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EXHIBIT 10.36
AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE--NET
(DO NOT USE THIS FORM FOR MULTI-TENANT PROPERTY)
1. BASIC PROVISIONS ("BASIC PROVISIONS")
1.1 PARTIES: This Lease ("Lease"), dated for reference purposes
only, December 22, 1995, is made by and between Campson Corporation, a
California corporation ("LESSOR") and CombiChem, Inc., a California corporation
("LESSEE"), (collectively the "PARTIES," or individually A "PARTY").
1.2 PREMISES: That certain real property, including all improvements
therein or to be provided by Lessor under the terms of this Lease, and commonly
known by the street address of 0000 Xxxxxx Xxxxx Xx, San Diego located in the
County of San Diego, State of California and generally described as (describe
briefly the nature of the property) an approximately 34,244 sq. ft. industrial
building together with adjoining parking areas, outside storage facility and all
landscaped areas (at no extra cost), including office space on two (2) floors,
and as legally described on attached Exhibit "A" ("PREMISES").
(See Paragraph 2 for further provisions)
1.3 TERM: ten (10) years and 0 months ("ORIGINAL TERM") commencing
June 1, 1996 ("COMMENCEMENT DATE") and ending May 31, 2006 ("EXPIRATION DATE").
(See Paragraph 3 for further provisions.)
1.4 EARLY POSSESSION: See Addendum "A" ("EARLY POSSESSION DATE").
(See Paragraphs 3.2 and 3.3 for further provisions.)
1.5 BASE RENT: $See Addendum "A" per month ("BASE RENT"), payable on
the first day of each month commencing July 1, 1996. (See Paragraph 4 for
further provisions.)
If this box is checked, there are provisions in this Lease for the
Base Rent to be adjusted.
1.6 BASE RENT DEPOSIT: $32,532 paid upon Lessor's receipt of Funding
Commitment (per Addendum "A") as Base Rent for the period of June 1-30, 1996.
1.7 SECURITY DEPOSIT: $See Addendum "A" ("SECURITY DEPOSIT"). (See
Paragraph 5 for further provisions.)
1.8 PERMITTED USE: General office use, all R&D/Chemistry research
associated with Lessee's business and all other lawful uses permitted under
applicable zoning laws. (See Paragraph 6 for further provisions.)
1.9 INSURING PARTY: Lessor is the "Insuring Party" unless otherwise
stated herein. (See Paragraph 8 for further provisions.)
1.10 REAL ESTATE BROKERS: The following real estate brokers
(collectively, the "BROKERS") and brokerage relationships exist in this
transaction and are consented to by the Parties (check applicable boxes): See
Addendum "A" represents
[ ] Lessor exclusively ("LESSOR'S BROKER"); both Lessor and Lessee, and
____________________________________________________ represents
[ ] Lessee exclusively ("LESSEE'S BROKER"); both Lessee and Lessor. (See
Paragraph 15 for further provisions.)
1.11 GUARANTOR. The obligations of the Lessee under this Lease are
to be guaranteed by _________________________ ("GUARANTOR"). (See Paragraph 37
for further provisions.)
1.12 ADDENDA. Attached hereto is an Addendum or Addenda consisting
of Paragraphs 1 through 18 and Exhibits "A" -- "D" all of which constitute a
part of the Lease.
2. PREMISES.
2.1 LETTING. Lessor hereby leases to Lessee, and Lessee hereby
leases from Lessor, the Premises, for the term, at the rental, and upon all of
the terms, covenants and conditions set forth in this Lease. Unless otherwise
provided herein, any statement of square footage set forth in this Lease, or
that may have been used in calculating rental, is an approximation which Lessor
and Lessee agree is reasonable and the rental based thereon is not subject to
revision whether or not the actual square footage is more or less.
2.2 CONDITION. Lessor shall deliver the Premises to Lessee in a good
and sanitary condition clean and free of debris and Hazardous Substance
Conditions on the Commencement Date and warrants to Lessee that the existing
plumbing (including, without limitation, sewer and drain lines), fire sprinkler
system, lighting, air conditioning, heating, and loading doors, if any, in the
Premises, other than those constructed by Lessee, shall be in good operating
condition on the Commencement Date. If a non-compliance with said warranty
exists as of the Commencement Date. Lessor shall, except as otherwise provided
in this Lease, promptly after receipt of written notice from Lessee setting
forth with specificity the nature and extent of such non-compliance, rectify
same at Lessor's expense. If Lessee does not give Lessor written notice of a
non-compliance with this warranty by December 31, 199_ correction of that
non-compliance shall be the obligation of Lessee at Lessee's sole cost and
expense.
2.3 COMPLIANCE WITH COVENANTS, RESTRICTIONS AND BUILDING CODE.
Lessor warrants to Lessee that the Improvements on the Premises comply with all
applicable covenants or restrictions of record and applicable building codes,
regulations and ordinances and any other applicable laws in effect on the
Commencement Date. Said warranty does not apply to the use to which Lessee will
put the Premises or to any Alterations or Utility Installations (as defined in
Paragraph 7.3(a)) made or to be made by Lessee. If the Premises do not comply
with said warranty, Lessor shall, except as otherwise provided in this Lease,
promptly after receipt of written notice from Lessee setting forth with
specificity the nature and extent of such non-compliance, rectify the same at
Lessor's expense. If Lessee does not give Lessor written notice of
non-compliance with this warranty by December 31, 19__ correction or that
non-compliance shall be the obligation of Lessee at Lessee's sole cost and
expense.
2.4 ACCEPTANCE OF PREMISES. Lessee hereby acknowledges: (a) that it
has been advised by the Brokers to satisfy itself with respect to the condition
of the Premises (including but not limited to the electrical and fire sprinkler
systems, security, environmental aspects, compliance with Applicable Law, as
defined in Paragraph 6.3) and the present and future suitability of the Premises
for Lessee's intended use, (b) that Lessee has made such investigation as it
deems necessary with reference to such matters, and (c) that neither Lessor, nor
any of Lessor's agents, has made any oral or written representations or
warranties with respect to the said matters other than as set forth in this
Lease.
2.5 DELETED
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3. TERM.
3.1 TERM. The Commencement Date, Expiration Date and Original Term
of this Lease are as specified in Paragraph 1.3.
3.2 EARLY POSSESSION. If Lessee totally or partially occupies the
Premises prior to the Commencement Date, the obligation to pay Base Rent shall
be abated for the period of such early possession as set forth in Addendum "A".
All other terms of this Lease, however, (including but not limited to the
obligations to pay Real Property Taxes and insurance premiums and to maintain
the Premises) shall be in effect during such period. Any such early possession
shall not affect nor advance the Expiration Date of the Original Term.
3.3 DELAY IN POSSESSION. If possession of the Premises is not
delivered to Lessee, Lessee may, at its option *1 by notice in writing to Lessor
within ten (10) days thereafter, cancel this Lease, in which event the Parties
shall be discharged from all obligations hereunder; provided, however, that if
such written notice by Lessee is not received by Lessor within said ten (10) day
period, Lessee's right to cancel this Lease shall terminate and be of no further
force or effect. Except as may be otherwise provided, and regardless of when the
term actually commences, if possession is not tendered to Lessee when required
by this Lease and Lessee does not terminate this Lease, as aforesaid, the period
free of the obligation to pay Base Rent, if any, that Lessee would otherwise
have enjoyed shall run from the date of delivery of possession and continue for
a period equal to what Lessee would otherwise have enjoyed under the terms
hereof, but minus any days of delay caused by the acts, changes or omissions of
Lessee.
4. RENT.
4.1 BASED RENT. Subject to the terms and conditions of Addendum "A"
Lessee shall cause payment of Base Rent and other rent or charges, as the same
may be adjusted from time to time, to be received by Lessor in lawful money of
the United States, without offset or deduction, on or before the day on which it
is due under the terms of this Lease. Base Rent and all other rent and charges
for any period during the term hereof which is for less than one (1) full
calendar month shall be prorated based upon the actual number of days of the
calendar month involved. Payment of Base Rent and other charges shall be made to
Lessor at is address stated herein or to such other persons or at such other
addresses as Lessor may from time to time designate in writing to Lessee. *2
5. SECURITY DEPOSIT. Lessee shall deposit with Lessor upon execution hereof the
Security Deposit set forth in Paragraph 1.7 as security for Lessee's faithful
performance of Lessee's obligations under this Lease. If Lessee fails to pay
Base Rent or other rent or charges due hereunder, or otherwise Defaults under
this Lease (as defined in Paragraph 13.1), Lessor may use, apply or retain all
or any portion of said Security Deposit for the payment of any amount due Lessor
or to reimburse or compensate Lessor for any liability, cost, expense, loss or
damage (including attorneys' fees) which Lessor may suffer or incur by reason
thereof. If Lessor uses or applies all or any portion of said Security Deposit,
Lessee shall within ten (10) days after written request therefor deposit moneys
with Lessor sufficient to restore said Security Deposit to the full amount
required by this Lease. Lessor shall, at the expiration or earlier termination
of the term hereof and after Lessee has vacated the Premises, return to Lessee
(or, at Lessor's option, to the last assignee, if any, of Lessee's interest
herein), that portion of the Security Deposit not used or applied by Lessor. *3
6. USE.
6.1 USE. Lessee shall use and occupy the Premises only for the
purposes set forth in Paragraph 1.8, or any other use which is comparable
thereto, and for no other purpose. Lessee shall not use or permit the use of the
Premiss in a manner that creates waste or a nuisance, or that disturbs owners
and/or occupants of, or causes damage to, neighboring premises or properties.
Lessor hereby agrees to not unreasonably withhold or delay its consent to any
written request by Lessee. Lessees assignees or subtenants, and by prospective
assignees and subtenants of the Lessee, its assignees and subtenants, for a
modification of said permitted purpose for which the premises may be used or
occupied, so long as the same will not impair the structural integrity of the
improvements on the Premises, the mechanical or electrical systems therein, is
not significantly more burdensome to the Premises and the Improvements thereon,
and is otherwise permissible pursuant to this Paragraph 6. If Lessor elects to
withhold such consent, Lessor shall within five (5) business days give a written
notification of same, which notice shall include an explanation of Lessor's
reasonable objections to the change in use. *4
6.2 HAZARDOUS SUBSTANCES.
(a) REPORTABLE USES REQUIRE CONSENT. The term "HAZARDOUS
SUBSTANCE" as used in this Lease shall mean any product, substance, chemical,
material or waste whose presence, nature, quantity and/or intensity of
existence, use, manufacture, disposal, transportation, spill, release or effect,
either by itself or in combination with other materials expected to be on the
Premises, is either: (i) potentially injurious to the public health, safety or
welfare, the environment or the Premises, (ii) regulated or monitored by any
governmental authority, or (iii) a basis for liability of Lessor to any
governmental agency or third party under any applicable statute or common law
theory. Hazardous Substance shall include, but not be limited to, hydrocarbons,
petroleum, gasoline, crude oil or any products, by-products or fractions
thereof. Lessee shall not engage in any activity in, on or about the Premises
which constitutes a Reportable Use (as hereinafter defined) of Hazardous
Substances and shall comply in a timely manner (at Lessee's sole cost and
expense) with all Applicable Law (as defined in Paragraph 6.3). "REPORTABLE USE"
shall mean (i) the installation or use of any above or below ground storage
tank, (ii) the generation, possession, storage, use, transportation, or disposal
of a Hazardous Substance that requires a permit from, or with respect to which a
report, notice, registration or business plan is required to be filed with, any
governmental authority. Reportable Use shall also include Lessee's being
responsible for the presence in, on or about the Premises of a Hazardous
Substance with respect to which any Applicable Law requires that a notice be
given to persons entering or occupying the Premises or neighboring properties.
Notwithstanding the foregoing, Lessee may, without Lessor's prior consent, but
in compliance with all Applicable Law, use any ordinary and customary materials
reasonably required to be used by Lessee in the normal course of Lessee's
business permitted on the Premises, so long as such use does not expose the
Premises or neighboring properties to any meaningful risk of contamination or
damage or expose Lessor to any liability therefor.
(b) DUTY TO INFORM LESSOR. If Lessee knows, or has reasonable
cause to believe, that a Hazardous Substance, or a condition involving or
resulting from same, has come to be located in, on, under or about the Premises,
other than as previously consented to by Lessor, Lessee shall immediately give
written notice of such fact to Lessor. Lessee shall also immediately give Lessor
a copy of any statement, report, notice, registration, application, permit,
business plan, license, claim, action or proceeding given to, or received from,
any
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governmental authority or private party, or persons entering or occupying the
Premises, concerning the presence, spill, release, discharge of, or exposure to,
any Hazardous Substance or contamination in, on, or about the Premises in
violation of applicable laws.
(c) INDEMNIFICATION. Lessee shall indemnify, protect, defend and
hold Lessor, its agents, employees, lenders and ground lessor, if any, and the
Premises, harmless from and against any and all loss of rents and/or damages,
liabilities, judgments, costs, claims, liens, expenses, penalties, permits and
attorney's and consultant's fees arising out of or involving any Hazardous
Substance or storage tank brought onto the Premises by or for Lessee or under
Lessee's control. Lessee's obligations under this Paragraph 6 shall include, but
not be limited to, the effects of any contamination or injury to person,
property or the environment created or suffered by Lessee, and the cost of
investigation (including consultant's and attorney's fees and testing), removal,
remediation, restoration and/or abatement thereof, or of any contamination
therein involved, and shall survive the expiration or earlier termination of
this Lease. No termination, cancellation or release agreement entered into by
Lessor and Lessee shall release Lessee from its obligations under this Lease
with respect to Hazardous Substances or storage tanks, unless specifically so
agreed by Lessor in writing at the time of such agreement. *5
6.3 LESSEE'S COMPLIANCE WITH LAW. Except as otherwise provided in
this Lease, Lessee, shall, at Lessee's sole cost and expense, fully, diligently
and in a timely manner, comply with all "APPLICABLE LAW," which term is used in
this Lease to include all laws, rules, regulations, ordinances, directives,
covenants, easements and restrictions of record, permits, the requirements of
any applicable fire insurance underwriter or rating bureau, relating in any
manner to the Premises (including but not limited to matters pertaining to (i)
industrial hygiene, (ii) environmental conditions on, in, under or about the
Premises, including soil and groundwater conditions, and (iii) the use,
generation, manufacture, production, installation, maintenance, removal,
transportation, storage, spill or release of any Hazardous Substance or storage
tank), now in effect or which may hereafter come into effect, and whether or not
reflecting a change in policy from any previously existing policy. Lessee shall,
within five (5) days after receipt of Lessor's written request, provide Lessor
with copies of all documents and information, including, but not limited to,
permits, registrations, manifests, applications, reports and certificates,
evidencing Lessee's compliance with any Applicable Law reasonably specified by
Lessor, and shall immediately upon receipt, notify Lessor in writing (with
copies of any documents involved) of any threatened or actual claim, notice,
citation, warning, complaint or report pertaining to or involving failure by
Lessee or the Premises to comply with any Applicable Law.
6.4 INSPECTION; COMPLIANCE. Lessor and Lessor's Lender(s) on at
least 24 hours prior notice (as defined in Paragraph 8.3(a)) shall have the
right to enter the Premises at any time, in the case of an emergency, and
otherwise at reasonable times, for the purpose of inspecting the condition of
the Premises and for verifying compliance by Lessee with this Lease and all
Applicable Laws (as defined in Paragraph 6.3), and to employ experts and/or
consultants in connection therewith and/or to advise Lessor with respect to
Lessee's activities, including but not limited to the installation, operation,
use, monitoring, maintenance, or removal of any Hazardous Substance or storage
tank on or from the Premises. The costs and expenses of any such inspections
shall be paid by the party requesting same, and a certified copy of such report
shall be provided to Lessee.
7. MAINTENANCE; REPAIRS; UTILITY INSTALLATIONS; TRADE FIXTURES AND
ALTERATIONS.
7.1 LESSEE'S OBLIGATIONS.
(a) Subject to the provisions of Paragraph 2.2 (Lessor's
warranty as to condition), 2.3 (Lessor's warranty as to compliance with
covenants, etc.), 7.2 (Lessor's obligations to repair), 9 (damage and
destruction), and 14 (condemnation), Lessee shall, at Lessee's sole cost and
expense and at all times *6
7.2 LESSOR'S OBLIGATIONS. Except for the warranties and agreements
of Lessor contained in Paragraphs 2.2 (relating to condition of the Premises),
2.3 (relating to compliance with covenants, restrictions and building code), 9
(relating to destruction of the Premises) and 14 (relating to condemnation of
the Premises), *7
7.3 UTILITY INSTALLATIONS; TRADE FIXTURES; ALTERATIONS.
(a) DEFINITIONS; CONSENT REQUIRED. The term "UTILITY
INSTALLATIONS" is used in this Lease to refer to all carpeting, window
coverings, air lines, power panels, electrical distribution, security, fire
protection systems, communication systems, lighting fixtures, heating,
ventilating, and air conditioning equipment, plumbing, and fencing in, on or
about the Premises. The term "TRADE FIXTURES" shall mean Lessee's machinery and
equipment that can be removed without doing material damage to the Premises. The
term "ALTERATIONS" shall mean any modification of the improvements on the
Premises from that which are provided by Lessor under the terms of this Lease,
other than Utility Installations or Trade Fixtures, whether by addition or
deletion. "LESSEE OWNED ALTERATIONS AND/OR UTILITY INSTALLATIONS" are defined as
Alterations and/or Utility Installations made by lessee that are not yet owned
by Lessor as defined in Paragraph 7.4(a). Lessee shall not make any Alterations
or Utility Installations in, on, under or about the Premises without Lessor's
prior written consent, which shall not be unreasonably withheld. Lessee may,
however, may non-structural Utility Installations to the interior of the
Premises (excluding the roof), as long as they are not visible from the outside,
do not involve puncturing, relocating or removing the roof or any existing
walls, and the cumulative cost thereof during the term of this Lease as extended
does not exceed $70,000.
(b) CONSENT. Any Alterations or Utility Installations that
Lessee shall desire to make and which require the consent of the Lessor shall be
presented to Lessor in written form with proposed detailed plans. All consents
given by Lessor, whether by virtue of Paragraph 7.3(a) or by subsequent specific
consent, shall be deemed conditioned upon: (i) Lessee's acquiring all applicable
permits required by governmental authorities, (ii) the furnishing of copies of
such permits together with a copy of the plans and specifications for the
Alteration or Utility Installation to Lessor prior to commencement of the work
thereon, and (iii) the compliance by Lessee with all conditions of said permits
in a prompt and expeditious manner. Any Alterations or Utility Installations by
Lessee during the term of this Lease shall be done in a good and workmanlike
manner, with good and sufficient materials, and in compliance with all
Applicable Law. Lessee shall promptly upon completion thereof furnish Lessor
with as-built plans and specifications therefor.
(c) INDEMNIFICATION. lessee shall pay, when due, all claims for
labor or materials furnished or alleged to have been furnished to or for Lessee
at or for use on the Premises, which claims are or may be secured by any
mechanics' or materialmen's lien against the Premises or ny interest therein.
Lessee shall give Lessor not less than ten (10) days' notice prior to the
commencement of any work in, on or about the Premises, and Lessor shall have the
right to post notices of non-responsibility in or on the Premises as provided by
law. If Lessee shall, in good faith, contest the validity of any such lien,
claim or demand, then Lessee shall, at its sole expense defend and protect
itself, Lessor and the Premises against the same and shall pay and satisfy any
such adverse judgment that may be rendered thereon before
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the enforcement thereof against the Lessor or the Premises. If Lessor shall
require, lessee shall furnish to Lessor a surety bond satisfactory to lessor in
an amount equal to one and one-half times the amount of such contested lien
claim or demand, indemnifying Lessor against liability for the same, as required
by law for the holding of the Premises free from the effect of such lien or
claim. In addition, Lessor may require Lessee to pay Lessors' reasonable
attorney's fees and costs in participating in such action if Lessor shall decide
it is to its best interest to do so.
7.4 OWNERSHIP; REMOVAL; SURRENDER; AND RESTORATION.
(a) OWNERSHIP. Subject to Lessor's right to require their
removal or become the owner thereof as hereinafter provided in this Paragraph
7.4, all Alterations and Utility Additions made to the Premises by Lessee shall
be the property of and owned by Lessee, but considered a part of the Premises.
Unless otherwise instructed per subparagraph 7.4(b) hereof, all Lessee Owned
Alterations and Utility Installations shall, at the expiration or earlier
termination of the Lease, become the property of Lessor and remain upon and be
surrendered by Lessee with the Premises.
(b) REMOVAL. Unless otherwise agreed in writing, Lessor may *8
require that any or all Lessee Owned alternations or Utility Installations be
removed by the expiration or earlier termination of this Lease, notwithstanding
their installation may have been consented to by Lessor. Lessor may require the
removal at any time of all or any part of any Lessee Owned Alterations or
Utility Installations made without the required consent of Lessor.
(c) SURRENDER/RESTORATION. Lessee shall surrender the Premises
by the end of the last day of the Lease term or any earlier termination date,
with all of the improvements, parts and surfaces thereof clean and free of
debris and in good operating order, condition and state of repair, ordinary wear
and tear excepted and subject to Paragraph 9. "ORDINARY WEAR AND TEAR" shall not
include any damage or deterioration that would have been prevented by good
maintenance practice or by Lessee performing all of its obligations under this
Lease. Except as otherwise agreed or specified in writing by Lessor, the
Premises, as surrendered, shall include the Utility Installations. The
obligation of Lessee shall include the repair of any damage occasioned by the
installation, maintenance or removal of Lessee's Trade Fixtures, furnishings,
equipment, and Alterations and/or Utility Installations, as well as the removal
of any storage tank installed by or for Lessee, and the removal, replacement, or
remediation of any soil, material or ground water contaminated by Lessee, all as
may then be required by Applicable Law and/or good service practice. Lessee's
Trade Fixtures shall remain the property of Lessee and shall be removed by
Lessee subject to its obligation to repair and restore the Premises per this
Lease. *9
8. INSURANCE; INDEMNITY.
8.1 PAYMENT FOR INSURANCE. Regardless of whether the Lessor or
Lessee is the Insuring Party, Lessee shall pay for all insurance required under
this Paragraph 8 except to the extent of the cost attributable to liability
insurance carried by Lessor in excess of $1,000,000 per occurrence. Premiums for
policy periods commencing prior to or extending beyond the Lease term shall be
prorated to correspond to the Lease term. Payment shall be made by Lessee to
Lessor within ten (10) days following receipt of an invoice from the company
providing such insurance for any amount due.
8.2 LIABILITY INSURANCE.
(a) CARRIED BY LESSEE. Lessee shall obtain and keep in force
during the term of his Lease a Commercial General Liability policy of insurance
protecting Lessee and Lessor (as an additional insured) against claims for
bodily injury, personal injury and property damage based upon, involving or
arising out of the ownership, use, occupancy or maintenance of the Premises and
all areas appurtenant thereto. Such insurance shall be on an occurrence basis
providing single limit coverage in an amount not less than $1,000,000 per
occurrence with an "Additional Insured-Managers or Lessors of Premises"
Endorsement and contain the "Amendment of the Pollution Exclusion" for damage
caused by heat, smoke or fumes from a hostile fire. The policy shall not contain
any intra-insured exclusions as between insured persons or organizations, but
shall include coverage for liability assumed under this Lease as an "insured
contract" for the performance of Lessee's indemnity obligations under this
Lease. The limits of said insurance required by this Lease or as carried by
Lessee shall not, however, limit the liability of Lessee nor relive Lessee of
any obligation hereunder. All insurance to be carried by Lessee shall be primary
to and not contributory with any similar insurance carried by Lessor, whose
insurance shall be considered excess insurance only.
(b) CARRIED BY LESSOR. In the event lessor is the Insuring
Party, Lessor shall also maintain liability insurance described in Paragraph
8.2(a), above, in addition to, and not in lieu of, the insurance required to be
maintained by Lessee. Lessee shall not be named as an additional insured
therein.*10
8.3 PROPERTY INSURANCE--BUILDING, IMPROVEMENTS AND RENTAL VALUE.
(a) BUILDING AND IMPROVEMENTS. The Insuring Party shall obtain
and keep in force during the term of this Lease a policy or policies in the name
of Lessor, with loss payable to Lessor and to the holders of any mortgages,
deeds of trust or ground leases on the Premises ("LENDERS(S)"), insuring loss or
damage to the Premises. The amount of such insurance shall be equal to the full
replacement cost of the Premises, as the same shall exist from time to time, or
the amount required by Lenders, but in no event more than the commercially
reasonable and available insurable value thereof if, by reasons of the unique
nature or age of the improvements involved, such latter amount is less than full
replacement cost. If Lessor is the Insuring Party, however, Lessee Owned
Alterations and Utility Installations shall be insured by Lessee under Paragraph
8.4 rather than by Lessor. If the coverage is available and commercially
appropriate, such policy or policies shall insure against all risks of direct
physical loss or damage (except the perils of flood and/or earthquake unless
required by a Lender), including coverage for any additional costs resulting
from debris removal and reasonable amounts of coverage for the enforcement of
any ordinance or law regulating the reconstruction or replacement of any
undamaged sections of the Premises required to be demolished or removed by
reason of the enforcement of any building, zoning, safety or land use laws as
the result of a covered cause of loss. Said policy or policies shall also
contain an agreed valuation provision in lieu of any coinsurance clause, waiver
of subrogation, and inflation guard protection causing an increase in the annual
property insurance coverage amount by a factor of not less than the adjusted
U.S. Department of Labor Consumer Price Index for All Urban Consumers for the
city nearest to where the Premises are located. If such insurance coverage has a
deductible clause, the deductible amount shall not exceed $1,000 per occurrence,
and Lessee shall be liable for such deductible amount in the event of an Insured
Loss, as defined in Paragraph 9.1(c).
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(b) RENTAL VALUE. The Insuring Party shall, in addition, obtain
and keep in force during the term of this Lease a policy or policies in the name
of Lessor, with loss payable to Lessor and Lender(s), insuring the loss of the
full rental and other charges payable by Lessee to Lessor under this Lease for
one (1) year (including all real estate taxes, insurance costs, and any
scheduled rental increases). Said insurance shall provide that in the event the
Lease is terminated by reason of an insured loss, the period of indemnity for
such coverage shall be extended beyond the date of the completion of repairs or
replacement of the Premises, to provide for one full year's loss of rental
revenues from the date of any such loss. Said insurance shall contain an agreed
valuation provision in lieu of any coinsurance clause, and the amount of
coverage shall be adjusted annually to reflect the projected rental income,
property taxes, insurance premium costs and other expenses, if any, otherwise
payable by Lessee, for the next twelve (12) month period. Lessee shall be liable
for any deductible amount in the event of such loss.
(c) DELETED.
(d) TENANT'S IMPROVEMENTS. If the Lessor is the Insuring Party,
the Lessor shall not be required to insure Lessee Owned Alterations and Utility
Installations unless the item in question has become the property of Lessor
under the terms of this Lease. If Lessee is the Insuring Party, the policy
carried by Lessee under this Paragraph 8.3 shall insure Lessee Owned Alterations
and Utility Installations.
8.4 LESSEE'S PROPERTY INSURANCE. Subject to the requirements of
Paragraph 8.5, Lessee at its cost shall either by separate policy or, at
Lessor's option, by endorsement to a policy already carried, maintain insurance
coverage on all of Lessee's personal property. Lessee Owned Alterations and
Utility Installations in, on, or about the Premises similar in coverage to that
carried by the Insuring Party under Paragraph 8.3. Such insurance shall be full
replacement cost coverage with a deductible of not to exceed $10,000 per
occurrence. The proceeds from any such insurance shall be used by Lessee for the
replacement of personal property or the restoration of Lessee Owned Alterations
and Utility Installations. Lessee shall be the Insuring Party with respect to
the insurance required by this Paragraph 8.4 and shall provide Lessor with
written evidence that such insurance is in force.
8.5 INSURANCE POLICIES. Insurance required hereunder shall be in
companies duly licensed to transact business in the state where the Premises are
located, and maintaining during the policy term a "General Policyholders Rating"
of at least B+, V, or such other rating as may be required by a Lender having a
lien on the Premises, as set forth in the most current issue of "Best's
Insurance Guide." Lessee shall not do or permit to be done anything which shall
invalidate the insurance policies referred to in this Paragraph 8. If Lessee is
the Insuring Party, Lessee shall cause to be delivered to Lessor certified
copies of policies of such insurance or certificates evidencing the existence
and amounts of such insurance with the insureds and loss payable clauses as
required by this Lease. No such policy shall be cancellable or subject to
modification except after thirty (30) days prior written notice to Lessor.
Lessee shall at least thirty (30) days prior to the expiration of such policies,
furnish Lessor with evidence of renewals or "insurance binders" evidencing
renewal thereof, or Lessor may order such insurance and charge the cost thereof
to Lessee, which amount shall be payable by Lessee to Lessor upon demand. If the
Insuring party shall fail to procure and maintain the insurance required to be
carried by the Insuring Party under this Paragraph 8, the other Party may but
shall not be required to, procure and maintain the same, but at Lessee's
expense.
8.6 WAIVER OF SUBROGATION. Without affecting any other rights or
remedies, Lessee and Lessor ("WAIVING PARTY") each hereby release and relieve
the other, and waiver their entire right to recover damages (whether in contract
or in tort) against the other, for loss of or damage to the Waiving Party's
property arising out of or incident to the perils required to be insured against
under Paragraph 8. The effect of such releases and waivers of the right to
recover damages shall not be limited by the amount of insurance carried or
required, or by any deductibles applicable thereto.*11
8.7 INDEMNITY. Except for Lessor's negligence willful misconduct
and/or breach of this Lease, Lessee shall indemnify, protect, defend and hold
harmless the Premises, Lessor and its agents, Lessor's master or ground lessor,
partners and Lenders, from and against any and all claims, loss of rents and/or
damages, costs, liens, judgments, penalties, permits, attorney's and
consultant's fees, expenses and/or liabilities arising out of, involving, or in
dealing with, the occupancy of the Premises by Lessee, the conduct of Lessee's
business, any act, omission or neglect of Lessee, its agents, contractors,
employees or invitees, and out of any Default or Breach by Lessee in the
performance in a timely manner of any obligation on Lessee's part to be
performed under this Lease. The foregoing shall include, but not be limited to,
the defense or pursuit of any claim or any action or proceeding involved
therein, and whether or not (in the case of claims made against Lessor)
litigated and/or reduced to judgment. In case any action or proceeding be
brought against Lessor by reason of any of the foregoing matters. Lessee upon
notice from Lessor shall defend the same at Lessee's expense by counsel
reasonably satisfactory to Lessor and Lessor shall cooperate with Lessee in such
defense. Lessor need not have first paid any such claim in order to be so
indemnified.
8.8 EXEMPTION OF LESSOR FROM LIABILITY. Except for Lessor's
negligence, willful misconduct and/or breach of this Lease, Lessor shall not be
liable for injury or damage to the person or goods, wares, merchandise or other
property of Lessee. Lessee's employees, contractors, invitees, customers, or any
other person in or about the Premises, whether such damage or injury is caused
by or results from fire, steam, electricity, gas, water or rain, or from the
breakage, leakage, obstruction or other defects of pipes, fire sprinklers,
wires, appliances, plumbing, air conditioning or lighting fixtures, or from any
other cause, whether the said injury or damage results from conditions arising
upon the Premises or upon other portions of the building of which the Premises
are a part, or from other sources or places, and regardless of whether the cause
of such damage or injury or the means of repairing the same is accessible or
not. Lessor shall not be liable for any damages arising from any act or neglect
of any other tenant of Lessor.
9. DAMAGE OR DESTRUCTION.
9.1 DEFINITIONS.
(a) "PREMISES PARTIAL DAMAGE" shall mean damage or destruction
to the improvements on the Premises, other than Lessee Owned Alterations and
Utility Installations, the repair cost of which damage or destruction is less
than 50% of the then Replacement Cost of the Premises immediately prior to such
damage or destruction, excluding from such calculation the value of the land and
Lessee Owned Alterations and Utility Installations.
(b) "PREMISES TOTAL DESTRUCTION" shall mean damage or
destruction to the Premises, other than Lessee Owned Alterations and Utility
Installations the repair cost of which damage or destruction is 50% or more of
the then Replacement Cost of the
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Premises immediately prior to such damage or destruction, excluding from such
calculation the value of the land and Lessee Owned Alterations and Utility
Installations.
(c) "INSURED LOSS" shall mean damage or destruction to
improvements on the Premises, other than Lessee Owned Alterations and Utility
Installations, which was caused by an event required to be covered by the
insurance described in Paragraph 8.3(a), irrespective of any deductible amounts
or coverage limits involved.
(d) "REPLACEMENT COST" shall mean the cost to repair or rebuild
the improvements owned by Lessor at the time of the occurrence to their
condition existing immediately prior thereto, including demolition, debris
removal and upgrading required by the operation of applicable building codes,
ordinances or laws, and without deduction for depreciation.
(e) "HAZARDOUS SUBSTANCE CONDITION" shall mean the occurrence or
discovery of a condition involving the presence of, or a contamination by, a
Hazardous Substance as defined in Paragraph 6.2(a), in, on, or under the
Premises.
9.2 PARTIAL DAMAGE--INSURED LOSS. If a Premises Partial Damage that
is an Insured Loss occurs, then Lessor shall, at Lessor's expense, repair such
damage (but not Lessee's Trade Fixtures or Lessee Owned Alterations and Utility
Installations) as soon as reasonably possible and this Lease shall continue in
full force and effect; provided, however, that Lessee shall, at Lessor's
election, make the repair of any damage or destruction the total cost to repair
of which is $10,000 or less, and, in such event, Lessor shall make the insurance
proceeds available to Lessee on a reasonable basis for that purpose.
Notwithstanding the foregoing, if the required insurance was not in force or the
insurance proceeds are not sufficient to effect such repair, the Insuring Party
shall promptly contribute the shortage in proceeds (except as to the deductible
which is Lessee's responsibility) as and when required to complete said repairs.
In the event, however, the shortage in proceeds was due to the fact that, by
reason of the unique nature of the improvements, full replacement cost insurance
coverage was not commercially reasonable and available, Lessor shall have no
obligation to pay for the shortage in insurance proceeds or to fully restore the
unique aspects of the Premises unless Lessee provides Lessor with the funds to
cover same, or adequate assurance thereof, within ten (10) days following
receipt of written notice of such shortage and request therefor. if Lessor
receives said funds or adequate assurance thereof within said ten (10) day
period, the party responsible for making the repairs shall complete them as soon
as reasonable possible and this Lease shall remain in full force and effect. If
Lessor does not receive such funds or assurance within said period, Lessor may
nevertheless elect by written notice to Lessee within ten (10) days thereafter
to make such restoration and repair as is commercially reasonable with Lessor
paying any shortage in proceeds, in which case this Lease shall remain in full
force and effect. If in such case Lessor does not so elect, then this Lease
shall terminate sixty (60) days following the occurrence of the damage or
destruction. Unless otherwise agreed, Lessee shall in no event have any right to
reimbursement from Lessor for any funds contributed by Lessee to repair any such
damage or destruction. Premises Partial Damage due to flood or earthquake shall
be subject to Paragraph 9.3 rather than Paragraph 9.2, notwithstanding that
there may be some insurance coverage, but the net proceeds of any such insurance
shall be made available for the repairs if made by either Party.
9.3 PARTIAL DAMAGE--UNINSURED LOSS. If a Premises Partial Damage
that is not an Insured Loss occurs, unless caused by a negligent or willful act
of Lessee (in which event Lessee shall make the repairs at Lessee's expense and
this Lease shall continue in full force and effect, but subject to Lessor's
rights under Paragraph 13), Lessor may at Lessor's option, either : (i) repair
such damage of knowledge of such damage at Lessor's expense, in which event this
Lease shall continue in full force and effect, or (ii) give written notice to
Lessee within thirty (30) days after receipt by Lessor of knowledge of the
occurrence of such damage of Lessor's desire to terminate this Lease as of the
date sixty (60) days following the giving of such notice. In the event Lessor
elects to give such notice of Lessor's intention to terminate this Lease, Lessee
shall have the right within ten (10) days after the receipt of such notice to
give written notice to Lessor of Lessee's commitment to pay for the repair of
such damage totally at Lessee's expense and without reimbursement from Lessor.
Lessee shall provide Lessor with the required funds or satisfactory assurance
thereof within thirty (30) days following Lessee's said commitment. In such
event this Lease shall continue in full force and effect, and Lessor shall
proceed to make such repairs as soon as reasonably possible and the required
funds are available. If Lessee does not give such notice and provide the funds
or assurance thereof within the times specified above, this Lease shall
terminate as of the date of the occurrence of such damage.
9.4 TOTAL DESTRUCTION. Notwithstanding any other provision hereof,
if a Premises Total Destruction occurs (including any destruction required by
any authorized public authority), this Lease shall terminate as of the date of
such Premises Total Destruction, whether or not the damage or destruction is an
Insured Loss or was caused by a negligent or willful act of Lessee. In the
event, however, that the damage or destruction was caused by Lessee, Lessor
shall have the right to recover Lessor's damages, from Lessee except as released
and waived in Paragraph 8.6.
9.5 DAMAGE NEAR END OF TERM. If at any time during the last six (6)
months of the term of this Lease (as extended by Lessee pursuant to any of
Lessee's renewal options), there is damage for which the cost to repair exceeds
four (4) months' Base Rent, whether or not an Insured Loss, either party may
terminate this Lease effective sixty (60) days following the date of occurrence
of such damage by giving written notice to the other party of its election to do
so within thirty (30) days after the date of occurrence of such damage.
Provided, however, if Lessee at that time has an exercisable option to extend
this Lease or to purchase the Premises, then Lessee may preserve this Lease by,
within twenty (20) days following the occurrence of the damage, or before the
expiration of the time provided in such option for its exercise, whichever is
earlier ("EXERCISE PERIOD"), (i) exercising such option and (ii) providing
Lessor with any shortage in insurance proceeds (or adequate assurance thereof)
needed to make the repairs. If Lessee duly exercises such option during said
Exercise Period and provides Lessor with funds (or adequate assurance thereof)
to cover any shortage in insurance proceeds, Lessor shall, at Lessor's expense
repair such damage as soon as reasonably possible and this Lease shall continue
in full force and effect. If Lessee fails to exercise such option and provide
such funds or assurance during said Exercise Period, then Lessor may at Lessor's
option terminate this Lease as of the expiration of said sixty (60) day period
following the occurrence of such damage by giving written notice to Lessee of
Lessor's election do so within ten (10) days after the expiration of the
Exercise Period, notwithstanding any term or provision in the grant of option to
the contrary.
9.6 ABATEMENT OF RENT; LESSEE'S REMEDIES.
(a) In the event of damage described in Paragraph 9.2 (Partial
Damage--Insured), whether or not Lessor or Lessee repairs or restores the
Premises, the Base Rent, Real Property Taxes, insurance premiums, and other
charges,
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if any, payable by Lessee hereunder for the period during which such damage, its
repair or the restoration continues, shall be abated in proportion to the degree
to which Lessee's use of the Premises is impaired. Except for abatement of base
Rent, Real Property Taxes, insurance premiums, and other charges, if any, as
aforesaid, all other obligations of Lessee hereunder shall be performed by
Lessee, and Lessee shall have no claim against Lessor for any damage suffered by
reason of any such repair or restoration.*12
(b) If Lessor shall be obligated to repair or restore the
Premises under the provisions of this Paragraph 9 and shall not commence, in a
substantial and meaningful way, the repair or restoration of the Premises within
ninety (90) days after such obligation shall accrue, Lessee may, at any time
prior to the commencement of such repair or restoration, give written notice to
Lessor and to any Lenders of which Lessee has actual notice of Lessee's election
to terminate this Lease on a date not less than sixty (60) days following the
giving of such notice. If Lessee gives such notice to Lessor and such Lenders
and such repair or restoration is not commenced within thirty (30) days after
receipt of such notice, this Lease shall terminate as of the date specified in
said notice. If Lessor or a Lender commences the repair or restoration of the
Premises within thirty (30) days after receipt of such notice, this Lease shall
continue in full force and effect. "COMMENCE" as used in this Paragraph shall
mean either the unconditional authorization of the preparation of required
plans, or the beginning of the actual work on the Premises, whichever first
occurs.*13
9.7 HAZARDOUS SUBSTANCE CONDITIONS. If a Hazardous Substance
Condition occurs, unless Lessee is legally responsible therefore (in which case
Lessee shall make the investigation and remediation thereof required by
Applicable Law and this Lease shall continue in full force and effect; but
subject to Lessor's rights under Paragraph 13), Lessor may at Lessor's option
either (i) investigate and remediate such Hazardous Substance Condition, if
required, as soon as reasonably possible at Lessor's expense, in which event
this Lease shall continue in full force and effect, or (ii) if the estimated
cost to investigate and remediate such condition exceeds twenty (20) times the
then monthly Base Rent, give written notice to Lessee within thirty (30) days
after receipt by Lessor of knowledge of the occurrence of such Hazardous
Substance Condition of Lessor's desire to terminate this Lease as of the date
one hundred eighty (180) days following the giving of such notice.*14 In the
event Lessor elects to give such notice of Lessor's intention to terminate this
Lease, Lessee shall have the right within ten (10) days after the receipt of
such notice to give written notice to Lessor of Lessee's commitment to pay for
the investigation and remediation of such Hazardous Substance Condition totally
at Lessee's expense and without reimbursement from Lessor except to the extent
of an amount equal to twenty (20) times the then monthly Base Rent. Lessee shall
provide Lessor with the funds required of Lessee or satisfactory assurance
thereof within thirty (30) days following Lessee's said commitment. In such
event this Lease shall continue in full force and effect, and Lessor shall
proceed to make such investigation and remediation as soon as reasonably
possible and the required funds are available. If Lessee does not give such
notice and provide the required funds or assurance thereof within the times
specified above, this Lease shall terminate as of the date specified in Lessor's
notice of termination. If a Hazardous Substance Condition occurs for which
Lessee is not legally responsible, there shall be abatement of Lessee's
obligations under this Lease to the same extent as provided in Paragraph 9.6(a)
for a period of not to exceed twelve (12) months.
9.8 TERMINATION--ADVANCED PAYMENTS. Upon termination of this Lease
pursuant to this Paragraph 9, an equitable adjustment shall be made concerning
advance Base Rent and any other advance payments made by Lessee to Lessor.
Lessor shall, in addition, return to Lessee so much of Lessee's Security Deposit
as has not been, or is not then required to be, used by Lessor under the terms
of this Lease.
9.9 WAIVE STATUTES. Lessor and Lessee agree that the terms of this
Lease shall govern the effect of any damage to or destruction of the Premises
with respect to the termination of his Lease and hereby waive the provisions of
any present or future statute to the extent inconsistent herewith.
10. REAL PROPERTY TAXES.
10.1 (a) PAYMENT OF TAXES. Lessee shall pay the Real Property Taxes,
as defined in Paragraph 10.2, applicable to the Premises during the term of this
Lease. Subject to Paragraph 10.1(b), all such payments shall be made at least
ten (10) days prior to the delinquency date of the applicable installment.
Lessee shall promptly furnish Lessor with satisfactory evidence that such taxes
have been paid. If any such taxes to be paid by Lessee shall cover any period of
time prior to or after the expiration or earlier termination of the term hereof,
Lessee's share of such taxes shall be equitably prorated to cover only the
period of time within the tax fiscal year this Lease is in effect, and Lessor
shall reimburse Lessee for any overpayment after such proration. If Lessee shall
fail to pay any Real Property Taxes required by this Lease to be paid by Lessee,
Lessor shall have the right to pay the same, and Lessee shall reimburse Lessor
therefor upon demand.
(b) ADVANCE PAYMENT. In order to insure payment when due and
before delinquency of any or all Real Property Taxes, Lessor reserves the right,
at Lessor's option, to estimate the current Real Estate Property Taxes
applicable to the Premises, and to require such current year's Real Property
Taxes to be paid in advance to Lessor by Lessee, in a lump sum amount equal to
the installment due, at least twenty (20) days prior to the applicable
delinquency date.
10.2 DEFINITION OF "REAL PROPERTY TAXES." As used herein, the term
"REAL PROPERTY TAXES" shall include any form or real estate tax or assessment,
general, special, ordinary or extraordinary, and any license fee, commercial
rental tax, improvement bond or bonds, levy or tax (other than inheritance,
personal income or estate taxes) imposed upon the Premises by any authority
having the direct or indirect power to tax, including any city, state or federal
government, or any school, agricultural, sanitary, fire, street, drainage or
other improvement district thereof, levied against any legal or equitable
interest of Lessor in the Premises or in the real property of which the Premises
are a part, Lessor's right to rent or other income therefrom, and/or Lessor's
business of leasing the Premises. The term "REAL PROPERTY TAXES" shall also
include any tax, fee, levy, assessment or charge, or any increase therein,
imposed by reason of events occurring, or changes in applicable law taking
effect, during the term of this Lease, including but not limited to a change in
the ownership of the Premises or in the improvements thereon, the execution of
this Lease, or any modification, amendment or transfer thereof, and whether or
not contemplated by the Parties.*15
10.3 DELETED.
10.4 PERSONAL PROPERTY TAXES. Subject to Lessee's legal right to
contest the amount or applicability of such taxes, Lessee shall pay prior to
delinquency all taxes assessed against and levied upon Lessee Owned Alterations.
Utility Installations, Trade Fixtures, furnishings, equipment and all personal
property of Lessee contained in the Premises or elsewhere. When possible, Lessee
shall cause its Trade Fixtures, furnishings, equipment and all other personal
property to be assessed and billed separately from the real property of Lessor.
If any of Lessee's said personal property shall be assessed with Lessor's real
property, Lessee shall pay Lessor the taxes attributable to Lessee
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within ten (10) days after receipt of a written statement setting forth the
taxes applicable to Lessee's property or, at Lessor's option, as provided in
Paragraph 10.1(b).
11. UTILITIES. Lessee shall pay for all water, gas, heat, light, power,
telephone, trash disposal and other utilities and services supplied to the
Premises, together with any taxes thereon. If any such services are not
separately metered to Lessee, Lessee shall pay a reasonable proportion, to be
determined by Lessor, of all charges jointly metered with other premises.
12. ASSIGNMENT AND SUBLETTING.
12.1 LESSOR'S CONSENT REQUIRED.
(a) Lessee shall not voluntarily or by operation of law assign,
transfer, mortgage or otherwise transfer or encumber (collectively,
"ASSIGNMENT") or sublet all or any part of Lessee's interest in this Lease or in
the Premises without Lessor's prior written consent given under and subject to
the terms of Paragraph 36; and subject to Addendum "A".
(b) A change in the control of Lessee shall constitute an
assignment requiring Lessor's consent.
(c) The involvement of Lessee or its assets in any transaction,
or series of transactions (by way of merger, sale, acquisition, financing,
refinancing, transfer, leveraged buy-out or otherwise), whether or not a formal
assignment or hypothecation of this Lease or Lessee's assets occurs, which
results or will result in a reduction of the Net Worth of Lessee, as hereinafter
defined, by an amount equal to or greater than twenty-five percent (25%) of such
Net Worth of Lessee as it was represented to Lessor at the time of the execution
by Lessor of this Lease or at the time of the most recent assignment to which
Lessor has consented, or as it exists immediately prior to said transaction or
transactions constituting such reduction, at whichever time said Net Worth of
Lessee was or is greater, shall be considered an assignment of this Lease by
Lessee to which Lessor may reasonably withhold its consent. "NET WORTH OF
LESSEE" for purposes of this Lease shall be the net worth of Lessee established
under generally accepted accounting principles consistently applied.
(d) Subject to paragraph 9 of Addendum "A", an assignment or
subletting of Lessee's interest in this Lease without Lessor's specific prior
written consent shall, at Lessor's option, be a Default curable after notice per
Paragraph 13.1(c) or a noncurable Breach without the necessity of any notice and
grace period. If Lessor elects to treat such unconsented to assignment or
subletting as a noncurable Breach, Lessor shall have the right to either: (i)
terminate this Lease, or (ii) upon thirty (30) days written notice ("Lessor's
Notice"), increase the monthly Base Rent to fair market rental value or one
hundred ten percent (110%) of the Base Rent then in effect, whichever is
greater. Pending determination of the new fair market rental value, if disputed
by Lessee, Lessee shall pay the amount set forth in Lessor's Notice, with any
overpayment credited against the next installment(s) of Base Rent coming due,
and any underpayment for the period retroactively to the effective date of the
adjustment being due and payable immediately upon the determination thereof.
Further, in the event of such Breach and market value adjustment, (i) the
purchase price of any option to purchase the Premises held by Lessee shall be
subject to similar adjustment to the then fair market value (without the Lease
being considered an encumbrance or any deduction for depreciation or
obsolescence, and considering the Premises at its highest and best use and in
good condition), or one hundred ten percent (110%) of the price previously in
effect, whichever is greater, (ii) any index-oriented rental or price adjustment
formulas contained in this Lease shall be adjusted to require that the base
index be determined with reference to the index applicable to the time of such
adjustment, and (iii) any fixed rental adjustments scheduled during the
remainder of the Lease term shall be increased in the same ratio as the new
market rental bears to the Base Rent in effect immediately prior to the market
value adjustment.
(e) Lessee's remedy for any breach of this Paragraph 12.1 by
Lessor shall be limited to compensatory damages and injunctive relief.
12.2 TERMS AND CONDITIONS APPLICABLE TO ASSIGNMENT AND SUBLETTING.
(a) Regardless of Lessor's consent, any assignment or subletting
shall not: (i) be effective without the express written assumption by such
assignee or sublessee of the obligations of Lessee under this Lease, (iii)
release Lessee of any obligations hereunder, or (iii) after the primary
liability of Lessee for the payment of Base Rent and other sums due Lessor
hereunder or for the performance of any other obligations to be performed by
Lessee under this Lease.
(b) Lessor may accept any rent or performance of Lessee's
obligations from any person other than Lessee pending approval or disapproval of
an assignment. Neither a delay in the approval or disapproval of such assignment
nor the acceptance of any rent or performance shall constitute a waiver or
estoppel of Lessor's right to exercise its remedies for the Default or Breach by
Lessee of any of the terms, covenants or conditions of this Lease.
(c) The consent of Lessor to any assignment or subletting shall
not constitute a consent to any subsequent assignment or subletting by Lessee or
to any subsequent or successive assignment or subletting by the sublessee.
However, Lessor may consent to subsequent sublettings and assignments of the
sublease or any amendments or modifications thereto without notifying Lessee or
anyone else liable on the Lease or sublease and without obtaining their consent,
and such action shall not relieve such persons from liability under this Lease
or sublease.
(d) In the event of any Default or Breach of Lessee's
obligations under this Lease, Lessor may proceed directly against Lessee, any
Guarantors or any one else responsible for the performance of the Lessee's
obligations under this Lease, including the sublease, without first exhausting
Lessor's remedies against any other person or entity responsible therefor to
Lessor, or any security held by Lessor or Lessee.
(e) Each request for consent to an assignment or subletting
shall be in writing, accompanied by information relevant to Lessor's
determination as to the financial and operational responsibility and
appropriateness of the proposed assignee or sublessee, including but not limited
to the intended use and/or required modification of the Premises, if any,
together with reimbursement of Lessor's legal fees and costs, which shall not
exceed $1,000. Lessee agrees to provide Lessor with such other or additional
information and/or documentation as may be reasonably requested by Lessor.
(f) Any assignee of, or sublessee under, this Lease shall, by
reason of accepting such assignment or entering into such sublease, be deemed,
for the benefit of Lessor, to have assumed and agreed to conform and comply with
each and every term, covenant, condition and obligation herein to be observed or
performed by Lessee during the term of said assignment or sublease, other than
such
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obligations as are contrary to or inconsistent with provisions of an assignment
or sublease to which Lessor has specifically consented in writing.
(g) Deleted.
(h) Deleted.
12.3 ADDITIONAL TERMS AND CONDITIONS APPLICABLE TO SUBLETTING. The
following terms and conditions shall apply to any subletting by Lessee of all or
any part of the Premises and shall be deemed included in all subleases under
this Lease whether or not expressly incorporated therein:
(a) Lessee hereby assigns and transfers to Lessor all of
Lessee's interest in all rentals and income arising from any sublease of all or
a portion of the Premises heretofore or hereafter made by Lessee, and Lessor may
collect such rent and income and apply same toward Lessee's obligations under
this Lease; provided, however, that until a Breach (as defined in Paragraph
13.1) shall occur in the performance of Lessee's obligations under this Lease,
Lessee may, except as otherwise provided in this Lease, receive, collect and
enjoy the rents accruing under such sublease. Lessor shall not, by reason of
this or any other assignment of such sublease to Lessor, nor by reason of the
collection of the rents from a sublease, be deemed liable to the sublessee for
any failure of Lessee to perform and comply with any of Lessee's obligations to
such sublessee under such sublease. Lessee hereby irrevocably authorizes and
directs any such sublessee, upon an uncured Breach in the performance of
Lessee's obligations under this Lease, to pay to Lessor the rents and other
charges due and to become due under the sublease. Sublease shall pay such rents
and other charges to Lessor notwithstanding any notice from or claim from Lessee
to the contrary. Lessee shall have no right or claim against said sublessee, or,
until the Breach has been cured, against Lessor, for any such rents and other
charges so paid by said sublessee to Lessor.
(b) In the event of a Breach by Lessee in the performance of its
obligations under this Lease, Lessor, at its option and without any obligation
to do so, may require any sublessee to attorn to Lessor, in which event Lessor
shall undertake the obligations of the sublessor under such sublease from the
time of the exercise of said option to the expiration of such sublease;
provided, however, Lessor shall not be liable for any prepaid rents or security
deposit paid by such sublessee to such sublessor or for any other prior Defaults
or Breaches of such sublessor under such sublease.
(c) Deleted.
(d) No sublessee shall further assign or sublet all or any part
of the Premises without Lessor's and Lessee's prior written consent.
(e) Lessor shall deliver a copy of any notice of Default or
Breach by Lessee to the sublessee, who shall have the right to cure the Default
of Lessee within the grace period, if any, specified in such notice. The
sublessee shall have a right of reimbursement and offset from and against Lessee
for any such Defaults cured by the sublessee.
13. DEFAULT; BREACH; REMEDIES.
13.1 DEFAULT; BREACH. Lessor and Lessee agree that if an attorney is
consulted by Lessor in connection with a Lessee Default or Breach (as
hereinafter defined), $500.00 is a reasonable maximum sum per such occurrence
for legal services and costs in the preparation and service of a notice of
Default, and that Lessor may include the cost of such services and costs in said
notice as rent due and payable to cure said Default. A "DEFAULT" is defined as a
failure by the Lessee to observe, comply with or perform any of the terms,
covenants, conditions or rules applicable to Lessee under this Lease. A "BREACH"
is defined as the occurrence of any one or more of the following Defaults, and,
where a grace period for cure after notice is specified herein, the failure by
Lessee to cure such Default prior to the expiration of the applicable grace
period, shall entitle Lessor to pursue the remedies set forth in Paragraphs 13.2
and/or 13.3:
(a) The vacating of the Premises without a lessor-authorized
assignee or sublessee, or without the intention to reoccupy same, or the
abandonment of the Premises.
(b) Except as expressly otherwise provided in this Lease, the
failure by Lessee to make any payment of Base Rent or any other monetary payment
required to be made by Lessee hereunder, whether to Lessor to a third party, as
and when due, the failure by Lessee to provide Lessor with reasonable evidence
of insurance or surety bond required under this Lease, or the failure of Lessee
to fulfill any obligation under this Lease which endangers or threatens life or
property, where such failure continues for a period of seven (7) days, following
written notice thereof by or on behalf of Lessor to Lessee.
(c) Except as expressly otherwise provided in this Lease, the
failure by Lessee to provide Lessor with reasonable written evidence (in duly
executed original form, if applicable of (i) compliance with Applicable Law per
Paragraph 6.3, (iii) the inspection, maintenance and service contracts required
under Paragraph 7.1(b), (iii) the recission of an unauthorized assignment or
subletting per Paragraph 12.1(b), (iv) a Tenancy Statement per Paragraphs 16 or
37, (v) the subordination or non-subordination of this Lease per Paragraph 30,
(vi) the guaranty of the performance of Lessee's obligations under this Lease if
required under Paragraphs 1.11 and 37, (vii) the execution of any document
requested under Paragraph 42 (easements), or (viii) any other documentation or
information which Lessor may reasonably require of Lessee under the terms of
this Lease, where any such failure continues for a period of twenty-one (21)
days following written notice by or on behalf of Lessor to Lessee.
(d) A Default by Lessee as to the terms, covenants, conditions
or provisions of this Lease, or the rules adopted under Paragraph 40 hereof,
that are to be observed, complied with or performed by Lessee, other than those
described in subparagraphs (a), (b) or (c), above, where such Default continues
for a period of thirty (30) days after written notice thereof by or on behalf of
Lessor to Lessee; provided, however, that if the nature of Lessee's Default is
such that more than thirty (30) days are reasonably required for its cure, then
it shall not be deemed to be a Breach of this Lease by Lessee if Lessee
commences such cure within said thirty (30) day period and thereafter diligently
prosecutes such cure to completion.
(e) The occurrence of any of the following events: (i) The
making by lessee of any general arrangement or assignment for the benefit of
creditors; (ii) Lessee's becoming a "debtor" as defined in 11 U.S.C. ss. 101 or
any successor statute thereto (unless, in the case of a petition filed against
Lessee, the same is dismissed within one hundred twenty (120) days; (iii) the
appointment of a trustee or receiver to take possession of substantially all of
Lessee's assets located at the Premises or of Lessee's interest in this Lease,
where possession is not restored to Lessee within thirty (30) days; or (iv) the
attachment, execution or other judicial seizure of substantially all of Lessee's
assets located at the Premises or of Lessee's interest in this Lease, where such
seizure is not discharged within thirty (30) days;
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provided, however, in the event that any provision of this subparagraph (e) is
contrary to any applicable law, such provision shall be of no force or effect,
and not affect the validity of the remaining provisions.
(f) The discovery of Lessor that any financial statement given
to Lessor by Lessee or any Guarantor of Lessee's obligations hereunder was
materially false, without a reasonable explanation from Lessee for such error.
(g) Deleted.
13.2 REMEDIES. If Lessee fails to perform any affirmative duty or
obligation of Lessee under this Lease, within ten (10) days after written notice
to Lessee (or in case of an emergency, without notice), Lessor may at its option
(but without obligation to do so), perform such duty or obligation on Lessee's
behalf, including but not limited to the obtaining of reasonably required bonds,
insurance policies, or governmental licenses, permits or approvals. The costs
and expenses of any such performance by Lessor shall be due and payable by
Lessee to Lessor upon invoice therefor. If any check given to Lessor by Lessee
shall not be honored by the bank upon which it is drawn, Lessor, at its option,
may require future payments for a period of one (1) calendar year to be made
under this Lease by Lessee to be made only by cashier's check *16 in the event
of a Breach of this Lease by Lessee, as defined in Paragraph 13.1, with or
without further notice or demand, and without limiting Lessor in the exercise of
any right or remedy which Lessor may have by reason of such Breach, Lessor may:
(a) Terminate Lessee's right to possession of the Premises by
any lawful means, in which case this Lease and the term hereof shall terminate
and Lessee shall immediately surrender possession of the Premises to Lessor. In
such event, Lessor shall be entitled to recover from Lessee: (i) the worth at
the time of the award of the unpaid rent which had been earned at the time of
termination; (ii) the worth at the time of award of the amount by which the
unpaid rent which would have been earned after termination until the time of
award exceeds the amount of such rental loss that the Lessee proves could have
been reasonably avoided; (iii) the worth at the time of award of the amount by
which the unpaid rent for the balance of the term after the time of award
exceeds the amount of such rental loss that the Lessee proves could be
reasonably avoided; and (iv) any other amount necessary to compensate Lessor for
the detriment proximately caused by the Lessee's failure to perform its
obligations under this Lease or which in the ordinary course of things would be
likely to result therefrom, including but not limited to the cost of recovering
possession of the Premises, expenses of reletting, including necessary
renovation and alteration of the Premises *17 reasonable attorneys' fees, and
that portion of the leasing commission paid by Lessor applicable to the
unexpired term of this Lease. The worth at the time of award of the amount
referred to in provision (iii) of the prior sentence shall be computed by
discounting such amount at the discount rate of the Federal Reserve Bank of San
Francisco at the time of award plus one percent (1%). Efforts by Lessor to
mitigate damages caused by Lessee's Default or Breach of this Lease shall not
waive Lessor's right to recover damages under this Paragraph. If termination of
this Lease is obtained through the provisional remedy of unlawful detainer,
Lessor shall have the right to recover in such proceeding the unpaid rent and
damages as are recoverable therein, or Lessor may reserve therein the right to
recover all or any part thereof in a separate suit for such rent and/or damages.
If a notice and grace period required under subparagraphs 13.1(b), (c) or (d)
was not previously given, a notice to pay rent or quit, or to perform or quit,
as the case may be, given to Lessee under any statute authorizing the forfeiture
of leases for unlawful detainer shall also constitute the applicable notice for
grace period purposes required by subparagraphs 13.1(b), (c) or (d). In such
case, the applicable grace period under subparagraphs 13.1(b), (c) or (d) and
under the unlawful detainer statute shall run concurrently after the one such
statutory notice, and the failure of Lessee to cure the Default within the
greater of the two such grace periods shall constitute both an unlawful detainer
and a Breach of this Lease entitling Lessor to the remedies provided for in this
Lease and/or by said statue.
(b) Continue the Lease and Lessee's right to possession in
effect (in California under California Civil Code Section 1951.4) after Lessee's
Breach and abandonment and recover the rent as it becomes due, provided Lessee
has the right to sublet or assign, subject only to reasonable limitations. See
paragraphs 12 and 36 for the limitations on assignment and subletting which
limitations Lessee and Lessor agree are reasonable. Acts of maintenance or
preservation, efforts to relet the Premises, or the appointment of a receiver to
protect the Lessor's interest under the Lease, shall not constitute a
termination of the Lessee's right to possession.
(c) Pursue any other remedy now or hereunder available to Lessor
under the laws or judicial decisions of the state wherein the Premises are
located.
(d) The expiration or termination of this Lease and/or the
termination of Lessee's right to possession shall not relieve Lessee from
liability under any indemnity provisions of this Lease at to matters occurring
or accruing during the term hereof or by reason of Lessee's occupancy of the
Premises.
13.3 INDUCEMENT RECAPTURE IN EVENT OF BREACH. Any agreement by
Lessor for free or abated rent or other charges applicable to the Premises, or
for the giving or paying by Lessor to or for Lessee of any cash or other bonus,
inducement or consideration for Lessee's entering into this Lease, all of which
concessions are hereinafter referred to as "Inducement Provisions," shall be
deemed conditioned upon Lessee's full and faithful performance of all of the
terms, covenants and conditions of this Lease to be performed or observed by
Lessee during the term hereof as the same may be extended. Upon the occurrence
of an uncured Breach of this Lease by Lessee, as defined in Paragraph 13.1, any
such inducement Provisions shall automatically be deemed deleted from this Lease
and of no further force or effect, and any rent, other charge, bonus, inducement
or consideration theretofore abated, given or paid by Lessor under such an
Inducement Provision shall be immediately due and payable to Lessee to Lessor,
and recoverable by Lessor as additional rent due under this Lease if such Breach
remains uncured after the applicable period available for its cure.
13.4 LATE CHARGES. Lessee hereby acknowledges that late payment by
Lessee to Lessor of rent and other sums due hereunder will cause Lessor to incur
costs not contemplated by this Lease, the exact amount of which will be
extremely difficult to ascertain. Such costs include, but are not limited to,
processing and accounting charges, and late charges which may be imposed upon
Lessor by the terms of any ground lease, mortgage or trust deed covering the
Premises. Accordingly, if any installment of rent or any other sum due from
Lessee shall not be received by Lessor or Lessor's designee within five (5) days
after such amount shall be due, then, without any requirement for notice to
Lessee, Lessee shall pay to Lessor a late charge equal to five percent (5%) of
such overdue amount. The parties hereby agree that such late charge represents a
fair and reasonable estimate of the costs Lessor will incur by reason of late
payment by Lessee. Acceptance of such late charge by Lessor shall in no event
constitute a waiver of Lessee's Default or Breach with respect to such overdue
amount, nor prevent Lessor from exercising any of the other rights and remedies
granted hereunder.
13.5 BREACH BY LESSOR. Lessor shall not be deemed in breach of this
Lease unless Lessor fails within a reasonable time to perform an obligation
required to be performed by Lessor. For purposes of this Paragraph 13.5, a
reasonable time shall in no event be less
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than thirty (30) days after receipt by Lessor, and by the holders of any ground
lease, mortgage or deed of trust covering the Premises whose name and address
shall have been furnished Lessee in writing for such purposes, of written notice
specifying wherein such obligation of Lessor has not been performed; provided,
however, that if the nature of Lessor's obligation is such that more than thirty
(30) days after such notice are reasonably required for its performance, then
Lessor shall not be in breach of this Lease if performance is commenced within
such thirty (30) day period and thereafter diligently pursued to completion.
14. CONDEMNATION. If the Premises or any portion thereof are taken under the
power of eminent domain or sold under the threat of the exercise of said power
(all of which are herein called "condemnation"), this Lease shall terminate as
to the part so taken as of the date the condemning authority takes title or
possession, whichever first occurs. If materially affected, or if more than ten
percent (10%) of the floor area of the Premises, or more than twenty-five
percent (25%) of the land area are not occupied by any building, is taken by
condemnation, Lessee may, at Lessee's option, to be exercised in writing within
thirty (30) days after Lessor shall have given Lessee written notice of such
taking (or in the absence of such notice, within thirty (30) days after the
condemning authority shall have taken possession) terminate this Lease as of the
date the condemning authority takes such possession.*18 If Lessee does not
terminate this Lease in accordance with the foregoing, this Lease shall remain
in full force and effect as to the portion of the Premises remaining, except
that the Base Rent shall be reduced in the same proportion as the rentable floor
area of the Premises taken bears to the total rentable floor area of the
building located on the Premises. No reduction of Base Rent shall occur if the
only portion of the Premises taken is land on which there is no building. Any
award for the taking of all or any part of the Premises under the power of
eminent domain or any payment made under the threat of the exercise of such
power shall be the property of Lessor, whether such award shall be made as
compensation for diminution in value of the leasehold or for the taking of the
fee, or as severance damages; provided, however, that Lessee shall be entitled
to any compensation separately awarded to Lessee for Lessee's relocation
expenses and/or loss of Lessee's Trade Fixtures. In the event that this Lease is
not terminated by reason of such condemnation, Lessor shall to the extent of its
net severance damages received over and above the legal and other expenses
incurred by Lessor in the condemnation matter, repair any damage to the Premises
caused by such condemnation, except to the extent that Lessee has been
reimbursed therefor by the condemning authority. Lessee shall be responsible for
the payment of any amount in excess of such net severance damages required to
complete such repair.
15. BROKER'S FEE.
15.1 The Broker's named in Paragraph 1.10 are the procuring causes
of this Lease.
15.2 Upon execution of this Lease by both Parties, Lessor shall pay
to said Brokers jointly, or in such separate shares as they may mutually
designate in writing, a fee as set forth in a separate written agreement between
Lessor and said Brokers for brokerage services rendered by said Brokers to
Lessor in this transaction.
15.3 Deleted.
15.4 Deleted.
15.5 Lessee and Lessor each represent and warrant to the other that
it has had no dealings with any person, firm, broker or finder (other than the
Brokers, if any named in Paragraph 1.10) in connection with the negotiation of
this Lease and/or the consummation of the transaction contemplated hereby, and
that no broker or other person, firm or entity other than said named Brokers is
entitled to any commission or finder's fee in connection with said transaction.
Lessor hereby agrees to indemnify, protect, defend and hold Lessee harmless from
and against liability for compensation or charges which may be claimed by any
such unnamed broker, finder or other similar party by reason of any dealings or
actions of Lessor, including any costs, expenses, attorneys' fees reasonably
incurred with respect thereto.
15.6 Lessor and Lessee hereby consent to and approve all agency
relationships, including any dual agencies, indicated in Paragraph 1.10.
16. TENANCY STATEMENT.
16.1 Each Party (as "RESPONDING PARTY") shall within ten (10) days
after written notice from the other Party (the "REQUESTING PARTY") execute,
acknowledge and deliver to the Requesting Party a statement in writing in form
similar to the then most current "TENANCY STATEMENT" form published by the
American Industrial Real Estate Association, plus such additional information,
confirmation and/or statements as may be reasonably requested by the Requesting
Party.
16.2 If Lessor desires to finance, refinance, or sell the Premises,
any part thereof, or the building of which the Premises are a party, Lessee and
all Guarantors of Lessee's performance hereunder shall deliver to any potential
lender or purchaser designated by Lessor such financial statements of Lessee and
such Guarantors as may be reasonably required by such lender or purchaser,
including but not limited to Lessee's financial statements for the past three
(3) years. *20 All such financial statements shall be received by Lessor and
such lender or purchaser in confidence and shall be used only for the purposes
herein set forth.
17. LESSOR'S LIABILITY. The term "LESSOR" as used herein shall mean the owner or
owners at the time in question of the fee title to the Premises, or, if this is
a sublease, of the Lessee's interest in the prior lease. In the event of a
transfer of Lessor's title or interest in the Premises or in this Lease, Lessor
shall deliver to the transferee or assignee (in cash or by credit) any unused
Security Deposit held by Lessor at the time of such transfer or assignment.
Except as provided in Paragraph 15, upon such transfer or assignment and
delivery of the Security Deposit, as aforesaid, the prior Lessor shall be
relieved of all liability with respect to the obligations and/or covenants under
this Lease thereafter to be performed by the Lessor. Subject to the foregoing,
the obligations and/or covenants in this Lease to be performed by the Lessor
shall be binding only upon the Lessor as hereinabove defined. *21
18. SEVERABILITY. The invalidity of any provision of this Lease, as determined
by a court of competent jurisdiction, shall in no way affect the validity of any
other provision hereof.
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19. INTEREST ON PAST-DUE OBLIGATIONS. Any monetary payment due Lessor hereunder,
other than late charges, not received by Lessor within thirty (30) days
following the date on which it was due, shall bear interest from the
thirty-first (31st) day after it was due at the rate of 12% per annum, but not
exceeding the maximum rate allowed by law, in addition to the late charge
provided for in Paragraph 13.4.
20. TIME OF ESSENCE. Time is of the essence with respect to the performance of
all obligations to be performed or observed by the Parties under this Lease.
21. RENT DEFINED. All monetary obligations of Lessee to Lessor under the terms
of this Lease *22 are deemed to be rent.
22. NO PRIOR OR OTHER AGREEMENTS; BROKER DISCLAIMER. This Lease contains all
agreements between the Parties with respect to any matter mentioned herein, and
no other prior or contemporaneous agreement or understanding shall be effective.
Lessor and Lessee each represents and warrants to the Brokers that it has made,
and is relying solely upon, its own investigation as to the nature, quality,
character and financial responsibility of the other Party to this Lease and as
to the nature, quality and character of the Premises. Brokers have no
responsibility with respect thereto or with respect to any default or breach
hereof by either Party.
23. NOTICES.
23.1 All notices required or permitted by this Lease shall be in
writing and may be delivered in person (by had or by messenger or courier
service) or may be sent by regular, certified or registered mail or U.S. Postal
Service Express Mail, with postage prepaid, or by facsimile transmission, and
shall be deemed sufficiently given if served in a manner specified in this
Paragraph 23. The addresses noted adjacent to a Party's signature on this Lease
shall be that Party's address for delivery or mailing of notice purposes. Either
Party may be written notice to the other specify a different address for notice
purposes, except that upon Lessee's taking possession of the Premises, the
Premises shall constitute Lessee's address for the purpose of mailing or
delivering notices to Lessee. A copy of all notices required or permitted to be
given to either party hereunder shall be concurrently transmitted to such party
or parties at such addresses as such party may from time to time hereafter
designate by written notice.
23.2 Any notice sent by registered or certified mail, return receipt
requested, shall be deemed given on the date of delivery shown on the receipt
card, or if no delivery date is shown, the postmark thereon. If sent by regular
mail the notice shall be deemed given seventy-two (72) hours after the same is
addressed as required herein and mailed with postage prepaid. Notices delivered
by United States Express Mail or overnight courier that guarantees next day
delivery shall be deemed given twenty-four (24) hours after delivery of the same
to the United States Postal Service or courier. If any notice is transmitted by
facsimile transmission or similar means, the same shall be deemed served or
delivered upon telephone confirmation of receipt of the transmission thereof,
provided a copy is also delivered via delivery or mail. If notice is received on
a Sunday or legal holiday, it shall be deemed received on the next business day.
24. WAIVERS. No waiver by Lessor of the Default or Breach of any term, covenant
or condition hereof by Lessee, shall be deemed a waiver of any other term,
covenant or condition hereof, or of any subsequent Default or Breach by Lessee
of the same or of any other term, covenant or condition hereof. Lessor's consent
to, or approval of, any act shall not be deemed to render unnecessary the
obtaining of Lessor's consent to, or approval of, any subsequent or similar act
by Lessee, or be construed as the basis of an estoppel to enforce the provision
or provisions of this Lease requiring such consent. Regardless of Lessor's
knowledge of a Default or Breach at the time of accepting rent, the acceptance
of rent by Lessor shall not be a waiver of any preceding Default or Breach by
Lessee of any provision hereof, other than the failure of Lessee to pay the
particular rent so accepted. Any payment given Lessor by Lessee may be accepted
by Lessor on account of moneys or damages due Lessor, notwithstanding any
qualifying statements or conditions made by Lessee in connection therewith,
which such statements and/or conditions shall be of no force or effect
whatsoever unless specifically agreed to in writing by Lessor at or before the
time of deposit of such payment.
25. RECORDING. Either Lessor or Lessee shall, upon request of the other,
execute, acknowledge and deliver to the other a short form memorandum of this
Lease for recording purposes. The Party requesting recordation shall be
responsible for payment of any fees or taxes applicable thereto.
26. NO RIGHT TO HOLDOVER. Lessee has no right to retain possession of the
Premises or any part thereof beyond the expiration or earlier termination of
this Lease.
27. CUMULATIVE REMEDIES. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies at
law or in equity.
28. COVENANTS AND CONDITIONS. All provisions of this Lease to be observed or
performed by Lessee are both covenants and conditions.
29. BINDING EFFECT; CHOICE OF LAW. This lease shall be binding upon the parties,
their personal representatives, successors and assigns and be governed by the
laws of the State in which the Premises are located. Any litigation between the
Parties hereto concerning this Lease shall be initiated in the county in which
the Premises are located.
30. SUBORDINATION; ATTORNMENT; NON-DISTURBANCE.
30.1 SUBORDINATION. This Lease and any Option granted hereby shall
be subject and subordinate to any ground lease, mortgage, deed of trust, or
other hypothecation or security device (collectively, "SECURITY DEVICE"), now or
hereafter placed by Lessor upon the real
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property of which the Premises are a part, to any and all advances made on the
security thereof, and to all renewals, modifications, consolidations,
replacements and extensions thereof. Lessee agrees that the Lenders holding any
such Security Device shall have no duty, liability or obligation to perform any
of the obligations of Lessor under this Lease, but that in the event of Lessor's
default with respect to any such obligation, Lessee will give any Lender whose
name and address have been furnished Lessee in writing for such purpose notice
of Lessor's default and allow such Lender thirty (30) days following receipt of
such notice for the cure of said default before invoking any remedies Lessee may
have by reason thereof. If any Lender shall elect to have this Lease and/or any
Option granted hereby superior to the lien of its Security Device and shall give
written notice thereof to Lessee, this Lease and such Options shall be deemed
prior to such Security Device, notwithstanding the relative dates of the
documentation or recordation thereof.
30.2 ATTORNMENT. Subject to the non-disturbance provisions of
Paragraph 30.3, Lessee agrees to attorn to a Lender or any other party who
acquires ownership of the Premises by reason of a foreclosure of a Security
Device, and that in the event of such foreclosure, such new owner shall not: (i)
be liable for any act or omission of any prior lessor or with respect to events
occurring prior to acquisition of ownership, (ii) be subject to any offsets or
defenses which Lessee might have against any prior lessor, or (iii) be bound by
prepayment of more than one (1) month's rent.
30.3 NON-DISTURBANCE. With respect to Security Devices entered into
by Lessor after the execution of this Lease, Lessee's subordination of this
Lease shall be subject to receiving assurance *23 (a "non-disturbance
agreement") from the Lender that Lessee's possession and this Lease, including
any options to extend the term hereof, will not be disturbed so long as Lessee
is not in Breach hereof and attorns to the record owner of the Premises.
30.4 SELF-EXECUTING. The agreements contained in this Paragraph 30
shall be effective without the execution of any further documents; provided,
however, that, upon written request from Lessor or a Lender in connection with a
sale, financing or refinancing of the Premises, Lessee and Lessor shall execute
such further writings as may be reasonably required to separately document any
such subordination or non-subordination, attornment and/or non-disturbance
agreement as is provided for herein.
31. ATTORNEY'S FEES. If any Party or Broker brings an action or proceeding to
enforce the terms hereof or declare rights hereunder, the Prevailing Party (as
hereafter defined) or Broker in any such proceeding, action, or appeal thereon,
shall be entitled to reasonable attorney's fees. Such fees may be awarded in the
same suit or recovered in a separate suit, whether or not such action or
proceeding is pursued to decision or judgment. The term, "PREVAILING PARTY"
shall include, without limitation, a Party or Broker who substantially obtains
or defeats the relief sought, as the case may be, whether by compromise,
settlement, judgment, or the abandonment by the other Party or Broker of its
claim or defense. The attorney's fees award shall not be computed in accordance
with any court fee schedule, but shall be such as to fully reimburse all
attorney's fees reasonably incurred. Lessor shall be entitled to attorney's
fees, costs and expenses incurred in the preparation and service of notices of
Default and consultations in connection therewith, whether or not a legal action
is subsequently commenced in connection with such Default or resulting Breach.
32. LESSOR'S ACCESS; SHOWING PREMISES; REPAIRS. Lessor and Lessor's agents shall
have the right to enter the Premises at any time, in the case of any emergency,
and otherwise at reasonable times upon twenty-four (24) hours prior notice for
the purpose of showing the same to prospective purchasers, lenders, or lessees
(during the last eight (8) months of the Lease term) and making such
alterations, repairs, improvements or additions to the Premises or to the
building of which they are a part, as Lessor may reasonably deem necessary.
Lessor may at any time place on or about the Premises or building any ordinary
"For Sale" signs and Lessor may at any time during the last one hundred twenty
(120) days of the term hereof place on or about the Premises any ordinary "For
Lease" signs. All such activities of Lessor shall be without abatement of rent
or liability to Lessee. *24
33. AUCTIONS. Lessee shall not conduct, nor permit to be conducted, either
voluntarily or involuntarily, any auction upon the Premises without first having
obtained Lessor's prior written consent. Notwithstanding anything to the
contrary in this Lease, Lessor shall not be obligated to exercise any standard
of reasonableness in determining whether to grant such consent.
34. SIGNS. Lessee shall not place any sign upon the Premises, except that Lessee
may, with Lessor's prior written consent, install (but not on the roof) such
signs as are reasonably required to advertise Lessee's own business. The
installation of any sign on the Premises by or for Lessee shall be subject to
the provisions of Paragraph 7 (Maintenance, Repairs, Utility Installation, Trade
Fixtures and Alterations). *25
35. TERMINATION; MERGER. Unless specifically stated otherwise in writing by
Lessor, the voluntary or other surrender of this Lease by Lessee, the mutual
termination or cancellation hereof, or a termination hereof by Lessor for Breach
by Lessee, shall automatically terminate any sublease or lesser estate in the
Premises; provided, however, Lessor shall, in the event of any such surrender,
termination or cancellation, have the option to continue any one or all of any
existing subtenancies. Lessor's failure within ten (10) days following any such
event to make a written election to the contrary by written notice to the holder
of any such lesser interest, shall constitute Lessor's election to have such
event constitute the termination of such interest.
36. CONSENTS.
(a) Except for Paragraph 33 hereof (Auctions) or as otherwise
provided herein, wherever in this Lease the consent of a Party is required to an
act by or for the other Party, such consent shall not be unreasonably withheld
or delayed. Lessor's actual reasonable costs and expenses (including but not
limited to architects', attorneys', engineers' or other consultants' fees)
incurred in the consideration of, or response to, a request by Lessee for any
Lessor consent pertaining to this Lease or the Premises, including but not
limited to consents to an
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assignment, a subletting or the presence or use of a Hazardous Substance,
practice or storage tank, shall be paid by Lessee to Lessor upon receipt of an
invoice and supporting documentation therefor. Subject to Paragraph 12.2(e)
(applicable to assignment or subletting), Lessor may, as a condition to
considering any such request by Lessee, require that Lessee deposit with Lessor
an amount of money (in addition to the Security Deposit held under Paragraph 5)
reasonably calculated by Lessor to represent the cost Lessor will incur in
considering and responding to Lessee's request. Except as otherwise provided,
any unused portion to said deposit shall be refunded to Lessee without interest.
Lessor's consent to any act, assignment of this Lease or subletting of the
Premises by Lessee shall not constitute an acknowledgement that no Default or
Beach by Lessee of this Lease exists, nor shall such consent be deemed a waiver
of any then existing Default or Breach, except as may be otherwise specifically
stated in writing by Lessor at the time of such consent.
(b) All conditions to Lessor's consent authorized by this Lease are
acknowledged by Lessee as being reasonable. The failure to specify herein any
particular condition to Lessor's consent shall not preclude the imposition by
Lessor at the time of consent of such further or other conditions as are then
reasonable with reference to the particular matter for which consent is being
given.
37. DELETED.
38. QUITE POSSESSION. Upon payment by Lessee of the rent for the Premises and
the observance and performance of all of the covenants, conditions and
provisions on Lessee's part to be observed and performed under this Lease,
Lessee shall have quiet possession of the Premises for the entire term hereof
subject to all of the provisions of this Lease.
39. OPTIONS.
39.1 DEFINITION. As used in this Paragraph 39 the word "OPTION" has
the following meaning: (a) the right to extend the term of this Lease or to
renew this Lease or to extend or renew any lease that Lessee has on other
property of Lessor; (b) the right of first refusal to lease the Premises or the
right of first offer to lease the Premises or the right of first refusal to
lease other property of Lessor or the right of first offer to lease other
property of Lessor; (c) the right to purchase the Premises, or the right of
first refusal to purchase the Premises, or the right of first offer to purchase
the Premises, or the right to purchase other property of Lessor, or the right of
first refusal to purchase other property of Lessor, or the right of first offer
to purchase other property of Lessor.
39.2 OPTIONS PERSONAL TO ORIGINAL LESSEE. Each Option granted to
Lessee in this Lease is personal to the original Lessee named in Paragraph 1.1
hereof, and cannot be voluntarily or involuntarily assigned or exercised by any
person or entity other than said original Lessee while the original Lessee is in
full and actual possession of the Premises and without the intention of
thereafter assigning or subletting. The Options, if any, herein granted to
Lessee are not assignable, either as a part of an assignment of this Lease or
separately or apart therefrom, and no Option may be separated from this Lease in
any manner, by reservation or otherwise; provided, however, that the Options may
be assigned to and exercised by any assignee of the Lease as to which Lessor's
consent is not required.
39.3 MULTIPLE OPTIONS. In the event that Lessee has any Multiple
Options to extend or renew this Lease, a later Option cannot be exercised unless
the prior Options to extend or review this Lease have been validly exercised.
39.4 EFFECT OF DEFAULT ON OPTIONS.
(a) Lessee shall have no right to exercise an Option,
notwithstanding any provision in the grant of Option to the contrary: (i) during
the period commencing with the giving of any notice of Default under Paragraph
13.1 and continuing until the noticed Default is cured, or (ii) during the
period of time any monetary obligation due Lessor from Lessee is unpaid (without
regard to whether notice thereof is given Lessee), or (iii) during the time
Lessee is in Breach of this Lease, or (iv) in the event that Lessor has given to
Lessee three (3) or more notices of Default under Paragraph 13.1, whether or not
the Defaults are cured, during the twelve (12) month period immediately
preceding the exercise of the Option.
(b) The period of time within which an Option may be exercised
shall not be extended or enlarged by reason by Lessee's inability to exercise an
Option because of the provisions of Paragraph 39.4(a).
(c) All rights of Lessee under the provisions of an Option shall
terminate and be of no further force or effect, notwithstanding Lessee's due and
timely exercise of the Option, if, after such exercise and during the term of
this Lease, (i) Lessee fails to pay to Lessor a monetary obligation of Lessee
for a period of thirty (30) days after such obligation becomes due (without any
necessity of Lessor to give notice thereof to Lessee), or (ii) Lessor gives to
Lessee three (3) or more notices of Default under Paragraph 13.1 during any
twelve (12) month period, whether or not the Defaults are cured, or (iii) if
Lessee commits a Breach of this Lease.
40. MULTIPLE BUILDINGS. If the Premises are part of a group of buildings
controlled by Lessor, Lessee agrees that it will abide by, keep and observe all
reasonable rules and regulations which Lessor may make from time to time for the
management, safety, care, and cleanliness of the grounds, the parking and
unloading of vehicles and the preservation of good order, as well as for the
convenience of other occupants or tenants of such other buildings and their
invitees, and that Lessee will pay its fair share of common expenses incurred in
connection therewith.
41. SECURITY MEASURES. Lessee hereby acknowledges that the rental payable to
Lessor hereunder does not include the cost of guard service or other security
measures, and that Lessor shall have no obligation whatsoever to provide same.
Lessee assumes all responsibility for the protection of the Premises, Lessee,
its agents and invitees and their property from the acts of third parties.
PAGE 14
15
42. RESERVATIONS. Lessor reserves to itself the right, from time to time, to
grant, without the consent or joinder of Lessee, such easements, rights and
dedications that Lessor deems necessary, and to cause the recordation of parcel
maps and restrictions, so long as such easements, rights, dedications, maps and
restrictions do not unreasonably interfere with the use of the Premises by
Lessee. Lessee agrees to sign any documents reasonably requested by Lessor to
effectuate any such easement rights, dedication, map or restrictions.
43. PERFORMANCE UNDER PROTEST. If at any time a dispute shall arise as to any
amount or sum of money to be paid by one Party to the other under the provisions
hereof, the Party against whom the obligation to pay the money is asserted shall
have the right to make payment "under protest" and such payment shall not be
regarded as a voluntary payment and there shall survive the right on the part of
said Party to institute suit for recovery of such sum. If it shall be adjudged
that there was no legal obligation on the part of said Party to pay such sum or
any part thereof, said Party shall be entitled to recover such sum or so much
thereof as it was not legally required to pay under the provisions of this
Lease, together with reasonable fees incurred in the recovery of such costs.
44. AUTHORITY. If either Party hereto is a corporation, trust, or general or
limited partnership, each individual executing this Lease on behalf of such
entity represents and warrants that he or she is duly authorized to execute and
deliver this Lease on its behalf. If Lessee is a corporation, trust or
partnership, Lessee shall, within thirty (30) days after request by Lessor,
deliver to Lessor evidence satisfactory to Lessor of such authority.
45. CONFLICT. Any conflict between the printed provisions of this Lease and the
typewritten or handwritten provisions shall be controlled by the typewritten or
handwritten provisions.
46. OFFER. Preparation of this Lease by Lessor or Lessor's agent and submission
of same to Lessee shall not be deemed an offer to lease to Lessee. This Lease is
not intended to be binding until executed by all Parties hereto.
47. AMENDMENTS. This Lease may be modified only in writing, signed by the
Parties in interest at the time of the modification. The parties shall amend
this Lease from time to time to reflect any adjustments that are made to the
Base Rent or other rent payable under this Lease. As long as they do not
materially change Lessee's obligations hereunder, Lessee agrees to make such
reasonable non-monetary modifications to this Lease as may be reasonably
required by an institutional, insurance company, or pension plan Lender in
connection with the obtaining of normal financing or refinancing of the property
of which the Premises are a part.
48. MULTIPLE PARTIES. Except as otherwise expressly provided herein, if more
than one person or entity is named herein as either Lessor or Lessee, the
obligations of such Multiple Parties shall be the joint and several
responsibility of all persons or entities named herein as such Lessor or Lessee.
LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND
PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR
INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE
TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE
AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE
PREMISES.
IF THIS LEASE HAS BEEN FILLED IN, IT HAS BEEN PREPARED FOR
SUBMISSION TO YOUR ATTORNEY FOR HIS APPROVAL FURTHER, EXPERTS SHOULD
BE CONSULTED TO EVALUATE THE CONDITION OF THE PROPERTY AS TO THE
POSSIBLE PRESENCE OF ASBESTOS, STORAGE TANKS OR HAZARDOUS
SUBSTANCES. NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE
AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION OR BY THE REAL ESTATE
BROKER(S) OR THEIR AGENTS OR EMPLOYEES AS TO THE LEGAL SUFFICIENCY,
LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION
TO WHICH IT RELATES; THE PARTIES SHALL RELY SOLELY UPON THE ADVICE
OF THEIR OWN COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS
LEASE. IF THE SUBJECT PROPERTY IS LOCATED IN A STATE OTHER THAN
CALIFORNIA, AN ATTORNEY FROM THE STATE WHERE THE PROPERTY IS LOCATED
SHOULD BE CONSULTED.
The parties hereto have executed this Lease at the place on the dates specified
above to their respective signatures.
Executed at San Diego, CA Executed at San Diego, CA
------------------------------- -------------------------------
on December 27, 1995 on 12/27/95
---------------------------------------- ----------------------------------------
by LESSOR: by LESSEE:
Campson corporation, a California CombiChem, Inc., a California corporation
------------------------------------------ ------------------------------------------
By /s/ Xxx X. Xxxxxxx By /s/ Xxxx Xxxxx
---------------------------------------- ----------------------------------------
Name Printed: Xxx X. Xxxxxxxx Name Printed: Xxxx Xxxxx
----------------------------- -----------------------------
Title: President Title: Controller
------------------------------------ ------------------------------------
PAGE 15
16
By By
---------------------------------------- ----------------------------------------
Name Printed: Name Printed:
----------------------------- -----------------------------
Title: Title:
------------------------------------ ------------------------------------
Address: 0000 Xxxxxxxxx Xxxxxx Xxxxx Address: 0000 Xxxxxx Xxxxx Xx
------------------------------------ ------------------------------------
Xx Xxxx, XX 00000 Xxx Xxxxx, XX 00000
------------------------------------ ------------------------------------
Tel. No. (000)000-0000 Fax No. (000) 000-0000 Tel. No. (000)000-0000 Fax No. (000) 000-0000
-------------- --------------- -------------- ---------------
NOTICE: These forms are often modified to meet changing requirements of law and
industry needs. Always write or call to make sure you are utilizing the most
current form: American Industrial Real Estate Association, 345 South Xxxxxxxx
Street, Suite M-1, Los Angeles, CA 00000 (000) 000-0000. Fax No. (000) 000-0000.
PAGE 16
17
ADDENDUM "A"
TO STANDARD INDUSTRIAL LEASE -- SINGLE-TENANT
BETWEEN
CAMPSON CORPORATION, A CALIFORNIA CORPORATION
AND
COMBICHEM, INC., A CALIFORNIA CORPORATION
This Addendum "A" to Lease ("Lease Addendum") is attached to and
made a part of that certain STANDARD INDUSTRIAL/COMMERCIAL SINGLE TENANT LEASE
-- NET, dated December 22, 1995, made by and between CAMPSON CORPORATION, a
California corporation, as "Lessor," and COMBICHEM, INC., a California
corporation, as "Lessee" (the "Lease"), and constitutes additional covenants and
agreements thereto as set forth in the Lease, with the covenants agreements
contained herein to prevail in the event of any conflicts between the covenants
and agreements contained herein and those in the Lease.
I. THE FOLLOWING INSERTS ARE HEREBY INCORPORATED INTO THE LEASE WHERE INDICATED
BY STARRED NUMERALS IN THE LEASE:
A. Insert *1
Paragraph 3.3 - Delay in Possession. Add the following in line 7 of
Paragraph 3.3 after "hereunder":
and any base rent prepared by Lessee, any costs paid to
Lessor pursuant to Addendum "A" (including, without
limitation, the security deposit, Lessee's deposits into
the Tenant Improvement Account, the costs of these
services to space planning, engineering, and
architectural work incurred by Lessee in connection with
the improvements that Lessee intends to make to the
Premises) shall be refunded to Lessee and the Letter of
Credit shall be terminated.
B. Insert *2
Article 4. Rent. Add the following paragraphs to Article 4:
4.2 Additional Rent. All charges payable by Lessee under
the terms of this Lease in addition to Base Rent shall
constitute additional rent ("Additional Rent") to
Lessor. All remedies available to Lessor for nonpayment
of rent shall be available for nonpayment of any
Additional Rent. The term "rent" means Base Rent and
Additional Rent. Unless this Lease provides otherwise,
all Additional Rent shall be paid by Lessee within
fifteen (15) days after Lessee's receipt of a statement
from Lessor. This Lease is a "triple net" lease, and it
is intended that the Base Rent payable hereunder shall
be an absolutely net return to Lessor and that Lessee
shall pay all costs and expenses relating
18
to the Premises, unless otherwise expressly provided in
this Lease. Additional Rent includes without limitation:
(a) Operating Expenses [see Paragraph 4.3]; (b)
Maintenance and Repairs [see Article 7]; (c) Insurance
[see Article 8]; (d) Real Property Taxes [see Article
10]; and (e) Utilities [see Article 11].
4.3 Operating Expenses.
(a) "OPERATING EXPENSES" shall include all expenses and
costs of every kind and nature which Lessor shall pay or
become obligated to pay because of or in connection with
the ownership and operation of the Premises, including,
but not limited to, the Premises, parking areas and
surrounding property and supporting facilities,
including, without limitation: (i) premiums for
insurance maintained by Lessor pursuant to Article 8;
(ii) all structural and non-structural maintenance and
repair (subject, however, to Lessor's warranties
provided in Section 2.3 of the Lease), waste disposal,
janitorial and service costs associated with Lessor's
management of the parking areas, loading and unloading
areas, trash areas, roadways, sidewalks, walkways,
driveways, landscaped areas, striping, irrigation
systems, outdoor lighting systems, exterior fire
hydrants, fences and gates, and roof of the Premises;
(iii) a property management fee equal to 4% of the Base
Rent ("Property Management Fee"); (iv) outside legal and
accounting expenses; (v) all interior and exterior
repairs, replacements and maintenance (excluding those
paid for by proceeds of insurance or by Lessee
directly); (vi) any capital improvement, replacement or
repair which does not exceed an aggregate cost of $5,000
per item; (vii) subject to the limitations of Paragraph
18 of Addendum "A", the amortization of capital
improvements, replacements or repairs which exceed an
aggregate cost of $5,000 per item; (vii) all charges for
utilities and similar services not separately metered by
Lessee and used or consumed in the Premises; and (viii)
utilities surcharges and any other costs, levies or
assessments resulting from statutes or regulations
promulgated by any governmental authority in connection
with the use or occupancy of the Premises. Operating
Expenses do not include separately-metered utilities and
services delivered to the Premises which costs are
Lessee's sole responsibility as further defined in
Article 11.
(b) In any year after the first full year of the Term,
the amount of Operating Expenses (excluding insurance,
taxes, the Property Management Fee and capital
improvements, repairs and replacements) shall not
increase by more than five percent (5%) in any calendar
year over the amount of Operating Expenses for the
previous calendar year; provided, however, that in the
event such Operating Expenses increase by more than five
percent (5%) in any calendar year over the amount of
Operating Expenses for the previous calendar year,
Lessor may require Lessee to independently obtain a bid
for the cost of comparable services for the Premises
which is less than the five percent (5%) limit on
Operating Expenses increases and, if Lessee is unable to
obtain comparable services for the Premises at a cost
which is less than the five percent (5%) limit on
Operating Expenses increases, Lessee agrees to pay the
amount by which the lowest bid for such comparable
services exceeds the five percent (5%) limit on
Operating Expenses increases. For example, if the cost
of an item of Operating Expenses increases by 10% over
the cost of such
A-2
19
services for the previous calendar year, and Lessee is
able to obtain a contract for comparable services at a
cost equal to an 8% increase over the cost of such
services for the previous calendar year, regardless of
whether Lessor elects to contract for the comparable
services, Lessee shall pay an 8% increase for such
services as part of the Operating Expenses.
(c) The cost of any capital improvements, replacements
and repairs reimbursed as Operating Expenses pursuant to
the foregoing obligations shall be amortized on a
straight-line basis (together with interest at the
interest rate of ten percent (10%) per annum on the
unamortized balance of such costs) over a period equal
to the useful life of the item (as determined by
reference to the vendor's or manufacturer's suggested
useful life for such capital item or, where such
reference does not exist, by reference to generally
accepted accounting principals, consistently applied).
(d) Lessor, at Lessor's sole cost and expense, shall
make an initial investment in general improvements to
landscaping in an amount not less than One Thousand
Dollars ($1,000) ("Initial Renovation Cost").
(e) Notwithstanding the provisions of this Paragraph
4.3, the following shall not be included within
Operating Expenses: (i) any depreciation on the
Premises; (ii) costs incurred due to Lessor's violation
of any terms or conditions of this Lease or any other
lease relating to the Premises; (iii) the Initial
Renovation Cost; (iv) damage and repairs attributable to
fire or other casualty; (v) damage and repairs covered
under any insurance policy carried by Lessor in
connection with the Premises; (vi) damage and repairs
necessitated by the negligence or willful misconduct of
Lessor or Lessor's employees, agents or contractors;
(vii) reserves for the repair, replacement or
improvement of the Premises; (viii) all principal,
interest, loan fees, and other carrying costs related to
any mortgage or deed of trust and all rental and other
payable due under any ground or underlying lease, unless
such costs are directly attributable to Lessee's, its
agents' or employees' activities in the Premises, or as
a result of a Lessee's breach or default under this
Lease; (ix) costs, including permit, license and
inspection costs, incurred with respect to the
installation of other tenants or other occupants in the
Premises, improvements made for other tenants or other
occupants of the Premises or incurred in improving,
decorating, painting or redecorating vacant space for
other tenants or other occupants of the Premises; (x)
any costs, fines, or penalties incurred due to
violations by Lessor or by any other tenant of the
Premises (other than Lessee) of any governmental rule or
authority, this Lease or any other lease of the
Premises, or due to Lessor's negligence or willful
misconduct; (xi) Landlord's costs of conforming the
Premises to the requirements of the American with
Disabilities Act and all regulations issued by the U.S.
Attorney General or other authorized agencies under the
authorization of the Americans with Disabilities Act
(unless necessitated by Lessee's improvements or
alterations to the Premises); (xii) costs of acquisition
of sculpture or other objects of art for the Premises;
(xiii) Lessor's wages, salaries or other compensation,
general corporate overhead and administrative expenses
(all of which shall be paid through the Property
Management Fee); (xiv) the cost of repairing any
structural defects in the Premises and repairing any
material defects in the design, materials or workmanship
of the Premises, including, without limitation, the
Building, which are disclosed to Lessor prior to
December 31, 1996, in accordance with Section 2.2 of the
Lease); (xv) any
A-3
20
other expense, which under generally accepted accounting
principles and practices, would not be considered a
normal maintenance and operating expense. Lessor agrees
to exercise care that there be no duplication of
submittals of items of expense for which Lessee is
obligated to pay Lessor under this Lease.
(f) Lessee shall have the option, upon reasonable
advance written notice to Lessor, to separately contract
at Lessee's sole cost and expense for any services
applicable to all or any part of the Premises which can
be conveniently done, without prejudice to Lessor, and
which results in a cost savings to Lessee compared to
the cost of Lessor's contract for similar services, and
in such event, Lessee shall not be assessed for the cost
of comparable services obtained directly by Lessee for
the Premises. Notwithstanding the foregoing, Lessor
shall be responsible for the management of services
performed by Lessee's contractors pursuant to the
foregoing right as consideration for the Property
Management Fee.
(g) Any Operating Expenses attributable to a period
which falls only partially within the Lease term shall
be prorated between Lessor and Lessee so that Lessee
shall pay only that proportion thereof which the part of
such period within the Lease term bears to the entire
period.
C. Insert *3
Paragraph 5 - Security Deposit. Add the following at the end of
Paragraph 5:
From and after the tenth (10th) day following the
expiration or earlier termination of this Lease, the
Security Deposit shall accrue interest at the rate set
forth in Paragraph 19 of this Lease.
D. Insert *4
Paragraph 6.1 - Use. Add the following at the end of Paragraph 6.1:
In the event of any zoning change or change in any other
land use law or ordinance (not procured or consented to
by Lessee), which prevents Lessee from using the
Premises for scientific research and development, Lessee
shall have the right to terminate this Lease upon not
less than one hundred twenty (120) days prior written
notice to Lessor; provided, however, that if, before the
expiration of said period, Lessor is able to cure the
situation such that the Premises may be legally used for
scientific research and development, this Lease shall
remain in full force and effect. Lessee agrees to act in
good faith to assist Lessor's efforts to cure the
situation, as Lessor may reasonably request.
A-4
21
E. Insert *5
Subparagraph 6.2(c) - Indemnification. Add the following at the end
of Subparagraph 6.2(c):
Notwithstanding any other provision of this Lease,
Lessor represents to the best of Lessor's actual
knowledge that there are no Hazardous Substances,
including but not limited to any solvents, metals,
petroleum, lead-based paint, PCBs, or asbestos in, on,
under or about the Premises. Notwithstanding this
representation, Lessor shall indemnify and hold Lessee
harmless against and from all liability and claims of
any kind for loss or damage to Lessee, its employees or
agents, and for expenses and fees of Lessee (including
but not limited to costs, expenses and attorneys' fees),
incurred, directly or indirectly, as a result of (1) the
negligence, willful misconduct or breach of this Lease
by any of Lessor, its agents, employees or contractors;
(2) the existence of Hazardous Substances in, on, under
or about the Premises as of the commencement of this
Lease; (3) any acts or omissions of Lessor, or other
lessees (past or future), or their officers, employees,
agents or subcontractors; and (4) any and all latent and
patent defects in the materials, design and workmanship
of the Premises of which Lessor receives actual
knowledge on or before December 31, 1996.
F. Insert *6
Paragraph 7.1 - Lessee's Obligations. In Paragraph 7.1, delete the
remainder of the paragraph starting at the beginning of the third line, and
replace with the following:
. . . keep the Premises in good order, condition and
repair during the term of the Lease, subject to ordinary
wear and tear and Paragraph 9 of the Lease, including
without limitation: interior surfaces of walls and
ceilings; wall and floor coverings; interior and
exterior windows and plate glass; window coverings;
doors; locks on closing devices; window casements and
frames; all heating, ventilation and air conditioning
systems and equipment, including leaks around ducts,
pipes, vents and other parts of the system; all
partitions, doors and door fixtures and hardware;
periodic interior painting, as determined by Lessee; all
fixtures and appurtenances including electrical,
lighting, all plumbing and plumbing fixtures; all signs,
awnings and canopies. Lessee shall maintain, at Lessee's
expense, a preventive maintenance contract providing for
the regular inspection and maintenance of the heating
and air conditioning system (including leaks around
ducts, pipes, vents, and other parts of the air
conditioning) by a licensed heating and air conditioning
contractor. It is the intention of Lessor and Lessee
that Lessee shall maintain the interior of the Premises,
at all times during the term of this Lease, in an
attractive and fully operative condition, at Lessee's
expense.
G. Insert *7
Paragraph 7.2 - Lessor's Obligations. In Paragraph 7.2, delete the
remainder of the paragraph following "Premises)" in line 3, and replace with the
following:
A-5
22
and subject to Lessee's obligation to reimburse Lessor
for the Operating Expenses pursuant to Article 4, Lessor
shall repair and maintain the roof (excluding interior
ceilings), the foundations, the structural and exterior
portions of the Premises and any building in which the
Premises are located, without limitation all of the
following: exterior walls; loading docks; exterior
sidewalks and walkways; landscaped areas and irrigation
facilities; driveways and parking areas, including
resurfacing, restriping and other repairs; periodic
exterior painting, as determined by Lessor; and exterior
lighting fixtures and appurtenances; provided, however,
Lessee shall pay as Additional Rent any maintenance and
repairs necessitated by active negligence, willful
misconduct or breach of this Lease by Lessee, its
agents, servants, employees or invitees, or caused by
alterations, additions or improvements made by Tenant to
the Premises. Except as hereinafter specifically
provided, there shall be no abatement of rent, and no
liability of Lessor, by reason of any injury to or
interference with Lessee's business arising from the
making of any repairs, alterations, or improvements to
any portion of the building or the Premises. Lessor
shall not be liable for any failure to make such repairs
or to perform any maintenance unless such failure shall
persist for more than five (5) consecutive business days
after written notice of the need therefor has been given
to Lessor by Lessee. If Lessor fails to perform Lessor's
obligations under this paragraph 7.2, and such failure
materially interferes with Lessee's use of the Premises
and continues for more than five (5) consecutive
business days after Lessee provides Lessor with notice
of such failure (or such shorter period as may be
reasonable due to the nature of such failure), Lessee
may perform such obligations on Lessor's behalf, and if
Lessee so elects, Lessor shall reimburse Lessee, upon
demand, for the costs thereof (and any reasonable costs
and fees associated with Lessee's collection of such
costs). With the exception of the foregoing sentence,
Tenant waives the right to make repairs at Lessor's
expense under Section 1942 of the California Civil Code,
or under any other law, statute, ordinance now or
hereafter in effect.
H. Insert *8
Subparagraph 7.4(b) - Removal. In the first line of subparagraph
7.4(b), insert between "may" and "require" the following:
(at the time Lessor gives its consent to the
installation of such Lessee-Owned Alterations or Utility
Installations)
I. Insert *9
Subparagraph 7.4(c) - Surrender/Restoration. Add the following at
the end of subparagraph 7.4.(c):
Any Trade Fixtures and Equipment purchased by Lessee and
installed in the Premises, which Lessee intends to
remove from the Premises upon the expiration or earlier
termination of this Lease, shall be separately
identified on a list ("Equipment List") to be compiled
by Lessee and acknowledged by Lessor. The Lease shall be
amended to incorporate the Equipment List upon its
completion. The Trade Fixtures and Equipment on the
Equipment List
A-6
23
shall be and remain the sole property of Lessee. Said
Fixtures and Equipment may be removed from the Premises
by Lessee at any time during the term of this Lease.
J. Insert *10
Subparagraph 8.2(b) - Carried By Lessor. Add the following at the
end of subparagraph 8.2(b):
Within ten (10) days after the date of this Lease,
Lessor shall provide Lessee with a certificate
evidencing the existence in an amount of Lessor's
liability insurance for the Premises. No such policy
shall be cancelable or subject to modification except
after thirty (30) days prior written notice to Lessee.
Lessor and Lessee agree that Lessor shall initially act
as the Insuring Party; provided, however, that Lessee
may, in its reasonable discretion and at any time, elect
to become the Insuring Party upon ninety (90) days
advance written notice to Lessor.
K. Insert *11
Paragraph 8.6 - Waiver of Subrogation. Add the following at the end
of paragraph 8.6:
Lessor and Lessee agree to have their respective
insurance companies issuing insurance pursuant to this
Lease, waive any right to subrogation that such
companies may have against Lessor or Lessee, as the case
may be, so long as the insurance is not invalidated
thereby.
L. Insert *12
Subparagraph 9.6(a) - Abatement of Rent; Lessee's Remedies. Add the
following at the end of subparagraph 9.6(a):
. . . , except for damages connected with Lessor's
negligence, willful misconduct, or breach of this Lease.
M. Insert *13
Subparagraph 9.6(b) - Abatement of Rent; Lessee's Remedies. Add the
following at the end of subparagraph 9.6(b):
If Lessor reasonably determines that repairs will
require more than one hundred eighty (180) days to
complete, or if repairs are not substantially completed
within one hundred eighty (180) days following the
commencement thereof, Lessee may, at its option,
terminate this Lease by giving at least thirty (30) days
prior written notice to Lessor specifying the
termination date. If, prior to the end of the initial
term of the Lease, this Lease shall terminate because of
Lessor's failure to repair or restore the Premises or
because of event of condemnation under paragraph 14,
then Lessor shall provide Lessee with funds equal to the
unamortized portion of Lessee's contribution to the cost
of the initial improvements (paid from the Tenant
Improvement Account described in Addendum paragraph 7),
which contribution shall be amortized on a straight-line
basis at an interest rate of 10% over the initial term
of the Lease.
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N. Insert *14
Paragraph 9.7 - Hazardous Substance Conditions. Add the following in
line 7 of paragraph 9.7, at the end of the first sentence:
. . . In which event Lessor shall reimburse Lessee for
Lessee's actual cost of moving Lessee's equipment and
furnishings to Lessee's replacement Premises and Lessor
waives the terms and conditions of Subparagraph 7.4(c).
O. Insert *15
Paragraph 10.2 - Definition of "Real Property Taxes". Add the
following at the end of paragraph 10.2:
Notwithstanding the foregoing, Real Property Taxes shall
not include (a) inheritance, estate or franchise taxes
imposed upon or assessed against the Premises, (b) taxes
on the net income of the Lessor, and (c) taxes
attributable to the first change in the ownership of the
Premises during the term of the Lease.
P. Insert *16
Paragraph 13.2 - Remedies. Add the following in line 6 of paragraph
13.2 after "cashier's check":
. . . ; provided, however, that Lessee shall not be
required to make future payments by cashier's check if,
no more than once in any calendar year, Lessee cures
such Breach by providing Lessor with funds in the amount
of the full payment due Lessor within twenty-four (24)
hours following Lessee's receipt of Lessor's notice that
a check given by Lessee has not been honored by the bank
upon which it is drawn.
Q. Insert *17
Paragraph 13.2(a) - Remedies. Add the following in line 9 of
paragraph 13.2(a) after "Premises":
. . . to the condition required by subparagraph 7.4(c),
. . .
R. Insert *18
Paragraph 14 - Condemnation. Add the following in line 6 of
paragraph 14 after "possession":
. . . or Lessee may elect to continue this Lease with
Base Rent abated in proportion to the adverse effect of
the condemnation on Lessee's business in the Premises,
as reasonably determined by Lessee.
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S. Insert *19
Paragraph 14 - Condemnation. Add the following in line 12 after
"Lessee's Trade Fixtures":
. . . and any Lessee-Owned Alterations and/or Utility
Installations which Lessee would be entitled to remove
on expiration or earlier termination of this Lease.
T. Insert *20
Paragraph 16 - Tenancy Statements. Add the following in line 4 of
subparagraph 16.2 after "three (3) years":
. . . ; provided that Lessor acknowledges that Lessee's
financial statements received prior to the date of this
Lease are in such reasonably acceptable form.
U. Insert *21
Paragraph 17 - Lessor's Liability. Add the following at the end of
paragraph 17:
Notwithstanding the foregoing, a Lessor whose interest
in this Lease or the Premises is foreclosed by a
foreclosure or execution sale shall not be relieved of
liability unless the party who acquires the Lessor's
interest agrees to recognize Lessee's interest and
rights in and under this Lease and not to disturb
Lessee's possession hereunder so long as Lessee is not
in default hereunder.
V. Insert *22
Paragraph 21 - Rent Defined. Add the following in Paragraph 21 after
"this Lease":
. . . (with the exception of unused portions of the
Security Deposit and the Letter of Credit) . . .
W. Insert *23
Paragraph 30.3 - Non-Disturbance. Add the following in line 2, after
"assurance":
. . . in a form reasonably acceptable to Lessee . . .
X. Insert *24
Paragraph 32 - Lessor's Access. Add the following at the end of
paragraph 32:
Lessor shall not permit such activities to interfere
with Lessee's (or any sublessee's) use of the Premises.
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Y. Insert *25
Paragraph 34 - Signs. Add the following at the end of paragraph 34:
Lessee shall be entitled to install building and
monument signs for the Premises as part of the proceeds
of the Tenant Improvement Account and such signs shall
be installed in conformance with all sign ordinances and
regulations. All such signage shall be reviewed and
approved by Lessor prior to manufacture and
installation. Lessor's approval of signage shall not be
unreasonably withheld.
II. THE FOLLOWING ADDENDA PARAGRAPHS 1 THROUGH 20 ARE HEREBY INCORPORATED INTO
THE LEASE.
1. BASE RENT SCHEDULE (EXCLUSIVE OF T.I. ALLOWANCE): Lessee shall pay Base Rent
for the rentable square footage of the Premises according to the schedule
outlined below:
Year 1: $0.70/sq ft/month/NNN
Year 2: $0.70/sq ft/month/NNN
Year 3: $0.75/sq ft/month/NNN
Year 4: $0.80/sq ft/month/NNN
Year 5: $0.83/sq ft/month/NNN
Year 6: $0.86/sq ft/month/NNN
Year 7: $0.90/sq ft/month/NNN
Year 8: $0.94/sq ft/month/NNN
Year 9: $0.98/sq ft/month/NNN
Year 10: $1.02/sq ft/month/NNN
The Premises contain an interior space area of Thirty-Four Thousand Two Hundred
Forty-Four (34,244) rentable square feet as shown on Exhibit "B" attached to the
Lease and by this reference incorporated herein. Lessee may confirm the
measurements of the rentable square footage of the Premises by measuring the
Premises in accordance with BOMA standards ANSIZ65.1 - 1980 and, if Lessee
disputes the Lessor's measurements, Lessee shall submit Lessee's measurements
and dispute to Lessor within thirty (30) days after the Commencement Date. If
Lessor and Lessee fail to agree on the measurement of the Premises within ten
(10) days, Lessor and Lessee shall resolve the dispute by submitting the dispute
to a third party acceptable to Lessor and Lessee and familiar with BOMA
standards, who shall measure the Premises and submit its calculation to Lessor
and Lessee within ten (10) days. Any changes in square footage to the Premises
shall be incorporated into this Lease by an amendment hereto entered into by the
parties.
2. SECURITY DEPOSIT & PREPAID RENT: Upon the execution of the Lease, Lessee
shall deposit with Lessor a security deposit in an amount equal to Sixty Five
Thousand Dollars ($65,000.00)("Security Deposit"). During such portion of the
Term as the Letter of Credit (as defined in Section 3 below) is available to the
Lessor to cover Lessee's obligations under the Lease, the Security Deposit shall
be held by Lessor in addition to Lessor's security deposit in the form of the
Letter of Credit made by Lessee in favor of Lessor (as set forth below) and,
collectively, the Security Deposit and the amount secured by the Letter of
Credit shall constitute the "Security Deposit." Upon the expiration or earlier
termination of the Letter of Credit (pursuant to the terms set forth below),
such portion of the Security Deposit in excess of Thirty Two Thousand Five
Hundred Dollars ($32,500.00) which has not been applied by Lessor to unpaid rent
or other Lessee obligations under the Lease shall be refunded to Lessee.
Commencing with the date of this Lease,
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that portion of the Security Deposit held by Lessor in the amount of Thirty Two
Thousand Five Hundred Dollars ($32,500.00) shall be held in Lessor's deposit
account with a financial institution acceptable to Lessee and shall accrue
interest at the rate of five percent (5%) per annum, and all interest accrued on
the Security Deposit shall be paid over to Lessee by Lessor within five (5)
business days of the last day of each calendar year. So long as Lessor is a
single asset entity with the Premises as its sole asset, Lessor may commingle
the Security Deposit in its general deposit accounts. Upon sale or transfer of
the Premises by Lessor, Lessor shall remain liable for the return of the unused
portion of the Security Deposit unless Lessor transfers the Security Deposit to
the transferee of the Premises and the transferee assumes, in writing, Lessor's
Lease obligations. Lessor may, but shall not be required to, apply all or part
of the Security Deposit and/or the Letter of Credit (by drawing upon the Letter
of Credit and/or by using the amounts held by Lessor as the Security Deposit) to
any unpaid rent or other charges due from Lessee or to cure any other defaults
of Lessee. If Lessor uses any part of the cash portion of the Security Deposit
for such purposes, Lessee shall deposit additional funds to restore the Security
Deposit to its then-current amount within ten (10) days after Lessor's written
request.
3. LETTER OF CREDIT. On or before the date on which Lessor funds its portion of
the Tenant Improvement Account (as set forth below), Lessee shall provide Lessor
with one or more letter(s) of credit (individually and, if more than one,
collectively, the "Letter of Credit") in a form reasonably satisfactory to
Lessor and in the aggregate amount of Three Hundred Twenty-Five Thousand Dollars
($325,000.00), payable pursuant to the terms and conditions set forth herein and
issued by a California bank previously approved by Lessor. Lessor shall pay for
the costs of the establishment and maintenance of the Letter of Credit, provided
that such costs do not exceed one percent (1%) per annum of the then current
value of the Letter of Credit. The Letter of Credit shall have an initial term
of not less than twelve (12) months and shall be renewable for up to two (2)
successive twelve (12) month periods; provided, however, that the aggregate
amount of the Letter of Credit may be reduced to the following amounts on the
following dates:
First Lease Year $325,000.00
Second Lease Year $216,666.67
Third Lease Year $108,333.33
Fourth Lease Year $ 0.00
With the exception of the conditions for early termination of the Letter of
Credit set forth below, the Letter of Credit shall be irrevocable, unconditional
and payable upon demand upon presentation of Lessor's draft, accompanied by the
original Letter of Credit together with a notarized statement, signed by an
authorized trustee or officer of Lessor, stating that Lessor has the right to
draw under the Letter of Credit. Partial draws shall be permitted. Lessor shall
have the right to draw on the Letter of Credit in the event that: (a) Lessor
applies all or part of the Security Deposit to any unpaid rent or other charges
due from Lessee or to cure any other defaults of Lessee as set forth above; (b)
Lessee is in default under the Lease after expiration of any grace period; or
(b) Lessee fails to renew the Letter of Credit, if required for the Letter of
Credit to conform to the aggregate amount requirements set forth above, at least
one (1) month prior to its expiration date.
(a) Effect of Lessee Breach. Notwithstanding the foregoing
schedule for reduction of the amount Letter of Credit, in the event of a Lessee
Breach of this Lease which remains uncured for the applicable cure period set
forth in the Lease, the amount secured by the Letter of Credit on the date of
such uncured Breach shall not be reduced in accordance with the foregoing
schedule, but shall continue as part of Lessee's Security Deposit until Lessee
cures such Breach and the earlier of: (a) the expiration of the initial term of
the Lease; or (b) Lessee achieves any of the Lessee financing criteria set forth
in subparagraph 3(b) below.
X-00
00
(x) Xxxxxx Financing Milestones. Notwithstanding anything to the
contrary in this Lease, the Letter of Credit shall be terminated by Lessor and
Lessee, by written notice to the issuer of the Letter of Credit, and the
original Letter of Credit shall returned to Lessee upon presentation of
reasonable proof to Lessor, in writing and certified by Lessee's chief financial
officer (or an officer of Lessee in similar capacity), of Lessee's satisfaction
any of the following criteria for early termination of the Letter of Credit: (i)
Lessee demonstrates a tangible net worth of $15 million or greater; (ii) Lessee
demonstrates aggregate revenue of $3 million or greater for any twelve (12)
consecutive months; or (iii) Lessee receives additional capital financing in an
amount not less than Ten Million Dollars ($10,000,000.00), through venture
capital sources, or other financing sources (but not including the "callable"
portion of the capital funding which Lessee received in August 1995).
4. EARLY OCCUPANCY: Lessee may occupy that approximately 10,000 rentable square
foot portion of the Premises designated by Lessee as the "Early Occupancy Space"
on Exhibit "C" attached hereto, for the purpose of making improvements to the
Premises and utilizing office space until the Commencement Date, immediately
upon the later of (i) Lease execution and (ii) close of escrow for Lessor's
purchase of the Premises from Campson Corp. All of the terms and conditions of
the Lease shall apply during the term of such early occupancy, except that
Lessee shall pay Base Rent (and reimburse Lessor's NNN expenses) for the Early
Occupancy Space only commencing on the later of (i) the date of Lessee's actual
occupancy of the Early Occupancy Space and (ii) January 1, 1996.
5. ENVIRONMENTAL ASSESSMENT. Prior to Lessee's occupancy of the Premises, Lessor
shall conduct an "Entrance Assessment," consisting of a Phase I Environmental
Assessment and such other tests as are listed on the "Assessment Criteria"
attached hereto as Addendum B, by an environmental consultant reasonably
acceptable to Lessee. Lessee shall receive a copy of the report(s) of the
Lessee's Entrance Assessment, and said report(s) shall be deemed to be the
baseline physical condition of the Premises upon Lessee's occupancy. The cost of
the Lessee's Entrance Assessment shall be paid by Lessor. Prior to Lessee's
surrender of the Premises, Lessee shall conduct an "Exit Assessment," consisting
of a Phase I Environmental Assessment and such other tests as are listed on the
Assessment Criteria attached hereto as Addendum B, by an environmental
consultant reasonably acceptable to Lessor. Lessor shall receive a copy of the
report(s) of the Lessee's Exit Assessment, and said report(s) shall be deemed
the physical condition of the Premises upon Lessee's surrender of the Premises.
The cost of the Lessee's Exit Assessment shall be paid by Lessee. Lessee's
Entrance and Exit Assessments shall be performed by an independent environmental
consultant with expertise in performing environmental analyses of biotechnology
laboratory and manufacturing facilities. In the event that the Exit Assessment
indicates contamination of the Premises resulting from Lessee's occupancy and/or
use of the Premises, Lessee shall take such action as may be reasonable under
the circumstances to restore the Premises to the condition evidenced by the
Entrance Assessment.
6. TENANT IMPROVEMENT ACCOUNT: On or before January 15, 1996, Lessor shall
provide Lessee with written proof, reasonably acceptable to Lessee, of a funding
commitment from a lender reasonably acceptable to Lessee for a loan in the
amount of Lessor's deposit into the Tenant Improvement Account ("Funding
Commitment"). On or before February 20, 1996, Lessor and Lessee shall each
deposit cash in the amount of Six Hundred Fifty Thousand and no/100 Dollars
($650,000) into one or more escrow accounts totalling $1,300,000 (collectively,
the "Tenant Improvement Account") with one or more escrow holders reasonably
acceptable to both parties (collectively, the "Escrow Holder"). The Tenant
Improvement Account shall be held by the Escrow Holder for distribution pursuant
to the terms of this Lease, including, without limitation, the Work Letter. The
Tenant Improvement Account shall be used to pay for Lessee's improvements to the
Premises ("Tenant Improvements") in accordance with that certain Work Letter
Agreement attached hereto as
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Exhibit "D". Any unused portion of the Tenant Improvement Account shall be
returned equally to both Lessor and Lessee and interest accruing on such
deposited funds will accrue to the benefit of both Lessor and Lessee. Lessee
shall submit plans and specifications to Lessor for such improvements and shall
complete such improvements in accordance with the Work Letter Agreement. All of
the funds provided by Lessor which are utilized by Lessee shall be repaid by
Lessee over the entire term of the Lease, amortized on a straight-line basis at
an interest rate of 10% per annum, payable monthly ("Lessor Reimbursement").
Base Rent, according to the terms of the Lease, shall mean the rent schedule
outlined in Section 1 above, together with the monthly payment of the amortized
Lessor Reimbursement. For example, if 100% of the $650,000 contributed by Lessor
is utilized by Lessee, the Base Rent shall be equal to the Base Rent amount set
forth in Section 1 above, plus $0.25/sq. ft./month.
7. EXISTING IMPROVEMENTS: The Premises will include the existing improvements,
furnishings and equipment left in the Building by the prior lessee (Quidel)
("Existing Improvements"). Lessor agrees, at Lessor's cost and expense, to pay
any costs associated with acquiring such Existing Improvements from Quidel, up
to a maximum of $30,000.00. If the cost of such Existing Improvements exceeds
$30,000, the overage shall be paid from the Tenant Improvement Account, provided
that Lessor first obtains Lessee's written approval of such additional expense.
In no event shall the amount paid from the Tenant Improvement Account for the
Existing Improvements exceed $20,000.00. Any costs of the Existing Improvements
exceeding $50,000 shall be Lessor's sole expense.
8. TRANSFER TO AFFILIATE PERMITTED. Any provision in this Lease to the contrary
notwithstanding, Lessor's consent shall not be required for a Transfer to any
person or entity who controls, is controlled by or is under common control with
Lessee, or to any corporation resulting from the merger or consolidation with
Lessee or to any person or legal entity which acquires all the assets of Lessee
as a going concern of the business being conducted on the Premises (each of the
foregoing is hereinafter referred to as a "Lessee Affiliate"); provided that
before such assignment shall be effective, (a) said Lessee Affiliate shall
assume, in full, the obligations of Lessee under this Lease, (b) Lessor shall be
given written notice of such assignment and assumption and (c) the use of the
Premises by the Lessee Affiliate shall be as set forth in Paragraph 1.8. For
purposes of this paragraph, the term "control" means possession, directly or
indirectly, of the power to direct or cause the direction of the management,
affairs and policies of anyone, whether through the ownership of voting
securities, by contract or otherwise. Lessor's entitlements to profits resulting
from a sublease of the premises set forth in Section 11 below shall not apply to
a sublease by Lessee to a Lessee Affiliate.
9. SUBLETTING: Lessee may sublease a portion or all of the Premises throughout
the initial term of the lease with Lessor's prior written approval, which
approval shall not be unreasonably withheld. Any net profits resulting from such
sublease shall be shared equally by Lessor and Lessee (profits shall be the net
cash benefit of the sublease, taking into account all costs that may apply
including leasing commissions, improvements, rental abatements, etc.). Lessee
may not, without obtaining Lessor's written approval which may be withheld in
Lessor's sole discretion, sublease the Premises for a duration beyond the
termination date of the initial term of the lease.
10. OPTION TO EXTEND. Lessee shall have three (3) consecutive options to extend
the Term of this Lease for one (1) additional period of five (5) years each
(each of such options are referred to herein individually as a "Premises
Option"). The period of each of the Premises Options is referred to herein
individually as an "Option Term". Lessee shall have no right or interest to
exercise the Premises Option unless, not later than two hundred seventy (270)
days prior to the end of the then-current Term or Option Term, Lessee provides
Lessor with (a) written notice of its exercise of
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the Premises Option (the "Extension Notice"). Base Rent payable during the first
year of each Option Term shall be an amount equal to ninety-five percent (95%)
of "Market Rent" (as defined in subparagraph (a) below), on the date of the
Extension Notice. All of the terms, covenants, conditions, provisions and
agreements of the Lease shall apply to the Option Term. Annual Base Rent after
the first year of each Option Term shall be as set forth in subparagraph (c)
below. Time is of the essence with respect to Lessee's exercise of each of the
Premises Options.
(a) MARKET RENT. As used herein, "Market Rent" shall mean the
price that a ready and willing tenant would pay, at commencement of the Option
Term, as monthly base rent to a ready and willing landlord if such office space
were offered for lease on the open market for a reasonable period of time and be
the sum of the fair market monthly rental rate per rentable square foot
multiplied by the Rentable Area of the Premises determined as follows: (a) as
mutually agreed by Lessor and Lessee within ten (10) days of Lessor's delivery
to Lessee of Lessor's opinion of the Market Rent for the first year of the
Option Term ("Lessor Rent Notice")(which shall be delivered to Lessee within ten
(10) days of receipt of Lessee's written Extension Notice); or (b) in the event
that Lessor and Lessee are unable to so agree within such ten (10) day period,
the Market Rent shall be determined by concurrent appraisals pursuant to
subparagraph (b) below. The Market Rent shall be determined by considering (i)
the highest and best use of the Premises, (ii) the duration of the Option Term,
(iii) the quality and prestige of the Premises (as then improved and maintained
as required by the terms and conditions of this Lease), (iv) recent monthly
rental rates for buildings of similar size and location, (v) anticipated CPI
Index changes from the date of the Market Rent determination to the date of the
actual Option Term Commencement; (vi) all other relevant terms and conditions of
this Lease.
(b) MARKET RENT APPRAISAL PROCEDURE.
(i) If Lessee rejects the Market Rent proposed by Lessor in
Lessor's Rent Notice, Lessor and Lessee shall attempt to agree in good faith
upon a single appraiser not later than five (5) days after the Lessor receives
notice of Lessee's rejection of Lessor's proposed Market Rent ("Lessee's
Rejection Notice"), which date of receipt shall be within ten (10) days of
Lessor's delivery of Lessor's Rent Notice. If Lessor and Lessee are unable to
agree upon a single appraiser within such time period, then Lessor and Lessee
shall each appoint one appraiser not later than ten (10) days after Lessor's
receipt of Lessee's Rejection Notice. Within five (5) days thereafter, the two
appointed appraisers shall appoint a third appraiser. Lessor and Lessee shall
instruct the appraiser(s) to complete the determination of the Market Rent not
later than fifteen (15) days after all appraisers have been appointed.
(ii) If either Lessor or Lessee fails to appoint its
appraiser within the prescribed time period, the single appraiser appointed
shall determine the Market Rent of the Premises for the first year of the Option
Term. If both parties fail to appoint appraisers within the prescribed time
periods, then the first appraiser thereafter selected by a party shall determine
the Market Rent of the Premises for the first year of the Option Term.
(iii) Lessor and Lessee shall each bear the cost of its own
appraiser and the parties shall share equally the cost of the single or third
appraiser, if applicable. All appraisers so designated herein shall have at
least five (5) years' experience in the appraisal of similar office buildings in
the San Diego area and shall be members of professional organizations such as
MAI or equivalent.
(iv) If a single appraiser is chosen, then such appraiser
shall determine the Market Rent of
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the Premises for the first year of the Option Term. Otherwise, the Market Rent
of the Premises for the first year of the Option Term shall be the arithmetic
average of (2) of the three (3) appraisals which are closest in amount, and the
third appraisal shall be disregarded.
11. OPTION TERM ESCALATION. During the Option Term, Base Rent shall
be subject to an annual increase, effective as of each anniversary of the Term
Commencement Date ("Adjustment Date"), to reflect any increase in the cost of
living, in accordance with the "Index" (as hereinafter defined), using as the
"Base Month" (Base Index) the month ninety (90) days prior to the date which is
one year prior to the applicable Adjustment Date, and using as the "Comparison
Month" (Comparison Index) the month ninety (90) days prior to the applicable
Adjustment Date. As of each Adjustment Date, the Base Rent payable during the
ensuing twelve (12) month period shall be determined by increasing the initial
Base Rent by a percentage equal to the percentage increase, if any, in the
Comparison Index over the Base Index; provided, however, that in no event shall
the Base Rent payable in any year of an Option Term be less than Base rent for
the immediately preceding year of the Option Term. When the Base Rent payable as
of each Adjustment Date is determined, Lessor shall promptly give Lessee written
notice of such adjusted Base Rent and the manner in which it was computed. The
Base Rent as so adjusted from time to time shall be the "Base Rent" for all
purposes under this Lease. As used herein, the term "Index" means the Consumer
Price Index for all Urban Consumers (Los Angeles-Anaheim-Riverside Area; base
reference period 1982-84 = 100), as published by the United States Department of
Labor, Bureau of Labor Statistics (or, in the event the Index is not issued by
the Bureau of Labor Statistics, such replacement Consumer Price Index as Lessor
may reasonably determine).
12. RIGHT OF FIRST OFFER. If, at some time during the term of this Lease,
Landlord shall desire to sell all or any part of the Premises, Landlord shall
deliver to Tenant written notice of Landlord's intention to sell and, for a
period of sixty (60) days following delivery of the notice, Landlord shall
negotiate in good faith solely with Tenant for the sale of the Premises. If, at
the expiration of the sixty (60) day period, Landlord and Tenant have not
executed a mutually acceptable written agreement pertaining to the sale of the
Premises, then Landlord shall thereafter be free to negotiate with any other
person or entity for the sale or exchange of the Premises on whatever terms and
conditions Landlord may choose. If Landlord shall fail to provide to Tenant the
notice of intention to sell the Premises prior to the date Landlord executes an
irrevocable purchase agreement with another person or entity for the sale of the
Premises, Tenant shall not have any right, claim or action against the buyer
and/or the Premises. The right of first offer shall only be effective one (1)
time and, following the expiration of the sixty (60) day period without a
contract being signed by Landlord and Tenant, the right of first offer shall
expire and be of no further force or effect.
13. EARLY TERMINATION. Lessee shall have a one time right to terminate this
Lease as of the first day of the seventy-second (72nd) month of the Lease Term
if Lessee wishes to exercises its right to terminate this Lease pursuant to this
Section, Lessee shall provide written notice to Lessor at least nine (9) months
prior to the effective date of the termination. If Lessee fails to deliver to
Lessor its notice of exercise of its right of termination within the prescribed
time period, such right of termination shall lapse, and there shall be no
further right to terminate the Lease Term.
14. DISCLOSURE: Xxx X. Xxxxxxx, Co-Trustee of The Xxxxxxx Family Trust, which is
the sole shareholder of Lessor, is a licensed real estate broker in the state of
California, acting in the capacity of a principal in this transaction.
15. BROKERS: CombiChem, Inc., herein described as Lessee is not currently
represented by a real estate brokerage company but was earlier represented by
Xx. Xxxx Xxxxxxxx of Business Real Estate. However, the relationship with Xx.
Xxxxxxxx was terminated by written notice. Campson Corporation, herein described
as Lessor is exclusively represented by Xxxxx Xxxxxx of Business Real
A-15
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Estate Brokerage Company and no other parties. Commissions shall be paid by
Lessor according to separate agreement.
16. AMERICANS WITH DISABILITIES ACT: Subject to the limitations on the time for
delivery of notice of non-compliance of the Premises with applicable laws as set
forth in Section 2.3 of the Lease, Lessor warrants that the offices rooms
buildings, structures, and adjacent property owned by lessor, including all
parking lots, walkways, entrances, hallways and other public spaces, elevators,
and other devices or pathways for ingress and exit to the leased property, that
might be used by customers, clients, invitees of Lessee and the general public,
conform to all the requirements of the American with Disabilities Act and all
regulations issued by the U.S. Attorney General or other authorized agencies
under the authorization of the Americans with Disabilities Act. The Lessor
promises to reimburse and indemnify and defend the Lessee for any expenses
incurred because of the failure of the leased premises and adjacently owned
property to conform with the above cited law and regulations, including the
costs of making any alterations, renovations, or accommodations required by the
American with Disabilities Act, or any governmental enforcement agency, or any
court, any and all fines, civil penalties, and damages awarded against the
Lessee resulting from violations of the above cited law and regulations, and all
reasonable legal expenses incurred in defending claims made under the above
cited law and regulations, including reasonable attorney's fees.
17. CAPITAL REPAIRS/RENOVATION EXPENSES: Lessor shall seek the
concurrence/approval of Lessee (such concurrence/approval shall not be
unreasonably withheld) prior to incurring large capital repair/renovation costs
(i.e. re-roofing, parking lot resurfacing, painting) which would be reimbursable
by Lessee according to the provisions of the Lease. For purposes of this
paragraph, it shall not be unreasonable for Lessee to disapprove any capital
repair/renovation costs that: (a) do not result in a reduction of Lessee's costs
of maintaining the Premises; (b) are not required to keep the Premises, and
every part thereof, in good order, condition and repair; (c) are not required
due to equipment failure or expiration of the useful life of a capital item (as
determined by reference to the vendor's or manufacturer's suggested useful life
for such capital item or, where such reference does not exist, by reference to
generally accepted accounting principals, consistently applied); or (d) are
capital costs not normally payable by tenants of as tenant costs under leases of
comparable premises in the San Diego metropolitan area. All work requiring
Lessee's approval shall be performed only by contractors and subcontractors
approved by Lessee in its reasonable discretion in a process by which the Lessor
shall solicit bids from at least three (3) sources and will select the
lowest-bid vendor/contractor unless in Lessor's reasonable discretion, such
lowest-bidder vendor/contractor does not meet reasonable standards established
by Lessor as to reputation, responsiveness, directly relevant experience,
knowledge and/or personnel qualifications.
18. LESSEE'S AUDIT RIGHTS. At any time within twelve (12) months of Lessee's
receipt of any statement from Lessor relating to Lessor's reimbursable expenses,
Lessor shall furnish Lessee following Lessee's written request therefor, but no
more than twice in any calendar year, including invoices and other source
documents relating to such reimbursable expenses. The audit shall be conducted
by a certified public accountant selected by Lessee. Such audit shall be limited
to the items necessary to a determination of the applicable reimbursable
expenses. In any event, if it is determined that Lessee was overcharged by more
than two percent (2%), such overcharge shall entitle Lessee to credit against
its next payment of Lessor's reimbursable expenses the amount of the overcharge
and the costs associated with the audit (and, if such credit occurs following
the expiration of the Term, Lessor shall promptly pay the amount of such credit
to Lessee). If the audit determines that the Lessee was overcharged less than
two percent (2%), such overcharge shall entitle Lessee to credit against its
next payment of Lessor's reimbursable expenses the amount of the overcharge and
Lessee shall pay for all costs associated with the audit. If the audit shall
determine that Lessee was
A-16
33
undercharged for the Lessor's reimbursable expenses, Lessee shall promptly pay
the amount of such undercharge to Lessor and Lessee shall pay for all costs
associated with the audit.
[Remainder of This Page Intentionally Left Blank]
A-17
34
[SIGNATURE PAGE TO ADDENDUM A]
AGREED AND ACCEPTED
LESSOR: LESSEE:
CAMPSON CORPORATION, a California COMBICHEM, INC., a California
corporation corporation
/s/ Xxx X. Xxxxxxxx /s/ Xxxx Xxxxx
------------------------------------------ ------------------------------------------
By: Xxx X. Xxxxxxxx By: Xxxx Xxxxx
---------------------------------------- ----------------------------------------
Title: President Title: Controller
------------------------------------- -------------------------------------
Date Signed: 12-27-95 Date Signed: 12/27/95
------------------------------- -------------------------------
X-00
00
XXXXXXXX "X"
ENTRANCE/EXIT ASSESSMENT CRITERIA
I. The Phase I Environmental Site Assessment prepared by SEACOR, and
dated August 30, 1994, shall be updated by Lessor as part of the "Entrance
Assessment," which shall be prepared by a consultant other than SEACOR. The
updated Phase I Assessment shall be consistent with the American Society for
Testing Materials (ASTM) Standard E-1527 and shall, by its terms, allow the
following parties to rely upon its conclusions: Campson Corporation and
CombiChem, Inc.
II. For purposes of compliance with the requirements of Section 6 of
the Addendum "A" to the Lease, the term "Assessment Criteria" with respect to
the Premises shall refer to, and include, the following studies and assessments:
A. The following additional assessments, inspections and
monitoring plans:
1. Interior Site Assessment consisting of a visual
inspection of all surfaces (floors, walls, ceiling
tiles, benches, interior of cabinets and fume hoods)
for signs of contamination and deterioration. Visual
inspection of all bench and hood sinks and readily
accessible drain lines for signs of deterioration,
loss of integrity and leakage. The Interior Site
Assessment shall include detailed written
documentation of all observations and dated photos to
document the existing condition thereof.
2. Wastewater Collection System Assessment consisting of
a flush and clean-out of all discharge piping and
traps with observation of effluent during the
clean-out. Videotaping of the Wastewater Collection
System shall be required along with a written report
for each ten foot (10') piping segment.
3. In order to verify that there is no contamination of
the laboratory hoods and exhaust system, an inspection
shall be made consisting of an inspection of the
laboratory hoods and exhaust system with detailed
documentation of all observances, including without
limitation, observed solids, liquids, odors or
Hazardous Materials entrapment. Such inspection shall
include inspection of the roof area to determine the
existence of any deterioration from condensation of
hazardous materials in the exhaust system.
36
EXHIBIT "A"
LEGAL DESCRIPTION OF PREMISES
PARCEL 1:
XXX 0 XX XXXXXXX XXXXX XXXXXXXXXX XXXX UNIT NO. 2, IN THE CITY OF SAN DIEGO,
COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 10055,
FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, ON APRIL 8,
1981.
PARCEL 2:
AN EASEMENT FOR THE JOINT PURPOSES OF INGRESS AND EGRESS OVER AND ACROSS THE
EASTERLY 75 FEET OF THE SOUTHERLY 20 FEET OF XXX 0 XX XXXXXXX XXXXX XXXXXXXXXX
XXXX XXXX XX. 0, AS FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO
COUNTY, ON APRIL 8, 1981.
SAID EASEMENT IS APPURTENANT TO AND FOR THE BENEFIT OF XXX 0 XX XXXXXXX XXXXX
XXXXXXXXXX XXXX XXXX XX. 0, XX XXXX XXX 00000.
37
EXHIBIT "B"
PREMISES FLOOR PLAN
Floor Plan Diagram
38
EXHIBIT "C"
EARLY OCCUPANCY SPACE
Diagram
39
EXHIBIT "D"
WORK LETTER AGREEMENT
This Work Letter Agreement ("Work Letter") supplements that certain
STANDARD INDUSTRIAL/COMMERCIAL SINGLE TENANT LEASE -- NET, dated December 22,
1995, made by and between CAMPSON CORPORATION, a California corporation, as
"Lessor," and COMBICHEM, INC., a California corporation, as "Lessee" (the
"Lease"), covering certain premises described in the Lease (the "Premises"). All
terms not defined herein shall have the same meaning as set forth in the Lease.
All notices required to be given hereunder shall be delivered in accordance with
the requirements for notice set forth in the Lease.
1. Construction of Improvements. Lessee shall furnish and install within the
Premises those items shown on the plans, drawings and specifications finally
approved by Lessor and Lessee pursuant to Paragraph 2 below (the "Improvements")
in compliance with all applicable codes, laws and regulations. In making or
allowing to be made the work of the Improvements, Lessee shall comply with all
of the insurance requirements of the Lease.
2. Construction Plans for Premises. Final plans and drawings required by this
Work Letter shall be prepared by Lessee subject to Lessor's review and approval,
which approval shall not be unreasonably withheld.
2.1 Cost of Planning Services. The cost of the space planning,
architectural and engineering services (including "value engineering" services)
relating to the preparation of the Preliminary Plans and "Final Plans" (as
defined below), which shall be prepared by a "Space Planner" selected by Lessee,
shall be included in the cost the Improvements to be incurred by Lessee subject
to reimbursement by Lessor up to the amount of the Tenant Improvement Account
(as defined below).
2.2 Preparation of Final Plans. Lessee shall have prepared complete
architectural plans, drawings and specifications and complete engineering,
mechanical, structural and electrical working drawings for all of the
Improvements for the Premises (collectively, the "Final Plans"), showing: (a)
the subdivision (including partitions and walls), layout, lighting, finish and
decoration work (including carpeting and other floor coverings) for the
Premises; (b) all internal and external communications and utility facilities
which will require conduiting or other improvements from the Building shell,
existing systems or equipment and/or within common areas; and (c) all other
specifications for the Improvements. Lessor and Lessee shall make all reasonable
efforts to reduce the costs of the Improvements to less than the Tenant
Improvement Account described in Subparagraph 3.1, below. Lessee may select
different materials of equal or greater value in place of Lessor's standard
building materials provided such selection is indicated on the Final Plans. The
Final Plans shall be submitted to Lessor for Lessor's reasonable approval. The
cost of preparing or revising the Final Plans, after Lessor's approval of such
Final Plans, shall be included in the cost of Improvements. Within two (2)
business days after delivery of the Final Plans, Lessor shall deliver notice to
Lessee of approval or reasonable disapproval of the Final Plans. The failure of
Lessor to deliver notice of disapproval within two (2) business days shall be
deemed to be a Lessor Delay. The failure of Lessor to deliver notice of
disapproval within five (5) business days shall be deemed to be Lessor's
approval. If Lessor reasonably disapproves of any portion of such Final Plans,
Lessor shall specify the reason for its disapproval, and the parties shall meet
within two (2) business days of Lessor's delivery of notice of Lessor's
disapproval in order to reach agreement on the Final Plans. The failure of
Lessor to meet with Lessee within two (2) business days shall be deemed to be a
Lessor Delay. The failure of Lessor to meet with Lessee within five (5) business
days shall be deemed to be Lessor's approval. Based upon such agreement, Lessee
shall cause the Space Planner to redesign the Final Plans, incorporating those
reasonable revisions required by Lessor.
2.3 Changes or Additions to Final Plans. Lessee shall have the right
from time to time to submit requests to Lessor for changes or additions to the
Final Plans ("Change Order"), the cost of which shall be calculated by Lessee's
Contractor (as defined below). If Lessor approves any such Change Order, the
Final Plans shall be revised and, to the extent that such Change Order results
in a cost to Lessee in excess of the Improvement Account set forth in
Subparagraph 3.1 below, Lessee shall pay for the cost of such Change Order. Any
Change Order which results in a cost savings to Lessee shall be credited to the
Tenant Improvement Account set forth in Subparagraph 3.1 below.
40
3. Allowance for Improvements.
3.1 Tenant Improvement Account. Lessor and Lessee agree to pay for
the "Work Costs" of the Improvements (as defined in Paragraph 5) up to the sum
of One Million Three Hundred Thousand Dollars ($1,300,000.00) ("Tenant
Improvement Account"). The Work Costs shall be paid directly to Lessee by the
escrow holder(s) of the Tenant Improvement Account ("Escrow Holder"), upon
Escrow Holder's receipt from Lessee of a certified invoice from the relevant
contractor(s) for the Work Costs attributable to the Tenant Improvement Account
as follows: one-half (1/2) of each invoice amount shall be paid from Lessee's
deposit into the Tenant Improvement Account; and one-half (1/2) of each invoice
amount shall be paid from Lessor's deposit into the Tenant Improvement Account;
provided, however, if, for any reason funds are not available from either
Lessor's or Lessee's portion of the Tenant Improvement Account at the time an
invoice is received, Escrow Holder shall pay one-half (1/2) of the invoice
amount from the Tenant Improvement Account and one-half (1/2) of the invoice
amount shall be paid directly by the party who has not deposited sufficient
funds into the Tenant Improvement Account. Lessee shall be solely responsible
for the cost of any Improvements in excess of the amount of the Tenant
Improvement Account. All items of Improvements, whether or not the cost thereof
is covered by the Tenant Improvement Account, shall become the property of
Lessor upon expiration or earlier termination of the Lease and shall remain on
the Premises at all times during the Term of this Lease, except as otherwise
provided in the Lease.
3.2 Preparation of Work Cost Estimate. After Lessor's approval of
the Final Plans, Lessee shall submit to Lessor a detailed written estimate of
the total Work Costs (as defined in Paragraph 5) covered by the final Plans
("Work Cost Estimate"). Within two (2) business days after delivery of the Work
Cost Estimate, Lessor shall deliver notice of approval or reasonable disapproval
of the Work Cost Estimate. The failure of Lessor to deliver notice of
disapproval within two (2) business days shall be deemed to be a Lessor Delay.
The failure of Lessor to deliver notice of disapproval within five (5) business
days shall be deemed to be Lessor's approval of the Work Cost Estimate. If
Lessor reasonably disapproves the Work Cost Estimate, Lessor shall notify Lessee
of such disapproval within such 5-day period and the parties shall immediately
meet in order to revise the Work Cost Estimate to an amount which is acceptable
to Lessor.
4. Construction of Improvements. Following Lessor's approval of the Final Plans
and the Work Cost Estimate as provided herein, Lessee shall commence and
diligently proceed to have constructed the Improvements in a good and
workmanlike manner, subject only to Lessor Delays.
5. Work Costs. "Work Costs" means: (a) the reasonable cost of space planning,
architectural and engineering (including "value engineering") services,
including, but not limited to reimbursable costs; (b) costs of permits, fees and
taxes (exclusive of real property taxes); (c) testing and inspecting costs; (d)
the actual costs and charges for material and labor, including, without
limitation, reasonable overtime; (e) Lessee's Contractor's fee for profit,
overhead and general conditions (including elevators, parking, utilities,
insurance, construction supervision, trash removal and clean-up) which shall in
no event exceed ten percent (10%) of the hard costs of construction and (f) the
cost of Lessee's signs on the Building and monument signs on the Premises, in
the event Lessee elects to erect such signs.
6. Commencement Date and Substantial Completion.
6.1 Substantial Completion; Punch-List. Lessee shall select a
contractor to construct the Improvements ("Lessee's Contractor"), subject to
Lessor's approval, which shall not be unreasonably withheld. Lessee's Contractor
shall be responsible for the construction of the Improvements substantially in
accordance with the approved Final Plans. The Improvements shall be deemed to be
"Substantially Completed", and "Substantial Completion" shall be deemed to occur
when Lessee's Contractor certifies in writing to Lessor and Lessee that (a)
Lessee has reasonable access to the Premises; (b) Lessee's Contractor has
substantially performed all of the Improvements work required to be performed
under this Work Letter, other than decoration and minor "punch list" items and
adjustments which do not materially interfere with Lessee's access to or use of
the Premises; and (c) Lessee's Contractor or Lessee has obtained a temporary
certificate of occupancy or other required approval from the local governmental
authority permitting occupancy of the Premises. Lessee's Contractor shall
guaranty all work and Improvements for one (1) year from the earlier of the Term
Commencement Date or the commencement of the warranty for those items covered by
manufacturer's or vendor's warranties and, to the extent possible, shall assign
all warranties to Lessee.
6.2 Commencement Date. The Term of the Lease shall commence as
provided in Section 3.1 of the Lease. The Commencement Date shall only be
extended for Lessor Delays (as defined in Paragraph 8).
D-2
41
If there are Lessor Delays, the Term Commencement Date shall be the Term
Commencement Date set forth in the Lease extended for a period equal to the
period of any delays encountered by Lessee affecting Lessee's construction of
the Improvements because of any Lessor Delays. In no event, however, shall the
Term commence prior to June 1, 1996, unless otherwise agreed to in writing by
Lessor and Lessee.
7. Lessor Delays. For purposes of this Work Letter, "Lessor Delays" shall mean
any delay in substantial completion of the Improvements resulting from any or
all of the following:
(a) Lessor's failure to timely approve or disapprove the Final
Plans as set forth in Subparagraph 2.2 of this Work Letter;
(b) Lessor's failure to timely meet with Lessee to approve the
Final Plans as set forth in Subparagraph 2.2 of this Work Letter;
(c) Lessor's failure to timely approve or disapprove the Work
Cost Estimate as set forth in Subparagraph 3.2 of this Work Letter; and
(d) Delays caused by failure of the Premises and the adjacent
property owned by Lessor, including all parking lots, walkways, entrances,
hallways and other public spaces, elevators, and other devices or pathways for
ingress and exit to the Premises, that might be used by customers, clients,
invitees of Lessee and the general public, to conform to all the requirements of
the American with Disabilities Act and all regulations issued by the U.S.
Attorney General or other authorized agencies under the authorization of the
Americans with Disabilities Act, as of the date of the Lease.
With respect to the Lessor Delays described above, no Lessor Delay
shall be deemed to have occurred unless Lessee has given notice to Lessor by
personal hand delivery, by overnight delivery service such as Federal Express,
or by facsimile (confirmed by mail) of the event, act or occurrence constituting
such a Lessor Delay.
8. Arbitration.
8.1 Dispute Resolution. If any dispute arises in connection with
this Work Letter, such dispute shall be resolved in accordance with this
Article. Such dispute shall be determined by a panel consisting of one
representative of Lessor, one of Lessee's construction representatives (or
another party designated by Lessee), and a third party with extensive
development and construction experience in the construction of commercial office
space in the San Diego County area selected in accordance with Subparagraph 8.3
of this Work Letter ("Construction Panel").
8.2 Notice. All disputes to be determined in accordance with this
Paragraph 8 shall be raised by notice to the other party, which notice shall
state with particularity the nature of the dispute and the demand for relief,
making specific reference by paragraph number and title to the provision of this
Work Letter alleged to give rise to the dispute. Such notice shall also refer to
this Paragraph 8.
8.3 Selection of Third Party/Costs. Lessor and Lessee shall mutually
and promptly select a third party who meets the qualifications set forth in
Subparagraph 8.1 of this Work Letter. In the event a selection is not made
within two (2) days after demand for resolution is made, the third party shall,
upon the request of either party, be appointed by the then-president of the
Association of General Contractors of San Diego County. All proceedings
contemplated by this Paragraph 8 shall take place at the locations for all job-
site meetings, unless the Construction Panel mutually agrees to another
location. The cost for the third party's services shall be paid by the
non-prevailing party, unless the Construction Panel determines otherwise.
8.4 Interpretation and Resolution. In determining any dispute, the
Construction Panel shall apply the pertinent provisions of this Work Letter (and
the Lease, if applicable) without departure therefrom in any respect. The
Construction Panel shall not have the power to add to, modify or change any of
the provisions of this Work Letter, but this provision shall not prevent in any
appropriate case the interpretation, construction and determination by the
Construction Panel of the applicable provisions of this Work Letter to the
extent necessary in applying the same to the matters to be determined by the
Construction Panel. As part of resolving a dispute, the Construction Panel shall
determine the days of delay in completing Improvements which directly result
from the dispute being considered by the Construction Panel, if any. The days of
delay
X-0
00
xxxxx xx designated as either Lessee Delays, Lessor Delays or Unavoidable
Delays or any combination of these three delays, as determined by the
Constructions Panel.
8.5 Continued Performance. During any proceedings pursuant to this
Paragraph 8, Lessor and Lessee shall, to the extent possible, continue to
perform and discharge all of their respective obligations under this Work Letter
and the Lease.
8.6 Binding Resolution. The Construction Panel shall meet within two
(2) days of the third party being selected as a member of the Construction Panel
and the Construction Panel shall thereafter resolve the issue in dispute within
two (2) business days, unless it is mutually agreed among the Construction Panel
members that additional times is necessary to resolve the dispute, but in no
event shall such additional time exceed five (5) business days. Lessor and
Lessee agree that time and strict punctual performance are of the essence with
respect to each provision of this Work Letter and that any and all decisions of
the Construction Panel as to the matter in dispute shall be binding upon both
Lessor and Lessee.
9. Liens. Lessee shall indemnify and hold Lessor harmless from any mechanic's,
materialmen's or other liens filed against all or any part of the Premises, by
reason of or in connection with the construction of the Improvements or other
work contracted for or undertaken by Lessee pursuant to this Work Letter. Lessee
shall at Lessor's request, provide Lessor with enforceable, conditional and
final lien releases (and other evidence reasonably requested by Lessor to
demonstrate protection from liens) from all persons furnishing labor and/or
materials with respect to the Premises. Lessor shall have the right at all
reasonable times to post on the Premises and record any notices of
nonresponsibility which it deems necessary for protection from such liens. If
any such liens are filed, Lessee shall, at its sole cost, promptly cause such
lien to be released of record or bonded so that it no longer affects title to
the Project or the Premises. If Lessee fails to cause such lien to be so
released or bonded within ten (10) days after Lessee's receipt of notice
thereof, such failure shall be deemed an Event of Default by Lessee under the
Lease, and Lessor may, without waiving its rights and remedies based on such
default, and without releasing Lessee from any of its obligations under the
Lease, cause such lien to be released by any means it shall deem proper,
including payment in satisfaction of the claim giving rise to such lien. Lessee
shall pay to Lessor within five (5) days after receipt of invoice from Lessor,
any sum paid by Lessor to remove such liens, together with interest at the rate
set forth in paragraph 19 of the Lease from the date of such payment by Lessor.
[SIGNATURES CONTINUED ON NEXT PAGE]
D-4
43
[SIGNATURE PAGE TO WORK LETTER AGREEMENT]
LESSOR: LESSEE:
CAMPSON CORPORATION, a California COMBICHEM, INC., a California corporation
corporation
------------------------------ -----------------------------
By:___________________________ By:__________________________
Title:_______________________ Title:_______________________
Date Signed: ______________ Date Signed:_________________
D-5
