LEASE AGREEMENT
BY AND BETWEEN
HMS GATEWAY OFFICE L.P.,
A DELAWARE LIMITED PARTNERSHIP
AS LANDLORD,
AND
ADVANCED MEDICINE, INC.,
A DELAWARE CORPORATION
AS TENANT
DATED FEBRUARY 17,1999
TABLE OF CONTENT
Page
Basic Lease Information....................................................viii
1. Demise....................................................................1
2. Premises..................................................................1
2.1. Definition of Premises, Building, Project, Parking Areas,
Common Areas.......................................................1
2.2. Construction of Base Building Improvements and Tenant
Improvements.......................................................2
2.3. Changes to Common Area.............................................2
3. Term......................................................................3
3.1. Commencement Date..................................................3
3.2. Commencement and Expiration Date Memorandum; Expiration
Date...............................................................3
4. Rent......................................................................3
4.1. Monthly Base Rent..................................................3
4.2. Additional Rent....................................................3
4.3. Adjustment to Additional Rent......................................6
4.4. Payment of Additional Rent.........................................7
4.4.1. Expense Statement.........................................7
4.4.2. Calculation of Additional Rent............................7
4.4.3. Tenant's Proportionate Share(s)...........................7
4.4.4. Tenant's Audit Rights.....................................8
4.5. General Payment Terms..............................................8
5. Utility Expenses..........................................................9
5.1. Tenant's Obligation to Pay.........................................9
5.2. Limitation of Landlord's Liability for Interruption of Utilities...9
6. Late Charge..............................................................10
7. Letter of Credit.........................................................10
8. Possession...............................................................13
8.1. Tenant's Right of Possession......................................13
i
8.2. Delay in Performance of Covenants Related to Base Building
Improvements......................................................13
8.3. Tenant's Right to Terminate Lease.................................13
8.4. Early Occupancy...................................................14
9. Use of Premises..........................................................15
9.1. Permitted Use.....................................................15
9.2. Compliance with Governmental Regulations and Private
Restrictions......................................................16
9.3. Compliance with Americans with Disabilities Act...................17
10. Acceptance of Premises...................................................18
11. Surrender................................................................18
11.1. Surrender at Expiration or Termination............................18
11.2. Removal Obligations and Abandonment of Tenant's Property..........18
11.3. Indemnification...................................................19
12. Alterations And Additions................................................19
12.1. Landlord's Consent Required.......................................19
12.2. Alterations Permitted Without Landlord's Consent; Removal
Requirements......................................................19
12.3. Alterations at Tenant's Expense...................................19
12.4. Requirements of Request for Approval..............................20
12.5. Permits Required; Insurance Required..............................21
12.5.1. Permits..................................................21
12.5.2. Insurance................................................21
12.6. Title to Improvements Removal Rights; Financing...................21
12.7. Computer, Utility and Telecommunications Equipment................22
12.8. Notice and Opportunity to Post Notice of Nonresponsibility........22
13. Maintenance and Repairs of Premises......................................22
13.1. Maintenance by Tenant.............................................22
13.2. Maintenance by Landlord...........................................23
13.3. Landlord's Right to Perform Tenant's Obligations..................23
13.4. Tenant's Waiver of Rights.........................................24
14. Landlord's Insurance.....................................................24
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15. Tenant's Insurance................................................... 24
15.1. Commercial General Liability Insurance........................ 24
15.2. Property Insurance............................................ 25
15.3. Worker's Compensation Insurance; Employer's Liability
Insurance..................................................... 25
15.4. Business Interruption Insurance............................... 25
15.5. Insurance Standards and Evidence of Coverage.................. 25
16. Indemnification...................................................... 26
16.1. Of Landlord................................................... 26
16.2. Of Tenant..................................................... 27
16.3. No Impairment of Insurance.................................... 27
17. Subrogation.......................................................... 27
18. Signs................................................................ 27
19. Free From Liens...................................................... 28
20. Entry By Landlord.................................................... 28
21. Destruction And Damage............................................... 29
21.1. Damage Covered by Extended Coverage Insurance................. 29
21.1.1. Material Damage; Insured Loss........................ 29
21.1.2. Minor Damage; Insured Loss........................... 29
21.1.3. Calculation of Restoration Period.................... 29
21.2. Uninsured Loss................................................ 30
21.3. Casualty During Last Twelve Months of Term.................... 30
21.4. Tenant's Right to Terminate Lease............................. 30
21.5. Rent Abatement................................................ 30
21.6. Restoration of Base Building Improvements and Tenant
Improvements.................................................. 31
21.7. Waiver........................................................ 31
22. Condemnation......................................................... 31
23. Assignment And Subletting............................................ 32
23.1. Landlord's Consent Required Except for Permitted Transfers.... 32
23.2. Requirements of Request for Consent........................... 33
iii
23.3. Criteria To Be Considered in Connection with Request
for Consent................................................... 34
23.4. Permitted Transfers........................................... 34
23.5. Excess Rent................................................... 34
23.6. No Release of Tenant.......................................... 35
23.7. Payment of Landlord's Fees.................................... 35
23.8. No Consent to Further Assignment.............................. 35
23.9. Constraints Reasonable........................................ 36
24. Tenant's Default..................................................... 36
25. Landlord's Remedies.................................................. 38
25.1. Termination................................................... 38
25.2. Continuation of Lease......................................... 39
25.3. Re-entry...................................................... 40
25.4. Reletting..................................................... 40
25.5. Termination................................................... 41
25.6. Cumulative Remedies........................................... 41
25.7. No Surrender.................................................. 41
26. Landlord's Right to Perform Tenant's Obligations..................... 41
26.1. Landlord's Right to Perform................................... 41
26.2. In Emergencies................................................ 42
26.3. Tenant's Obligation to Reimburse Landlord..................... 42
27. Attorneys' Fees...................................................... 42
27.1. Prevailing Party Entitled to Fees............................. 42
27.2. Costs of Collection........................................... 42
28. Taxes................................................................ 43
29. Effect Of Conveyance................................................. 43
30. Tenant's Estoppel Certificate........................................ 43
31. Subordination........................................................ 44
32. Environmental Covenants.............................................. 44
32.1. Disclosure Certificate........................................ 44
32.2. Tenant's Obligation to Update Disclosure Certificate.......... 45
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32.3. Definition of Hazardous Materials............................. 45
32.4. Definition of Environmental Laws.............................. 45
32.5. Tenant's Use of Hazardous Materials........................... 46
32.6. Tenant's Remediation Obligations.............................. 46
32.7. Landlord's Inspections........................................ 46
32.8. Landlord's Right to Remediate................................. 47
32.9. Condition of Premises Upon Expiration or Termination.......... 47
32.10. Tenant's Indemnification of Landlord.......................... 48
32.11. Landlord's Indemnification of Tenant.......................... 48
32.12. Limitation of Tenant's Liability.............................. 48
32.13. Survival...................................................... 48
33. Notices.............................................................. 48
34. Waiver............................................................... 49
35. Holding Over......................................................... 49
36. Successors And Assigns............................................... 49
36.1. Binding on Successors, Etc.................................... 49
36.2. Landlord's Right to Sell...................................... 50
37. Time................................................................. 50
38. Brokers.............................................................. 50
39. Limitation Of Liability.............................................. 50
40. Financial Statements................................................. 51
41. Rules And Regulations................................................ 51
42. Mortgagee Protection................................................. 51
42.1. Modifications for Lender...................................... 51
42.2. Rights to Cure................................................ 51
43. Entire Agreement..................................................... 52
44. Interest............................................................. 52
45. Interpretation....................................................... 52
46. Representations And Warranties....................................... 52
46.1. Of Tenant...................................................... 52
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46.2. Of Landlord.................................................. 53
47. Security............................................................ 53
47.1. Landlord Not Obligated to Provide Security................... 53
47.2. Tenant's Obligation to Comply with Security Measures......... 54
48. Jury Trial Waiver................................................... 54
49. Option to Renew..................................................... 54
49.1. Commencement Dates........................................... 55
49.2. Renewal Option is Personal; Non-Transferable................. 55
49.3. Tenant's Notice of Exercise.................................. 55
49.4. Monthly Base Rent During Renewal Term........................ 55
49.4.1. Fair Market Rent Definition......................... 55
49.4.2. Determination of Fair Market Rent................... 56
49.4.3. Arbitrator Qualifications........................... 56
49.4.4. Fees and Costs of Arbitrators....................... 56
49.4.5. Arbitration Period Base Rent........................ 57
50. Parking............................................................. 57
50.1. Grant of Parking License..................................... 57
50.2. No Assignment of Parking License............................. 57
50.3. Visitor Parking.............................................. 58
51. Right of First Offer................................................ 58
51.1. Offer Notice................................................. 58
51.2. Election Notice.............................................. 58
51.3. Purchase and Sale Agreement.................................. 58
51.4. Failure to Exercise or Sign Agreement........................ 58
51.5. Net Operating Income......................................... 59
51.6. Landlord's Sale to Affiliate; Survival of Option............. 59
52. Memorandum of Lease................................................. 60
vi
EXHIBIT
A Parcel Map
B Base Building Construction Agreement
B-1 Preliminary Specifications for Base
Building Improvements
B-2 Site Plan
C Premises Construction Agreement
C-1 Description of "Warm Shell"
Improvements
C-2 Example of Tenant Improvement Loan
Amortization
D Commencement and Expiration Date
Memorandum
E Additional Operational Guidelines
F Rules and Regulations
G Hazardous Materials Disclosure Certificate
H Tenant's Property
I Memorandum of Lease
J Tenant Improvement Loan Amortization
Memorandum
vii
LEASE AGREEMENT
BASIC LEASE INFORMATION
LEASE DATE: February 17, 1999
LANDLORD: HMS Gateway Office, L.P.
a Delaware limited partnership
LANDLORD'S ADDRESS: c/o Hines Interests Limited Partnership
101 California Street, Suite 1000
San Francisco, California 94111-5848
Attn: Tom Kruggel
ALL NOTICES SENT TO LANDLORD UNDER THIS
LEASE SHALL BE SENT TO THE ABOVE ADDRESS,
WITH COPIES TO:
Hines
651 Gateway Boulevard, Suite 1140
South San Francisco, California 94080
Attn: Lisa Burke
TENANT: Advanced Medicine, Inc.,
a Delaware corporation
- --------------------------------------------------------------------------------
TENANT'S CONTACT PERSON: Marty Glick
TENANT'S ADDRESS PRIOR TO 280 Utah Avenue
THE COMMENCEMENT DATE: South San Francisco, CA 94080
AFTER THE COMMENCEMENT 901 Gateway Boulevard
DATE: South San Francisco, California 94080
- --------------------------------------------------------------------------------
PREMISES SQUARE FOOTAGE: One hundred ten thousand (110,000) square feet,
subject to final determination by Landlord's
Architect upon the commencement of the Term, such
measurement to be made in accordance with BOMA
standard definition of gross square footage.
- --------------------------------------------------------------------------------
PREMISES ADDRESS: 901 Gateway Boulevard
South San Francisco, California
- --------------------------------------------------------------------------------
viii
- --------------------------------------------------------------------------------
PROJECT: Parcel 5 of Lot 9 of the Gateway, as shown on
the Parcel Map dated February, 1999 and
attached hereto as EXHIBIT A (as such lot and
parcel now exist or may hereafter be modified
through the filing of parcel maps, the
consummation of lot line adjustments or other
legal means), together with all improvements
constructed thereon.
- --------------------------------------------------------------------------------
BUILDING (IF NOT THE SAME AS: 901 Gateway Boulevard
THE PROJECT): South San Francisco, California
TENANT'S PROPORTIONATE SHARE
OF PROJECT: 100%
- --------------------------------------------------------------------------------
TENANT'S PROPORTIONATE SHARE
OF BUILDING: 100%
LENGTH OF TERM: One hundred forty-four (144) months
- --------------------------------------------------------------------------------
ESTIMATED COMMENCEMENT
DATE: April 1, 2000
- --------------------------------------------------------------------------------
ESTIMATED EXPIRATION DATE: March 31, 2012
- --------------------------------------------------------------------------------
MONTHLY BASE RENT: 1. Monthly Base Rent for the first Lease
Year shall be $203,500.00;
2. Monthly Base Rent for the second Lease
Year shall be $209,605.00;
3. Monthly Base Rent for the third Lease
Year shall be $215,893.15;
4. Monthly Base Rent for the fourth Lease
Year shall be $222,369.94;
5. Monthly Base Rent for the fifth Lease
Year shall be $229,041.04;
6. Monthly Base Rent for the sixth Lease
Year shall be $235,912.27;
7. Monthly Base Rent for the seventh Lease
Year shall be $242,989.64;
8. Monthly Base Rent for the eighth Lease
Year shall be $250,279.33;
9. Monthly Base Rent for the ninth Lease
Year shall be $257,787.71;
10. Monthly Base Rent for the tenth Lease
Year shall be $265,521.34;
11. Monthly Base Rent for the eleventh Lease
Year shall be $273,486.98;
- --------------------------------------------------------------------------------
ix
12. Monthly Base Rent for the twelfth Lease
Year shall be $281,691.59.
The above monthly Base Rent calculations are
subject to change after final determination
of the Premises gross square footage by
Landlord's Architect and any such adjustment
shall be based on a monthly Base Rent for the
first Lease Year of $1.85 per square foot
multiplied by the Premises gross square
footage, and a monthly Base Rent for each
subsequent Lease Year of 103% of the
preceding Lease Year's monthly Base Rent.
LETTER OF CREDIT: Two Million Seven Hundred Fifty Thousand
Dollars ($2,750,000) subject to reduction in
accordance with Paragraph 7(c) hereof.
PERMITTED USE: General office and research and development
activities associated with
biotechnology/pharmaceutical services. All
uses must be in accordance with all
applicable Laws.
- --------------------------------------------------------------------------------
UNRESERVED PARKING SPACES: Three Hundred Eight (308) non-exclusive and
undesignated parking spaces.
Except as otherwise provided in this Lease to
the contrary, the foregoing parking
calculation shall remain fixed and shall not
be adjusted based upon the final
determination of the Premises gross square
footage by Landlord's Architect.
- --------------------------------------------------------------------------------
BROKER: BT Commercial Real Estate
- --------------------------------------------------------------------------------
TENANT IMPROVEMENT Four Million Nine Hundred Fifty Thousand
ALLOWANCE: Dollars ($4,950,000.00) (VIZ. $45.00 per
square foot), subject to adjustment upon the
final determination of the Premises square
footage by Landlord's Architect.
- --------------------------------------------------------------------------------
TENANT IMPROVEMENT LOAN: Up to Two Million Seven Hundred Fifty
Thousand Dollars ($2,750,000.00) (VIZ. $25.00
per square foot), subject to adjustment upon
the final determination of the Premises gross
square footage by Landlord's Architect.
Subject to the right of Tenant to prepay the
Tenant Improvement Loan in accordance with
and to the extent provided in Section D of
EXHIBIT C, the Tenant Improvement Loan shall
be amortized over the initial Ten and repaid,
together with interest at the per annum rate
of 12%, in accordance with said Section D of
EXHIBIT C.
x
LEASE AGREEMENT
THIS LEASE AGREEMENT is made and entered into by and between Landlord and
Tenant on the Lease Date. The defined terms used in this Lease which are defined
in the Basic Lease Information attached to this Lease Agreement ("BASIC LEASE
INFORMATION") shall have the meaning and definition given them in the Basic
Lease Information. The Basic Lease Information, the exhibits, the addendum or
addenda described in the Basic Lease Information, and this Lease Agreement are
and shall be construed as a single instrument and are referred to herein as the
"Lease".
1. DEMISE
In consideration for the rents and all other charges and payments payable
by Tenant, and for the agreements, terms and conditions to be performed by
Tenant in this Lease, LANDLORD DOES HEREBY LEASE TO TENANT, AND TENANT DOES
HEREBY HIRE AND TAKE FROM LANDLORD, the Premises described below (the
"Premises"), upon the agreements, terms and conditions, of this Lease for the
Term hereinafter stated.
2. PREMISES
2.1. DEFINITION OF PREMISES, BUILDING, PROJECT PARKING AREAS, COMMON
AREAS
The "Premises" demised by this Lease consist of that certain three
(3) story building (the "BUILDING") shown on the Site Plan attached hereto as
Exhibit BA-1, which Building is to be located in that certain real estate
development (the "PROJECT") specified in the Basic Lease Information. Subject to
the provisions of this Lease, Landlord shall have the right to revise the
definition of "PROJECT" from time to time as Landlord develops and improves the
Project and surrounding real property now or hereafter owned by Landlord or its
Affiliates (as hereinafter defined), or sells to third parties portions of the
Project or such adjacent properties. If at any time during the Term, Tenant is
leasing, in accordance with the terms and conditions of this Lease, less than
the entire Building, the "Premises" shall be deemed to include only that portion
of the Building then leased by Tenant pursuant to this Lease. Tenant shall have
the non exclusive right (in common with the other tenants, Landlord and any
other person granted use by Landlord) to use the Common Areas (as hereinafter
defined), except that, with respect to the Project's parking areas (the "PARKING
AREAS"), Tenant shall have only the rights set forth in Paragraph 50 below. No
easement for light or air is incorporated in the Premises. For purposes of this
Lease, the term "COMMON AREAS" shall mean all areas and facilities outside the
Premises and outside other buildings occupied or intended to be occupied by
tenants and within the exterior boundary line of the Project that are from time
to time provided and designated by Landlord for the non-exclusive use of
Landlord, Tenant and other tenants of the Project and their respective
employees, guests and invitees, including, without limitation, the Parking
Areas.
1
2.2. CONSTRUCTION OF BASE BUILDING IMPROVEMENTS AND TENANT IMPROVEMENTS
Landlord shall cause the construction of the Base Building
Improvements in accordance with the terms and conditions of the Base Building
Construction Agreement attached hereto as EXHIBIT B. The Base Building
Improvements are generally described on EXHIBIT B-1 hereto. Additionally, Tenant
shall cause the construction of certain tenant improvements in the interior of
the Premises in accordance with the terms and conditions of the Premises
Construction Agreement attached hereto as EXHIBIT C.
2.3. CHANGES TO COMMON AREA
(a) Landlord has the right, in its sole and absolute
discretion, from time to time, to: (i) make changes to the Common Areas,
including, without limitation, changes in the location, size, shape and number
of driveways, entrances, parking spaces (provided, however, Landlord shall not
have the right, except as otherwise provided herein, to reduce the total number
of parking spaces below the number allocated to Tenant in the Basic Lease
Information), Parking Areas, ingress, egress, direction of driveways, entrances,
corridors and walkways; (ii) close temporarily any of the Common Areas for
maintenance or construction purposes so long as reasonable access to the
Premises remains available; (iii) add additional buildings and improvements to
the Common Areas or remove existing buildings or improvements therefrom; (iv)
use the Common Areas while engaged in making additional improvements, repairs or
alterations to the Project or any portion thereof so long as reasonable access
to the Premises and the loading area serving the Premises remains available; and
(v) do and perform any other acts or make any other changes in, to or with
respect to the Common Areas and the Project as Landlord may, in its sole and
absolute discretion, deem to be appropriate.
(b) In the event Tenant fails to exercise the Expansion Option
(as hereinafter defined), then notwithstanding anything to the contrary
contained in this Lease, including without limitation, Paragraph 2.3(a) above,
Landlord shall have the right in its sole discretion to improve, develop, alter
or make changes to the real property shown on the Site Plan upon which the
Expansion Building would otherwise have been situated.
(c) Notwithstanding the terms of Paragraph 2.3(a) above, Tenant
understands and acknowledges that Landlord will during the Term be developing
the Project and other lands owned by Landlord for Tenant and other tenants or
occupants and that from time to time, whether during periods of construction or
otherwise, Landlord may be unable to provide the full number of parking spaces
allocated to Tenant under this Lease in the Parking Areas. During such periods,
Landlord shall have the right to provide parking to Tenant on properties
reasonably proximate to the Project (the "ADJACENT PROPERTIES") or through the
use of valets or parking attendants on the Parking Areas or the Adjacent
Properties, provided only that Tenant shall at all times have parking for the
number of automobiles contemplated under this Lease.
2
3. TERM
3.1. COMMENCEMENT DATE
The term of this Lease (the "TERM") shall commence on April 1,
2000 or such later date as may be established pursuant to Section D.4 of EXHIBIT
B hereto (the "COMMENCEMENT DATE")
3.2. COMMENCEMENT AND EXPIRATION DATE MEMORANDUM; EXPIRATION DATE
In the event the actual Commencement Date, as determined pursuant
to the foregoing, is a date other than April 1, 2000, then Landlord and Tenant
shall promptly execute a Commencement and Expiration Date Memorandum in the form
attached hereto as EXHIBIT D, wherein the parties shall specify the Commencement
Date, the Expiration Date and the date on which Tenant is to commence paying
Rent. The Term of this Lease shall expire on March 31, 2012 (the "EXPIRATION
DATE") if the Commencement Date occurs on or before April 1, 2000; provided,
however, that if the actual Commencement Date occurs after April 1, 2000 in
accordance with Section D.4 of EXHIBIT B hereto, then the Expiration Date shall
be the day immediately preceding the twelfth (12th) anniversary of such actual
Commencement Date.
As used in this Lease, the term "LEASE YEAR" shall mean a period
of twelve (12) full calendar months commencing on the Commencement Date of this
Lease with respect to the first Building occupied by Tenant hereunder and each
subsequent sequential twelve (12) full calendar month period thereafter.
4. RENT
4.1. MONTHLY BASE RENT
Commencing on the Commencement Date, Tenant shall pay to Landlord,
in advance on the first day of each month, without further notice or demand and
without offset or deduction, the monthly installments of rent specified in the
Basic Lease Information (the "MONTHLY BASE RENT"). If the actual Commencement
Date does not occur on the first (1st) day of a calendar month, or if the
expiration or termination of the Term of this Lease is not the last day of a
calendar month, a prorated installment of Rent based on a per diem calculation
shall be paid for the fractional calendar month during which the Rent commences
or the Term expires or terminates.
4.2. ADDITIONAL RENT
This Lease is intended to be a triple-net Lease with respect to
Landlord; and subject to Paragraph 13.2 below, the Base Rent owing hereunder is
(1) to be paid by Tenant absolutely net of all costs and expenses relating to
Landlord's ownership and operation, of the Project and the Building, and (2) not
to be reduced, offset or diminished, directly or indirectly, by any cost, charge
or expense payable hereunder by Tenant or by others in connection with the
Premises, the Building and/or the Project or any part
3
thereof. The provisions of this Paragraph 4.2 for the payment of Tenant's
Proportionate Share(s) of Expenses (as hereinafter defined) are intended to pass
on to Tenant its share of all such costs and expenses. In addition to the Base
Rent, Tenant shall pay to Landlord, in accordance with this Paragraph 4.
Tenant's Proportionate Share(s) of all costs and expenses paid or incurred by
Landlord in connection with the ownership, operation, maintenance, management
and repair of the Premises, the Building and/or the Project or any part thereof
(collectively, the "EXPENSES"), including, without limitation, all the following
items (the "ADDITIONAL RENT"):
1. TAXES AND ASSESSMENTS. ALL real estate taxes and
assessments, which shall include any form of tax, assessment, fee, license fee,
business license fee, levy, penalty (if a result of Tenant's delinquency), or
tax (other than net income, estate, succession, inheritance, transfer or
franchise taxes), imposed by any authority having the direct or indirect power
to tax, or by any city, county, state or federal government or any improvement
or other district or division thereof, whether such tax is (i) determined by the
area of the Premises, the Building and/or the Project or any part thereof, or
the Rent and other sums payable hereunder by Tenant or by other tenants,
including, but not limited to, any gross income or excise tax levied by any of
the foregoing authorities with respect to receipt of Rent and/or other sums due
under this Lease; (ii) upon any legal or equitable interest of Landlord in the
Premises, the Building and/or the Project or any part thereof; (iii) upon this
transaction or any document to which Tenant is a party creating or transferring
any interest in the Premises, the Building and/or the Project; (iv) levied or
assessed in lieu of, in substitution for, or in addition to, existing or
additional taxes against the Premises, the Building and/or the Project, whether
or not now customary or within the contemplation of the parties; or (v)
surcharged against the parking area. Tenant and Landlord acknowledge that
Proposition 13 was adopted by the voters of the State of California in the June,
1978 election and that assessments, taxes, fees, levies and charges may be
imposed by governmental agencies for such purposes as fire protection, street,
sidewalk, road, utility construction and maintenance, refuse removal and for
other governmental services which may formerly have been provided without charge
to property owners or occupants. It is the intention of the parties that all new
and increased assessments, taxes, fees, levies and charges due to any cause
whatsoever are to be included within the definition of real property taxes for
purposes of this Lease. "TAXES AND ASSESSMENTS" shall also include legal and
consultants' fees, costs and disbursements incurred in connection with
proceedings to contest, determine or reduce taxes, Landlord specifically
reserving the right, but not the obligation, to contest by appropriate legal
proceedings the amount or validity of any taxes. In the event Landlord elects
not to contest the real property taxes and assessments levied against the
Building with respect to any calendar year during the Term, and if Tenant
demonstrates to Landlord's reasonable satisfaction that such a contest would
likely result in a reduction of such taxes and assessments, then Tenant shall
have the right to retain a consultant to prosecute such contest, subject to
Landlord's reasonable approval of the identity of such consultant. Such contest
shall be conducted at Tenant's sole cost and expense, provided that if Tenant
prevails in such contest, the reasonable fees and costs of Tenant's consultants
shall, to the extent of any actual savings resulting from such contest, be
equitably shared by Tenant and other tenant(s) who receive the benefit of such
savings. Tenant shall have
4
the right to deduct from its payments of Additional Rent the shares of such
fees and costs to be charged to other tenants, as reasonably determined by
Landlord, and Landlord shall cause such amounts to be billed or charged to
the other benefited tenant(s).
2. INSURANCE. All insurance premiums for the Building and/or
the Project or, subject to clause (i) of the paragraph immediately following
Paragraph 4.2(8) below, any part thereof, including premiums for "all risk" fire
and extended coverage insurance, commercial general liability insurance, rent
loss or abatement insurance, earthquake insurance, flood or surface water
coverage, and other insurance as Landlord deems necessary in its sole
discretion, and any deductibles paid under policies of any such insurance.
3. UTILITIES. The cost of all Utilities (as hereinafter
defined) serving the Premises, the Building and the Common Areas that are not
separately metered to Tenant, any assessments or charges for Utilities or
similar purposes included within any tax bill for the Building or the Common
Areas, including without limitation, entitlement fees, allocation unit fees,
and/or any similar fees or charges and any penalties (if a result of Tenant's
delinquency) related thereto, and any amounts, taxes, charges, surcharges,
assessments or impositions levied, assessed or imposed upon the Building or the
Common Areas, or any part thereof, or upon Tenant's use and occupancy thereof,
as a result of any rationing of Utility services or restriction on Utility use
affecting the Building and/or the Common Areas, as contemplated in Paragraph 5
below (collectively, "UTILITY EXPENSES").
4. COMMON AREA EXPENSES. All costs to operate, maintain,
repair, replace, supervise, insure and administer the Common Areas, including
supplies, materials, labor and equipment used in or related to the operation and
maintenance of the Common Areas, including parking areas (including, without
limitation, all costs of resurfacing and restriping parking areas), signs and
directories on the Building and/or the Project, landscaping (including
maintenance contracts and fees payable to landscaping consultants), amenities,
sprinkler systems, sidewalks, walkways, driveways, curbs, lighting systems and
security services, if any, provided by Landlord for the Common Areas, and any
charges, assessments, costs or fees levied by any association or entity of which
the Project or any part thereof is a member or to which the Project or any part
thereof is subject.
5. PARKING CHARGES. Any parking charges or other costs levied,
assessed or imposed by, or at the direction of, or resulting from statutes or
regulations, or interpretations thereof, promulgated by any governmental
authority or insurer in connection with the use or occupancy of the Building or
the Project.
6. MAINTENANCE AND REPAIR COSTS. Except for costs which are
the responsibility of Landlord pursuant to Paragraph 13.2 below, all costs to
maintain, repair, and replace the Premises, the Building and/or the Common Areas
or any part thereof, including without limitation, (i) all costs paid under
maintenance, management and service agreements such as contracts for janitorial,
security and refuse removal, (ii) all
5
costs to maintain, repair and replace the roof coverings of the Building, (iii)
all costs to maintain, repair and replace the heating, ventilating, air
conditioning, plumbing, sewer, drainage, electrical, fire protection, life
safety and security systems and other mechanical and electrical systems and
equipment serving the Premises, the Building and/or the Common Areas or any part
thereof (collectively, the "SYSTEMS"), all to the extent that Landlord or
Landlord's Agents perform such tasks.
7. LIFE SAFETY COSTS. ALL costs to install, maintain, repair
and replace all life safety systems, including, without limitation, all fire
alarm systems, serving the Premises, the Building and/or the Common Areas or any
part thereof (including all maintenance contracts and fees payable to life
safety consultants) whether such systems are or shall be required by Landlord's
insurance carriers, Laws (as hereinafter defined) or otherwise, all to the
extent that Landlord or Landlord's Agents perform such tasks.
8. MANAGEMENT AND ADMINISTRATION. All costs for management and
administration of the Premises, the Building and/or the Project or any part
thereof, including, without limitation, a property management fee equal to two
percent (2%) of the annual Rent derived from the Building, accounting, auditing,
billing, postage, legal and accounting costs and fees for licenses and permits
related to the ownership and operation of the Project (but specifically
excluding any salaries and benefits of employees of Landlord or the property
manager of the Building).
Notwithstanding anything in this Paragraph 4.2 to the
contrary, (i) Tenant shall not be responsible for the payment of any Expenses
which relate to or benefit solely another building within the Project occupied
or intended to be occupied by tenants or for which Landlord receives full
reimbursement from other tenants, and (ii) with respect to all sums payable by
Tenant as Additional Rent under this Paragraph 4.2 for the replacement of any
item or the construction of any new item in connection with the physical
operation of the Premises, the Building or the Project (i.e., HVAC, roof
membrane or coverings and parking area) which is a capital item the replacement
of which would be capitalized under generally accepted accounting principles
consistently applied, Tenant shall be required to pay only the prorata share of
the cost of the item failing due within the Term (including any Renewal Term)
based upon the amortization of the same over the useful life of such item, as
reasonably determined by Landlord. Such share shall be paid by Tenant on a
monthly basis throughout the Term (rather than in a lump sum when incurred by
Landlord).
4.3. ADJUSTMENT TO ADDITIONAL RENT
Notwithstanding any other provision herein to the contrary, if the
Building is not fully occupied during any year of the Term, an adjustment shall
be made in computing Additional Rent for such year so that Additional Rent shall
be computed as though the Building had been fully occupied during such year;
provided, however, that in no event shall Landlord collect in total, from Tenant
and all other tenants of the Building, an amount greater than one hundred
percent (100%) of the actual Expenses during any year of the Term.
6
4.4. PAYMENT OF ADDITIONAL RENT
4.4.1. EXPENSE STATEMENT
Upon the Commencement Date, Landlord shall submit to Tenant
an estimate of monthly Additional Rent for the period between the Commencement
Date and the following December 31 and Tenant shall pay such estimated
Additional Rent on a monthly basis, in advance, on the first day of each month.
Tenant shall continue to make said monthly payments until notified by Landlord
of a change therein. By April 1 of each calendar year, Landlord shall endeavor
to provide to Tenant a statement (the "EXPENSE STATEMENT") showing the actual
Additional Rent due to Landlord for the prior calendar year, to be prorated
during the first year from the Commencement Date. If the total of the monthly
payments of Additional Rent that Tenant has made for the prior calendar year is
less than the actual Additional Rent chargeable to Tenant for such prior
calendar year, then Tenant shall pay the difference in a lump sum within ten
(10) days after receipt of such statement from Landlord. Any overpayment by
Tenant of Additional Rent for the prior calendar year shall be credited towards
the Additional Rent next due.
4.4.2. CALCULATION OF ADDITIONAL RENT
Landlord's then-current annual operating and capital
budgets for the Building and the Project shall be used for purposes of
calculating Tenant's monthly payment of estimated Additional Rent for the
current year. Landlord shall make the final determination of Additional Rent for
the year in which this Lease terminates as soon as possible after termination of
such year. Even though the Term has expired and Tenant has vacated the Premises,
Tenant shall remain liable for payment of any amount due to Landlord in excess
of the estimated Additional Rent previously paid by Tenant, and, conversely,
Landlord shall promptly return to Tenant any overpayment. Failure of Landlord to
submit statements as called for herein shall not be deemed a waiver of Tenant's
obligation to pay Additional Rent as herein provided.
4.4.3. TENANT'S PROPORTIONATE SHARE(S)
With respect to Expenses which Landlord allocates to the
Building, Tenant's "PROPORTIONATE SHARE" shall be the percentage set forth in
the Basic Lease Information as Tenant's Proportionate Share of the Building, as
adjusted by Landlord from time to time for a remeasurement of or changes in the
physical size of the Premises or the Building. With respect to Expenses which
Landlord allocates to the Project, Tenant's "PROPORTIONATE SHARE" shall be the
percentage set forth in the Basic Lease Information as Tenant's Proportionate
Share of the Project as adjusted by Landlord from time to time in connection
with the construction of additional buildings within the Project or a
remeasurement of or changes in the physical size of the Premises or the Project,
whether such changes in size are due to an addition to or a sale or conveyance
of a portion of the Project or otherwise. Notwithstanding the foregoing,
Landlord may equitably adjust Tenant's Proportionate Share(s) for all or part of
any item of expense or cost reimbursable by Tenant that relates to a repair,
replacement, or service that benefits
7
only the Premises or only a portion of the Building and/or the Project or that
varies with the occupancy of the Building and/or the Project; provided, however,
that Tenant's prorata allocation of any such Expense shall not be
disproportionate to any other tenant's prorata allocation of such Expense.
4.4.4. TENANT'S AUDIT RIGHTS
Provided Tenant is not in Default under the terms of
this Lease, Tenant, at its sole cost and expense, shall have the right within
sixty (60) days after the delivery of each Expense Statement to review and
audit Landlord's books and records regarding such Expense Statement for the
sole purpose of determining the accuracy of such Expense Statement. Such
review or audit shall be performed by a nationally recognized accounting firm
that calculates its fees with respect to hours actually worked and that does
not discount its time or rate (as opposed to a calculation based upon
percentage of recoveries or other incentive arrangement), shall take place
during normal business hours in the office of Landlord or Landlord's property
manager and shall be completed within three (3) business days after the
commencement thereof. If Tenant does not so review or audit Landlord's books
and records, Landlord's Expense Statement shall be final and binding upon
Tenant. In the event that Tenant determines on the basis of its review of
Landlord's books and records that the amount of Expenses paid by Tenant
pursuant to this Paragraph 4 for the period covered by such Expense Statement
is less than or greater than the actual amount properly payable by Tenant
under the terms of this Lease, Tenant shall promptly pay any deficiency to
Landlord or, if Landlord concurs with the results of Tenant's audit, Landlord
shall promptly refund any excess payment to Tenant, as the case may be.
Landlord shall pay for any reasonable audit expenses if such excess payment
exceeds the aggregate Expenses in Landlord's Expense Statement by seven
percent (7%).
4.5. GENERAL PAYMENT TERMS
The Base Rent, Additional Rent and all other sums payable by
Tenant to Landlord hereunder, including, without limitation, any Late Charges,
as defined below, assessed pursuant to Paragraph 6 below, any interest assessed
pursuant to Paragraph 44 below and any payments of principal and/or interest on
the Tenant Improvement Loan, are referred to collectively as the "RENT." All
Rent shall be paid without deduction, offset or abatement (except as
specifically provided in this Lease) in lawful money of the United States of
America. Checks are to be made payable to HMS Gateway Office, L.P. and shall be
mailed: c/o Hines Interests Limited Partnership, 101 California Street, Suite
1000, San Francisco, California 94111-5848, Attn: Tom Kruggel, or to such other
person or place as Landlord may, from time to time, designate to Tenant in
writing. The Rent for any fractional part of a calendar month at the
commencement or termination of the Lease term shall be a prorated amount of the
Rent for a full calendar month based upon the number of days in the month of the
commencement or termination of the Lease term, as applicable.
8
5. UTILITY EXPENSES
5.1. TENANT'S OBLIGATION TO PAY
Tenant shall pay the cost of all water, sewer use, sewer
discharge fees, gas, heat, electricity, refuse pick-up, janitorial service
(including, without limitation, exterior and interior window washing),
telephone, cable T.V., telecommunications facilities and all materials and
services or other utilities (collectively, "UTILITIES") billed or metered
separately to the Premises and/or Tenant, together with all taxes,
assessments, charges and penalties added to or included within such cost.
Tenant acknowledges that the Premises, the Building and/or the Project may
become subject to the rationing of Utility services or restrictions on
Utility use as required by a public utility company, governmental agency or
other similar entity having jurisdiction thereof. Tenant acknowledges and
agrees that its tenancy and occupancy hereunder shall be subject to such
rationing or restrictions as may be imposed upon Landlord, Tenant, the
Premises, the Building and/or the Project, and Tenant shall in no event be
excused or relieved from any covenant or obligation to be kept or performed
by Tenant by reason of any such rationing or restrictions. Tenant agrees to
comply with energy conservation programs implemented by Landlord by reason of
rationing, restrictions or Laws.
5.2. LIMITATION OF LANDLORD'S LIABILITY FOR INTERRUPTION OF UTILITIES
(a) Landlord shall not be liable for any loss, injury or damage
to property caused by or resulting from any variation, interruption, or failure
of Utilities due to any cause whatsoever, or from failure to make any repairs or
perform any maintenance. No temporary interruption or failure of such services
incident to the making of repairs, alterations, improvements, or due to
accident, strike, or conditions or other events shall be deemed an eviction of
Tenant or relieve Tenant from any of its obligations hereunder; provided,
however, that Landlord shall give Tenant not less than forty-eight (48) hours'
notice of any interruption of Utilities planned in advance by Landlord. Landlord
shall also use reasonable efforts to notify Tenant of any planned interruption
of Utilities by any Utility service provider, provided that Landlord obtains
actual knowledge of such planned interruption. In no event shall Landlord be
liable to Tenant for any damage to the Premises or for any loss, damage or
injury to any property therein or thereon occasioned by bursting, rupture,
leakage, failure or overflow of any plumbing or other pipes (including, without
limitation, water, steam, and/or refrigerant lines), sprinklers, tanks, drains,
drinking fountains or washstands, or other similar cause in, above, upon or
about the Premises, the Building or the Project.
(b) Notwithstanding the provisions of Paragraph 5.2(a) above,
if any Utility Services to the Premises are interrupted or interfered with as
the result of the negligence or willful misconduct of any contractors engaged by
Landlord to perform services at the Project, then Landlord shall use
commercially reasonable efforts to pursue any claims for compensation or
reimbursement available to Landlord against such contractors to the extent of
any losses suffered by Tenant and shall make any monies received available to
Tenant after allowance for Landlord's costs of collection. In
9
addition to the foregoing, if any policy of insurance maintained by Landlord
with respect to the Premises provides coverage for losses incurred due to the
failure of Utilities, then Landlord shall make a claim under such policy to the
extent of any losses suffered by Tenant, and shall make the proceeds received,
if any, available to Tenant after allowance for Landlord's costs of collection.
6. LATE CHARGE
Notwithstanding any other provision of this Lease, Tenant hereby
acknowledges that late payment to Landlord of Rent, or other amounts due
hereunder will cause Landlord to incur costs not contemplated by this Lease, the
exact amount of which will be extremely difficult to ascertain. If any Rent or
other sums due from Tenant are not received by Landlord or by Landlord's
designated agent when due, and if Tenant does not cure such failure within five
(5) days after the due date (the "GRACE PERIOD"), then Tenant shall pay to
Landlord a late charge equal to five percent (5%) of such overdue amount (the
"LATE CHARGE"), plus any costs and reasonable attorneys' fees incurred by
Landlord by reason of Tenant's failure to pay Rent and/or other charges when due
hereunder; provided, however, that Tenant shall have the right to pay Rent
during the Grace Period only five (5) times during the Term and, after Tenant
has paid Rent during the Grace Period an aggregate of five (5) times, Tenant
shall pay to Landlord a Late Charge on any Rent or other sums due hereunder that
are not received by Landlord or Landlord's designated agent when due.
Notwithstanding the foregoing, if Tenant establishes and maintains throughout
the Term a direct payment or debit arrangement with a bank or financial
institution pursuant to which the Rent due hereunder is automatically paid to
Landlord by electronic transfer on the first day of each month, and if Tenant
provides Landlord with evidence of such arrangement, then Landlord shall provide
Tenant with notice of any late payment of Rent prior to the imposition of a Late
Charge. Landlord and Tenant hereby agree that such Late Charge represent a fair
and reasonable estimate of the cost that Landlord will incur by reason of
Tenant's late payment and shall not be construed as a penalty. Landlord's
acceptance of such Late Charge shall not constitute a waiver of Tenant's default
with respect to such overdue amount or estop Landlord from exercising any of the
other rights and remedies granted under this Lease.
INITIALS: LANDLORD /s/ [Illegible] TENANT /s/ [Illegible]
--------------- ---------------
7. LETTER OF CREDIT
(a) DELIVERY OF LETTER OF CREDIT. Concurrently with the execution
hereof, Tenant shall deliver to Landlord, at Tenant's sole cost and expense, the
Letter of Credit described below in the amount of Two Million Seven Hundred
Fifty Thousand Dollars ($2,750,000) as security for the full and faithful
performance of Tenant's covenants and obligations under this Lease. Upon the
date that is forty-five (45) days after the expiration of the Term or earlier
termination of this Lease, the Letter of Credit (as reduced pursuant to this
Paragraph 7) shall be returned to Tenant, reduced by any
10
amounts that Landlord reasonably estimates to be required to remedy any Defaults
on the part of Tenant hereunder.
(b) LANDLORD'S RIGHT TO DRAW ON LETTER OF CREDIT; LETTER OF
CREDIT PROCEEDS. Landlord may (but shall not be required to) draw upon the
Letter of Credit from time to time, in a singular draw or by partial draws at
Landlord's election, as permitted by the Letter of Credit, and use the proceeds
therefrom (the "LETTER OF CREDIT PROCEEDS") or any portion thereof to (i) cure
or remedy any Default of Tenant under this Lease, (ii) repair damage to the
Premises caused by Tenant, (iii) clean the Premises upon termination of this
Lease, (iv) reimburse Landlord for the payment of any amount which Landlord may
spend or be required to spend by reason of Tenant's Default, or (v) compensate
Landlord for any other loss or damage which Landlord may suffer by reason of
Tenant's Default, including, without limitation, all costs incurred by Landlord
in releasing the Premises and any tenant improvement costs and leasing
commissions associated therewith; it being understood that any use of the Letter
of Credit Proceeds shall not constitute a bar or defense to any of Landlord's
remedies set forth in this Lease. In such event and upon written notice from
Landlord to Tenant specifying the amount of the Letter of Credit Proceeds so
utilized by Landlord, Tenant shall immediately deliver to Landlord an amendment
to the Letter of Credit restoring the Letter of Credit to the full amount
required under Paragraph 7(a) above, less any reductions theretofore permitted
pursuant to Paragraph 7(c) below. Tenant's failure to deliver such amendment to
Landlord within ten (10) business days of Landlord's notice shall constitute a
Default hereunder.
(c) REDUCTION OF AMOUNT OF LETTER OF CREDIT. As used herein,
"Letter of Credit" shall mean an unconditional, stand-by irrevocable letter of
credit (hereinafter referred to as the "LETTER OF CREDIT") issued by Mellon Bank
or the San Francisco Bay Area office of another major national bank mutually
satisfactory to Landlord and Tenant (collectively, the "PHASE I LC ISSUING
BANK"), naming Landlord as beneficiary, in the amount specified above; provided,
however, that the amount of the Letter of Credit shall be subject to reduction
from time to time as provided below:
(1) If Tenant elects to and actually repays the
unamortized principal balance of and all accrued interest on the Tenant
Improvement Loan on the first, second or third anniversary of the Commencement
Date in accordance with Section D of EXHIBIT C hereto, the then-current amount
of the Letter of Credit shall be reduced by twenty-five percent (25%) (in
addition to any other reduction to which Tenant is entitled under subparagraphs
(2) and (3) below);
(2) If Tenant achieves actual annual net sales revenues
of Twenty Million Dollars ($20,000,000) or more during any calendar year during
the Term, the then-current amount of the Letter of Credit shall be reduced by
twenty-five percent (25%) (in addition to any other reduction to which Tenant is
entitled under subparagraph (1) above and subparagraph (3) below); for purposes
of this subparagraph (2), "net sales revenues" shall mean the gross revenues
actually realized by Tenant from the operation of its core business (as opposed
to non-recurring income or
11
revenues not generated by Tenant's core business), less actual expenses incurred
by Tenant during the applicable calendar year; and
(3) commencing on the fourth (4th) anniversary of the
Commencement Date, the then-current amount of the Letter of Credit shall be
reduced on the first day of each Lease Year in substantially equal annual
amounts such that the balance of the Letter of Credit shall be zero on the
Expiration Date.
The Letter of Credit shall be for no less than a one-year term and in any event
shall be maintained in effect from the date hereof through the date that is
forty-five (45) days after expiration of the Term or the earlier termination of
this Lease.
(d) FORM OF LETTER OF CREDIT. The Letter of Credit shall
provide: (i) that Landlord may make partial and multiple draws thereunder, up
to the face amount thereof, (ii) that Landlord may draw upon the Letter of
Credit up to the full amount thereof, and the Phase I LC Issuing Bank will
pay to Landlord the amount of such draw upon receipt by the Phase I LC
Issuing Bank of a draft signed by Landlord (which draft may be presented by
Landlord to the Phase I LC Issuing Bank in person, by overnight mail or by
telefacsimile), accompanied by a written statement from Landlord that Tenant
is in Default under the Lease or that Landlord is otherwise entitled to draw
upon the Letter of Credit, and (iii) that, in the event of Landlord's
assignment or other transfer of its interest in this Lease, the Letter of
Credit shall be freely transferable by Landlord, without recourse, to the
assignee or transferee of such interest and the Phase I LC Issuing Bank shall
confirm the same to Landlord and such assignee or transferee.
(e) FAILURE TO PROVIDE FOR ANNUAL RENEWAL OR REPLACEMENT OF
LETTER OF CREDIT. In the event that the Phase I LC Issuing Bank shall fail to
notify Landlord at least forty-five (45) days prior to expiration of the
Letter of Credit that the Letter of Credit will be renewed for at least one
(1) year beyond the then applicable expiration date, and deliver to Landlord
a replacement Letter of Credit or a modification to the existing Letter of
Credit effectuating such renewal at least forty-five (45) days prior to
expiration of the Letter of Credit, and Tenant shall not have otherwise
delivered to Landlord, at least forty-five (45) days prior to the relevant
annual expiration date, a replacement Letter of Credit in the amount required
hereunder and otherwise meeting the requirements set forth above, then
Landlord shall be entitled to draw on the Letter of Credit as provided above,
and shall hold the proceeds of such draw in a segregated interest bearing
cash collateral account in the name of Landlord and with a bank selected by
Landlord, as security for the full and faithful performance of Tenant's
obligations hereunder, until Tenant shall have provided a new Letter of
Credit satisfying the requirements of this Paragraph 7, in which event
Landlord shall promptly return the proceeds of such draw plus all accrued
interest thereon, not otherwise used in accordance with the terms of the
Lease, to Tenant.
12
8. POSSESSION
8.1. TENANT'S RIGHT OF POSSESSION
Subject to Paragraph 8.2, Tenant shall be entitled to possession of the
Premises upon the substantial completion of the Base Building Improvements.
8.2. DELAY IN PERFORMANCE OF COVENANTS RELATED TO BASE BUILDING
IMPROVEMENTS
Except as expressly provided in Paragraph 8.3 below, if for any reason
whatsoever Landlord cannot perform any covenant contained in this Lease or in
any exhibit hereto relating to the design and construction of the Base Building
Improvements, this Lease shall not be void or voidable and shall not entitle
Tenant to terminate this Lease, nor shall Landlord, or Landlord's agents,
advisors, employees, partners, shareholders, directors, invitees or independent
contractors (collectively, "LANDLORD'S AGENTS"), be liable to Tenant for any
loss or damage resulting therefrom, nor shall such failure affect the
obligations of Tenant under this Lease, including, without limitation, the
obligation to pay Rent commencing on the Commencement Date.
8.3. TENANT'S RIGHT TO TERMINATE LEASE
(a) Subject to Paragraph 8.3(b) below, if for any reason
Landlord fails to complete the milestones set forth below (each, a "MILESTONE")
on or before the outside date for performance specified below (each, a
"MILESTONE DATE"), then Tenant shall have the right, as its sole and exclusive
remedy for such failure, to terminate this Lease by written notice given to
Landlord on or before the tenth (10th) day after the applicable Milestone Date.
In the event Tenant has the right and fails to deliver a termination notice to
Landlord in a timely manner as provided herein, then Tenant shall be deemed to
have waived its right to terminate this Lease with respect to the applicable
Milestone and this Lease shall continue in full force and effect. The Milestones
and Milestone Dates are as follows:
MILESTONE MILESTONE DATE
Certificate from Landlord's December 15, 1999
Architect that the
foundation of the Building
has been completed ("INITIAL
MILESTONE").
Concrete for the third (3rd) March 1, 2000
floor metal deck has been
poured ("SECONDARY
MILESTONE").
13
(b) Notwithstanding anything to the contrary contained in
Paragraph 8.3(a) above, if Landlord is delayed in completing any Milestone due
to Tenant Delays or Force Majeure Events (as hereinafter defined), the Milestone
Dates shall be extended for a period equal to the length of such delay. As used
herein, "TENANT DELAYS" means any delays caused by Tenant or any employee, agent
or representative of Tenant, including, without limitation, delays caused by (i)
failure to furnish information in accordance with EXHIBIT B or EXHIBIT C of this
Lease; (ii) Tenant's request for any special, long lead time materials or
installations as part of the Tenant Improvements or the Tenant Requested Base
Building Improvements (as defined in EXHIBIT B hereto); (iii) Tenant's changes
in the Approved Plans (as defined in EXHIBIT C hereto); (iv) any changes
initiated by reason of the disapproval of any plans or drawings or any cost
proposals or authorizations resulting in the preparation of revised plans,
drawings, cost proposals or authorizations; (v) field changes to construction
work; (vi) the delivery, installation or completion of the Tenant Improvements
work performed by Contractor (as defined in EXHIBIT C hereto); (vii) Tenant's
request for any Tenant Requested Base Building Improvements; or (viii) any other
act or omission of Tenant. As used herein, "FORCE MAJEURE EVENTS" means
strikes, embargoes, governmental regulations, acts of God, war, civil commotion
or other strife, and other events beyond the reasonable control of the party
whose performance is affected thereby.
8.4. EARLY OCCUPANCY
In the event that, prior to April 1, 2000, the Tenant Improvements have
been substantially completed (as determined in accordance with this Paragraph
8.4), then Tenant shall have the right to occupy the Premises and to commence
business operations therein (such period commencing on Tenant's actual occupancy
of the Premises and expiring on March 31, 2000 being herein referred to as the
"EARLY OCCUPANCY PERIOD"), provided that (A) Tenant shall pay Base Monthly Rent
during the Early Occupancy Period equal to twenty-five percent (25%) of the Base
Monthly Rent first payable hereunder from and after April 1, 2000, (B) Tenant
shall not be required to commence paying monthly installments on the Tenant
Improvement Loan until April 1, 2000, and (C) except as expressly provided to
the contrary in the foregoing clauses (A) and (B), Tenant's occupancy of the
Premises during the Early Occupancy Period shall be subject to all of the terms
and conditions of this Lease, including, without limitation, the covenant to pay
Additional Rent in accordance with the terms of Paragraph 4.2 above. For
purposes of this Paragraph 8.4, the Premises shall be deemed to be
"substantially completed" when the following conditions have been satisfied:
(a) The Tenant Improvements have been approved by the
appropriate governmental agency as being in accordance with its building code
and the building permit issued for such improvements, as evidenced by the
issuance of a certificate of occupancy or final building inspection approval, as
applicable; and
(b) Tenant's Architect and Contractor have both certified in
writing that the Tenant Improvements have been substantially completed in
accordance with the
14
plans and specifications therefor, subject only to items of a "punch-list"
nature which do not materially affect the use or functionality of the space.
9. USE OF PREMISES
9.1. PERMITTED USE
(a) The use of the Premises by Tenant and Tenant's agents,
advisors, employees, partners, shareholders, directors, invitees and independent
contractors (collectively, "TENANT'S AGENTS") shall be solely for the Permitted
Use specified in the Basic Lease Information and for no other use. Tenant shall
not permit any objectionable or unpleasant smoke, dust, gas, noise or vibration
to emanate from or near the Premises, and shall use its best efforts to prevent
any objectionable odor from emanating from or near the Premises. Tenant shall
strictly comply with the measures set forth on EXHIBIT E hereto and any
additional measures reasonably required by Landlord from time to time to
eliminate the emanation of objectionable odors. Tenant shall promptly provide
Landlord with copies of all permits issued to Tenant by the Bay Area Air
Quality Management District (the "AIR MANAGEMENT DISTRICT") and any other
governmental agency responsible for or having jurisdiction over matters related
to air quality, together with copies of all correspondence between Tenant and
the Air Management District or such other agencies. Tenant acknowledges that The
Gateway, the real estate development in which the Project is located, is a
first-class office and R&D campus and that "objectionable odors" is a subjective
standard. Accordingly, Tenant agrees that if odors in the area of the Building
lead to complaints from other tenants and occupants of The Gateway, and if
Landlord reasonably determines, based upon observation and/or a review of
Tenant's records, that such odors emanated from the Premises, Tenant shall
promptly use its best efforts to correct the situation at Tenant's sole cost and
expense. Such measures to be taken by Tenant shall include, without limitation,
the hiring of special consultants and the making of capital improvements to the
Premises. Tenant shall make its laboratory records available to Landlord for
review in connection with any complaints by tenants or occupants of the Gateway
and as otherwise reasonably requested by Landlord. Any failure of Tenant to
comply with its obligations under this Paragraph 9.1(a) shall constitute an
immediate Default under this Lease.
(b) The Premises shall not be used to create any nuisance or
trespass, for any illegal purpose, for any purpose not permitted by Laws, for
any purpose that would invalidate the insurance or increase the premiums for
insurance on the Premises, the Building or the Project or for any purpose or in
any manner that would unreasonably interfere with other tenants' use or
occupancy of the Project. Tenant agrees to pay to Landlord, as Additional Rent,
any increases in premiums on policies resulting from Tenant's Permitted Use or
any other use or action by Tenant or Tenant's Agents which increases Landlord's
premiums or requires additional coverage by Landlord to insure the Premises.
Tenant agrees not to overload the floor(s) of the Building.
15
9.2. COMPLIANCE WITH GOVERNMENTAL REGULATIONS AND PRIVATE RESTRICTIONS
(a) Subject to the terms and conditions of the Lease, Landlord
covenants that the Base Building Improvements shall be constructed in compliance
with all applicable building code requirements in effect and actively being
enforced by the City of South San Francisco on the date the building permits are
issued to the Contractor therefor and substantially in accordance with the Base
Building Plans and Specifications (as defined in EXHIBIT B hereto). Any claims
by Tenant under this Paragraph 9.2 shall be made in writing not later than one
(1) year after the Commencement Date of the Lease. In the event Tenant fails to
deliver a written claim to Landlord on or before such date, then Landlord shall
be conclusively deemed to have satisfied its obligations under this paragraph.
The covenants contained in this paragraph are subject to Paragraph 39 below of
the Lease and are made specifically and exclusively for the benefit of the
original Tenant and any assignee or sublessee under a Permitted Transfer
pursuant to Paragraph 23.4 below.
(b) Tenant and Tenant's Agents shall, at Tenant's expense,
faithfully observe and comply with (1) all municipal, state and federal laws,
statutes, codes, rules, regulations, ordinances, requirements, and orders
(collectively, "LAWS"), now in force or which may hereafter be in force
pertaining to the Premises or Tenant's use of the Premises, the Building or the
Project, including without limitation, any Laws requiring installation of fire
sprinkler systems, seismic reinforcement and related alterations, whether
substantial in cost or otherwise, provided, however, that except as provided in
Paragraph 9.3 below, Tenant shall not be required to make or, except as provided
in Paragraph 4 above, pay for, structural changes to the Premises or the
Building not related to Tenant's specific use of the Premises unless the
requirement for such changes is imposed as a result of any improvements or
additions made or proposed to be made at Tenant's request; (2) all recorded
covenants, conditions and restrictions affecting the Project ("PRIVATE
RESTRICTIONS") now in force or which may hereafter be in force, Landlord hereby
specifically reserving the right to hereafter adopt such Private Restrictions
and to impose the same on the Project or any portion thereof; provided that such
Private Restrictions adopted after the date hereof shall not unreasonably impair
Tenant's use of the Premises for any Permitted Use; and (3) any and all rules
and regulations set forth in EXHIBIT E and any other rules and regulations now
or hereafter promulgated by Landlord (collectively, the "RULES AND
REGULATIONS"). Without limiting the generality of the foregoing, Tenant hereby
covenants and agrees for itself, its successors and assigns, and all persons
claiming under or through it, that this Lease is made and accepted upon and
subject to the condition that there shall be no discrimination against, or
segregation of, any person or group of persons on account of race, color, creed,
religion, sex, marital status, national origin or ancestry in the leasing,
subleasing, transferring, use, occupancy, tenure or enjoyment of the Premises
herein leased, nor shall Tenant, or any person claiming under or through it,
establish or permit any such practice or practices of discrimination or
segregation with reference to the selection, location, number, use or occupancy
of tenants, lessees, subtenants, sublessees or vendees in the premises herein
leased. The judgment of any court of competent jurisdiction, or the admission of
Tenant in any action or proceeding against Tenant, whether Landlord be a party
thereto or not,
16
that Tenant has violated any such Laws or Private Restrictions, shall be
conclusive of that fact as between Landlord and Tenant.
9.3. COMPLIANCE WITH AMERICANS WITH DISABILITIES ACT
Landlord and Tenant hereby agree and acknowledge that the Premises, the
Building and/or the Project may be subject to, among other Laws, the
requirements of the Americans with Disabilities Act, a federal law codified at
42 U.S.C. 12101 ET SEQ., including, but not limited to Title III thereof, and
all regulations and guidelines related thereto, together with any and all laws,
rules, regulations, ordinances, codes and statutes now or hereafter enacted by
local or state agencies having jurisdiction thereof, including all requirements
of Title 24 of the State of California, as the same may be in effect on the date
of this Lease and may be hereafter modified, amended or supplemented
(collectively, the "ADA"). Landlord shall cause the Base Building Improvements
to be constructed in compliance with the ADA as currently administered by the
City of South San Francisco. Any Tenant Improvements to be constructed hereunder
or Alterations (as hereinafter defined) made during the Term shall be in
compliance with the requirements of the ADA, and all costs incurred for purposes
of compliance therewith shall be a part of and included in the costs of the
Tenant Improvements or the Alterations, as applicable. Tenant shall be solely
responsible for conducting its own independent investigation of this matter and
for ensuring that the design of all Tenant Improvements strictly complies with
all requirements of the ADA. Subject to reimbursement pursuant to Paragraph 4
above, if any barrier removal work or other work is required to the Building,
the Common Areas or the Project under the ADA, then such work shall be the
responsibility of Landlord; provided, if such work is required under the ADA as
a result of Tenant's use of the Premises or any work or Alteration made to the
Premises by or on behalf of Tenant, then such work shall be performed by
Landlord at the sole cost and expense of Tenant; and, provided further, that if
any such work is required under the ADA as a result of another tenant's specific
use of its premises or improvements made by another tenant to its premises, then
the cost of such work shall be solely chargeable to such tenant and Tenant shall
have no responsibility therefor. Except as otherwise expressly provided in this
provision, Tenant shall be responsible at its sole cost and expense for fully
and faithfully complying with all applicable requirements of the ADA, including
without limitation, not discriminating against any disabled persons in the
operation of Tenant's business in or about the Premises, and offering or
otherwise providing auxiliary aids and services as, and when, required by the
ADA. Within ten (10) days after receipt, Tenant shall advise Landlord in
writing, and provide Landlord with copies of (as applicable), any notices
alleging violation of the ADA relating to any portion of the Premises, the
Building or the Project; any claims made or threatened orally or in writing
regarding noncompliance with the ADA and relating to any portion of the
Premises, the Building or the Project; or any governmental or regulatory actions
or investigations instituted or threatened regarding noncompliance with the ADA
and relating to any portion of the Premises, the Building or the Project. Tenant
shall and hereby agrees to protect, defend (with counsel acceptable to Landlord)
and hold Landlord and Landlord's Agents harmless and indemnify Landlord and
Landlord's Agents from and against all liabilities, damages, claims, losses,
penalties, judgments, charges and expenses (including attorneys'
17
fees, costs of court and expenses necessary in the prosecution or defense of any
litigation including the enforcement of this provision) arising from or in any
way related to, directly or indirectly, Tenant's or Tenant's Agents' violation
or alleged violation of the ADA. Landlord shall and hereby agrees to protect,
defend (with counsel acceptable to Tenant) and hold Tenant and Tenant's Agents
harmless and indemnify Tenant and Tenant's Agents from and against all
liabilities, damages, claims, losses, penalties, judgments, charges and expenses
(including attorneys' fees, costs of court and expenses necessary in the
prosecution or defense of any litigation including the enforcement of this
provision) arising from or in any way related to, directly or indirectly,
Landlord's failure to have the Base Building Improvements constructed in
compliance with the ADA as currently administered by the City of South San
Francisco.
10. ACCEPTANCE OF PREMISES
By taking possession of the Premises hereunder Tenant accepts the
Premises as suitable for Tenant's intended use and as being in good and sanitary
operating order, condition and repair, AS IS, and without representation or
warranty by Landlord as to the condition, use or occupancy which may be made
thereof, except for Landlord's express obligations described in EXHIBIT B and
Landlord's covenant set forth in Section 9.2(a) above. Any exceptions to the
foregoing must be by written agreement executed by Landlord and Tenant.
11. SURRENDER
11.1. SURRENDER AT EXPIRATION OR TERMINATION
Tenant agrees that on the last day of the Term, or on the sooner
termination of this Lease, Tenant shall surrender the Premises to Landlord (i)
in good condition and repair (damage by acts of God, fire, and normal wear and
tear excepted), but with all interior walls painted or cleaned so they appear
painted and, where appropriate, patched, any carpets cleaned, all floors cleaned
and waxed, and all plumbing fixtures in good condition and working order and,
where appropriate, capped, and (ii) otherwise in accordance with Paragraph 32.9.
Normal wear and tear shall not include any damage or deterioration that would
have been prevented by proper maintenance by Tenant, or Tenant otherwise
performing all of its obligations under this Lease.
11.2. REMOVAL OBLIGATIONS AND ABANDONMENT OF TENANT'S PROPERTY
On or before the expiration or sooner termination of this Lease, Tenant
shall, in accordance with this Paragraph 11, and at Tenant's sole cost and
expense, remove, and repair any damage caused by such removal, (A) all of
Tenant's Property (as hereinafter defined) and Tenant's signage from the
Premises, the Building and the Project, and (B) all Tenant Improvements and
Alterations required to be removed pursuant to Paragraph 12 below and Section 5
of EXHIBIT B hereto. Any of Tenant's Property not so removed by Tenant as
required herein shall be deemed abandoned and may be stored, removed, and
disposed of by Landlord at Tenant's expense, and Tenant waives all claims
18
against Landlord for any damages resulting from Landlord's retention and
disposition of such property; provided, however, that Tenant shall remain liable
to Landlord for all costs incurred in storing and disposing of such abandoned
property of Tenant. All Tenant Improvements and Alterations except those which
Tenant is required to remove pursuant to Paragraph 12 below hereto shall remain
in the Premises as the property of Landlord.
11.3. INDEMNIFICATION
If the Premises are not surrendered at the end of the Term or sooner
termination of this Lease, and in accordance with the provisions of this
Paragraph 11 and Paragraph 32.9 below, Tenant shall indemnify, defend and hold
Landlord harmless from and against any and all loss or liability resulting from
delay by Tenant in so surrendering the Premises including, without limitation,
any loss or liability resulting from any claim against Landlord made by any
succeeding tenant or prospective tenant founded on or resulting from such delay
and losses to Landlord due to lost opportunities to lease any portion of the
Premises to any such succeeding tenant or prospective tenant, together with, in
each case, reasonable attorneys' fees and costs.
12. ALTERATIONS AND ADDITIONS
12.1. LANDLORD'S CONSENT REQUIRED
Tenant shall not make, or permit to be made, any alteration, addition or
improvement (hereinafter referred to individually as an "ALTERATION" and
collectively as the "ALTERATIONS") to the Premises or any part thereof without
the prior written consent of Landlord, which consent shall not be unreasonably
withheld, conditioned or delayed; provided, however, that Landlord shall have
the right in its sole and absolute discretion to consent or to withhold its
consent to any Alteration which affects the structural portions of the Premises,
the Building or the Project or the Systems serving the Premises, the Building
and/or the Project or any portion thereof.
12.2. ALTERATIONS PERMITTED WITHOUT LANDLORD'S CONSENT; REMOVAL
REQUIREMENTS
Notwithstanding the foregoing, but subject to the conditions set forth
below, Tenant may, without Landlord's consent, make Alterations within the
Premises provided that (i) such Alterations do not affect the structural
portions of the Premises, the Building or the Project or the Systems, and (ii)
the cost, on an individual project basis, of any Alteration or related series of
Alterations is less than $50,000, and all Alterations in the aggregate do not
exceed $500,000 over the Term. The Alterations made by Tenant without the
consent of Landlord in accordance with this Paragraph 12.2 shall be herein
referred to as the "PERMITTED ALTERATIONS."
12.3. ALTERATIONS AT TENANT'S EXPENSE
Any Alteration to the Premises shall be at Tenant's sole cost and
expense, in compliance with all applicable Laws and all requirements requested
by Landlord,
19
including, without limitation, the requirements of any insurer providing
coverage for the Premises or the Project or any part thereof, and in accordance
with plans and specifications approved in writing by Landlord (except for
Permitted Alterations). which approval shall not be unreasonably withheld,
conditioned or delayed. Notwithstanding the foregoing, with respect to
Alterations that may be made without Landlord's prior consent as permitted
above, Landlord agrees that Tenant shall not be required to submit plans and
specifications for prior approval of the Landlord and that Landlord shall not
require prior approval of the installing contractor; provided, however, if
Tenant does not obtain the prior approval of plans and specifications for any
Alteration, then subject to the terms of Paragraph 12.4(b) below, Landlord may,
by notice to Tenant given not later than ninety (90) days prior to the
Expiration Date (except in the event of a termination of this Lease prior to the
scheduled Expiration Date, in which event no advance notice shall be required),
require Tenant, at Tenant's expense, to remove, and repair any damage caused by
removal of, any and all such Alterations. If Tenant does not obtain Landlord's
prior consent as to the installing contractor, Tenant shall be responsible for
maintaining harmonious labor relations with all contractors and service
providers servicing the Premises, Building and/or Project. In addition, with
respect to any Permitted Alterations made without Landlord's prior consent as
permitted above, Tenant agrees to meet with Landlord, at Landlord's request, not
more than once in every calendar year, to discuss any such Permitted Alterations
that have been made to the Premises (each such meeting being herein referred to
as an "ALTERATIONS MEETING"). Tenant shall provide to Landlord within forty five
(45) days after written request as-built plans and specifications for any
Alterations (including, without limitation, any Permitted Alterations) made by
Tenant to the Premises. Notwithstanding anything in this Lease to the contrary,
any approval by Landlord of any drawings, plans or specifications prepared on
behalf of Tenant shall not in any way bind Landlord, create any responsibility
or liability on the part of Landlord for the completeness of the same, their
design sufficiency or compliance with applicable statutes, ordinances or
regulations or constitute a representation or warranty by Landlord as to the
adequacy or sufficiency of such drawings, plans or specifications, or the
improvements to which they relate, but such approval shall merely evidence the
consent of Landlord to such drawings, plans or specifications.
12.4. REQUIREMENTS OF REQUEST FOR APPROVAL
(a) Any Alterations requiring the prior consent of Landlord
shall contain a request that Landlord specify in writing to Tenant those
Alterations that Tenant will be required to remove in accordance with Paragraph
11.1 upon expiration or sooner termination of this Lease. Upon receipt of such
request, Landlord shall make such determination and respond to Tenant within
twenty (20) business days of such request. Landlord's failure to respond within
such time shall be deemed to mean that Tenant shall not be required to remove
such Alterations upon the expiration or sooner termination of this Lease.
(b) In the event Tenant constructs or installs any Permitted
Alterations without the consent of Landlord, then Tenant shall have the right at
the next succeeding Alterations Meeting to request that Landlord specify in
writing whether Tenant will be
20
required to remove all or any portion of such Permitted Alterations upon
expiration or sooner termination of this Lease. Upon receipt of such request,
Landlord shall make such determination and respond to Tenant within twenty (20)
business days of such request. Landlord's failure to respond within such time
shall conclusively be deemed to be an irrevocable waiver of Landlord's right to
demand their removal.
12.5. PERMITS REQUIRED; INSURANCE REQUIRED
12.5.1. PERMITS
Before Alterations may begin, valid building permits or
other permits or licenses required must be furnished to Landlord, and, once the
Alterations begin, Tenant will diligently and continuously pursue their
completion. Landlord may monitor construction of the Alterations, either through
its own employees or through a construction manager retained by Landlord.
12.5.2. INSURANCE
Tenant shall maintain during the course of any
construction (including, without limitation, during the construction of the
Tenant Improvements and any Alterations), at its sole cost and expense,
builders' risk insurance for the amount of the completed value of the
Alterations and Tenant Improvements on an all-risk nonreporting form covering
all improvements under construction, including building materials, and other
insurance in amounts and against such risks as Landlord shall reasonably require
in connection with the Alterations and Tenant Improvements, including without
limitation naming Landlord and Landlord's lender as loss payee under any such
policy. In addition to and without limitation on the generality of the
foregoing, Tenant shall ensure that its contractor(s) procure and maintain in
full force and effect during the course of construction a "broad form"
commercial general liability and property damage policy of insurance naming
Landlord, Tenant and Landlord's lenders as additional insureds. The minimum
limit of coverage of the aforesaid policy shall be in the amount of not less
than Three Million Dollars ($3,000,000.00) for injury or death of one person in
any one accident or occurrence and in the amount of not less than Three Million
Dollars ($3,000,000.00) for injury or death of more than one person in any one
accident or occurrence, and shall contain a severability of interest clause or a
cross liability endorsement. Such insurance shall further insure Landlord and
Tenant against liability for property damage of at least One Million Dollars
($1,000,000.00).
12.6. TITLE TO IMPROVEMENTS; REMOVAL RIGHTS; FINANCING
Except as otherwise expressly stated herein or agreed to in writing
between the parties, the Tenant Improvements actually paid for by Tenant,
including, without limitation, any Tenant Improvements exclusively paid for with
the proceeds of the Tenant Improvement Loan, and all Alterations, including, but
not limited to, heating, lighting, electrical, air conditioning, fixed
partitioning, drapery, wall covering and paneling, built-in cabinet work and
carpeting installations made by Tenant, together with all property
21
that has become an integral part of the Premises or the Building, shall upon
installation become the property of Tenant; provided, however, that title to all
such Tenant Improvements, Alterations and property shall automatically transfer
to Landlord upon the expiration of the Term or the sooner termination of this
Lease without the payment of any consideration or the execution of any transfer
documents. Notwithstanding the foregoing, Tenant shall retain title to and
ownership of Tenant's Property at all times.
12.7. COMPUTER, UTILITY AND TELECOMMUNICATIONS EQUIPMENT
No private telephone systems, utilities and/or other related
computer, utility or telecommunications equipment or lines may be installed
without Landlord's prior written consent, which consent shall not be
unreasonably withheld. If Landlord gives such consent, all equipment must be
installed within the Premises and, unless Landlord, at the time of installation,
notifies Tenant in writing that removal will be required, left in the Premises
and surrendered to Landlord upon the expiration or sooner termination of this
Lease.
12.8. NOTICE AND OPPORTUNITY TO POST NOTICE OF NONRESPONSIBILITY
Tenant agrees not to proceed to make any Alterations,
notwithstanding consent from Landlord to do so, without fifteen (15) days prior
written notice to Landlord, in order that Landlord may post appropriate notices
to avoid any liability to contractors or material suppliers for payment for
Tenant's improvements. Tenant will at all times permit such notices to be posted
and to remain posted until the completion of work.
13. MAINTENANCE AND REPAIRS OF PREMISES
13.1. MAINTENANCE BY TENANT
Subject to the provisions of Paragraph 13.2, 21 and 22 below,
throughout the Term, Tenant shall, at its sole expense, (1) keep and maintain in
good order and condition the Building and the Premises and repair the Building
and the Premises and every part thereof, including interior and exterior glass,
windows, window frames and casements, interior and exterior doors and door
frames and door closers; interior and exterior lighting (including, without
limitation, light bulbs and ballasts), the roof covering; the Systems serving
the Premises and the Building; interior and exterior signage, interior demising
walls and partitions, equipment, interior painting and interior walls and
floors, and the roll-up doors, ramps and dock equipment, including, without
limitation, dock bumpers, dock plates, dock seals, dock levelers and dock lights
located in or on the Premises (excepting only those portions of the Building or
the Project to be maintained by Landlord, as provided in Paragraph 13.2 below),
(2) furnish all expendables, including light bulbs, paper goods and soaps, used
in the Premises, and (3) keep and maintain in good order and condition and
repair and replace all of Tenant's security systems in or about or serving the
Premises. Tenant shall not do nor shall Tenant allow Tenant's Agents to do
anything to cause any damage, deterioration or unsightliness
22
to the Premises, the Building or the Project. Tenant shall perform its
obligations under this Paragraph 13.1 in accordance with maintenance and repair
standards adopted by Landlord from time to time for the Project. Tenant shall
cause to be furnished to Landlord on not less than a quarterly basis maintenance
reports on all Systems and the roof of the Building prepared by a qualified
vendor or consultant, and Tenant shall promptly perform any maintenance tasks
recommended by such reports or otherwise required by Landlord to cause the
Premises and the Systems to comply with Landlord's maintenance and repair
standards.
13.2. MAINTENANCE BY LANDLORD
Subject to the provisions of Paragraphs 13.1, 21 and 22, and
further subject to Tenant's obligation under Paragraph 4 to reimburse Landlord,
in the form of Additional Rent, for Tenant's Proportionate Share(s) of the
Project and the Building, as applicable, of the cost and expense of the
following items, Landlord agrees to repair and maintain the Common Areas in good
order and condition, including, without limitation, the Parking Areas, pavement,
landscaping, sprinkler systems, sidewalks, driveways, curbs, and lighting
systems in the Common Areas. Subject to the provisions of Paragraphs 13.1, 21
and 22, Landlord, at its own cost and expense, agrees to repair and maintain the
following items: the structural portions of the roof (specifically excluding the
roof coverings), the foundation, the footings, the floor slab, and the load
bearing walls and exterior walls of the Building (excluding any glass and any
routine maintenance, including, without limitation, any painting, sealing,
patching and waterproofing of such walls).
13.3. LANDLORD'S RIGHT TO PERFORM TENANT'S OBLIGATIONS
Notwithstanding anything in this Paragraph 13 to the contrary,
Landlord shall have the right to either repair or to require Tenant to repair
any damage to any portion of the Premises, the Building and/or the Project
caused by or created due to any act, omission, negligence or willful misconduct
of Tenant or Tenant's Agents and to restore the Premises, the Building and/or
the Project, as applicable, to the condition existing prior to the occurrence of
such damage; provided, however, that in the event Landlord elects to perform
such repair and restoration work, Tenant shall reimburse Landlord upon demand
for all costs and expenses incurred by Landlord in connection therewith.
Landlord's obligation hereunder to repair and maintain is subject to the
condition precedent that Landlord shall have received written notice of the need
for such repairs and maintenance and a reasonable time to perform such repair
and maintenance. Tenant shall promptly report in writing to Landlord any
defective condition which Landlord is required to repair, and failure to so
report such defects shall make Tenant responsible to Landlord for the costs and
expenses of repairing any Preventable Damage occurring after the date Tenant
obtains actual knowledge of such defective condition and any liability incurred
by Landlord by reason of Tenant's failure to notify Landlord of such defective
condition in a timely manner as provided herein. As used herein, "PREVENTABLE
DAMAGE" means any damage or deterioration which could have been prevented had
Landlord received timely notice of the defective condition. Nothing
23
contained herein shall be deemed or construed to limit Tenant's obligations
under Paragraph 16 below.
13.4. TENANT'S WAIVER OF RIGHTS
Tenant hereby expressly waives all rights to make repairs at the
expense of Landlord or to terminate this Lease, as provided for in California
Civil Code Sections 1941 and 1942, and 1932(1), respectively, and any similar or
successor statute or law in effect or any amendment thereof during the Term.
14. LANDLORD'S INSURANCE
At all times during the Term of this Lease, Landlord shall purchase and
keep in force "all risk" property insurance covering the Base Building
Improvements, the Tenant Improvements and all Alterations made to the Premises
by Tenant in accordance with the terms of Paragraph 12 above, in accordance with
Landlord's customary insurance program for comparable properties. Tenant shall
provide Landlord with such information as may be requested by Landlord or its
insurers concerning the value of the Tenant Improvements or any Alterations.
Tenant acknowledges and agrees that Landlord shall have no obligation to
maintain property insurance covering any alterations, additions or improvements
made to the Premises other than Alterations made in strict accordance with
Paragraph 12 (such other alterations, additions or improvements being herein
referred to as "UNPERMITTED ALTERATIONS"), and Tenant hereby agrees to indemnify
and hold harmless Landlord and Landlord's Agents from and against any and all
Losses (as hereinafter defined) resulting from or arising out of the making of
any such Unpermitted Alterations. Tenant shall, at its sole cost and expense,
comply with any and all reasonable requirements pertaining to the Premises, the
Building and the Project of any insurer necessary for the maintenance of
reasonable property damage and commercial general liability insurance, covering
the Building and the Project. Landlord, at Tenant's cost, may maintain "Loss of
Rents" insurance, insuring that the Rent will be paid in a timely manner to
Landlord for a period of at least twelve (12) months if the Building or any
portion thereof are destroyed or rendered unusable or inaccessible by any cause
insured against under this Lease.
15. TENANT'S INSURANCE
15.1. COMMERCIAL GENERAL LIABILITY
At all times during the Term of this Lease, Tenant shall, at Tenant's
expense, secure and keep in force a Commercial General Liability insurance
policy covering the Premises, insuring Tenant, and naming Landlord and its
lenders as additional insureds, against liability arising out of the ownership,
use, occupancy or maintenance of the Premises. The minimum limit of coverage of
such policy shall be in the amount of not less than Three Million Dollars
($3,000,000.00) for each occurrence combined single limit for bodily injury and
property damage, shall include contractual liability coverage (which shall
include coverage for Tenant's indemnification obligations in this Lease,
24
provided that the amount of such coverage shall not be construed to limit
Tenant's indemnification obligations hereunder), and shall contain severability
of interests and cross liability coverage clauses and/or endorsements. Such
insurance shall be endorsed to be primary and non-contributory to any insurance
Landlord may carry. Landlord may from time to time require reasonable increases
in any such limits if Landlord believes that additional coverage is necessary or
desirable. The limit of any insurance shall not limit the liability of Tenant
hereunder. No policy maintained by Tenant under this Paragraph 15.1 shall
contain a deductible greater than Five Thousand Dollars ($5,000.00). Such
policies of insurance shall be issued as primary policies and not contributing
with or in excess of coverage that Landlord may carry.
15.2. PROPERTY INSURANCE
At all times during the Term of this Lease, Tenant shall, at Tenant's
expense, maintain in full force and effect special form property insurance on
all of its personal property, possessions, furniture, furnishings, trade or
business fixtures, equipment and such other items listed on EXHIBIT H
(collectively, "TENANT'S PROPERTY") located on the Premises. Such special form
property insurance shall be on a full replacement cost basis and shall be
written to cover all risks of direct loss or damage, including, but not be
limited to, theft, water damage and sprinkler leakage. No such policy shall
contain a deductible greater than Five Thousand Dollars ($5,000.00). During the
Term of this Lease the proceeds from any such policy or policies of insurance
shall be used for the repair or replacement of Tenant's Property. Landlord shall
have no interest in the insurance upon Tenant's Property and will sign all
documents reasonably necessary in connection with the settlement of any claim or
loss by Tenant. Landlord will not carry insurance on Tenant's Property.
15.3. WORKER'S COMPENSATION INSURANCE; EMPLOYER'S LIABILITY INSURANCE
At all times during the Term of this Lease, Tenant shall, at Tenant's
expense, maintain in full force and effect worker's compensation insurance with
not less than the minimum limits required by Law, and employer's liability
insurance with a minimum limit of coverage of One Million Dollars ($1,000,000)
per accident.
15.4. BUSINESS INTERRUPTION INSURANCE
Tenant shall, at all times during the Term of this Lease, maintain in
full force and effect loss of income and extra expense insurance in such amounts
as will reimburse Tenant for direct or indirect loss of earnings or extra
expenses attributable to or resulting from all perils commonly insured under a
special form policy of property insurance.
15.5. INSURANCE STANDARDS AND EVIDENCE OF COVERAGE
All insurance required to be carried by Tenant hereunder shall be
maintained with insurance companies authorized to do business in the State of
California for the issuance of the applicable type of insurance coverage and
rated A:XIII or better in
25
Best's Key Rating Guide. Notwithstanding the foregoing, Landlord hereby approves
General Star Indemnity as the carrier of the insurance required under Paragraph
15.1 above, provided that General Star Indemnity shall at all times during the
Term maintain a Best's Key Rating of not less than A++:VIII. Tenant shall
deliver to Landlord certificates of insurance and true and complete copies of
any and all endorsements required herein for all insurance required to be
maintained by Tenant hereunder at the time of execution of this Lease by Tenant.
Tenant shall, at least thirty (30) days prior to expiration of each policy,
furnish Landlord and the other parties named as additional insureds with
certificates of renewal or "binders" thereof. Each certificate shall expressly
provide that such policies shall not be cancelable except after thirty (30) days
prior written notice to Landlord and the other parties named as additional
insureds as required in this Lease (except for cancellation for nonpayment of
premium, in which event cancellation shall not take effect until at least ten
(10) days' notice has been given to Landlord and the parties named as additional
insureds hereunder).
16. INDEMNIFICATION
16.1. OF LANDLORD
Tenant shall indemnify and hold harmless Landlord and Landlord's
advisors, employees. partners, shareholders and directors against and from any
and all claims, liabilities, judgments, costs, demands, causes of action and
expenses (including, without limitation, reasonable attorneys' fees)
(collectively, "LOSSES") arising from (1) the use of the Premises, the Building
or the Project by Tenant or Tenant's Agents, or from any activity done,
permitted or suffered by Tenant or Tenant's Agents in or about the Premises, the
Building or the Project, and (2) any act, neglect, fault, willful misconduct or
omission of Tenant or Tenant's Agents, or from any breach or default in the
terms of this Lease by Tenant or Tenant's Agents, and (3) any action or
proceeding brought on account of any matter in items (1) or (2); provided,
however, that in no event shall Tenant be required to indemnify Landlord against
any claims, demands or losses resulting from any failure of Landlord to observe
any of the terms and conditions of this Lease, including, without limitation,
the covenant set forth in Paragraph 9.2(a) above, in each case to the extent
such failure or breach has persisted for an unreasonable period of time after
written notice of such failure or breach. If any action or proceeding is brought
against Landlord by reason of any such claim, upon notice from Landlord, Tenant
shall defend the same at Tenant's expense by counsel reasonably satisfactory to
Landlord. As a material part of the consideration to Landlord, Tenant hereby
releases Landlord and Landlord's Agents from responsibility for, waives its
entire claim of recovery for and assumes all risk of (i) damage to property or
injury to persons in or about the Premises, the Building or the Project from any
cause whatsoever (except that which is caused by the gross negligence or willful
misconduct of Landlord or Landlord's Agents or by the failure of Landlord to
observe any of the terms and conditions of this Lease, if such failure has
persisted for an unreasonable period of time after written notice of such
failure), or (ii) loss resulting from business interruption or loss of income at
the Premises. The obligations of Tenant under this paragraph 16.1 shall survive
the expiration or earlier termination of this Lease.
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16.2. OF TENANT
Landlord shall indemnify and hold harmless Tenant and Tenant's employees,
partners, shareholders and directors against and from any and all Losses
relating to the Project and arising from (1) the gross negligence or willful
misconduct of Landlord or Landlord's Agents, (2) the failure of Landlord to
observe any of the terms and conditions of this Lease, if such failure has
persisted for an unreasonable period of time after written notice of such
failure, and (3) any action or proceeding brought on account of any matter in
items (1) or (2). If any action or proceeding is brought against Tenant by
reason of any such claim, upon notice from Tenant, Landlord shall defend the
same at Landlord's expense by counsel reasonably satisfactory to Landlord. The
obligations of Landlord under this Paragraph 16.2 shall survive any termination
of this Lease.
16.3. NO IMPAIRMENT OF INSURANCE
The foregoing indemnity shall not relieve any insurance carrier of its
obligations under any policies required to be carried by either party pursuant
to this Lease, to the extent that such policies cover the peril or occurrence
that results in the claim that is subject to the foregoing indemnity.
17. SUBROGATION
Landlord and Tenant hereby mutually waive any claim against the other and
its Agents for any loss or damage to any of their property located on or about
the Premises, the Building or the Project that is caused by or results from
perils covered by the property insurance required to be carried by the
respective parties in accordance with Paragraphs 14 and 15 of this Lease,
whether or not due to the negligence of the other party or its Agents. Because
the foregoing waivers will preclude the assignment of any claim by way of
subrogation to an insurance company or any other person, each party now agrees
to immediately give to its insurer written notice of the terms of these mutual
waivers and shall have their insurance policies endorsed to prevent the
invalidation of the insurance coverage because of these waivers. Nothing in this
Paragraph 17 shall relieve a party of liability to the other for failure to
carry insurance required by this Lease.
18. SIGNS
Tenant shall not place or permit to be placed in, upon, or about the
Premises, the Building or the Project any exterior lights, decorations,
balloons, flags, pennants, banners, advertisements or notices, or erect or
install any signs, windows or door lettering, placards, decorations, or
advertising media of any type which can be viewed from the exterior of the
Premises without obtaining Landlord's prior written consent or without complying
with Landlord's signage program, as the same may be modified by Landlord from
time to time, and with all applicable Laws, and will not conduct, or permit to
be conducted, any sale by auction on the Premises or otherwise on the Project.
Tenant shall remove any sign, advertisement or notice placed on the Premises,
the Building or
27
the Project by Tenant upon the expiration of the Term or sooner termination of
this Lease, and Tenant shall repair any damage or injury to the Premises, the
Building or the Project caused thereby, all at Tenant's expense. If any signs
are not removed, or necessary repairs not made, Landlord shall have the right to
remove the signs and repair any damage or injury to the Premises, the Building
or the Project at Tenant's sole cost and expense.
19. FREE FROM LIENS
Tenant shall keep the Premises, the Building and the Project free from
any liens arising out of any work performed, material furnished or obligations
incurred by or for Tenant in accordance with the provisions of this Paragraph
19. In the event that Tenant shall not, within ten (10) days following the
imposition of any such lien, cause the lien to be released of record by payment
or posting of a proper bond, Landlord shall have in addition to all other
remedies provided herein and by law the right but not the obligation to cause
same to be released by such means as it shall deem proper, including payment of
the claim giving rise to such lien. All such sums paid by Landlord and all
expenses incurred by it in connection therewith (including, without limitation,
reasonable attorneys' fees) shall be payable to Landlord by Tenant upon demand.
Landlord shall have the right at all times to post and keep posted on the
Premises any notices permitted or required by law or that Landlord shall deem
proper for the protection of Landlord, the Premises, the Building and the
Project, from mechanics' and materialmen's liens. Tenant agrees not to proceed
to perform any repairs or construction on the Premises without fifteen (15) days
prior written notice to Landlord in order that Landlord may post appropriate
notices to avoid any liability to contractors or material suppliers for payment
for Tenant's work.
20. ENTRY BY LANDLORD
Tenant shall permit Landlord and Landlord's Agents to enter into and upon
the Premises at all reasonable times upon twenty-four (24) hours' notice (except
in the case of an emergency, in which event no advance notice shall be required)
for the purpose of inspecting the same or showing the Premises to prospective
purchasers, lenders or tenants or to alter, improve, maintain and repair the
Premises or the Building as required or permitted of Landlord under the terms
hereof, or for any other reasonable business purpose, without any rebate of Rent
and without any liability to Tenant for any loss of occupation or quiet
enjoyment of the Premises thereby occasioned; and Tenant shall permit Landlord
to post notices of non-responsibility and ordinary "for sale" or "for lease"
signs. Notwithstanding the foregoing, Landlord shall only enter the Premises for
the purpose of showing the same to prospective tenants during the last ten (10)
months of the Term. No such entry shall be construed to be a forcible or
unlawful entry into, or a detailer of, the Premises, or an eviction of Tenant
from the premises. Tenant's representatives shall have the right to accompany
landlord on any inspection of the Premises, provided that Tenant's
representatives are available at the time of such inspections. Landlord may
temporarily close entrances, doors, corridors, elevators or
28
other facilities without liability to Tenant by reason of such closure in the
case of an emergency and when Landlord otherwise reasonably deems such closure
necessary.
21. DESTRUCTION AND DAMAGE
21.1. DAMAGE COVERED BY EXTENDED COVERAGE INSURANCE
If the Premises are damaged by fire or other perils covered by extended
coverage insurance, Landlord shall, at Landlord's option:
21.1.1. MATERIAL DAMAGE; INSURED LOSS
In the event of material damage to the Premises (which
shall mean damage or destruction of a nature such that all required permits
cannot be reasonably obtained and/or the Premises can not be substantially
repaired and restored to the condition existing immediately prior to such damage
or destruction within three hundred sixty-five (365) days after the date
Landlord obtains actual knowledge of such destruction (the "Casualty Discovery
Date")), Landlord may elect either to commence promptly to repair and restore
the Premises and prosecute the same diligently to completion, in which event
this Lease shall remain in full force and effect; or not to repair or restore
the Premises, in which event this Lease shall terminate. Landlord shall give
Tenant written notice of its intention within sixty (60) days after the Casualty
Discovery Date. If Landlord elects in writing not to restore the Premises, this
Lease shall be deemed to have terminated as of the date of such destruction.
21.1.2. MINOR DAMAGE; INSURED LOSS
In the event of minor damage to the Premises (which shall
mean damage or destruction of a nature such that all required permits can be
reasonably obtained and the Premises may be substantially repaired or restored
to the condition existing immediately prior to such damage or destruction within
three hundred sixty-five (365) days after the Casualty Discovery Date) for
which Landlord will receive insurance proceeds sufficient to cover the cost to
repair and restore such partial destruction, Landlord shall commence and proceed
diligently with the work of repair and restoration, in which event this Lease
shall continue in full force and effect. If the insurance proceeds (plus any
amounts Tenant may elect or is obligated to contribute) are not sufficient to
cover the cost of such repair and restoration, Landlord may elect either to so
repair and restore, in which event this Lease shall continue in full force and
effect, or not to repair or restore, in which event this Lease shall terminate.
In either case, Landlord shall give written notice to Tenant of its intention
within sixty (60) days after the Casualty Discovery Date. If Landlord elects, in
writing, not to restore the Premises, this Lease shall be deemed to have
terminated as of the date of such partial destruction.
21.1.3. CALCULATION OF RESTORATION PERIOD.
Following the occurrence of any casualty event, Landlord shall obtain
from a licensed general contractor selected by Landlord (the "Restoration
Contractor") an
29
estimate of the time required to obtain all permits and to fully repair and
restore the Premises. In the event the Restoration Contractor determines that
the work of repair and restoration shall require more than three hundred
sixty-five (365) days to complete, Tenant shall have the right to discuss such
timing with the Restoration Contractor and, with the approval of Landlord, to
discuss modifications to the scope of work in an effort to reduce the repair and
restoration time to a period of less than three hundred sixty-five days;
provided, however, that in the event of any disagreement between the parties as
to the estimated length of the restoration period or the scope of work required,
the determination of Landlord and the Restoration Contractor shall control.
21.2. UNINSURED LOSS
If the Premises are damaged by any peril not covered by Landlord's
property insurance, and the cost to repair such damage exceeds any amount Tenant
may agree to contribute, Landlord may elect either to commence promptly to
repair and restore the Premises and prosecute the same diligently to completion,
in which event this Lease shall remain in full force and effect; or not to
repair or restore the Premises, in which event this Lease shall terminate.
Landlord shall give Tenant written notice of its intention within sixty (60)
days after the Casualty Discovery Date. If Landlord elects, in writing, not to
restore the Premises, this Lease shall be deemed to have terminated as of the
date on which Tenant surrenders possession of the Premises to Landlord.
21.3. CASUALTY DURING LAST TWELVE MONTHS OF TERM
If fifty percent (50%) or more of the Building is damaged or
destroyed during the last twelve (12) months of the Term (unless Tenant has
remaining extension options and has previously validly exercised such options or
validly exercises such options within ten (10) days after the Casualty Discovery
Date), Landlord shall have the option to terminate this Lease, exercisable by
notice to Tenant within sixty (60) days after the Casualty Discovery Date.
21.4. TENANT'S RIGHT TO TERMINATE LEASE
If the Premises is damaged or destroyed to the extent that the
Premises cannot be substantially repaired or restored by Landlord within three
hundred sixty-five (365) days after the Casualty Discovery Date, Tenant may
terminate this Lease immediately upon notice thereof to Landlord, which notice
shall be given, if at all, not later than fifteen (15) days after Landlord
notifies Tenant of Landlord's estimate of the period of time required to repair
such damage or destruction.
21.5. RENT ABATEMENT
In the event of repair and restoration as herein provided, the
monthly installments of Base Rent and Additional Rent shall be abated
proportionately to the extent Tenant's use of the Premises is impaired during
the period of such repair or restoration, but only to the extent of rental
abatement insurance proceeds actually
30
received by Landlord. The number of parking spaces allocated to Tenant hereunder
shall be reduced on a proportionate basis in the event any of the parking spaces
in the Parking Areas are eliminated as a result of such damage or destruction
affecting such Parking Areas. Except as expressly provided above with respect to
abatement of Base Rent, Tenant shall have no claim against Landlord for, and
hereby releases Landlord and Landlord's Agents from responsibility for and
waives its entire claim of recovery for any cost, loss or expense suffered or
incurred by Tenant as a result of any damage to or destruction of the Premises,
the Building or the Project or the repair or restoration thereof, including,
without limitation, any cost, loss or expense resulting from any loss of use of
the whole or any part of the Premises, the Building or the Project and/or any
inconvenience or annoyance occasioned by such damage, repair or restoration.
21.6. RESTORATION OF BASE BUILDING IMPROVEMENTS AND TENANT IMPROVEMENTS
If Landlord is obligated to or elects to repair or restore as herein
provided, Landlord shall repair or restore only the Base Building Improvements
constructed pursuant to the terms of this Lease, substantially to their
condition existing immediately prior to the occurrence of the damage or
destruction; and Tenant shall promptly repair and restore, at Tenant's expense,
the Tenant Improvements and Tenant's Alterations. Landlord shall make available
to Tenant to pay Restoration Costs (as hereinafter defined) any insurance
proceeds actually collected by Landlord allocable to the Tenant Improvements and
Alterations. Such proceeds shall be disbursed by Landlord in accordance with
customary construction-lending practices and disbursement procedures (including,
without limitation, the creation of a retention). As used herein, "RESTORATION
COSTS" means costs actually incurred by Tenant in repairing and restoring the
Tenant Improvements and any Alterations made by Tenant to the Premises.
21.7. WAIVER
Tenant hereby waives the provisions of California Civil Code Section
1932(2) and Section 1933(4) which permit termination of a lease upon destruction
of the leased premises, and the provisions of any similar law now or hereinafter
in effect, and the provisions of this Paragraph 21 shall govern exclusively in
case of such destruction.
22. CONDEMNATION
(a) If twenty-five percent (25%) or more of the Building or fifty percent
(50%) or more of the Designated Parking Areas (as hereinafter defined) is taken
for any public or quasi-public purpose by any lawful governmental power or
authority, by exercise of the right of appropriation, inverse condemnation,
condemnation or eminent domain, or sold to prevent such taking (each such event
being referred to as a "CONDEMNATION"), Landlord may, at its option, terminate
this Lease as of the date title vests in the condemning party. If twenty-five
percent (25%) or more of the Premises is taken and if the Premises remaining
after such Condemnation and any
31
repairs by Landlord would be untenantable for the conduct of Tenant's business
operations, Tenant shall have the right to terminate this Lease as of the date
title vests in the condemning party. If either party elects to terminate this
Lease as provided herein, such election shall be made by written notice to the
other party given within thirty (30) days after the nature and extent of such
Condemnation have been finally determined. If neither Landlord nor Tenant elects
to terminate this Lease to the extent permitted above, Landlord shall promptly
proceed to restore the Premises, to the extent of any Condemnation award
received by Landlord, to substantially the same condition as existed prior to
such Condemnation, allowing for the reasonable effects of such Condemnation, and
a proportionate abatement shall be made to the Base Rent and Additional Rent
corresponding to the time during which, and to the portion of the floor area of
the Premises (adjusted for any increase thereto resulting from any
reconstruction) of which, Tenant is deprived on account of such Condemnation and
restoration, as reasonably determined by Landlord. Except as expressly provided
in the immediately preceding sentence with respect to abatement of Rent, Tenant
shall have no claim against Landlord for, and hereby releases Landlord and
Landlord's Agents from responsibility for and waives its entire claim of
recovery for any cost, loss or expense suffered or incurred by Tenant as a
result of any Condemnation or the repair or restoration of the Premises, the
Building, the Project or the Parking Areas following such Condemnation,
including, without limitation, any cost, loss or expense resulting from any loss
of use of the whole or any part of the Premises, the Building, the Project or
the parking areas, and/or any inconvenience or annoyance occasioned by such
Condemnation, repair or restoration. The provisions of California Code of Civil
Procedure Section 1265.130, which allows either party to petition the Superior
Court to terminate the Lease in the event of a partial taking of the Premises,
the Building or the Project or the parking areas for the Building or the
Project, and any other applicable law now or hereafter enacted, are hereby
waived by Tenant.
(a) Landlord shall be entitled to any and all compensation, damages,
income, rent, awards, or any interest therein whatsoever which may be paid or
made in connection with any Condemnation, and Tenant shall have no claim against
Landlord for the value of any unexpired term of this Lease or otherwise;
provided, however, that Tenant shall be entitled to receive any award separately
allocated by the condemning authority to Tenant for Tenant's relocation expenses
or the value of Tenant's Property (specifically excluding fixtures, Alterations
and other components of the Premises which under this Lease or by law are or at
the expiration of the Term will become the property of Landlord), provided that
such award does not reduce any award otherwise allocable or payable to Landlord.
23. ASSIGNMENT AND SUBLETTING
23.1. LANDLORD'S CONSENT REQUIRED EXCEPT FOR PERMITTED TRANSFERS
Except as specifically provided for in Paragraph 23.3 below,
Tenant shall not voluntarily or by operation of law, (1) mortgage, pledge,
hypothecate or encumber
32
this Lease or any interest herein, (2) assign or transfer this Lease or any
interest herein, (3) sublease the Premises or any part thereof, or any right or
privilege appurtenant thereto, or (4) allow any other person (the employees and
invitees of Tenant excepted) to occupy or use the Premises, or any portion
thereof, without first obtaining the written consent of Landlord, which consent
shall not be unreasonably withheld, conditioned or delayed provided that Tenant
is not then in Default under this Lease nor is any event then occurring which
with the giving of notice or the passage of time, or both, would constitute
a Default hereunder.
23.2. REQUIREMENTS OF REQUEST FOR CONSENT.
When Tenant requests Landlord's consent to such assignment or subletting,
it shall notify Landlord in writing of the name and address of the proposed
assignee or subtenant and the nature and character of the business of the
proposed assignee or subtenant and shall provide current and prior financial
statements for the proposed assignee or subtenant prepared in accordance with
generally accepted accounting principles consistently applied ("GAAP"). Tenant
shall also provide Landlord with a copy of the proposed sublease or assignment
agreement, including all material terms and conditions thereof, and such
additional information concerning the proposed assignee or subtenant as Landlord
may request. Landlord shall have the option, to be exercised within fifteen (15)
days of receipt of the foregoing in the case of a proposed assignment or
subletting affecting not more than twenty five thousand (25,000) square feet of
the Premises, and within thirty (30) days of receipt of the foregoing in the
case of a proposed assignment or subletting affecting more than twenty five
thousand (25,000) square feet ("LANDLORD'S REVIEW PERIOD"), to (1) consent to
the proposed assignment or sublease, (2) refuse its consent to the proposed
assignment or sublease, providing that such consent shall not be unreasonably
withheld, conditioned or delayed so long as Tenant is not then in Default under
this Lease or the Expansion Lease, if any, nor is any event then occurring which
with the giving of notice or the passage of time, or both, would constitute a
Default hereunder or under the Expansion Lease, or (3) sublease or take an
assignment, as the case may be, from Tenant of the interest in this Lease and/or
the Premises that Tenant proposes to assign or sublease, on the same terms and
conditions as stated in the proposed sublet or assignment agreement.
Notwithstanding the foregoing, in the event Tenant wishes to assign or sublet
all of the Premises for all of the remainder of the Term (except in either event
in connection with a Permitted Transfer), then in addition to the options
specified in the aforesaid clauses (1), (2) and (3), Landlord shall have the
additional right, to be exercised within the aforesaid thirty (30) day period,
to terminate this Lease in its entirety. In the event Landlord elects to
terminate this Lease or sublease or take an assignment from Tenant of the
interest in this Lease and/or the Premises that Tenant proposes to assign or
sublease as provided in the foregoing clauses of this Paragraph 23.2, then
Landlord shall have the additional right to negotiate directly with Tenant's
proposed assignee or subtenant and to enter into a direct lease or occupancy
agreement with such party on such terms as shall be acceptable to Landlord in
its sole and absolute discretion, and Tenant hereby waives any claims against
Landlord related thereto, including, without limitation, any claims for any
compensation or profit related to such lease or occupancy agreement.
33
23.3 CRITERIA TO BE CONSIDERED IN CONNECTION WITH REQUEST FOR CONSENT
Without otherwise limiting the criteria upon which Landlord may withhold
its consent to a proposed assignment or sublease, Landlord shall be entitled to
consider all reasonable criteria including, but not limited to, the following:
(1) whether or not the proposed subtenant or assignee is engaged in a business
which, and the Premises will be used in a manner which, is in keeping with the
then character and nature of all other tenancies in the Project, (2) whether the
use to be made of the Premises by the proposed subtenant or assignee will
conflict with any so-called "exclusive" use then in favor of any other tenant of
the Building, the Project, or the Adjacent Properties, and whether such use
would be prohibited by any other portion of this Lease, including, but not
limited to, any rules and regulations then in effect, or under applicable Laws,
and whether such use imposes an unreasonable load upon the Premises and the
Building and Project services, (3) the business reputation of the proposed
individuals who will be managing and operating the business operations of the
assignee or subtenant, and the long-term financial and competitive business
prospects of the proposed assignee or subtenant, and (4) the creditworthiness
and financial stability of the proposed assignee or subtenant in light of the
responsibilities involved. In any event, Landlord may withhold its consent to
any assignment or sublease if the actual use proposed to be conducted in the
Premises or portion thereof is not a Permitted Use provided for under Paragraph
9 above or a general office use.
23.4. PERMITTED TRANSFERS
Notwithstanding the foregoing, Tenant may, without Landlord's consent,
but upon notice and delivery of evidence documenting such assignment or
subletting, assign or sublet to an Affiliate (as defined below) of the original
Tenant (such assignment or subletting being referred to as a "PERMITTED
TRANSFER"). In addition, a sale or transfer of the capital stock of Tenant shall
be deemed a Permitted Transfer if (1) such sale or transfer occurs in connection
with any bona fide financing or capitalization for the benefit of Tenant or (2)
occurring through a public trade. For purposes of this Lease, "AFFILIATE" shall
mean, as to any Person, any person, firm or corporation (i) which shall be
controlled by, under the control of, or under common control with such person,
(ii) which results from a merger of, reorganization of, or consolidation with,
or (iii) which acquires substantially all of the stock or assets with respect to
the business that is conducted in the Premises. "PERSON" means any natural
person, corporation, firm, association, government, governmental agency or any
other entity, whether acting in any individual, fiduciary or other capacity. For
purposes hereof, "CONTROL" shall mean the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of a
person, firm or corporation, whether through the ownership of voting securities,
by contract or otherwise.
23.5. EXCESS RENT
If Landlord approves an assignment or subletting as herein provided,
Tenant shall pay to Landlord, as Additional Rent, fifty percent (50%) of the
Transfer
34
Profits (as hereinafter defined), as evidenced by written records satisfactory
to Landlord. As used herein, "Transfer Profits" means the difference, if any,
between (1) the Base Rent plus Additional Rent allocable to that part of the
Premises affected by such assignment or sublease pursuant to the provisions of
this Lease, and (2) the rent and any additional rent payable by the assignee or
sublessee to Tenant, less actual leasing commissions and reasonable attorneys'
fees, if any, incurred by Tenant in connection with such assignment or sublease,
and actual tenant improvement costs paid by Tenant up to an aggregate of five
dollars ($5.00) per square foot of space subject to the assignment or sublease
transaction. The assignment or sublease agreement, as the case may be, after
approval by Landlord, shall not be amended without Landlord's prior written
consent, which consent shall not be unreasonably withheld, conditioned or
delayed, shall contain an express assumption by the assignee or subtenant of
Tenant's obligations under this Lease and shall contain a provision directing
the assignee or subtenant to pay the rent and other sums due thereunder
directly to Landlord upon receiving written notice from Landlord that Tenant is
in default under this Lease with respect to the payment of Rent. In the event
that, notwithstanding the giving of such notice, Tenant collects any rent or
other sums from the assignee or subtenant, then Tenant shall hold such sums in
trust for the benefit of Landlord and shall immediately forward the same to
Landlord. Landlord's collection of such rent and other sums shall not constitute
an acceptance by Landlord of attornment by such assignee or subtenant. A consent
to one assignment, subletting, occupation or use shall not be deemed to be a
consent to any other or subsequent assignment, subletting, occupation or use,
and consent to any assignment or subletting shall in no way relieve Tenant of
any liability under this Lease. Any assignment or subletting without Landlord's
consent shall be void, and shall, at the option of Landlord, constitute a
Default under this Lease.
23.6. NO RELEASE OF TENANT
Notwithstanding any assignment or subletting, including, without
limitation, a Permitted Transfer, Tenant shall at all times remain fully
responsible and liable for the payment of the Rent and for compliance with all
of Tenant's other obligations under this Lease (regardless of whether Landlord's
approval has been obtained for any such assignment or subletting).
23.7 PAYMENT OF LANDLORD'S FEES
Tenant shall pay Landlord's reasonable fees (including, without
limitation, the fees of Landlord's counsel, not to exceed $1,000.00 per
transaction), incurred in connection with Landlord's review and processing of
documents regarding any proposed assignment or sublease.
23.8. NO CONSENT TO FURTHER ASSIGNMENT
Notwithstanding anything in this Lease to the contrary, in the event
Landlord consents to an assignment or subletting by Tenant in accordance with
the terms of this Paragraph 23 (specifically excluding any Permitted Transfer),
Tenant's assignee or
35
subtenant shall have no right to further assign this Lease or any interest
therein or thereunder or to further sublease all or any portion of the Premises.
23.9. CONSTRAINTS REASONABLE
Tenant acknowledges and agrees that the restrictions, conditions and
limitations imposed by this Paragraph 23 on Tenant's ability to assign or
transfer this Lease or any interest herein, to sublet the Premises or any part
thereof, to transfer or assign any right or privilege appurtenant to the
Premises, or to allow any other person to occupy or use the Premises or any
portion thereof, are, for the purposes of California Civil Code Section 1951.4,
as amended from time to time, and for all other purposes, reasonable at the time
that the Lease was entered into, and shall be deemed to be reasonable at the
time that Tenant seeks to assign or transfer this Lease or any interest herein,
to sublet the Premises or any part thereof, to transfer or assign any right or
privilege appurtenant to the Premises, or to allow any other person to occupy or
use the Premises or any portion thereof.
24. TENANT'S DEFAULT
The occurrence of any one of the following events shall constitute an
event of default on the part of Tenant ("DEFAULT"):
(a) The vacation of the Premises for a consecutive period of sixty (60)
days or more, without (i) the intention of retaking possession or occupancy, and
(ii) providing for the security of the Building, or the abandonment of the
Premises by Tenant or any other vacation which would cause any insurance policy
to be invalidated or otherwise lapse;
(b) Failure to pay any installment of Rent or any other monies due and
payable hereunder within five (5) days after the date the same are due;
(c) A general assignment by Tenant for the benefit of creditors;
(d) The filing of a voluntary petition in bankruptcy by Tenant, the
filing by Tenant of a voluntary petition for an arrangement, the filing by or
against Tenant of a petition, voluntary or involuntary, for reorganization, or
the filing of an involuntary petition by the creditors of Tenant, said
involuntary petition remaining undischarged for a period of sixty (60) days;
(e) Receivership, attachment, or other judicial seizure of substantially
all of Tenant's assets on the Premises, such attachment or other seizure
remaining undismissed or undischarged for a period of sixty (60) days after the
levy thereof;
(f) Death or disability of Tenant, if Tenant is a natural person., or the
failure by Tenant to maintain its legal existence, if Tenant is a corporation,
partnership, limited liability company, trust or other legal entity;
36
(g) Failure of Tenant to execute and deliver to Landlord any estoppel
certificate, subordination agreement, or lease amendment in the time periods and
manner required by Paragraphs 30 or 31 or 42;
(h) An assignment or sublease, or attempted assignment or sublease, of
this Lease or the Premises by Tenant contrary to the provisions of Paragraph
23,
unless such assignment or sublease is expressly conditioned upon Tenant having
received Landlord's consent thereto;
(i) Failure of Tenant to deposit the Letter of Credit with Landlord when
required under Paragraph 7, and/or failure of Tenant to restore the Letter of
Credit to the amount and within the time period provided in Paragraph 7;
(j) Failure in the performance of any of Tenant's covenants, agreements
or obligations hereunder (except those failures specified as events of Default
in any other subparagraphs of this Paragraph 24, which shall be governed by such
other subparagraphs), which failure continues for thirty (30) days after written
notice thereof from Landlord to Tenant, provided that, if Tenant has exercised
reasonable diligence to cure such failure and such failure cannot be cured
within such thirty (30) day period despite reasonable diligence, Tenant shall
not be in default under this subparagraph so long as Tenant thereafter
diligently and continuously prosecutes the cure to completion;
(k) Chronic delinquency by Tenant in the payment of Rent, or any other
periodic payments required to be paid by Tenant under this Lease. "CHRONIC
DELINQUENCY" shall mean failure by Tenant to pay Rent, or any other periodic
payments required to be paid by Tenant under this Lease, when due (i) for any
three (3) months (consecutive or nonconsecutive) during any period of twelve
(12) months or (ii) for any twelve (12) months (consecutive or nonconsecutive)
during the Term. In the event of a Chronic Delinquency, in addition to
Landlord's other remedies for Default provided in this Lease, at Landlord's
option, Landlord shall have the right to require that Rent be paid by Tenant
quarterly, in advance;
(l) Chronic overuse by Tenant or Tenant's Agents of the number of
undesignated parking spaces set forth in the Basic Lease Information. "CHRONIC
OVERUSE" shall mean use by Tenant or Tenant's Agents of a number of parking
spaces greater than the number of parking spaces set forth in the Basic Lease
Information more than three (3) times during any twelve (12) month period;
(m) Any insurance required to be maintained by Tenant pursuant to this
Lease shall be canceled or terminated or shall expire or be reduced or
materially changed, except as permitted in this Lease, and shall not have been
replaced with substitute insurance satisfying the requirements of this Lease
within five (5) business days of Tenant's receipt of notice of such termination,
reduction or change;
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(n) Any failure by Tenant to discharge any lien or encumbrance placed on the
Project or any part thereof in violation of this Lease within ten (10) days
after the date such lien or encumbrance is filed or recorded against the Project
or any part thereof; and
(o) The occurrence of a Default under an Expansion Lease, if any.
Tenant agrees that any notice given by Landlord pursuant to Paragraph
24(j) above shall satisfy the requirements for notice under California Code of
Civil Procedure Section 1161. and Landlord shall not be required to give any
additional notice in order to be entitled to commence an unlawful detainer
proceeding.
25. LANDLORD'S REMEDIES
25.1. TERMINATION
In the event of any Default by Tenant, then in addition to any other
remedies available to Landlord at law or in equity and under this Lease,
Landlord shall have the immediate option to terminate this Lease and all rights
of Tenant hereunder by giving written notice of such intention to terminate. In
the event that Landlord shall elect to so terminate this Lease then Landlord may
recover from Tenant:
(1) the worth at the time of award of any unpaid Rent and any
other sums due and payable which have been earned at the time of such
termination; plus
(2) the worth at the time of award of the amount by which the
unpaid Rent and any other sums due and payable which would have been earned
after termination until the time of award exceeds the amount of such rental loss
Tenant proves could have been reasonably avoided; plus
(3) the worth at the time of award of the amount by which the
unpaid Rent and any other sums due and payable for the balance of the term of
this Lease after the time of award exceeds the amount of such rental loss that
Tenant proves could be reasonably avoided; plus
(4) any other amount necessary to compensate Landlord for all the
detriment proximately caused by Tenant's failure to perform its obligations
under this Lease or which in the ordinary course would be likely to result
therefrom, including, without limitation, (A) any costs or expenses incurred by
Landlord (1) in retaking possession of the Premises; (2) in maintaining,
repairing, preserving, restoring, replacing, cleaning, altering, remodeling or
rehabilitating the Premises or any affected portions of the Building or the
Project, including such actions undertaken in connection with the reletting or
attempted reletting of the Premises to a new tenant or tenants, (3) for leasing
commissions, advertising costs and other expenses of reletting the Premises; or
(4) in carrying the Premises, including taxes, insurance premiums, utilities and
security precautions; (B) any unearned brokerage commissions paid in connection
with this Lease; (C) reimbursement of any previously waived or abated Base Rent
or Additional
38
Rent or any free rent or reduced rental rate granted hereunder; and (D) any
concession made or paid by Landlord to the benefit of Tenant in consideration of
this Lease including, but not limited to, any moving allowances, contributions,
payments or loans by Landlord for tenant improvements or build-out allowances
(including without limitation, any unamortized portion of the Tenant Improvement
Allowance (such Tenant Improvement Allowance to be amortized over the Term in
the manner reasonably determined by Landlord), if any, and any outstanding
balance (principal and accrued interest) of the Tenant Improvement Loan, if
any), or assumptions by Landlord of any of Tenant's previous lease obligations;
plus
(5) such reasonable attorneys' fees incurred by Landlord as a
result of a Default, and costs in the event suit is filed by Landlord to enforce
such remedy; and plus
(6) at Landlord's election, such other amounts in addition to or
in lieu of the foregoing as may be permitted from time to time by applicable
law.
Notwithstanding the provisions of Paragraph 25.1(4) above, in the event
of a Default by Tenant occurring on or after the commencement of the seventh
(7th) Lease Year. Landlord shall be entitled to recover from Tenant the expenses
described in clauses (B), (C) and (D) of said Paragraph 25.1(4) only to the
extent that Landlord does not (i) recover from Tenant the unpaid Rent described
in Paragraphs 25.1(1) through 25.1(3) or (ii) enter into a lease agreement
covering the Premises with a replacement tenant with a scheduled expiration date
not earlier than the Expiration Date of this Lease, and pursuant to which the
Replacement Tenant agrees to pay Rent for the Premises equal to or greater than
the Rent (including, without limitation, installments of principal and interest
on the Tenant Improvement Loan) otherwise due hereunder during such period.
As used in subparagraphs (1) and (2) above, the "WORTH AT THE TIME OF
AWARD" is computed by allowing interest at an annual rate equal to twelve
percent (12%) per annum or the maximum rate permitted by law, whichever is less.
As used in subparagraph (3) above, the "WORTH AT THE TIME OF AWARD" is computed
by discounting such amount at the discount rate of the Federal Reserve Bank of
San Francisco at the time of award, plus one percent (1%). Tenant waives
redemption or relief from forfeiture under California Code of Civil Procedure
Sections 1174 and 1179, or under any other pertinent present or future Law, in
the event Tenant is evicted or Landlord takes possession of the Premises by
reason of any Default of Tenant hereunder.
25.2. CONTINUATION OF LEASE
In the event of any Default by Tenant, then in addition to any other
remedies available to Landlord at law or in equity and under this Lease,
Landlord shall have the remedy described in California Civil Code Section 1951.4
(Landlord may continue this Lease in effect after Tenant's Default and
abandonment and recover Rent as it becomes due, provided Tenant has the right to
sublet or assign, subject only to reasonable limitations). In addition, Landlord
shall not be liable in any way whatsoever
39
for its failure or refusal to relet the Premises; provided, however, that the
foregoing provision shall not be deemed to relieve Landlord of any duty under
applicable law to mitigate Tenant's damages in the event Landlord elects to seek
damages for Tenant's breach or default. For purposes of this Paragraph 25.2, the
following acts by Landlord will not constitute the termination of Tenant's right
to possession of the Premises:
(1) Acts of maintenance or preservation or efforts to relet the
Premises, including, but not limited to, alterations, remodeling, redecorating,
repairs, replacements and/or painting as Landlord shall consider advisable for
the purpose of reletting the Premises or any part thereof; or
(2) The appointment of a receiver upon the initiative of Landlord
to protect Landlord's interest under this Lease or in the Premises.
25.3. RE-ENTRY
In the event of any Default by Tenant, Landlord shall also have the
right, with or without terminating this Lease, in compliance with applicable
law, to re-enter the Premises and remove all persons and property from the
Premises; such property may be removed and stored in a public warehouse or
elsewhere at the cost of and for the account of Tenant.
25.4. RELETTING
In the event of the abandonment of the Premises by Tenant or in the event
that Landlord shall elect to re-enter as provided in Paragraph 25.3 or shall
take possession of the Premises pursuant to legal proceeding or pursuant to any
notice provided by law, then if Landlord does not elect to terminate this Lease
as provided in Paragraph 25.1, Landlord may from time to time, without
terminating this Lease, relet the Premises or any part thereof for such term or
terms and at such rental or rentals and upon such other terms and conditions as
Landlord in its sole discretion may deem advisable with the right to make
alterations and repairs to the Premises in Landlord's sole discretion. In the
event that Landlord shall elect to so relet, then rentals received by Landlord
from such reletting shall be applied in the following order: (1) to reasonable
attorneys' fees incurred by Landlord as a result of a Default and costs in the
event suit is filed by Landlord to enforce such remedies; (2) to the payment of
any indebtedness, other than Rent due hereunder from Tenant to Landlord; (3) to
the payment of any costs of such reletting; (4) to the payment of the costs of
any alterations and repairs to the Premises; (5) to the payment of Rent due and
unpaid hereunder; and (6) the residue, if any, shall be held by Landlord and
applied in payment of future Rent and other sums payable by Tenant hereunder as
the same may become due and payable hereunder. Should that portion of such
rentals received from such reletting during any month, which is applied to the
payment of Rent hereunder, be less than the Rent payable during the month by
Tenant hereunder, then Tenant shall pay such deficiency to Landlord. Such
deficiency shall be calculated and paid monthly. Tenant shall also pay to
Landlord, as soon as ascertained, any costs and
40
expenses incurred by Landlord in such reletting or in making such alterations
and repairs not covered by the rentals received from such reletting.
25.5. TERMINATION
No re-entry or taking of possession of the Premises by Landlord
pursuant to this Paragraph 25 shall be construed as an election to terminate
this Lease unless a written notice of such intention is given to Tenant or
unless the termination thereof is decreed by a court of competent jurisdiction.
Notwithstanding any reletting without termination by Landlord because of any
Default by Tenant, Landlord may at any time after such reletting elect to
terminate this Lease for any such Default.
25.6. CUMULATIVE REMEDIES
The remedies herein provided are not exclusive and Landlord shall
have any and all other remedies provided herein or by law or in equity.
25.7. NO SURRENDER
No act or conduct of Landlord, whether consisting of the
acceptance of the keys to the Premises, or otherwise, shall be deemed to be or
constitute an acceptance of the surrender of the Premises by Tenant prior to the
expiration of the Term, and such acceptance by Landlord of surrender by Tenant
shall only flow from and must be evidenced by a written acknowledgment of
acceptance of surrender signed by Landlord. The surrender of this Lease by
Tenant, voluntarily or otherwise, shall not work a merger unless Landlord elects
in writing that such merger take place, but shall operate as an assignment to
Landlord of any and all existing subleases, or Landlord may, at its option,
elect in writing to treat such surrender as a merger terminating Tenant's estate
under this Lease, and thereupon Landlord may terminate any or all such subleases
by notifying the sublessee of its election so to do within five (5) days after
such surrender.
26. LANDLORD'S RIGHT TO PERFORM TENANT'S OBLIGATIONS
26.1. LANDLORD'S RIGHT TO PERFORM
Without limiting the rights and remedies of Landlord contained in
Paragraph 25 above, if Tenant shall be in Default in the performance of any of
the terms, provisions, covenants or conditions to be performed or complied with
by Tenant pursuant to this Lease, then Landlord may at Landlord's option,
without any obligation to do so, and without further notice to Tenant perform
any such term, provision, covenant, or condition, or make any such payment and
Landlord by reason of so doing shall not be liable or responsible for any loss
or damage thereby sustained by Tenant or anyone holding under or through Tenant
or any of Tenant's Agents, unless caused by Landlord's gross negligence or
willful misconduct.
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26.2. IN EMERGENCIES
Without limiting the rights of Landlord under Paragraph 25 above,
Landlord shall have the right at Landlord's option, without any obligation to do
so, to perform any of Tenant's covenants or obligations under this Lease without
notice to Tenant in the case of an emergency, as determined by Landlord in its
good faith and absolute judgment, or if Landlord otherwise determines in its
reasonable discretion that such performance is necessary or desirable for the
preservation of the rights and interests or safety of other tenants of the
Building or the Project.
26.3. TENANT'S OBLIGATION TO REIMBURSE LANDLORD
If Landlord performs any of Tenant's obligations hereunder in
accordance with this Paragraph 26, the full amount of the cost and expense
incurred or the payment so made or the amount of the loss so sustained shall
immediately be owing by Tenant to Landlord, and Tenant shall promptly pay to
Landlord upon demand, as Additional Rent, the full amount thereof with interest
thereon from the date of payment by Landlord at the lower of (1) twelve percent
(12%) per annum, or (2) the highest rate permitted by applicable law.
27. ATTORNEYS' FEES
27.1. PREVAILING PARTY ENTITLED TO FEES
If either party hereto fails to perform any of its obligations
under this Lease or if any dispute arises between the parties hereto concerning
the meaning or interpretation of any provision of this Lease, then the
defaulting party or the party not prevailing in such dispute, as the case may
be, shall pay any and all costs and expenses incurred by the other party on
account of such default and/or in enforcing or establishing its rights
hereunder, including, without limitation, court costs and reasonable attorneys'
fees and disbursements. Any such attorneys' fees and other expenses incurred by
either party in enforcing a judgment in its favor under this Lease shall be
recoverable separately from and in addition to any other amount included in such
judgment, and such attorneys' fees obligation is intended to be severable from
the other provisions of this Lease and to survive and not be merged into any
such judgment.
27.2. COSTS OF COLLECTION
Without limiting the generality of Paragraph 27.1 above, if
Landlord utilizes the services of an attorney for the purpose of collecting any
Rent due and unpaid by Tenant or in connection with any other breach of this
Lease by Tenant, Tenant agrees to pay Landlord reasonable attorneys' fees as
determined by Landlord for such services, regardless of the fact that no legal
action may be commenced or filed by Landlord.
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28. TAXES
Tenant shall be liable for and shall pay, prior to delinquency, all taxes
levied against Tenant's Property. If any Alteration or Tenant Improvement
installed by Tenant pursuant to Paragraph 12 or any of Tenant's Property is
assessed and taxed with the Project or Building, Tenant shall pay such taxes to
Landlord, in an amount reasonably determined by Landlord if such taxes are not
separately stated in the applicable tax bill, within ten (10) days after
delivery to Tenant of a statement therefor.
29. EFFECT OF CONVEYANCE
The term "LANDLORD" as used in this Lease means, from time to time, the
then current owner of the Building or the Project containing the Premises, so
that, in the event of any sale of the Building or the Project, Landlord shall be
and hereby is entirely freed and relieved of all covenants and obligations of
Landlord arising hereunder from and after the date of such transfer, and it
shall be deemed and construed, without further agreement between the parties and
the purchaser at any such sale, that the purchaser of the Building or the
Project has assumed and agreed to carry out any and all covenants and
obligations of Landlord hereunder.
30. TENANT'S ESTOPPEL CERTIFICATE
From time to time, upon written request of Landlord, Tenant shall
execute, acknowledge and deliver to Landlord or its designee, a written
certificate stating (a) the date this Lease was executed, the Commencement Date
of the Term and the date the Term expires; (b) the date Tenant entered into
occupancy of the Premises; (c) the amount of Rent and the date to which such
Rent has been paid; (d) that this Lease is in full force and effect and has not
been assigned, modified, supplemented or amended in any way (or, if assigned,
modified, supplemented or amended, specifying the date and terms of any
agreement so affecting this Lease); (e) that this Lease represents the entire
agreement between the parties with respect to Tenant's right to use and occupy
the Premises (or specifying such other agreements, if any); (f) that all
obligations under this Lease to be performed by Landlord as of the date of
such certificate have been satisfied (or specifying those as to which Tenant
claims that Landlord has yet to perform); (g) that all required contributions by
Landlord to Tenant on account of Tenant's improvements have been received (or
stating exceptions thereto); (h) that on such date there exist no defenses or
offsets that Tenant has against the enforcement of this Lease by Landlord (or
stating exceptions thereto); (i) that no Rent or other sum payable by Tenant
hereunder has been paid more than one (1) month in advance (or stating
exceptions thereto); (j) that a currently valid Letter of Credit has been
deposited with Landlord, stating the original amount thereof and any increases
or decreases thereto; and (k) any other matters evidencing the status of this
Lease that may be required either by a lender making a loan to Landlord to be
secured by a deed of trust covering the Building or the Project or by a
purchaser of the Building or the Project. Any such certificate delivered
pursuant to this Paragraph 30 may be relied upon by a prospective purchaser of
Landlord's interest or a mortgagee of Landlord's interest or assignee of any
mortgage upon Landlord's interest in
43
the Premises. If Tenant shall fail to provide such certificate within ten (10)
days of receipt by Tenant of a written request by Landlord as herein provided,
such failure shall at Landlord's election, constitute a Default under this
Lease, and Tenant shall be deemed to have given such certificate as above
provided without modification and shall be deemed to have admitted the accuracy
of any information supplied by Landlord to a prospective purchaser or mortgagee.
31. SUBORDINATION
Landlord shall have the right to cause this Lease to be and remain
subject and subordinate to any and all mortgages, deeds of trust and ground
leases, if any ("ENCUMBRANCES") that are now or may hereafter be executed
covering the Premises, or any renewals, modifications, consolidations,
replacements or extensions thereof, for the full amount of all advances made or
to be made thereunder and without regard to the time or character of such
advances, together with interest thereon and subject to all the terms and
provisions thereof, provided only, and as an express condition precedent to any
such subordination of this Lease to an Encumbrance hereafter executed covering
the Premises, the holder of such Encumbrance ("HOLDER") shall agree to recognize
Tenant's rights under this Lease upon the foreclosure or termination, as
applicable, of such Encumbrance as long as Tenant shall pay the Rent and observe
and perform all the provisions of this Lease to be observed and performed by
Tenant. Within ten (10) days after Landlord's written request, Tenant shall
execute, acknowledge and deliver any and all reasonable documents required by
Landlord or the Holder to effectuate such subordination, provided that,
concurrently with the execution of such subordination documents, the Holder
shall execute a nondisturbance agreement in favor of Tenant consistent with the
terms of this Paragraph 31. If Tenant fails to do so, such failure shall
constitute a Default by Tenant under this Lease. Notwithstanding anything to the
contrary set forth in this Paragraph 31, Tenant hereby attorns and agrees to
attorn to any person or entity purchasing or otherwise acquiring the Premises at
any sale or other proceeding or pursuant to the exercise of any other rights,
powers or remedies under such Encumbrance.
32. ENVIRONMENTAL COVENANTS
32.1. DISCLOSURE CERTIFICATE
Prior to executing this Lease, Tenant has completed, executed and
delivered to Landlord a Hazardous Materials Disclosure Certificate ("INITIAL
DISCLOSURE CERTIFICATE"), a fully completed copy of which is attached hereto as
EXHIBIT G and incorporated herein by this reference. Tenant covenants,
represents and warrants to Landlord that the information on the Initial
Disclosure Certificate is, to the best of Tenant's knowledge, true and correct
and accurately describes the Hazardous Materials which will be treated, used or
stored on or about the Premises by Tenant or Tenant's Agents.
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32.2. TENANT'S OBLIGATION TO UPDATE DISCLOSURE CERTIFICATE
Tenant shall, on a semi-annual basis, complete, execute and
deliver to Landlord an updated Disclosure Certificate (each, an "UPDATED
DISCLOSURE CERTIFICATE") describing Tenant's then current and proposed future
uses of Hazardous Materials on or about the Premises, which Updated Disclosure
Certificates shall be in the same format as that which is set forth in EXHIBIT G
or in such updated format as Landlord may require from time to time. Landlord
shall have the right to approve or disapprove such new or additional Hazardous
Materials in its sole and absolute discretion. Tenant shall make no use of
Hazardous Materials on or about the Premises except as described in the Initial
Disclosure Certificate or as otherwise approved by Landlord in writing in
accordance with this Paragraph 32.2.
32.3. DEFINITION OF HAZARDOUS MATERIALS
As used in this Lease, the term "HAZARDOUS MATERIALS" shall mean
and include any substance that is or contains (1) any "hazardous substance" as
now or hereafter defined in Section 101(14) of the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended ("CERCLA") (42
U.S.C. Section 9601 ET SEQ.) or any regulations promulgated under CERCLA; (2)
any "hazardous waste" as now or hereafter defined in the Resource Conservation
and Recovery Act, as amended ("RCRA") (42 U.S.C. Section 6901 ET SEQ.) or any
regulations promulgated under RCRA; (3) any substance now or hereafter regulated
by the Toxic Substances Control Act, as amended ("TSCA") (15 U.S.C. Section 2601
ET SEQ.) or any regulations promulgated under TSCA; (4) petroleum, petroleum
by-products, gasoline, diesel fuel, or other petroleum hydrocarbons; (5)
asbestos and asbestos-containing material, in any form, whether friable or
non-friable; (6) polychlorinated biphenyls; (7) lead and lead-containing
materials; or (8) any additional substance, material or waste (A) the presence
of which on or about the Premises (i) requires reporting, investigation or
remediation under any Environmental Laws (as hereinafter defined), (ii) causes
or threatens to cause a nuisance on the Premises or any adjacent area or
property or poses or threatens to pose a hazard to the health or safety of
persons on the Premises or any adjacent area or property, or (iii) which, if it
emanated or migrated from the Premises, could constitute a trespass, or (B)
which is now or is hereafter classified or considered to be hazardous or toxic
under any Environmental Laws. Landlord hereby notifies Tenant in accordance with
California Health & Safety Code Section 25359.7 that in 1981-82, the Project was
the subject of a state-supervised cleanup of hazardous waste disposed of on the
site by prior occupants. As part of the cleanup approved by the applicable
agencies, some soils containing heavy metals were left in place, covered by
clean fill. These soils are managed in accordance with the requirements of the
applicable agencies and a Declaration of Covenants, Conditions and Restrictions
imposed by Homart Development Co.
32.4. DEFINITION OF ENVIRONMENTAL LAWS
As used in this Lease, the term "ENVIRONMENTAL LAWS" shall mean
and include (1) CERCLA, RCRA and TSCA; and (2) any other federal, state or local
laws,
45
ordinances, statutes, codes, rules, regulations, orders or decrees now or
hereinafter in effect relating to (A) pollution, (B) the protection or
regulation of human health, natural resources or the environment, (C) the
treatment, storage or disposal of Hazardous Materials, or (D) the emission,
discharge, release or threatened release of Hazardous Materials into the
environment.
32.5. TENANT'S USE OF HAZARDOUS MATERIALS
Tenant agrees that during its use and occupancy of the Premises it
will (1) not (A) introduce any Hazardous Materials on or about the Premises
except in a manner and quantity necessary for the ordinary performance of
Tenant's business or (B) release, discharge or dispose of any Hazardous
Materials on, in, at, under, or emanating from, the Premises, the Building or
the Project; (2) comply with all Environmental Laws relating to Tenant's use of
Hazardous Materials in, on or about the Premises and not engage in or permit
Tenant's Agents to engage in any activity in, on or about the Premises in
violation of any Environmental Laws; and (3) immediately notify Landlord of (A)
any inquiry, test, investigation or enforcement proceeding by any governmental
agency or authority against Tenant, Landlord or the Premises, Building or
Project relating to any Hazardous Materials or under any Environmental Laws or
(B) the occurrence of any event or existence of any condition that would cause a
breach of any of the covenants set forth in this Paragraph 32.
32.6. TENANT'S REMEDIATION OBLIGATIONS
If Tenant's use of Hazardous Materials on or about the Premises
results in a release, discharge or disposal of Hazardous Materials on, in, at,
under, or emanating from, the Premises, the Building or the Project, Tenant
agrees to investigate, clean up, remove or remediate such Hazardous Materials in
full compliance with (1) the requirements of (A) all Environmental Laws and (B)
any governmental agency or authority responsible for the enforcement of any
Environmental Laws; and (2) any additional requirements of Landlord that are
reasonably necessary to protect the value of the Premises, the Building or the
Project.
32.7. LANDLORD'S INSPECTIONS
Upon twenty-four (24) hours' notice to Tenant (except in the case
of an emergency, in which event no advance notice shall be required), Landlord
may inspect the Premises and surrounding areas for the purpose of determining
whether there exists on or about the Premises any Hazardous Material or other
condition or activity that is in violation of the requirements of this Lease or
of any Environmental Laws. Such inspections may include, but are not limited to,
entering upon the property adjacent to or surrounding the Premises with drill
rigs or other machinery for the purpose of obtaining laboratory samples.
Landlord shall not be limited in the number of such inspections during the Term
of this Lease. In the event (1) such inspections reveal the presence of any such
Hazardous Material or other condition or activity caused by Tenant or its Agents
in violation of the requirements of this Lease or of any Environmental Laws, or
46
(2) Tenant or its Agents contribute or knowingly consent to the
importation of any Hazardous Materials in, on, under, through or about the
Premises, the Building or the Project or, through their actions, exacerbate the
condition of or the conditions caused by any Hazardous Materials in, on, under,
through or about the Premises, the Building or the Project, Tenant shall
reimburse Landlord for the cost of such inspections within ten (10) days of
receipt of a written statement therefor. Tenant will supply to Landlord such
historical and operational information regarding the Premises and surrounding
areas as may be reasonably requested to facilitate any such inspection and will
make available for meetings appropriate personnel having knowledge of such
matters. In the event Tenant vacates the Premises prior to the Expiration Date,
Tenant shall give Landlord at least sixty (60) days' prior notice of its
intention to vacate the Premises so that Landlord will have an opportunity to
perform such an inspection prior to such vacation. The right granted to Landlord
herein to perform inspections shall not create a duty on Landlord's part to
inspect the Premises, or liability on the part of Landlord for Tenant's use,
storage, treatment or disposal of Hazardous Materials, it being understood that
Tenant shall be solely responsible for all liability in connection therewith.
32.8. LANDLORD'S RIGHT TO REMEDIATE
Landlord shall have the right, but not the obligation, prior or
subsequent to a Default, without in any way limiting Landlord's other rights and
remedies under this Lease, to enter upon the Premises, or to take such other
actions as it deems necessary or advisable, to investigate, clean up, remove or
remediate any Hazardous Materials or contamination by Hazardous Materials
present on, in, at, under, or emanating from, the Premises, the Building or the
Project in violation of Tenant's obligations under this Lease or under any
Environmental Laws. Notwithstanding any other provision of this Lease, Landlord
shall also have the right, at its election, in its own name or as Tenant's
agent, to negotiate, defend, approve and appeal, at Tenant's expense, any action
taken or order issued by any governmental agency or authority with regard to any
such Hazardous Materials or contamination by Hazardous Materials. All reasonable
costs and expenses paid or incurred by Landlord in the exercise of the rights
set forth in this Paragraph 32 shall be payable by Tenant upon demand.
32.9. CONDITION OF PREMISES UPON EXPIRATION OR TERMINATION
Tenant shall surrender the Premises to Landlord upon the
expiration or earlier termination of this Lease free of debris, waste or
Hazardous Materials placed on, about or near the Premises by Tenant or Tenant's
Agents, and in a condition which complies with (i) all Environmental Laws, and
(ii) any additional requirements of Landlord that are reasonably necessary to
protect the value of the Premises, the Building or the Project, including,
without limitation, the obtaining of any closure permits or other governmental
permits or approvals related to Tenant's use of Hazardous Materials in or about
the Premises. Tenant's obligations and liabilities pursuant to the provisions
of this Paragraph 32 shall survive the expiration or earlier termination of
this Lease.
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32.10. TENANT'S INDEMNIFICATION OF LANDLORD
Tenant agrees to indemnify and hold harmless Landlord from and
against any and all claims, losses (including, without limitation, loss in value
of the Premises, the Building or the Project and any losses to Landlord due to
lost opportunities to lease any portions of the Premises to succeeding tenants
due to the failure of Tenant to surrender the Premises upon the expiration or
sooner termination of this Lease in accordance with the provisions of Paragraph
32.9 above), liabilities and expenses (including attorney's fees) sustained by
Landlord attributable to (1) any Hazardous Materials placed on or about the
Premises, the Building or the Project by Tenant or Tenant's Agents, or (2)
Tenant's breach of any provision of this Paragraph 32.
32.11. LANDLORD'S INDEMNIFICATION OF TENANT
Landlord agrees to indemnify and hold harmless Tenant from and
against any and all claims, losses, liabilities and expenses (including
attorneys' fees, but specifically excluding lost profits and consequential
damages) actually sustained by Tenant attributable to any Hazardous Materials
placed on or about the Premises, the Building or the Project by Landlord or
Landlord's Agents, except to the extent the condition thereof has been
exacerbated by Tenant or Tenant's Agents.
32.12. LIMITATION OF TENANT'S LIABILITY
Notwithstanding anything in this Lease to the contrary, Tenant
shall not be responsible for the clean up or remediation of, and shall not be
required to indemnify Landlord against any costs or liabilities attributable to,
contamination by Hazardous Materials during the Term caused by third parties or
Hazardous Materials place on or about the Premises (i) prior to the Commencement
Date by third parties not related to Tenant or Tenant's Agents, or (ii) by
Landlord at any time, except in any of the foregoing cases to the extent that
Tenant or Tenant's Agents have contributed to or exacerbated the presence of
such Hazardous Materials.
32.13. SURVIVAL
The provisions of this Paragraph 32 shall survive the expiration
or earlier termination of this Lease.
33. NOTICES
All notices and demands which are required or may be permitted to be
given to either party by the other hereunder shall be in writing and shall be
sent by United States mail, postage prepaid, certified, or by personal delivery
or overnight courier, addressed to the addressee at Tenant's Address or
Landlord's Address as specified in the Basic Lease Information, or to such
other place as either party may from time to time designate in a notice to the
other party given as provided herein. Copies of all notices and demands given to
Landlord shall additionally be sent to Landlord's property manager at the
address specified in the Basic Lease Information or at such other address as
Landlord
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may specify in writing from time to time. Notice shall be deemed given upon
actual receipt (or attempted delivery if delivery is refused), if personally
delivered, or one (1) business day following deposit with a reputable overnight
courier that provides a receipt, or on the third (3rd) day following deposit in
the United States mail in the manner described above.
34. WAIVER
The waiver of any breach of any term, covenant or condition of this Lease
shall not be deemed to be a waiver of such term, covenant or condition or of any
subsequent breach of the same or any other term, covenant or condition herein
contained. The subsequent acceptance of Rent by Landlord shall not be deemed to
be a waiver of any preceding breach by Tenant, other than the failure of Tenant
to pay the particular rental so accepted, regardless of Landlord's knowledge of
such preceding breach at the time of acceptance of such Rent. No delay or
omission in the exercise of any right or remedy of Landlord in regard to any
Default by Tenant shall impair such a right or remedy or be construed as a
waiver. Any waiver by Landlord of any Default must be in writing and shall not
be a waiver of any other Default concerning the same or any other provisions of
this Lease.
35. HOLDING OVER
Any holding over after the expiration of the Term, without the express
written consent of Landlord, shall constitute a Default and, without limiting
Landlord's remedies provided in this Lease, such holding over shall be construed
to be a tenancy at sufferance, at a rental rate equal to the greater of one
hundred fifty percent (150%) of (i) the fair market rental value for the
Premises as determined by Landlord or (ii) the Base Rent last due in this Lease,
plus Additional Rent, and shall otherwise be on the terms and conditions herein
specified, so far as applicable; provided, however, in no event shall any
renewal or extension option or other similar right or option contained in this
Lease be deemed applicable to any such tenancy at sufferance. If the Premises
are not surrendered at the end of the Term or sooner termination of this Lease,
and in accordance with the provisions of Paragraphs 11 and 32.9, Tenant shall
indemnify, defend and hold Landlord harmless from and against any and all loss
or liability resulting from delay by Tenant in so surrendering the Premises
including, without limitation, any loss or liability resulting from any claim
against Landlord made by any succeeding tenant or prospective tenant caused by
such delay and losses to Landlord due to lost opportunities to lease any portion
of the Premises to any such succeeding tenant or prospective tenant, together
with, in each case, actual attorneys' fees and costs.
36. SUCCESSORS AND ASSIGNS
36.1. BINDING ON SUCCESSORS, ETC.
The terms, covenants and conditions of this Lease shall, subject
to the provisions as to assignment, apply to and bind the heirs, successors,
executors,
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administrators and assigns of all of the parties hereto. If Tenant shall consist
of more than one entity or person, the obligations of Tenant under this Lease
shall be joint and several.
36.2. LANDLORD'S RIGHT TO SELL
Notwithstanding anything in this Lease to the contrary, Landlord
shall have the right to sell, transfer or otherwise convey, either separately or
jointly, its interest in the Building and/or the Project, and all of Landlord's
related rights and obligations hereunder, to any Person.
37. TIME
Time is of the essence of this Lease and each and every term, condition
and provision herein.
38. BROKERS
Landlord and Tenant each represents and warrants to the other that
neither it nor its officers or agents nor anyone acting on its behalf has dealt
with any real estate broker except the Broker(s) specified in the Basic Lease
Information in the negotiating or making of this Lease, and each party agrees to
indemnify and hold harmless the other from any claim or claims, and costs and
expenses, including attorneys' fees, incurred by the indemnified party in
conjunction with any such claim or claims of any other broker or brokers to a
commission in connection with this Lease as a result of the actions of the
indemnifying party. Landlord shall pay the brokerage commissions due to the
Brokers listed in the Basic Lease Information. Nothing contained herein shall
restrict Landlord from paying any fees owed by Landlord in connection with the
execution of this Lease to any constituent partner of Landlord (or any Affiliate
of any such partner) and to any consultants providing services to Landlord in
connection with the Project.
39. LIMITATION OF LIABILITY
Tenant agrees that, in the event of any default or breach by Landlord
with respect to any of the terms of this Lease to be observed and performed by
Landlord or with respect to the enforcement of an indemnity obligation of
Landlord under this Lease (1) Tenant shall look solely to the then-current
landlord's interest in the Building for the satisfaction of such indemnity
obligation of Landlord or for satisfaction of Tenant's remedies for the
collection of a judgment (or other judicial process) requiring the payment of
money by Landlord; (2) no other property or assets of Landlord, its partners,
shareholders, officers, directors, employees, investment advisors, or any
successor in interest of any of them (collectively, THE "LANDLORD PARTIES")
shall be subject to levy, execution or other enforcement procedure for the
satisfaction of Tenant's remedies; (3) no personal liability shall at any time
be asserted or enforceable against the Landlord Parties; and (4) no judgment
will be taken against the Landlord Parties (except for a judgment against
Landlord which is enforceable only to the extent of Landlord's interest
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in the Building). The provisions of this Paragraph shall apply only to the
Landlord and the parties herein described, and shall not be for the benefit of
any insurer nor any other third party.
40. FINANCIAL STATEMENTS
Within ten (10) days after Landlord's request, Tenant shall deliver to
Landlord the then current, or if Tenant is a publicly traded company, the
publicly available financial statements of Tenant (including interim periods
following the end of the last fiscal year for which annual statements are
available), prepared, compiled or reviewed by a certified public accountant,
including a balance sheet and profit and loss statement for the most recent
prior year, all prepared in accordance with GAAP.
41. RULES AND REGULATIONS
Tenant agrees to comply with such reasonable rules and regulations as
Landlord may adopt from time to time for the orderly and proper operation of the
Building and the Project. Such rules may include but shall not be limited to the
following: (a) restriction of employee parking to a limited, designated area or
areas in reasonable proximity to the Building; and (b) regulation of the
removal, storage and disposal of Tenant's refuse and other rubbish at the sole
cost and expense of Tenant. The then current rules and regulations shall be
binding upon Tenant upon delivery of a copy of them to Tenant. Landlord shall
not be responsible to Tenant for the failure of any other person to observe and
abide by any of said rules and regulations; provided, however, Landlord shall
enforce such rules and regulation in a non-discriminatory manner. Landlord's
current rules and regulations are attached to this Lease as EXHIBIT F.
42. MORTGAGEE PROTECTION
42.1. MODIFICATIONS FOR LENDER
If, in connection with obtaining financing for the Project or any
portion thereof, Landlord's lender shall request reasonable modifications to
this Lease as a condition to such financing, Tenant shall not unreasonably
withhold, delay or defer its consent to such modifications, provided such
modifications do not materially adversely affect Tenant's rights or increase
Tenant's obligations under this Lease.
42.2. RIGHTS TO CURE
Tenant agrees to give to any trust deed or mortgage holder
("HOLDER"), by registered mail, at the same time as it is given to Landlord, a
copy of any notice of default given to Landlord, provided that prior to such
notice Tenant has been notified, in writing, (by way of notice of assignment of
rents and leases, or otherwise) of the address of such Holder. Tenant further
agrees that if Landlord shall have failed to cure such default within the time
provided for in this Lease, then the Holder shall have an additional twenty (20)
days after expiration of such period, or after receipt of such notice from
Tenant (if
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such notice to the Holder is required by this Paragraph 42.2), whichever shall
last occur within which to cure such default or if such default cannot be cured
within that time, then such additional time as may be necessary if within such
twenty (20) days, any Holder has commenced and is diligently pursuing the
remedies necessary to cure such default (including but not limited to
commencement of foreclosure proceedings, if necessary to effect such cure), in
which event there shall be no default under this Lease.
43. ENTIRE AGREEMENT
This Lease, including the Exhibits and any Addenda attached hereto, which
are hereby incorporated herein by this reference, contains the entire agreement
of the parties hereto, and no representations, inducements, promises or
agreements, oral or otherwise, between the parties, not embodied herein or
therein, shall be of any force and effect.
44. INTEREST
Any installment of Rent and any other sum due from Tenant under this
Lease which is not received by Landlord when due shall bear interest from the
date such payment was originally due under this Lease until paid at an annual
rate equal to the maximum rate of interest permitted by law. Payment of such
interest shall not excuse or cure any Default by Tenant. In addition, Tenant
shall pay all costs and reasonable attorneys' fees incurred by Landlord in
collection of such amounts.
45. INTERPRETATION
This Lease shall be construed and interpreted in accordance with the laws
of the State of California. The parties acknowledge and agree that no rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall be employed in the interpretation of this Lease, including
the Exhibits and any Addenda attached hereto. All captions in this Lease are for
reference only and shall not be used in the interpretation of this Lease.
Whenever required by the context of this Lease, the singular shall include the
plural, the masculine shall include the feminine, and vice versa. If any
provision of this Lease shall be determined to be illegal or unenforceable, such
determination shall not affect any other provision of this Lease and all such
other provisions shall remain in full force and effect. Unless otherwise
specifically stated herein to the contrary, Landlord's consent may be given or
withheld in Landlord's sole and absolute discretion.
46. REPRESENTATIONS AND WARRANTIES
46.1. OF TENANT
Tenant hereby makes the following representations and warranties,
each of which is material and being relied upon by Landlord, is true in all
respects as of the date of this Lease, and shall survive the expiration or
termination of the Lease.
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(1) If Tenant is an entity, Tenant is duly organized, validly
existing and in good standing under the laws of the state of its organization
and the persons executing this Lease on behalf of Tenant have the full right and
authority to execute this Lease on behalf of Tenant and to bind Tenant without
the consent or approval of any other person or entity. Tenant has full power,
capacity, authority and legal right to execute and deliver this Lease and to
perform all of its obligations hereunder. This Lease is a legal, valid and
binding obligation of Tenant, enforceable in accordance with its terms.
(2) Tenant has not (i) made a general assignment for the
benefit of creditors, (ii) filed any voluntary petition in bankruptcy or
suffered the filing of an involuntary petition by any creditors, (iii) suffered
the appointment of a receiver to take possession of all or substantially all of
its assets, (iv) suffered the attachment or other judicial seizure of all or
substantially all of its assets, (v) admitted in writing its inability to pay
its debts as they come due, or (vi) made an offer of settlement, extension or
composition to its creditors generally.
46.2. OF LANDLORD
Landlord hereby makes the following representations and
warranties, each of which is material and being relied upon by Tenant, is true
in all respects as of the date of this Lease, and shall survive the expiration
or termination of the Lease.
(1) If Landlord is an entity, Landlord is duly organized,
validly existing and in good standing under the laws of the state of its
organization and the persons executing this Lease on behalf of Landlord have the
full right and authority to execute this Lease on behalf of Landlord and to bind
Landlord without the consent or approval of any other person or entity. Landlord
has full power, capacity, authority and legal right to execute and deliver this
Lease and to perform all of its obligations hereunder. This Lease is a legal,
valid and binding obligation of Landlord, enforceable in accordance with its
terms.
(2) Landlord has not (i) made a general assignment for the
benefit of creditors, (ii) filed any voluntary petition in bankruptcy or
suffered the filing of an involuntary petition by any creditors, (iii) suffered
the appointment of a receiver to take possession of all or substantially all of
its assets, (iv) suffered the attachment or other judicial seizure of all or
substantially all of its assets, (v) admitted in writing its inability to pay
its debts as they come due, or (vi) made an offer of settlement, extension or
composition to its creditors generally.
47. SECURITY
47.1. LANDLORD NOT OBLIGATED TO PROVIDE SECURITY
Tenant acknowledges and agrees that, while Landlord may engage
security personnel to patrol the Building or the Project, Landlord is not
required to
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provide any security services with respect to the Premises, the Building or the
Project and the Landlord shall not be liable to Tenant for, and Tenant waives
any claim against Landlord with respect to, any loss by theft or any other
damage suffered or incurred by Tenant in connection with any unauthorized entry
into the Premises or any other breach of security with respect to the Premises,
the Building or the Project.
47.2. TENANT'S OBLIGATION TO COMPLY WITH SECURITY MEASURES
Tenant hereby agrees to the exercise by Landlord and Landlord's
Agents, within their sole discretion, of such security measures as, but not
limited to, the evacuation of the Premises, the Building or the Project for
cause, suspected cause or for drill purposes, the denial of any access to the
Premises, the Building or the Project and other similarly related actions that
it deems necessary to prevent any threat of property damage or bodily injury.
The exercise of such security measures by Landlord and Landlord's Agents, and
the resulting interruption of service and cessation of Tenant's business, if
any, shall not be deemed an eviction or disturbance of Tenant's use and
possession of the Premises, or any part thereof, or render Landlord or
Landlord's Agents liable to Tenant for any resulting damages, or relieve Tenant
from Tenant's obligations under this Lease.
48. JURY TRIAL WAIVER
Landlord and Tenant each hereby waive any right to trial by jury with
respect to any action or proceeding (i) brought by Landlord, Tenant or any other
party, relating to (A) this Lease and/or any understandings or prior dealings
between the parties hereto, or (B) the Premises, the Building or the Project or
any part thereof, or (ii) to which Landlord is a party. The parties each hereby
agree that this Lease constitutes a written consent to waiver of trial by jury
pursuant to the provisions of California Code of Civil Procedure Section 631.
49. OPTION TO RENEW
Tenant shall have two (2) options (each a "RENEWAL OPTION") to extend the
Term of this Lease with respect to the entire Premises (including, without
limitation, the "EXPANSION BUILDING," if Tenant has exercised the "EXPANSION
OPTION") for successive periods of five (5) years each (each a "RENEWAL TERM").
Each Renewal Option shall be effective only if Tenant is not in Default under
this Lease and no event has occurred which with the giving of notice or the
passage of time, or both, would constitute a Default hereunder, either at the
time of exercise of the Renewal Option or the time of commencement of the
Renewal Term. For purposes of this Paragraph 49, "EXPANSION BUILDING" and
"EXPANSION OPTION" shall have the meanings set forth in the Option to Lease
Agreement, by and between Landlord and Tenant, dated as of even date herewith.
54
49.1. COMMENCEMENT DATES
If Tenant exercises the first Renewal Option in accordance
herewith, the first Renewal Term shall commence on the day following the last
day of the initial Term and end on the day preceding the fifth anniversary
thereof. If Tenant exercises the second Renewal Option, the second Renewal Term
shall commence on the day following the last day of the first Renewal Term and
end on the day preceding the fifth anniversary thereof. The second Renewal
Option may not be exercised unless Tenant has previously exercised the first
Renewal Option. Each Renewal Term, if properly exercised, shall be upon the same
terms and conditions as the Lease except for Monthly Base Rent (which shall be
determined as provided in the following provisions of this Paragraph).
49.2. RENEWAL OPTION IS PERSONAL; NON-TRANSFERABLE
The Renewal Option shall be personal to Tenant, any transferee
under a Permitted Transfer, and any assignee to whom Tenant assigns its entire
right, title and interest under, or any sublessee to whom Tenant subleases the
entire Premises for the entire remaining Term of, this Lease, and shall not be
assignable or otherwise transferable in whole or in part, voluntarily or by
operation of law, to any other permitted assignee, subtenant or other third
parties and there shall be no further Renewal Option beyond the expiration of
the second Renewal Term.
49.3. TENANT'S NOTICE OF EXERCISE
In order to exercise a Renewal Option, Tenant shall give written
notice to Landlord of Tenant's exercise of such election ("Tenant's Notice") at
least ten (10) months prior to expiration of the then current Term and if such
notice is not so given, the Renewal Option shall lapse; the Tenant hereby
expressly acknowledges and agrees that time is of the essence for purposes of
notice of exercise of a Renewal Option and that Tenant's failure to do so by
said date will relieve Landlord of any obligation under this Paragraph. If
Tenant gives such notice within the time prescribed, Landlord and Tenant shall
be deemed to have entered into an extension of this Lease for a five (5) year
extended term on the terms and conditions set forth herein.
49.4. MONTHLY BASE RENT DURING RENEWAL TERM
The Monthly Base Rent payable during any Renewal Term shall be an
amount equal to the greater of (i) the Monthly Base Rent payable for the last
month of the then expiring Term (provided that such Monthly Base Rent shall be
increased during each year of the Renewal Term to an amount equal to one hundred
three percent (103%) of the Monthly Base Rent payable during the immediately
preceding term), or (ii) ninety-five percent (95%) of the Fair Market Rent (as
hereinafter defined) for the Premises during such Renewal Term.
49.4.1. FAIR MARKET RENT DEFINITION
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"FAIR MARKET Rent, shall mean the rate being charged
for comparable office/R&D/laboratory space in comparable locations in the South
San Francisco/Brisbane market area, taking into consideration: tenant credit,
tenant improvements or allowances provided or to be provided and leasing
commissions, but specifically excluding any specialized laboratory improvements
or other Tenant Improvements in the Premises paid for exclusively by Tenant,
including without limitation, any Tenant Improvements paid for with the proceeds
of the Tenant Improvement Loan.
49.4.2. DETERMINATION OF FAIR MARKET RENT
Landlord and Tenant shall meet and attempt in good
faith to mutually determine the Fair Market Rent for any Renewal Term. If the
parties have not reached agreement on the Fair Market Rent by the date that is
thirty (30) days after Landlord's receipt of Tenant's Notice, each party shall
appoint an arbitrator and shall give to the other party notice of the identity
of the arbitrator no later than the date that is forty (40) days after
Landlord's receipt of Tenant's Notice. If either party fails to appoint an
arbitrator by the date that is forty (40) days after Landlord's receipt of
Tenant's Notice, the sole arbitrator appointed, if any, shall determine the Fair
Market Rent. If two arbitrators are appointed, they shall immediately meet and
attempt to agree upon such Fair Market Rent. If the arbitrators cannot reach
agreement on the Fair Market Rent by the date that is sixty (60) days after
Landlord's receipt of Tenant's Notice, each arbitrator shall submit a
determination of Fair Market Rent to Landlord and Tenant. If the determinations
of Fair Market Rent made by these two arbitrators vary by ten percent (10%) or
less, the Fair Market Rent shall be the average of the two determinations. If
the determinations vary by more than ten percent (10%), the two arbitrators
shall within ten (10) days after submission of their determinations appoint a
third arbitrator. If the two arbitrators shall be unable to agree on the
selection of a third arbitrator within the 10-day period, then either Tenant or
Landlord may request such appointment by petitioning the presiding judge of the
Superior Court in and for the County of San Mateo. Such third arbitrator shall,
within thirty (30) days after appointment, make a determination of the Fair
Market Rent and submit such determination to Landlord and Tenant. The Fair
Market Rent shall be the determination of Fair Market Rent submitted by the
original two arbitrators that is closer to the Fair Market Rent determination of
the third arbitrator. If the third arbitrator's determination is exactly between
the Fair Market Rent determination of the original two arbitrators, then the
Fair Market Rent shall be the average of the original two determinations. The
determination of Fair Market Rent pursuant to this Paragraph 49 shall be final
and binding on Landlord and Tenant.
49.4.3. ARBITRATOR QUALIFICATIONS
For purposes of this Paragraph, "ARBITRATOR" shall
mean a licensed commercial real estate broker or leasing agent with not less
than five (5) years of full-time commercial brokerage experience in San Mateo
County.
49.4.4. FEES AND COSTS OF ARBITRATORS
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Each party shall bear the fees and costs of its
arbitrator in connection with the determination of Fair Market Rent and one-half
of the fees and costs of the third arbitrator, if any.
49.4.5. ARBITRATION PERIOD BASE RENT
If the determination of Fair Market Rent has not been
made by the expiration of the then expiring Term, Tenant shall (i) continue to
pay Monthly Base Rent at the Monthly Base Rent for the last month of the Term
(the "ARBITRATION PERIOD BASE RENT") as well as any Additional Rent due under
the Lease and (ii) pay to Landlord, or receive as a refund from Landlord, as
applicable, on the first day of the month after the determination of Fair Market
Rent is made, an amount, if any, equal to the difference between the Arbitration
Period Base Rent that was paid to Landlord and the Monthly Base Rent for the
Renewal Term that should have been paid to Landlord as the Monthly Base Rent for
the Renewal Term as determined hereunder.
50. PARKING
50.1. GRANT OF PARKING LICENSE
Provided that Tenant shall comply with and abide by Landlord's
parking rules and regulations from time to time in effect, Tenant shall have a
license to use for the parking of passenger automobiles the number of
non-exclusive and undesignated parking spaces set forth in the Basic Lease
Information in the areas shown on the Site Plan attached to this Lease as
EXHIBIT B-1 (the "DESIGNATED PARKING AREAS"), provided, however, that Landlord
shall not be required to enforce Tenant's right to use such parking spaces (but
Landlord shall use commercially reasonable efforts to resolve any problems
related to parking); and, provided further, that the number of parking spaces
allocated to Tenant hereunder shall be reduced on a proportionate basis in the
event any of the parking spaces in the Designated Parking Areas are taken or
otherwise eliminated as a result of any Condemnation or casualty event affecting
such Designated Parking Areas. Notwithstanding the foregoing provisions of this
Paragraph 50.1, Landlord shall have the right to relocate Tenant's parking from
time to time to other areas within the Project and to provide parking spaces to
Tenant in surface parking lots, parking structures or other areas now or
hereafter designated by Landlord as the "Project's Parking Areas." All
unreserved spaces will be on a first-come, first-served basis in common with
other tenants of and visitors to the Project in parking spaces provided by
Landlord from time to time in the Project's Parking Areas. Tenant's license to
use the parking spaces provided for herein shall be subject to such terms,
conditions, rules and regulations as Landlord or the operator of the Parking
Area may impose from time to time.
50.2. NO ASSIGNMENT OF PARKING LICENSE
The license granted hereunder is for self-service parking only and
does not include additional rights or services except to the extent that
Landlord elects in its sole and absolute discretion to provide any such
services.
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50.3. VISITOR PARKING
Tenant recognizes and agrees that visitors, clients and/or customers
(collectively the "VISITORS") to the Project and the Premises must park
automobiles or other vehicles only in areas designated by Landlord from time to
time as being for the use of such Visitors and Tenant hereby agrees to ask its
Visitors to park only in the areas designated by Landlord from time to time for
the use of Tenant's Visitors.
51. RIGHT OF FIRST OFFER
51.1. OFFER NOTICE
If subsequent to the full execution of this Lease, Landlord desires
to sell the Building, Landlord shall notify Tenant in writing of such intent to
sell (the "OFFER NOTICE"); provided, however, Landlord shall not be required to
provide Tenant with the Offer Notice with respect to the Building if Landlord
has previously terminated this Lease or recaptured the Premises. This Right of
First Offer shall be personal to Tenant and any transferee under a Permitted
Transfer and shall not be assignable or otherwise transferable in whole or in
part, voluntarily or by operation of law, to any other permitted assignee,
subtenant or other third parties. Tenant's right to receive the Offer Notice
shall further be effective only if Tenant is not in Default under this Lease and
no event has occurred which with the giving of notice or the passage of time, or
both, would constitute a Default hereunder. Subject to Paragraph 51.4 below,
Tenant's right to receive an Offer Notice in accordance with this Paragraph
51.1 shall be a one-time right.
51.2. ELECTION NOTICE
In the event Tenant desires to purchase the Building, Tenant shall
notify Landlord in writing of its election to purchase the Building (the
"ELECTION NOTICE") within ten (10) days following Tenant's receipt of the Offer
Notice. If Tenant delivers an Election Notice to Landlord, Tenant shall acquire
the Building on an "as-is" basis and without any representations or warranties
from Landlord.
51.3. PURCHASE AND SALE AGREEMENT
In the event Tenant timely delivers the Election Notice to Landlord,
the parties shall thereafter execute a purchase and sale agreement prepared by
Seller's counsel (the "PURCHASE AND SALE AGREEMENT") with the purchase price of
the Building equal to the quotient of the Net Operating Income (as defined
below) of the Building divided by nine one hundredths (.09) and with a closing
to be held on or before the date that is forty-five (45) days after delivery of
the Offer Notice.
51.4. FAILURE TO EXERCISE OR SIGN AGREEMENT
If Tenant fails to deliver an Election Notice within the 10-day time
period, or if for any reason whatsoever Tenant has not executed the Purchase and
Sale Agreement within ten (10) days after its receipt thereof from Landlord,
Tenant's right to purchase the
58
Building hereunder shall automatically terminate and be of no further force and
effect with respect to Landlord or any other Person (as hereinafter defined) and
Landlord shall thereafter have the right to sell the Building at any time to any
Person on terms acceptable to Landlord in its sole and absolute discretion.
Notwithstanding the foregoing, if Landlord fails to enter into a letter of
intent or purchase and sale agreement for the sale of the Building to any such
Person within two hundred seventy (270) days after the date Tenant's right to
purchase the Building lapses pursuant to this Paragraph 51.4, then Tenant's
rights under this Paragraph 51 shall be reinstated and Landlord shall once again
furnish Tenant with an Offer Notice prior to selling the Building to a Person
other than a Landlord Affiliate. Tenant hereby expressly acknowledges and agrees
that time is of the essence for purposes of the Election Notice and the ten (10)
day period to execute the Purchase and Sale Agreement and that Tenant's failure
to deliver such Election Notice or the executed Purchase and Sale Agreement as
specified herein will relieve Landlord of any obligation under this Paragraph.
51.5. NET OPERATING INCOME
As used herein, "Net Operating Income" shall mean the Monthly Base
Rent due under the Lease with respect to the Building being purchased for the
twelve (12) full calendar months following the Offer Notice or, if the Offer
Notice is given prior to the Commencement Date, the Monthly Base Rent for the
Premises for the first (1st) Lease Year. As used in this Paragraph 51.5, Monthly
Base Rent shall mean the scheduled Monthly Base Rent set forth in the Basic
Lease Information PLUS the monthly installment of principal and interest
required to be paid on the Tenant Improvement Loan pursuant to Section D of
EXHIBIT C.
51.6 LANDLORD'S SALE TO AFFILIATE; SURVIVAL OF OPTION
Notwithstanding anything in this Paragraph to the contrary, this
Paragraph shall be inapplicable to, and neither Landlord nor any person or
entity providing financing to Landlord in connection with the Building
("LENDER") shall have any obligation to provide an Offer Notice to Tenant in
connection with (i) any sale, conveyance or other transfer or proposed sale,
conveyance or other transfer of the Building to any Person who controls, is
controlled by or is under common control with, Landlord or Lender or any Person
in which Hines Interest Limited Partnership or Morgan Stanley Real Estate
Investment Fund maintains an interest (collectively, a "LANDLORD AFFILIATE"), or
(ii) any foreclosure sale or deed-in-lieu of foreclosure or the exercise of any
similar remedy (collectively, a "FORECLOSURE") by any Lender. As used herein
"PERSON" shall mean any natural person, corporation, firm, association or other
entity, whether acting in an individual, fiduciary or other capacity. Tenant's
rights under this Paragraph 51.6 shall survive Landlord's transfer pursuant to
clause (i) of this Paragraph 51.6 but shall not survive any Foreclosure.
59
52. MEMORANDUM OF LEASE
Promptly after full execution of this Lease, Landlord and Tenant
shall execute and cause to be recorded a Memorandum of Lease in the form
attached hereto as EXHIBIT I.
Landlord and Tenant have executed and delivered this Lease as of the
Lease Date specified in the Basic Lease Information.
LANDLORD: HMS GATEWAY OFFICE, L.P.,
a Delaware limited partnership
By: Hines Gateway Office, L.P.,
Administrative Partner
By: Hines Interests Limited Partnership,
General Partner
By: Hines Holdings, Inc.,
General Partner
By: /s/ Jim Buie
-------------------------------
Name: Jim Buie
-----------------------------
Its: Executive Vice President
------------------------------
TENANT: ADVANCED MEDICINE, INC.,
a Delaware corporation
By: /s/ Marty Glick
--------------------------------
Print Name: Marty Glick
-----------------------
Its: Senior Vice President & CEO
------------------------------
60
EXHIBIT A
TENTATIVE PARCEL MAP
[MAP]
EXHIBIT B
BASE BUILDING CONSTRUCTION AGREEMENT
This exhibit, entitled "Base Building Construction Agreement", is and
shall constitute EXHIBIT B to the Lease Agreement, dated as of February 17,
1999, by and between Landlord and Tenant (the "LEASE"). The terms and conditions
of this EXHIBIT B are hereby incorporated into and are made a part of the Lease.
Subject to the terms and conditions set forth herein and in the Lease,
Landlord shall cause construction of the Building in accordance with the
procedures set forth below:
A. DEFINITIONS
1. "BASE BUILDING IMPROVEMENTS" shall mean a three (3) story
building, containing approximately 110,000 square feet,
all exterior surfaces, utilities, landscaping and paved
parking, all in substantial compliance with those items
listed on the 901 Gateway Preliminary Specifications as
"Base Building" and located substantially in accordance
with the Site Plan; provided, however, that the term "BASE
BUILDING IMPROVEMENTS" shall not include any Tenant
Requested Base Building Improvements.
2. "BASE BUILDING PLANS AND SPECIFICATIONS" is defined in
Section B.1 below.
3. "BUILDING WORK COST" is defined in Section B.3 below.
4. "CONTRACTOR" shall mean a licensed general contractor
selected by Landlord and approved by Tenant, which approval
shall not be unreasonably withheld, conditioned or delayed.
5. "CONSTRUCTION WARRANTIES" is defined in Section D.2 below.
6. "LANDLORD'S ARCHITECT" shall mean Dowler Gruman Architects
(in association with Form 4 Architects) or another
architect selected by Landlord in Landlord's reasonable
discretion.
7. "LANDLORD'S CONTRACT" shall mean the construction contract
entered into by and between Landlord and the Contractor for
the construction of the Base Building Improvements and any
Tenant Requested Base Building Improvements.
8. "901 GATEWAY PRELIMINARY SPECIFICATIONS" shall mean those
preliminary specifications for construction of the Base
Building
B-1
Improvements categorized as "Base Building" and more
particularly described on the attached EXHIBIT B-1.
9. "SITE PLAN" shall mean the site plan set forth on the
attached EXHIBIT B-2 establishing the approximate location
of the Building.
10. "TENANT'S COSTS" is defined in Section B.6 below.
11. "TENANT REQUESTED BASE BUILDING IMPROVEMENTS" shall mean
those improvements requested by Tenant in accordance with
this EXHIBIT B that are to be incorporated into the Base
Building Plans and Specifications.
Capitalized terms not otherwise defined in this EXHIBIT B shall have the
meanings ascribed to them in the Lease.
B. SCHEDULE
1. PLANS AND SPECIFICATIONS. At Landlord's sole cost and
expense, Landlord's Architect shall prepare (A) on or
before March 15, 1999, plans and specifications for the
civil and structural trades within the Base Building
Improvements (such plans and specifications being herein
referred to as "CONSTRUCTION PACKAGE #1") substantially in
accordance with the 901 Gateway Preliminary Specifications,
and (B) on or before May 1, 1999, plans and specifications
for all other trades within the Base Building Improvements
("CONSTRUCTION PACKAGE #2 and, together with Construction
Package #1, collectively, the "BASE BUILDING PLANS AND
SPECIFICATIONS"). Tenant shall have the right to approve
the Base Building Plans and Specifications only to the
extent of any material deviations from the 901 Gateway
Preliminary Specifications; provided, however, that such
approval shall not be unreasonably withheld, conditioned or
delayed and, provided further, that if Tenant fails to
respond within ten (10) days following Landlord's request
for approval, Tenant shall be conclusively deemed to have
given its approval to the matter submitted by Landlord.
Notwithstanding the foregoing, the Base Building Plans and
Specifications are, from time to time, subject to change in
Landlord's discretion, upon written consent from Tenant,
which consent shall not be unreasonably withheld,
conditioned or delayed and provided further that if Tenant
fails to respond within five (5) business days following
Landlord's request for consent, Tenant shall be
conclusively deemed to have given its consent to any such
change. Landlord may without the written
B-2
consent of the Tenant change the Base Building Plans and
Specifications as may be required by any governmental agency
or as necessary to comply with any governmental requirements
or to address structural or unanticipated field conditions
or which, in the reasonable discretion of Landlord, will not
have a material effect on Tenant's use of the Premises or a
material effect on the aesthetic appearance or impression
relating to the Base Building Improvements.
2. TENANT REQUESTED BASE BUILDING IMPROVEMENTS. On or before
May 1, 1999, Tenant shall deliver to Landlord's Architect
detailed specifications for any Tenant Requested Base
Building Improvements. Landlord shall have ten (10) days
from its receipt of such specifications to approve or
disapprove the Tenant Requested Base Building Improvements.
Landlord's approval may be given or withheld in Landlord's
reasonable discretion, to ensure, among other things, that
the Tenant Requested Base Building Improvements are
compatible with all other construction and all Systems
within the Building. If Landlord disapproves the Tenant
Requested Base Building Improvements, then within five (5)
business days thereafter, Landlord shall meet with the
Tenant's Architect (as defined in EXHIBIT C) and Tenant to
discuss, or shall submit to Tenant's Architect and Tenant
in writing, the reasons for Landlord's disapproval. Within
five (5) business days following such meeting or
submission, Tenant shall cause Tenant's Architect to revise
the same and to submit new specifications for the Tenant
Requested Base Building Improvements to Landlord. The
procedure set forth in this paragraph will be repeated as
set forth above until Landlord has approved the Tenant
Requested Base Building Improvements.
3. ESTIMATE OF BUILDING WORK COSTS. Following the approval by
Landlord of the Tenant Requested Base Building
Improvements, Landlord shall furnish Tenant with an
estimate of the cost of the Tenant Requested Base Building
Improvements (the "BUILDING WORK COST").
4. TENANT'S REVIEW OF BUILDING WORK COST. The Building Work
Cost shall be subject to Tenant's approval, which approval
shall not be unreasonably withheld, conditioned or delayed
and provided further that if Tenant fails to respond within
five (5) business days following Landlord's request for
consent, Tenant shall be conclusively deemed to have given
its approval to the Building
B-3
Work Cost. If Tenant timely disapproves the Building Work
Cost, then within five (5) business days thereafter, Tenant
shall meet with Landlord, Contractor, Landlord's Architect
and Tenant's Architect to discuss value engineering changes
to the Tenant Requested Base Building Improvements. Within
five (5) business days following such meeting, Tenant shall
cause Tenant's Architect to revise the Tenant Requested
Base Building Improvements and to submit revised
specifications for approval by Landlord in accordance with
the procedure set forth above and for a new Building Work
Cost to be prepared by Landlord. The procedure set forth in
this paragraph will be repeated until Tenant has approved
the Building Work Cost.
5. REVISION of PLANS & SPECIFICATIONS. Following Landlord's
approval of the Tenant Requested Base Building Improvements
and Tenant's approval of the Building Work Cost, Landlord
shall cause Landlord's Architect to revise the Base
Building Plans and Specifications to incorporate the Tenant
Requested Base Building Improvements.
6. TENANT'S RESPONSIBILITY FOR COST OF TENANT REQUESTED BASE
BUILDING IMPROVEMENTS. ALL costs associated with designing
and incorporating the Tenant Requested Base Building
Improvements into the Base Building Plans and
Specifications and all costs of constructing (including,
without limitation, the cost of obtaining all necessary
City approvals and permits) the Tenant Requested Base
Building Improvements (the "TENANT'S COSTS") shall be the
responsibility of Tenant and shall not be credited against
Tenant's Allowance, as defined in EXHIBIT C. Tenant shall
make progress payments to Landlord from time to time as the
Tenant Requested Base Building Improvements are
constructed. Tenant shall pay the portion of such progress
payments attributable to Tenant's Costs to Landlord within
ten (10) days of delivery of statements from Landlord to
Tenant therefor. Upon receipt of such payments, Landlord
shall make all progress payments directly to Contractor or
subcontractors, as appropriate. Landlord shall be entitled
to suspend or terminate construction of the Base Building
Improvements and to declare Tenant in default in accordance
with the terms of the Lease, if payment by Tenant to
Landlord of Tenant's Costs has not been received as
required hereunder.
B-4
C. CONSTRUCTION
The Base Building Improvements shall be constructed, at Landlord's sole
cost and expense, by Contractor in accordance with the Base Building Plans and
Specifications, as the same may be amended or modified from time to time by
Landlord.
D. GENERAL
1. RIGHT OF TERMINATION. Landlord and Tenant acknowledge that
construction of the Base Building Improvements and all
matters relating thereto are subject to Landlord obtaining
all necessary governmental approvals to commence
construction of the Base Building Improvements. Landlord
shall use commercially reasonable efforts to obtain such
approvals; however, if Landlord is unable to obtain the
building permits necessary to commence construction by July
1, 1999, either party shall have the right to terminate the
Lease by delivering written notice of termination to the
other party on or before July 15, 1999. If written notice
of termination is given in a timely manner, the Lease shall
immediately terminate, except for any obligations which by
their terms survive the termination or earlier expiration
of the Lease. If no such notice of termination is given,
the Lease shall remain in full force and effect.
Notwithstanding anything herein to the contrary, Landlord
shall not be liable to Tenant for any loss or damage
resulting from any delay in constructing or developing the
Base Building Improvements, nor shall such failure affect
the obligations of Tenant under the Lease, except as
otherwise expressly set forth in the Lease.
2. LANDLORD'S COVENANT. Subject to the terms and conditions of
the Lease, Landlord covenants that the Base Building
Improvements shall be free from material latent defects in
design, materials and workmanship. Any claims by Tenant
under this Paragraph 2 shall be made in writing not later
than one (1) year after the Commencement Date. In the event
Tenant fails to deliver a written claim to Landlord on or
before the applicable date set forth above, then Landlord
shall be conclusively deemed to have satisfied its
obligations under this paragraph. The covenants contained
in this paragraph are subject to Paragraph 39 of the Lease
and are made specifically and exclusively for the benefit
of the original Tenant and any assignee or sublessee under
a Permitted Transfer pursuant to Paragraph 23.4 of the
Lease.
B-5
3. CONSTRUCTION WARRANTIES. Landlord shall obtain from
Contractor, and shall request Contractor to obtain
from all subcontractors and material suppliers,
warranties (collectively, "CONSTRUCTION WARRANTIES")
for all components of the Base Building Improvements
for which warranties are customarily provided in the
construction industry and Landlord shall enforce the
Construction Warranties as reasonably requested by
Tenant.
4. POSTPONEMENT OF COMMENCEMENT DATE.
(a) Notwithstanding anything to the contrary
contained in Paragraph 8.3(a) of the Lease, in the
event that Landlord fails to perform the Initial
Milestone on or before August 1, 1999 (the
"Foundation Date") and/or the Secondary Milestone on
or before October 15, 1999 (the "Third Floor Slab
Date") for reasons other than Tenant Delays and
Force Majeure Events, and if as a result thereof
Tenant's Contractor is prevented from substantially
completing the Tenant Improvements on or before
April 1, 2000, then and only then the Commencement
Date shall be delayed beyond April 1, 2000 by one
(1) day for each day of delay caused by Landlord's
failure to complete the applicable Milestone(s) on
or before the aforesaid dates (but in no event
longer than the actual number of days Tenant's
Contractor is prevented from substantially
completing the Tenant Improvements).
(b) Notwithstanding the terms of Section D.4(a) above,
(1) if Landlord is delayed in completing the Initial
Milestone on or before the Foundation Date and/or
the Secondary Milestone on or before the Third Floor
Slab Date due to Tenant Delays, the Foundation Date
or the Third Floor Slab Date, as appropriate, shall
be extended for a period equal to the length of the
delay caused by such Tenant Delays, but the
Commencement Date shall not be extended beyond April
1, 2000, (2) if Landlord is delayed in completing
the Initial Milestone on or before the Foundation
Date and/or the Secondary Milestone on or before the
Third Floor Slab Date due to Force Majeure Events,
the Foundation Date or the Third Floor Slab Date, as
appropriate, AND the Commencement Date shall each be
extended by one (1) day for each day of delay
caused by such Force Majeure Events (but in no event
shall the Commencement Date be delayed longer than
the actual number of days Tenant's Contractor is
prevented from substantially completing the Tenant
Improvements).
B-6
INITIALS:
TENANT: /s/ [ILLEGIBLE]
--------------------
LANDLORD: /s/ [ILLEGIBLE]
------------------
B-7
EXHIBIT B-1
901 Gateway Preliminary Specifications
A "cold shell" standard shell for each building shall be constructed per
all governmental codes by Landlord for Tenant, including but not limited to the
following:
STRUCTURE/ENVELOPE
- - Concrete foundation to be reinforced grade beams with spread footings or
other system as specified by geotechnical and engineering consultants.
- - Ground floor to be concrete slab, minimum thickness 5", level to FF-20,
FL-15, on grade or as required by geotechnical and engineering
consultants with a minimum of 4" drain rock, 2" sand cushion and a 10 mil
vapor barrier, but in no event a mat slab.
- - Second and third floors to have vented metal decking with reinforced
concrete topping slab which meets fire inspection code and flat to FF-20.
- - Building structural framing to consist of reinforced steel "braced frame"
with beams and columns constructed using rolled shapes. Cross bracing at
exterior.
- - Non-bearing exterior curtain wall consisting of EIFS, with exterior
containing a minimum average of 40% glass with ribbon windows of high
performance glass (minimum shading coefficient of .67).
- - Floor system designed with live load capacity of 120 psf.
- - Roof live load to be 50 psf in all bays.
- - Floor to floor heights to be 17'-0".
- - Roof drains and drain lines with connection to site storm drain system.
- - Paved surface parking adjacent to the Premises as required to provide
tenant with the parking designated in the Lease.
- - Roof screens up to 11'-0" in height above the roof as required by City of
South San Francisco.
- - Roofing membrane to be a four-ply asphalt built-up over rigid insulation
over metal deck roof construction.
- - Fire proofing of building structure, if required, to building code.
- - Fire safing between floors to maintain code required separations.
- - Perimeter and roof base building insulation per Title 24 requirements.
UTILITIES
- - 4,000 amp 277/480 volt, 3-phase electric service and transformer with
underground electrical to switchgear and meter.
- - "House power" panels and transformer for site lights and irrigation.
- - One gas service to exterior meter.
- - Four (4), 4" telephone and data conduits. Stubbed to building.
- - Site storm drain system.
- - Domestic water service with meters, backflow preventers and check
assembly located per California Water Service requirements.
- - Sanitary sewer to and including main line under ground floor slab.
- - Complete light hazard automatic fire sprinkler system to meet NFPA
standards (excluding drops to suspended ceilings).
MISCELLANEOUS
- - Exterior doors prepared with hardware and rough-in to provide for
electronic security. Such security to be provided and installed by
Tenant.
- - All utility connection(s) and development fees for base building systems.
- - Landscaping, hardscapes and automatic irrigation systems, including
control systems.
- - One (1) monument sign at each main entrance along Gateway Boulevard
identifying The Gateway North Campus and the building address.
- - Site lighting a minimum of one (1) foot candle per square foot, including
control system.
- - Two (2) sets of interior exit stairs per building and two corresponding
entrances; one set of exit stairs shall be extended to the roof for roof
access.
EXHIBIT B-2
SITE PLAN
[DIAGRAM OF FLOOR PLAN]
EXHIBIT C
PREMISES CONSTRUCTION AGREEMENT
This exhibit, entitled "Premises Construction Agreement", is and shall
constitute EXHIBIT C to the Lease Agreement, dated as of February 17, 1999, by
and between Landlord and Tenant (the "LEASE"). The terms and conditions of this
EXHIBIT C are hereby incorporated into and are made a part of the Lease.
Subject to the terms and conditions set forth herein and in the Lease,
Landlord shall allow the construction or installation of the improvements in the
interior of the Premises in accordance with the procedures set forth below:
A. DEFINITIONS
1. "APPROVED PLANS" is defined in Section B.5 below.
2. "CONTRACTOR" shall mean the general contractor retained by
Landlord pursuant to EXHIBIT B to the Lease.
3. "ESTIMATED WORK COST" is defined in Section B.3 below.
4. "EXCESS TENANT IMPROVEMENTS COSTS" is defined in Section B.6
below.
5. "FINAL COST QUOTATION" is defined in Section B.6 below and shall
include all costs associated with the Tenant Improvements,
including, without limitation, costs of all tenant improvement
work; architectural and engineering fees; governmental agency fees
for permits, licenses and inspections; construction fees,
including, without limitation, general contractors' overhead and
supervision fees; and such other costs as may be incurred by
Landlord in connection with such construction.
6. "PRELIMINARY PLANS" is defined in Section B.1 below.
7. "TENANT IMPROVEMENT ALLOWANCE" shall mean an amount equal to Four
Million Nine Hundred Fifty Thousand Dollars ($4,950,000.00) (based
on $45.00 multiplied by the Premises square footage), which amount
shall, except as otherwise provided in this EXHIBIT C, be paid by
Landlord toward the cost of completion of the Tenant Improvements
and related design, engineering, governmental, overhead,
supervision and administration fees and costs (collectively, the
"TENANT IMPROVEMENT COST"). The Tenant Improvement Allowance shall
be subject to adjustment upon the
C-1
final determination of the Premises square footage by Landlord's
Architect. Notwithstanding the foregoing, (i) not less than One
Million Six Hundred Fifty Thousand Dollars ($1,650,000) (VIZ.
$15.00 per square foot) (the "WARM SHELL ALLOWANCE") shall be
expended on the improvements generally described on EXHIBIT C-1
hereto, and (ii) no portion of the Tenant Improvement Allowance
shall be paid by Landlord toward the cost of the Tenant Requested
Base Building Improvements or Tenant Improvements that constitute
furniture, equipment or trade fixtures or result in changes to the
Base Building Improvements. If the Tenant Improvement Cost exceeds
the Tenant Improvement Allowance, the difference shall be paid by
Tenant in accordance with this EXHIBIT C. If the total cost of
constructing and installing the improvements described on EXHIBIT
C-1 is less than the Warm Shell Allowance, then the Tenant
Improvement Allowance shall be reduced by the difference and the
difference shall not be disbursed to Tenant.
8. "TENANT'S ARCHITECT" shall mean Dowler Gruman Architects or a
replacement licensed architect selected by Tenant and approved by
Landlord.
9. "TENANT'S CONTRACT" shall mean the construction contract entered
into by and between Tenant and the Contractor for the construction
of the Tenant Improvements.
10. "TENANT IMPROVEMENTS" shall mean all improvements made to the
Premises pursuant to the Approved Plans, specifically excluding,
however, any Tenant Requested Base Building Improvements (as
defined in EXHIBIT B to the Lease). Without limiting the
generality of the foregoing, the Tenant Improvements shall include
and Tenant shall be responsible for the construction and
installation of the improvements described on EXHIBIT C-1.
11. "WARM SHELL ALLOWANCE" is defined within the definition of Tenant
Improvement Allowance in Paragraph A.7 above.
Capitalized terms not otherwise defined in this EXHIBIT C shall
have the meanings ascribed to them in the Lease.
B. SCHEDULE
1. Tenant shall cause Tenant's Architect to furnish to Landlord on or
before March 15, 1999, preliminary space plans and specifications
C-2
(the "PRELIMINARY PLANS"). Tenant shall be responsible for all
costs associated with the Preliminary Plans (collectively, the
"PRELIMINARY DESIGN COSTS"), including any revisions required by
Section B.2 hereunder.
2. Landlord shall have ten (10) days from its receipt of the
Preliminary Plans to approve or disapprove the same. Landlord's
approval of the Preliminary Plans shall not be unreasonably
withheld, conditioned or delayed. If Landlord disapproves the
Preliminary Plans, then within five (5) business days thereafter,
Landlord shall meet with Tenant's Architect and Tenant to discuss,
or shall submit to Tenant's Architect and Tenant in writing, the
reasons for Landlord's disapproval. Within five (5) business days
following such meeting or submission, Tenant shall cause the
Tenant's Architect to revise the same and to submit new
Preliminary Plans to Landlord. The same procedure set forth in
this paragraph will be repeated as set forth above until Landlord
has approved the Preliminary Plans.
3. Promptly after approval of the Preliminary Plans, Tenant shall
cause Contractor to furnish Landlord with an estimate of the cost
of the Tenant Improvements as shown on the Preliminary Plans (the
"ESTIMATED WORK COST"). The Estimated Work Cost shall separately
itemize all costs to complete the improvements described on
EXHIBIT C-1 hereto.
4. Following Contractor's calculation of the Estimated Work Cost,
Tenant shall cause Tenant's Architect to prepare detailed
construction drawings and specifications (the "WORKING DRAWINGS")
for the Tenant Improvements based strictly upon the Preliminary
Plans, except as otherwise agreed in writing by Landlord and
Tenant. Tenant shall be responsible for all costs associated with
the Working Drawings. The Working Drawings shall be completed no
later than May 1, 1999.
5. Landlord shall have ten (10) days from its receipt of the Working
Drawings to approve or disapprove the same. Landlord's approval of
the Working Drawings shall not be unreasonably withheld,
conditioned or delayed. If Landlord disapproves the Working
Drawings, then within five (5) business days thereafter, Landlord
shall meet with Tenant's Architect and Tenant to discuss, or shall
submit to the Tenant's Architect and Tenant in writing, the
reasons for Landlord's disapproval. Within five (5) business days
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following such meeting or submission, Tenant shall cause Tenant's
Architect to revise the same and to submit new Working Drawings to
Landlord, and the same procedure will be repeated as set forth
above until Landlord has approved the Working Drawings (the
"APPROVED PLANS"). Upon approval of the Working Drawings, Landlord
shall deliver to Tenant a list of Tenant Improvements to be
removed by Tenant, at Tenant's cost and expense in accordance with
Paragraph 11.2 of the Lease, upon expiration of the Term or
earlier termination of the Lease. Notwithstanding the foregoing,
during the preparation of the Working Drawings, Landlord shall,
upon Tenant's request, advise Tenant of items that will be
required to be removed pursuant to the previous sentence.
6. Within ten (10) business days after Landlord's approval of the
Approved Plans, Tenant shall cause Contractor to furnish to
Landlord a cost estimate for the Tenant Improvements based upon
the Approved Plans (the "FINAL COST QUOTATION"). The Final Cost
Quotation shall separately itemize all costs to complete the
improvements described on EXHIBIT C-1 hereto. If the Final Cost
Quotation is greater than the Tenant Improvement Allowance, Tenant
shall be responsible for the difference between the Tenant
Improvement Allowance and the Final Cost Quotation (the "EXCESS
TENANT IMPROVEMENTS COST").
7. Landlord and Tenant shall make progress payments on a pro rata
basis (in the proportion that the Tenant Improvement Allowance
paid by Landlord and the Excess Tenant Improvements Cost paid by
Tenant bear to the Final Cost Quotation) from time to time as the
Tenant Improvements are constructed in the Premises. Tenant shall
pay its pro rata share of any progress payments directly to
Contractor or subcontractors, as appropriate, and Landlord shall
pay its pro rata share of any progress payments directly to
Tenant, as appropriate, subject to a reasonable retention as
determined by Landlord. Landlord shall be entitled to suspend or
terminate construction of the Tenant Improvements and to declare
Tenant in default in accordance with the terms of the Lease, if
payment by Tenant of both Landlord and Tenant's pro rata shares of
any progress payment have not been received by Contractor when
due, as required hereunder. Moreover, Landlord shall not be
required to pay its pro rata share of any progress payment until
such time as Landlord receives from Tenant an unconditional lien
waiver duly executed by Contractor as to the applicable progress
payment and a conditional lien waiver for the progress payment
next due. All lien
C-4
waivers shall comply with California law regarding materialmen and
mechanic's liens.
C. TENANT IMPROVEMENT CONSTRUCTION
1. All Tenant Improvements to be constructed or installed in the
Premises shall be performed by Contractor in accordance with the
Approved Plans, subject to any changes agreed to by Landlord and
Tenant in writing. Landlord shall have no obligation to Tenant for
defects in design, workmanship or materials in connection with the
Tenant Improvements. Any changes to the Approved Plans shall
require the written approval of Landlord and Tenant, which
approval shall not be unreasonably withheld, conditioned or
delayed. All such changes must be evidenced by a written change
order executed by Landlord and Tenant or their respective
representatives describing the change required in the Approved
Plans, and the cost of such changes shall be paid in accordance
with the terms of this EXHIBIT C.
2. Tenant shall cause Contractor to construct the Tenant Improvements
in a manner designed to avoid interference with the construction
of the Base Building Improvements. Landlord and Tenant shall each
use good faith efforts to reasonably resolve any issues or
conflicts that may arise during the course of constructing the
Tenant Improvements and the Base Building Improvements. Entry by
Contractor in accordance with this EXHIBIT C shall not constitute
Tenant's occupancy of the Premises under Paragraph of the Lease;
however, Tenant shall comply with all terms and conditions of the
Lease (excluding only, prior to the Commencement Date, the
obligation to pay Rent) during Contractor's occupancy of and work
within the Premises. Tenant shall be responsible for maintaining
harmonious labor relations with all contractors and service
providers servicing the Premises.
3. In addition to and without limitation on the requirements set
forth in the Lease, Tenant shall ensure that Contractor and all
subcontractor(s) procure and maintain in full force and effect
during the course of construction a "broad form" commercial
general liability and property damage policy of insurance naming,
Landlord, Tenant and Landlord's lenders as additional insureds.
The minimum limit of coverage of the aforesaid policy shall be in
the amount of not less than Three Million Dollars ($3,000,000) for
injury or death of one person in any one accident or occurrence
and
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in the amount of not less than Three Million Dollars
($3,000,000) for injury or death of more than one person in
any one accident or occurrence, and shall contain a
severability of interest clause or a cross liability
endorsement. Such insurance shall further insure Landlord
and Tenant against liability for property damage of at
least One Million Dollars ($1,000,000).
D. TENANT IMPROVEMENT LOAN
In addition to the Tenant Improvement Allowance, Landlord agrees to lend
Tenant up to Two Million Seven Hundred Fifty Thousand Dollars ($2,750,000) (VIZ.
$25.00 per square foot) to be applied toward completion of the Tenant
Improvements (the "TENANT IMPROVEMENT LOAN") after the Tenant Improvement
Allowance has been disbursed. The Tenant Improvement Loan shall be subject to
adjustment upon the final determination of the Premises square footage by
Landlord's Architect. The Tenant Improvement Loan shall be disbursed by Landlord
upon the submission of draw requests in a form approved by Landlord and in
accordance with customary construction lending disbursement procedures
(including, without limitation, the establishment of a retention.) The Tenant
Improvement Loan shall be repayable by Tenant to Landlord in substantially equal
self-amortizing monthly installments over the initial Term of the Lease,
together with interest on the balance outstanding from time to time from the
date of disbursement at the rate of twelve percent (12%) per annum; provided,
however, that Tenant shall have the right to prepay the then outstanding balance
(principal and accrued but unpaid interest) of the Tenant Improvement Loan in
whole (but not in part) on the first (1st), second (2nd) or third (3rd)
anniversary of the Commencement Date, provided only that Tenant shall give
Landlord not less than thirty (30) days' notice of its election to so prepay. By
way of example, if the original principal balance of the Tenant Improvement Loan
is Two Million Seven Hundred Fifty Thousand Dollars ($2,750,000), and assuming
for purposes of this example that such loan is disbursed as shown on EXHIBIT C-2
hereto and that Tenant does not elect to prepay the Tenant Improvement Loan as
provided in the immediately preceding sentence, then the Tenant Improvement Loan
shall be repayable in installments in the amount shown on said EXHIBIT C-2. Such
installments shall be payable on the first day of each month concurrently with
the payment of Monthly Base Rent, and shall be deemed a part of the "Rent"
hereunder for all purposes of this Lease. Notwithstanding anything herein to the
contrary, in the event the Lease shall terminate for any reason prior to the
scheduled expiration thereof, the Tenant Improvement Loan and all accrued and
unpaid interest thereon shall immediately become due and payable in full.
E. GENERAL
1. All drawings, space plans, plans and specifications for any
improvements or installations in the Premises are expressly
subject to Landlord's prior written approval, which approval shall
not be
C-6
unreasonably withheld, conditioned or delayed. Any approval by
Landlord of any drawings, plans or specifications prepared on
behalf of Tenant including, without limitation, any Preliminary
Plans, Working Drawings or Approved Plans, or any revisions
thereto, shall not in any way bind Landlord, create any
responsibility or liability on the part of the Landlord for the
completeness of the same, their design sufficiency or compliance
with applicable statutes, ordinances or regulations or constitute
a representation or warranty by Landlord as to the adequacy or
sufficiency of such drawings, plans or specifications, or the
improvements to which they relate, but such approval shall merely
evidence the consent of Landlord to such drawings, plans or
specifications.
2. The Tenant Improvement Allowance (including, without limitation,
the Warm Shell Allowance) and the Tenant Improvement Loan, if
borrowed by Tenant, shall be used by Tenant to construct Tenant
Improvements in the entire Premises and may not be used to improve
only a portion or portions of the Premises.
3. Any failure by Tenant to pay any amounts due hereunder shall have
the same effect under the Lease as a failure to pay Rent and any
failure by Tenant to perform any of its other obligations
hereunder shall be subject to Paragraph 24 of the Lease.
4. Tenant shall provide Landlord with as-built plans and
specifications of the Tenant Improvements within forty-five (45)
days after the Commencement Date.
INITIALS:
TENANT: [ILLEGIBLE]
---------------
LANDLORD: [ILLEGIBLE]
-------------
C-7
EXHIBIT C-1
DESCRIPTION OF "WARM SHELL" IMPROVEMENTS
- - Elevator(s) per code
- - Stairs in excess of two (2) exit stairs provided as part of the 901
Gateway Preliminary Specifications
- - Restrooms per code
- - HAVC for standard office use (laboratory upgrades will not be funded out
of the Warm Shell Allowance)
- - Standard office lobby
- - Electrical for standard office use (laboratory upgrades will not be
funded out of the Warm Shell Allowance)
- - Trash Enclosure
- - Rooftop mechanical platform
- - Roof Screens
EXHIBIT C-2
EXAMPLE OF TENANT IMPROVEMENT LOAN AMORTIZATION
(Assumes April 1, 2000 Lease Commencement)
TI Loan Amount $ 2,750,000.00
- --------------------------------------------------------------------------------
DATE AMOUNT OF TI LOAN CALCULATION OF END OF MONTH
DRAW REQUEST MONTHLY INTEREST LOAN BALANCE
- --------------------------------------------------------------------------------
Dec-99 625,000.00 3,125.00 $ 628,125.00
Jan-00 675,000.00 9,656.25 $ 1,312,781.25
Feb-00 700,000.00 16,627.81 $ 2,029,409.06
Mar-00 750,000.00 24,044.09 2,803,453.15
- --------------------------------------------------------------------------------
Loan Balance as of Lease Commencement Date (assuming Lease Commences
April 1, 2000)
$ 2,803,453
Monthly Installment $36,821
Interest Rate 12%
Monthly Rate 1%
Lease Term* 144 months
*Lease term to be adjusted depending on lease commencement date.
Exhibit D
COMMENCEMENT AND EXPIRATION DATE MEMORANDUM
LANDLORD: HMS GATEWAY OFFICE L.P.
TENANT: ADVANCED MEDICINE, INC.
LEASE DATE: February 17, 1999
BUILDING: Located at 901 Gateway Boulevard, South San
Francisco, California
Tenant hereby accepts the Premises as being in the condition required
under the Lease, with all Base Building Improvements completed (except for minor
punchlist items which Landlord agrees to complete).
The Commencement Date of the Lease with respect to the above-referenced
Building is hereby established as _________________, 199_.
TENANT: ADVANCED MEDICINE, INC.,
a Delaware corporation
By:
-------------------------------------------
Print Name:
-----------------------------------
Its:
------------------------------------------
Approved and Agreed:
LANDLORD: HMS GATEWAY OFFICE, L.P.,
a Delaware limited partnership
By: Hines Gateway Office, L.P.,
Administrative Partner
By: Hines Interests Limited Partnership,
General Partner
By: Hines Holdings, Inc.,
General Partner
By:
-----------------------------
Name:
---------------------------
Its:
----------------------------
D-1
INITIALS:
TENANT: [ILLEGIBLE]
------------------
LANDLORD: [ILLEGIBLE]
----------------
D-2
Exhibit E
ADDITIONAL OPERATIONAL GUIDELINES
As a component of the Tenant Improvements and any Alterations made by
Tenant to the Premises, Tenant shall install fume hoods, as well as a rooftop
venting and exhaust system designed to increase the velocity of exhaust such
that any odors shall be discharged high into the atmosphere in order to minimize
the risk of odors detectable at ground level. In addition, Tenant shall install
and utilize such additional venting, exhaust and quenching systems, including,
without limitation, base quenching, distillation units, acid quenching, and
mechanical exhaust/filtration systems, as appropriate to reduce the risk of
emanation of such odors.
E-1
Exhibit F
RULES AND REGULATIONS
This exhibit, entitled "Rules and Regulations," is and shall constitute
EXHIBIT F to the Lease Agreement, dated as of the Lease Date, by and between
Landlord and Tenant for the Premises. The terms and conditions of this EXHIBIT F
are hereby incorporated into and are made a part of the Lease. Capitalized
terms used, but not otherwise defined, in this EXHIBIT F have the meanings
ascribed to such terms in the Lease.
1. Tenant shall not use any method of heating or air conditioning other
than that approved by Landlord in writing without the prior written consent of
Landlord, which consent shall not to be unreasonably withheld, conditioned or
delayed.
2. All window coverings installed by Tenant and visible from the outside
of the Building require the prior written approval of Landlord.
3. Tenant shall not use, keep or permit to be used or kept any foul or
noxious gas or substance or any flammable or combustible materials on or around
the Project or the Adjacent Properties, except to the extent that Tenant is
permitted to use the same in the Premises under the terms of Paragraph 32 of the
Lease.
4. Tenant shall not alter any lock or install any new locks or bolts on
any door at the Premises without the prior written consent of Landlord, which
consent shall not be unreasonably withheld, conditioned or delayed.
5. Tenant shall not make any duplicate keys without the prior written
consent of Landlord, which consent shall not be unreasonably withheld,
conditioned or delayed.
6. Tenant shall park motor vehicles in parking areas designated by
Landlord, including areas for loading and unloading. During those periods of
loading and unloading, Tenant shall not unreasonably interfere with traffic flow
around the Building or the Project and loading and unloading areas of other
tenants.
7. Tenant shall not disturb, solicit or canvas any tenant or other
occupant of the Building or Project and shall cooperate to prevent same.
8. No person shall go on the roof without Landlord's permission except as
required to repair and maintain the same as required under the Lease.
9. Business machines and mechanical equipment belonging to Tenant which
cause noise or vibration that may be transmitted to the structure of the
Building, to such a degree as to be objectionable to Landlord or other tenants,
shall be placed and maintained by Tenant, at Tenant's expense, on vibration
isolators or in noise-dampening housing or other devices sufficient to eliminate
noise or vibration.
F-1
10. All goods, including material used to store goods, delivered to the
Premises of Tenant shall be immediately moved into the Premises and shall not be
left in parking or receiving areas overnight. During the period of construction
of the Tenant Improvements and any Alterations, all construction materials shall
be stored in a manner and a location mutually acceptable to Landlord and Tenant.
11. Tenant is responsible for the storage and removal of all trash and
refuse. All such trash and refuse shall be contained in suitable receptacles
stored behind screened enclosures at locations approved by Landlord.
12. Tenant shall not store or permit the storage or placement of goods or
merchandise in or around the Common Areas surrounding the Premises. No displays
or sales or merchandise shall be allowed in the Parking Areas or other Common
Areas.
13. Tenant shall not permit any animals, including but not limited to,
any household pets, to be brought or kept in or about the Premises, the
Building, the Project or any of the Common Areas which would violate applicable
Laws or constitute a nuisance to the Premises, the Building or the Project.
Tenant shall prior to the Commencement Date and thereafter from time to time
upon the request of Landlord provide to Landlord a written plan for the handling
and disposal of all animals used by Tenant in the conduct of its business, which
plan shall be subject to the written approval of Landlord.
INITIALS:
TENANT: [Illegible]
-------------------
LANDLORD: [Illegible]
-----------------
F-2
EXHIBIT G
HAZARDOUS MATERIALS DISCLOSURE CERTIFICATE
Your cooperation in this matter is appreciated. Initially, the
information provided by you in this Hazardous Materials Disclosure Certificate
is necessary for the Landlord to evaluate your proposed uses of the premises
(the "PREMISES") and to determine whether to enter into a lease agreement with
you as tenant. If a lease agreement is signed by you and the Landlord (the
"LEASE AGREEMENT"), on an annual basis in accordance with the provisions of
Paragraph 32 of the Lease Agreement, you are to provide an update to the
information initially provided by you in this certificate. Any questions
regarding this certificate should be directed to, and when completed, the
certificate should be delivered to:
Landlord: HMS Gateway Office L.P.
c/o Hines
651 Gateway Boulevard, Suite 1140
South San Francisco, California 94080
Phone: (650) 794-1111
Name of (Prospective) Tenant: Advanced Medicine, Inc.
Mailing Address:_________________________________________________________
_________________________________________________________________________
Contact Person, Title and Telephone Number(s):_________________________
Contact Person for Hazardous Waste Materials Management and Manifests and
Telephone Number(s):_____________________________________________________
_________________________________________________________________________
Address of (Prospective) Premises:_____________________________________
Length of (Prospective) initial Term:____________________________________
_________________________________________________________________________
G-1
1. GENERAL INFORMATION:
Describe the proposed operations to take place in, on, or about
the Premises, including, without limitation, principal products
processed, manufactured or assembled, and services and activities to
be provided or otherwise conducted. Existing tenants should describe
any proposed changes to on-going operations.
______________________________________________________________________
______________________________________________________________________
2. USE, STORAGE AND DISPOSAL OF HAZARDOUS MATERIALS
2.1 Will any Hazardous Materials (as hereinafter defined) be used,
generated, treated, stored or disposed of in, on or about the
Premises? Existing tenants should describe any Hazardous
Materials which continue to be used, generated, treated, stored
or disposed of in, on or about the Premises.
Wastes Yes / / No / /
Chemical Products Yes / / No / /
Other Yes / / No / /
If Yes is marked, please explain:______________________________
_______________________________________________________________
_______________________________________________________________
2.2 If Yes is marked in Exhibit 2.1, attach a list of any Hazardous
Materials to be used, generated, treated, stored or disposed of
in, on or about the Premises, including the applicable hazard
class and an estimate of the quantities of such Hazardous
Materials to be present on or about the Premises at any given
time; estimated annual throughput; the proposed location(s) and
method of storage (excluding nominal amounts of ordinary
household cleaners and janitorial supplies which are not
regulated by any Environmental Laws as hereinafter defined);
and the proposed location(s) and method(s) of treatment or
disposal for each Hazardous Material, including, the estimated
frequency, and the proposed contractors or subcontractors.
Existing tenants should attach a list setting forth the
information requested above and such list should include actual
data from on-going operations and the identification of any
variations in such information from the prior year's
certificate.
G-2
3. STORAGE TANKS AND SUMPS
3.1 Is any above or below ground storage or treatment of gasoline,
diesel, petroleum, or other Hazardous Materials in tanks or sumps
proposed in, on or about the Premises? Existing tenants should
describe any such actual or proposed activities.
Yes / / No / /
If yes, please explain:___________________________________________
__________________________________________________________________
__________________________________________________________________
4. WASTE MANAGEMENT
4.1 Has your company been issued an EPA Hazardous Waste Generator I.D.
Number? Existing tenants should describe any additional
identification numbers issued since the previous certificate.
Yes / / No / /
4.2 Has your company filed a biennial or quarterly reports as a
hazardous waste generator? Existing tenants should describe any
new reports filed.
Yes / / No / /
If yes, attach a copy of the most recent report filed.
5. WASTEWATER TREATMENT AND DISCHARGE
5.1 Will your company discharge wastewater or other wastes to:
_____ storm drain? _____ sewer?
_____ surface water? _____ no wastewater or other wastes
discharged.
Existing tenants should indicate any actual discharges. If so,
describe the nature of any proposed or actual discharge(s).
__________________________________________________________________
__________________________________________________________________
G-3
5.2 Will any such wastewater or waste be treated before discharge?
Yes / / No / /
If yes, describe the type of treatment proposed to be conducted.
Existing tenants should describe the actual treatment conducted.
__________________________________________________________________
__________________________________________________________________
6. AIR DISCHARGES
6.1 Do you plan for any air filtration systems or stacks to be used in
your company's operations in, on or about the Premises that will
discharge into the air; and will such air emissions be monitored?
Existing tenants should indicate whether or not there are any such
air filtration systems or stacks in use in, on or about the
Premises which discharge into the air and whether such air
emissions are being monitored.
Yes / / No / /
If yes, please describe:__________________________________________
__________________________________________________________________
__________________________________________________________________
6.2 Do you propose to operate any of the following types of equipment,
or any other equipment requiring an air emissions permit? Existing
tenants should specify any such equipment being operated in, on or
about the Premises.
_____ Spray booth(s) _____ Incinerator(s)
_____ Dip tank(s) _____ Other (Please describe)
_____ Drying oven(s) _____ No Equipment Requiring Air
Permits
If yes, please describe:__________________________________________
__________________________________________________________________
__________________________________________________________________
6.3 Please describe (and submit copies of with this Hazardous
Materials Disclosure Certificate) any reports you have filed in
the past [thirty-six] months with any governmental or
quasi-governmental agencies or authorities related to air
discharges or clean air requirements and any such reports which
have been issued during such period by any such agencies or
authorities with respect to you or your business operations.
G-4
7. HAZARDOUS MATERIALS DISCLOSURES
7.1 Has your company prepared or will it be required to prepare a
Hazardous Materials management plan ("MANAGEMENT PLAN") or
Hazardous Materials Business Plan and Inventory ("BUSINESS PLAN")
pursuant to Fire Department or other governmental or regulatory
agencies' requirements? Existing tenants should indicate whether
or not a Management Plan is required and has been prepared.
Yes / / No / /
If yes, attach a copy of the Management Plan or Business Plan.
Existing tenants should attach a copy of any required updates to
the Management Plan or Business Plan.
7.2 Are any of the Hazardous Materials, and in particular chemicals,
proposed to be used in your operations in, on or about the
Premises listed or regulated under Proposition 65? Existing
tenants should indicate whether or not there are any new Hazardous
Materials being so used which are listed or regulated under
Proposition 65.
Yes / / No / /
If yes, please explain:___________________________________________
__________________________________________________________________
__________________________________________________________________
G-5
8. ENFORCEMENT ACTIONS AND COMPLAINTS
8.1 With respect to Hazardous Materials or Environmental Laws, has
your company ever been subject to any agency enforcement actions,
administrative orders, or consent decrees or has your company
received requests for information, notice or demand letters, or
any other inquiries regarding its operations? Existing tenants
should indicate whether or not any such actions, orders or decrees
have been, or are in the process of being, undertaken or if any
such requests have been received.
Yes / / No / /
If yes, describe the actions, orders or decrees and any continuing
compliance obligations imposed as a result of these actions,
orders or decrees and also describe any requests, notices or
demands, and attach a copy of all such documents. Existing tenants
should describe and attach a copy of any new actions, orders,
decrees, requests, notices or demands not already delivered to
Landlord pursuant to the provisions of Paragraph 32 of the Lease
Agreement.
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
8.2 Have there ever been, or are there now pending, any lawsuits
against your company regarding any environmental or health and
safety concerns?
Yes / / No / /
If yes, describe any such lawsuits and attach copies of the
complaint(s), cross-complaint(s), pleadings and other documents
related thereto as requested by Landlord. Existing tenants should
describe and attach a copy of any new complaint(s), cross-
complaint(s), pleadings and other related documents not already
delivered to Landlord pursuant to the provisions of Paragraph 32
of the Lease Agreement.
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
G-6
8.3 Have there been any problems or complaints from adjacent tenants,
owners or other neighbors at your company's current facility with
regard to environmental or health and safety concerns? Existing
tenants should indicate whether or not there have been any such
problems or complaints from adjacent tenants, owners or other
neighbors at, about or near the Premises and the current status of
any such problems or complaints.
Yes / / No / /
If yes, please describe. Existing tenants should describe any such
problems or complaints not already disclosed to Landlord under the
provisions of the signed Lease Agreement and the current status of
any such problems or complaints.
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
9. PERMITS AND LICENSES
9.1 Attach copies of all permits and licenses issued to your company
with respect to its proposed operations in, on or about the
Premises, including, without limitation, any Hazardous Materials
permits, wastewater discharge permits, air emissions permits, and
use permits or approvals. Existing tenants should attach copies of
any new permits and licenses as well as any renewals of permits or
licenses previously issued.
As used herein, "HAZARDOUS MATERIALS" shall mean and include any
substance that is or contains (a) any "HAZARDOUS SUBSTANCE" as now or
hereafter defined in Section 101(14) of the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended ("CERCLA")
(42 U.S.C. Section 9601 ET SEQ.) or any regulations promulgated under CERCLA;
(b) any "HAZARDOUS WASTE" as now or hereafter defined in the Resource
Conservation and Recovery Act, as amended ("RCRA") (42 U.S.C. Section 6901 ET
SEQ.) or any regulations promulgated under RCRA; (c) any substance now or
hereafter regulated by the Toxic Substances Control Act, as amended ("TSCA")
(15 U.S.C. Section 2601 ET SEQ.) or any regulations promulgated under TSCA;
(d) petroleum, petroleum by-products, gasoline, diesel fuel, or other
petroleum hydrocarbons; (e) asbestos and asbestos-containing material, in any
form, whether friable or non-friable; (f) polychlorinated biphenyls; (g) lead
and lead-containing materials; or (h) any additional substance, material or
waste (A) the presence of which on or about the Premises (i) requires
reporting, investigation or remediation under any Environmental Laws (as
hereinafter defined), (ii) causes or threatens to cause a nuisance on the
Premises or any adjacent property or poses or threatens to pose a hazard to
the health or safety of persons on the Premises or any adjacent property, or
(iii) which, if it emanated or migrated from the Premises, could constitute a
trespass, or (B) which is now or is hereafter classified or
G-7
considered to be hazardous or toxic under any Environmental Laws; and
"ENVIRONMENTAL LAWS" shall mean and include (a) CERCLA, RCRA and TSCA; and (b)
any other federal, state or local laws, ordinances, statutes, codes, rules,
regulations, orders or decrees now or hereinafter in effect relating to (i)
pollution, (ii) the protection or regulation of human health, natural resources
or the environment, (iii) the treatment, storage or disposal of Hazardous
Materials, or (iv) the emission, discharge, release or threatened release of
Hazardous Materials into the environment.
The undersigned hereby acknowledges and agrees that this Hazardous
Materials Disclosure Certificate is being delivered to Landlord in connection
with the evaluation of a Lease Agreement and, if such Lease Agreement is
executed, will be attached thereto as an exhibit. The undersigned further
acknowledges and agrees that if such Lease Agreement is executed, this Hazardous
Materials Disclosure Certificate will be updated from time to time in accordance
with Paragraph 32 of the Lease Agreement. The undersigned further acknowledges
and agrees that the Landlord and its partners, lenders and representatives may,
and will, rely upon the statements, representations, warranties, and
certifications made herein and the truthfulness thereof in entering into the
Lease Agreement and the continuance thereof throughout the term, and any
renewals thereof, of the Lease Agreement. I [print name], _____________________
acting with full authority to bind the (proposed) Tenant and on behalf of the
(proposed) Tenant, certify, represent and warrant that the information
contained in this certificate is true and correct.
(PROSPECTIVE) TENANT:
ADVANCED MEDICINE, INC.,
a Delaware corporation
By:
----------------------------
Title:
----------------------------
Date:
----------------------------
G-8
EXHIBIT H
TENANT'S PROPERTY
Laboratory related furniture and equipment including:
benches and tables
casework
biosafety, laminar flow, and fume hoods
cages/fencing
DI water system
vacuum pumps
compressed air
nitrogen manifold
Office related furniture and equipment including:
open office partitions
telephone and network equipment
reception desk
lobby furniture
lobby display cases
appliances
interior signage
H-1
EXHIBIT I
RECORDING REQUESTED BY AND WHEN RECORDED RETURN TO:
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
Attention:
-----------------------------------------
- --------------------------------------------------------------------------------
MEMORANDUM OF LEASE
THIS MEMORANDUM OF LEASE is executed as of February 17, 1999, by and between HMS
GATEWAY OFFICE, L.P., a Delaware limited partnership ("Landlord"), and ADVANCED
MEDICINE, INC., a Delaware corporation ("Tenant"). Landlord has previously
leased to Tenant a portion of that certain real property described on EXHIBIT A
attached hereto and incorporated herein by reference, consisting of the building
commonly known as 901 Gateway Boulevard located in South San Francisco,
California, commencing on ______________, _____ and terminating on
_____________, _____ on the terms and conditions set forth in that certain Lease
between Landlord and Tenant dated as of February ___, 1999 (the "Off Record
Lease"). Landlord has also granted to Tenant (i) options to renew the term of
the Lease for two (2) additional periods of five (5) years each, and (ii) a
right to expand the premises being leased by Tenant, all terms and conditions of
the Off Record Lease.
I-1
IN WITNESS WHEREOF, the undersigned have executed this Memorandum of
Lease so that third parties might have notice of the lease by Landlord and
Tenant herein.
LANDLORD: HMS GATEWAY OFFICE, L.P.,
a Delaware limited partnership
By: Hines Gateway Office, L.P.,
Administrative Partner
By: Hines Interests Limited Partnership,
General Partner
By: Hines Holdings, Inc.,
General Partner
By:
------------------------------
Name:
----------------------------
Its:
-----------------------------
TENANT: ADVANCED MEDICINE, INC.,
a Delaware corporation
By:
----------------------------------------
Name:
--------------------------------------
Its:
---------------------------------------
I-2
EXHIBIT J
TENANT'S IMPROVEMENT LOAN AMORTIZATION MEMORANDUM
LANDLORD: HMS GATEWAY OFFICE L.P.
TENANT: Advanced Medicine, Inc.
LEASE DATE: February 17, 1999
PREMISES: Located at 901 Gateway Boulevard, South San
Francisco, California
Tenant hereby acknowledges that Landlord has provided a Tenant
Improvement Loan to Tenant in the amount of ________________________________
Dollars ($ __________________________ ) pursuant to Section D of EXHIBIT C to
the Lease. Subject to the terms of the Lease and said EXHIBIT B, the Tenant
Improvement Loan shall be repayable by Tenant, together with interest on the
principal balance outstanding from time to time at the rate of twelve percent
(12%) per annum, in monthly installments of ____________________ Dollars ($
___________________ ) each. Said installments shall be payable on the first day
of each month during the initial Term of the Lease concurrently with the payment
of Monthly Base Rent.
TENANT: ADVANCED MEDICINE, INC.,
a Delaware corporation
By:
---------------------------------
Print Name:
-------------------------
Its:
--------------------------------
J-1
Approved and Agreed:
LANDLORD:
HMS GATEWAY OFFICE, L.P.,
a Delaware limited partnership
By: Hines Gateway Office, L.P.,
Administrative Partner
By: Hines Interests Limited Partnership,
General Partner
By: Hines Holdings, Inc.,
General Partner
By:
-----------------------------------------
Name:
---------------------------------------
Its:
----------------------------------------
J-2