EXHIBIT 10.48
LEASE AND AGREEMENT OF LEASE
Between
TNCA, LLC
a Delaware limited liability company
as Landlord
and
TECHNICLONE CORPORATION,
a Delaware corporation
as Tenant
Dated: As of December 24, 1998
93
TABLE OF CONTENTS
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PAGE
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RECITALS 1
I. LEASE 3
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1.1. Demise of Premises 3
1.2. Title and Condition 3
1.3. Use of Leased Premises 3
1.4. Quiet Enjoyment 4
II. TERM 4
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2.1. Term 4
III. BASIC RENT; ADDITIONAL RENT; SECURITY DEPOSIT 4
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3.1. Basic Rent 4
3.2. Additional Rent 6
3.3. Late Charge 6
3.4. Security Deposit 6
3.5. True Lease 6
3.6. Net Lease; Non-Terminability 7
IV. PAYMENT OF IMPOSITIONS, TAXES AND ASSESSMENTS; COMPLIANCE
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V. WITH LAW; ENVIRONMENTAL MATTERS 8
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4.1. Payment of Impositions 8
4.2. Compliance with Laws 8
4.3. Permitted Contests 8
4.4. Hazardous Materials 9
V. MAINTENANCE AND REPAIR; ALTERATIONS 11
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5.1. Maintenance and Repair 12
5.2. Engineering Report 12
5.3. Encroachments 12
5.4. Alterations 13
5.5. No Liens 13
5.6 Shell Space Improvements 13
VI. INSURANCE; INDEMNIFICATION 13
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6.1. Insurance 13
6.2. Permitted Insurers 15
6.3. Insurance Claims 16
6.4. Insured Parties 16
(i)
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6.5. Delivery of Policies 16
6.6. No Double Coverage 16
6.7. Blanket Insurance 16
6.8. Damages for Tenant's Failure to Properly Insure 16
6.9. Casualty 17
6.10. Indemnification 17
VII. CONDEMNATION
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7.1. Assignment of Award
7.2. Definitions for Article VII 18
7.3. Complete Taking 19
7.4. Partial Taking 19
7.5. Temporary Taking 20
7.6. Procedure After Purchase Offer; Procedure on Event of
Purchase 20
7.7. Compensation for Personal Property and Relocation
Expenses 21
VIII. ASSIGNMENT AND SUBLETTING 21
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8.1. Power to Assign and Sublet 21
8.2. Assumption by Assignee or Transferee; Tenant Remains
Liable 22
8.3. Other Transfers Void 22
IX. FINANCIAL INFORMATION 22
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9.1. Financial Statements 22
X. DEFAULT 22
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10.1. Events of Default 22
10.2. Landlord's Remedies 24
10.3. Additional Rights of Landlord 25
10.4. Waivers by Tenant 26
10.5. Attorneys' Fees 26
XI. MISCELLANEOUS 26
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11.1. Notices, Demands and Other Instruments 26
11.2. Estoppel Certificates and Consents 26
11.3. Determination of Fair Rental Value 27
11.4. No Merger 29
11.5. Surrender 29
11.6. Separability 29
11.7. Merger, Consolidation or Sale of Assets 29
11.8. Savings Clause 30
11.9. Binding Effect 30
11.10. Table of Contents and Headings 30
11.11. Governing Law 30
(ii)
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11.12. Certain Definitions 30
11.13. Exhibits 32
11.13. Integration 32
11.15. Lease Memorandum 33
11.16. Subordination to Financing 33
11.17. Tenant's Right of First Refusal 33
Exhibit A Legal Description
Exhibit B Permitted Encumbrances
Exhibit C Tenant Estoppel Certificate
Exhibit D Subordination, Non-Disturbance, and Attornment Agreement
Exhibit E Memorandum of Lease
Exhibit F Shell Space Improvement Costs
(iii)
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LEASE
AND
AGREEMENT OF LEASE
THIS LEASE AND AGREEMENT OF LEASE (the "Lease") is made, entered into
and effective this 24 day of December, 1998 (the "Commencement Date"), by and
between TNCA, LLC, a Delaware limited liability company, and its successors or
assigns (the "Landlord"), whose address for purposes of notice hereunder is 1900
Avenue of the Stars, Suite 2840, Los Angeles, CA 90067, Fax: (310) 282-8585 and
Techniclone Corporation, a Delaware corporation (the "Tenant"), whose address
for purposes of notice hereunder is 14282 Franklin Avenue, Tustin, CA 92780,
Fax: (714) 838-4094
R E C I T A L S
This Lease is made with reference to the following facts and
objectives, and may be entered as admissions against either party by the other
in any action arising from or related to this Lease.
Landlord is the owner of the following: (i) certain tract(s) or
parcel(s) of land located in Tustin, California, and more particularly described
on the attached and incorporated Exhibit "A" (the land described above, together
with all rights, interests, easements, rights of way and appurtenances related
thereto, shall hereinafter be referred to as the "Land"); and (ii) a building or
buildings located or to be located on the Land at 14272 and 14282 Franklin
Avenue, Tustin, CA, and all other structures and improvements existing or to be
constructed on the Land, together with all fixtures and equipment therein owned
by Landlord and used in the operation of the same (collectively, the
"Improvements"). The Land and Improvements are hereinafter collectively referred
to as the "Premises." No easement for light, air or view is included with or
appurtenant to the Premises.
In connection with the financing of the Premises, Landlord has executed
and delivered a promissory note (the "Note") to Finova Realty Capital, Inc., a
Delaware corporation (together with its successors and assigns, the "Lender").
To secure the payment of such Note, the Landlord has granted a mortgage lien on
the Premises pursuant to a Deed of Trust and Security Agreement of even date
herewith (the "Mortgage") and an Assignment of Rents and Leases of even date
herewith (the "Assignment") on the Premises to the Lender, and entered into that
certain loan commitment with Lender dated November 19, 1998 (the "Loan
Commitment"). The aforesaid Note, Loan Commitment, Mortgage and Assignment and
all related instruments and documents are hereinafter referred to as the "Loan
Documents" and the transaction to which the these instruments and documents
relate is hereinafter referred to as the "Loan." Reference herein to "Default
Rate" and "Default Rate Interest" shall have the meaning set forth in Article 5
of the Note, which is the lesser of thirteen percent (13%) or the maximum amount
permitted by applicable law.
Pursuant to all of the terms, conditions, covenants and provisions of
this Lease, Tenant desires to lease the Premises from Landlord, and Landlord
desires to lease the Premises to Tenant, for the rents and during the terms
hereinafter set forth.
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Landlord acquired the Premises on the date that the initial term of
this Lease commenced and for the period of at least one year prior to said
commencement date, Tenant owned, occupied and operated the Premises.
Tenant is currently operating biotechnology research, development and
manufacturing operations in the Premises and intends to continue to do so during
the term of this Lease. Tenant has examined the title of the Premises, the
physical condition of the premises, environmental studies and reports of the
Premises, and the economic feasibility of conducting Tenant's research and
manufacturing operations in and from the Premises. Tenant has determined that
the same are satisfactory to Tenant, and Tenant accepts the Premises on an "AS
IS WHERE IS" basis. TENANT ACKNOWLEDGES THAT LANDLORD (WHETHER ACTING AS
LANDLORD HEREUNDER OR IN ANY OTHER CAPACITY) HAS NOT MADE AND WILL NOT MAKE, NOR
SHALL LANDLORD BE DEEMED TO HAVE MADE, ANY WARRANTY OR REPRESENTATION, EXPRESS
OR IMPLIED, WITH RESPECT TO ANY OF THE PREMISES, INCLUDING WITHOUT LIMITATION,
ANY WARRANTY OR REPRESENTATION AS TO ITS FITNESS FOR USE OR PURPOSE, DESIGN OR
CONDITION FOR ANY PARTICULAR USE OR PURPOSE, AS TO THE QUALITY OF THE MATERIAL
OR WORKMANSHIP THEREIN, LATENT OR PATENT, AS TO LANDLORD'S TITLE THERETO, OR AS
TO VALUE, COMPLIANCE WITH APPLICABLE LAWS, SPECIFICATIONS, LOCATION, USE,
CONDITION, MERCHANTABILITY, QUALITY, DESCRIPTION, DURABILITY OR OPERATION, IT
BEING AGREED THAT ALL RISKS INCIDENT THERETO ARE TO BE BORNE BY TENANT. Tenant
acknowledges that the Premises are of its selection and to its specifications,
and that the Premises have been inspected by Tenant and are satisfactory to it.
In the event of any defect or deficiency in any of the Premises of any nature,
whether patent or latent, Landlord shall not have any responsibility or
liability with respect thereto or for any incidental or consequential damages
(including strict liability in tort).
The Premises are Landlord's sole asset. The rents to be paid by Tenant
to Landlord hereunder will be used by Landlord to, among other things, satisfy
Landlord's obligations under the Loan Documents. It is, therefore, the parties'
objective to provide for an absolute "Bond Type" net net net lease to Landlord;
the Basic Rent (as hereinafter defined) payable by Tenant hereunder shall be an
absolute "Bond Type" net net net return to Landlord and Tenant shall pay all
costs and expenses relating to the Premises and Tenant's research and
manufacturing operations carried on therein.
NOW, THEREFORE, IN CONSIDERATION of the aforesaid Recitals, and in
consideration of the Premises leased by Landlord to Tenant hereby, and in
consideration of the rents and covenants to be paid and performed by Tenant
hereunder, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties covenant and agree as
follows:
I. LEASE.
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1.1. DEMISE OF PREMISES. In consideration of the rents and
covenants herein stipulated to be paid and performed, Landlord hereby demises
the Premises to Tenant, and Tenant hereby lets and accepts the Premises from
Landlord, for the term herein described.
1.2. TITLE AND CONDITION. The Premises are demised and let "as
is" subject to (a) the rights of any parties in possession and the existing
state of the title as of the commencement of the term of this Lease, (b) any
state of facts which an accurate survey or physical inspection thereof might
show, (c) all zoning regulations, restrictions, rules and ordinances, building
restrictions and other laws and regulations now in effect or hereafter adopted
by any governmental authority having jurisdiction over the condition of any
buildings, structures and other improvements located thereon, as of the
commencement of the term of this Lease, without representation or warranty by
Landlord. Tenant represents that it has examined the title to and the condition
of the Premises and has found the same to be satisfactory to it.
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1.3. USE OF LEASED PREMISES.
(a) Tenant may occupy and use the Premises for a research
facility and related uses, including the manufacturing of pharmaceutical
products, office uses, laboratories and light warehousing, or for any other
lawful purpose, (except that the Premises may not be used for or associated with
a pornographic shop, adult book store, or massage parlor) so long as such other
lawful purpose would not (i) have a material adverse effect on the value of the
Premises, (ii) increase (when compared to use as a research facility) the
likelihood that Tenant, Landlord or Lender would incur liability under any
provisions of any Environmental Laws, or (iii) result in or give rise to any
material environmental deterioration or degradation of the Premises, including
without limitation, mining or the removal of oil, gas or minerals, or (iv)
violate any covenants, easement agreements, deed restrictions, agreements of
record affecting the Premises or Applicable Laws. Tenant shall not create or
suffer to exist any public or private nuisance, hazardous or illegal condition
or waste on or with respect to the Premises. Tenant shall not use, occupy or
permit any of the Premises to be used or occupied, nor do or permit anything to
be done in or on any of the Premises, in a manner which would (A) make void or
voidable any insurance which Tenant is required hereunder to maintain then in
force with respect to any of the Premises, or (B) affect the ability of Tenant
to obtain any insurance which Tenant is required to furnish hereunder, or (C)
impair Landlord's title to the Premises, or in such manner as might reasonably
make possible a claim or claims of adverse usage or adverse possession by the
public, as such, or third Persons, or of implied dedication of the Premises or
any portion thereof. Nothing contained in this Lease and no action by Landlord
shall be construed to mean that Landlord has granted to Tenant any authority to
do any act or make any agreement that may create any such third party or public
right, title, interest, lien, charge or other encumbrance upon the estate of the
Landlord in the Premises. The preceding sentence does not limit Tenant's right
to assign or sublet its interest hereunder, as provided in Section 8.
(b) Tenant shall not conduct its business operation in
the Premises unless and until (and only during such time as) all necessary
certificates of occupancy, permits, licenses and consents from any and all
appropriate governmental authorities have been obtained by Tenant and are in
full force and effect.
1.4. QUIET ENJOYMENT. For so long as no Event of Default (as
hereinafter defined) has occurred and is continuing hereunder, Landlord warrants
peaceful and quiet enjoyment of the Premises by Tenant against acts of Landlord
or anyone claiming through Landlord, provided that Landlord and its agents may
enter upon and examine the Premises at reasonable times upon 24 hours prior
notice, except in the event of a bona fide emergency. Exercise by Landlord of
its rights to come upon the Premises as set forth in this Lease, including any
limitations prescribed by federal law, shall not constitute a violation of this
Section 1.4.
II. TERM.
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2.1. TERM. Subject to the terms and conditions hereof, Tenant
shall have and hold the Premises for a primary term (herein called the "Primary
Term") commencing on the date hereof, and ending at midnight on December 31,
2010. Thereafter, Tenant shall have the rights and options to extend this Lease
for two (2) consecutive extended terms of five (5) years each (herein called the
"Extended Terms" and individually, an "Extended Term," and together with the
Primary Term, called the "Terms") upon the expiration of the Primary Term or the
preceding Extended Term unless this Lease shall be sooner terminated pursuant to
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Article VII of this Lease. If no default or Event of Default shall exist and be
continuing hereunder beyond any applicable cure period, each Extended Term shall
commence on the day immediately succeeding the expiration date of the Primary
Term or the preceding Extended Term and shall end at midnight on the day
immediately preceding the fifth anniversary of the first day of such Term.
Provided no Event of Default shall exist and be continuing at the time of
exercise of such option, Tenant may exercise each said option to extend this
Lease for an Extended Term by giving written notice to that effect at least
eighteen (18) months prior to the expiration of the then existing term.
Notwithstanding the foregoing, if Tenant fails to give notice to Landlord to
extend the Term of the Lease within said eighteen (18) month period, Landlord
shall give written notice to Tenant of said failure to give notice and Tenant
shall have an additional thirty (30) days after said notice is given to exercise
said Extended Term. If Tenant does not exercise any such option in a timely
manner after such notice, then Landlord shall have the right during the
remainder of the Term of this Lease to advertise the availability of the
Premises for sale or reletting and to erect upon the Premises signs appropriate
for the purpose of indicating such availability. The phrase "term of this Lease"
or "term hereof" means the Primary Term, plus any Extended Terms with respect to
which the right has been exercised. The term "Lease Year" shall mean such
successive period of twelve (12) consecutive calendar months commencing on the
"Commencement Date" (hereinafter defined). Except as otherwise expressly
provided herein, all of the provisions of this Lease shall be applicable during
each Extended Term.
III. BASIC RENT; ADDITIONAL RENT; SECURITY DEPOSIT.
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3.1. BASIC RENT. Tenant covenants to pay to Landlord as and
for the rental of the Premises the amounts set forth below (which amounts, as
increased by the amounts provided for in Section 3.2 hereof, is together called
the "Basic Rent"):
(a) For and with respect to the first twenty four (24)
calendar months of the Primary Term, including the partial month, if any,
immediately following the Commencement Date (hereinafter defined), at the rate
of Six Hundred Seventy Five Thousand Dollars ($675,000.00) per annum, payable in
equal monthly installments of Fifty Six Thousand Two Hundred Fifty Dollars
($56,250.00);
(b) For and with respect to the second twenty four (24)
calendar months of the Primary Term, at the rate of Six Hundred Ninety Seven
Thousand Six Hundred Twelve and 50/100 Dollars ($697,612.50) per annum, payable
in equal monthly installments of Fifty Eight Thousand One Hundred Thirty Four
and 38/100 Dollars ($58,134.38).
(c) For and with respect to the third twenty four (24)
calendar months of the Primary Term, at the rate of Seven Hundred Twenty
Thousand Nine Hundred Eighty Two and 52/100 Dollars ($720,982.52) per annum,
payable in equal monthly installments of Sixty Thousand Eighty One and 88/100
Dollars ($60,081.88).
(d) For and with respect to the fourth twenty four (24)
calendar months of the Primary Term, at the rate of Seven Hundred Forty Five
Thousand One Hundred Thirty Five and 43/100 Dollars ($745,135.43) per annum,
payable in equal monthly installments of Sixty Two Thousand Ninety Four and
62/100 Dollars ($62,094.62).
(e) For and with respect to the fifth twenty four (24)
calendar months of the Primary Term, at the rate of Seven Hundred Seventy
Thousand Ninety Seven and 47/100 Dollars ($770,097.47) per annum, payable in
equal monthly installments of Sixty Four Thousand One Hundred Seventy Four and
79/100 Dollars ($64,174.79).
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(f) For and with respect to the sixth twenty four (24)
calendar months of the Primary Term, at the rate of Seven Hundred Ninety Five
Thousand Eight Hundred Ninety Five and 74/100 Dollars ($795,895.74) per annum,
payable in equal monthly installments of Sixty Six Thousand Three Hundred Twenty
Four and 64/100 Dollars ($66,324.64).
(g) If Tenant's option to extend the Term of this Lease
is exercised, for and with respect to each twenty four (24) calendar months
during the Extended Term, at the rate that is equal to 103.35 % multiplied by
the rent payable during the immediately preceding twenty four (24) calendar
month period.
Basic Rent payments are due on the first of each calendar month (Basic Rent
Payment Date") and are payable monthly in advance. Tenant unconditionally and
irrevocably agrees to make the Basic Rent payments directly to Lender for so
long as the Note is outstanding. Thereafter, Tenant shall make Basic Rent
payments to Landlord or Landlord's designee. Tenant shall pay the same by
immediately available funds on the Basic Rent Payment Date; provided, however,
that on the Commencement Date Tenant shall pay to Landlord the first installment
of Basic Rent in an amount equal to the aggregate per diem Basic Rent for each
day between the Commencement Date and the first day of the first full calendar
month after the month on which the Commencement Date falls. All payments of
Basic Rent shall be accompanied by the following advice:
_____________________Bond Lease
Rent for (month/year)
to:
_____________________
ABA No.
Account No.
3.2. ADDITIONAL RENT.
3.2.1 Tenant shall pay and discharge before the
imposition of any fine, lien, interest or penalty may be added thereto for late
payment thereof, as Additional Rent, all other amounts and obligations which
Tenant assumes or agrees to pay or discharge pursuant to this Lease, together
with every fine, penalty, interest and cost which may be added by the party to
whom such payment is due for nonpayment or late payment thereof. In the event of
any failure by Tenant to pay or discharge any of the foregoing, Landlord shall
have all rights, powers and remedies provided herein, by law or otherwise, in
the event of nonpayment of Basic Rent.
3.2.2 Notwithstanding the provisions of Sections 3.2.1
and 4.1 herein, in respect of the payment of real estate taxes as Additional
Rent, Tenant shall pay to Landlord on the first day of each calendar month (i)
one-twelfth of an amount which would be sufficient to pay real estate taxes
payable, or estimated by Landlord to be payable, during the next ensuing twelve
(12) months.
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3.3. LATE CHARGE. If any installment of Basic Rent is not paid
within five (5) days of when the same is due, Tenant shall pay to Landlord or
Lender, as the case may be, on demand, as Additional Rent, an amount equal to
five percent (5%) of such overdue installment of Basic Rent plus interest at the
Default Rate (which amounts are together called the "Late Charge").
3.4. SECURITY DEPOSIT. To secure the faithful performance by
Tenant of the covenants, conditions and agreements set forth in this Lease to be
performed by it, Tenant shall deposit with Landlord, within ten (10) days
following Tenant's execution of this Lease, and thereafter at all times during
the continuance of this Lease shall maintain on deposit with Landlord, a
security deposit in an amount equal to two (2) months Basic Rent under the
Primary Term ("Security Deposit"). Tenant shall pay the Security Deposit on the
understanding (a) that the Security Deposit or any portion thereof may be
applied to the curing of any default that may exist, without prejudice to any
other remedy or remedies that Landlord may have on account thereof, and upon
such application Tenant shall pay Landlord on demand the amount so applied which
shall be added to the Security Deposit so that the same will be restored to the
required amount; (b) that should the Premises be transferred by Landlord, the
Security Deposit or any balance thereof may be turned over to Landlord's
successor or transferee, and Tenant agrees to look solely to such successor or
transferee for such application or return; (c) that Landlord or its successors
shall hold the Security Deposit as a separate fund and shall not commingle it
with other funds; (d) that the Security Deposit shall not be deemed prepaid
rent; and (e) that if Tenant shall faithfully perform all of the covenants and
agreements in this Lease contained on the part of Tenant to be performed, the
Security Deposit, or any then remaining balance thereof, shall be returned to
Tenant, without interest, within thirty (30) days after the expiration of the
Terms.
3.5. TRUE LEASE. Landlord and Tenant agree that this Lease is
a true lease and does not represent a financing arrangement.
3.6. NET LEASE; NON-TERMINABILITY.
(a) This is an absolutely net lease to Landlord. It is
the intent of the parties hereto that the Basic Rent payable under this Lease
shall be an absolutely net return to Landlord and that Tenant shall pay all
costs and expenses relating to the Premises and all operations carried on
therein, unless otherwise expressly provided in this Lease. Any amount or
obligation herein relating to the Premises which is not expressly declared to be
that of Landlord shall be deemed to be an obligation of Tenant to be timely
performed by Tenant at Tenant's expense. Basic Rent, Additional Rent and all
other sums payable hereunder by Tenant, shall be paid without notice, demand,
set-off, counterclaim, abatement, suspension, deduction or defense.
(b) This Lease shall not terminate nor shall Tenant have
any right to terminate this Lease (except as otherwise expressly provided in
Article VII), nor shall Tenant be entitled to any abatement or reduction of rent
hereunder (except as expressly provided in Article VII of this Lease), nor shall
the obligations of Tenant under this Lease be affected by reason of: (i) any
damage to or destruction of all or any part of the Premises from whatever cause;
(ii) the taking in whole or in part of the Premises or any portion thereof by
condemnation, requisition or otherwise except as provided in Article VII; (iii)
the prohibition, limitation or restriction of Tenant's use of all or any part of
the Premises, or any interference with such use; (iv) any eviction by paramount
title or otherwise or any other defect in title or breach of the right of Tenant
to quiet enjoyment of the Premises; (v) Tenant's acquisition or ownership of all
or any of the Premises otherwise than as expressly provided herein; (vi) any
default on the part of Landlord under this Lease, or under any other agreement
to which Landlord and Tenant may be parties; (vii) any abandonment of the
Premises by Tenant; or (viii) any other cause whether similar or dissimilar to
the foregoing, any present or future law to the contrary notwithstanding. It is
the intention of the parties hereto that the obligations of Tenant hereunder
shall be separate and independent covenants and agreements, that the Basic Rent,
the Additional Rent and all other sums payable by Tenant hereunder shall
continue to be payable in all events and that the obligations of Tenant
hereunder shall continue unaffected, unless the requirement to pay or perform
the same shall have been terminated pursuant to Article VII of this Lease.
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(c) Tenant agrees that it will remain obligated under
this Lease in accordance with its terms, and it will not take any action to
terminate, rescind or avoid this Lease because of: (i) any readjustment,
liquidation, dissolution, or winding-up or other proceeding affecting Landlord
or its successors-in-interest or (ii) any action with respect to this Lease
which may be taken by any trustee or receiver of Landlord or its
successors-in-interest or by any court in any such proceeding.
(d) Tenant waives all rights which may now or hereafter
be conferred by law or otherwise (i) to quit, terminate or surrender this Lease
or the Premises or any part thereof, or (ii) to any abatement, suspension,
deferment or reduction of the Basic Rent, Additional Rent or any other sums
payable under this Lease, except as otherwise provided in Article VII of this
Lease.
(e) Under no circumstances shall Landlord be required to
make any payment of any kind hereunder or to have any obligation with respect to
the use, possession, control, maintenance, alteration, rebuilding, replacing,
repairing, restoration or operation of all or any part of the Premises.
IV. PAYMENT OF IMPOSITIONS, TAXES AND ASSESSMENTS; COMPLIANCE
WITH LAW; ENVIRONMENTAL MATTERS.
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4.1. PAYMENT OF IMPOSITIONS. Tenant shall pay or discharge all
Impositions (as hereinafter defined) when due. Notwithstanding the foregoing
provision of this Section 4.1, Tenant shall not be required to pay any
franchise, corporate, estate, inheritance, succession, transfer (other than
transfer taxes, recording fees, or similar charges payable in connection with a
conveyance hereunder to Tenant), income, excess profits or revenue taxes of
Landlord hereunder. In the event the Premises are sold by Landlord during the
Terms, Tenant shall not be responsible for the payment of real estate taxes
based on an assessed value in excess of 125% of the current appraised value of
the Premises. Tenant agrees to furnish to Landlord and Lender, evidence of the
payment of the taxes and other Impositions described in Section 11.12(a) within
fifteen (15) days after payment thereof. In the event that any Imposition levied
or assessed against the Premises becomes due and payable during the term hereof
and may be legally paid in installments, Tenant shall have the option to pay
such Imposition in installments. In such event, Tenant shall be liable only for
those installments which become due and payable during the term hereof.
4.2. COMPLIANCE WITH LAWS. Tenant shall, at its expense,
comply with and shall cause the Premises to comply with all governmental
statutes, laws, rules, orders, regulations and ordinances, including without
limitation, the Americans with Disabilities Act of 1990, as the same may be
amended from time to time, all fire regulations, occupational health and safety
laws, applicable point of sale laws, building codes, Environmental Laws
(hereafter defined), zoning and land use laws and regulations ("Applicable
Laws"), and any other law the failure to comply with which at any time would
affect the Premises or any part thereof, or the use thereof, including those
which require the making of any structural, unforeseen or extraordinary changes,
whether or not any of the same involve a change of policy on the part of the
body enacting the same. Tenant shall, at its expense, comply with all changes
required in order to obtain the Required Insurance (as hereinafter defined), and
with the provisions of all contracts, agreements, instruments, easements,
restrictions, reservations or covenants existing at the commencement of this
Lease or thereafter suffered or permitted by Tenant affecting the Premises or
any part thereof or the ownership, occupancy or use thereof. To the extent
otherwise applicable hereunder, Landlord agrees to comply with all Environmental
Laws and Applicable Laws in connection with its ownership of the Premises.
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4.3. PERMITTED CONTESTS. Tenant shall not be required to: (i)
pay any Imposition; (ii) comply with any statute, law, rule, order, regulation
or ordinance; (iii) discharge or remove any lien, encumbrance or charge; or (iv)
obtain any waivers or settlements or make any changes or take any action with
respect to any encroachment, hindrance, obstruction, violation or impairment
referred to in Section 5.3, so long as Tenant shall contest, in good faith and
at its expense, the existence, the amount or the validity thereof, the amount of
the damages caused thereby, or the extent of its liability therefor, by
appropriate proceedings. While any such proceedings are pending, Landlord shall
not have the right to pay, remove or cause to be discharged the tax, assessment,
levy, fee, rent or charge or lien, encumbrance or charge thereby being
contested. Tenant shall deposit in escrow a sum no less than 125% of the amount
being contested (or bond over or furnish alternate security satisfactory to
Landlord) as security for the payment of Impositions which Tenant may ultimately
be held responsible for. For so long as the Note is outstanding, the escrow
account for permitted contests shall be established with Lender or Lender's
designee and the cost of such escrow shall be borne by Tenant. No such contest
or proceedings shall in any way eliminate or otherwise interfere with Tenant's
obligation to make timely payments of Basic Rent and additional rent under this
Lease. Tenant further agrees that each such contest shall be promptly prosecuted
to a final conclusion. Tenant shall pay, indemnify and save Landlord and Lender
harmless against, any and all losses, judgments, decrees and costs (including
all attorneys' fees, appearance costs and expenses) in connection with any such
contest and shall, promptly after the final settlement, compromise or
determination of such contest, fully pay and discharge the amounts which shall
be levied, assessed, charged or imposed or be determined to be payable therein
or in connection therewith, together with all penalties, fines, interests, costs
and expenses thereof or in connection therewith, and perform all acts, the
performance of which shall be ordered or decreed as a result thereof; provided,
however, that nothing herein contained shall be construed to require Tenant to
pay or discharge any lien, encumbrance or other charge created by any act or
failure to act of Landlord or the payment of which Tenant is not otherwise
required to perform hereunder. No such contest shall subject Landlord or Lender
to the risk of any criminal or putative civil liability.
4.4. HAZARDOUS MATERIALS. Tenant shall:
(a) not cause, except for items sold or used in the
ordinary course of Tenant's business in compliance with Applicable Laws and for
which appropriate licenses and permits are issued (if required), including
without limitation a class F operating permit, or permit any Hazardous Material
(as defined below) to exist on or discharge from the Premises, and shall
promptly: (i) pay any claim against Tenant, Landlord, Lender or the Premises;
(ii) remove any charge or lien upon any of the Premises; and (iii) defend,
indemnify and hold Landlord and Lender harmless from any and all claims,
expenses, liability, loss or damage, in any case resulting from any Hazardous
Material that at any time exists on or is discharged from the Premises;
(b) not cause or permit any Hazardous Material to exist
on or to discharge from any property owned or used by Tenant which is not in
compliance with Applicable Laws or a class F operating permit or which would
result in any charge or lien upon the Premises and shall promptly: (i) pay any
claim against Tenant, Landlord, Lender or the Premises; (ii) remove any charge
or lien upon the Premises; and (iii) defend, indemnify and hold Landlord and
Lender harmless from any and all claims, expenses, liability, loss or damage, in
any case resulting from the existence or discharge of any such Hazardous
Material on, under or off the Premises;
(c) notify Landlord and Lender within ten (10) days after
Tenant first has knowledge of any of the following:
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(i) that Hazardous Material exists on or has been
discharged from or onto the Premises (whether originating thereon or
migrating to the Premises from other property) in violation of
Applicable Laws or a class F operating permit;
(ii) that Tenant is subject to investigation by any
governmental authority evaluating whether any remedial action is needed
to respond to the release or threatened release of any Hazardous
Material into the environment from the Premises;
(iii) notice or claim to the effect that Tenant is or
may be liable to any person as a result of the release or threatened
release of any Hazardous Material into the environment from the
Premises in violation of Applicable Laws or a class F operating permit;
(iv) notice that the Premises are subject to an
environmental lien;
(v) notice of violation to Tenant or awareness by
Tenant of a condition which might reasonably result in a notice of
violation of any Applicable Laws or a class F operating permit that
could have a material adverse effect upon the Premises.
(d) comply, and cause the Premises to comply, with all
statutes, laws, ordinances, rules and regulations, including the operating
conditions of a class F operating permit of all local, state or federal
authorities having authority over the Premises or any portion thereof or their
use, including without limitation, relative to any Hazardous Material, petroleum
products, asbestos containing materials or PCB's.
(e) cause any construction or alterations of the Premises
to be done in a way so as to not expose in an unsafe manner the persons working
on or visiting the Premises to Hazardous Materials present upon the Premises and
in connection with such construction or alterations shall remove any Hazardous
Materials present upon the Premises which are not in compliance with Applicable
Laws or the conditions of Tenant's class F operating permit or which present a
danger to persons working on or visiting the Premises.
(f) If there exists a threat of an immediate release of
Hazardous Materials from, on, at, to or under the Premises in violation of any
Applicable Laws or the conditions of Tenant's class F operating permit, and
Tenant fails to take steps necessary to prevent such immediate release, Landlord
shall have the right, but not the obligation, to take any action which is
required to prevent such immediate release. Landlord make take such emergency
action with only such notice (if any) as is practical, in Landlord's judgment.
Tenant shall, pay and reimburse Landlord as Additional Rent, forthwith upon
being billed for same by Landlord, the cost of such emergency action. Such
amount shall bear interest at the Lease Default Rate from the date of billing
until paid.
(g) "HAZARDOUS MATERIAL" means any hazardous or toxic
material, substance or waste which is defined by those or similar terms or is
regulated as such under any Environmental Laws. "ENVIRONMENTAL LAWS" means any
statute, law, ordinance, rule or regulation of any local, county, state or
federal authority having jurisdiction over the Property or any portion thereof
or its use as the same may be amended from time to time, including but not
limited to: (i) the Federal Water Pollution Control Act (33 U.S.C. Section 1317)
as amended; (ii) the Federal Resource Conservation and Recovery Act (42 U.S.C.
Section 6901 et seq.) as amended; (iii) the Comprehensive Environmental Response
Compensation and Liability Act (42 U.S.C. Section 9601 et seq.) as amended; (iv)
the Toxic Substance Control Act (15 U.S.C. Section 2601) as amended; (v) the
Clean Air Act (42 U.S.C. Section 7401) as amended; and (vi) the Federal
Insecticide, Fungicide and Rodenticide Act (7 U.S.C. Section 1336 et seq.).
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(h) Except to the extent of liability resulting from or
arising out of the gross negligent or willful act of Landlord or Lender or their
agents or their successors and assigns on or about the Premises, Tenant agrees
to protect, defend, indemnify and hold harmless Landlord, its members,
directors, officers, employees and agents, and any successors to Landlord's
interest in the chain of title to the Premises, their direct or indirect
partners, members, directors, officers, employees, and agents, from and against
any and all liability, including all foreseeable and all unforeseeable damages
including but not limited to attorneys' and consultants' fees, fines, penalties
and civil or criminal damages, directly or indirectly arising out of the use,
generation, storage, treatment, release, threatened release, discharge, spill,
presence or disposal of Hazardous Materials from, on, at, to or under the
Premises prior to or during the Term of this Lease, and including, without
limitation, the cost of any required or necessary repair, response action,
remediation, investigation, cleanup or detoxification and the preparation of any
closure or other required plans, whether such action is required or necessary
prior to or following transfer of title to the Premises by Tenant. This
agreement to indemnify and hold harmless shall be in addition to any other
obligations or liabilities Tenant may have to Landlord at common law under all
statutes and ordinances or otherwise, and shall survive following the date of
expiration or earlier termination of this Lease without limit of time. Tenant
expressly agrees that the representations, warranties and covenants made and the
indemnities stated in this Lease are not personal to Landlord, and the benefits
under this Lease may be assigned to subsequent parties in interest to the chain
of title to the Premises, which subsequent parties in interest may proceed
directly against Tenant to recover pursuant to this Lease. Tenant, at its
expense, may institute appropriate legal proceedings with respect to
environmental matters of the type specified in this paragraph 4.4 (h) or any
lien for such environmental matters, not involving Landlord or Lender as a
defendant (unless Landlord or Lender is the alleged cause of the damage),
conducted in good faith and with due diligence, provided that such proceedings
shall not in any way impair the interests of Landlord or lenders under this
Lease or contravene the provisions of any first mortgage. Counsel to Tenant in
such proceedings shall be reasonably approved by Landlord if Landlord is a
defendant in the same proceeding. Landlord shall have the right to appoint
co-counsel, which co-counsel will cooperate with Tenant's counsel in such
proceedings. The fees and expenses of such co-counsel shall be paid by Landlord,
unless such co-counsel are appointed because the interests of Landlord and
Tenant in such proceedings, in such counsel's opinion, are or have become
adverse, or Tenant or Tenant's counsel is not conducting such proceedings in
good faith or with due diligence. Notwithstanding any other provision of this
Lease, Landlord and Lender shall have the right to participate in the defense or
settlement of any cause of action, suit, claim, or demand alleging the violation
of any Environmental Laws, whether or not Landlord or Lender have been named or
joined as parties to such cause of action, suit, claim or demand.
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V. MAINTENANCE AND REPAIR; ALTERATIONS.
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5.1. MAINTENANCE AND REPAIR. Tenant acknowledges that it has
received the Premises in good condition, repair and appearance. Tenant agrees
that, at its expense, it will keep and maintain the Premises, including any
altered, rebuilt, additional or substituted buildings, structures and other
improvements thereto, in good condition and repair. It will make promptly, all
structural and nonstructural, foreseen and unforeseen, ordinary and
extraordinary changes and repairs or replacements of every kind which may be
required to be made to keep and maintain the Premises in such good condition,
repair and appearance and it will keep the Premises orderly and free and clear
of rubbish. Tenant shall maintain on the Premises, and turn over to Landlord
upon expiration or termination of this Lease, any current operating manuals for
any equipment or operating systems owned by Landlord that now exist and are in
possession or control of Tenant, or are hereafter located on the Premises.
Tenant covenants not to install any underground storage tanks on the Premises.
Tenant agrees that its obligation to maintain and repair the Premises as set
forth in this Section 5.1 benefit both Landlord and Tenant, are the sole
responsibility of Tenant, and may not be delegated. Tenant further covenants to
perform or observe all terms, covenants or conditions of any reciprocal
easement, deed covenant running with the land or maintenance agreement to which
it may at any time be a party or to which the Premises are currently subject.
Tenant shall, at its expense, use its best efforts to enforce compliance with
any reciprocal easement or maintenance agreement benefiting the Premises by any
other person subject to such agreement. Tenant shall maintain the Premises on
compliance with all Applicable Laws and in accordance with the requirements of
all insurance policies required to be maintained by Tenant hereunder. Landlord
shall not be required to maintain, repair or rebuild, or to make any
alterations, replacements or renewals of any nature to the Premises, or any part
thereof, whether ordinary or extraordinary, structural or nonstructural,
foreseen or not foreseen to maintain the Premises or any part thereof in any
way. Tenant hereby expressly waives the right to make repairs at the expense of
Landlord which may be provided for in any law in effect at the time of the
commencement of the term of this Lease or which may thereafter be enacted. If
Tenant shall abandon the Premises, it shall give Landlord and Lender immediate
notice thereof. The obligations of the Tenant to pay Basic Rent and Additional
Rent shall not be eliminated, reduced, suspended, or otherwise impaired by
reason of such abandonment of the Premises. In the event that the Premises shall
violate any law and as a result of such violation an enforcement action is
threatened or commenced against Tenant or with respect to the Premises, then
Tenant shall either (i) obtain valid and effective waivers or settlements of all
claims, liabilities and damages resulting from each such violation, whether the
same shall affect Landlord, Tenant or both, or (ii) take such action as shall be
necessary to remove such violation, including, if necessary, making any
necessary repairs or replacements, structural or otherwise.
5.2. ENGINEERING REPORT. Beginning the Sixth Lease Year, and
every five (5) years thereafter, Landlord shall have the right to have an
engineering study of the Premises ("Engineering Report") prepared by a qualified
engineering firm, in scope and form consistent with industry standards and at
Landlord's cost. The Engineering Report shall include, without limitation, a
study or analysis of (a) all structural components of the Premises, (b) all
mechanical, electrical, plumbing, HVAC, sprinkler, fire suppression, elevators,
and other building systems and equipment designated by Landlord, and (c) the
roof of the building. Tenant shall be provided with a copy of the Engineering
Report and shall correct any deficiencies requested by Lender which do not meet
the maintenance and repair provisions of Section 5.1 of this Lease or which
violate any Applicable Laws or the conditions of Tenant's class F operating
permit. If any such deficiency noted in the Engineering Report is not corrected
by Tenant within one hundred twenty (120) days of Tenant's receipt of the
report, Landlord shall have the right to take all necessary action to correct
such deficiency. In such event, the cost of both Landlord's corrective action
and the cost of the Engineering Report shall constitute Additional Rent and be
promptly reimbursed by Tenant.
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5.3. ENCROACHMENTS. If any Improvements situated on the
Premises at any time during the Terms of this Lease shall encroach upon any
property, street or right-of-way adjoining or adjacent to the Premises, or shall
violate the agreements or conditions contained in any restrictive covenant
affecting the Premises or any part thereof, or shall impair the rights of others
under or hinder or obstruct any easement or right-of-way to which the Premises
are subject, then, promptly after the written request of Landlord or any person
affected by any such encroachment, violation, impairment, hindrance or
obstruction, Tenant shall, at its expense, either (i) obtain effective waivers,
or settlements of all claims, liabilities and damages resulting from each such
encroachment, violation, impairment, hindrance or obstruction whether the same
shall affect Landlord, Tenant or both, or (ii) make such changes in the
improvements on the Premises and take such other action as shall be necessary to
remove such encroachments, hindrances or obstructions and to end such violations
or impairments, including, if necessary, the alteration or removal of any
improvement on the Premises or (iii) obtain a waiver or consent to the
encroachment or an encroachment permit or easement for the life of the
encroachment. Any such alteration or removal shall be made in conformity with
the requirements of Section 5.4 hereof to the same extent as if such alteration
or removal were an alteration under the provisions of Section 5.4. Landlord
shall cooperate and use its best efforts to cause Lender to cooperate in all
transfers necessary to effectuate such matters.
5.4. ALTERATIONS.
(a) Tenant may, at its expense, make additions to and
alterations of the Improvements to the Premises, and make substitutions and
replacements therefore, provided that: (i) Landlord approves any addition to or
structural alteration to the Premises, after having received from Tenant
complete plans and specification for the proposed work, which such consent shall
not be unreasonably withheld, (ii) the market value of the Premises shall not
thereby be lessened; (iii) such addition or alteration is architecturally
consistent with existing Improvements; (iv) such actions shall be performed in a
good and workmanlike manner; (v) such work shall not violate any term of any
restriction to which the Premises are subject or the requirements of any
insurance policy required to be maintained by Tenant hereunder, and shall be
expeditiously completed in compliance with all Applicable Laws; and (vi) no
Improvements shall be demolished unless Tenant shall have first furnished
Landlord with such surety bonds or other security acceptable to Landlord as
shall be necessary to assure rebuilding of such Improvements. Notwithstanding
the foregoing, Landlord's approval shall not be required for any nonstructural
alterations costing less than One Hundred Thousand Dollars ($100,000.00). Tenant
shall promptly pay all costs and expenses of each such addition, alteration,
additional Improvement, substitution or replacement, discharge all liens arising
therefrom and procure and pay for all permits and licenses required in
connection therewith. All such additions, alterations, additional Improvements
substitutions and replacements shall be and remain part of the realty and the
property of Landlord and shall be subject to this Lease. Tenant may place upon
the Premises any inventory, trade fixtures, machinery or equipment belonging to
Tenant or third parties and may remove the same at any time during the Terms.
Tenant shall repair any damage to the Premises caused by such removal.
5.5. NO LIENS. Tenant will not, directly or indirectly, create
or permit to remain, and shall within thirty (30) days of filing of any,
mechanics, contractors or other liens, discharge or bond, at its expense, any
liens with respect to, the Premises or any part thereof or Tenant's interest
therein or the Basic Rent, Additional Rent or other sums payable by Tenant under
this Lease, other than any encumbrances permitted by a Permitted Encumbrance
described in Section 11.12. Nothing contained in this Lease shall be construed
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as constituting the consent or request, expressed or implied, by Landlord to the
performance of any labor or services or of the furnishing of any materials for
any construction, alteration, addition, repair or demolition of or to the
Premises or any part thereof by any contractor, subcontractor, laborer,
materialman or vendor. Notice is hereby given that Landlord will not be liable
for any labor, services or materials furnished or to be furnished to Tenant, or
to anyone holding the Premises or any part thereof, and that no mechanic's or
other liens for any such labor services or materials shall attach to or affect
the interest of Landlord in and to the Premises.
5.6 SHELL SPACE Improvements. Tenant has prepared an estimate
of the cost involved in improving the shell condition space within the Premises,
a copy of which is attached and incorporated as Exhibit "F" hereto. Tenant shall
complete the shell space improvement work according to the plans and estimates
approved by Landlord not later than September 1, 2009.
VI. INSURANCE; INDEMNIFICATION.
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6.1. INSURANCE. Tenant shall maintain, or cause to be
maintained, at its sole expense, the following insurance on the Premises (herein
called the "Required Insurance"):
(a) Insurance against loss or damage to the Improvements
(the "Improvements Insurance") under a fire and broad form of all risk extended
coverage insurance policy (which shall include flood insurance if the Premises
is located within a flood hazard area, and earthquake insurance if required by
Lender and the Premises is located within an earthquake zone) together with an
agreed value endorsement. Such insurance shall be in amounts equal to the full
insurable value of the Improvements and not be less than the full replacement
cost of the Improvements as determined from time to time by Landlord but not
more frequently than once in any 12-month period. Such insurance policies shall
contain a replacement cost endorsement and a waiver of depreciation, and may
contain reasonable exclusions and deductible amounts as may be approved by
Landlord.
(b) Comprehensive general public liability insurance,
including contractual injury, bodily injury, broad form death and property
damage liability, and umbrella liability insurance against any and all claims,
including legal liability to the extent insurable, and all court costs and
attorneys' fees and expenses, for the benefit of Landlord, Tenant and Lender
against claims for damages to person or property arising out of or connected
with the possession, use, leasing, operation, maintenance or condition of the
Premises, occurring on, in or about the Premises and the adjoining streets,
sidewalks, gutters, curbs, passageways and other areas adjacent thereto, if any,
of at least Two Million Dollars ($2,000,000) single limit with respect to bodily
injury or death to any one person, at least Five Million Dollars ($5,000,000)
with respect to any one incident, and at least Two Million Dollars ($2,000,000)
with respect to property damage or such greater amounts as may reasonably be
required by Landlord, consistent with coverage on properties similarly
constructed, occupied and maintained, such insurance to include full coverage of
the indemnity set forth in Section 6.10. Policies for such insurance shall be
for the mutual benefit of Landlord, Tenant and Lender, as their respective
interests may appear, and shall name Lender as an additional insured.
(c) Workers' compensation insurance to the extent
necessary to protect Landlord and the Premises against workers' compensation
claims, covering all persons employed in connection with any work done on or
about the Premises with respect to which claims for death or bodily injury could
be asserted against Landlord, Tenant or the Premises. Such policy of workers'
compensation insurance shall comply with all of the requirements of applicable
state law. Without limiting the foregoing, Tenant may, at its option, maintain a
program of workers' compensation self-insurance which complies in all respects
to the rules and regulations of the State of California.
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(d) At any time when any portion of the Premises is being
constructed, altered or replaced, builder's "all-risk" insurance (in completed
value non-reporting form) insuring the Premises in an amount no less than the
actual replacement value of the Improvements, exclusive of foundations and
excavations.
(e) Such other insurance on the Premises, including, but
not limited to, insurance against loss or damage from (i) leakage of sprinkler
systems, and (ii) explosion of steam boilers, air conditioning equipment,
pressure vessels or similar apparatus now or hereinafter installed in the
Premises, in such amounts and against such other hazards which may be required
by Landlord or Lender, including twelve (12) months of rental interruption
insurance, and insurance to cover the cost of complying with any governmental
statutes, laws, rules, orders, regulations and ordinances enacted after the
execution of this Lease.
(f) All insurance policies shall be in such form and with
such endorsements and in such amounts as shall be satisfactory to Landlord (and
Landlord shall be entitled to approve amounts, form, risk coverage, deductibles,
loss payees and insureds). The policy referred to in Section 6.1(a) shall
contain a replacement cost endorsement and a waiver of depreciation. All of the
above referenced policies shall name Lender as an additional insured/loss payee,
shall provide that all insurance proceeds be payable to Lender, and shall
contain: (i) "Non Contributory Standard Beneficiary Clause" and a Lender's Loss
Payable Endorsement (Form 438 BFUNS) or their equivalents naming Lender as the
person to which all payments shall be paid and a provision that payment of
insurance proceeds in excess of One Hundred Thousand Dollars ($100,000.00) shall
be made by a check payable only to Lender; (ii) a waiver of subrogation
endorsement as to Lender and its assigns providing that no policy shall be
impaired or invalidated by virtue of any act, failure to act, negligence of, or
violation of declarations, warranties or conditions contained in such policy by
Lender, Landlord or any other named insured, additional insured or loss payee,
except for the willful misconduct of Lender knowingly in violation of the
conditions of such policy; (iii) an endorsement indicating that neither Lender
nor the Landlord shall be or be deemed to be a co-insurer with respect to any
risk insured by such policies and shall provide for an aggregate deductible per
loss for all policies of an amount not more than that which is customarily
maintained by prudent owners of property of the same type and quality as the
Premises, but in no event in excess of five percent (5%) of the replacement cost
of the Improvements (or, in the case of earthquake insurance, the smallest
deductible which is commercially available, which deductible as of the date here
is deemed to be ten percent (10%); (iv) a provision that such policies shall not
be canceled or amended, including, without limitation, any amendment reducing
the scope or limits of coverage, without at least thirty (30) days' prior
written notice to Lender in each instance; and (v) effective waivers by the
insurer of all claims for insurance premiums against any loss payees, additional
insureds and named insureds (other than the Tenant). Certificates of insurance
with respect to all renewal and replacement policies shall be delivered to the
Landlord not less than thirty (30) days prior to the expiration date of any of
the insurance policies required to be maintained hereunder which certificates
shall bear notations evidencing payment of applicable premiums. If Tenant fails
to maintain and deliver to the Landlord the certificates of insurance required
by this Lease, Landlord may, at its option, after written notice to Tenant,
procure such insurance, and the Tenant shall reimburse Landlord for the amount
of all premiums paid by Landlord thereon promptly, after demand by Landlord,
with interest thereon at the Default Rate from the date paid by Landlord to the
date of repayment.
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6.2. PERMITTED INSURERS. The insurance required hereunder
shall be written by companies of recognized financial standing authorized to do
insurance business in the state in which the Premises are located and have a
general policy rating of A or better and a financial class of IX or better by
A.M. Best Co. and a Standard and Poor's claims paying ability rating of AA or
better, and shall name as the insured parties thereunder Landlord and Tenant, as
their interests may appear, and Lender as an additional insured under a standard
"mortgagee" endorsement or its equivalent satisfactory to Landlord. Landlord
shall not be required to prosecute any claim against, or to contest any
settlement proposed by, an insurer. Tenant may, at its expense, prosecute any
such claim or contest any such settlement in the name of Landlord, Tenant or
both with the consent of Landlord, and Landlord will join therein at Tenant's
written request upon the receipt by Landlord of an indemnity from Tenant against
all costs, liabilities and expenses in connection therewith.
6.3. INSURANCE CLAIMS. Insurance claims by reason of damage to
or destruction of any portion of the Premises shall be adjusted by Tenant, both
Landlord and Lender shall have the right to join with Tenant in adjusting any
such loss.
6.4. INSURED PARTIES. Every policy referred to herein shall
bear a first mortgage endorsement in favor of Lender; and any loss under any
such policy shall be made payable to Lender, provided that any recovery under
any such policy shall be applied by Lender in the manner provided in Section
6.3. Every policy of required insurance shall contain an agreement that the
insurer will not cancel such policy except after thirty (30) days' prior written
notice to Landlord and Lender and that any loss otherwise payable thereunder
shall be payable notwithstanding any act or negligence of Landlord, Tenant or
Lender which might, absent such agreement, result in a forfeiture of all or a
part of such insurance payment and notwithstanding (i) any foreclosure or other
action taken by a creditor pursuant to any provision of any Permitted
Encumbrance upon the happening of a default or Event of Default thereunder or
(ii) any change in ownership of the Premises.
6.5. DELIVERY OF POLICIES. Tenant shall deliver to Landlord
promptly after the delivery of this Lease, the original or certified duplicate
policies or Acord-27 and Acord-25 form certificates of insurers, satisfactory to
Lender, evidencing all of the Required Insurance. Tenant shall, at least fifteen
(15) days prior to the expiration of any such policy, deliver to Landlord other
original or duplicate of such policy or certificates evidencing the renewal of
any such policy. If Tenant fails to maintain or renew any required insurance, or
to pay the premium therefor, or to deliver such certificate, then Landlord, at
its option, but without obligation to do so, may, after giving Tenant notice
thereof, procure such insurance. Any sums so expended by Landlord shall be
Additional Rent hereunder and shall be repaid by Tenant within five (5) days
after notice to Tenant of such expenditure and the amount thereof.
6.6. NO DOUBLE COVERAGE. Neither Tenant nor Landlord shall
obtain or carry separate insurance covering the same risks as any Required
Insurance unless Tenant, Landlord and Lender are included therein as named
insured, with loss payable as provided in this Lease and the policy contains a
first mortgagee endorsement in favor of the Lender. Tenant and Landlord shall
immediately notify each other whenever any such separate insurance is obtained
and shall deliver to each other the policies or certificates evidencing the
same.
6.7. BLANKET INSURANCE. Anything contained in this Article VI
to the contrary notwithstanding, all Required Insurance may be carried under a
"blanket" or "umbrella" policy or policies covering other property or
liabilities of Tenant, provided that such policies otherwise comply with the
provisions of this Lease and specify the coverage and amounts thereof with
respect to the Premises.
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6.8. DAMAGES FOR TENANT'S FAILURE TO PROPERLY INSURE. Landlord
or Lender shall not be limited in the proof of any damages which Landlord or
Lender may claim against Tenant arising out of or by reason of Tenant's failure
to provide and keep in force insurance, as provided above, to the amount of the
insurance premium or premiums not paid or incurred by Tenant and which would
have been payable under such insurance; but Landlord and Lender shall also be
entitled to recover as damages for such breach, the uninsured amount of any
loss, to the extent of any deficiency in the Required Insurance and damages,
costs and expenses of suit suffered or incurred by reason of or damage to, or
destruction of, the Premises, occurring during any period when Tenant shall have
failed to provide the Required Insurance. Tenant shall indemnify and hold
harmless Landlord and Lender for any liability incurred by Landlord or Lender
arising out of any deductibles for Required Insurance.
6.9. CASUALTY. If all or any part of the Premises shall be
damaged or destroyed by casualty, Tenant shall promptly notify Landlord and
Lender thereof within five (5) Business Days, and shall, with reasonable
promptness and diligence, rebuild, replace and repair any damage or destruction
to the Premises, at its expense, in conformity with the requirements of Section
5.4(a) hereof, in such manner as to restore the same to the same or better
condition as existed prior to such casualty, using materials of the same or
better grade than that of the materials being replaced, and there shall be no
abatement of Basic Rent or Additional Rent. Proceeds of casualty insurance of
$100,000.00 or less shall be paid to Tenant. Proceeds in excess of $100,000.00
shall be held by Landlord or a proceeds trustee (which shall be Lender or
Lender's designee for so long as the Note is outstanding, or an escrow or title
company, or a bank or trust company designated by Landlord thereafter) and paid
to Tenant, but only against certificates of Tenant and appropriate lien waivers
delivered to Landlord from time to time, but not more frequently than once per
calendar month, as such work or repair progresses. Each such certificate shall
describe the work or repair for which Tenant is requesting payment and the cost
incurred by Tenant in connection therewith and stating that Tenant has not
theretofore received payment for such work and has sufficient funds remaining to
complete the work free of liens or claims. Any proceeds remaining after Tenant
has repaired the Premises shall be delivered to Landlord; provided, however,
that if such aggregate amounts exceed One Hundred Thousand Dollars ($100,000),
the excess shall, at Lender's direction and with Lender's written consent at its
sole discretion, be applied in reduction of the principal amount of the Note or
paid to Tenant; provided further, however, that no payment shall be made to
Tenant if any material or monetary default or Event of Default shall have
happened and be continuing under this Lease. If the excess is applied to the
remaining principal outstanding under the Note, the Note shall be reamortized
and monthly payment of Basic Rent payable on or after the second Basic Rent
Payment Date occurring after such application shall be reduced in an amount
equal to the amount by which the monthly payment under the Note has been
reduced. The foregoing references to "Note" shall mean the Note and any future
promissory note that may be issued in connection with a refinancing of the
Mortgage
6.10. INDEMNIFICATION.
(a) Tenant agrees to pay, and to protect, defend,
indemnify and save harmless Landlord, Lender and their agents from and against
any and all liabilities, losses, damages, costs, expenses (including all
reasonable attorneys' fees and expenses of Landlord and Lender), causes of
action, suits, claims, demands or judgments of any nature whatsoever that may be
suffered or imposed on or asserted against any of them (i) arising from any
injury to, or the death of, any person or damage to property (including property
of employees and invitees of Tenant) on the Premises or upon adjoining
sidewalks, streets or ways or elsewhere, in any manner growing out of or
connected with the use, non-use, condition or occupation of the Premises or any
part thereof, so long as not occasioned by the gross negligence or willful
misconduct of Landlord, Lender, their agents, servants, employees or assigns,
and/or (ii) arising from violation by Tenant of any agreement or condition of
this Lease, or any contract
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or agreement to which Tenant is a party or any restriction, law, ordinance or
regulation, including without limitation, the Americans With Disabilities Act of
1990 and all regulations issued thereunder, in each case affecting the Premises
or any part thereof or the ownership, occupancy or use thereof, so long as not
occasioned by the negligence or willful misconduct of Landlord, Lender, their
agents, servants, employees or assigns; (iii) arising out of any permitted
contest referred to in Section 4.3 (collectively, "Indemnified Matters"). If
Landlord, Lender or any agent of Landlord or Lender shall be made a party to any
such litigation commenced against Tenant, and if Tenant, at its expense, shall
fail to provide Landlord, Lender or their agents with counsel (upon Landlord's
request) reasonably approved by Landlord, Tenant shall pay all costs and
attorneys' fees and expenses incurred or paid by Landlord, Lender or their
agents in connection with such litigation. Tenant's obligations and liabilities
under this Section 6.10 shall survive the expiration of this Lease. Tenant
waives all claims against Landlord arising form any liability described in this
Section 6.10 (a), except to the extent caused by the negligence or willful
misconduct of Landlord, Lender, their agents, servants, employees or assigns.
The waiver and indemnity provisions in this paragraph are intended to exculpate
and indemnify each of Landlord and Lender (i) from and against the consequences
of its own negligence or fault when Landlord or Lender are solely negligent or
contributorily, partially, jointly, comparatively or concurrently negligent with
Tenant or any other person (but is not solely or grossly negligent, has not
committed an intentional act or made an intentional omission) and (ii) from and
against any liability of Landlord or Lender based on any applicable doctrine of
strict liability.
(b) Should any claim be made against Landlord by a person not
a party to this Lease with respect to any Indemnified Matter, Landlord shall
promptly give Tenant written notice of any such claim, and Tenant shall
thereafter defend or settle any such claim, at its sole expense, on its own
behalf and with counsel of its selection; provided, however, that Tenant's
counsel shall be competent counsel experienced in the type of litigation or
claim at issue and shall be acceptable to Landlord, acting reasonably. Upon
Tenant's assumption of the defense of any claim against Landlord pursuant to
Tenant's indemnity, Landlord shall have the right to participate in the defense
or settlement of the claim with counsel retained and paid by it, and Tenant
shall cause the attorneys retained by it to consult and cooperate fully with
counsel for Landlord. In such defense or settlement of any claims, Landlord
shall provide Tenant with originals or copies of all relevant documents and
shall cooperate with and assist Tenant, at no expense to Landlord.
Notwithstanding any provision of this Section 6.10 to the contrary, Tenant shall
not enter into any settlement or agreement in connection with any Indemnified
Matters binding upon or adversely affecting either Landlord or Lender, or admit
any liability or fact in controversy binding upon or adversely affecting either
Landlord or Lender, without the prior written consent of Landlord or Lender, as
the case may be, in such party's sole discretion.
VII. CONDEMNATION.
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7.1. ASSIGNMENT OF AWARD. Subject to the rights of Tenant set
forth in this Article VII, Tenant hereby irrevocably assigns to Landlord any
award or payment to which Tenant may be or become entitled with respect to
Complete, Partial or Temporary Taking (all as hereinafter defined) of the
Premises or any part thereof, by condemnation or other eminent domain
proceedings pursuant to any law, general or special, by any governmental
authority, whether the same shall be paid or payable in respect of Tenant's
leasehold interest hereunder or otherwise. Landlord and Tenant agree that as
long as the Note is outstanding, Lender shall hold all proceeds until disbursed
pursuant to the terms hereof. Landlord and Lender shall be entitled to
participate in any such proceeding and the expenses thereof (including counsel
fees and expenses) shall be paid by Tenant.
7.2. DEFINITIONS FOR ARTICLE VII.
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(a) "Complete Taking" shall mean the occurrence of any
actual or threatened condemnation or other eminent domain proceeding pursuant to
any general or special law, or any agreement with an authority having the power
of eminent domain, which results in the taking or conveyance of (i) the entire
Premises or (ii) such a significant portion of the Premises that, in the good
faith judgment of Tenant, it is uneconomic to rebuild or restore the remaining
portion of the Premises for the continued operation of the Premises.
(b) "Partial Taking" shall mean the occurrence of any
taking of a portion of the Premises by condemnation or other eminent domain
proceedings, or any agreement with an authority having the power of eminent
domain, which does not result in a Complete Taking.
(c) "Temporary Taking" shall mean the occurrence of a
temporary taking of the use or occupancy of the Premises or any part thereof by
any governmental authority.
(d) "Net Award" shall mean all amounts payable as a
result of any condemnation or other eminent domain proceeding and all amounts
payable pursuant to any agreement with any condemning authority (which agreement
shall be deemed to be a taking) which has been made in settlement of or under
threat of any condemnation or other eminent domain proceeding affecting the
Premises, less all expenses incurred as a result thereof not otherwise paid by
Tenant and the collection of such amounts.
(e) "Purchase Offer" shall mean a purchase offer as
described in this Article VII with a Purchase Price hereafter defined.
7.3. COMPLETE TAKING. Upon the occurrence of a Complete
Taking, Tenant shall deliver a Purchase Offer to Landlord, with a copy to
Lender, specifying a Termination Date occurring not less than thirty (30) nor
more than one hundred eighty (180) days after the delivery of such Purchase
Offer and this Lease shall continue in full force and effect without any
abatement of rent, notwithstanding any taking, until the Termination Date as
defined herein. The Purchase Offer shall contain a purchase price ("Purchase
Price") which is the greater of the Net Award or the lesser of (a) Landlord's
acquisition cost of the Premises, or (b) the amount of the first mortgage
against the Premises, including any prepayment penalties, plus Landlord's
unamortized equity in the Premises based on a twenty year term at 7%, plus the
reasonable out-of-pocket expenses of Landlord and Lender relating to the
purchase, and shall be accompanied by a Tenant's Certificate stating that a
"Complete Taking" has occurred within the meaning of clause (a) of Section 7.2.
Notwithstanding anything contained herein to the contrary, in no event shall the
Purchase Price be less than the full amount due Lender under the Loan Documents.
If Tenant shall fail to deliver a Purchase Offer as required above, Tenant shall
be conclusively presumed to have made a Purchase Offer on a date which is one
hundred twenty (120) days after any such taking (or such later date as is agreed
to in writing by Landlord), and in the event Tenant is so presumed to have made
a Purchase Offer, the Termination Date shall be deemed to be one hundred fifty
(150) days after such Purchase Offer is presumed to have been made; but nothing
in this sentence shall relieve Tenant of its obligation actually to deliver such
Purchase Offer. No Basic Rent or Additional Rent shall abate through the
Termination Date.
7.4. PARTIAL TAKING. Upon the occurrence of any Partial
Taking, this Lease shall continue in full effect without abatement or reduction
of Basic Rent, Additional Rent or other sums payable by Tenant. In the event
Landlord receives a Net Award in connection with any such Partial Taking,
Landlord shall make the Net Award available to Tenant to make any repairs
required by Section 5.4 hereof so that, thereafter, the Premises shall be, as
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nearly as possible, in a condition as good as the condition thereof immediately
prior to such Partial Taking, but, if such Net Award shall be in excess of One
Hundred Thousand Dollars ($100,000), only if there is no default or Event of
Default and Tenant delivers to Landlord of (i) certificates of Tenant
identifying the repair work for which Tenant is requesting payment and the cost
incurred by Tenant in connection therewith and stating that Tenant has not
theretofore received payment for such work; and (ii) appropriate lien waivers.
Any Net Award remaining after such repairs have been made shall be delivered to
Tenant; but only to the extent that the aggregate amount of such Net Award so
remaining and all amounts theretofore paid to Tenant pursuant to this sentence
do not exceed One Hundred Thousand Dollars ($100,000). If such amounts exceed
One Hundred Thousand Dollars ($100,000), the excess may, at Lender's direction
and with Lender's written consent at its sole option, be applied in reduction of
the outstanding principal amount of the Note, in accordance with the terms of
the Loan Documents. If the excess is applied to the remaining principal
outstanding under the Note, the Note shall be reamortized and monthly payment of
Basic Rent payable on or after the second Basic Rent Payment Date occurring
after such application shall be reduced in an amount equal to the amount by
which the monthly payment under the Note has been reduced.
7.5. TEMPORARY TAKING. Upon the occurrence of any Temporary
Taking, Tenant shall, promptly after any such Temporary Taking ceases, at its
expense, repair any damage caused thereby in conformity with the requirements of
Section 5.4 hereof so that, thereafter, the Premises shall be, as nearly as
possible, in a condition as good as the condition thereof immediately prior to
such Temporary Taking. In the event of such Temporary Taking, Tenant shall be
entitled to receive the entire Net Award payable by reason of such Temporary
Taking, less any costs incurred by the Landlord in connection therewith. If the
cost of any repairs required to be made by Tenant pursuant to this Section 7.5
shall exceed the amount of the Net Award, the deficiency shall be paid by
Tenant. No payments shall be made to Tenant pursuant to this Section 7.5, if any
default or Event of Default shall have happened and shall be continuing under
this Lease. Basic Rent shall abate through the duration of such Temporary
Taking.
7.6. PROCEDURE AFTER PURCHASE OFFER; PROCEDURE ON EVENT OF
PURCHASE.
(a) If Landlord shall have accepted the Purchase Offer in
writing, Landlord shall convey the Premises to Tenant for the Purchase Price
contained therein, giving due credit, if any, against such Purchase Price to
Tenant for any Net Award received and retained by Landlord.
(b) If the Premises or any part thereof shall be
purchased by Tenant under Article VII of this Lease, Landlord need not transfer
and convey to Tenant or its designee any better title thereto than existed on
the date of the commencement of this Lease, and Tenant shall accept such title,
subject, however, to such liens, encumbrances, charges, exceptions and
restrictions, against or relating to the Premises, (i) including those arising
pursuant to the terms of this Lease and (ii) subject to all applicable laws,
regulations and ordinances, but free of the Mortgage and all other mortgages,
liens, encumbrances, charges, exceptions and restrictions which shall have been
created by or resulted from acts or failures to act of Landlord.
(c) On the date fixed for any such purchase, which shall
be the next Payment Date as defined in the Loan Commitment, Tenant shall pay to
Landlord, at any place within the United States of America designated by
Landlord before 2:00 P.M. Pacific Time, the Purchase Price therefor, in
immediately available funds, together with all installments of Basic Rent and
all other sums then due under this Lease and unpaid to and including the
purchase date without offset or deduction for any reason, and Landlord shall
deliver to Tenant: (i) a special grant deed conveying title to the Premises and
describing the Premises or portion thereof being sold and conveying the title
thereto; (ii) such instruments as shall be necessary to transfer to Tenant or
its designee any other property then required to be transferred by Landlord
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pursuant to this Lease; and (iii) an assignment of condemnation awards due in
connection with the Property, but not yet paid to the Landlord or Lender. Tenant
shall pay all charges incident to such conveyance and transfer, including
Landlord and Lender's reasonable counsel fees, escrow fees, recording fees,
title insurance premiums and all applicable federal, state and local taxes
(other than any income, sales, rental receipts, or franchise taxes levied upon
or assessed against Landlord) which may be incurred or imposed by reason of such
conveyance and transfer.
(d) Upon the completion of such purchase, but not prior
thereto, this Lease and all obligations hereunder (including the obligations to
pay Basic Rent and Additional Rent) shall terminate, except with respect to any
obligations and liabilities of Tenant, actual or contingent, under this Lease
which arose on or prior to such date of purchase, and with respect to such
obligations and liabilities they shall survive the Termination of the Lease.
(e) If Landlord (with the written consent of Lender)
shall have tendered a written rejection of the Purchase Offer not later than the
tenth (10th) day prior to the Termination Date specified in such Purchase Offer,
this Lease shall terminate on such Termination Date (except with respect to
obligations and liabilities of Tenant under this Lease, actual or contingent,
which have arisen on or prior to such Termination Date), upon payment by Tenant
of all of the Basic Rent, Additional Rent and all other sums due and payable
hereunder to and including the Termination Date without offset or deduction for
any reason. If Landlord shall fail to accept or reject the Purchase Offer within
the times allotted, Landlord shall be conclusively presumed to have accepted the
Purchase Offer.
7.7. COMPENSATION FOR PERSONAL PROPERTY AND RELOCATION
EXPENSES. Tenant shall have the right to claim and recover from the condemning
authority any such compensation as may be awarded to Tenant for the value of
furniture, equipment owned by Tenant, removal of merchandise, moving and
relocation expenses, goodwill, or damage to Tenant's research and development
operations conducted at the Premises.
VIII. ASSIGNMENT AND SUBLETTING.
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8.1. POWER TO ASSIGN AND SUBLET. Provided that no Event of
Default shall be continuing and Landlord shall have first given its consent
thereto, which such consent shall not be unreasonably withheld or delayed,
Tenant may assign all its rights and interests under this Lease or sublet all or
any part of the Premises (provided that each such assignment or sublease is
expressly made subject to all of the provisions, including the use provisions of
Section 1.3 of this Lease) and may assign all its rights and interests under
this Lease. Tenant shall, within ten (10) days after the execution and delivery
of any such assignment or the sublease of all or substantially all of the
Premises, deliver a conformed copy thereof to Landlord. Within ten (10) days
after the execution and delivery of any sublease of a portion of the Premises,
Tenant shall give notice to Landlord of the existence and term thereof, and of
the same name and address of the sublessee thereunder. Such sublease shall not
relieve Tenant of any responsibilities or obligations of the Lease. Tenant shall
comply with all the terms and provisions of any sublease.
8.2. ASSUMPTION BY ASSIGNEE OR TRANSFEREE; TENANT REMAINS
LIABLE. If Tenant assigns all its rights and interests under this Lease, or
sells or otherwise transfers all of substantially all of its assets as set forth
in Section 11.7, the transferee or the assignee under such assignment shall
expressly assume all the obligations of Tenant hereunder in an instrument
delivered to Landlord at the time of such assignment. No assignment or sublease
made as permitted by this Article VIII or merger, consolidation, sale or
transfer of assets made as set forth in Section 11.7 shall affect or reduce any
of the obligations of Tenant hereunder, and all such obligations shall continue
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in full force and effect as obligations of a principal and not as obligations of
a guarantor or surety, to the same extent as though no assignment, subletting,
merger, consolidation, sale or transfer of assets had been made, provided that
performance by any such assignee, sublessee, surviving Person or transferee of
any of the obligations of Tenant under this Lease shall be deemed to be
performance by Tenant. No sublease or assignment made as permitted by this
Article VIII or merger, consolidation, or sale or transfer of assets made as
permitted by Section 11.7 shall impose any obligations on Landlord or otherwise
affect any of the rights of Landlord under this Lease. At Landlord's option, the
assignee, sublessee, surviving Person or transferee, as applicable, shall have
direct responsibility to Landlord and shall have the same obligations of Tenant
as required under this Lease.
8.3. OTHER TRANSFERS VOID. Except as hereafter provided,
neither this Lease nor the Term hereby demised shall be mortgaged by Tenant, nor
shall Tenant mortgage or pledge the interest of Tenant in and to any sublease of
the Premises or the rentals payable thereunder. Any mortgage, pledge, sublease
or assignment made in violation of this Article VIII shall be void.
Notwithstanding the foregoing, Tenant may, without Landlord's consent, mortgage,
pledge or convey a security interest in Tenant's leasehold interest in the
Premises ("Leasehold Mortgage") for financing purposes. As used in this Section
8.3, the term "Leasehold Mortgage" shall mean a deed of trust, mortgage or other
instrument encumbering Tenant's leasehold. A Leasehold Mortgage shall be subject
to all of the terms and conditions stated in this Lease and to all rights and
interests of Landlord. No Leasehold Mortgage shall extend to or otherwise affect
the interest or estate of Landlord in and to the Premises. Prior to the time of
the recordation of a Leasehold Mortgage, Tenant shall deliver a copy thereof to
Landlord, together with a written notice containing the name and address of
Tenant's lender.
IX. FINANCIAL INFORMATION.
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9.1. FINANCIAL STATEMENTS. Tenant will furnish to Landlord and
Lender (i) Tenant's annual audited financial statements within ninety (90) days
after the end of Tenant's fiscal year, and (ii) Tenant's unaudited quarterly
financial statements within the time frame required for filing quarterly
statements with the Securities and Exchange Commission, but in no event later
than forty five (45) days following the end of the first three quarters of the
fiscal year. Audited financial statements shall be accompanied by an opinion
from a "Big Five" accounting firm or other certified public accounting firm
reasonably acceptable to Lender and Landlord and prepared according to generally
accepted accounting principles.
X. DEFAULT.
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10.1. EVENTS OF DEFAULT. Any of the following occurrences or
acts shall constitute an event of default (herein called an "Event of Default")
under this Lease:
(a) If Tenant, at any time during the continuance of this
Lease (and regardless of the pendency of any bankruptcy, reorganization,
receivership, insolvency or other proceedings at law, in equity, or before any
administrative tribunal, which have or might have the effect of preventing
Tenant from complying with the terms of this Lease), shall (i) fail to make any
payment of Basic Rent or Additional Rent within five (5) days of when due, or
(ii) fail to make any payment of any other sum herein required to be paid by
Tenant hereunder or (iii) fail to provide and keep in force the insurance
required by Section 6 hereunder, or (iv) fail to observe or perform any other
provision hereof (with the exception of any payment or insurance provisions
which failure shall constitute an Event of Default under (a)(i), (ii) and (iii)
hereof) for thirty (30) days after written notice (provided, that in the case of
any default referred to in this Lease which cannot with diligence be cured
within such thirty (30) day period, if Tenant shall proceed promptly to cure the
same and thereafter shall prosecute the curing of such default with diligence,
then upon receipt by Landlord of a Tenant's Certificate stating the reason such
default cannot be cured within thirty (30) days and stating that Tenant is
proceeding with due diligence to cure such default, the time within which such
failure may be cured shall be extended for such period as may be necessary to
complete the curing of the same with diligence but in no event longer than one
hundred twenty (120) days); or
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(b) If any representation or warranty of Tenant set forth
in any notice, certificate, demand, request or other instrument delivered
pursuant to, or in connection with this Lease or the Assignment, shall either
prove to be false or misleading in any material respect as of the time when the
same shall have been made; or
(c) If Tenant shall file a petition commencing a
voluntary case under the Federal Bankruptcy Code or any federal or state law (as
now or hereafter in effect) relating bankruptcy, insolvency, reorganization,
winding-up or adjustment of debts (hereinafter collectively called "Bankruptcy
Law") or if Tenant shall: (i) apply for or consent to the appointment of, or the
taking of possession by, any receiver, custodian, trustee, United States Trustee
or liquidator (or other similar official) of the Premises or any part thereof or
of any substantial portion of Tenant's property; or (ii) generally not pay its
debts as they become due, or admit in writing its inability to pay its debts
generally as they become due; or (iii) make a general assignment for the benefit
of its creditors; or (iv) file a petition commencing a voluntary case under or
seeking to take advantage of any Bankruptcy Law; or (v) fail to controvert in
timely and appropriate manner, or in writing acquiesce to, any petition
commencing an involuntary case against Tenant or otherwise filed against Tenant
pursuant to any Bankruptcy Law; or (vi) take any action in furtherance of any of
the foregoing; or
(d) If an order for relief against Tenant shall be
entered in any involuntary case under the Federal Bankruptcy Code or any similar
order against Tenant shall be entered pursuant to any other Bankruptcy Law, or
if a petition commencing an involuntary case against Tenant or proposing the
reorganization of Tenant under any Bankruptcy Law shall be filed and not be
discharged or denied within sixty (60) days after such filing, or if a
proceeding or case shall be commenced in any court of competent jurisdiction
seeking: (i) the liquidation, reorganization, dissolution, winding-up or
adjustment of debts of Tenant; or (ii) the appointment of a receiver, custodian,
trustee, United States Trustee or liquidator (or any similar official) of the
Premises or any part thereof or of Tenant or of any substantial portion of
Tenant's property; or (iii) any similar relief as to Tenant pursuant to any
Bankruptcy Law, and any such proceeding or case shall continue undismissed, or
an order, judgment or decree approving or ordering any of the foregoing shall be
entered and continue unstayed and in effect for sixty (60) days; or
(e) If the Premises shall be left both unattended and
without maintenance as provided herein, for a period of thirty (30) days or
more.
10.2. LANDLORD'S REMEDIES.
(a) If an Event of Default shall have happened and be
continuing, Landlord shall have the right at its election to give Tenant twenty
(20) days written notice of Landlord's intention to terminate the term of this
Lease on a date specified in such notice. Thereupon, the term of this Lease and
the estate hereby granted shall terminate on such date as completely and with
the same effect as if such date were the date fixed herein for the expiration of
the term of this Lease, and all rights of Tenant hereunder shall terminate, but
Tenant shall remain liable as provided herein.
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(b) If an Event of Default shall have happened and be
continuing Landlord shall have the immediate right, whether or not the term of
this Lease shall have been terminated pursuant to Section 10.2(a), to (i)
re-enter and repossess the Premises or any part thereof by any means permissible
under California law, (ii) remove all persons and property therefrom, Tenant
hereby expressly waiving any and all notices to quit, cure or vacate provided by
current or any future law; and (iii) collect from Tenant all sums due hereunder,
plus interest at the Default Rate. Landlord shall be under no liability by
reason of any such re-entry, repossession or removal. No such re-entry or taking
of possession of the Premises by Landlord shall be construed as an election on
Landlord's part to terminate the term of this Lease unless a written notice of
such intention to be given to Tenant pursuant to Section 10.2(a).
(c) At any time or from time to time after the
repossession of the Premises or any part thereof pursuant to Section 10.2(b),
whether or not the term of this Lease shall have been terminated pursuant to
Section 10.2(a), Landlord may relet the Premises or any part thereof for the
account of Tenant, in the name of Tenant or Landlord or otherwise, without
notice to Tenant, for such term or terms (which may be greater or less than the
period which would otherwise have constituted the balance of the term of this
Lease) and on such conditions (which may include concessions or free rent) and
for such uses Landlord, in its absolute discretion, may determine, and Landlord
may collect and receive any rents payable by reason of such reletting.
(d) No termination of the term of this Lease pursuant to
Section 10.2(a), by operation of law or otherwise, and no repossession of the
Premises or any part thereof pursuant to Section 10.2(b) or otherwise, and no
reletting of the Premises or any part thereof pursuant to Section 10.2(c), shall
relieve Tenant of its liabilities and obligations hereunder, all of which shall
survive such expiration, termination, repossession or reletting.
(e) At any time after such termination or repossession by
reason of the occurrence of any Event of Default, whether or not Landlord shall
have collected any current damages pursuant to this Section 10.2(e), Landlord
shall be entitled to recover from Tenant, and Tenant will pay to Landlord on
demand, as and for liquidated and agreed final damages for Tenant's default and
in lieu of all current damages beyond the date of such demand (it being agreed
that it would be impracticable or extremely difficult to fix the actual
damages), an amount equal to the present value of all rent payable under the
Lease beyond the date of such demand over the then present value of the then
fair market rental for the Premises, at the date of such demand for what would
be the unexpired term of the Lease, which present value shall in each case be
determined by the application of a discount factor of five percent (5%) per
annum; however, this amount shall not be less than any "make whole provision" in
favor of the Lender, including without limitation, any yield maintenance
premium, default interest and late charges specified in the Loan Documents in
connection with the indebtedness encumbered by the Premises. If any law,
including without limitation, California Civil Code Section 1951.2 or its
successor, shall be construed to limit the amount of such liquidated final
damages to less than the amount above agreed upon, Landlord shall be entitled to
the maximum amount allowable under such statute or rule of law. Landlord retains
all remedies described in California Civil Code Section 1951.4.
(f) Notwithstanding anything to the contrary stated
herein, if an Event of Default shall have happened and be continuing, whether or
not Tenant shall have abandoned the Premises, Landlord may elect to continue
this Lease in effect for so long as the Landlord does not terminate Tenant's
right to possession of the Premises and Landlord may enforce all of its rights
and remedies hereunder including, without limitation, the right to recover all
Basic Rent, Additional Rent and other sums payable hereunder as the same become
due
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10.3. ADDITIONAL RIGHTS OF LANDLORD. No right or remedy herein
conferred upon or reserved to Landlord is intended to be exclusive of any other
right or remedy, and each and every right and remedy shall be cumulative and in
addition to any other right or remedy given hereunder or now or hereafter
existing at law or in equity or by statute. The failure of Landlord to insist at
any time upon the strict performance of any covenant or agreement or to exercise
any option, right, power or remedy contained in this Lease shall not be
construed as waiver or a relinquishment thereof for the future. A receipt by
Landlord of any Basic Rent, any Additional Rent or any other sum payable
hereunder with knowledge of the breach of any covenant or agreement contained in
this Lease shall not be deemed a waiver of such breach, and no waiver by
Landlord of any provision of this Lease shall be deemed to have been made unless
expressed in writing and signed by Landlord. In addition to other remedies
provided in this Lease, Landlord shall be entitled, to the extent permitted by
applicable law, to injunctive relief in case of the violation, or attempted or
threatened violation, of any of the covenants, agreements, conditions or
provisions of this Lease, or to a decree compelling performance of any of the
covenants, agreements, conditions or provisions of this Lease, or to any other
remedy allowed to Landlord at law or in equity.
10.4. WAIVERS BY TENANT. Tenant hereby waives and surrenders
for itself and all those claiming under it, including creditors of all kinds,
(i) any right or privilege which it or any of them may have under any present or
future construction, statute or rule of law to redeem the Premises or to have a
continuance of this Lease for the term hereby demised after termination of
Tenant's right of occupancy by order or judgment of any court or by any legal
process or writ, or under the terms of this Lease or after the termination of
the term of this Lease as herein provided, and (ii) the benefits of any present
or future constitution, statute or rule of law which exempts property from
liability for debt or for distress for rent.
10.5. ATTORNEYS' FEES. In the event an action shall be brought
for the enforcement of any right set forth herein in connection with, and
subject to, the indemnification provisions contained in Section 6.10 hereof, the
non-prevailing party shall be liable for all of the reasonable expenses incurred
in connection therewith, including without limitation, reasonable attorneys'
fees.
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XI. MISCELLANEOUS.
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11.1. NOTICES, DEMANDS AND OTHER INSTRUMENTS. All notices,
demands, requests, consents, approvals and other instruments required or
permitted to be given pursuant to the terms of this Lease shall be in writing
and shall be deemed to have been properly given if (a) with respect to Tenant,
sent by registered or certified mail with a return receipt requested, postage
prepaid, or sent by facsimile, nationally recognized overnight express carrier
or delivered by hand, in each case addressed to Tenant at its notice address
first above set forth, and (b) with respect to Landlord, sent by registered or
certified mail with a return receipt request, postage prepaid, or sent by
facsimile, nationally recognized overnight express courier or delivered by hand
in each case, addressed to the Landlord at its address first above set forth
along with a copy to Lender: Finova Capital Realty, Inc., a Delaware
corporation,19900 MacArthur Boulevard, Suite 1100, Irvine, California 92612,
and Lender's Legal Counsel: Paul Hastings Janofsky & Walker, LLP, 695 Town
Center Drive, 17th Floor, Costa Mesa, California 92626-1924 Landlord and Tenant
shall each have the right from time to time to specify as its address for
purposes of this Lease any other address in the United States of America upon
giving fifteen (15) days written notice thereof, similarly given, to the other
party. Notices shall be deemed communicated upon the earlier of receipt, or
seventy-two (72) hours from the time of mailing if mailed as provided in this
Section 11.1 and on the Business Day or first Business Day following
transmission if given by facsimile.
11.2. ESTOPPEL CERTIFICATES AND CONSENTS.
(a) Tenant and Landlord will, from time to time, upon
not less than twenty (20) days prior request by Landlord or by Lender, execute,
acknowledge and deliver to the other party a Certificate in the form of Exhibit
"C" attached hereto certifying: (i) that this Lease is unmodified and in full
effect (or setting forth any modifications along with the statement that this
Lease as modified is in full effect ); (ii) that the Basic Rent and Additional
Rent payable and the dates to which the Basic Rent, Additional Rent and other
sums payable hereunder have been paid and the most recent dates on which the
Basic Rent, Additional Rent and other sums payable hereunder have been paid;
(iii) that to the knowledge of Tenant, Landlord is not in any default of the
Lease which Tenant may have knowledge; (iv) the commencement and expiration
dates of the Lease; (v) the amount of any security or other deposits; (vi) that
either Tenant is in possession of the Premises or who is in possession; (vii)
any concessions or other rights that Tenant (including first refusal, option or
other occupancy claims) or Landlord may have; and (viii) such other matters as
may reasonably be required by the requesting party. Any such certificate may be
relied upon by any mortgagee, prospective purchaser, or prospective mortgagee of
the Premises. Tenant further agrees to reasonably cooperate with Lender and its
affiliates in the preparation and review of disclosure documents which may be
issued in connection with a secondary market transaction involving a sale or
securitization of the Loan. Landlord will be responsible for any reasonable
outside legal or accounting costs incurred by Tenant in connection with such
cooperation, in an amount not to exceed $2,500.00 unless otherwise approved by
Landlord.
(b) From time to time during the term of this Lease,
Landlord expects to secure financing of its interest in the Premises by
assigning Landlord's interest in this Lease and the sums payable hereunder. In
the event of any such assignment to Lender, Tenant will, upon not less than ten
(10) days prior request by Landlord, execute, acknowledge and deliver to
Landlord a consent clearly indicating (i) that Tenant is to make Basic Rent
payments or portions thereof directly to Lender or Lender's designee if required
by Lender, and (ii) consent to such assignment addressed to such lender in a
form satisfactory to Lender; and Tenant will use its best efforts to produce, at
Tenant's expense, such certificates, opinions of counsel and other documents as
may be reasonably requested by Lender, at a cost not to exceed $2,500.
Notwithstanding the foregoing, Landlord will contribute one-half the cost of any
opinion of counsel requested by Lender. Tenant acknowledges that, by execution
hereof, it has agreed to make payments of Basic Rent or portions thereof
directly to Lender or Lender's designee, without further notice or direction if
required by Lender.
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11.3. DETERMINATION OF FAIR MARKET VALUE. Fair market value
for purposes of Section 11.7.1 hereof shall be determined by an appraisal, which
shall be performed by an appraiser selected by Landlord, and paid by Tenant. Any
appraiser selected by Landlord shall have qualifications that include a minimum
of five (5) years of experience in the appraisal of commercial real estate in
Orange County. Such appraiser shall be disinterested, and shall be a member of a
nationally recognized appraisal association. Further, any such appraiser shall
comply with the licensing law then in effect for appraisers authorized to
perform general appraisals within the State of California. If there are then any
existing United States laws governing appraisers, said appraiser shall be in
compliance with the then applicable Federal laws for appraisers performing
appraisals of commercial real estate. In the event that Tenant disputes the
appraised fair market value determined by an appraiser (hereinafter the "First
Appraiser"), who performed an appraisal pursuant to this Section 11.3, it shall
so notify Landlord within five (5) days after receipt of such written
determination by the First Appraiser, and the disagreement shall be resolved as
follows:
(a) Within five (5) days after the service of such
notice by Tenant to Landlord, Tenant shall designate a second appraiser (the
"Second Appraiser"), who shall appraise the fair market value of the Premises,
assuming the provisions of this Lease (except the Basic Rent provision) would
govern for a five (5) year term, all in accordance with the requirements of this
Section 11.3. This Second Appraiser shall render its opinion of the fair market
value no later than thirty (30) days after the service of notice by Tenant
stated above. In the event that the higher of the two appraised fair market
values rendered herein is not more than ten percent (10%) greater than the lower
of the two appraised fair market rental values, then the mean between the two
appraised values shall be utilized to fix the appraised fair market value.
(b) In the event that the higher of the two appraised
fair market values is more than ten percent (10%) higher than the lower of the
two appraised fair market rental values, then the First Appraiser and the Second
Appraiser will meet within five (5) days after receipt and acceptance of the
Second Appraisal by Tenant, to attempt to agree upon the appraised fair market
value. If the First Appraiser and Second Appraiser do not agree upon the
appraised fair market value after such meeting, then they shall appoint a third
appraiser (the "Third Appraiser").
(c) If the First and Second Appraiser shall be unable to
agree upon the appointment of the Third Appraiser within five (5) days after the
time specified in subsection "(ii)" above, then the Third Appraiser shall be
selected by the Tenant and Landlord themselves. If Tenant and Landlord cannot
agree on the third appraiser, within a further period of five (5) days, then
either, on behalf of both, may apply to the person who is, at the time, the most
senior in service, active Judge of the United States District Court for the
District of where the Premises are located, for the selection of the Third
Appraiser. If that Judge cannot or will not make the appointment, then the
application will be made to the next most senior Judge, and so on down the line
of seniority. The fees and costs of the Second Appraiser and the Third Appraiser
will be borne by Tenant, and the cost of application to the Judge of the United
States District Court shall be borne by Tenant. In the event of the failure,
refusal or inability of any appraiser to act, a new appraiser shall be appointed
in this stead, which appointment shall be made in the same manner as provided
herein; e.g., if the Second Appraiser must be replaced, then Tenant will have
the right to designate its replacement. In the event that a Third Appraiser is
selected in the manner aforesaid, it shall perform an appraisal of the fair
market value of the Premises in accordance with the terms of this Section 11.3
within thirty (30) days after its appointment. In the event that the appraised
fair market rental value rendered by the Third Appraiser is higher than the
lower appraised fair market value, but lower than the higher appraised fair
market value, as rendered by the First Appraiser and the Second Appraiser, then
the appraised fair market value rendered by the Third Appraiser shall become the
appraised value. In the event that the appraised value rendered by the Third
Appraiser is lower than the lower appraised value or higher than the higher
appraised fair value, as rendered by the First Appraiser and Second Appraiser,
than an Appraisal Panel shall be convened.
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The "Appraisal Panel," consisting of the First, Second and
Third Appraiser, shall convene within five (5) days after submission of a
written appraisal to Landlord and Tenant by the Third Appraiser (which Third
Appraisal does not resolve the appraised fair market value question in
accordance with this Section 11.3). The purpose of the formation of the
Appraisal Panel will be to attempt to reach a decision by two members of the
Appraisal Panel on the appraised fair market value. A decision joined in by any
two of the appraisers of the Appraisal Panel shall be the decision of the
Appraisal Panel, and shall be binding upon the parties hereto. If no two members
of the Appraisal Panel can concur in a decision of the appraised fair rental
value within ten (10) days after the submission of the appraisal by the Third
Appraiser to the parties, then the parties shall go to a neutral mediator for
mediation. If the parties are unable to agree upon a fair market value through
mediation, the matter will be submitted to binding arbitration under the
expedited rules of the American Arbitration Association.
11.4. NO MERGER. There shall be no merger of this Lease or the
leasehold estate hereby created with the fee estate in the Premises or any part
thereof by reason of the same person acquiring or holding, directly or
indirectly, this Lease or the leasehold estate hereby created or any interest in
this Lease or in such leasehold estate as well as the fee estate in the Premises
or any portion thereof.
11.5. SURRENDER. Upon the termination of this Lease, Tenant
shall peaceably surrender the Premises to Landlord in good and marketable
condition, fully operational as a standard, fully air-conditioned research and
development building. Tenant shall remove from the Premises prior to or within a
reasonable time after such termination (not to exceed thirty (30) days) all its
property that is capable of removal without causing damage to the Premises, and,
at Tenant's expense, shall at such times of removal, repair any damage caused by
such removal. Property not so removed shall become the property of Landlord.
Landlord may thereafter cause such property to be removed and disposition of and
the cost of repairing any damage caused by such removal shall be borne by
Tenant. Notwithstanding anything to the contrary contained herein, upon
termination of this Lease pursuant to a default by Tenant, the heating,
ventilation and air conditioning systems shall remain on the Premises and shall
become the property of Landlord. Any holding over by Tenant of the Premises
after the expiration or earlier termination of the term of this Lease or any
extensions thereof, with the consent of Landlord, shall operate and be construed
as a tenancy from month to month only, at one hundred twenty-five percent (125%)
of the Basic Rent reserved herein and upon the same terms and conditions as
contained in this Lease. Notwithstanding the foregoing, any holding over without
Landlord's consent shall entitle Landlord, in addition to collecting Basic Rent
at a rate of one hundred twenty- five percent (125%) thereof, to exercise all
rights and remedies provided by law or in equity.
11.6. SEPARABILITY. Each and every covenant and agreement
contained in this Lease is separate and independent, and the breach of any
thereof by Landlord shall not discharge or relieve Tenant from any obligation
hereunder. If any term or provision of this Lease or the application thereof to
any person or circumstances or at any time to any extent be invalid and
unenforceable, the remainder of this Lease, or the application of such term or
provision to persons or circumstances or at any time other than those to which
it is invalid or unenforceable, shall not be affected thereby, and each term and
provision of this Lease shall be valid and shall be enforced to the extent
permitted by law.
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11.7. MERGER, CONSOLIDATION OR SALE OF ASSETS.
11.7.1 A merger or consolidation of Tenant with another
unaffiliated entity or the sale of substantially all of the assets of Tenant to
another entity shall be subject to the terms of this Section 11.7 and shall
require Landlord's reasonable consent. Tenant may, however, without Landlord's
consent, merge with or convey its assets to another entity with a credit rating
that is equal or better than Tenant's credit rating, as determined by the major
national credit rating agencies, including Dunn & Bradstreet, or engage in a
leveraged buyout or recapitalization; provided that, if the transaction results
in a downgrading of Tenant's credit rating, then Landlord's consent is required.
Any of the foregoing acts, if done without the consent of Landlord, if required,
shall be void and shall, at the option of Landlord, constitute an Event of
Default that entitles Landlord to terminate this Lease unless Tenant makes an
offer to purchase the Premises for an amount which is equal to the fair market
value of the Premises (including the value of the Lease) determined in the
manner set forth in Section 11.3, plus any prepayment costs of the Loan, which
such offer may be accepted or rejected by Landlord. If Landlord fails to accept
Tenant's purchase offer, it will be deemed to have consented to the merger,
consolidation or sale of assets.
11.7.2. In addition to foregoing, if Landlord consents
to a merger, consolidation or sale of assets as set forth in Section 11.7.1, or
if Tenant has become a subsidiary of a corporation whose senior unsecured and
unenhanced debt has an investment grade rating by Standard and Poors
Corporation, Tenant shall cause such assignee or parent corporation to deliver
to Landlord an unconditional guaranty of payment and performance (and not merely
collectability) of all of Tenant's obligations under the Lease, containing
customary waivers and in form reasonably satisfactory to Landlord.
11.8. SAVINGS CLAUSE. No provision contained in this Lease
which purports to obligate Tenant to pay any amount of interest or any fees,
costs or expenses which are in excess of the maximum permitted by applicable
law, shall be effective to the extent that it calls for payment of any interest
or other sums in excess of such maximum.
11.9. BINDING EFFECT. All of the covenants, conditions and
obligations contained in this Lease shall be binding upon and inure to the
benefit of the respective successors and assigns of Landlord and Tenant to the
same extent as if each successor and assign were in each case named.
11.10. TABLE OF CONTENTS AND HEADINGS. The table of contents
and headings used in this Lease are for convenience of reference only and shall
not to any extent have the effect of modifying, amending or changing the
provisions of this Lease.
11.11. GOVERNING LAW. This Lease shall be governed by and
interpreted under the laws of the state of California.
11.12. CERTAIN DEFINITIONS.
(a) The term "Affiliate" of a person or entity means any
other person or entity which, directly or indirectly, controls or is controlled
by or is under common control with such person or entity (excluding any trustee
under, or any committee with responsibility for administering, any employee
benefit plan under which such person, or any wholly-owned subsidiary of such
person, may have liability). A person or entity shall be deemed to be controlled
by any other person or entity if such other person or entity possesses, directly
or indirectly, power to direct or cause the direction of the management and
policies of such person or entity whether through the ownership of voting
securities, by contract or otherwise
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(b) The term "Business Day" shall mean any day other
than a Saturday, a Sunday, or a day on which federally insured depository
institutions in Los Angeles, California or New York, New York are authorized or
obligated by law, regulation, governmental decree or executive order to be
closed.
(c) The term "Imposition" shall have the following
meaning and include all surcharges, interest and penalties thereto:
(i) All real estate taxes, including without
limitation, any special taxing districts taxes or levies, imposed by
governmental authorities or special taxing districts of any kind;
(ii) Any single business, transaction privilege,
rent, gross receipts or similar taxes imposed or levied upon, assessed
against or measured by the Basic Rent, Additional Rent or any other
sums payable by Tenant hereunder or levied upon or assessed against the
Premises;
(iii) All ad valorem, sales and use taxes which may
be levied or assessed against or payable by Landlord and Tenant on
account of the acquisition, leasing or use of the Premises or any
portion thereof, including without limitation, any taxes levied on the
rental payable hereunder;
(iv) All payments due on all covenants and
obligations running with the land;
(v) All charges for water, gas, light, heat,
telephone, electricity, and other utilities and communication services
rendered or used on or about the Premises: and
(vi) All other taxes and any payments in lieu
thereof, assessments (including assessments for benefits from public
works or improvements, whether or not begun or completed prior to the
commencement of the term of this Lease and whether or not to be
completed within said term), levies, fees, water and sewer rents and
charges, and all other governmental charges of every kind, general and
special, ordinary and extraordinary, whether or not the same shall have
been within the express contemplation of the parties hereto, imposed or
levied upon or assessed against: (A) the Premises or any part thereof;
(B) any Basic Rent or Additional Rent reserved or payable hereunder;
and/or (C) this Lease or the leasehold estate created hereby or which
arise in respect of the operation, possession, occupancy or use of the
Premises.
(d) The term "Landlord" means the owner, for the time
being, of the rights of the lessor under this Lease, and its successors and
assigns, and upon any assignment or transfer of such rights, except an
assignment or transfer made as security for an obligation, the assignor or
transferor shall be relieved of all future duties and obligations under this
Lease, subject to the consent of Lender, and if and only if the assignee or the
transferee shall expressly agree in writing to be bound by and to assume all the
covenants of Landlord hereunder.
(e) The term "Lease" means this Lease and Agreement of
Lease as amended and modified from time to time together with any memorandum or
short form of lease entered into for the purpose of recording.
125
(f) The term "Lender" means Finova Realty Capital, Inc.,
a Delaware corporation and its successors and assigns and any other subsequent
holder of a first mortgage encumbering the Premises.
(g) The term "Permitted Encumbrance" means:
(i) The Mortgage, the Assignment and any other
security instrument relating to the Premises and this Lease, subject to
the rights of Tenant under this Lease, and securing the borrowing by
Landlord from Lender;
(ii) Any liens for taxes, assessments and other
governmental charges and any liens of mechanics, materialmen and
laborers for work or services performed or materials furnished in
connection with the Premises, which are not due and payable;
(iii) The easements, rights-of-way, encroachments,
encumbrances, restrictive covenants or other matters affecting the
title to the Premises or any part thereof set forth in Schedule B to
the policy of owners title insurance (or commitment therefor) delivered
to and accepted by Landlord with respect to the Premises in connection
with the delivery of this Lease as shown on Exhibit "B" attached
hereto; and
(iv) This Lease and the rights of Tenant hereunder;
(h) The term "Person" means any individual, corporation,
limited liability company, partnership, joint venture, association, joint-stock
company, trust, unincorporated organization or government.
(i) The term "Tenant's Certificate" means a written
certificate signed by the Chairman of the Board, the Chief Executive Officer,
the President or any Vice President of Tenant.
(j) The term "Tenant's Trade Fixtures" means all
personal property of Tenant in or on the Premises which is not necessary for the
operation of the Improvements.
(k) The term "Termination Date" means the date on which
this Lease terminates in accordance with its terms, and shall be a Payment Date
(as defined in the Loan Commitment).
11.13. EXHIBITS. The following are Exhibits "A," "B," "C" and
"D" referred to in this Lease, which are hereby incorporated by reference herein
and made a part hereof.
(a) Exhibit "A" to Lease: Legal Description.
(b) Exhibit "B" to Lease: Permitted Encumbrances.
(c) Exhibit "C" to Lease: Tenant Estoppel Certificate
(d) Exhibit "D" to Lease: Subordination, Non-
Disturbance, and
Attornment Agreement
(e) Exhibit "E" to Lease: Memorandum of Lease
(f) Exhibit "F" to Lease: Shell Space Improvement Costs
126
11.14. INTEGRATION. This Lease, the exhibits hereto and the
memorandum, if any, hereof, constitute the entire agreement between the parties
hereto with regard to the subject matter hereof, and supersede any prior
understandings, agreements or negotiations. This Lease may not be amended or
modified except by a writing executed by Tenant and Landlord, with the written
consent of Lender.
11.15. LEASE MEMORANDUM. Each of Landlord and Tenant shall
execute, acknowledge and deliver to the other a written memorandum of this Lease
("Memorandum") in the form attached as Exhibit "E", to be recorded at Tenant's
sole cost and expense in the appropriate land records of the jurisdiction in
which the Premises is located, in order to give public notice and protect the
validity of this Lease. In the event of any discrepancy between the provisions
of the recorded Memorandum and the provisions of this Lease, the provisions of
this Lease shall prevail.
11.16. SUBORDINATION TO FINANCING.
(a) (i) Subject to the provisions of Section
11.16(a)(ii) below, Tenant agrees that this Lease shall at all times be subject
and subordinate to the lien of any first Mortgage, and Tenant agrees, upon
demand, without cost, to execute instruments as may be required to further
effectuate or confirm such subordination.
(ii) Except as expressly provided in this Lease by
reason of the occurrence of an Event of Default, Tenant's tenancy and Tenant's
rights under this Lease shall not be disturbed, terminated or otherwise
adversely affected, nor shall this Lease be affected, by any default under any
Mortgage, and in the event of a foreclosure or other enforcement of any
Mortgage, or sale in lieu thereof, the purchaser at such foreclosure sale shall
be bound to Tenant for the Terms of this Lease, the rights of Tenant under this
Lease shall expressly survive, and this Lease shall in all respects continue in
full force and effect so long as no Event of Default has occurred and is
continuing. Tenant shall not be named as a party defendant in any such
foreclosure suit, except as may be required by law. Any Mortgage to which this
Lease is now or hereafter subordinate shall provide, in effect, that during the
time this Lease is in force insurance and condemnation proceeds shall be
permitted to be used in accordance with the provisions of this Lease.
(b) Notwithstanding the provisions of Section 11.16(a),
the holder of any first Mortgage to which this Lease is subject and subordinate
shall have the right, at its sole option, at any time, to subordinate and
subject the Mortgage, in whole or in part, to this Lease by recording a
unilateral declaration to such effect, provided that such holder shall have
agreed that during the time this Lease is in force insurance proceeds and Net
Award shall be permitted to be used for restoration in accordance with the
provisions of this Lease.
(c) At any time prior to the expiration of the Term,
Tenant agrees, at the election and upon demand of any owner of the Leased
Premises, or of a lender who has granted non- disturbance to Tenant pursuant to
Section 11.16(a) above, to attorn, from time to time, to any such owner or
lender, upon the terms and conditions of this Lease, for the remainder of the
Term. The provisions of this Section 11.16(c) shall inure to the benefit of any
such owner or lender, shall apply notwithstanding that, as a matter of law, this
Lease may terminate upon the foreclosure of the Mortgage, shall be
self-operative upon any such demand, and no further instrument shall be required
to give effect to said provisions.
(d) Each of Tenant, any owner and lender, however, upon
demand of the other, hereby agrees to execute, from time to time, instruments in
confirmation of the foregoing provisions of Sections 11.16(a) and 11.16(c),
reasonably satisfactory to the requesting party acknowledging such
subordination, non-disturbance and attornment as are provided in such
subsections and setting forth the terms and conditions of its tenancy.
127
(e) Each of Tenant, Landlord and Lender agrees that, if
requested by any of the others, each shall, without charge, enter into a
Subordination, Non-Disturbance and Attornment Agreement in the form attached
hereto as Exhibit "D" and Tenant hereby agrees for the benefit of Lender that
Tenant will not: (i) without in each case the prior written consent of Lender,
which shall not be unreasonably withheld, conditioned or delayed, amend or
modify the Lease (provided, however, Lender, in Lender's sole discretion may
withhold or condition its consent to any amendment or modification which would
or could (A) alter in any way the amount or time for payment of any Basic Rent,
Additional Rent or other sum payable hereunder, (B) alter in any way the
absolute and unconditional nature of Tenant's obligations hereunder or
materially diminish any such obligations, (C) result in any termination hereof
prior to the end of the Primary Term, or (D) otherwise, in Lender's reasonable
judgment, affect the rights or obligations of Landlord or Tenant hereunder), or
enter into any agreement with Landlord so to do; (ii) without the prior written
consent of Lender which may be withheld in Lender's sole discretion, cancel or
surrender or seek to cancel or surrender the Term hereof, or enter into any
agreement with Landlord to do so (the parties agreeing that the foregoing shall
not be construed to affect the rights or obligations of Tenant, Landlord or
Lender with respect to any termination permitted under the express terms hereof
in connection with an offer to purchase the property following certain events of
condemnation; or (iii) pay any installment of Basic Rent more than one (1) month
in advance of the due date thereof or otherwise than in the manner provided for
in this Lease.
11.17. TENANT'S RIGHT OF FIRST REFUSAL. If during the Term of
this Lease Landlord receives a bona fide third party offer to purchase the
Premises which it wishes to accept, Tenant shall the right to acquire ownership
of the Premises on the same terms and conditions set forth in the third party
offer. In the event Landlord receives and wishes to accept an offer for the
purchase of the Premises, Landlord shall deliver to Tenant a notice (the "First
Refusal Notice") setting forth (i) the identity of the offeree, and (ii) each of
the material terms of the proposed transaction. Tenant shall have fifteen (15)
days after receipt of the First Refusal Notice from Landlord (the "Right of
First Refusal Period") to notify Landlord in writing of its intent to purchase
the Premises on the terms set forth in the First Refusal Notice. By notifying
Landlord within the Right of First Refusal Period, Tenant will be bound under
this Lease to purchase the Premises from Landlord, and Landlord will be bound
under this Lease to sell to Tenant, the Premises on such terms. If Tenant fails
to respond to during the Right of First Refusal Period, Tenant shall be deemed
to have elected not to purchase the Premises and Landlord shall have the right
to sell the Premises without further obligation to Tenant. If Landlord agrees to
sell the Premises to a prospective buyer for a price which is more than ten
percent (10%) lower than the price originally offered to Tenant in the First
Refusal Notice, then the Premises must be re-offered to Tenant at such lower
price (the "Re-offer Notice"). Tenant shall notify Landlord in writing within
five (5) days of receipt of the Re-offer Notice whether it elects to purchase
the Premises. If Tenant is the purchaser under this Section 11.17, then such
purchase shall be on an "as is, where is" basis and Tenant shall release
Landlord from any and all claims arising from or related to the condition of the
Premises, including without limitation, claims arising under Environmental Laws
or Applicable Laws. This right of first refusal shall only apply to the first
sale of the Premises to occur after the Commencement Date and shall be
extinguished if Tenant fails to accept Landlord's offer to sell the Premises.
IN WITNESS WHEREOF, the parties hereto have executed this Lease as of
the day and year first above set forth.
128
"LANDLORD"
TNCA, LLC
a Delaware limited liability company
By: TNCA, Inc., a Delaware
corporation, Its Manager
By: /S/ C. FREDERICK WEHBA
--------------------------------
C. Frederick Wehba II, President
"TENANT"
TECHNICLONE CORPORATION,
a Delaware corporation
By: /S/ STEVEN C. BURKE
---------------------------------
Name: STEVEN C. BURKE
-------------------------------
Title: CFO
------------------------------
129
EXHIBIT "A"
-----------
LEGAL DESCRIPTION
-----------------
Parcel A:
Parcels 2 and 3 of parcel map 95-115, in the city of Tustin, County of Orange,
State of California, as per map recorded in book 290 page(s) 3 through 5
inclusive of Miscellaneous maps, in the office of the County Recorder of said
County.
Excepting therefrom all oil, oil rights, minerals, mineral rights, natural gas
rights, and other hydrocarbons by whatsoever name known that may be within or
under the parcel of land hereinabove described, together with the perpetual
rights of drilling, mining, exploring and operating therefor, and storing in and
removing the same from said land or any other land, including the right to
whipstock or directionally drill and mine from land other than those hereinabove
described, oil or gas wells, tunnels and shafts into, through or across the
subsurface of the land hereinabove described, and to bottom such whipstocked or
directionally thereof, and to redrill retunnel, equip, maintain, repair, deepen
and operate any wells or mines, without, however, the right to drill, mine,
store, explore and operate through the surface of the upper 500 feet of the
subsurface of the land hereinabove described, as reserved in deeds or record.
Parcel B:
Easements for access, ingress, egress and parking over parcel A of parcel map
recorded in book 290 , pages 3, 4 and 5 of parcel maps as set forth in that
certain declaration of restrictions entitled "Franklin Court" and recorded
January 9, 1996 as instrument No. 96-0012567 and re-recorded April 30, 1996 as
instrument No. 96-214962 both of official records.
130
EXHIBIT "B"
-----------
PERMITTED ENCUMBRANCES
----------------------
1. A perpetual air or flight easement, sometimes referred to as Aviation Rights,
in and to all the air space above a plane of 500 feet over said land, as
conveyed to the county of Orange by an instrument. Recorded:
March 17, 1964 in book 6965, Page 721, Official Records.
2. An easement affecting that portion of said land and for the purposes stated
herein and incidental purposes as shown on the filed map. For: Proposed Railroad
Easement. Affects: Parcel B
3. Covenants, conditions and restrictions, but omitting any covenants or
restrictions if any, based on race, color religion, sex, handicap, familial
status or national origin unless and only to the extent that said covenant (A)
is exempt under Chapter 42, Section 3607 of the United States Code or (B)
relates to handicap but does not discriminate against handicapped persons, in an
instrument. Recorded: in book 11132, page(s) 514, official records. Said
covenants, conditions and restrictions provide that a violation thereof shall
not defeat the lien of any mortgage or deed of trust made in good faith and for
value.
4. An easement affecting that portion of said land and for the purposes stated
herein and incidental purposes as shown on the filed map. For: Water lines.
Affects: The southwesterly 3 feet of said land.
5. Covenants, conditions and restrictions, but omitting any covenants or
restrictions if any, based on race, color, religion, sex, handicap, familial
status or national origin unless and only to the extent that said covenant (A)
is exempt under Chapter 42, Section 3607 of the United States code or (B)
relates to Handicap but does not discriminate against handicapped persons, in an
instrument. Recorded: In book 13907, page(s) 809, official records. Said
covenants, conditions and restrictions provide that a violation thereof shall
not defeat the lien of any mortgage or deed of trust made in good faith and for
value.
6. An easement affecting that portion of said land and for the purposes stated
herein and incidental purposes as provided in the following: Granted to: Irvine
Ranch Water District, a California Water District. For: Public Utilities.
Recorded: July 7, 1987 as instrument no. 87-386568, official records. Affects:
Parcels A and B.
7. An easement affecting that portion of said land and for the purposes stated
herein and incidental purposes as provided in the following: Granted to:
Southern California Edison Company, a corporation. For: Public Utilities.
Recorded: July 29, 1987 as instrument no. 87-430548, official records. Affects:
Parcel 2 of Parcels A and B.
8. Covenants, conditions, restrictions, limitations, easements, assessments,
reservations, exceptions, terms, liens or charges, but omitting any covenants or
restrictions if any, based on race, color, religion, sex, handicap, familial
status or national origin unless and only to the extent that said covenant (A)
is exempt under Chapter 42, Section 3607 of the United States Code or (B)
relates to handicap but does not discriminate against handicapped persons, as
provided in an instrument. Recorded: January 9, 1996 as instrument no.
96-0012667, official records. And re-recorded April 30, 1996 Instrument No.
96-0214962, of official records.
9. Any rights of parties in possession of said land as tenants only under
written by unrecorded Leases containing no options to purchase or rights of
First Refusal.
131
10. Any rights, interests or claims which may exist or arise by reason of the
facts shown on a survey plant entitled A.L.T.A./A.C.S.M. Land Title Survey for
Techniclone Corporation, dated September 10, 1998, prepared by Huitt-Zollars,
Inc., Job No. 10063201, as follows:
A) Landscaping along all the boundary lines (Affects Parcel
B).
B) Water meters and water valve assemblies, sewer
clean-outs, electric pull box, temporary power poles,
concrete walkway for pedestrian ingress and egress
(Affects Parcel B).
C) Electrical vault outside the easement area (Affects
Parcel 3 of Parcel A of the legal description).
D) Concrete retaining wall encroaches unto the easement
shown as item no. 8 of this report. (Affects Parcel B).
132
EXHIBIT "C"
-----------
TENANT ESTOPPEL CERTIFICATE
---------------------------
To: FINOVA Realty Capital Inc., a Delaware corporation, its successors
and assigns (collectively "LENDER")
The undersigned hereby certifies and agrees as follows:
1. The undersigned is the tenant (the "TENANT") under that certain
Lease (the "LEASE") by and between Tenant and TNCA (such party, together with
its successors and assigns hereinafter collectively referred to as the
"LANDLORD") dated as of December __, 1998 affecting space in the building
located at 14272 and 14282 Franklin Avenue, Tustin, California 92780 (the
"BUILDING").
2. The Lease commenced on December ___ , 1998.
3. The primary term of the Lease expires on December 31, 2010. Tenant
has no option or other right to extend the term of the Lease beyond December 31,
2020
4. Tenant has accepted and is occupying the entire premises demised to
it under the Lease (the "PREMISES") and all improvements to the Premises
required by the Lease have been completed by Landlord in accordance with the
Lease.
5. Tenant has not paid rent or additional rent beyond the current month
and agrees not to pay rent or additional rent more than one month in advance at
any time.
6. Rent payable in the amount of $56,250 per month has been paid
(pro-rated) through December 31, 1998.
7. There are no defenses to or offsets against the enforcement of the
Lease or any provision thereof by the Landlord.
8. Tenant has deposited $112,500 as a security deposit with Landlord
pursuant to the terms of the Lease.
9.Landlord has not agreed to grant Tenant any free rent or rent rebate
or to make any contribution to tenant improvements. Landlord has not agreed to
reimburse Tenant for or to pay Tenant's rent obligation under any other lease.
10. Tenant has not advanced any funds for or on behalf of Landlord for
which Tenant has a right to deduct from or offset against future rent payments.
11. The Lease is in full force and effect without default thereunder by
Tenant or, to the best knowledge of Tenant, Landlord.
12. The Lease is the entire agreement between the Landlord and Tenant
pertaining to Tenant's right, title and interest in and to the Premises.
13. The Lease has not been amended, modified or supplemented except as
set forth in Paragraph 1 above.
133
14. Tenant agrees that no future amendment of the Lease shall be
enforceable unless such amendment has been consented to in writing by Lender.
15. Except as set forth in the Lease, Tenant does not have any purchase
option or first refusal right with respect to the Building. Tenant does not have
any right or option for additional space in the Building.
16. Since the date of the Lease, there has been no material adverse
change in the financial condition of Tenant, and there are no actions, whether
voluntary or otherwise, pending against Tenant under the bankruptcy,
reorganization, arrangement, moratorium or similar laws of the United States,
any state thereof or any other jurisdiction.
17. Tenant will not seek to terminate the Lease or seek or assert any
set-off or counterclaim against the rent or additional rent by reason of any act
or omission of the Landlord, until Tenant shall have given written notice of
such act or omission to Lender.
18. Tenant agrees to provide earthquake insurance, in addition to the
other insurance required under the Lease, in an amount reasonably determined by
Lender in its sole discretion.
19. If Tenant shall make a Purchase Offer (as defined in the Lease)
pursuant to Section 7 of the Lease and purchases the Property in connection
therewith, Tenant acknowledges that all proceeds shall be applied first to the
amount due Lender under the Loan Documents, including any prepayment penalties,
plus reasonable out-of-pocket expenses of Lender relating to such purchase.
Tenant acknowledges that Lender will rely on this Certificate in making
a loan or otherwise extending credit to Borrower.
TECHNICLONE CORPORATION,
a Delaware corporation
By:________________________________
Name:______________________________
Title:_____________________________
134
EXHIBIT "D"
-----------
SUBORDINATION, NON-DISTURBANCE, AND
ATTORNMENT AGREEMENT
--------------------
THIS SUBORDINATION, NONDISTURBANCE AND ATTORNMENT AGREEMENT (the
"Agreement") is made as of the ____day of December, 1998 by and between FINOVA
Realty Capital Inc., a Delaware corporation, having an address at 19900
MacArthur Boulevard, Suite 1100, Irvine, California 92612 ("Lender") and
TECHNICLONE CORPORATION, a Delaware corporation, having an address at 14282
Franklin Avenue, Tustin, California 92780 ("Tenant").
RECITALS:
A. Lender is the present owner and holder of a certain mortgage
and security agreement (the "Security Instrument") dated December ___, 1998,
given by Landlord (defined below) to Lender which encumbers the fee estate of
Landlord in certain premises described in Exhibit A attached hereto (the
"Property") and which secures the payment of certain indebtedness owed by
Landlord to Lender evidenced by a certain promissory note dated December ___ ,
1998, given by Landlord to Lender (the "Note");
B. Tenant is the holder of a leasehold estate in a portion of the
Property under and pursuant to the provisions of a certain lease dated as of
December , 1998 between TNCA, LLC, a Delaware limited liability company, as
landlord ("Landlord") and Tenant, as tenant (the "Lease"); and
C. Tenant has agreed to subordinate the Lease to the Security
Instrument and to the lien thereof and Lender has agreed to grant
non-disturbance to Tenant under the Lease on the terms and conditions
hereinafter set forth.
AGREEMENT:
For good and valuable consideration, Tenant and Lender agree as
follows:
1. SUBORDINATION. The Lease and all of the terms, covenants and
provisions thereof and all rights, remedies and options of Tenant thereunder are
and shall at all times continue to be subject and subordinate in all respects to
the terms, covenants and provisions of the Security Instrument and to the lien
thereof, including without limitation, all renewals, increases, modifications,
spreaders, consolidations, replacements and extensions thereof and to all sums
secured thereby and advances made thereunder with the same force and effect as
if the Security Instrument had been executed, delivered and recorded prior to
the execution and delivery of the Lease.
2. NON-DISTURBANCE. If any action or proceeding is commenced by
Lender for the foreclosure of the Security Instrument or the sale of the
Property, Tenant shall not be named as a party therein unless such joinder shall
be required by law, provided, however, such joinder shall not result in the
termination of the Lease or disturb the Tenant's possession or use of the
premises demised thereunder, and the sale of the Property in any such action or
proceeding and the exercise by Lender of any of its other rights under the Note
or the Security Instrument shall be made subject to all rights of Tenant under
the Lease, provided that at the time of the commencement of any such action or
proceeding or at the time of any such sale or exercise of any such other rights
135
(a) the term of the Lease shall have commenced pursuant to the provisions
thereof, (b) Tenant shall be in possession of the premises demised under the
Lease, (c) the Lease shall be in full force and effect and (d) Tenant shall not
be in material default under any of the terms, covenants or conditions of the
Lease as determined by Lender in its reasonable discretion or of this Agreement
on Tenant's part to be observed or performed.
3. ATTORNMENT. If Lender or any other subsequent purchaser of the
Property shall become the owner of the Property by reason of the foreclosure of
the Security Instrument or the acceptance of a deed or assignment in lieu of
foreclosure or by reason of any other enforcement of the Security Instrument
(Lender or such other purchaser being hereinafter referred as "Purchaser"), and
the conditions set forth in Section 2 above have been met at the time Purchaser
becomes owner of the Property, the Lease shall not be terminated or affected
thereby but shall continue in full force and effect as a direct lease between
Purchaser and Tenant upon all of the terms, covenants and conditions set forth
in the Lease and in that event, Tenant agrees to attorn to Purchaser and
Purchaser by virtue of such acquisition of the Property shall be deemed to have
agreed to accept such attornment, provided, however, that Purchaser shall not be
(a) liable for the failure of any prior landlord (any such prior landlord,
including Landlord and any successor landlord, being hereinafter referred to as
a "Prior Landlord") to perform any of its obligations under the Lease which have
accrued prior to the date on which Purchaser shall become the owner of the
Property, provided that the foregoing shall not limit Purchaser's obligations
under the Lease to correct any conditions that (i) existed as of the date
Purchaser shall become the owner of the Property and (ii) violate Purchaser's
obligations as landlord under the Lease; provided further, however, that
Purchaser shall have received written notice of such omissions, conditions or
violations and has had a reasonable opportunity to cure the same, all pursuant
to the terms and conditions of the Lease, (b) subject to any offsets, defenses,
abatements or counterclaims which shall have accrued in favor of Tenant against
any Prior Landlord prior to the date upon which Purchaser shall become the owner
of the Property, (c) liable for the return of rental security deposits, if any,
paid by Tenant to any Prior Landlord in accordance with the Lease unless such
sums are actually received by Purchaser, (d) bound by any payment of rents,
additional rents or other sums which Tenant may have paid more than one (1)
month in advance to any Prior Landlord unless (i) such sums are actually
received by Purchaser or (ii) such prepayment shall have been expressly approved
of by Purchaser or (e) bound by any agreement terminating or amending or
modifying the rent, term, commencement date or other material term of the Lease,
or any voluntary surrender of the premises demised under the Lease, made without
Lender's or Purchaser's prior written consent prior to the time Purchaser
succeeded to Landlord's interest. In the event that any liability of Purchaser
does arise pursuant to this Agreement, such liability shall be limited and
restricted to Purchaser's interest in the Property and shall in no event exceed
such interest.
4. NOTICE TO TENANT. After notice is given to Tenant by Lender
that the Landlord is in default under the Note and the Security Instrument and
that the rentals under the Lease should be paid to Lender pursuant to the terms
of the assignment of leases and rents executed and delivered by Landlord to
Lender in connection therewith, Tenant shall thereafter pay to Lender or as
directed by the Lender, all rentals and all other monies due or to become due to
Landlord under the Lease and Landlord hereby expressly authorizes Tenant to make
such payments to Lender and hereby releases and discharges Tenant from any
liability to Landlord on account of any such payments.
136
5. NOTICE TO LENDER AND RIGHT TO CURE. Tenant shall notify Lender
of any default by Landlord under the Lease and agrees that, notwithstanding any
provisions of the Lease to the contrary, no notice of cancellation thereof or of
an abatement shall be effective unless Lender shall have received notice of
default giving rise to such cancellation or abatement and shall have failed
within forty five (45) days after receipt of such notice to cure such default,
or if such default cannot be cured within forty five (45) days, shall have
failed within forty five (45) days after receipt of such notice to commence and
thereafter diligently pursue any action necessary to cure such default.
Notwithstanding the foregoing, Lender shall have no obligation to cure any such
default.
6. NOTICES. All notices or other written communications hereunder
shall be deemed to have been properly given (i) upon delivery, if delivered in
person or by facsimile transmission with receipt acknowledged by the recipient
thereof and confirmed by telephone by sender, (ii) one (1) Business Day
(hereinafter defined) after having been deposited for overnight delivery with
any reputable overnight courier service, or (iii) three (3) Business Days after
having been deposited in any post office or mail depository regularly maintained
by the U.S. Postal Service and sent by registered or certified mail, postage
prepaid, return receipt requested, addressed as follows:
If to Tenant: TECHNICLONE CORPORATION
14282 Franklin Avenue
Tustin, CA 92780
Attention: Steven C. Burke
Phone No. (714) 508-6000
Facsimile No. (714) 838-9433
If to Lender: FINOVA REALTY CAPITAL INC.
c/o Midland Loan Services, L. P.
Commercial Mortgage Servicing
210 West 10th Street, 5th Floor
Kansas City, MO 64105
Attention: Dennis Siefers
Phone No. (816) 435-5061
Facsimile No. (816)435-2327
or addressed as such party may from time to time designate by written notice to
the other parties. For purposes of this Section 0, the term "Business Day" shall
mean a day on which commercial banks are not authorized or required by law to
close in the state where the Property is located. Either party by notice to the
other may designate additional or different addresses for subsequent notices or
communications.
7. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of Lender, Tenant and Purchaser and their respective
successors and assigns.
8. GOVERNING LAW. This Agreement shall be deemed to be a contract
entered into pursuant to the laws of the State where the Property is located and
shall in all respects be governed, construed, applied and enforced in accordance
with the laws of the State where the Property is located.
9. MISCELLANEOUS. This Agreement may not be modified in any
manner or terminated except by an instrument in writing executed by the parties
hereto. If any term, covenant or condition of this Agreement is held to be
invalid, illegal or unenforceable in any respect, this Agreement shall be
construed without such provision. This Agreement may be executed in any number
137
of duplicate originals and each duplicate original shall be deemed to be an
original. This Agreement may be executed in several counterparts, each of which
counterparts shall be deemed an original instrument and all of which together
shall constitute a single Agreement. The failure of any party hereto to execute
this Agreement, or any counterpart hereof, shall not relieve the other
signatories from their obligations hereunder. Whenever the context may require,
any pronouns used herein shall include the corresponding masculine, feminine or
neuter forms, and the singular form of nouns and pronouns shall include the
plural and vice versa.
IN WITNESS WHEREOF, Lender and Tenant have duly executed this
Agreement as of the date first above written.
LENDER:
FINOVA REALTY CAPITAL INC.
a Delaware corporation
By:________________________________
Name:______________________________
Title:_____________________________
TENANT:
TECHNICLONE CORPORATION
a Delaware corporation
By:________________________________
Name:______________________________
Title:_____________________________
The undersigned accepts and agrees to
the provisions of Section 4 hereof:
LANDLORD:
TNCA, LLC,
a Delaware corporation
By: TNCA, INC.
a Delaware corporation
Manager
By:________________________________
Name:______________________________
Title:_____________________________
(ALL SIGNATURES MUST BE NOTARIZED)
State of California )
) ss.
County of Los Angeles )
138
On , _______________before me, the undersigned, personally appeared C. Frederick
Wehba II, personally known to me (or proved to me on the basis of satisfactory
evidence) to be the person(s) whose name(s) is/are subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ies), and that by his/her/their signature(s)
on the instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.
WITNESS my hand and official seal.
______________________________
Notary Public in and for said
County and State
(SEAL)
(SEAL)
State of California )
) ss.
County of Orange )
On ________ , before me, the undersigned, personally appeared _________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.
WITNESS my hand and official seal.
______________________________
Notary Public in and for said
County and State
(SEAL)
State of California )
) ss.
County of Orange )
(SEAL)
139
On ______, before me, the undersigned, personally appeared, ________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.
WITNESS my hand and official seal.
______________________________
Notary Public in and for said
County and State
(SEAL)
(SEAL)
140
EXHIBIT A
(Description of Property)
Parcel A:
Parcels 2 and 3 of parcel map 95-115, in the city of Tustin, County of Orange,
State of California, as per map recorded in book 290 page(s) 3 through 5
inclusive of Miscellaneous maps, in the office of the County Recorder of said
County.
Excepting therefrom all oil, oil rights, minerals, mineral rights, natural gas
rights, and other hydrocarbons by whatsoever name known that may be within or
under the parcel of land hereinabove described, together with the perpetual
rights of drilling, mining, exploring and operating therefor, and storing in and
removing the same from said land or any other land, including the right to
whipstock or directionally drill and mine from land other than those hereinabove
described, oil or gas wells, tunnels and shafts into, through or across the
subsurface of the land hereinabove described, and to bottom such whipstocked or
directionally thereof, and to redrill retunnel, equip, maintain, repair, deepen
and operate any wells or mines, without, however, the right to drill, mine,
store, explore and operate through the surface of the upper 500 feet of the
subsurface of the land hereinabove described, as reserved in deeds or record.
Parcel B:
Easements for access, ingress, egress and parking over parcel A of parcel map
recorded in book 290 , pages 3, 4 and 5 of parcel maps as set forth in that
certain declaration of restrictions entitled "Franklin Court" and recorded
January 9, 1996 as instrument No. 96-0012567 and re-recorded April 30, 1996 as
instrument No. 96-214962 both of official records.
141
EXHIBIT "E"
-----------
LEASE MEMORANDUM
----------------
RECORD AND RETURN TO:
TNCA, LLC
c/o The Bentley Forbes Group
1900 Avenue of the Stars141
Suite 2840
Los Angeles, CA 90067
Attention: C. Frederick Wehba II
THIS SPACE RESERVED FOR RECORDERS USE
________________________________________________________________________________
MEMORANDUM OF LEASE
THIS MEMORANDUM OF LEASE is made and entered into this day of December
___, 1998, by and between TNCA, LLC, a Delaware limited liability company
(hereinafter "Landlord") and TECHNICLONE CORPORATION, a Delaware corporation
(hereinafter "Tenant).
WITNESSETH
Landlord is the owner of certain tracts or parcels of land in Tustin,
California (the "Land"), together with buildings and certain other structures on
the Land (the "Improvements") and equipment therein (collectively, as the
"Premises"). The legal description of the Premises is set forth on the attached
and incorporated EXHIBIT "A."
DEMISE OF PREMISES. In consideration of the rent to be paid and upon the
terms and conditions set forth in that certain Lease and Agreement of Lease
relating to the Premises between Landlord and Tenant of even date herewith
("Lease") all of which terms and conditions are incorporated by reference
herein, Landlord hereby demises the Premises to Tenant, and Tenant hereby lets
and accepts the Premises from Landlord.
TERMS. Subject to the terms and conditions of the Lease, Tenant shall
have and hold the premises for a primary term commencing on the date hereof, and
ending at 11:59 p.m. Pacific Time on December 31, 2010. Thereafter, Tenant shall
have the right and options to extend the Lease for two (2) consecutive extended
terms of five (5) years each.
ASSIGNMENT AND SUBLETTING. Provided that no Event of Default as defined
in the Lease shall be continuing, Tenant may assign all its rights and interests
under the Lease or sublet all or any part of the Premises with Landlord's
reasonable consent if each such assignment or sublease is expressly made subject
to all of the provisions of the Lease, including the use provisions of Section
1.3 of the Lease.
142
MECHANIC'S LIENS. Section 5.5 of the Lease contains a provision that
Landlord will not be liable for any labor, services or materials furnished or to
be furnished to Tenant, or to anyone holding the Premises or any part thereof,
and that no mechanic's or other liens for any such labor, services or materials
shall attach to or affect the interest of Landlord in or to the Premises.
SUBORDINATION TO FINANCING. Section 11.16 of the Lease contains a
subordination provision allowing Landlord to subordinate the Lease to a first
mortgage, deed of trust, or other encumbrance placed upon the Premises by
Landlord so long as the lender provides Tenant with a nondisturbance agreement.
RIGHT OF FIRST REFUSAL. Section 11.17 of the Lease grants to Tenant a
right of first refusal to purchase the property which is subject to certain
terms and conditions set forth therein.
SUCCESSORS. The covenants, conditions and agreements made and entered
into by the parties hereto shall be binding upon and inure to the benefit of
their respective representatives, successors and assigns.
In the event of any discrepancy between the provisions of this Memorandum
and the provisions of the Lease, the provisions of the Lease shall prevail.
[SIGNATURES COMMENCE ON FOLLOWING PAGE]
143
IN WITNESS WHEREOF, upon the day and year first hereinabove written,
the respective parties hereto have executed the Memorandum of Lease, personally
or by officers or agents thereunto duly authorized.
TENANT:
TECHNICLONE CORPORATION,
a Delaware corporation
By:________________________________
Name:______________________________
Title:_____________________________
-AND-
LANDLORD:
TNCA, LLC,
a Delaware limited liability company
By: TNCA, Inc., a Delaware corporation
its authorized Manager
By:_____________________________
Name: C. Frederick Wehba II
Title: President
144
State of California )
) SS
County of Los Angeles )
The foregoing instrument was acknowledged before me this ___day of
December, 1998, by C. Frederick Wehba II as president of TNCA, Inc., a Delaware
corporation, the manager of TNCA, LLC, a Delaware limited liability company.
My commission expires: ___________________________
____________________________________
NOTARY PUBLIC
State of )
) SS
County of )
The foregoing instrument was acknowledged before me this ____ day of
December 1998, by ___________________________ as ________________________ of
TECHNICLONE CORPORATION, a Delaware corporation, on behalf of the corporation.
My commission expires: ___________________________
____________________________________
NOTARY PUBLIC
145
EXHIBIT "F"
-----------
SHELL SPACE IMPROVEMENT COSTS
-----------------------------
TECHNICLONE CORPORATION
STATEMENT OF FUTURE IMPROVEMENTS
NOVEMBER 24, 1998
Pursuant to the loan commitment for Finova, the 4,750 square feet of shell
condition space located within the 14282 Franklin Avenue building will be
improved to a basic R&D finish at a price of approximately $12.00 per square
foot. Said improvements will include basic dropped ceiling, finished walls,
vinyl tile flooring, supplied with basic mechanical systems, i.e., electrical,
lighting, plumbing and HVAC.
/S/ ELIZABETH GORBETT-FROST
- --------------------------------------
Elizabeth Gorbett-Frost
Corporate Secretary
11/24/98
- --------------------------------------
Date
146