in, on or about the Premises during the
Term, together with any taxes thereon. Charges for garbage are included in
Direct Expenses. If any utilities to be directly charged to Tenant are not
separately metered to the Premises, Landlord shall bill Tenant for Tenant's pro
rata share based on Tenant's Share (or based on such other equitable basis as
reasonably agreed to by Landlord and Tenant), and Tenant shall pay such share to
Landlord within ten (10) days after receipt of Landlord's written statement.
(b) The Premises shall be separately metered for gas, water/sewer and
electricity at the expense of Tenant prior to or during construction of the
Tenant Improvements as set forth in Section 33(d) below.
(c) Landlord shall not be liable under any circumstances for loss of
business or injury to property, however occurring, through or in connection with
or incidental to failure of any utility or other service furnished to the
Premises, and Tenant shall not be entitled to any abatement or reduction of rent
Tenant shall pay and provide for all services and utilities not furnished by
Landlord.
22. Personal Property and Other Taxes
Tenant shall pay, before delinquency, any and all taxes levied or assessed
and which become payable during the Term hereof upon Tenant's equipment,
furniture, fixtures, trade fixtures, and other personal property located in the
Premises, including carpeting installed by Tenant even though said carpeting has
become a part of the Premises; and any and all taxes or increases therein levied
or assessed on Landlord or Tenant by virtue of alterations, additions or
improvements to the Premises made by Tenant or Landlord at Tenant's request. In
the event said taxes are charged to or paid or payable by Landlord, Tenant,
forthwith upon demand therefor, shall reimburse Landlord for all of such taxes
paid by Landlord.
23. Rules and Regulations
Except as the same may be waived as to its application to Tenant or the
Premises from time to time by Landlord in writing, Tenant shall faithfully
observe and comply with the rules and regulations printed on or annexed to this
Lease as Exhibit F ("Rules and Regulations") and all modifications of and
additions thereto applicable to all tenants of the Building from time to time
put into effect by Landlord of which Tenant shall have notice, to the extent
such rules and regulations and any modifications and additions are consistent
with the terms and intent of this Lease, and the size, location, purposes and
uses of the Premises contemplated by this Lease
Page 24
(which includes the contemplated presence and use on the Premises of Hazardous
Materials and animals and Tenant having principal responsibility for its own
HVAC, janitorial services, Equipment Area and Roof Platforms). Exhibit F-1
contains the amendments to the Rules and Regulations and constitutes the written
waiver of Landlord to application of Exhibit F to Tenant. Landlord shall not be
responsible to Tenant for the nonperformance by any other tenant or occupant of
the Building of any of said Rules and Regulations, but Landlord shall not
enforce the same in a discriminatory manner adverse to Tenant.
24. Holding Over
If Tenant holds possession of the Premises after the Term of this Lease,
Tenant shall, (at option of Landlord to be exercised by Landlord's giving
written notice to Tenant and not otherwise) become a Tenant from month to month
upon the terms and conditions herein specified, so far as applicable, at a
monthly rental of 150% times the Base Rent in effect during the last month of
the Term. Such monthly rent shall be payable in advance, in lawful money, and
shall continue until thirty (30) days after Tenant shall have given to Landlord
or Landlord shall have given to Tenant a written notice of intent to terminate
such monthly tenancy. Unless Landlord shall exercise the option provided herein,
Tenant shall be a tenant at sufferance only, whether or not Landlord shall
accept any rent from Tenant while Tenant is so holding over.
25. Subordination
(a) This Lease shall be subject and subordinate at all times to all ground
or underlying leases which may now exist or hereafter be executed affecting the
Building and/or the Complex or the land upon which the Building is situated and
to the lien of any mortgages or deeds of trust in any amount or amounts
whatsoever now or hereafter placed on or against said Building and/or the land
upon which the Building is situated and/or on the Complex or on or against
Landlord's interest or estate therein or on or against any ground or underlying
lease without the necessity of having further instruments on the part of Tenant
to effectuate such subordination. Notwithstanding the foregoing, Tenant
covenants and agrees to execute and deliver, within ten (10) days after
Landlord's written request therefor, such further instruments evidencing such
subordination of this Lease to such ground or underlying leases and to the lien
of any such mortgages or deeds of trust as may be reasonably required by
Landlord. Notwithstanding the foregoing subordination, in the event of
termination of any ground or underlying lease, or in the event of foreclosure or
exercise of any power of sale under any mortgage or deed of trust superior to
this Lease or to which this Lease is subject or subordinate, Tenant shall upon
demand attorn to the lessor under such ground or underlying lease or to the
purchaser at any foreclosure sale or sale pursuant to the exercise of any power
of sale under any mortgage or deed of trust, in which event this Lease shall not
terminate, and Tenant shall automatically be and become the Tenant of said
lessor under such ground or underlying lease or to said purchaser, whichever
shall make demand therefor.
(b) If any lessor or holder of a mortgage or deed of trust advises Landlord
that it desires or requires this Lease to be prior and superior to a lease,
mortgage or deed of trust, Landlord may notify Tenant. Within thirty (30) days
of Landlord's notice, Tenant shall execute,
Page 25
have acknowledged and deliver to Landlord any and all documents or instruments,
in the form present to Tenant, which Landlord, or a holder of a mortgage or deed
of trust deems necessary or desirable to make this Lease prior and superior to
the lease, mortgage or deed of trust.
(c) It is further agreed that notwithstanding any such subordination, in
the event of termination of any ground or underlying lease, or in the event of
foreclosure or exercise of any power of sale under any mortgage or deed of trust
superior to this Lease or to which this Lease is subject or subordinate, upon
the attornment of Tenant (or if applicable, the Leasehold Mortgagee or Leasehold
Mortgage Purchaser as defined in Schedule 3 attached to this Lease) to the
----------
lessor under such ground or underlying lease or to the purchaser at any
foreclosure sale or sale pursuant to the exercise of any power of sale under any
mortgage or deed of trust, this Lease shall not terminate, and Tenant (or if
applicable, the Leasehold Mortgagee or Leasehold Mortgage Purchaser) shall
automatically be and become the tenant under the terms of this Lease to said
lessor under such ground or underlying lease or to said purchaser, whichever is
applicable, and any subordination agreement requested of Tenant shall so
provide. Landlord's interest in any Tenant Improvements or any alterations,
additions or improvements made by Tenant shall be subordinate to the interest of
the Leasehold Mortgagee and Landlord's interest in any equipment, fixtures,
inventory, furniture, trade fixtures or other personal property of Tenant shall
be subordinate to the interest of the Leasehold Mortgagee or Equipment Mortgagee
(as defined in Schedule 3 attached to this Lease).
----------
(d) Landlord agrees that in the event Landlord is unable to obtain a non-
disturbance agreement, in form and substance similar to Exhibit G attached
hereto, within thirty (30) days of execution of this Lease, Tenant shall have
the right to terminate this Lease by providing written notice to Landlord within
fifteen (15) days thereafter of its election to terminate the Lease. Failure to
provide such written notice to Landlord within the time period provided shall be
deemed Tenant's election not to terminate the Lease.
---
26. Entry By Landlord
Landlord reserves and shall at any and all reasonable times have the right
to enter the Premises to inspect the same, to submit the Premises to prospective
purchasers or Tenants, to post notices of non-responsibility, and to alter,
improve or repair the Premises and any portion of the Building without abatement
of rent and may for that purpose erect scaffolding and other necessary
structures where reasonably required by the character of the work to be
performed, provided the entrance to the Premises shall not be blocked thereby
and further providing that the business of Tenant shall not be interfered with
unreasonably. Tenant hereby waives any claim for damages for any injury or
inconvenience to or interference with Tenants business, any loss of occupancy of
quiet enjoyment of the Premises, and other loss occasioned by such entry. For
each of the aforesaid purposes, Landlord shall at all times have and retain a
key with which to unlock all of the doors, in, upon and about the Premises
excluding Tenant's vaults and safes, and Landlord shall have the right to use
any and all means which Landlord may deem proper to open said doors in an
emergency in order to obtain entry to the Premises, and any entry to the
Premises obtained by Landlord by any of said means, or otherwise, shall not
under any circumstances be construed or deemed to be a forcible or unlawful
entry into or a detainer of the
Page 26
Premises or an eviction of Tenant from the Premises or any portion thereof
Notwithstanding the foregoing, Landlord's access to the Premises is subject to
reasonable security regulations of Tenant.
27. INSOLVENCY OR BANKRUPTCY
Either (i) the appointment of a receiver to take possession of all or
substantially all of the assets of Tenant, (ii) an assignment by Tenant for the
benefit of creditors, or (iii) any action taken or suffered by Tenant under any
insolvency, bankruptcy or reorganization act shall constitute an event of
default entitling Landlord to terminate this Lease and to exercise all other
remedies provided in Section 28 of this Lease; provided, however, if an
involuntary bankruptcy petition is filed against Tenant, there shall be no event
of default under this Lease if that petition is dismissed within sixty (60) days
after it is filed. In no event shall this Lease be assigned or assignable by
reason of any voluntary or involuntary bankruptcy proceedings nor shall any
rights or privileges hereunder be an asset of Tenant in any bankruptcy,
insolvency or reorganization proceedings.
28. DEFAULT
(a) The occurrence of any of the following shall constitute a default under
this Lease: (i) Tenant's failure to pay rent or any other sum due under this
Lease within five (5) business days after Landlord's delivery of written notice
to Tenant of Tenant's failure to pay such sum when due hereunder; or (ii)
Tenant's failure to perform any other obligation of Tenant under this Lease
within thirty (30) days after Landlord's delivery of written notice to Tenant of
Tenant's failure to perform such obligation when due hereunder (provided,
however, the 30-day period shall be extended if Tenant cannot reasonably cure
that default within 30 days so long as Tenant promptly commences that cure
within the 30-day period and thereafter diligently prosecutes that cure to
completion); or (iii) Tenant abandons the Premises.
(b) In the event of any breach or default of this Lease by Tenant, then
Landlord, besides any other rights and remedies of Landlord at law or equity,
shall have the right either to terminate Tenant's right to possession of the
Premises and thereby terminate this Lease or to have this Lease continue in full
force and effect with Tenant at all times having the right to possession of the
Premises. In the event Landlord elects to terminate this Lease, Landlord, in
addition to any other rights and remedies (including rights and remedies under
Subsections (1), (2) and (4) of Subdivision (a) of Section 1951.2 of the
California Civil Code or any amendment thereto), shall be entitled to recover
from Tenant the worth at the time of award of the amount by which the unpaid
rent for the balance of the Term after the time of award exceeds the amount of
such rental loss that the Tenant proves could be reasonably avoided. The "worth
at the time of award" of the amount referred to in Subsections (1) and (2) of
Subdivision (a) of Section 1951.2 of the California Civil Code shall be computed
by allowing interest at the legal rate and the amount referred to in Subsection
(3) of Subdivision (a) of Section 1951.2 of the California Civil Code shall be
computed by discounting such amount at the discount rate of the Federal Reserve
Bank of San Francisco at the time of the award plus one percent (1%).
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(c) Should Landlord, following any breach or default of this Lease by
Tenant, elect to keep this Lease in full force and effect, with Tenant retaining
the right to possession of the Premises (notwithstanding the fact the Tenant may
have abandoned the leased Premises), then Landlord, besides the rights and
remedies specified in Section 1951.4 of the California Civil Code ("lessor may
continue lease in effect after lessee's breach and abandonment and recover rent
as it becomes due, if lessee has right to sublet or assign, subject only to
reasonable limitations") and all other rights and remedies Landlord may have at
law or equity, shall have the right to enforce all of Landlord's rights and
remedies under this Lease. Notwithstanding any such election to have this Lease
remain in full force and effect, Landlord may at any time thereafter elect to
terminate Tenant's right to possession of said Premises and thereby terminate
this Lease for any previous breach or default which remains uncured, or for any
subsequent breach or default.
(d) Landlord may, with or without terminating this Lease, re-enter the
Premises and remove all persons and property from the Premises; such property
may be removed and stored in a public warehouse or elsewhere at the cost of and
for the account of Tenant No re-entry or taking possession of the Premises by
Landlord pursuant to this section shall be construed as an election to terminate
this Lease unless a written notice of such intention is given to Tenant.
(e) For purposes of this Section 28, Tenants right to possession shall not
be considered to have been terminated by Landlord's efforts to relet the
Premises, by Landlord's acts of maintenance or preservation with respect to the
Premises, or by appointment of a receiver to protect Landlord's interest under
this Lease. This list is merely illustrative of acts that may be performed by
Landlord without terminating Tenant's right to possession.
(f) Tenant waives redemption or relief from forfeiture under California
Code of Civil Procedure Sections 1174 and 1179, or under any other present or
future law, if Tenant is evicted or Landlord takes possession of the Premises by
reason of any default of Tenant hereunder.
29. DAMAGE OR DESTRUCTION
(a) In the event the Premises, or any part of the Complex that provides
building services to the Premises, or the parking areas for the Premises (to the
extent any parking areas are lost or become unusable) are damaged by fire or
other casualty, to the extent of available insurance proceeds and an amount
equal to Landlord's insurance deductible or otherwise uninsured amount, but in
either case not to exceed $50,000 unless Landlord, in its sole discretion,
determines to spend an amount greater than $50,000, Landlord shall diligently
repair and restore the same to substantially the same condition as existing
immediately prior to such damage to the fullest extent possible, subject to the
provisions of this Section 29, provided that if any repairs to the Premises
cannot reasonably be made within one hundred eighty (180) days after issuance of
a building permit therefor under the laws and regulations of federal, state and
local governmental authorities having jurisdiction thereof, either Landlord or
Tenant may by notice to the other given within thirty (30) days after the date
of such fire or other casualty, elect to terminate this Lease as of a date
specified in such notice. Landlord shall notify Tenant, within twenty (20) days
after the date of such fire or other casualty, of the estimated period required
for repairing any
Page 28
such damage to the Premises and the estimated cost of repairing such damage. In
the event Landlord's deductible or otherwise uninsured amount exceeds $50,000
and Landlord elects not to spend an amount greater than $50,000 in addition to
the insurance proceeds received by Landlord to restore the Premises, then Tenant
may elect upon written notice to Landlord to provide any amount in excess of the
$50,000 to restore the Premises to substantially the same conditions as existing
immediately prior to such damage. Notwithstanding the foregoing: (i) if any such
damage to the Premises shall occur during the final year of the Lease Term (with
all options to extend having then occurred or expired or been waived without
exercise) and the reasonably estimated cost of repairing such damage exceeds ten
percent (10%) of the full replacement value of the Premises (including all
Tenant Improvements, and any alterations, additions or other improvements),
either Landlord or Tenant may instead elect to terminate this Lease upon written
notice given to the other within thirty (30) days after the date of such fire or
other casualty, in which event this Lease shall terminate as of the termination
date specified in such notice; and (ii) if the reasonably estimated cost of
repairing any damage to the Premises which is not covered by any applicable
insurance coverage exceeds twenty percent (20%) of the full replacement value of
the Premises (including all Tenant Improvements, and any alterations, additions
or other improvements), then Landlord may instead elect to terminate this Lease
upon written notice given to Tenant within thirty (30) days after the date of
such fire or other casualty, in which event this Lease shall terminate as of the
termination date specified in Landlord's notice.
(b) where more than one patty is entitled to and in fact gives any notice
of termination, the earlier of the termination dates specified in such notices
of termination shall be controlling. As to any notice of termination given by
Landlord which provides for a period of notice of termination shorter than
thirty (30) days, Tenant shall have the right by notice to Landlord to require
that such shorter notice period given by Landlord be extended to be a period of
thirty (30) days. In the event of the occurrence of any such damage unless the
damage were due to the willful misconduct of Tenant, an abatement of rent (both
Base Rent and additional rent) under this Lease shall be allowed Tenant during
the period and to the extent Tenant's use of the Premises in the conduct of its
business is materially affected by any damage to, or any repairs being made to,
the Premises, the Building or the Complex; provided however, that such abatement
of rent shall not exceed the amount of any rent loss insurance proceeds, or such
other proceeds, that are paid to Landlord with respect to such occurrence and
nothing herein shall preclude Landlord from being entitled to collect the full
amount of any rent loss insurance proceeds maintained by Landlord. Tenant shall
not be entitled to any compensation or damages from Landlord for loss of the use
of the Premises, damage to Tenant's personal property or any inconvenience
occasioned by any damage, repair or restoration.
(c) A total destruction of the Building automatically shall terminate this
Lease. Landlord and Tenant acknowledge that this Lease constitutes the entire
agreement of the parties regarding events of damage or destruction, and Tenant
waives the provisions of California Civil Code Sections 1932(2) and 1933(4) and
any similar statute now or hereafter in force.
(d) If the Premises are to be repaired subject to the provisions of this
Section 29, Landlord shall repair any injury or damage to the Building itself
and restore the Premises to the condition existing upon substantial completion
of the Tenant Improvements, as such Tenant
Page 29
Improvements may be modified or supplemented by any subsequent alterations,
additions or improvements; provided, however, Tenant shall make available to
Landlord the proceeds of any insurance to be maintained by Tenant thereon
pursuant to Section 1 9(a)(ii) when and to the extent needed to pay the cost of
any such repairs or replacements by Landlord to the Tenant Improvements, as such
Tenant Improvements may have been modified or supplemented by any subsequent
alterations, additions or improvements, and Tenant shall pay the cost of
repairing or replacing all Tenant's trade fixtures, furnishing, equipment and
other personal property.
30. EMINENT DOMAIN
If all or any part of the Premises shall be taken or appropriated by any
public or quasi public authority under the power of eminent domain, and such
taking will substantially impair Tenant's use of the Premises for more than
ninety (90) days, Tenant shall have the right, at its option, to terminate this
Lease as of the date of such taking. If all or any substantial part of the
Premises shall be permanently taken or appropriated by any public or quasi
public authority under any power of eminent domain, either Landlord or Tenant
may terminate this Lease. In either of such events, Landlord shall be entitled
to and Tenant upon demand of Landlord shall assign to Landlord any rights of
Tenant to any and all income, rent award, or any interest therein relating to
the value of any unexpired term of this Lease, and Tenant shall have no claim
against Landlord for the value of any unexpired term of this Lease. If a part of
the Premises shall be so taken or appropriated and neither party hereto shall
elect to terminate this Lease, the rent thereafter to be paid by Tenant shall be
equitably reduced.
31. CLAUSES, PLATS AND RIDERS
Clauses, plats and riders, if any, affixed to this Lease are incorporated
herein and made a part hereof. In the event of variation or discrepancy, the
duplicate original hereof, including such clauses, plats and riders, if any,
held by Landlord shall control.
32. BOMA MEASUREMENTS
(a) All calculations of rentable square footage of the Premises, Equipment
Area or other space leased under this Lease shall be made in accordance with the
Building Owners and Managers Association's 1996 American National standard
method of floor measurement for office buildings. If by reason of actual
measurement of the Premises, it is ascertained that the rentable square footage
is different from the rentable square footage stated in the Basic Lease
Information, there shall be a like recalculation and amendment to the Basic
Lease Information. If as a result of recalculation of the rentable square
footage it is determined that Tenant paid in excess of what it should have,
Tenant may apply the amount of overpayment against rent due from Tenant; and if
a credit remains at the end of the Term, Landlord shall remit the amount thereof
to Tenant within thirty (30) days thereafter. If as a result of recalculation of
the rentable square footage it is determined that Tenant paid less than it
should have, Tenant shall remit the amount of the under payment to Landlord
within ten (10) days of such recalculation.
(b) Tenant and Landlord agree to recalculate the rentable area of the
Premises as of the Projected Delivery Date. Landlord's architect shall provide,
subject to verification by
Page 30
Tenant's architect, the rentable area calculation for the Premises as measured
in accordance with subsection (a). Such recalculation of the rentable area of
the Premises, shall include the enclosed entry area of 866 Malcolm Road and one-
half(l/2) of the enclosed breezeway area between 866 Malcolm Road and 863 Mitten
Road and shall not include the square footage of the restrooms in F Wing of the
Complex, provided that Tenant has built, as part of its Tenant improvements,
restrooms in the Premises and Tenant expressly agrees not to use the F Wing
Complex restrooms in conjunction with its leasing of the Premises.
33. EXISTING TENANTS
(a) Tenant acknowledges that the Premises are currently under lease to
other tenants ("Existing Tenants"). Landlord agrees to use commercially
reasonable efforts to buy out the leases of the Existing Tenants or to relocate
the Existing Tenants to other space within the Complex prior to the Projected
Delivery Date. If despite Landlord's commercially reasonable efforts, Landlord
cannot deliver possession of the entire Premises to Tenant on or before the
Projected Delivery Date due to the filing for bankruptcy by an Existing Tenant
(an "Existing Tenant Delay"), then, subject to the provisions of this Section 33
and Section 4 above, this Lease shall not be void or voidable, nor shall
Landlord be liable to Tenant for any loss or damage resulting therefrom;
(b) Landlord agrees to use reasonable efforts to minimize the costs of
relocating or buying out the leases of any Existing Tenants and Landlord agrees
to consult with Tenant regarding any proposed terms or costs to be paid for the
relocation or buying out of an Existing Tenant. Tenant and Landlord agree to
share the cost of relocating Existing Tenants or buying out the leases of
Existing Tenants (collectively, the "Relocation Costs") as follows:
(i) Landlord shall pay twenty five percent (25%) of the Relocation Costs,
and Tenant shall pay for seventy-five percent (75%) of the Relocation Costs,
subject to adjustment. Landlord's percentage of the Relocation Costs shall be
adjusted if Landlord and an Existing Tenant agree at any time prior to six (6)
months after the Commencement Date to the terms of a new or amended lease for
relocation space in the Complex and the term of such new lease exceeds the term
of the prior lease in the Premises by one year or more. In that event, Landlord
shall pay an additional ten percent (10%) of the Relocation Costs for such
Existing Tenant for each year of the additional term under the new lease. For
example, if an Existing Tenant executes a new lease for the relocation premises
that is for a term that is three years longer than the term of the Existing
Tenant's lease for a portion of the Premises, Landlord's share of the Relocation
Costs for that Existing Tenant will be 25% + (3x10%) = 55%, and Tenants share
will be 45%.
(ii) Notwithstanding the foregoing, in no event shall Tenant's aggregate
share of the Relocation Costs exceed Thirty-Seven Thousand Five Hundred Dollars
($37,500).
(iii) Landlord and Tenant shall concurrently pay all Relocation Costs for
an Existing Tenant upon receipt of invoices or other reasonably satisfactory
evidence of such costs. In the event that Tenant fails to pay any such amount
when due, then Landlord shall have the right to deduct the same from the Tenant
Improvement Allowance.
Page 31
(c) During the Early Occupancy Period, as Existing Tenants vacate portions
of the Premises, Landlord shall tender to Tenant such vacant portions of the
Premises in an 'as is' condition. Landlord shall have no obligation whatsoever
to make any improvements or renovation to the vacant portion other than as set
forth in the Work Letter to prepare the same for Tenant's occupancy. By taking
possession of the Premises, Tenant shall be deemed to have accepted the Premises
in the condition in which Landlord was required to deliver the Premises. Tenant
shall be entitled to enter such vacant portions on the terms contained herein.
(d) During the Early Occupancy Period: (i) Tenant's use and occupancy of
any portion of the Premises shall be subject to the provisions of Section 4
above; (ii) Tenant's entry on and early possession of the Premises shall be
conducted in a manner so as not to materially interfere with any Existing
Tenants still occupying any portion of the Premises; (iii) Tenant shall deliver
to Landlord before entering on the Premises evidence of liability insurance
coverage required under this Lease; (iv) Tenant shall at all times during
Tenant's early possession keeps the Premises free of all mechanic's,
materialmen's and design professionals' liens arising from the work being
performed by Tenant and otherwise shall comply wit the provisions of Section 16;
(v) within tiny (30) days of delivery of the entire Premises (as the Premises
may be reduced by Tenant in accordance with the terms of Section 4 of this
Lease), Tenant shall separately meter the Premises; (vi) Tenant shall be subject
to and governed generally by all the applicable terms and conditions of this
Lease, except Tenant shall be obligated to pay only Interim Rent but not any
other additional rent (with the exception that Tenant or its contractor shall
pay as additional rent the reasonably allocable cost of security and any
electricity, water, HVAC and other utilities used by Tenant in the Premises in
demolition) for early occupancy unless Tenant is conducting business from the
Premises or any part thereof, in which case Tenant shall be liable for Base Rent
and additional rent as provided in Section 4 (c); and (vii) Tenant shall not be
permitted to enter any portion of the Premises still occupied by Existing
Tenants.
(e) As respects any portions of the Premises, Tenant shall have the right,
at its sole cost and expense, promptly following any Existing Tenant's vacating
of a portion of the Premises, to have such portion tested by a reputable
environmental consulting firm to confirm that such portion of the Premises
(including any drains) does not contain any Hazardous Materials. A copy of any
environmental consultant's report on Hazardous Materials shall be delivered by
Tenant to Landlord within ten (10) days of receipt by Tenant. If the testing
reflects the presence of any Hazardous Materials, Tenant shall notify Landlord
thereof, and Tenant may elect within thirty (30) days after receipt of such
report (i) to accept such portion of the Premises in such condition and to cause
such Hazardous Materials to be removed at its sole cost and expense, (ii) to
refuse delivery of such space (with the size of the Premises reduced on a pro
rata basis where appropriate in light of the reduced square footage area of the
Premises being leased), or (iii) to terminate this Lease. The foregoing right of
Tenant to refuse delivery of any portion of the Premises shall not extend to any
floor tile, mastic or floor coating which may contain asbestos. Landlord shall
not have any obligation to cause such Hazardous Materials to be removed from the
Premises. In the event Tenant refuses delivery of such space or terminates this
Lease, Tenant shall repair the space to the condition prior to commencement of
such testing and shall indemnify Landlord pursuant to Section 18 for any of
Tenant's testing activities. The period for election by Tenant as to the
acceptance or refusal of the delivery of any portion of the
Page 32
Premises shall be limited so as not to exceed sixty (60) days from the date of
delivery by Landlord to Tenant of the respective portion of the Premises,
provided, however, that Tenant shall have the right upon payment to Landlord of
a lump sum equal to One Dollar ($1.00) per square foot of the Premises that has
then been tendered to Tenant (an "Inspection Extension Payment"), to extend the
sixty day period stated above for an additional thirty (30) days. If the Lease
is ultimately terminated pursuant either to this Section 33 or Section 4 above,
Landlord's obligation as to reimbursing Tenant for one-half of any Interim Rent
or Relocation Costs paid by Tenant as provided in Section 4(a) above, shall not
extend to such Inspection Extension Payment.
Notwithstanding the foregoing, as respects the portion of the Premises
currently leased by Orkin ("Orkin Space"), Tenant may only refuse delivery of
the Orkin Space and the Lease shall remain in full force and effect (with the
size of the Premises reduced on a pro rata basis where appropriate in light of
the reduced square footage area of the Premises being leased) but Tenant shall
not have the right to terminate the Lease except as to that portion of the
Premises comprised of the Orkin Space.
(f) Landlord represents to Tenant that it does not have any actual
knowledge of any material defects in the construction of any portion of the
Premises or in any operating systems or utilities servicing the Premises and
that it shall be responsible to cause the existing HVAC equipment serving the
Premises or any portion thereof to be in reasonable working order at the time of
delivery of such portions of the Premises (or so much of the Premises as Tenant
elects to6 Lease in accordance with this Section) to Tenant.
34. SALE BY LANDLORD
In the event the Landlord hereunder shall sell or convey the Building, all
liabilities and obligations on the part of the Landlord under this Lease
accruing thereafter shall terminate, and thereupon all such liabilities and
obligations shall be binding upon the new owner. Tenant agrees to attorn to such
new owner. If any Security Deposit be given by Tenant to secure the faithful
performance of all or any of the covenants of this Lease on the part of Tenant,
Landlord may transfer and/or deliver the Security Deposit to the successor-in-
interest of Landlord and thereupon Landlord shall be discharged from any further
liability in reference thereto. Except as set forth in this Section 34, this
Lease shall not be affected by any such sale or conveyance.
35. LIMITATION OF LIABILITY
It is expressly understood and agreed by Tenant that none of Landlord's
covenants, undertakings or agreements are made or intended as personal
covenants, undertakings or agreements by Landlord, any mortgagee having a
security interest in the Complex or portion thereof, Landlord's partners (if
Landlord is a partnership), Landlord's shareholders, officers and directors (if
Landlord is a corporation) or Landlord's members, managers, officers and
directors (if Landlord is a limited liability company). Any liability for damage
or breach or nonperformance by Landlord shall be collectible only out of
Landlord's ownership interest in the Complex and no personal liability is
assumed by, nor at any time may be asserted against,
Page 33
Landlord, any mortgagee having an interest in the Complex or portion thereof; or
Landlord's partners, shareholders, members, managers, officers, or directors, as
applicable, or any of their respective officers, agents, employees, legal
representatives, successors or assigns, all such liability, if any, being
expressly waived and released by Tenant.
36. ESTOPPEL CERTIFICATES
At any time and from time to time, within ten (10) days after request by
either Landlord or Tenant (the "Requesting Party"), the other party (the
"Responding Party") shall execute, acknowledge and deliver to Requesting Party a
statement certifying the Commencement Date of this Lease, stating that this
Lease is unmodified and in hill force and effect (or if there have been
modifications, that this Lease is in hill force and effect as modified and the
date and nature of such modifications) and the dates to which the rent has been
paid, and setting forth such other matters as may reasonably be requested by the
Requesting Party. Landlord and Tenant intend that any such statement delivered
pursuant to this section may be relied upon by any mortgagee or the beneficiary
of any deed of trust or by any purchaser or prospective purchaser of the
Building or Complex or by any assignee of, sublessee under, Leasehold Mortgagee,
Equipment Mortgagee or other lender to or investor in Tenant. If the Responding
Party fails to so execute, acknowledge and deliver any such certificate within
the time provided, then the Requesting Party may certify any of the foregoing
matters, on which any such person may rely, and the Responding Party shall be
estopped from denying the truth of such facts. In addition, from time to time,
upon Landlord's request, Tenant shall promptly furnish Landlord Tenant's most
recently prepared financial statements and, if rendered in the ordinary course
of conducting Tenant's business, a copy of Tenant's latest certified financial
statements, which financial statements shall be treated as confidential by
Landlord.
37. RIGHT OF LANDLORD TO PERFORM
All covenants and agreements to be kept or performed by Tenant under any of
the terms of this Lease shall be performed by Tenant at Tenant's sole cost and
expense and without any abatement of rent. If Tenant shall fail to pay any sum
of money, other than rent, required to be paid by it hereunder or shall fail to
perform any other act on its part to be performed hereunder, and such failure
shall continue for ten (10) days after notice thereof by Landlord, Landlord may,
but shall not be obligated to, and without waiving any default of Tenant or
releasing Tenant from any obligations of Tenant hereunder, make any such payment
or perform any such other act on Tenant's part to be made or performed as
provided herein. All sums so paid by Landlord and all necessary incidental
costs, together with interest thereon at the highest rate allowed by law from
the date of such payment by Landlord, shall be paid to Landlord forthwith on
demand, and Landlord shall have (in addition to any other right or remedy of
Landlord) the same rights and remedies in the event of nonpayment thereof by
Tenant as in the case of default by Tenant in payment of rent.
38. LANDLORD'S DEFAULT AND TENANT'S REMEDIES
Landlord shall not be deemed to be in default (entitling Tenant to the
extent permitted by applicable law to terminate this Lease) unless Landlord
fails to perform any of its obligations
Page 34
under this Lease and fails to cure such default within thirty (30) days after
written notice from Tenant specifying the nature of such default where such
default could reasonably be cured within said thirty (30) -day period, or fails
to commence such cure within said thirty (30)-day period and thereafter
continuously with due diligence prosecute such cure to completion where such
default could not reasonably be cured within said thirty (30)-day period. Tenant
waives the provisions of Section 1932(1), 1941 and 1942 of the California Civil
Code and/or any similar or successor law regarding Tenant's right to terminate
this Lease or to make repairs and deduct the expenses of such repairs from the
rent due under the Lease.
39. MORTGAGEE PROTECTIONS
(a) If any lender requires, as a condition to its lending funds the
repayment of which is to be secured by a mortgage or trust deed on the Complex
or any portion thereof, that certain minor modifications be made to this Lease,
which modifications will not require Tenant to pay any additional amounts or
otherwise change materially the rights or obligations of Tenant hereunder,
Tenant shall not unreasonably withhold its approval to and execution of any
appropriate instruments designed to effect such modifications.
(b) In the event of any act or omission by Landlord which would give Tenant
the right to terminate this Lease, Tenant will not exercise any such right to
terminate until (i) it shall have given written notice of the act or omission to
Landlord and to the holder(s) of any mortgage or deed of trust encumbering the
Complex, if the name and address of such holder(s) have been furnished to
Tenant, and (ii) such holder(s) shall have been given a reasonable opportunity
to cure Landlord's default, including time to obtain possession of the Complex
or portion thereof by power of sale or judicial foreclosure or other appropriate
legal proceedings, if such should prove necessary to effect a cure.
40. ATTORNEY FEES
If as a result of any breach or default on the part of either patty under
this Lease ("Defaulting Party"), the other party uses the services of any
attorney in order to secure compliance with this Lease, the Defaulting Party
shall reimburse the other upon demand for any and all attorneys' fees and
expenses incurred by the other party, whether or not formal legal proceedings
are instituted. Should either party bring action against the other party to
enforce the provisions of this Lease, then the party which prevails in such
action shall be entitled to its reasonable attorneys' fees and expenses related
to such action in addition to all other recovery or relief.
41. SURRENDER OF POSSESSION
The voluntary or other surrender of this Lease by Tenant or mutual
cancellation thereof shall not work a merger and, at the option of Landlord,
shall terminate all or any existing subleases or subtenancies, or at the option
of Landlord, may operate as an assignment to Landlord of any or all such
subleases or subtenancies.
Page 35
42. WAIVER
The waiver by Landlord or Tenant of performance of any term, covenant or
condition herein contained shall not be deemed to be a waiver of such term,
covenant or condition or any subsequent breach of the same or any other term,
covenant or condition herein contained. The subsequent acceptance of rent
hereunder by Landlord shall not be deemed to be a waiver of any preceding breach
by Tenant of any term, covenant or condition of this Lease, other than the
failure of Tenant to pay the particular rent so accepted, regardless of
Landlord's knowledge of such preceding breach at the time of acceptance of such
rent.
43. NOTICES
Any notices required or permitted to be given hereunder shall be given in
writing and shall be delivered (i) in person, (ii) by certified mail, postage
prepaid, return receipt requested, (iii) by a commercial overnight courier that
guarantees next day delivery and provides a receipt, or (iv) by tele-facsimile
or telecopy, and such notices shall be addressed to Tenant or Landlord, as
applicable, at the addresses specified for each in the Basic Lease Information
or to such other address as either party may from time to time specify in
writing to the other party. Any notice shall be deemed delivered (i) when
actually delivered, if such delivery is in person, (ii) three (3) business days
after deposit with the U.S. Postal Service, if such delivery is by certified
mail, (iii) one (1) business day after deposit with the overnight courier
service, if such delivery is by an overnight courier service, and (iv) one (1)
business day after transmission, if such delivery is by tele-facsimile or
telecopy. The foregoing shall in no event prohibit notice from being given as
provided by the federal or state Rules of Civil Procedure, as the same may be
amended from time to time.
44. DEFINED TERMS AND MARGINAL HEADINGS
The words "Landlord" and "Tenant" as used herein shall include the plural
as well as the singular and words used in masculine gender shall include the
feminine and neuter. If there is more than one Tenant, the obligations hereunder
imposed upon Tenant shall be joint and several. The marginal headings and titles
to the sections of the Lease are not a part of this Lease and shall have no
effect upon the construction or interpretation of any part hereof.
45. TIME AND APPLICABLE LAW
Time is of the essence of this Lease and each and all of its provisions.
This Lease shall in all respects be governed by the laws of the state in which
the Premises are located.
46. SUCCESSORS
Subject to the provisions of Section 17 hereof, the covenants and
conditions herein contained shall be binding upon and inure to the benefits of
the heirs, successors, executors, administrators and assigns of the parties
hereto.
Page 36
47. ENTIRE AGREEMENT
This Lease constitutes the entire agreement between Landlord and Tenant and
no promises or representations. express or implied, either written or oral, not
herein set forth shall be binding upon or inure to the benefit of Landlord or
Tenant. This Lease shall not be modified by any oral agreement, either express
or implied, and all modifications hereof shall be in writing and signed by both
Landlord and Tenant.
48. LATE CHARGE; INTEREST
In the event Tenant shall fail to pay any rent or other sums due hereunder
when due under this Lease, then the amount so due and unpaid shall bear interest
from and after due date until paid at an annual rate of interest equal to the
lesser of (i) three percent (3%) over the prevailing "prime rate" announced from
time, to time by the Bank of America NT & SA for purposes of pricing loans to
major corporate borrowers, or (ii) the highest rate allowed by law for
commercial obligations, which interest shall be payable forthwith upon demand.
In addition to such interest, with respect to any installment of Base Rent and
additional rent not received by Landlord within five (5) business days after
written notice from Landlord that such payment is past due, Landlord shall be
entitled to collect from Tenant a one time late collection charge in an amount
equal to five percent (5%) of the delinquent amount to compensate Landlord for
Landlord's administrative and other costs and efforts in connection therewith.
Landlord and Tenant hereby agree that such five percent (5%) late charge
represents a reasonable approximation of Landlord's losses and costs that would
be incurred in connection with the late payment of such monthly rent. (The
foregoing shall be in addition to any other fight or remedy of Landlord).
49. BROKERS
(a) Landlord and Tenant each represent and warrant to the other that, other
than the Broker identified in the Basic Lease Information, no broker, agent, or
finder negotiated or was instrumental in negotiating or consummating this Lease
on its behalf and that it knows of no broker, agent, or finder, other than the
Broker, who is, or might be, entitled to a commission or compensation in
connection with this Lease. Broker's commission or compensation is to be paid
pursuant to a separate agreement.
(b) In the event of any such claims for additional brokers' or finders'
fees or commissions in connection with the negotiation, execution or
consummation of this Lease, then Landlord shall indemnity, save harmless and
defend Tenant from and against such claims, and any liability, loss, damage, or
expense (including attorneys" fees and costs) if they shall be based upon any
statement, representation or agreement by Landlord, and Tenant shall indemnify,
save harmless and defend Landlord from and against such claims, and any
liability, loss, damage, or expense (including attorneys' fees and costs) if
they shall be based upon any statement, representation or agreement made by
Tenant. The parties obligations under this section shall survive the expiration
or earlier termination of the Lease.
Page 37
50. NO DISCRIMINATION
Tenant agrees for Tenant and Tenant's heirs, executors, administrators,
successors and assigns and all persons claiming tinder or through Tenant, and
this Lease is made and accepted upon the following conditions: that there shall
be no discrimination against or segregation of any person or group of persons on
account of race, color, creed, sex, religion, martial status, ancestry or
national origin (whether in the use, occupancy, subleasing, transferring, tenure
or enjoyment of the Premises or otherwise) nor shall Tenant or any person
claiming through or under Tenant establish or permit any such practice or
practices of discrimination or segregation with reference to or arising out of
the use or occupancy of the Premises by Tenant or any person claiming through or
under Tenant.
51. PARKING AND COMMON AREAS
(a) Apart from any parking to which Tenant may entitled to under the 863
Mitten Lease, Tenant and Tenant's employees shall have the right to six (6)
parking spaces for Tenant's exclusive use on the east side of the Premises in
the area so identified on Exhibit B attached hereto. In addition, Tenant and
Tenant's employees shall have the non-exclusive right during the term to use
additional parking spaces such that the total number of parking spaces
(including the reserved spaces in the preceding sentence) equals one (1) space
per 350 rentable square feet of the Premises. Unless as otherwise provided,
Tenants use of the parking area, as herein set forth, shall be in common with
other tenants of the Building and Complex and any other parties permitted by
Landlord to use the parking area, The parking rights herein granted shall not be
deemed a lease but shall be construed as a license granted by Landlord to Tenant
for the term of this Lease.
(b) Landlord shall have the right, without obligation, and from time to
time, to change the number, size, location, shape and arrangement of parking
areas and other common areas, restrict parking of tenants or their guests to
areas as are reasonably designated by Landlord, designate loading or handicap
loading areas, and change the level or grade of parking.
(c) Except as otherwise specifically provided herein, all access roads,
courtyards and other areas, facilities or improvements furnished by Landlord are
for the general and non-exclusive use in common of all tenants of the Building
or the Complex, and those persons invited upon the land upon which the Building
or the Complex is situated and shall be subject to the exclusive control and
management of Landlord, and Landlord shall have the right, without obligation to
establish, modify and enforce such Rules and Regulations which the Landlord may
deem reasonable and/or necessary.
52. SIGNAGE
(a) Tenant shall not place on the Premises any exterior signs or
advertisements, or any interior signs or advertisement that are visible from the
exterior of the Premises without Landlord's prior written consent, which
Landlord may withhold in its sole discretion, provided that such discretion
shall not be exercised in a discriminatory manner between Tenant and other
tenants.
Page 38
(b) Tenant may install one (1) sign identifying Tenant, provided that
Landlord approves, in its reasonable judgment, plans and specifications for such
sign and the location of such sign, and that such sign complies with all
applicable laws, regulations, ordinances and building codes. Landlord hereby
grants its approval to signage that would be in the location and with a maximum
size as follows: a parapet mounted sign on the side of Building E facing Malcolm
Road, which shall be dedicated exclusively to Tenant, with an overall size not
to. exceed three (3) feet in height and ten (10) feet in length. Landlord shall
not permit any other signage to be placed on the exterior of what is currently
commonly referred to as Building E, except any signage that may be required by
any appropriate municipal or other governmental authority, or in the last year
of the term (as the same may be extended pursuant to the terms of this Lease),
any leasing signs.
(c) Throughout the Term, Tenant shall have the right to signage adjacent to
or on the primary entrance to the Premises, with the name of Tenant, not to
exceed three (3) names. Landlord, at Landlord's expense, shall provide once for
such signage for one name. Any necessary revision to such directory shall be
made by Landlord, at Tenant's expense, within a reasonable time after written
notice from Tenant of the change making the revision necessary. Landlord shall
have the right to remove all non-permitted signs without notice to Tenant and at
the expense of Tenant.
(d) The size, design, color, location and other physical aspects of any sign
in or on the Building and otherwise within the Complex shall be subject to (i)
the Rules and Regulations set forth in Exhibit F, (ii) any signage criteria
which Landlord may reasonably establish from time to time, (iii) Landlord's
approval prior to installation, which approval may be withheld in its sole
discretion, provided that such discretion shall not be exercised in a
discriminatory manner between Tenant and other tenants.; and (iv) any
appropriate municipal or other governmental approvals. The costs of any
permitted sign, and the costs of its installation, maintenance and removal,
shall be at Tenants sole expense and shall be paid within ten (10) days of
Tenant's receipt of a bill from Landlord for the costs.
53. TELEPHONE SERVICE
(a) Except as required by the express terms of this Lease, Landlord shall
have no responsibility for providing to Tenant any telephone equipment,
including wiring within the Premises or for providing telephone service or
connections from the utility to the Premises.
(b) Tenant shall not alter, modify, add to or disturb any telephone wiring
in the Premises or elsewhere in the Building without the Landlord's prior
consent. Tenant shall be liable to Landlord for any damage to the telephone
wiring in the Building due to the act, negligent or otherwise, of Tenant or any
employee, contractor or other agent of Tenant. Tenant shall have no access to
the telephone closets within the Building, except in the manner and under
procedures established by Landlord. Tenant shall promptly notify Landlord of any
actual or suspected failure of telephone service to the Premises.
(c) All costs incurred by Landlord for the installation, maintenance,
repair and replacement of telephone wiring within the Building shall be an
Operating Expense, as otherwise
Page 39
defined in Section 7 of this Lease, unless Landlord is reimbursed for such costs
by other tenants of the Building.
(d) Landlord shall not be liable to Tenant and Tenant waives all claims
against Landlord whatsoever, whether for personal injury, property damage, loss
of use of the Premises, or otherwise, due to the interruption or failure of
telephone services to the Premises. Tenant agrees to obtain loss of rental
insurance adequate to cover any damage, loss or expense occasioned by the
interruption of telephone service.
54. HAZARDOUS SUBSTANCE DISCLOSURE
California law requires landlords to disclose to tenants the existence of
certain Hazardous Materials. Accordingly, the existence of gasoline and other
automotive fluids, maintenance fluids, copy fluids and other office supplies and
equipment, certain construction and finish materials, tobacco smoke, cosmetics
and other personal items, and asbestos containing materials ("ACM"), must be
disclosed. Gasoline and other automotive fluids are found in the parking area of
the Complex. Cleaning, lubricating and hydraulic fluids used in the operation
and maintenance of the Complex are found in the utility areas of the Complex not
generally accessible to tenants or the public. Many Complex occupants use copy
machines and printers with associated fluids and toners, and pens, markers, inks
and office equipment that may contain Hazardous Materials. Certain adhesives,
paints and other construction materials and finishes used in portions of the
Complex may contain Hazardous Materials. Although smoking is prohibited in the
public areas of the Complex, these areas may, from time to time, be exposed to
tobacco smoke. Complex occupants and other persons entering the Complex from
time to time may use or carry prescription and non-prescription drugs, perfumes,
cosmetics and other toiletries, and foods and beverages, some which may contain
Hazardous Materials. Certain floor tiles, mastic and floor coating in the
Building may also contain ACM. Other than such floor tile, mastic and floor
coating and as described in the environmental reports listed in Exhibit H
attached hereto, Landlord has no actual knowledge of any existing Hazardous
Materials in the Premises which will remain in the Premises at the time of
delivery thereof to Tenant, but it is acknowledged that Landlord has not made
any special investigation of the Premises with respect to Hazardous Materials.
55. AUTHORITY
If Tenant is a corporation, partnership, trust, association or other entity,
Tenant and each person executing this Lease on behalf of Tenant hereby covenants
and warrants that (i) Tenant is duly incorporated or otherwise established or
formed and validly existing under the laws of its state of incorporation,
establishment or formation, (ii) Tenant is duly qualified to do business in the
State of California, (iii) Tenant has lull corporate, partnership, trust,
association or other appropriate power and authority to enter into this Lease
and to perform all of Tenant's obligations hereunder, and (iv) each person (and
all persons if more than one signs) signing this -Lease on behalf of Tenant is
duly and validly authorized to do so.
Page 40
56. EXECUTION OF LEASE
The submission of this Lease to Tenant or its broker or other agent, does
not constitute an offer to Tenant to lease the premises. This Lease shall have
no force and effect until (i) it is executed and delivered by Tenant to Landlord
and (ii) it is hilly reviewed and executed by Landlord.
57. COUNTERPARTS
This Lease may be signed in multiple counterparts which, when signed by all
parties, shall constitute a binding agreement.
58. RECORDING
Except as provided herein, Tenant shall not record this Lease or any
memorandum or short form thereof. Landlord shall, upon Tenant's request join in
executing a memorandum of short form of this Lease, which shall be recorded at
Tenant's expense.
59. SEVERABILITY
The illegality, invalidity or unenforceability of any term, condition, or
provision of the Lease shall in no way impair or invalidate any other term,
provision or condition of the Lease, and all such other terms, provisions and
conditions shall remain in full force and effect.
60. COVENANTS AND CONDITIONS
All provisions, whether covenants or conditions, on the part of Tenant
shall be deemed to be both covenants and conditions.
61. QUIET ENJOYMENT
Landlord covenants and agrees that Tenant, upon making all of Tenant's
payments as and when due under the Lease, and upon performing, observing and
keeping the covenants, agreements and conditions of this Lease on its part to be
kept, shall peaceably and quietly hold, occupy and enjoy the Premises during the
term of this Lease Term without hindrance or molestation from Landlord subject
to the terms and provisions of this Lease.
62. CUMULATIVE REMEDIES
No remedy or election provided, allowed or given by any provision of the
Lease shall be deemed exclusive unless so indicated, but shall, whenever
possible, be cumulative with all other remedies in law or equity.
63. REASONABLE APPROVAL STANDARD
Unless specifically provided otherwise in this Lease, or unless a matter is
expressly stated to be within the sole discretion of that patty, whenever in
this Lease the review, acceptance,
Page 41
approval, or consent of either Landlord or Tenant ("Reviewing Party") is
required to the taking of or refraining from taking any action under this Lease,
or to the manner of performing or observing any covenant or condition of this
Lease (collectively "Matter"), the favorable review, acceptance, approval or
consent (collectively "Approval") as to any such Matter shall neither be
unreasonably withheld nor unduly delayed by the Reviewing Party, and if the
Reviewing Party desires to deny or withhold its Approval as to any such Matter,
the Reviewing Party shall, by written notice to the other party given within the
time period for the giving of such Approval as provided herein or elsewhere in
this Lease, state with particularity the basis for the denial or withholding by
such Reviewing Party of such Approval. The failure of the Reviewing Party to so
respond in writing to any Matter within twenty (20) days of receipt of the
written request of the other party (or within such other period of time for
response if this Lease otherwise expressly provides a specific period for such
Approval), shall be deemed to constitute the Reviewing Party's Approval of the
Matter.
IN WITNESS WHEREOF Landlord and Tenant have executed this Lease as of the day
and year first above written.
LANDLORD: TENANT:
SFO OFFICE ASSOCIATES LLC, a MEGABIOS CORP.,
California limited liability company a California corporation
/s/MICHAEL HALPER /s/PATRICK ENRIGHT
By: ______________________________ By: _______________________________
Michael Halper Patrick Enright
Name: ______________________________ Name: _______________________________
Manager CFO and Vice President
Title: ______________________________ Title: _______________________________
Page 42
EXHIBIT A-1
EQUIPMENT AREA
[SITE PLAN APPEARS HERE]
EXHIBIT B
SITE PLAN OF COMPLEX
(INCLUDING IDENTIFICATION OF TENANT'S RESERVED PARKING)
[SITE PLAN APPEARS HERE]
EXHIBIT C
DESCRIPTION OF SMALL-SCALE MANUFACTURING USES
In addition to office use, the Premises may be used for laboratory and
small-scale manufacturing uses involving research into and production of life
science and biomedical products as may be relevant from time to time to Tenant's
business. These laboratory and small-scale manufacturing uses currently include,
but are not limited to, research into and production of DNA plasmids (which
currently would involve using either or both fermentation and purification
processes). It is the understanding of both parties that the procedures and
processes involved in research and small-scale manufacturing will and are
allowed under the Lease to change from time to time as appropriate to Tenant's
business. Any laboratory and manufacturing procedures and processes shall
conform with any and all applicable governmental regulations and the terms of
this Lease.
EXHIBIT D-1
LEASE COMMENCEMENT DATE MEMORANDUM
Landlord: SFO OFFICE ASSOCIATES LLC,
a California limited liability company
Tenant: MEGABIOS CORP.,
a California corporation
Lease Date: March 18, 1997
Premises: 866 Malcolm Road, Building E
Burlingame, California 94010
Pursuant to Section 3 of the above-referenced Lease, the Commencement Date
hereby is established as ___________________________
LANDLORD: TENANT:
SFO OFFICE ASSOCIATES LLC, a MEGABIOS CORP.,
California limited liability company a California corporation
By: ______________________________ By: _______________________________
Name: _____________________________ Name: _____________________________
Title: ___________________________ Title: ____________________________
EXHIBIT D-2
PREMISES ACCEPTANCE DATE MEMORANDUM
Landlord: SFO OFFICE ASSOCIATES LLC, a California limited liability
company
Tenant: MEGABIOS CORP.,
a California corporation
Lease Date: March 18, 1997
Premises: 866 Malcolm Road, Building E
Burlingame, California 94010
Pursuant to Section 3 of the above-referenced Lease, the Premises Acceptance
Date hereby is established as ___________________________
LANDLORD: TENANT:
SFO OFFICE ASSOCIATES LLC, a MEGABIOS CORP.,
California limited liability company a California corporation
By: ______________________________ By: _______________________________
Name: _____________________________ Name: _____________________________
Title: ___________________________ Title: ____________________________
EXHIBIT A
LEGAL DESCRIPTION
Commonly known as: 819-863 Mitten Road and 866 Malcolm Road, Burlingame,
California and described as follows:
PARCEL ONE:
Lots 28, 29, 30, 31, and a portion of Lots 27 and 32, Block 3 as shown on
the Map entitled "EAST MILLSDALE INDUSTRIAL PARK UNIT NO. 2, BURLINGAME, SAN
MATEO COUNTY, CALIFORNIA," filed in the office of the County Recorder of San
Mateo County on August 3, 1959, in Book 52 of Maps at Pages 4, 5, and 6 and a
portion of Lots 13, 14, 15, 16, 17, 18, Block 3 as shown on the Map entitled
"EAST MILLSDALE INDUSTRIAL PARK UNIT NO. 1, BURLINGAME, SAN MATEO COUNTY,
CALIFORNIA," filed in the office of the County Recorder of San Mateo County on
January 23, 1959, in Book 50 of Maps at Pages 24 and 25, more particularly
described as a whole as follows:
BEGINNING at the point of intersection of the Southwesterly line of said
Lot 18 with the Southeasterly line of Mitten Road as shown on last mentioned
Map; thence from said point of beginning along said Southwesterly line of Lot 18
South 50 degrees 41' 25" East 305.00 feet to a point distant thereon North 50
degrees 41' 25" West 105.00 feet from the most Southerly corner of said Lot 18;
thence leaving said Southwesterly line North 39 degrees 18' 35" East 363.00
feet; thence South 50 degrees 41' 25" East 105.00 feet to a point on common line
between said subdivisions above mentioned; thence along said common line South
39 degrees 18' 35" West 338.00 feet; thence South 50 degrees 41' 25" East 235.00
feet to the Northwesterly line of Malcolm Road, as shown on the Map first above
mentioned, thence along said Northwesterly line of Malcolm Road North 39 degrees
18' 35" East 315.00 feet to the Northeasterly line of said Lot 31; thence along
said Northeasterly line North 50 degrees 41' 25" West 175.00 feet; thence
leaving the last mentioned line North 39 degrees 18' 35" East 60.00 feet to the
Northeasterly line 50 degrees of Lot 32; thence along the last mentioned line
North 41' 25" West 60.00 feet to the common line between said Lots 32 and 13;
thence along said common line South 39 degrees 18' 35" West 5.00 feet; thence
leaving the last mentioned line North 50 degrees 41' 25" West 410.00 feet to the
said Southeasterly line of Mitten Road; thence along the last mentioned line
South 39 degrees 18' 35" West 395.00 feet to the point of beginning.
PARCEL TWO:
Lot 26 and a portion of Lot 27 Block 3 as shown on the Map entitled "EAST
MILLSDALE INDUSTRIAL PARK UNIT NO. 2, BURLINGAME, SAN MATEO COUNTY, CALIFORNIA,"
filed in the office of the County Recorder of San Mateo County on August 3,
1959, in Book 52 of Maps at Pages 4, 5 and 6 and a portion of Lots 13, 14, 15,
16, 17, and 18, Block 3 as shown on the Map entitled "EAST MILLSDALE INDUSTRIAL
PARK UNIT NO. 1, BURLINGAME, SAN MATEO COUNTY, CALIFORNIA," filed in the office
of the County Recorder of San Mateo County on January 23, 1959, in Book 50 of
Maps at Pages 24 and 25 more particularly described as a whole as follows:
EXHIBIT A - Page 1
BEGINNING at the point of intersection of the Southwesterly line of said
Lot 26 with the Northwesterly line of Malcolm Road as shown on the first above
mentioned Map; thence from said point of beginning along said Southwesterly line
of Lot 26 North 50 degrees 41' 25" West 235.00 feet to the most Westerly corner
thereof; thence along the Northwesterly line of said Lots 26 and 27 North 39
degrees 18' 35" East 75.00 feet to the most Southerly corner of said Lot 18
thence along the Southwesterly line of said Lot 18 North 50 degrees 41' 25" West
105.00 feet; thence leaving the last mentioned line North 39 degrees 18' 35"
East 363.00 feet; thence South 50 degrees 41' 25" East 105.00 feet to a point on
common line between said subdivisions above mentioned; thence along the common
line South 39 degrees 18' 35" West 338.00 feet; thence South 50 degrees 41' 25"
East 235.00 feet to the said Northwesterly line of Malcolm Road; thence South 39
degrees 18' 35" West along the last mentioned Road 100.00 feet to the point of
beginning.
A.P.N. 024-403-400.J.P.N. 24-40-403-40.
A.P.N. 024-403-410.J.P.N. 24-40-403-41.
A.P.N. 026-301-310.J.P.N. 26-30-301-31.
A.P.N. 026-301-320.J.P.N. 26-30-301-32.
PARCEL THREE:
Lots 7, 8, and 9 in Block 3 as shown on that certain Map entitled "EAST
MILLSDALE INDUSTRIAL PARK UNIT NO. 1, BURLINGAME, SAN MATEO COUNTY, CALIFORNIA,
filed in the office of the County Recorder of San Mateo County on January 23,
1959, in Book 50 of Maps at Pages 24 and 25.
PARCEL FOUR:
Lot 12 and a portion of Lots 11 and 13, Block 3 as shown on that certain
Map entitled "EAST MILLSDALE INDUSTRIAL PARK UNIT NO. 1, BURLINGAME, SAN MATEO
COUNTY, CALIFORNIA," filed in the office of the County Recorder of San Mateo
County on January 23, 1959, in Book 50 of Maps at Pages 24 and 25 and a portion
of Lots 33 and 34, Block 3 as shown on that certain Map entitled "EAST MILLSDALE
INDUSTRIAL PARK UNIT NO. 2, BURLINGAME, SAN MATEO COUNTY, CALIFORNIA," filed in
the office of the County Recorder of San Mateo County on August 3, 1959, in Book
52 of Maps at Pages 4, 5 and 6, more particularly described as a whole as
follows:
BEGINNING at a point on the Southeasterly line of Mitten Road as shown on
the first above mentioned Map distant thereon South 39 degrees 18' 35" West
49.00 feet from the most Northerly corner of said Lot 11; thence from said point
of beginning South 50 degrees 4l' 25" East 410.00 feet to a point on the
dividing line between said Lots 11 and 34; thence continuing South 50 degrees
4l' 25" East 64.00 feet; thence South 39 degrees 18' 35" West 71.00 feet to the
Southwesterly line of said Lot 33; thence North 50 degrees 51' 25" West along
the last mentioned line 64.00 feet to the most Easterly corner of said Lot 13;
thence along the Southeasterly line of said Lot 13, South 39 degrees 18' 35"
West 5.00 feet; thence leaving the last mentioned line North 50 degrees 41' 25"
West 410.00 feet to the said
EXHIBIT A - Page 2
Southeasterly line of Mitten Road; thence North 39 degrees 18' 15" East along
the last mentioned line 76.00 feet to the said point of beginning.
PARCEL FIVE:
Lot 10 and a portion of Lot 11, Block 3, as shown on that certain Map
entitled "EAST MILLSDALE INDUSTRIAL PARK UNIT NO. 1, BURLINGAME, SAN MATEO
COUNTY, CALIFORNIA," filed in the office of the County Recorder of San Mateo
County on January 23, 1959, in Book 50 of Maps at Pages 24 and 25 and a portion
of Lots 34 and 35, Block 3 as shown on that certain Map entitled "EAST MILLSDALE
INDUSTRIAL PARK UNIT NO. 2, BURLINGAME, SAN MATEO COUNTY, CALIFORNIA," filed in
the office of the County Recorder of San Mateo County on August 3, 1959, in Book
52 of Maps at Pages 4, 5 and 6, more particularly described as a whole as
follows:
BEGINNING at the point of intersection of the Northeasterly line of said
Lot 10 with the Southeasterly line of Mitten Road, as shown on the first above
mentioned Map; thence from said point of beginning along said Northeasterly line
of Lot 10 South 50 degrees 41' 25" East 410.00 feet to the most Northerly corner
of said Lot 35; thence along the Northeasterly line of laid lot 35, South 50
degrees 41' 25" East 64.00 feet; thence South 39 degrees 18' 35" West 109.00
feet; thence North 50 degrees 41' 25" west 64.00 feet to a point on the dividing
line between said Lots 34 and 11; thence continuing North 50 degrees 41' 25"
West 410.00 feet to a point on said Southwesterly line of Mitten Road distant
thereon South 39 degrees 18' 35" West 49.00 feet from the most Northerly corner
of said Lot 11; thence North 39 degrees 18' 35" East along the last mentioned
line, 109.00 feet to the point of beginning.
A.P.N. 024-403-360.J.P.N. 24-40-403-36.
A.P.N. 024-403-370.J.P.N. 24-40-403-37.
A.P.N. 024-403-380.J.P.N. 24-40-403-38.
A.P.N. 026-301-220.J.P.N. 26-30-301-22.
A.P.N. 026-301-240.J.P.N. 26-30-301-24.
EXHIBIT A - Page 3
EXHIBIT E
WORK LETTER AGREEMENT
This Work Letter Agreement ("Agreement") supplements that certain lease
(the "Lease") dated and executed concurrently herewith by and between SFO OFFICE
ASSOCIATES LLC, a California limited liability company ("Landlord"), and
MEGABIOS CORP., a California corporation ("Tenant"), with the terms defined in
this Lease to have the same definition where used herein.
This Agreement shall set forth the terms and conditions relating to the
construction of the Premises.
1. LANDLORD IMPROVEMENTS
Landlord shall cause the Building to be improved pursuant to the plans
prepared by MSI, Job No. 9610116, dated November 6, 1996 ("MSI Plans"), and to
the bid provided by Rudolf and Sletten dated December 3, 1996, during the time
period Tenant is constructing the Tenant Improvements ("Landlord Improvements").
The cost of such Landlord Improvements shall be borne equally by Landlord and
Tenant; provided, however, Tenant's portion of such costs for Landlord
Improvements shall not exceed fifty percent (50%) of the Tenant improvement
Allowance as defined in Section 2 below except in the event that the City of
Burlingame ("City") requires Landlord to complete additional seismic upgrade
work not included in the MSI Plans. In the event the City requires such
additional seismic upgrade work not included in the MSI Plans, then Tenant and
Landlord shall bear such costs equally without a limitation on the amount of
Tenant's portion of such costs. The preliminary budget for the Landlord
Improvements is set forth on the attached Schedule 1 to this Work Letter and is
----------
subject to adjustment. Included in the Landlord Improvement costs are the costs
of the plans and specifications for the Landlord Improvements, construction
costs, a five percent (5%) fee to Landlord for construction administration,
costs for building permits and inspections and other costs directly associated
with such work.
2. TENANT IMPROVEMENTS
(a) Tenant Improvement Allowance. Tenant shall be entitled to a one-time
----------------------------
tenant improvement allowance (the "Tenant Improvement Allowance") in the amount
of $10.00 for each of the rentable square feet of the Premises to be applied
toward payment of the tenant improvement costs described below in connection
with the remediation, demolition and construction work described in the
"Approved Working Drawings," as that term is defined in Section 2 below (the
"Tenant Improvements"). In no event shall Landlord be obligated to make
disbursements pursuant to this Agreement in a total amount which exceeds the
Tenant Improvement Allowance.
(b) Disbursement of the Tenant Improvement Allowance.
------------------------------------------------
(i) Tenant Improvement Allowance Items. Except as otherwise set forth in
----------------------------------
this Agreement, the Tenant Improvement Allowance shall be disbursed as provided
below by Landlord for the costs of remediation, demolition and construction of
the Tenant Improvements
EXHIBIT E - Page 1
and Tenant's share of the Landlord Improvements, including, without limitation,
the following items (collectively the "Tenant Improvement Allowance Items"):
(1) ADA;
(2) seismic upgrades; and
(3) Hazardous Materials and asbestos abatement or removal.
(ii) Disbursement of Tenant Improvement Allowance. Upon
--------------------------------------------
completion of the construction of the Tenant Improvements and issuance of the
Notice of Completion, Landlord shall disburse the Tenant Improvement Allowance
or so much thereof as remains after disbursement for Landlord Improvements to
Tenant for Tenant Improvement Allowance Items within thirty (30) days of written
request by Tenant for disbursement.
(iii) Tenant shall provide to Landlord prior to disbursement (i)
a request for payment detailing the work completed; (ii) invoices from all of
Tenant's Agents as defined below, for labor rendered and materials delivered to
the Premises; (iii) executed mechanic's lien releases from all of Tenant's
Agents which shall comply with the appropriate provisions, as reasonably
determined by Landlord, of California Civil Code Section 3263(d); and (iv) all
other information reasonably requested by Landlord. Thereafter Landlord shall
deliver a check to Tenant for the Tenant Improvement Allowance, provided that
Landlord does not in good faith dispute any request for payment based on non-
compliance of any work with the Approved Working Drawings, or due to Tenant's
failure to deliver the items required in the prior sentence. If Landlord
disputes only a portion of the amount requested, Landlord shall so pay the
undisputed portion, and the parties shall cooperate in good faith to resolve any
such dispute as soon as is reasonably possible. Landlord's payment of the Tenant
Improvement Allowance shall not be deemed Landlord's approval or acceptance of
the work furnished or materials supplied as set forth in Tenant's payment
request.
(iv) Other Terms. Landlord shall only be obligated to make
-----------
disbursements from the Tenant Improvement Allowance to the extent costs are
incurred by Tenant for Tenant Improvement Allowance Items, and, in any event, in
an aggregate amount not to exceed the Tenant Improvement Allowance.
3. CONSTRUCTION DRAWINGS
(a) Delivery of Base Building Plans. Landlord shall deliver to Tenant at
-------------------------------
Tenant's request any and all base building plans and specifications pertaining
to the Building that contains the Premises as Landlord may have (collectively,
"Base Building Plans") to facilitate Tenant's design and construction of the
Tenant Improvements.
(b) Review of Drawings. Tenant shall retain, with the prior approval of
------------------
Landlord and pursuant to an AIA contract with modifications as approved by
Landlord or such other contract as approved by Landlord, one or more duly
licensed architects of good reputation (collectively, the "Architect") to
prepare the Construction Drawings. Landlord hereby approves Randall Dowler as
the architect if Tenant should elect to use Randall Dowler. Tenant or Architect
shall retain, with the prior approval of Landlord and pursuant to an AIA
contract with modifications as
EXHIBIT E - Page 2
approved by Landlord or such other contract as approved by Landlord, one or more
engineering consultants of good reputation (collectively, the "Engineers") to
prepare all plans and engineering working drawings relating to the structural,
mechanical, electrical, plumbing, HVAC, life safety, and sprinkler work in the
Premises. The plans and drawings to be prepared by the Architect and the
Engineers hereunder, including, without limitation, the Final Space Plan and the
Final Working Drawings, shall be known collectively as the "Construction
Drawings." Tenant shall submit all Construction Drawings to Landlord for
Landlord's approval, which approval shall not be unreasonably withheld and which
shall be given or withheld within five (5) days following Landlord's receipt
thereof from Tenant. If Landlord withholds such approval. Landlord shall do so
in writing and shall provide Tenant with a detailed written explanation of the
reasons for such withholding of approval and the measures that Tenant should
take to obtain such approval. Landlord and Tenant shall cooperate in good faith
to resolve any such issues to enable Tenant to receive such approval within five
(5) days following Tenant's receipt of such written notice from Landlord. Tenant
and Architect shall verify, in the field, the dimensions and conditions as shown
on the Base Building Plans, and Tenant and Architect shall be solely responsible
for the same, and Landlord shall have no responsibility in connection therewith.
Landlord's review of the Construction Drawings as set forth in this Section 2,
shall be for its sole purpose and shall not imply Landlord's review of the same,
or obligate Landlord to review the same, for quality, design, code compliance
or other like matters. Accordingly, notwithstanding that any Construction
Drawings are reviewed by Landlord or its space planner, architect, engineers and
consultants, and notwithstanding any advice or assistance which may be rendered
to Tenant by Landlord or Landlord's architect, engineers, and consultants,
Landlord shall have no liability whatsoever in connection therewith and shall
not be responsible for any omissions or errors contained in the Construction
Drawings, and Tenant's indemnity set forth in Section 18 of this Lease shall
specifically apply to the Construction Drawings.
(c) Final Space Plan. Tenant shall supply Landlord with two (2) copies of
----------------
its final space plan for the Premises for Landlord's approval, which approval
shall not be unreasonably withheld and which shall be given or withheld within
five (5) days following Landlord's receipt thereof from Tenant. If Landlord
withholds such approval, Landlord shall do so in writing and shall provide
Tenant with a detailed written explanation of the reasons for such withholding
of approval and the measures that Tenant should take to obtain such approval.
Landlord and Tenant shall cooperate in good faith to resolve any such issues to
enable Tenant to receive such approval within five (5) days following Tenant's
receipt of such written notice from Landlord. The final space plan (the "Final
Space Plan") shall include a layout and designation of all offices, rooms and
other partitioning, their intended use, and equipment to be contained therein.
(d) Final Working Drawings. Upon the approval of the Final Space Plan by
----------------------
Landlord and Tenant, Tenant shall promptly cause the Architect and the Engineers
to complete the architectural and engineering drawings for the Premises, and the
Architect shall compile a fully coordinated set of architectural, structural,
mechanical, electrical and plumbing working drawings in a form which is complete
to allow subcontractors to bid on the work and to obtain all applicable permits
(collectively, the "Final Working Drawings"). Tenant shall submit two (2)
complete sets of the Final Working Drawings to Landlord for Landlord's approval,
which approval shall not be unreasonably withheld and which shall be given or
withheld within five (5) days following Landlord's receipt thereof from Tenant.
If Landlord withholds such approval, Landlord shall do so in writing and shall
provide Tenant with a detailed written explanation of the
EXHIBIT E - Page 3
reasons for such withholding of approval and the measures that Tenant should
take to obtain such approval. Landlord and Tenant shall cooperate in good faith
to resolve any such issues to enable Tenant to receive such approval within five
(5) days following Tenant's receipt of such written notice from Landlord.
(e) Approved Working Drawings. The Final Working Drawings shall be approved
-------------------------
by Landlord (the "Approved Working Drawings"), as provided above, prior to the
commencement of construction of the Premises by Tenant. After approval by
Landlord of the Final Working Drawings, Tenant may submit the same to the City
of Burlingame for all applicable building permits. Tenant hereby agrees that
neither Landlord nor Landlord's consultants shall be responsible for obtaining
any building permit or certificate of occupancy for the Premises and that
obtaining the same shall be Tenant's responsibility; provided, however, that
Landlord shall cooperate with Tenant in executing permit applications and
performing other ministerial acts reasonably necessary to enable Tenant to
obtain any such permit or certificate of occupancy.
(f) Changes. No material changes, modifications or alterations in the
-------
Approved Working Drawings ("Change") shall be made by Tenant without the prior
written consent of Landlord, which consent shall not be unreasonably withheld,
conditioned or delayed. Any request by Tenant for a Change shall he in writing
and shall be accompanied by all information necessary to clearly identify and
explain the proposed Change. Tenant shall submit all proposed Changes to
Landlord for Landlord's approval, which approval shall not be unreasonably
withheld and which shall be given or withheld within two (2) business days
following Landlord's receipt thereof from Tenant. If Landlord withholds such
approval, Landlord shall do so in writing and shall provide Tenant with a
detailed written explanation of the reasons for such withholding of approval and
the measures that Tenant should take to obtain such approval. Landlord and
Tenant shall cooperate in good faith to resolve any such issues to enable Tenant
to receive such approval within two (2) business days following Tenant's receipt
of such written notice from Landlord.
4. CONSTRUCTION OF THE TENANT IMPROVEMENTS
(a) Tenant's Selection of Contractors.
---------------------------------
(i) The Contractor. A duly licensed general contractor of good
--------------
reputation shall be retained by Tenant to construct the Tenant Improvements.
Such general contractor ("Contractor") shall be subject to the approval of
Landlord, which approval shall not be unreasonably withheld or delayed. Landlord
hereby approves Rudolph & Sletten as the Contractor if Tenant should elect to
use Rudolph & Sletten.
(ii) Tenant's Agents. All subcontractors, laborers, materialmen, and
---------------
suppliers used by Tenant in connection with the design and construction of the
Tenant Improvements shall be known collectively as "Tenant's Agents".
(b) Construction of Tenant Improvements by Tenant's Agents.
------------------------------------------------------
(i) Construction Contract. Promptly following Tenant's execution of
---------------------
the construction contract and general conditions with the Contractor on an MA
contract with modifications as approved by Landlord or such other contract as
approved by Landlord (the "Contract"), Tenant shall deliver to Landlord for
Landlord's information a copy of the Contract.
EXHIBIT E - Page 4
The Contract shall expressly provide that Landlord is a third parry beneficiary
of the Contractor's obligations under the Contract.
(ii) Tenant's Agents.
---------------
(1) Landlord's General Conditions for Tenant's Agents and Tenant
------------------------------------------------------------
Improvement Work. Tenant's and Tenant's Agents' construction of the Tenant
- ----------------
Improvements shall comply with the following: (i) the Tenant Improvements shall
be constructed in substantial accordance with the Approved Working Drawings; and
(ii) Tenant shall abide by all reasonable rules made by Landlord with respect to
the storage of materials, coordination of work with the contractors of other
tenants of the Complex, and any other matter in connection with this Agreement,
including, without limitation, the construction of the Tenant Improvements.
(2) Indemnity. Tenant's indemnity of Landlord as set forth in
---------
Section 18 of this Lease shall also apply with respect to any and all costs,
losses, damages, injuries and liabilities related in any way to any act or
omission of Tenant or Tenant's Agents, or anyone directly or indirectly employed
by any of them, or in connection with Tenant's non-payment of any amount arising
out of the Tenant Improvements and/or Tenant's disapproval of all or any portion
of any request for payment. Such indemnity by Tenant, as set forth in Section 18
of this Lease, shall also apply with respect to any and all costs, losses,
damages, injuries and liabilities related in any way to Landlord's performance
of any ministerial acts reasonably necessary (i) to permit Tenant to complete
the Tenant Improvements, and (ii) to enable Tenant to obtain any building permit
or certificate of occupancy for the Premises. Tenant's obligations to indemnify
Landlord hereunder shall in no event extend to any costs, losses, damages,
injuries or liabilities arising primarily from Landlord's negligent or willful
acts.
(3) Insurance Requirements.
----------------------
a) General Coverages. All of Tenant's Agents shall carry
-----------------
worker's compensation insurance covering all of their respective employees, and
shall also carry public liability insurance, including property damage, all with
limits, in form and with companies as are required to be carried by Tenant as
set forth in Section 19 of this Lease.
b) Special Coverages. Tenant shall carry, or shall require
-----------------
that the Contractor carry, "Builder's All Risk" insurance in an amount
reasonably appropriate to cover the cost of construction of the Tenant
Improvements, it being understood and agreed that the Tenant Improvements shall
be insured by Tenant pursuant to Section 19 of this Lease immediately upon
completion thereof.
c) General Terms. Certificates for all insurance carried
-------------
pursuant to this Section 3 shall be delivered to Landlord before the
commencement of construction of the Tenant Improvements and before the
Contractor's equipment is moved onto the site. All such policies of insurance
must contain a provision that the company writing said policy will give Landlord
thirty (30) days' prior written notice of any cancellation or lapse of the
effective date or any reduction in the amounts of such insurance. In the event
that the Tenant Improvements are damaged by any cause during the course of the
construction thereof, Tenant shall immediately repair the same at Tenant's sole
cost and expense. Tenant's Agents shall
EXHIBIT E - Page 5
maintain all of the foregoing insurance coverage in force until the Tenant
Improvements are fully completed. All policies carried under this Section 3
shall insure Landlord and Tenant, as their Interests may appear. All insurance,
except workers' compensation, maintained by Tenant's Agents shall preclude
subrogation claims by the insurer against anyone insured thereunder. Such
insurance shall provide that it is primary insurance as respects the Landlord
and that any other insurance maintained by Landlord is excess and non-
contributing with the insurance required hereunder. The requirements for the
foregoing insurance shall not derogate from the provisions for indemnification
of Landlord by Tenant under Section 3 of this Agreement.
(iii) Governmental Compliance. The Tenant Improvements shall comply in
-----------------------
all respects with the following: (1) the applicable building code and other
state, federal, city or quasi-governmental laws, codes, ordinances and
regulations, as each may apply according to the rulings of the controlling
public official, agent or other person; (2) applicable standards of the American
Insurance Association (formerly, the National Board of Fire Underwriters) and
the National Electrical Code; and (3) building material manufacturer's
specifications.
(iv) Inspection by Landlord. Landlord shall have the right, during
----------------------
normal business hours and after reasonable notice, to inspect the Tenant
Improvements; provided, however, that Landlord's failure to inspect the Tenant
Improvements shall in no event constitute a waiver of any of Landlord's rights
hereunder nor shall Landlord's inspection of the Tenant Improvements constitute
Landlord's approval of the same. Landlord shall have no right to disapprove of
any of the Tenant Improvements, except to the extent that they materially
deviate from the Approved Working Drawings. Should Landlord disapprove any
portion of the Tenant Improvements, Landlord shall notify Tenant in writing of
such disapproval and shall specify the items disapproved. Any material
deviations from the Approved Working Drawings in the Tenant Improvements shall
be rectified by Tenant at no expense to Landlord; provided however, that in the
event Landlord determines that any such deviation exists and such deviation
might adversely affect the mechanical, electrical, plumbing, heating,
ventilating and air-conditioning or life-safety systems of the Building, the
structure or exterior appearance of the Building or any other tenant's use of
such other tenant's leased premises, Landlord may take such action as Landlord
reasonably deems necessary, following reasonable notice to Tenant and a
reasonable opportunity for Tenant to rectify the same, at Tenant's expense and
without incurring any liability on Landlord's part, to correct any such
deviation, including, without limitation, causing the cessation of performance
of the construction of the Tenant Improvements until such time as the deviation
is corrected to Landlord's reasonable satisfaction.
(c) Notice of Completion; Copy of Record Set of Plans. Within ten (10) days
-------------------------------------------------
after completion of construction of the Tenant Improvements, Tenant shall cause
a Notice of Completion to be recorded in the office of the Recorder of the
County of San Mateo in accordance with Section 3093 of the Civil Code of the
State of California or any successor statute, and shall furnish a copy thereof
to Landlord upon such recordation. if Tenant fails to do so, following
Landlord's notice thereof to Tenant and a reasonable opportunity for Tenant to
correct such failure, Landlord may execute and file the same on behalf of Tenant
as Tenant's agent for such purpose, at Tenant's sole cost and expense. At the
conclusion of construction, Tenant shall cause the Architect and the Contractor
(A) to update the Approved Working Drawings as necessary to reflect all changes
made to the Approved Working Drawings during the course of construction, (B) to
certify to Tenant to the best of their knowledge that the "record-set" of mylar
EXHIBIT E - Page 6
as-built drawings are true and correct, which certification shall survive the
expiration or termination of this Lease, and (C) to deliver to Landlord two (2)
sets of copies of such record set of drawings within ninety (90) days following
issuance of a certificate of occupancy for the Premises.
5. MISCELLANEOUS
(a) Time of the Essence in This Agreement. Unless otherwise indicated, all
-------------------------------------
references herein to a "number of days" shall mean and refer to calendar days.
If any item requiring approval is timely disapproved by Landlord, the procedure
for preparation of the document and approval thereof shall be repeated until the
document is approved by Landlord.
(b) Tenant's Lease Default. Notwithstanding any provision to the contrary
----------------------
contained in this Lease, during the existence of (i) an event of default as
described in Section 38 of this Lease or (ii) a breach by Tenant of any of its
material obligations under this Agreement that is not cured within a reasonable
period of time following notice thereof from Landlord, then in addition to all
other rights and remedies granted to Landlord pursuant to this Lease, Landlord
shall have the right (x) to suspend payment of all or any portion of the Tenant
Improvement Allowance until such event of default or breach is cured and/or
Landlord may cause the Contractor to suspend the construction of the Premises
until such event of default or breach is cured (in which case, Tenant shall be
responsible for any delay in the substantial completion of the Premises caused
by such work stoppage), and (y) all other obligations of Landlord under the
terms of this Agreement shall be forgiven until such time as such event of
default or breach is cured pursuant to the terms of this Lease (in which case,
Tenant shall be responsible for any delay in the substantial completion of the
Premises caused by such inaction by Landlord).
(c) Tenant's Agents. All subcontractors, laborers, materialmen, and
---------------
suppliers retained directly by Tenant shall conduct their activities in and
around the Premises, Building and the Complex in a harmonious relationship with
all other subcontractors, laborers, materialmen and suppliers at the Premises,
Building and Complex.
(d) Hazardous Materials. if the construction of the Tenant Improvements or
-------------------
Tenant's move into the Premises will involve the use of or disturb hazardous
materials or substances existing in the Premises, Tenant shall comply with
Landlord's reasonable rules and regulations concerning such hazardous materials
or substances.
(e) No Fee to Landlord. Other than as expressly provided in this Lease,
------------------
Landlord shall receive no fee for supervision, profit, overhead or general
conditions in connection with the design or construction of the Tenant
Improvements.
(f) No Miscellaneous Charges. Other than as expressly provided in the
------------------------
Lease, neither Tenant nor the Contractor shall be charged for parking (to the
extent parking is available) or for toilet facilities during the construction of
the Tenant Improvements or during Tenant's move-in prior to the commencement of
its business operations. Notwithstanding the foregoing, Tenant shall provide
toilet facilities during the construction period.
(g) Bonding. Provided that Rudolf & Sletten is the sole general contractor
-------
for the remediation, demolition, construction, alteration or improvement work
contemplated in the Lease
EXHIBIT E - Page 7
and this Work Letter, including the construction of the Tenant Improvements,
Tenant shall not be required to provide performance and completion bonds in
connection with such remediation, demolition, construction, alteration or
improvement work, including the construction of the Tenant Improvements. In the
event Tenant elects to contract with a general contractor other than Rudolf &
Sletten to be the general contractor for any of the remediation, demolition,
construction, alteration or improvement work contemplated in the Lease and this
Work Letter including the construction of the Tenant Improvements, then Landlord
may require, in its sole discretion, that Tenant obtain or provide completion or
performance bonds in an amount determined by Landlord but not to exceed one
hundred twenty-five percent (125%) of the estimated cost of such remediation,
demolition, construction, alteration or improvement work, including for
construction of the Tenant Improvements. In the event a bond, or bonds, is
required pursuant to this subparagraph (g), Tenant must provide such bond, or
bonds, prior to commencement of any such work. Failure to provide such bond, or
bonds, at the request of Landlord, shall be a default under this Work Letter. In
the event no performance or completion bonds are required pursuant to this
subparagraph (g), Tenant shall pay to Landlord, in addition to any fees in
Paragraph I above, a fee equal to Five Thousand Dollars ($5,000) as a fee to
Landlord in consideration for not requiring completion or performance bonds and
such fee shall be due and payable within fifteen (15) days of commencement of
construction of the Tenant Improvements. In the event Tenant does not pay such
fee within the time provided, Landlord may deduct this fee amount from the
Tenant Improvement Allowance.
(h) Staging Area. In addition to any rights that Tenant may have with
------------
respect to storage space within the Building, during the period prior to the
Commencement Date, Tenant shall have the right, without the obligation to pay
rent, to place a construction trailer in the courtyard adjacent to the Premises
as reasonably designated by Landlord for the purposes of storing and staging its
materials, furniture and equipment. With respect to such construction trailer
and staging areas in the Building, Tenant shall be responsible for providing all
insurance required for the Premises under this Agreement and for providing any
necessary fencing or other protective facilities. Tenant shall hold Landlord
harmless and shall indemnify Landlord from and against any and all costs,
losses, damages, injuries and liabilities arising out of or in connection with
use of such construction trailer and staging areas in the Building by Tenant.
Tenant shall be obligated to remove all of the stored materials and any such
fencing or other facilities within thirty (30) days following its receipt of
written notice from Landlord that the interior staging area is needed by
Landlord for construction of another tenant's premises. Tenant shall repair any
damage that may be caused by it or its contractors as a result of such use of
the construction trailer or staging areas in the Building (including replacing
any landscaping that may be damaged by the construction trailer).
(i) Reasonable Approval Standard. Unless otherwise expressly provided to be
----------------------------
in the party's sole discretion, the provisions of Section 63 of this Lease shall
apply to all Matters contemplated in this Agreement.
EXHIBIT E - Page 8
SCHEDULE 1 TO WORK LETTER AGREEMENT
PRELIMINARY BUDGET FOR LANDLORD IMPROVEMENTS
Rudolph and Sletten $59,000
MSI $ 5,000
City Fees $ 1,500
Inspection Fees $ 4,000
Contingency $ 5,000
Construction Management Fee
(Landlord) $ 3,725
-------
Total $78,225
These are estimates only.
EXHIBIT F
RULES AND REGULATIONS FOR THE BUILDING
1. Except as provided or required by Landlord in accordance with building
standards, no sign, placard, picture, advertisement, name or notice shall be
inscribed, displayed, printed, painted or affixed by Tenant on or to any part
of the Building or exterior of the Premises leased to Tenants or to the door
or doors thereof without the written consent of Landlord first obtained and
Landlord shall have the right to remove any such sign, placard, picture,
advertisement, name or notice without notice to and at the expense of Tenant.
2. Except as provided or required by Landlord in accordance with Building
standards, no draperies, curtains, blinds, shades, screens or other devices
shall be hung at or used in connection with any window or exterior door or
doors of the Premises.
3. The bulletin board or directory of the building shall be used primarily for
display of the name and location of Tenants and Landlord reserves the right
to exclude any other names therefrom, to limit the number of names associated
with Tenants to be placed thereon and to charge for names associated with
Tenants to be placed thereon at rates applicable to all Tenants.
4. The sidewalks, halls, passages, exits, entrances, elevators and stairways of
the Building shall not be obstructed by Tenants or used by them for any
purpose other than for ingress to and egress from their respective Premises.
The halls, passages, exits, entrances, elevators, stairways, balconies and
roof of the Building are not for the use of the general public and Landlord
in all cases reserves the right to control the same and prevent access
thereto by all persons whose presence, in the judgment of the Landlord, is or
may be prejudicial to the safety, character, reputation or interests of the
Building and its Tenants; provided however, that Landlord shall not prevent
such access to persons with whom Tenants deal in the ordinary course of
business unless such persons are engaged in illegal activities. No person
shall go upon the roof of the Building unless expressly so authorized by
Landlord.
5. Tenants shall not alter any lock nor install any new or additional locks or
any bolts on any interior or exterior door of any Premises leased to Tenant.
6. The doors, windows, light fixtures and any lights or skylights that reflect
or admit light into halls or other places of the Building shall not be
covered or obstructed. The toilet rooms, toilets, urinals, wash bowls and
other apparatus shall not be used for any purpose other than that for which
they were constructed and no foreign substance of any kind whatsoever shall
be thrown or placed therein. The expense of any breakage, stoppage or damage
resulting from the violation of this rule shall be borne by the Tenant who,
or whose employees or invitees, cause such expense.
EXHIBIT F - Page 1
7. Tenants shall not mark, drive nails, screw or drill into the walls, woodwork
or plaster or in any way deface the Building or any Premises leased to
Tenant.
8. Furniture, freight or equipment of every kind shall be moved into or out of
the building only at such times and in such manner as Landlord shall
designate. Landlord may prescribe and limit the weight, size and position of
all equipment to be used by Tenants, other than standard office desks, chairs
and tables and portable office machines. Safes and other heavy equipment
shall, if considered necessary by Landlord, stand on wood strips of such
thickness as Landlord deems necessary to distribute properly the weight
thereof. All damage to the building or Premises occupied by Tenants caused by
moving or maintaining any property of a Tenant shall be repaired at the
expense of such Tenant.
9. No Tenant shall employ any person, other than the janitor provided by
Landlord, for the purposes of cleaning the Premises occupied by such Tenant
unless otherwise agreed to by Landlord. Except with the written consent of
Landlord, no person shall be permitted to enter the Building for the purpose
of cleaning the same. Tenants shall not cause any unnecessary labor by
carelessness or indifference in the preservation of good order and
cleanliness. Landlord shall not be responsible to any Tenant for loss of
property on the Premises, however occurring, or for any damage to the
property of any Tenant caused by the employees or independent contractors of
Landlord or by any other person. Janitor service will not be furnished when
rooms are occupied during the regular hours when janitor service is provided.
Window cleaning shall be done only at the regular and customary times
determined by Landlord for such services.
10. No Tenant shall sweep or throw or permit to be swept or thrown any din or
other substance into any of the corridors, halls or elevators or out of the
doors or stairways of the Building; use or keep or permit to be used or kept
any foul or noxious gas or substance; permit or suffer the Premises occupied
by such Tenant to be occupied or used in a manner offensive or objectionable
to Landlord or other Tenants by reason of noise, odors or vibrations;
interfere in any way with other Tenants or persons having business in the
Building; or bring or keep or permit to be brought or kept in the Building
any animal life form, other than human, except seeing-eye dogs when in the
company of their masters.
11. No cooking shall be done or permitted by Tenants in their respective
Premises, nor shall Premises occupied by Tenants be used for the storage of
merchandise, washing clothes, lodging, or any improper, objectionable or
immoral purposes.
12. No Tenant shall use or keep in the Premises or the Building any kerosene,
gasoline or inflammable or combustible fluid or material other than limited
quantities thereof reasonably necessary for the operation or maintenance of
customary office equipment, or, without Landlord's prior written approval,
use any method of heating or air conditioning other than that supplied by
Landlord. No Tenant shall use or keep or permit to be used or kept any foul
or noxious gas or substance in the Premises, or permit or suffer the
Premises to be occupied or used in a manner offensive or objectionable to
Landlord or
EXHIBIT F - Page 2
other occupants of the Building by reason of noise, odors or vibrations, or
interfere in any way with other Tenants or those having business therein.
Tenant must comply with any government imposed codes and regulations
concerning the use or storage of any substances on the Premises.
13. No boring or cutting for telephone or electric wires shall be allowed
without the consent of Landlord and any such wires permitted shall be
introduced at the place and in the manner described by Landlord. The
location of telephones, speakers, fire extinguisher and all other office
equipment affixed to Premises occupied by Tenants shall be subject to the
approval of Landlord. Each Tenant shall pay all expenses incurred in
connection with the installation of its equipment, including any telephone
and electricity distribution equipment.
14. Upon termination of occupancy of the Building, each Tenant shall deliver to
Landlord all keys furnished by Landlord, and any reproductions thereof made
by or at the direction of such Tenant, and in the event of loss of any keys
furnished to Tenant shall pay Landlord therefor.
15. No Tenant shall affix any floor covering in any manner except as approved by
the Landlord. The expense of repairing any damage caused by removal of any
such floor covering shall be borne by the Tenant by whom, or by whose
contractors, employees or invitees, the damage shall have been caused.
16. No mail, furnished, packages, supplies, equipment, merchandise or deliveries
of any kind will be received in the building or carried up or down in the
elevators except between such hours and in such elevators as shall be
designated by Landlord.
17. On Saturdays, Sundays and legal holidays and between the hours of 6:00p.m.
and 8:00 a.m., access to the Building may be refused artless the person
seeking access is known to the person charged with responsibility for the
safety and protection of the Building and has a pass or is properly
identified. In no case shall Landlord be liable for any loss or damage for
any error with respect to the admission to or exclusion from the Building of
any person. In case of invasion, mob, riot, public excitement or other
commotion and at such times as Landlord deems necessary for the safety and
protection of the Building, its Tenants and all property located therein,
Landlord may prohibit and prevent access to the Building by all persons by
any means Landlord deems appropriate.
18. Each Tenant shall see that the exterior doors of its Premises are closed and
securely locked on Sundays and legal holidays and not later than 6:00 p.m.
of each other day each Tenant shall exercise extraordinary care and caution
that all water faucets or water apparatus are entirely shut off each day
before its Premises are left unoccupied and that all electricity or gas
shall likewise be carefully shut off so as to prevent waste or damage to
Landlord or to other Tenants of the Building.
EXHIBIT F - Page 3
19. Landlord may exclude or expel from the Building any person who, in the
judgment of Landlord, is intoxicated or under the influence of liquor or
drugs, or who shall in any manner do any act in violation of any of the
rules and regulations of the Building.
20. The requirements of Tenants will be attended to only upon application to
Landlord at the office of the Building. Employees of Landlord shall not
perform any work outside of their regular duties unless under special
instructions from Landlord, and no employee of Landlord shall be required to
admit any person (Tenant or otherwise) to any Premises in the Building.
21. No vending or food or beverage dispensing machine or machines of any
description shall be installed, maintained or operated upon any Premise in
the Building without the written permission of the Landlord.
22. Landlord, without notice and without liability to any Tenant, at any time
may change the name or the street address of the Building.
23. The word "Building" as used in these rules and regulations means the
Building of which a part of the Premises are leased pursuant to the Lease to
which these rules and regulations are attached. Each Tenant shall be liable
to Landlord and to each other Tenant of the Building for any loss, cost,
expense, damage or liability, including attorneys' fees, caused or
occasioned by the failure of such first named Tenant to comply with these
rules, but Landlord shall have no liability for such failure or for failing
or being unable to enforce compliance therewith by any Tenant and such
failure by Landlord or non-compliance by any other Tenant shall not be a
ground for termination of the Lease to which these rules and regulations are
attached by the Tenant thereunder.
24. Carpet protector pads shall be used by all desk stations.
25. Each Tenant shall maintain the portions of its Premises which are visible
from the outside of the Building or from hallways or other public areas of
the Building, in a neat, clean and orderly condition.
26. No Tenant shall tamper with or attempt to adjust the temperature control
thermostats in its Premises. Landlord shall adjust such thermostats as
required to maintain heat and air conditioning at the Building standard
temperature.
27. All requests for air conditioning or heating during hours when such services
are not normally furnished by Landlord must be submitted in writing to the
Building management office by 2:00 p.m. on the preceding Thursday for
weekend service, and by 9:00 a.m. on the preceding business day for holiday
service.
28. No Tenant shall place any items whatsoever on the roof or balcony areas of
the Building without prior written consent of Landlord.
EXHIBIT F - Page 4
29. No curtains, draperies, blinds, shutters, shades, screens or other
coverings, hangings or decorations shall be attached to, hung or placed in,
or used in connection with any window of the Building without prior written
consent of Landlord. In any event, with the prior written consent of
Landlord, such items shall be installed on the office side of the Landlord's
standard window covering and shall in no way be visible from the exterior of
the Building.
30. No Tenant shall obtain or use in the Premises ice, drinking water, food,
beverage, towel or other similar services, except at such reasonable hours
and under reasonable regulations as may be fixed by the Landlord.
31. Except with the prior written consent of Landlord, no Tenant shall sell, or
permit the sale at retail, of newspapers, magazines, periodicals, tickets or
any other goods or merchandise to the general public in or on the Premises,
nor shall any Tenant carry on, or permit or allow any employee or other
person to carry on, the business of stenography, notary, typewriting or
similar business in or from the Premises for the service or accommodation of
occupants of any other portion of the Building, nor shall the Premises of
any Tenant be used for manufacturing of any kind, or any business or
activity other than that specifically provided for in such Tenant's Lease.
32. No Tenant shall install any radio or television antenna, loudspeaker or
other device on the roof or exterior walls of the Building.
33. There shall not be used in any space, or in the public halls of the
Building, either by any Tenant or others, any hand trucks except those
equipped with rubber tires and side guards or such other material handling
equipment as Landlord may approve. No other vehicles of any kind shall be
brought by any Tenant into the Building or kept in or about the Premises.
34. Each Tenant shall store all its trash and garbage within its Premises. No
material shall be placed in the trash boxes or receptacles if such material
is of such nature that it may not be disposed of in the ordinary and
customary manner of removing and disposing of trash and garbage in the City
of Burlingame without being in violation of any law or ordinance governing
such disposal. All garbage and refuse disposal shall be made only through
entryways and elevators provided for such purpose and at such times as
Landlord shall designate.
35. Canvassing, peddling, soliciting, and distribution of handbills or any other
written materials in or about the Building are prohibited, and each Tenant
shall cooperate to prevent same.
36. While in the Building, Tenant's contractors shall be subject to and under
the control and direction of the manager of the Building or the Building
Engineer (but not as an agent or employee of Landlord or said manager or
engineer).
EXHIBIT F - Page 5
37. Landlord may waive any one or more of these Rules and Regulations for the
benefit of any particular Tenant or Tenants, but no such waiver by Landlord
shall be construed as a waiver of such rules and Regulations against any or
all of the Tenants of the Building.
38. These Rules and Regulations are in addition to, and shall not be construed
to in any way modify or amend, in whole or in part, the terms, covenants,
agreements and conditions of any Lease of Premises in the Building.
39. Landlord reserves the right to make such other reasonable rules and
regulations as in its judgment may from time to time be needed for the
safety, care and cleanliness of the Building and for the preservation of
good order therein.
EXHIBIT F - Page 6
EXHIBIT F-1
AMENDMENTS TO
"EXHIBIT F -- RULES AND REGULATIONS FOR THE BUILDING"
Landlord and Tenant hereby agree to the following amendments to the
correspondingly numbered items in the attached "RULES AND REGULATIONS FOR THE
BUILDING:"
4. Tenant, its employees and authorized maintenance/repair people shall
not need the express authorization of Landlord to go on the roof if: 1)
they are doing so in order to repair Tenant's equipment or address a matter
which may impact the operation of Tenant's business, and 2) they provide to
Landlord a certificate of insurance indicating appropriate coverage.
5. Tenant shall provide locks and keys to its own premises ("Premises").
Tenant shall provide to Landlord a copy of all keys unlocking areas to
which emergency access may be required by Landlord.
7. Tenant shall have the right to "mark, drive nails, screw or drill into
the walls, woodwork or plaster" within the Premises but shall be required
to repair the results of any such actions, normal wear and tear excepted,
if so requested by Landlord upon termination of the Lease.
9. As described in the Lease, Tenant shall handle its janitorial services
separately from those provided by the Landlord.
10. Tenant shall have the right to use and/or keep on Premises chemicals,
animals and equipment as permitted in the Lease. The permitted uses of the
Premises (including animal experimentation) shall not be deemed to be
offensive or objectionable.
11. Tenant's employees or caterers hired by Tenant shall be allowed to
cook on the Premises utilizing small appliances, such as microwave ovens.
12. Tenant shall be allowed to keep chemicals on the Premises as permitted
in the Lease. Tenant's Premises' heating and air-conditioning are separate
from those of the remainder of the Building.
13. Tenant shall be allowed to install/move or have installed/moved by its
contractors Tenant's telephone and data transmissions jacks, wires and
related equipment within the Premises without the consent of the Landlord.
16. Not applicable -- deliveries shall be made to the Premises directly.
21. Tenant shall be allowed to maintain vending, food and beverage
dispensing machines.
EXHIBIT F-1, Amendments to
"EXHIBIT F - RULES AND REGULATIONS"
Page 2
on the Premises for the use of its employees and their guests without the
written permission of the Landlord.
24. Not applicable.
26. Not applicable.
27. Not applicable.
30. Not applicable.
34. Tenant shall be permitted to store trash and garbage outside the
Premises in a location in close proximity to Tenant's existing
shipping/receiving area at 863 Mitten Road, in containers approved by the
Landlord, which approval shall not be unreasonably withheld. Tenant shall
dispose of hazardous materials in a manner which is consistent with
applicable laws, as further detailed in the Lease.
EXHIBIT G
RECORDING REQUESTED BY AND
WHEN RECORDED RETURN TO:
SHEPPARD, MULLIN, RICHTER & HAMPTON
Four Embarcadero Center, 17th Floor
San Francisco, California 94111
Attention: Juliette M. Ebert
SUBORDINATION, NON-DISTURBANCE AND
ATTORNMENT AGREEMENT
THIS AGREEMENT ("Agreement") is dated the 18th day of March, 1997, and
is made between GENERAL ELECTRIC CAPITAL CORPORATION ("Lender"), SFO OFFICE
ASSOCIATES LLC ("Borrower"), and MEGABIOS CORP. ("Tenant").
RECITALS
--------
(a) Borrower and Tenant are about to enter into a certain Lease dated
March 18, 1997 (the "Lease") related to the premises located at 866
Malcolm Road, Building F, Burlingame, California, on the property more
particularly described on Exhibit "A" attached hereto and
incorporated herein by this reference (the "Premises");
(b) Lender has made a mortgage loan to Borrower secured by a lien on
the real estate and improvements (the "Property") of which the Premises
form a part pursuant to that certain Deed of Trust, Security Agreement
and Fixture Filing executed by Borrower, as trustor, in favor of
Lender, as beneficiary, recorded in San Mateo County, California (the
"Deed of Trust") as Instrument No. 96-106705;
(c) Lender desires that the Lease and all terms thereof, including
any purchase options or rights of first refusal, at all times remain
subordinate to the Deed of Trust, and Borrower has requested Lender to
enter this Agreement;
NOW, THEREFORE, in consideration of the Premises and of the sum of TEN
DOLLARS ($10.00) by each party in hand paid to the other, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereby agree as follows:
-1-
EXHIBIT G
1. The Lease and all rights granted therein is and shall be, subject and
subordinate to the lien (the "Lien") granted pursuant to the Deed of Trust,
including any purchase options or rights of first refusal, and the interest
granted Lender in that certain Assignment of Rents and Leases (the "Assignment
of Leases"), and to all renewals, modifications, consolidations, substitutions,
replacement and extensions thereof, to the fill extent of amounts secured by
the Deed of Trust, the Assignment of Leases and all interests thereon.
2. Tenant, for itself, and all other parties bound or affected by the
Lease, agrees that it will attorn to and recognize any purchaser at a
foreclosure sale under the Deed of Trust, any transferee who acquires the
Property by deed in lieu of foreclosure or otherwise, and the successors and
assigns of such purchasers, as the owner upon the same terms and conditions set
forth in said Lease.
3. If it becomes necessary to foreclose the lien granted in the Deed of
Trust, or if Lender otherwise succeeds to the interest of Borrower in the
Property, Lender will not terminate the Lease, nor disturb Tenant's use or
possession of the Premises, nor join Tenant in summary or foreclosure
proceedings so long as Tenant is not in default under any of the terms,
covenants, or conditions of the Lease (and all grace or cure periods have
expired), and then only if Lender so elects.
4. If Lender succeeds to the interest of the landlord under the Lease, or
if the Property is sold by reason of foreclosure or other proceedings brought to
enforce the Deed of Trust, or if the Property is transferred by deed in lieu of
foreclosure, the Lease shall continue in fill force and effect as a direct
lease between the then owner of the Property (including Lender) and Tenant for
the balance of the term of the Lease, and Tenant agrees to attorn unto the then
owner as landlord, and pay rent and all other amounts due under the Lease
directly to said owner. From and after said owner's acquisition of title, Lender
shall be deemed to have assumed the landlord's obligations under the Lease,
provided, however, that Lender shall not be:
(a) liable for any act or omission of any prior landlord (including
Borrower);
(b) liable for the return of any security deposit unless actually
delivered to Lender by Borrower;
(c) subject to any offsets or defenses which Tenant might have against
any prior landlord (including Borrower), except those resulting from
matters of which Tenant has given written notice to Lender;
(d) bound by any rent or additional rent which Tenant might have paid
more than thirty (30) days in advance of the date when due under the
-2-
EXHIBIT G
Lease to any prior landlord (including Borrower), unless Lender shall have
consented thereto or shall have received, directly or indirectly, such rent
or additional rent; or
(e) bound by any amendment or modification of the Lease made without
its consent.
5. Tenant agrees to give Lender, by registered mail, a copy of any notice
of default served by Tenant upon Borrower. Tenant further agrees that if
Borrower shall have failed to cure such default within the time provided for in
this Lease, then, prior to Tenant terminating the Lease, Lender shall have an
additional sixty (60) days within which to cure such default after receipt of
written notice thereof from Tenant, or if such default cannot be cured within
that time, then such additional time as may be necessary to cure such default
shall be granted if within sixty (60) days Lender has commenced and is
diligently pursuing the remedies necessary to cure such default (including, but
not limited to, commencement of foreclosure proceedings, if necessary to effect
such cure), in which event the Lease shall not be terminated while such remedies
are being so diligently pursued.
6. Tenant acknowledges that the interest of Borrower in the Property has
been assigned to the Lender as security for the Loan and that until the Lender
acquires title to the Premises, Lender assumes no duty, liability, or obligation
under the Lease either by virtue of said assignment or by any subsequent receipt
or collection of rents relating to the Property.
7. Borrower and Tenant agree that on receipt by Tenant of written notice
from Lender or any of its successors or assignees to do so, Tenant shall
thereafter pay all fixed rent, and other sums payable under the Lease, to Lender
or such successors or assignees, until further notice from Lender or such
successors or assignees and any such payment by Tenant to Lender or its
successors or assignees shall be deemed to constitute payment by Tenant to
Borrower under the Lease.
8. This Agreement shall be governed by and construed under the internal
laws of the State of California without regard to its conflict of law
principles. This Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and assigns, or heirs and
personal representatives, as applicable. Time is of the essence hereunder. This
Agreement may be executed in counterparts all of which when taken together shall
constitute the whole of this Agreement.
-3-
EXHIBIT G
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
"Lender"
GENERAL ELECTRIC CAPITAL CORPORATION
By:
--------------------------------
Its:
---------------------------
"Borrower"
SF OFFICE ASSOCIATES LLC,
a California limited liability company
By:
----------------------------------
Michael Halper
Managing Member
"Tenant"
MEGABIOS CORP.,
a California corporation
By:
-----------------------------------
Its:
------------------------------
-4-
EXHIBIT H
ENVIRONMENTAL REPORTS
1. Phase I Environmental Site Assessment for ATC Partners by E2C, Inc.
dated June 28, 1996.
2. Phase I Environmental Site Assessment for GE Capital by Clayton
Environmental Consultants, Clayton Project No. 70302.00.
3. Letter dated July 22, 1996, Clayton Environmental Consultants.
SCHEDULE 1-A
FORM OF OPTION EXERCISE NOTICE
CERTIFIED MAIL--
RETURN RECEIPT REQUESTED
- ------------------------
TO: SFO OFFICE ASSOCIATES, LLC
2269 Chestnut Street, #336
San Francisco, CA 94123
Attn: Mr. Mike Halper
Notice is hereby given that the undersigned Tenant hereby exercises the
Option to extend the term of the Lease in accordance with Schedule I of that
----------
certain SFO Office Complex Office Lease, dated as of March 18, 1997, between the
undersigned, as Tenant, and SFO Office Associates, LLC, as Landlord. This Option
to extend the term of the Lease is being exercised to extend the term of the
Lease for one five (5)-year period to _____________________, ________.
Dated TENANT
--------------, -----
MEGABIOS CORP.
By:
---------------------------
Its.
---------------------------
SCHEDULE 2
LIMITATIONS ON OPERATING EXPENSES
The categories of Operating Expenses listed in Section 7 of the Lease shall be
limited so as not to include any of the following items unless otherwise
expressly permitted in Section 7:
(i) wages, salaries, fees, and fringe benefits paid to administrative or
executive personnel or officers, partners or members of Landlord or its agents
unless such persons are employed at competitive rates as would be paid to an
independent third party, and then only to the extent that the labor of such
persons are reasonably allocable to the operation or maintenance of the Complex;
(ii) any charge for depreciation and any interest or other financing charge
relating to any financing of the Complex that are not necessary to fulfill
Landlord's obligations under this Lease and which do not relate to items which
otherwise would be includable in Operating Expenses as amortizable expenses;
(iii) any taxes, other than those permitted as Taxes pursuant to Section 6
of the Lease, and then only to the extent that Tenant is not already directly
paying its fair share of any such Taxes pursuant to Section 6;
(iv) all costs relating to activities for the solicitation, negotiation,
execution or enforcement of present or prospective leases of space in the
Complex (except enforcement of this Lease against Tenant);
(v) all costs for which Tenant or any other tenant in the Complex is being
or may be directly charged other than pursuant to a sharing in Operating
Expenses;
(vi) the costs of any alterations, additions, changes, replacements, and
other items (albeit classified by Landlord as maintenance or repairs) that under
generally accepted accounting principles are properly classified as capital
expenditures;
(vii) any Operating Expenses representing an amount paid (or reimbursed
for expenses) to any management agent, property manager or any other person or
entity to the extent they exceed what would reasonably be charges for comparable
services if rendered by an independent third party;
(viii) the cost of any work or service performed for or facilities or
utilities furnished to any tenant in the Complex that are provided selectively
or disproportionately to other tenants for their benefit and either not offered
to Tenant or separately billed to Tenant;
(ix) the cost of any improvements or alterations of space leased to other
tenants in the Complex that would under generally accepted accounting principles
be capital improvements;
SCHEDULE 2 - Page 1
(x) the cost of overtime or other expense (including attorney's fees) to
Landlord because of its defaults or performing work expressly provided in this
Lease to be borne at Landlord's expense;
(xi) amounts paid after the date of this Lease (including interest and
penalties) by Landlord or any other tenant in the Complex in order to comply
with or cure violations of statutes, laws, notices, or ordinances that were
applicable to the Complex prior to the date of this Lease (except in the event
and to the extent caused by any act or omission of Tenant, including as a result
of any alterations or improvements made to the Premises by Tenant, or which is
otherwise the obligation of Tenant under this Lease);
(xii) any expense attributable to alterations, improvements or repairs
required after the date of this Lease by any law, ordinance, rule or regulation
that were applicable to the Complex prior to the date of this Lease, including
any costs of seismic work in the Complex or any costs of management, abatement,
remediation or removal of any Hazardous Materials in the Complex (except in the
event and to the extent caused by any act or omission of Tenant, including as a
result of any alterations or improvements made to the Premises by Tenant);
(xiii) any taxes assessed due to any improvements to other buildings other
than the Building or to any tenant spaces (excluding improvements made by
Tenant) on any portion of the Complex;
(xiv) all costs for which insurance or any other third party is obligated
by law or contract to reimburse Landlord to the extent Landlord actually
receives such reimbursement;
(xv) the cost of insurance premiums for any insurance in excess of levels
for comparable buildings, with the premiums, levels and coverages as they exist
as of the date hereof being hereby acknowledged to be reasonable (except in the
event and to the extent caused by any act or omission of Tenant), but excluding
any premiums associated with any insurance coverage of any tenant improvements
(including the Tenant Improvements);
(xvi) all costs associated with the operation or maintenance (including
repair) of the Building or any other buildings constituting a part of the
Complex if such cost or type of cost as it relates to the Premises is identified
under this Lease as a cost to be borne directly by Tenant hereunder:
(xvii) all costs associated with the operation, maintenance or repair of
any elevators in any buildings in the Complex.
SCHEDULE 2 - Page 2
SCHEDULE 2-A
SFO OFFICE COMPLEX
EXPENSE DISTRIBUTION - MEGABIOS CORP.
REVISED: March 5,1997
866 Malcolm Bldg. E
EXPENSES
Management Salary Reimbursed to Landlord by Tenant
Group Insurance Reimbursed to Landlord by Tenant
Security Reimbursed to Landlord by Tenant
Misc G&A (less advertising) Reimbursed to Landlord by Tenant
Management Expense Reimbursed to Landlord by Tenant
Management Fee Reimbursed to Landlord by Tenant
Prof. Services Reimbursed to Landlord by Tenant
Legal Fees (as defined in lease) Reimbursed to Landlord by Tenant
Property Tax Services Reimbursed to Landlord by Tenant
Electricity Paid Separately by Tenant to Vendors
Natural Gas Paid Separately by Tenant to Vendors
Water & Sewer Paid Separately by Tenant to Vendors
Janitorial Service Paid Separately by Tenant to Vendors
Janitorial Supplies Paid Separately by Tenant to Vendors
Keys & locks (common areas only) Reimbursed to Landlord by Tenant
Pest Control Reimbursed to Landlord by Tenant
Plant Maintenance Reimbursed to Landlord by Tenant
Maintenance Salary Reimbursed to Landlord by Tenant
Trash Removal Reimbursed to Landlord by Tenant
Window Cleaning Reimbursed to Landlord by Tenant
Carpet Cleaning Reimbursed to Landlord by Tenant
Electrical & Lighting Reimbursed to Landlord by Tenant
Repair Hardware & Supply Reimbursed to Landlord by Tenant
Plumbing Repairs Reimbursed to Landlord by Tenant
Roof Repairs Reimbursed to Landlord by Tenant
Sign Repairs Reimbursed to Landlord by Tenant
Other Building Repairs Reimbursed to Landlord by Tenant
Elevator Maintenance No reimbursement - Landlord excludes these expenses
HVAC Maintenance Paid Separately by Tenant to Vendors
Other Equipment Maintenance Reimbursed to Landlord by Tenant
Elevator Repair No reimbursement - Landlord excludes these expenses
HVAC Repairs Paid Separately by Tenant to Vendors
Other Equipment Repair Reimbursed to Landlord by Tenant
Grounds Supply Equipment Reimbursed to Landlord by Tenant
Landscape Contract Reimbursed to Landlord by Tenant
Parking Lights Reimbursed to Landlord by Tenant
Sweeping Reimbursed to Landlord by Tenant
Insurance Reimbursed to Landlord by Tenant
Property Taxes Reimbursed to Landlord by Tenant
SCHEDULE 2-A
SCHEDULE 3
LEASEHOLD MORTGAGE PROVISIONS
(a) Leasehold Mortgage Authorized. Tenant may mortgage or otherwise encumber
-----------------------------
Tenant's leasehold estate (a "Leasehold Mortgage") to an Institutional Investor
(as hereinafter defined), under a Leasehold Mortgage and assign Tenant's
interest in this Lease as security for such Leasehold Mortgage.
(b) Notice to Landlord.
------------------
(1) Tenant shall keep Landlord reasonably informed as to any decision by
Tenant to enter into a Leasehold Mortgage. If Tenant shall mortgage Tenant's
leasehold estate to an Institutional Investor, and if either Tenant or the
holder of such Leasehold Mortgage shall provide Landlord with notice of such
Leasehold Mortgage together with a true copy of such Leasehold Mortgage and
the name and address of mortgagee thereunder (the "Leasehold Mortgagee"),
Landlord and Tenant agree that, following receipt of such notice by Landlord,
the provisions of this Schedule shall apply in respect to such Leasehold
Mortgage.
(2) In the event of any assignment of a Leasehold Mortgage (but such
assignment shall be only to an Institutional Investor) or in the event of a
change of address of a Leasehold Mortgagee, notice of the new name or address
of the Leasehold Mortgagee shall be provided to Landlord.
(3) Landlord shall promptly upon receipt of the notice provided for by
paragraph (b)(1) above acknowledge in writing to the Leasehold Mortgagee
receipt of such communication as constituting the notice provided for by
paragraph (b)(l) above.
(4) After Landlord has received the notice provided for by paragraph
(b)(I) above, Tenant, upon being requested to do so by Landlord, shall with
reasonable promptness, but in no event more than fifteen (15) days thereafter,
provide Landlord with copies of the note or other obligation secured by such
Leasehold Mortgage and of any other documents pertinent to the Leasehold
Mortgage as specified by Landlord. If requested to do so by Landlord, Tenant
shall thereafter also provide Landlord from time to time with a copy of each
amendment or other modification or supplement to such instruments, and any
assignments or conveyances of the Leasehold Mortgagee's interest.
(5) Tenant shall promptly provide Landlord with a copy of any notice of
default Tenant may receive from Leasehold Mortgagee with respect to the
Leasehold Mortgage.
(c) Definitions. The following terms are defined to and shall have the
-----------
following indicated meanings when used in this Schedule.
SCHEDULE 3 - Page 1
(i) The term "Institutional Investor" shall refer to a savings bank,
savings and loan association, commercial bank, trust company, credit union,
insurance company, college, university, venture capital and/or partnership,
real estate investment trust or pension fluid. The term "Institutional
Investor" shall also include other lenders of substance which perform
functions similar to any of the foregoing, and which have assets in excess of
fifty million dollars ($50,000,000) at the time the Leasehold Mortgage loan is
made.
(ii) The term "Leasehold Mortgage" shall include a mortgage, a deed of
trust, a deed to secure debt, an assignment of rents, issues and profits from
the Premises, or other security instrument by which Tenant's leasehold estate
is mortgaged, conveyed, assigned, or otherwise transferred, to secure a debt
or other obligation.
(iii) The term "Leasehold Mortgagee" shall refer to a holder of a
Leasehold Mortgage in respect to which the notice provided for by paragraph
(b) of this Schedule has been given and received and as to which the
provisions of this Schedule are applicable.
(iv) The term "Leasehold Mortgage Purchaser" shall refer to the
purchaser at any sale of this Lease and of the leasehold estate hereby created
in any proceedings for the foreclosure of any Leasehold Mortgage, or the
assignee or transferee of this Lease and of the leasehold estate hereby
created under any instrument of assignment or transfer in lieu of the
foreclosure of any Leasehold Mortgage.
(d) Consent of Leasehold Mortgagee Required. No cancellation, surrender or
---------------------------------------
material modification of this Lease shall be effective as to the Leasehold
Mortgagee unless consented to in writing by such Leasehold Mortgagee.
(e) Default Notice. Landlord, upon providing Tenant any notice of (i) default
--------------
under this Lease, or (ii) termination of this Lease, shall at the same time
provide a copy of such notice to the Leasehold Mortgagee. No such notice by
Landlord to Tenant shall be deemed to have been duly given unless and until a
copy thereof has been so provided to the Leasehold Mortgagee. From and after the
date upon which such notice has been given to a Leasehold Mortgagee, such
Leasehold Mortgagee shall have the same period, after the giving of such notice
upon it, for remedying any default or acts or omissions which are the subject
matter of such notice or causing the same to be remedied, as is given Tenant
after the giving of such notice to Tenant, plus in each instance, the additional
periods of time specified in paragraphs (f) and (g) of this Schedule to remedy,
commence remedying or cause to be remedied the defaults or acts or omissions
which are the subject matter of such notice specified in any such notice.
Landlord shall accept such performance by or at the instigation of such
Leasehold Mortgagee as if the same had been done by Tenant. Tenant authorizes
the Leasehold Mortgagee to take any such action at such Leasehold Mortgagee's
option and does hereby authorize entry upon-the Premises by the Leasehold
Mortgagee for such purpose.
(f) Notice to Leasehold Mortgagee. Anything contained in this Lease to the
-----------------------------
contrary notwithstanding, if any default shall occur which entitles Landlord to
terminate this Lease while
SCHEDULE 3 - Page 2
there exists a Leasehold Mortgage, Landlord shall have no right to terminate
this Lease unless, following the expiration of the period of time given Tenant
to cure such default or the act or omission which gave rise to such default,
Landlord shall notify the Leasehold Mortgagee of Landlord's intent to so
terminate this Lease ("Termination Notice") at least fifteen (15) days in
advance of the proposed effective date of such termination if such default is
capable of being cured by the payment of money, and at least thirty (30) days in
advance of the proposed effective date of such termination if such default is
not capable of being cured by the payment of money. The provisions of paragraph
(g) below of this Schedule shall apply if, during such 15- or 30-day Termination
Notice period, the Leasehold Mortgagee shall:
(i) notify Landlord of such Leasehold Mortgagee's desire to nullify
such notice, and
(ii) pay or cause to be paid all Base Rent, additional rent, and other
payments then due and in arrears as specified in the Termination Notice to
such Leasehold Mortgagee and which may become due during such 15 or 30-day
period, and
(iii) comply or, in good faith, with reasonable diligence and
continuity, commence to comply with all non-monetary requirements of this
Lease then in default and susceptible of being complied with by such Leasehold
Mortgagee.
(g) Procedure on Default.
--------------------
(1) If Landlord shall elect to terminate this Lease by reason of any
default of Tenant, and a Leasehold Mortgagee shall have proceeded in the
manner provided for by paragraph (f) of this Schedule, the specified date for
the termination of this Lease as fixed by Landlord in its Termination Notice
shall be extended for a period of four (4) months, provided that such
Leasehold Mortgagee shall, during such four (4)-month period:
(i) Pay or cause to be paid the Base Rent, additional rent and other
monetary obligations of Tenant under this Lease as the same become due, and
continue its good faith efforts to perform all of Tenant's other obligations
under this Lease, excepting past non-monetary obligations then in default and
not susceptible of being cured by such Leasehold Mortgagee such as curing the
bankruptcy or insolvency of Tenant; and
(ii) If not enjoined or stayed, take steps to acquire or sell Tenant's
interest in this Lease by foreclosure of the Leasehold Mortgage or other
appropriate means and prosecute the same to completion with due diligence.
(2) If at the end of such four (4)-month period such Leasehold Mortgagee
is complying, and thereafter continues to comply with paragraph (g)(l), this
Lease shall not then terminate, and the time for completion by such Leasehold
Mortgagee of its proceedings shall continue so long as such Leasehold
Mortgagee is enjoined or stayed and thereafter for so long as such Leasehold
Mortgagee proceeds to complete steps to acquire or sell Tenant's interest in
this Lease by foreclosure of the Leasehold Mortgage or
SCHEDULE 3 - Page 3
there exists a Leasehold Mortgage, Landlord shall have no right to terminate
this Lease unless, following the expiration of the period of time given Tenant
to cure such default or the act or omission which gave rise to such default,
Landlord shall notify the Leasehold Mortgagee of Landlord's intent to so
terminate this Lease ("Termination Notice") at least fifteen (15) days in
advance of the proposed effective date of such termination if such default is
capable of being cured by the payment of money, and at least thirty (30) days
in advance of the proposed effective date of such termination if such default
is not capable of being cured by the payment of money. The provisions of
paragraph (g) below of this Schedule shall apply if, during such 15- or 30-day
Termination Notice period, the Leasehold Mortgagee shall:
(i) notify Landlord of such Leasehold Mortgagee's desire to nullify
such notice, and
(ii) pay or cause to be paid all Base Rent, additional rent, and other
payments then due and in arrears as specified in the Termination Notice to
such Leasehold Mortgagee and which may become due during such 15 or 30-day
period, and
(iii) comply or, in good faith, with reasonable diligence and
continuity, commence to comply with all non-monetary requirements of this
Lease then in default and susceptible of being complied with by such Leasehold
Mortgagee.
(g) Procedure on Default.
--------------------
(1) If Landlord shall elect to terminate this Lease by reason of any
default of Tenant, and a Leasehold Mortgagee shall have proceeded in the
manner provided for by paragraph (f) of this Schedule, the specified date for
the termination of this Lease as fixed by Landlord in its Termination Notice
shall be extended for a period of four (4) months, provided that such
Leasehold Mortgagee shall, during such four (4) -month period:
(i) Pay or cause to be paid the Base Rent, additional rent and other
monetary obligations of Tenant under this Lease as the same become due, and
continue its good faith efforts to perform all of Tenant's other obligations
under this Lease, excepting past non-monetary obligations then in default and
not susceptible of being cured by such Leasehold Mortgagee such as curing the
bankruptcy or insolvency of Tenant; and
(ii) If not enjoined or stayed, take steps to acquire or sell Tenant's
interest in this Lease by foreclosure of the Leasehold Mortgage or other
appropriate means and prosecute the same to completion with due diligence.
(2) If at the end of such four (4) -month period such Leasehold Mortgagee
is complying, and thereafter continues to comply with paragraph (g)(l), this
Lease shall not then terminate, and the time for completion by such Leasehold
Mortgagee of its proceedings shall continue so long as such Leasehold
Mortgagee is enjoined or stayed and thereafter for so long as such Leasehold
Mortgagee proceeds to complete steps to acquire or sell Tenant's interest in
this Lease by foreclosure of the Leasehold Mortgage or
SCHEDULE 3 - Page 3
by other appropriate means with reasonable diligence and continuity. Nothing
in this paragraph (g) of this Schedule, however, shall be construed to extend
this Lease beyond the original term thereof as extended by any options to
extend the term of this Lease properly exercised by Tenant in accordance with
the provisions of this Schedule, nor to require a Leasehold Mortgagee to
continue such foreclosure proceedings after the default has been cured. If the
default shall be cured and the Leasehold Mortgagee shall discontinue such
foreclosure proceedings, this Lease shall continue in full force and effect as
if Tenant had not defaulted under this Lease.
(3) If a Leasehold Mortgagee is complying with paragraph (g)(l) of this
Schedule, upon the acquisition of Tenant's estate herein by such Leasehold
Mortgagee or its designee or any other Leasehold Mortgage Purchaser, this
Lease shall continue in full force and effect as if Tenant had not defaulted
under this Lease.
(4) For the purposes of this Schedule, the making of a Leasehold Mortgage
shall not be deemed to constitute an assignment or transfer of this Lease or
of the leasehold estate hereby created, nor shall the Leasehold Mortgagee, as
such, be deemed to be an assignee or transferee of this Lease or of the
leasehold estate hereby created so as to require such Leasehold Mortgagee, as
such, to assume the performance of any of the terms, covenants or conditions
on the part of the Tenant to be performed hereunder, but a Leasehold Mortgage
Purchaser shall be deemed to be an assignee or transferee within the meaning
of this Schedule, and such Leasehold Mortgage Purchaser shall be deemed to
have agreed to perform all of the terms, covenants and conditions on the part
of the Tenant to be performed hereunder from and after the date of such
purchase and assignment, but only for so long as such Leasehold Mortgage
Purchaser is the owner of the Leasehold Estate.
(5) Any Leasehold Mortgage Purchaser may, upon acquiring Tenant's
leasehold estate hereunder, with the further consent of Landlord in accordance
with Section 17, sell and assign such leasehold estate on such terms and to
such person or entity as assignee as are acceptable to such Leasehold Mortgage
Purchaser and thereafter be relieved of all obligations under this Lease,
provided that such assignee has delivered to Landlord in accordance with
Section 17 its written agreement to be bound by all of the provisions of this
Lease.
(6) Notwithstanding any other provisions of this Lease, any sale of this
Lease and of the leasehold estate hereby created in any proceedings for the
foreclosure of any Leasehold Mortgage, or the assignment or transfer of this
Lease and of the leasehold estate hereby created in lieu of the foreclosure of
the Leasehold Mortgage shall be deemed to be a permitted sale, transfer or
assignment of this Lease and of the leasehold estate hereby created.
(h) New Lease. In the event of the termination of this Lease as a result of
---------
Tenant's default, Landlord shall, in addition to providing the notices of
default and termination as required by paragraphs (e) and (f) above of this
Schedule, provide the Leasehold Mortgagee with written
SCHEDULE 3 - Page 4
notice that the Lease has been terminated, together with a statement of all sums
which would at that time be due under this Lease but for such termination, and
of all other defaults, if any, then known to Landlord. Landlord agrees, at the
election of the Leasehold Mortgagee, to enter into a new lease ("New Lease") of
the Premises with such Leasehold Mortgagee or its designee for the remainder of
the term of this Lease, effective as of the date of termination, at the Base
Rent and additional rent, and upon the terms, covenants and conditions
(including all options to renew, but excluding requirements which are not
applicable or which have already been fulfilled) of this Lease, provided:
(i) Such Leasehold Mortgagee shall make written request upon Landlord
for such New Lease within ten (10) business days after the date such Leasehold
Mortgagee receives Landlord's Notice of Termination of this Lease given
pursuant to this paragraph (h).
(ii) Such Leasehold Mortgagee or its designee shall pay or cause to be
paid to Landlord at the time of the execution and delivery of such New Lease,
any and all sums which would at the time of execution and delivery thereof be
due pursuant to this Lease but for such termination and, in addition thereto,
all reasonable expenses, including reasonable attorneys' fees and court costs,
which Landlord shall have incurred by reason of such default by Tenant and the
termination and the execution and delivery of the New Lease and which have not
otherwise been received by Landlord from Tenant or another party.
(iii) Such Leasehold Mortgagee or its designee shall agree to remedy
any of Tenant's defaults of which said Leasehold Mortgagee was notified by
Landlord's Notice of Termination and which are susceptible of being so cured
by the Leasehold Mortgagee or its designee.
(iv) Any New Lease made pursuant to this paragraph (h) shall have the
same right, title and interest in and to the Premises and the buildings and
improvements thereon as Tenant had under this Lease.
(v) The tenant under any such New Lease shall be liable to perform the
obligations imposed on the Tenant by such New Lease only during the period
such person has ownership of such Leasehold Estate.
Upon execution and delivery of the New Lease, Landlord, at the expense of
the new tenant thereunder, shall take such action as shall be necessary to
cancel and discharge this Lease and to remove Tenant named herein from the
Premises. Landlord agrees that, until the earlier to occur of (A) the execution
and delivery of the New Lease, or (B) the expiration of the ten (10) business
day period set forth in subparagraph (h)(i) above without the Leasehold
Mortgagee's having given notice of its request for the New Lease, Landlord shall
not modify, amend or terminate any sublease of any portion of the Premises and
that, upon execution and delivery of any New Lease, Landlord shall assign all of
its right, title and interest in and to all such subleases to the Leasehold
Mortgagee or the Leasehold Mortgage Purchaser. Any sums received by Landlord as
rental owed to
SCHEDULE 3 - Page 5
Tenant under any such subleases shall be credited against any monetary defaults
under this Lease.
(i) Casualty Loss. A standard mortgagee clause naming the Leasehold Mortgagee
-------------
may be added to any and all insurance policies required to be carried by Tenant
hereunder on the condition that the insurance proceeds are to be applied in the
manner specified in this Lease and the Leasehold Mortgage shall so provide.
(j) Legal Proceedings. Landlord shall give Leasehold Mortgagee prompt notice
-----------------
of any arbitration or legal proceedings between Landlord and Tenant involving
obligations under this Lease. Leasehold Mortgagee shall have the right to
intervene in any such proceedings and be made a party to such proceedings, and
the parties hereto do hereby consent to such intervention. In the event that the
Leasehold Mortgagee shall not elect to intervene or become a party to any such
proceedings, Landlord shall give the Leasehold Mortgagee notice of, and a copy
of any award or decision made in any such proceedings, which shall be binding on
the Leasehold Mortgagee.
(k) Security Deposit. If the Leasehold Mortgagee or Leasehold Mortgage
----------------
Purchaser has acquired the leasehold estate of Tenant pursuant to foreclosure,
conveyance in lieu of foreclosure or other proceedings, or has entered into a
New Lease with Landlord in accordance with paragraph (h) of this Schedule, such
Leasehold Mortgagee or Leasehold Mortgage Purchaser shall succeed to the rights
of Tenant, if any, in and to the security deposit paid by Tenant to Landlord
pursuant to the terms of this Lease. In such event, Tenant shall no longer have
any rights to such security deposit and Landlord shall hold such security
deposit for and on behalf of such Leasehold Mortgagee or Leasehold Mortgage
Purchaser.
(l) Erroneous Payments. No payment made to Landlord by a Leasehold Mortgagee
------------------
shall constitute agreement that such payment was, in fact, due under the terms
of this Lease; and a Leasehold Mortgagee having made any payment to Landlord
pursuant to Landlord's wrongful, improper or mistaken notice or demand shall be
entitled to the return of any such payment or portion thereof, provided that
such Leasehold Mortgagee shall have made demand therefor not later than one year
after the date of its payment.
(m) Sublease Rentals. Landlord consents to a provision in any Leasehold
----------------
Mortgage or otherwise for an assignment of Tenants interest in rents from
subleases of the Premises, as additional security to the Leasehold Mortgagee.
(n) Equipment Mortgages Authorized. On one or more occasions, Tenant may
------------------------------
lease, sell and leaseback, mortgage or otherwise encumber Tenants interest in
any item or items of furniture, inventory, trade fixtures, equipment (including,
without limitation, any equipment which by its installation in the Premises has
become a fixture) or other personal property then or thereafter to be located or
installed in the Premises (collectively for purposes of this Schedule,
"Equipment Mortgage" and "Equipment," respectively) to any company engaged in
the business of selling or financing the same (including but not limited to the
manufacturer, distributor or retailer of any Equipment or any Institutional
Investor) under one or more Equipment Mortgages. If either Tenant or any
Equipment Mortgagee shall provide Landlord with notice of any
SCHEDULE 3 - Page 6
Equipment Mortgage, together with a true copy of such Equipment Mortgage and the
name and address of the Equipment Mortgagee, Landlord and Tenant agree that the
following shall apply to such Equipment Mortgage and the Equipment:
(i) Title to the Equipment shall be and remain in the name of either
Tenant or Equipment Mortgagee during the term of the Lease and not that of
Landlord, and as between Landlord and Equipment Mortgagee, shall not be deemed
to constitute real property and may be removed from the Premises by the
Equipment Mortgagee at any time during the term of the Lease in the event of a
default by Tenant under the terms of its Equipment Mortgage.
(ii) In the event of any assignment of an Equipment Mortgage, or in
the event of a change of address of an Equipment Mortgagee, notice of the new
name or address of the Equipment Mortgagee shall be provided to Landlord.
(iii) Landlord shall promptly notify the Equipment Mortgagee of any
termination or expiration of the term of this Lease, and afford any Equipment
Mortgagee a reasonable period of time, which period shall not exceed sixty
(60) days without the Landlord's written consent, after Equipment Mortgagee's
receipt of such notice in which Equipment Mortgagee may enter the premises to
inspect and remove any Equipment from the Premises which then remains subject
to such Equipment Mortgage. In the event that the Equipment Mortgagee occupies
the Premises or any portion thereof for any period, Equipment Mortgagee shall
pay Landlord an occupancy fee equal to the Base Rent and any additional rent
allocable to the portion so occupied. All physical damage to the Premises
caused by the removal of the Equipment by Equipment Mortgagee shall be
reimbursed or repaired by Equipment Mortgagee.
(iv) Landlord shall upon request of Tenant, execute any document
reasonably requested of it to evidence in favor of any Equipment Mortgagee (A)
the consent of Landlord to any such Equipment Mortgage, (B) the waiver by
Landlord of any possible rights in or liens upon any such Equipment, and (C)
the acknowledgment by Landlord of the rights of such Equipment Mortgagee in
and to such Equipment (including the rights of Equipment Mortgagee to remove,
subject to repairing the Premises, such Equipment upon termination of this
Lease); provided, that such Equipment Mortgagee expressly agrees to reimburse
Landlord for or to repair any damage to the Premises caused by the removal of
the Equipment and otherwise agrees to the terms of this Section,
(o) Notices. Notices from Landlord to the Leasehold Mortgagee or Equipment
-------
Mortgagee shall be mailed to the address furnished Landlord pursuant to this
Schedule, and those from the Leasehold Mortgagee or Equipment Mortgagee to
Landlord shall be mailed to the address designated pursuant to the provisions of
Section 43 of this Lease. Such notices, demands and requests shall be given in
the manner described in Section 43 of this Lease and shall in all respects be
governed by the provisions of that Section.
SCHEDULE 3 - Page 7
(p) Leasehold and Equipment Mortgagee Benefited. The respective provisions of
-------------------------------------------
this Schedule are for the benefit of, and are to be enforceable by, the
Leasehold Mortgagee, Leasehold Mortgagee Purchaser or Equipment Mortgagee.
SCHEDULE 3 - Page 8