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EXHIBIT 10.63
SINGLE-TENANT LEASE
(TRIPLE NET)
LANDLORD:
ADI RESEARCH PARTNERS, L.P.,
A CALIFORNIA LIMITED PARTNERSHIP
TENANT:
DATAWORKS CORPORATION,
A CALIFORNIA CORPORATION
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STANDARD FORM SINGLE-TENANT LEASE
TABLE OF CONTENTS
Section Title Page
------- ----- ----
SUMMARY OF BASIC LEASE INFORMATION AND DEFINITIONS ................. iv
1 Lease of Premises .................................................. 1
2. Term ............................................................... 1
3. Rent ............................................................... 3
4. Common Area; Operating Expenses .................................... 3
5. Communication Equipment ............................................ 6
6. Use ................................................................ 7
7. Payments and Notices ............................................... 9
8. Brokers ............................................................ 9
9. Surrender; Holding Over ............................................ 9
10. Taxes .............................................................. 10
11. Repairs ............................................................ 11
12. Alterations ........................................................ 12
13. Liens .............................................................. 13
14. Assignment and Subletting .......................................... 14
15. Entry by Landlord .................................................. 15
16. Utilities and Services ............................................. 15
17. Indemnification and Exculpation .................................... 16
18. Damage or Destruction .............................................. 17
19. Eminent Domain ..................................................... 18
20. Tenant's Insurance ................................................. 18
21. Waiver of Subrogation .............................................. 20
22. Tenant's Default and Landlord's Remedies ........................... 20
23. Landlord's Default ................................................. 21
24. Subordination ...................................................... 22
25. Estoppel Certificate ............................................... 22
26. Parking ............................................................ 23
27. Modification and Cure Rights of Landlord's Mortgagees and Lessors .. 23
28. Quiet Enjoyment .................................................... 23
29. Transfer of Landlord's Interest .................................... 23
30. Limitation on Landlord's Liability ................................. 23
31. Miscellaneous ...................................................... 23
32. Lease Execution .................................................... 26
33. Building 3 ......................................................... 26
34. Expansion of Project ............................................... 28
EXHIBITS
EXHIBIT "A" Site Plan (including Tenant's Site, the Building 3 Site and the
Adjacent Land)
EXHIBIT "B" Work Letter Agreement
EXHIBIT "C" Sample Form of Notice of Lease Term Dates
EXHIBIT"D" Environmental Questionnaire
EXHIBIT "E" Sample Form of Tenant Estoppel Certificate
EXHIBIT "F" Rules and Regulations
EXHIBIT "G" Form of Memorandum
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STANDARD FORM SINGLE-TENANT LEASE
INDEX OF DEFINED TERMS
AAA ......................................................................... 25
Abatement Conditions ........................................................ 16
Actual Statement ............................................................ 5
ADA ......................................................................... 7
Adjacent Land ............................................................... 28
Affiliate ................................................................... 15
Allowance ................................................................... Exhibit B
Arbitration Notice .......................................................... 25
Arbitrator .................................................................. 25
Architect ................................................................... Exhibit B
Base Improvements ........................................................... Exhibit B
Billing Period .............................................................. 5
BOMA Standards .............................................................. 1
Brokers ..................................................................... v
Building 3 Site ............................................................. 26
Building 3 Space ............................................................ 27
Building Systems ............................................................ Exhibit B
Building 1 .................................................................. iv
Building 2 .................................................................. iv
Building 3 .................................................................. 26
Buildings ................................................................... iv
Commencement Date ........................................................... iv
Common Area ................................................................. 3
Communication Equipment ..................................................... 6
Comparable Buildings ........................................................ 12
Control ..................................................................... 15
Cure Notice ................................................................. 16
Depository .................................................................. 17
Early Occupancy Date ........................................................ 1
Economic Terms .............................................................. 27
Effective Date .............................................................. 1
Election Date ............................................................... 27
emergency ................................................................... 15
Estimate Statement .......................................................... 5
Expansion Commencement Date ................................................. 26
Expansion Negotiating Period ................................................ 27
Expansion Notice ............................................................ 26
Expansion Option ............................................................ 26
Expansion Payments .......................................................... 27
Extension Option ............................................................ 1
Fair Market Rental .......................................................... 1
Final Plans ................................................................. Exhibit B
First Refusal Notice ........................................................ 27
Force Majeure ............................................................... 25
Force Majeure Delays ........................................................ Exhibit B
Hazardous Materials ......................................................... 8
HVAC ........................................................................ Exhibit B
Indemnified Claims .......................................................... 16
Interest Rate ............................................................... v
JAMS ........................................................................ 25
Landlord .................................................................... 1
Landlord Indemnified Parties ................................................ 8
Landlord Parties ............................................................ 16
Landlord's Address .......................................................... iv
Landlord's Determination .................................................... 1
Laws ........................................................................ 12
Lease ....................................................................... 1
Lease Expiration Date ....................................................... iv
market cap .................................................................. 15
Market Rent Data ............................................................ 2
Memorandum .................................................................. 24
Monthly Rent ................................................................ iv
Negotiating Period .......................................................... 2
Operating Expenses .......................................................... 4
Option Period ............................................................... 1
Original Tenant ............................................................. 1
Outside Date ................................................................ Exhibit B
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Outside Date Termination Notice ............................................. 2
Outside Termination Date .................................................... 2
Parking Ratio ............................................................... v
PCBs ........................................................................ 8
Permitted Assignee .......................................................... 26
Permitted Business .......................................................... 14
Permitted Non-Affiliate Assignee ............................................ 15
Permitted Use ............................................................... v
PID ......................................................................... 2
Pre-Approved Change ......................................................... 12
Preliminary Plans ........................................................... Exhibit B
Premises .................................................................... iv
Proceeds .................................................................... 17
Project ..................................................................... iv
Punch List .................................................................. Exhibit B
Punch List Items ............................................................ Exhibit B
Real Property Taxes ......................................................... 10
Rent ........................................................................ 3
Restoration ................................................................. 17
Restore ..................................................................... 17
Review Period ............................................................... 5
Right of First Refusal ...................................................... 27
Security Deposit ............................................................ v
Signage ..................................................................... 7
Signage Specifications ...................................................... 7
Substantial Completion ...................................................... Exhibit B
Summary ..................................................................... iv
Superior Interest ........................................................... 22
Tenant ...................................................................... 1
Tenant Change ............................................................... 12
Tenant Changes .............................................................. 12
Tenant Delays ............................................................... Exhibit B
Tenant Improvements ......................................................... Exhibit B
Tenant's Address ............................................................ iv
Tenant's Contribution ....................................................... Exhibit B
Tenant's Election Notice .................................................... 27
Tenant's Monthly Operating Expense Charge ................................... 5
Tenant's Parties ............................................................ 8
Tenant's Review Period ...................................................... 2
Tenant's Site ............................................................... iv
Term ........................................................................ 1
Termination Date ............................................................ 17
Transfer .................................................................... 14
Transfer Date ............................................................... 14
Transfer Notice ............................................................. 14
Transferee .................................................................. 14
Work Cost Statement ......................................................... Exhibit B
Work Costs .................................................................. Exhibit B
Work Letter ................................................................. iv
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SUMMARY OF BASIC LEASE INFORMATION AND DEFINITIONS
This SUMMARY OF BASIC LEASE INFORMATION AND DEFINITIONS ("SUMMARY") is hereby
incorporated into and made a part of the attached Single-Tenant Lease which
pertains to the Premises described in Section 1.4 below. All references in the
Lease to the "Lease" shall include this Summary. All references in the Lease to
any term defined in this Summary shall have the meaning set forth in this
Summary for such term. Any initially capitalized terms used in this Summary and
any initially capitalized terms in the Lease which are not otherwise defined in
this Summary shall have the meaning given to such terms in the Lease.
1.1 LANDLORD'S ADDRESS: c/o The Xxxxx Group
000 Xxxxx Xxxxxxx
Xxxxxxx, XX 00000
Attn: Xx. Xxxxxxx Xxxxx
Telephone: (000) 000-0000
Facsimile (000) 000-0000
With a copy to:
Xxxxxx Services, Inc.
0000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, XX 00000-0000
Attn: Mr. Xxxxx Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
1.2 TENANT'S ADDRESS: Prior to the Commencement Date:
Dataworks Corporation
0000 Xxxxxxx Xxxxxx Xxxxxxxxx
Xxx Xxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Following the Commencement Date:
To be designated upon receipt of permits.
1.3 PROJECT: The industrial development known as Sorrento Gateway in the
City of San Diego, County of San Diego, State of California, as shown on
the site plan attached hereto as Exhibit "A". The Project includes all
buildings, improvements and facilities, now or subsequently located
within such development from time to time. The aggregate saleable land
area located within the Project (including Tenant's Site) is expected to
be approximately 1,389,564 square feet.
1.4 PREMISES: A two (2) story building containing approximately one hundred
ten thousand (110,000) rentable square feet ("BUILDING 1") and a two (2)
story building containing approximately sixty thousand (60,000) rentable
square feet ("BUILDING 2"), all to be constructed by Landlord at
approximately those locations in the Project shown on Exhibit 'A"
pursuant to the Work Letter Agreement attached hereto as Exhibit "B"
(the "WORK LETTER"). Building 1 and Building 2 may be collectively
referred to herein as the "BUILDINGS." That area surrounding the
Buildings including Tenant's parking area as shown on Exhibit "A" may be
referred to herein as "TENANT'S SITE."
1.5 Commencement DATE: The date which is thirty (30) days after the date of
Substantial Completion (as determined in accordance with the Work
Letter) of Improvements in the Premises; however, the Commencement Date
shall not occur prior to September 1, 1999. Subject to Force Majeure
Delays and Tenant Delays, Landlord anticipates that the Commencement
Date will occur on or around September 1, 1999.
1.6 LEASE EXPIRATION DATE: Ten (10) years following the Commencement Date,
subject to two (2) extension options of five (5) years pursuant to
Section 2.4 of the Lease. If the Commencement Date occurs on a day other
than the first day of a month, then for purposes of determining the
Lease Expiration Date, the ten (10) year period shall be measured from
the first day of the month following the month in which the Commencement
Date occurs.
1.7 Monthly Rent:
MONTHLY RENT PER
YEARS RENTABLE SQUARE FOOT
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1-2* $1.450
3-4 $1.537
5-6 $1.629
7-8 $1.727
9-10 $1.831
*Including any partial month at the beginning of the Term.
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1.8 SECURITY DEPOSIT: None.
1.9 PERMITTED USE: The Premises may be used only for general office,
laboratory, research and development and light manufacturing and any
other lawful use consistent with a first-class building which is
otherwise permitted by applicable zoning ordinances, including without
limitation, any use which would be permitted, subject to Landlord's
reasonable approval, by variance or conditional use permit.
1.10 Brokers: CB Xxxxxxx Xxxxx, Inc. and Colliers International.
1.11 INTEREST RATE: The lesser of: (a) the prime rate then announced by Xxxxx
Fargo Bank, NA (or the largest state chartered bank in the State of
California if Xxxxx Fargo Bank, NA ceases to exist or to publish a prime
rate) plus five percent (5%) per annum; or (b) the maximum rate
permitted BY law.
1.12 PARKING RATIO: Not less than four (4) spaces per 1,000 rentable square
feet of the Premises as shown on Exhibit "A.
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SINGLE-TENANT LEASE
This LEASE ("LEASE"), which includes the preceding Summary attached hereto and
incorporated herein by this reference, is made as of the 14th day of August,
1998, by and between ADI RESEARCH PARTNERS, L.P., a California limited
partnership ("LANDLORD"), and DATAWORKS CORPORATION, a California corporation
("TENANT").
1. LEASE OF PREMISES.
1.1 LEASE OF PREMISES. Landlord hereby leases to Tenant and Tenant hereby leases
from Landlord the Premises upon and subject to the terms, covenants and
conditions contained in this Lease to be performed by each party.
1.2 MEASUREMENT OF PREMISES. On or before Substantial Completion of the
Improvements, Landlord shall cause the Architect (as defined in Section 2.2 of
Exhibit "B") to measure the rentable square footage of the Premises. For
purposes of this Lease, rentable square footage of the Premises or of the other
buildings in the Project shall mean Gross Building Area calculated in accordance
with the Standard Method for Measuring Floor Area in Office Buildings ANSI/BOMA
Z65.1-1996 ("BOMA STANDARDS"). Based upon such measurement, the Monthly Rent,
the Allowance and the rentable square footage of the Project shall be adjusted
and the parties shall make any necessary reconciliations in payments of sums
previously made hereunder.
2. TERM.
2.1 TERM; NOTICE OF LEASE DATES. This Lease shall be effective upon the date
first above written (the "EFFECTIVE DATE"). Subject to Section 2.2 below, the
term of this Lease (the "TERM") shall commence upon the Commencement Date and
shall expire on the Lease Expiration Date, unless sooner terminated or extended
as permitted herein, and if extended, the "Term" will include the Option
Period(s). Within ten (10) business days after Landlord's written request,
Tenant shall execute a written confirmation of the Commencement Date as set
forth in the Notice of Lease Term Dates attached hereto as Exhibit "C".
2.2 EARLY OCCUPANCY. Landlord shall allow Tenant to enter the Premises when the
construction of the Buildings has proceeded to a point where, consistent with
good construction practices, Tenant can commence preparation of the Premises for
Tenant's occupancy, which shall in no event be later than sixty (60) days prior
to the date Landlord projects for Substantial Completion (the "EARLY OCCUPANCY
DATE") for purposes of Tenant's installation of Tenant's furniture, cabling,
fixtures and equipment. Landlord shall provide Tenant with written notice of the
projected Early Occupancy Date at least thirty (30) days prior to such date.
Tenant's entry into the Premises from and after the Early Occupancy Date shall
be subject to Tenant's coordination of such entry with Landlord and Landlord's
general contractor(s) so as not to hinder or unreasonably interfere with the
completion of the Premises and the Tenant Improvements therein. Such early
occupancy shall be subject to all of the terms and conditions of this Lease,
including, without limitation, those provisions requiring that Tenant shall be
responsible for all costs, expenses and obligations relating to the Premises
(including, without limitation, Sections 17, 20 and 22) except that Tenant will
not be obligated to pay any Rent or the Monthly Management Fee described in
Section 3.3 below during the period of such early occupancy. In addition,
Landlord agrees that neither Tenant, nor any contractor or subcontractor of
Tenant shall be charged for the use of elevators, hoists (if any), water,
electricity, HVAC, security or any other utilities or services prior to the
Commencement Date.
2.3 OPTION TO EXTEND. Tenant shall have two (2) options (each, an "EXTENSION
OPTION") to extend the Term for a period (each, an "Option PERIOD") of five (5)
years each, commencing upon the Lease Expiration Date upon the same terms and
conditions previously applicable, except for the grant of any exercised
Extension Option and Monthly Rent (which shall be determined as set forth
below). An Extension Option may be validly exercised only by notice in writing
received by Landlord not more than twelve (12) months and not less than six (6)
months prior to the Lease Expiration Date (or expiration of the first (1st)
Option Period, if applicable); provided, however, that the Extension Option may
be validly exercised only if no uncured Tenant default exists as of the date of
exercise. If Tenant does not exercise an Extension Option during the exercise
period set forth above in strict accordance with the provisions hereof, each
Extension Option shall forever terminate and be of no further force or effect.
Each Extension Option is personal to the Tenant originally named herein (the
"ORIGINAL TENANT"), may not be exercised by any person or entity other than the
Original Tenant and shall become null and void if the Original Tenant assigns
its interest in this Lease, unless such assignment is to an Affiliate or a
Permitted Non-Affiliate Transferee (as those terms are defined in Section 14.5
below).
Monthly Rent during an Option Period shall be equal to Fair Market Rental as of
the commencement of the Option Period. For purposes hereof, "FAIR MARKET RENTAL"
shall mean the base rent payable during an Option Period to a willing landlord
by a willing tenant having a similar financial responsibility, credit rating and
capitalization as Tenant then has, taking into account all other relevant
factors for like and comparable space, improved with tenant improvements of like
and comparable quality to those then existing in the Premises (taking into
account the age and the layout of the existing improvements) in the Sorrento
Mesa area of San Diego and further taking into account items that professional
real estate brokers customarily consider, including, but not limited to, rental
rates (including any market increases over the applicable term of any such
Option Period), space availability, tenant size, tenant improvement allowances,
freeway visibility, free rent and any other lease concessions, if any, then
being charged or granted by Landlord or the landlords of such similar buildings.
Landlord shall provide Tenant with written notice of Landlord's determination of
the Fair Market Rental for the applicable Option Period ("LANDLORD'S
DETERMINATION") not later than one (1) month after the date upon which Tenant
delivers the required notice to Landlord exercising the applicable Extension
Option. Tenant shall have one (1) month ("TENANT'S
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REVIEW PERIOD") after receipt of Landlord's Determination within which to accept
the Fair Market Rental set forth in Landlord's Determination or to object
thereto in writing. Failure of Tenant to so object to Landlord's Determination
within Tenant's Review Period shall conclusively be deemed Tenant's approval and
acceptance thereof. In the event Tenant objects to Landlord's Determination
within Tenant's Review Period, Landlord and Tenant shall have a period of ten
(10) business days (the "NEGOTIATING PERIOD") within which the parties shall
attempt, in good faith, to agree upon such Fair Market Rental for the applicable
Option Period using their best good faith efforts. If the parties agree on the
Fair Market Rental for the Option Period within the Negotiating Period, they
shall execute an amendment to this Lease setting forth such Fair Market Rental
and such other terms and conditions as may be mutually agreed by the parties. If
the parties are unable to agree on the Fair Market Rental for the applicable
Option Period within the Negotiating Period then each party shall place in a
separate sealed envelope their final proposal as to the Fair Market Rental for
the Option Period and such determination shall be submitted to each other and to
arbitration as set forth below. The cost of arbitration shall be paid by
Landlord and Tenant equally.
Within ten (10) business days of the expiration of the Negotiating Period,
Landlord and Tenant shall agree upon and jointly appoint a single arbitrator who
shall by profession be a real estate appraiser who shall have been active over
the ten (10) year period ending on the date of such appointment in the appraisal
of commercial properties in San Diego County, California, and who shall not have
been employed or engaged by either party during the five (5) year period
preceding the date of such appointment. If Landlord and Tenant fail to agree and
appoint an arbitrator, then the appointment of the arbitrator shall be made by
the Presiding Judge of the San Diego Superior Court, or, if he or she refuses to
act, by any judge having jurisdiction over the parties. Neither Landlord nor
Tenant shall consult with such arbitrator as to his or her opinion as to the
Fair Market Rental for the applicable Option Period prior to the appointment.
The determination of the arbitrator shall be limited solely to the issue of
whether Landlord's or Tenant's submitted Fair Market Rental for the Premises is
closer to the actual prevailing market rent for the Premises as determined by
the arbitrator, taking into account the requirements hereof. Such arbitrator may
hold such hearings and require such briefs as the arbitrator, in his or her sole
discretion, determines is necessary. In addition, Landlord or Tenant may submit
to the arbitrator, with a copy to the other party, within five (5) business days
after the appointment of the arbitrator any market data and additional
information that such party deems relevant to the determination of the Fair
Market Rental for the applicable Option Period ("MARKET RENT DATA") and the
other party may submit a reply in writing within five (5) business days after
receipt of such Market Rent Data.
The arbitrator shall, within ten (10) business days of his or her receipt of
all Market Rent Data, and in no event later than forty-five (45) days after his
or her appointment, reach a decision as to whether the parties shall use
Landlord's or Tenant's submitted Fair Market Rental for the applicable Option
Period (i.e., the arbitrator shall not be entitled to reach a compromise
position), and shall notify Landlord and Tenant of such determination. The
decision of the arbitrator shall be binding upon Landlord and Tenant.
If the Fair Market Rental for the Option Period shall not have been determined
by the commencement of the applicable Option Period, Tenant shall continue to
pay the Monthly Rent and additional rent payable as of the month immediately
preceding such commencement until the Fair Market Rental is established so that
the Monthly Rent established for the Option Period shall be retroactive to the
commencement of the Option Period.
2.4 CONDITIONS PRECEDENT. Landlord will not be obligated to deliver possession
of the Premises to Tenant (but Tenant will be liable for Rent if the
Commencement Date has occurred and if Landlord can otherwise deliver the
Premises, or the applicable portion thereof, to Tenant as required hereunder)
until Landlord has received from Tenant certificates of insurance as required
under Section 20 of this Lease.
2.5 DELAY IN POSSESSION. In the event that the Substantial Completion of the
Improvements in the Premises has not occurred by the "OUTSIDE TERMINATION DATE,"
which shall be March 1, 2000, as such March 1, 2000 date may be extended by the
number of days of Tenant Delays and by the number of days of Force Majeure
Delays (but only up to a maximum of ninety (90) days for Force Majeure Delays),
then the sole remedy of Tenant (except as provided in Section 7.2 of the Work
Letter Agreement) shall be the right to deliver a notice to Landlord (the
"OUTSIDE DATE TERMINATION NOTICE") electing to terminate this Lease effective
upon receipt of the Outside Date Termination Notice by Landlord. Except as
provided hereinbelow, the Outside Date Termination Notice must be delivered by
Tenant to Landlord, if at all, not earlier than the Outside Termination Date and
not later than ten (10) business days after the Outside Termination Date. If
prior to the Outside Termination Date Landlord determines that Substantial
Completion of the Improvements in the Premises will not occur by the Outside
Termination Date, Landlord shall have the right to deliver a written notice to
Tenant stating Landlord's opinion as to the date by which Substantial Completion
of the Improvements in the Premises shall occur and Tenant shall be required,
within ten (10) business days after receipt of such notice, to either deliver
the Outside Date Termination Notice (which will mean that this Lease shall
thereupon terminate) or agree to extend the Outside Termination Date to that
date which is set by Landlord. Failure of Tenant to so respond in writing within
said five business day period shall be deemed to constitute Tenant's agreement
to extend the Outside Termination Date to that date which is set by Landlord. If
the Outside Termination Date is so extended, Landlord's right to request Tenant
to elect to either terminate or further extend the Outside Termination Date
shall remain and shall continue to remain, with each of the notice periods and
response periods set forth above, until the Substantial Completion of the
Improvements in the Premises or until this Lease is terminated. If this Lease is
terminated, neither party shall have any further obligation to the other, except
that Landlord shall, within thirty (30) days after such termination, pay to
Tenant an amount equal to the product of Five Thousand Dollars ($5,000.00)
multiplied by the number of days from the Outside Date (as extended pursuant to
Section 7.2 of the Work Letter Agreement) until the date of termination.
2.6 PLANNED INDUSTRIAL DEVELOPMENT PERMIT. Landlord agrees to provide evidence
of Landlord's receipt of all required approvals for landscaping and landscaping
inspections pursuant to the Planned Industrial Development Permit for the
Premises ("PID") to Tenant on or before the Commencement Date. In addition,
Landlord acknowledges that to the extent the city of San Diego requires an
updated traffic study and/or requires mitigation of any significant traffic
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impacts under the PID, Tenant shall not be required to pay for any portion of
the cost of any such study or any such mitigation by way of contributions to
Operating Expenses or otherwise.
3. RENT.
3.1 MONTHLY RENT. Tenant agrees to pay Landlord, as rent for the Premises, the
Monthly Rent designated in Section 1.7 of the Summary. The Monthly Rent shall be
paid by Tenant in advance on the first day of each and every calendar month
commencing upon the Commencement Date, except that on the Commencement Date the
Monthly Rent for any partial month at the beginning of the Term and the Monthly
Rent for the first full month of the Term shall be payable by Tenant. Monthly
Rent for any partial month shall be prorated in the proportion that the number
of days this Lease is in effect during such month bears to the actual number of
days in such month.
3.2 ADDITIONAL RENT. All amounts and charges payable by Tenant under this Lease
in addition to the Monthly Rent described in Section 3.1 above (including
Tenant's Monthly Operating Expense Charge pursuant to Section 4 below) shall be
considered additional rent for the purposes of this Lease, and the word "RENT"
in this Lease shall include such additional rent unless the context specifically
or clearly implies that only the Monthly Rent is referenced. Rent shall be paid
to Landlord as provided in Section 7, without any prior demand therefor and
without any deduction or offset except as specified elsewhere in the Lease, in
lawful money of the United States of America.
3.3 MANAGEMENT FEE. Tenant shall pay to Landlord as additional rent a monthly
management fee equal to one percent (1%) of the Monthly Rent. Such fee shall be
payable concurrently with Monthly Rent.
3.4 LATE PAYMENTS. Late payments of Rent will be subject to interest and a late
charge as provided in Sections 22.6 and 22.7 below.
3.5 TENANT'S OBLIGATIONS. Except as otherwise provided herein, all Rent shall be
absolutely net to Landlord so that this Lease shall yield net to Landlord, the
Rent to be paid each month during the Term of this Lease. Accordingly, and
except as otherwise provided herein, all costs, expenses and obligations of
every kind or nature whatsoever relating to the Premises which may arise or
become due during the Term of this Lease shall be paid by Tenant. Nothing herein
contained shall be deemed to require Tenant to pay or discharge any liens or
mortgages of any character whatsoever which may exist or hereafter be placed
upon the Premises by Landlord.
4. COMMON AREA; OPERATING EXPENSES.
4.1 DEFINITION OF COMMON AREA. The term "COMMON AREA," as used in this Lease
means all areas and the improvements thereon within the exterior boundaries of
the Project now or later made available for the general use of Landlord, Tenant
and other persons entitled to occupy floor area in the Project and their
customers, including, without limitation, the parking facilities of the Project,
trash areas, roadways, sidewalks, walkways, parkways, driveways, landscaped
areas, and similar areas and facilities situated within the Project which are
not reserved for the exclusive use of any Project occupants.
4.2 MAINTENANCE AND USE OF COMMON AREA. The manner in which the Common Area
shall be maintained shall be reasonably determined by Landlord; provided,
however, Landlord shall at all times keep the Common Areas (other than Tenant's
Site, which shall be maintained by Tenant pursuant to Section 11.1 below) in a
clean and first-class condition comparable to landlords of other first-class
commercial developments in the Sorrento Mesa area of San Diego. The use and
occupancy by Tenant of the Premises shall include the right to use the Common
Area (except areas used in the maintenance or operation of the Project), in
common with Landlord and other tenants of the Project and their customers and
invitees, subject to (i) any covenants, conditions and restrictions now or
hereafter of record, and (ii) such reasonable, non-discriminatory rules and
regulations concerning the Project as may be established by Landlord from time
to time provided the same do not materially and adversely interfere with
Tenant's use and occupancy of the Premises. Landlord's initial rules and
regulations with respect to the use of the Common Areas (which shall be applied
and enforced by Landlord in a reasonable and non-discriminatory manner) area
attached to this Lease as Exhibit "F." Tenant agrees to promptly comply with all
such rules and regulations upon receipt of written notice from Landlord. Except
as specifically provided in Section 4.3 below, the Common Areas (specifically
including Tenant's parking facilities therein) shall be accessible to Tenant
twenty-four (24) hours per day, seven (7) days per week, every day of the year,
including holidays.
4.3 CONTROL OF AND CHANGES TO COMMON AREA. Subject to the limitations set forth
below, Landlord shall have the sole and exclusive control of the Common Area, as
well as the right to make reasonable changes to the Common Area. Provided
Landlord does not materially and adversely interfere with Tenant's use of and
access to the Premises and Tenant's access or use of the parking facilities in
the Common Areas, Landlord's rights shall include, but not be limited to, the
right to (a) restrain the use of the Common Area by unauthorized persons; (b)
cause Tenant to remove or restrain persons from any unauthorized use of the
Common Area if they are using the Common Area by reason of Tenant's presence in
the Project; (c) utilize from time to time any portion of the Common Area (other
than Tenant's parking area) for promotional, entertainment, and related matters;
(d) temporarily close any portion (but not all) of the Common Area (for a period
not to exceed five (5) days in any single instance except that such limitation
shall not apply in the case of casualty) for repairs, improvements or
alterations, to discourage non-customer use, to prevent public dedication or an
easement by prescription from arising, or for any other reason deemed
appropriate in Landlord's reasonable business judgment; and (e) reasonably
change the shape and size of the Common Area, add, eliminate or change the
location of improvements to the Common Area, including, without limitation,
structures, lighting, parking areas, landscaped areas, roadways, walkways, drive
aisles and curb cuts; provided, however, except as may be required by law, in no
event may Landlord (i) change the primary access to the Project from the
adjacent public streets, (ii) change the layout or configuration of the parking
spaces as shown on Exhibit "A", (iii) reduce the number of parking spaces
available to Tenant below the ratio of four (4) spaces per one thousand (1,000)
rentable square feet of the Premises, or (iv) materially impair the visibility
of Tenant's signage on the Buildings without the prior written consent of
Tenant, which consent may
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be withheld by Tenant in it's sole and absolute discretion. Tenant acknowledges
that all or any portion of Landlord's rights and obligations with respect to the
Common Areas under this Lease may be transferred to an owners' association
formed for the Project; such rights and obligations may include, without
limitation, the obligation to maintain the Common Areas subject to the terms and
conditions set forth in this Lease, and the right to collect Operating Expenses
from tenants and owners within the Project.
4.4 OPERATING EXPENSES. Commencing on the Commencement Date and continuing
throughout the Term, Tenant agrees to pay Landlord as additional rent in
accordance with the terms of this Section 4, Tenant's Share of all costs and
expenses for the operation, maintenance, repair, and replacement of the Common
Area ("OPERATING EXPENSES") which shall include but not be limited to the
following items: (i) except as specifically provided in Section 10.1 below, any
form of Real Property Tax, assessment, license fee, license tax, business
license fee, commercial rental tax, levy, charge, improvement bond or similar
imposition of any kind or nature imposed by any authority having the direct
power to tax, including any city, county, state or federal government, or any
school, agricultural, lighting, drainage or other improvement or special
assessment district thereof (provided, however, that Operating Expenses shall
not include the cost of any bonds posted as security for any improvements nor
shall Operating Expenses include any fees paid in connection with the initial
development of the Project); (ii) any and all assessments under any covenants,
conditions and restrictions affecting the Project; (iii) water, sewer and other
utility charges; (iv) costs of insurance obtained by Landlord; (v) waste
disposal services for the Common Areas only (it being acknowledged by Landlord
that Tenant will contract directly for the removal of trash and rubbish from the
Buildings); (vi) security, if Landlord elects to provide security services;
(vii) labor; (viii) management costs including, without limitation: (A) wages
and salaries (and payroll taxes and similar charges) of property management
employees, and (B) management office rental, supplies, equipment and related
operating expenses and commercially reasonable management/administrative fees;
(ix) supplies, materials, equipment and tools including rental of personal
property; (x) maintenance, sweeping, repairs, resurfacing, and upkeep of all
parking and other Common Areas; (xii) amortization on a straight line basis over
the useful life (together with interest at the lesser of Landlord's actual
market cost of capital or the Interest Rate on the unamortized balance) of all
capitalized expenditures which are: (A) reasonably intended to produce a
reduction in operating charges or energy consumption; or (B) required under any
governmental law or regulation that was not applicable to the Common Area at the
time it was originally constructed; or (C) for replacement or restoration of any
Common Area equipment and/or improvements needed to operate and/or maintain the
Common Area at the same quality levels as prior to the replacement or
restoration; (xiii) gardening and landscaping; (xiv) maintenance of signs (other
than signs of tenants of the Project); (xv) personal property taxes levied on or
attributable to personal property used in connection with the Common Areas;
(xvi) reasonable accounting, management, audit, verification, legal, owners'
association and other consulting fees; and (xvii) any other actual and
documented costs and expenses of repairs, maintenance, painting, lighting,
cleaning, and similar items. Notwithstanding anything to the contrary contained
herein, the following shall not be included in Common Area Operating Expenses:
(1) costs incurred due to Landlord's violation of any terms or conditions of
this Lease or any other lease relating to the Project; (2) damage and repairs
attributable to fire or other casualty insurable under a standard form of
"all-risk" property insurance on the Premises or Project; (3) damage and repairs
covered under any other insurance policy carried by Landlord in connection with
the Project, to the extent that Tenant's insurance is not the primary coverage
therefore; (4) uninsured damage and repairs caused solely by the negligence or
willful misconduct of Landlord, its partners, employees, agents, contractors or
invitees; (5) reserves for the repair, replacement or improvement of the
Premises or Project; (6) all payments of principal, finance charges or interest
(except as expressly provided in (xii) above) or debt or amortization on any
mortgage, deed of trust or any other debt of Landlord and all rental and other
costs due under any ground or underlying lease; (7) advertising, promotional,
and marketing costs, including leasing commissions and attorneys' fees in
connection with the negotiation and preparation of letters, deal memos, letters
of intent, leases, subleases, and/or assignments, space planning costs, site use
permits, and other costs and expenses incurred in connection with any lease,
sublease and/or assignment negotiations and transactions with present or
prospective tenants or other occupants in the Project; (8) costs, including
permit, license and inspection costs, incurred with respect to the installation
of improvements for other tenants or other occupants in the Project or incurred
in renovating or otherwise improving, decorating, painting or redecorating
vacant space for tenants or other occupants of the Project; (9) any costs,
fines, or penalties incurred due to violations by Landlord or other tenants of
the Project (other than Tenant) of any governmental rule or authority; (10)
expenses incurred by Landlord in connection with services or other benefits
which are not offered to Tenant or items and services for which Tenant or any
other occupant of the Project reimburses Landlord (other than through its share
of Operating Expenses), or which Landlord offers selectively to one or more
tenants, other than Tenant, without reimbursement; (11) the cost of repairing
any structural defects in the Premises or Project and repairing any material
defects in the design, materials or workmanship of the Premises or Project; (12)
wages, salaries, or other compensation paid to any executive employees of
Landlord above the grade of project manager; (13) Landlord's general corporate
overhead and administrative expenses; (14) the costs of repairs and/or
replacements of the roof, foundation, and structural supports of the Premises;
(15) any management fee other than the Management Fee payable by Tenant pursuant
to Section 3.3 above (provided, however, that this exclusion (15) shall apply
only to the extent that an owner's association for the Project has not been
formed to maintain the Common Areas); (16) all costs of the initial construction
of the Project, including Common Areas, parking areas and landscaping and
further including, without limitation, any development impact fees, school fees,
utility hook-up or tap-in-fees and other similar fees and impositions which are
required to be paid by Landlord as a condition to the issuance of a building
permit and/or the subsequent issuance of a certificate of occupancy (or an
equivalent certificate) for the Premises; (17) costs incurred for charitable
contributions and works of art (other than repair and maintenance of works)
within the Project; and (18) any costs and expenses incurred by Landlord in
connection with the formation of an owner's association for the Project
(including, without limitation, attorneys' fees and costs and accounting fees
and costs). Landlord agrees to exercise reasonable care that there be no
duplication of submittals of items of expense for which Tenant is obligated to
pay Landlord directly under this Lease. Notwithstanding anything in this Section
4.4 to the contrary, Landlord shall not include within Operating Expenses any
costs incurred by Landlord for other portions of the Project which are used by
other tenants for a purpose similar to the purposes for which Tenant uses
Tenant's Site, to the extent Tenant is responsible for such items within
Tenant's Site; by way of example, because Tenant is responsible for repair and
maintenance of the parking facilities located on Tenant's Site, Landlord shall
not include within Operating Expenses costs incurred in connection with repair
and maintenance of the parking facilities for another site within the Project.
Despite
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anything in this Section 4.4 to the contrary, Landlord shall xxxx Tenant for
Tenant's Share of Operating Expenses within two (2) years of the date Landlord
shall have incurred such Operating Expenses (the "BILLING PERIOD"). In the event
Landlord shall have incurred and been billed for such Operating Expenses prior
to the expiration of a particular Billing Period, Tenant shall not be obligated
to pay Tenant's Share of such Operating Expenses that could have been billed and
were not billed to Tenant prior to the expiration of such Billing Period.
Landlord shall use reasonable judgment to control Operating Expenses and shall
use its commercially reasonable efforts to obtain competitive pricing on all
material items of Operating Expenses consistent with the operation of the
Project in a first-class manner, but in any event shall operate the Project in
a first-class manner. Tenant acknowledges that if Landlord's rights and
obligations with respect to the Common Areas under this Lease are transferred to
an owner's association formed for the Project as described in Section 4.3 above,
Tenant shall be required to pay directly to such association on or before the
date due, any such assessments for such purposes and, in such case, this Section
4.4 and the remaining sections of this Article 4 shall not apply.
4.5 TENANT'S MONTHLY OPERATING EXPENSE CHARGE. From and after the Commencement
Date, Tenant shall pay to Landlord, on the first day of each calendar month
during the Term of this Lease, Tenant's Share of an amount estimated by Landlord
to be the Monthly Operating Expenses for the Project for that month ("TENANT'S
MONTHLY OPERATING EXPENSE CHARGE"). "TENANT'S SHARE" shall be the ratio that the
saleable land area of Tenant's Site bears to the total saleable land area within
the Project from time to time. Saleable land area shall mean the area of the
final building pad(s) plus setback areas. Tenant's Share is initially
anticipated to be thirty-three point six zero five percent (33.605%), which
shall be subject to verification or adjustment upon Substantial Completion of
the Improvements in accordance with Section 1.2 above.
4.6 ESTIMATE STATEMENT. Prior to the Commencement Date and by no later than July
1st of each subsequent calendar year during the Term of this Lease, Landlord
shall deliver to Tenant a statement ("ESTIMATE STATEMENT") wherein Landlord will
estimate both the Operating Expenses and Tenant's Monthly Operating Expense
Charge for the then current calendar year. Tenant agrees to pay Landlord, as
additional rent, Tenant's estimated Monthly Operating Expense Charge each month
thereafter, beginning with the next installment of rent due, until such time as
Landlord issues a revised Estimate Statement or the Estimate Statement for the
succeeding calendar year. If at any time during the Term of this Lease, but not
more often than two (2) times per year, Landlord reasonably determines that
Tenant's Share of Operating Expenses for the current calendar year will be
greater than the amount set forth in the then current Estimate Statement,
Landlord may issue a revised Estimate Statement (which shall include a detailed
statement of the reasons for any such increase) and Tenant agrees to pay
Landlord, within thirty (30) days of receipt of the revised Estimate Statement,
the difference between the amount owed by Tenant under such revised Estimate
Statement and the amount owed by Tenant under the original Estimate Statement
for the portion of the then current calendar year which has expired; provided,
however, if the amount of such difference is in excess of Fifteen Thousand
Dollars ($15,000.00), Tenant shall have the right to pay the same in equal
installments over a six (6) month period rather than in a single lump sum.
Thereafter Tenant agrees to pay Tenant's Monthly Operating Expense Charge based
on such revised Estimate Statement until Tenant receives the next calendar
year's Estimate Statement or a new revised Estimate Statement for the current
calendar year.
4.7 ACTUAL STATEMENT. By July 1st of each calendar year during the Term of this
Lease, Landlord shall deliver to Tenant a statement ("ACTUAL STATEMENT") which
states in reasonable detail (i) the total Operating Expenses for the preceding
year (by account) and all adjustments thereto; and (ii) Landlord's calculation
of Tenant's Share of the actual Operating Expenses for the preceding calendar
year. If the Actual Statement reveals that Tenant's Share of the actual
Operating Expenses is more than the total Additional Rent paid by Tenant for
Operating Expenses on account of the preceding calendar year, Tenant agrees to
pay Landlord the difference in a lump sum within thirty (30) days of receipt of
the Actual Statement; provided, however, if the amount of such difference is in
excess of Fifteen Thousand Dollars ($15,000.00), Tenant shall have the right to
pay the same in equal installments over a six (6) month period rather than in a
single lump sum. If the Actual Statement reveals that Tenant's Share of the
actual Operating Expenses is less than the Additional Rent paid by Tenant for
Operating Expenses on account of the preceding calendar year, Landlord will
credit any overpayment toward the next monthly installment(s) of Tenant's Share
of the Operating Expenses due under this Lease or reimburse such amount to
Tenant within thirty (30) days of the expiration or earlier termination of this
Lease. Such obligation will be a continuing one which will survive the
expiration or earlier termination of this Lease.
4.8 LANDLORD'S BOOKS AND RECORDS. Within one (1) year after Tenant's receipt of
any Actual Statement (the "REVIEW PERIOD") Tenant shall have the right, only
once in any calendar year, at its sole cost and expense, to audit or inspect and
photocopy Landlord's detailed records with respect to Operating Expenses, as
well as all other additional rent payable by Tenant pursuant to the Lease for
the calendar year which is the subject of the Actual Statement and such records
for the immediately preceding calendar year. Said audit may be completed by
Tenant's personnel, an independent certified public accountant or an outside
consultant. Landlord shall utilize, and cause to be utilized, accounting records
and procedures for each calendar year conforming to applicable generally
accepted accounting principles consistently applied with respect to all the
Operating Expenses for such calendar year, to enable the audit or inspection by
Tenant pursuant to this clause to be conducted. Pursuant to the foregoing,
Landlord shall be obligated to keep such records for all calendar years included
in the Term of this Lease until one (1) year following the expiration or earlier
termination of this Lease. Tenant shall give Landlord not less than ten (10)
business days prior written notice of its intention to conduct any such audit.
Landlord shall reasonably cooperate with Tenant during the course of such audit,
which shall be conducted during normal business hours in Landlord's Project
management office in Southern California. Landlord agrees to make such personnel
available to Tenant as is reasonably necessary for Tenant's employees and agents
to conduct such audit. Landlord shall make such records available to Tenant's
employees and agents for inspection during normal business hours. Tenant's
employees and agents shall be entitled to make photostatic copies of such
records, provided Tenant bears the expense of such copying, and further provided
that Tenant keeps such copies in a confidential manner and does not discuss,
display or distribute such copies to any other third party. Tenant's failure to
commence an audit within the Review Period shall be deemed to constitute
Tenant's approval of the Operating Expenses and other additional rent set forth
in the Actual Statement. Despite anything in this Section 4.8 to the contrary,
if Tenant conducts an audit of Operating Expenses which discloses an
overstatement of Tenant's Share of any particular item(s) of
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Operating Expenses which has also been a component of Operating Expenses in the
immediately preceding year, then notwithstanding the limitations on the timing
for Tenant's audit right as provided herein, Tenant shall be permitted to audit
Landlord's books and records with respect to such item(s) for the immediately
preceding calendar year (but not any year prior to such immediately preceding
calendar year) and the results of any such further audit shall otherwise be
subject to the terms and conditions set forth in this Section 4.8 and Section
4.9 below (except that Tenant may not then audit any additional prior years).
The results of such audit, after corrections for any errors, as reasonably
determined by both parties using applicable generally accepted accounting
principles, shall be binding upon Landlord and Tenant and all aspects of the
audit, including the results and any settlements, shall be kept strictly
confidential between the parties. If such audit discloses that the amount paid
by Tenant as Tenant's Share of Operating Expenses, or of other additional rent
payable pursuant to this Lease, has been overstated, then the amount of such
overpayment shall be credited against the next installment(s) of Operating
Expenses then due (or shall be paid to Tenant if such audit was conducted at the
expiration or earlier termination of the Term). In addition, if such audit
discloses that the amount paid by Tenant as Tenant's Share of Operating
Expenses, or of other additional rent payable pursuant to the Lease, has been
overstated by more than four percent (4%) then, in addition to immediately
repaying such overpayment with interest at the Interest Rate to Tenant, Landlord
shall also pay the out-of-pocket costs incurred by Tenant in connection with
such audit (which cost shall not exceed the amount overcharged whether repaid or
credited to Tenant). In the event of a dispute between Landlord and Tenant
regarding the results of any audit conducted by or at the direction of Tenant,
either party may submit the matter to arbitration as provided in Section 31.20
below.
4.9 MISCELLANEOUS. Except as specifically provided herein, any delay or failure
by Landlord in delivering any Estimate Statement or Actual Statement pursuant to
this Section 4 will not constitute a waiver of its right to require an increase
in additional rent for Operating Expenses nor will it relieve Tenant of its
obligations pursuant to this Section 4, except that Tenant will not be obligated
to make any payments based on such Estimate Statement or Actual Statement until
thirty (30) days after receipt of such Estimate Statement or Actual Statement.
Even though the Term has expired and Tenant has vacated the Premises, when the
final determination is made of Tenant's Share of the actual Operating Expenses
for the year in which this Lease terminates, Tenant agrees to promptly pay any
increase due over the estimated expenses paid through the expiration date of the
Term and, conversely, any overpayment made in the event said expenses decrease
shall promptly be rebated by Landlord to Tenant. Such obligation will be a
continuing one which will survive the expiration or termination of this Lease.
Each time Landlord provides Tenant with an Actual Statement and/or Estimated
Statement of Operating Expenses, such statement shall be reasonably itemized,
showing the applicable expense for the applicable year and the year prior to the
applicable year.
5. COMMUNICATION EQUIPMENT. Satellite "dishes" or other similar devices. such as
antennae together with all cable, wiring, conduits (other than those conduits
that are part of the Base Improvements to be constructed by Landlord pursuant to
the Work Letter attached hereto in Exhibit "B") and related equipment, for the
purpose of receiving and sending radio, television, computer, telephone or other
communication signals, shall be referred to herein collectively as
"COMMUNICATION EQUIPMENT". Subject to the terms and conditions contained in this
Section 5, Tenant and Tenant's contractors (which shall first be reasonably
approved by Landlord) shall have the right, at Tenant's sole cost and expense
(and without any additional charges from Landlord), to install, repair, replace,
remove, operate and maintain Communication Equipment on or around the Premises,
the parking facilities designated for the Premises, the landscaped areas of the
Premises, and the roof of the Premises, in each case at locations reasonably
approved by Landlord. With respect to any installation(s) of Communication
Equipment on the roof of the Premises, Tenant shall retain Landlord's designated
roofing contractor or a roofing contractor reasonably approved by Landlord to
make any necessary penetrations and associated repairs to the roof in order to
preserve Landlord's roof warranty. Tenant's installation and operation of the
Communication Equipment shall be governed by the following terms and conditions:
(a) Tenant's right to install, replace, repair, remove, operate and maintain
the Communication Equipment shall be subject to all governmental laws,
rules and regulations, and any applicable covenants, conditions and
restrictions, and Landlord makes no representation that such laws, rules
and regulations permit such installation and operation.
(b) All plans and specifications for the Communication Equipment shall be
subject to Landlord's reasonable approval. If Landlord fails to respond
to any written request for such approval from Tenant within ten (10)
days after Landlord's receipt of such request, Tenant may deliver
written notice to Landlord that Landlord has so failed to respond to
such request for approval and if Landlord still fails to respond within
ten (10) days after Landlord's receipt of such notice, Tenant's request
shall be deemed approved. In no event shall Tenant's request be deemed
approved without Landlord's actual approval if Tenant has failed to so
notify Landlord in writing that Landlord has failed to respond to
Tenant's initial request for approval.
(c) All costs of installation, operation and maintenance of the
Communication Equipment and any necessary related equipment (including,
without limitation, costs of obtaining any necessary permits and
connections to the Premises' or Project's electrical system) shall De
borne by Tenant.
(d) Tenant shall use the Communication Equipment so as not to cause any
interference to other tenants in the Project or with any other tenant's
Communication Equipment, and not to damage the Project or Premises or
interfere with the normal operation of the Project.
(e) Landlord shall not have any obligations with respect to the
Communication Equipment. Landlord makes no representation that the
Communication Equipment will be able to receive or transmit
communication signals without interference or disturbance (whether or
not by reason of the installation or use of similar equipment by others
in the Project) and Tenant agrees that Landlord shall not be liable to
Tenant therefor; provided, however, Landlord will not permit any other
tenant of the Project to install any Communications Equipment which, at
the time of such installation, Landlord reasonably believes will
interfere with the use and operation of the Communication Equipment
installed by Tenant.
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(f) Tenant shall (i) be solely responsible for any damage caused as a result
of the Communication Equipment, (ii) promptly pay any tax, license or
permit fees charged pursuant to any laws or regulations in connection
with the installation, maintenance or use of the Communication Equipment
and comply with all precautions and safeguards recommended by all
governmental authorities, and (iii) pay for all necessary repairs,
replacements to or maintenance of the Communication Equipment.
(g) The Communication Equipment shall remain the sole property of Tenant.
Tenant shall remove the Communication Equipment and related equipment at
Tenant's sole cost and expense upon the expiration or earlier
termination of this Lease or upon the imposition of any governmental law
or regulation which may require removal, and shall repair the Premises
and Project upon such removal to the extent required by such work of
removal. If Tenant fails to remove the Communication Equipment and
repair the Premises or portions thereof in which the Communication
Equipment is located within thirty (30) days after the expiration or
earlier termination of this Lease, Landlord may, following an additional
five (5) days written notice to Tenant, do so at Tenant's expense. The
provisions of this Section 5(g) shall survive the expiration or earlier
termination of this Lease.
(h) The Communication Equipment shall be deemed to constitute a portion of
the Premises for purposes of Articles 17 and 20 of this Lease.
6. USE.
6.1 GENERAL. Tenant shall use the Premises solely for the Permitted Use
specified in Section 1.9 of the Summary, and shall not use or permit the
Premises to be used for any other use or purpose whatsoever. Tenant shall, at
its sole cost and expense, observe and comply with all requirements of any board
of fire underwriters or similar body relating to the Premises, and all laws,
statutes, codes, reasonable and non-discriminatory rules and regulations now or
hereafter in force relating to or affecting the use, occupancy, alteration or
improvement (whether structural or non-structural, including unforeseen and/or
extraordinary alterations or improvements, and regardless of the period of time
remaining in the Term) of the Premises, including, without limitation, the
provisions of the Americans with Disabilities Act and the California Disability
Access Laws and their respective implementing regulations (collectively, the
"ADA") as it pertains to Tenant's specific use, occupancy, improvement and
alteration (whether structural or non-structural, including unforeseen and/or
extraordinary alterations or improvements, and regardless of the period of time
remaining in the Term) of the Premises. Tenant shall not use or allow the
Premises to be used (a) in violation of any recorded covenants, conditions and
restrictions affecting the Premises or of any law or governmental rule or
regulation, or of any certificate of occupancy issued for the Premises, or (b)
for any improper or unlawful purpose. Tenant shall not cause, maintain or permit
any nuisance in, on or about the Premises, nor commit or suffer to be committed
any waste in, on or about the Premises.
6.2 SIGNS. Subject to this Section 6.2 and provided that the Original Tenant, an
Affiliate or a Permitted Non-Affiliate Assignee (as those terms are defined in
Article 14 below) leases at least fifty percent (50%) of the rentable square
feet of any Building, the Original Tenant (or such Affiliate or such Permitted
Non-Affiliate Assignee) shall have the exclusive right to install, at its sole
cost and expense, signage on the exterior of such Building and at locations on
the property upon which such Building is located ("SIGNAGE"). The graphics,
materials, color, design, lettering, lighting (if any), specifications and exact
location of the Signage (collectively, the "SIGNAGE SPECIFICATIONS") and any
subsequent changes thereto, shall be subject to the prior written approval of
Landlord, which approval should not be unreasonably withheld, conditioned or
delayed. If Landlord fails to respond to any written request for such approval
from Tenant within thirty (30) days after Landlord's receipt of such request,
Tenant's request shall be deemed approved. In addition, the Signage and all
Signage Specifications therefor shall be subject to Tenant's receipt of all
required governmental permits and approvals, shall be subject to all applicable
governmental laws and ordinances, and all covenants, conditions and restrictions
affecting the Premises and the Project. Tenant hereby acknowledges that,
notwithstanding Landlord's approval of the Signage and/or the Signage
Specifications therefor, Landlord has made no representations or warranty to
Tenant with respect to the probability of obtaining such approvals and permits.
In the event Tenant does not receive the necessary permits and approvals for the
Signage, Tenant's and Landlord's rights and obligations under the remaining
provisions of this Lease shall not be affected. The cost of installation of the
Signage, as well as all costs of design and construction of such Signage and all
other costs associated with such Signage, including, without limitation,
permits, maintenance and repair, shall be the sole responsibility of Tenant. The
rights to the Signage shall be personal to Original Tenant and may not be
transferred except (i) in connection with Tenant's assignment of its entire
interest in this Lease, if any, to an Affiliate or a Permitted Non-Affiliate
Assignee (as those terms are defined in Section 14.5 below), and (ii) subject to
the requirements for the Original Tenant an Affiliate or a Permitted
Non-Affiliate Assignee specified in the first sentence of this Section 6.2
above, a subtenant of greater than 5,000 rentable square feet which has been
approved by Landlord pursuant to Article 14 below shall be entitled to erect
Signage in accordance with this Section 6.2, provided that the name of such
subtenant is not an "Objectionable Name," as that term is defined below. The
Term "OBJECTIONABLE NAME" shall mean any name that relates to an entity that is
of a character or reputation, or is associated with a political orientation or
faction that is materially inconsistent with the quality of the Project, or
which would otherwise reasonably offend landlords of projects comparable to the
project, taking into consideration the visibility of the Signage. Should the
Signage require maintenance or repairs as determined in Landlord's reasonable
judgment, Landlord shall have the right to provide written notice thereof to
Tenant and Tenant shall cause such repairs and/or maintenance to be performed
within thirty (30) days after receipt of such notice from Landlord at Tenant's
sole cost and expense. Should Tenant fail to perform such maintenance and
repairs within the period described in the immediately preceding sentence,
Landlord shall have the right, following an additional five (5) days written
notice to Tenant, to cause such work to be performed and to charge Tenant, as
additional rent, for the cost of such work. Upon the expiration or earlier
termination of this Lease, Tenant shall, at Tenant's sole cost and expense,
cause the Signage to be removed from the exterior of the Premises and/or
locations on the property on which the Premises is located and shall cause such
Signage locations to be restored to the condition existing prior to the
placement of such Signage. If Tenant fails to remove such Signage and to restore
such Signage locations as provided in the immediately preceding sentence within
thirty (30) days following the expiration or early termination of this Lease,
then Landlord, following an additional five (5) days written notice to Tenant,
may perform such work, and all costs and expenses incurred by Landlord in so
performing such work shall be reimbursed by
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Tenant to Landlord within ten (10) days after Tenant's receipt of invoice
therefor. The immediately preceding sentence shall survive the expiration or
earlier termination of this Lease. Except as provided in this Section 6.2 above,
Tenant may not install any signs on the exterior or roof of the Building or
anywhere else in the Project.
6.3 HAZARDOUS MATERIALS.
6.3.1 TENANT'S ENVIRONMENTAL REPRESENTATIONS AND INDEMNIFICATION. Except for
ordinary and general office supplies, such as copier toner, liquid paper, glue,
ink and common cleaning and janitorial materials and, to the extent approved in
writing by Landlord (which shall not be unreasonably withheld), materials
reasonably necessary for the conduct of Tenant's business that are used and
stored in compliance with all applicable laws (some or all of which may
constitute "Hazardous Materials" as defined in this Lease), Tenant agrees not to
cause or permit any Hazardous Materials to be brought upon, stored, used,
handled, generated, released or disposed of on, in, under or about the Premises
by Tenant, its agents, employees, subtenants, assignees, licensees, contractors
or invitees (collectively, "TENANT'S PARTIES"), without the prior written
consent of Landlord, which consent Landlord may withhold in its sole and
absolute discretion. Concurrently with the execution of this Lease, Tenant
agrees to complete and deliver to Landlord an Environmental Questionnaire in the
form of Exhibit "D" attached hereto. Upon the expiration or earlier termination
of this Lease, Tenant agrees to promptly remove from the Premises, at its sole
cost and expense, any and all Hazardous Materials, including any equipment or
systems containing Hazardous Materials which are installed, brought upon,
stored, used, generated or released upon, in, under or about the Premises by
Tenant or any of Tenant's Parties. To the fullest extent permitted by law,
Tenant agrees to promptly indemnify, protect, defend and hold harmless Landlord
and Landlord's partners, officers, directors, employees, agents, successors and
assigns (collectively, "LANDLORD INDEMNIFIED PARTIES") from and against any and
all claims, damages, judgments, suits, causes of action, losses, liabilities,
penalties, fines, expenses and costs (including, without limitation, clean-up,
removal, remediation and restoration costs, sums paid in settlement of claims,
attorneys' fees, consultant fees and expert fees and court costs) which arise or
result from the presence of Hazardous Materials on, in, under or about the
Premises and which are caused or permitted by Tenant or any of Tenant's Parties
or any other persons or entities. Tenant agrees to promptly notify Landlord of
any release of Hazardous Materials of which Tenant obtains actual knowledge
during the Term of this Lease, whether caused by Tenant or any other persons or
entities. In the event of any release of Hazardous Materials caused or permitted
by Tenant or any of Tenant's Parties or any other persons or entities, Landlord
shall have the right, but not the obligation, to cause Tenant to immediately
take all steps Landlord deems reasonably necessary or appropriate to remediate
such release and prevent any similar future release to the satisfaction of
Landlord and Landlord's mortgagee(s). At all times during the Term of this
Lease, Landlord will have the right, but not the obligation, following
reasonable advance written notice to Tenant (except in the case of an emergency
when no notice shall be required) to enter upon the Premises to inspect,
investigate, sample and/or monitor the Premises to determine if Tenant is in
compliance with the terms of this Lease regarding Hazardous Materials. Tenant
will, upon the request of Landlord, cause to be performed an environmental audit
of the Premises at Tenant's expense by an environmental consulting firm
reasonably acceptable to Landlord. As used in this Lease, the term "HAZARDOUS
MATERIALS" shall mean and include any hazardous or toxic materials, substances
or wastes as now or hereafter designated or regulated under any law, statute,
ordinance, rule, regulation, order or ruling of any agency of the State, the
United States Government or any local governmental authority, including, without
limitation, asbestos, petroleum, petroleum hydrocarbons and petroleum based
products, urea formaldehyde foam insulation, polychlorinated biphenyls ("PCBs"),
and freon and other chlorofluorocarbons. The provisions of this Section 6.3.1
will survive the expiration or earlier termination of this Lease.
6.3.2 LANDLORD'S ENVIRONMENTAL REPRESENTATIONS AND INDEMNIFICATION. Landlord
represents and warrants to Tenant that as of the date of this Lease and to
Landlord's actual knowledge and except as disclosed in that certain Phase 1
dated June, 1996, prepared by Xxxxxx Xxxxxx Associates (i) there are no
Hazardous Materials in, on, under, below or otherwise located on or about the
Premises in violation of applicable law, and (ii) there has been no release or
migration of any Hazardous Materials in violation of applicable law onto,
beneath, upon or about the Premises. Landlord shall indemnify, protect, defend
and hold Tenant, its successors, assigns, subtenants, agents, employees,
officers and directors harmless from any and all losses, damages, liabilities,
judgments, costs, claims, expenses, penalties, including, but not limited to,
attorneys' fees, court costs and consultant fees (a) arising out of or involving
any Hazardous Materials introduced to the Premises by Landlord to the extent
that the same were Hazardous Materials at the time of such introduction to the
Premises; or (b) due to Landlord's breach of its foregoing representation. The
provisions of this Section 6.3.2 will survive the expiration or earlier
termination of this Lease. Landlord's actual knowledge means the actual
knowledge of the following individuals, without inquiry: Xxxxxx X. Xxxxx, Xxxxxx
X. Xxxxx, Xxxxx Xxxxxxx and Xxxxxxx X. Stock, who Landlord represents are the
representatives of Landlord who are most knowledgeable with respect to the
existing physical condition of the Project. In addition, Landlord shall be
responsible for, at Landlord's sole cost and expense, the repair, cleanup,
detoxification, encapsulation, removal and/or remediation of Hazardous
Materials, to the extent such action is necessitated, directly or indirectly, by
the presence or use, generation, storage, release, or disposal of Hazardous
Materials by any person at the Project (or the real property on which the
Project is located) prior to the Early Occupancy Date, including any prior owner
of such real property and to the extent such removal or remediation is required
by applicable law, provided that the presence, generation, storage, release, or
disposal of such Hazardous Material is not the result of acts or omissions of
Tenant, its agents, contractors or employees (which acts or omissions shall be
governed by Section 6.3.1 above).
6.4 REFUSE AND SEWAGE. Tenant agrees not to keep any trash, garbage, waste or
other refuse on the Premises except in proper containers and agrees to contract
directly for the regular removal of the same from the Premises. Tenant shall
keep all containers or other equipment used for storage of such materials in a
clean and sanitary condition. Tenant shall, at Tenant's sole cost and expense,
properly dispose of all sanitary sewage and shall not use the sewage disposal
system for the disposal of anything except sanitary sewage. Tenant shall keep
that portion of the sewage disposal system within Tenant's Site free of all
obstructions and in good operating condition. Tenant shall contract directly for
all trash disposal services at Tenant's sole cost and expense.
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6.5 ACCESS/SECURITY SYSTEM. Landlord acknowledges that, subject to Sections 18
and 19 below, the Premises shall be accessible to Tenant twenty-four (24) hours
per day, seven (7) days per week, every day of the year, including holidays.
Landlord acknowledges that as a part of the Tenant Improvements, Tenant intends
to install an automated security system in, on, or about the Premises,
including, without limitation, a cardreader access system for access through all
exterior doors of the Buildings which shall be programmable and controlled by a
computer system located within the Buildings and capable of remote access by
employees of Tenant. Landlord shall have the right to review and to approve or
disapprove the plans in Landlord's reasonable discretion as provided in the Work
Letter Agreement attached to this Lease as Exhibit "B". Landlord agrees that
Tenant shall have the right, upon the expiration or earlier termination of this
Lease, to remove the security system; provided, however, Tenant shall, at its
sole cost and expense, repair any damage caused by such removal.
7. PAYMENTS AND NOTICES. All Rent and other sums payable by Tenant to Landlord
hereunder shall be paid to Landlord at the address designated in Section 1.1 of
the Summary, or to such other persons and/or at such other places as Landlord
may hereafter designate in writing. Any notice required or permitted to be given
hereunder must be in writing and may be given by personal delivery (including
delivery by nationally recognized overnight courier or express mailing service),
or by registered or certified mail, postage prepaid, return receipt requested,
addressed to Tenant at the address(es) designated in Section 1.2 of the Summary,
or to Landlord at the address(es) designated in Section 1.1 of the Summary.
Either party may, by written notice to the other, specify a different address
for notice purposes.
8. BROKERS. The parties recognize that the brokers who negotiated this Lease are
stated in Section 1.10 of the Summary and that Landlord shall be solely
responsible for the payment of the brokerage commission to the brokers and that
Tenant shall have no obligation or responsibility therefor. Such commissions are
to be paid (a) to CB Xxxxxxx Xxxxx, Inc. at the rate of $7.71 per rentable
square foot for Buildings 1 and 2 and (b) to Colliers Xxxxx Xxxx at the rate of
$3.00 per rentable square foot for Buildings 1 and 2, and in the event Tenant
exercises its Option to Expand pursuant to Section 33 below, Landlord shall pay
to CB Xxxxxxx Xxxxx, Inc. and Colliers Xxxxx Xxxx commissions at the respective
rates of $7.71 and $3.00 per rentable square foot of Building 3 (such commission
amounts for Building 3 to be prorated by Landlord on a straight line basis based
upon the time remaining in the initial Lease Term as of the effective date of
Tenant's lease of such expansion space). Landlord further agrees that fifty
percent (50%) of the brokerage commission to be paid to CB Xxxxxxx Xxxxx, Inc.
for Buildings 1 and 2 only shall be due and payable at such time as this Lease
has been signed by Landlord and Tenant and a deed of trust evidencing a loan for
the construction of the Premises has been recorded against the Premises;
provided, however, if the deed of trust evidencing the loan for the construction
of the Premises has not been recorded within sixty (60) days from the date of
last execution of this Lease by Landlord and Tenant, the first fifty percent
(50%) of such brokerage commission for Buildings 1 and 2 shall become
immediately due and payable. The remaining fifty percent (50%) of the brokerage
commission for Building 1 and 2 shall be paid to CB Xxxxxxx Xxxxx, Inc. on the
Commencement Date. In the event that Landlord fails to make any payment to CB
Xxxxxxx Xxxxx, Inc. on or before the date due as specified in this Section 8
above, Tenant may send a factually correct written notice to Landlord and CB
Xxxxxxx Xxxxx, Inc. of such failure and if Landlord still fails to pay said
amounts to CB Xxxxxxx Xxxxx, Inc. as described in Tenant's written notice within
thirty (30) days after Landlord's receipt of said written notice, Tenant shall
have the option (but shall not be required) to pay said amounts directly to CB
Xxxxxxx Xxxxx, Inc. and to offset the amounts so paid by Tenant to CB Xxxxxxx
Xxxxx, Inc. together with interest at the Interest Rate from the date of payment
until the date of offset, from Tenant's next Monthly Rent obligations which may
become due under this Lease. Any amounts so paid by Tenant to CB Xxxxxxx Xxxxx,
Inc. and offset from Tenant's Monthly Rent obligations under this Lease shall no
longer be owed from Landlord to CB Xxxxxxx Xxxxx, Inc. Each party represents and
warrants to the other, that, to its knowledge, no other broker, agent or finder
(a) negotiated or was instrumental in negotiating or consummating this Lease on
its behalf, and (b) is or might be entitled to a commission or compensation in
connection with this Lease. Any broker, agent or finder of Tenant whom Tenant
has failed to disclose herein shall be paid by Tenant. Tenant shall indemnify,
protect, defend (by counsel reasonably approved in writing by Landlord) and hold
Landlord harmless from and against any and all claims, judgments, suits, causes
of action, damages, losses, liabilities and expenses (including attorneys' fees
and court costs) resulting from any breach by Tenant of the foregoing
representation, including, without limitation, any claims that may be asserted
against Landlord by any broker, agent or finder undisclosed by Tenant herein.
Landlord shall indemnify, protect, defend (by counsel reasonably approved in
writing by Tenant) and hold Tenant harmless from and against any and all claims,
judgments, suits, causes of action, damages, losses, liabilities and expenses
(including attorneys' fees and court costs) resulting from any breach by
Landlord of the foregoing representation, including, without limitation, any
claims that may be asserted against Tenant by any broker, agent or finder
undisclosed by Landlord herein. The foregoing indemnities shall survive the
expiration or earlier termination of this Lease.
9. SURRENDER: HOLDING OVER.
9.1 SURRENDER OF PREMISES. Upon the expiration or sooner termination of this
Lease, Tenant shall surrender all keys for the Premises to Landlord, and Tenant
shall deliver exclusive possession of the Premises to Landlord broom clean and
in first-class condition and repair, reasonable wear and tear excepted (and
casualty damage excepted if this Lease is terminated as a result thereof
pursuant to Section 18), with all of Tenant's personal property (and those
items, if any, of Tenant Improvements and Tenant Changes identified by Landlord
pursuant to Section 12.2 below) removed therefrom and all damage caused by such
removal repaired, as required pursuant to Sections 12.2 and 12.3 below. If, for
any reason, Tenant fails to surrender the Premises on the expiration or earlier
termination of this Lease, with such removal and repair obligations completed,
then, in addition to the provisions of Section 9.3 below and Landlord's rights
and remedies under Section 12.4 and the other provisions of this Lease, Tenant
shall indemnify, protect, defend (by counsel reasonably approved in writing by
Landlord) and hold Landlord harmless from and, against any and all claims,
judgments, suits, causes of action, damages, losses, liabilities and expenses
(including attorneys' fees and court costs but excluding, in any event,
consequential damages) resulting from such failure to surrender.
9.2 HOLDING OVER. If Tenant, without Landlord's consent, holds over after the
expiration or earlier termination of the Lease Term, then, without waiver of any
right on the part of Landlord as a result of Tenant's failure to timely
surrender
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possession of the Premises to Landlord, Tenant shall become a tenant at
sufferance only, upon the terms and conditions set forth in this Lease so far as
applicable (including Tenant's obligation to pay all costs, expenses and any
other additional rent under this Lease), but at a Monthly Rent equal to a
percentage of the Monthly Rent applicable to the Premises immediately prior to
the date of such expiration or earlier termination, which percentage shall be
(i) one hundred twenty-five percent (125%) for the first three (3) months of
such holding over and (ii) one hundred fifty percent (150%) thereafter.
Acceptance by Landlord of rent after such expiration or earlier termination
shall not constitute a consent to a hold over hereunder or result in an
extension of this Lease.
9.3 PRE-APPROVED HOLDING OVER. Notwithstanding the foregoing, by written notice
to Landlord given at least six (6) months prior to the expiration of the
original Term or any Option Period, Tenant shall have a one-time right to elect
to hold over in the entire Premises (which hold over will be deemed to be with
Landlord's consent for one (1), two (2), or three (3) full months as specified
in Tenant's notice). Any such hold over shall be upon all of the terms and
conditions of this Lease, as applicable, except that Monthly Rent shall be one
hundred twenty-five percent (125%) of the Monthly Rent applicable immediately
prior to such hold over. The original Term (or any applicable Option Period)
will be extended for the period specified in such written notice by Tenant to
Landlord and a vacation of the Premises by Tenant prior to such date will not
relieve Tenant of its obligation to pay Monthly Rent and additional rent
accruing under this Lease through such expiration, as extended pursuant to
Tenant's notice.
9.4 NO EFFECT ON LANDLORD'S RIGHTS. The foregoing provisions of this Section 9
are in addition to, and do not affect, Landlord's right of re-entry or any other
rights of Landlord hereunder or otherwise provided at law or in equity.
10. TAXES.
10.1 Real Property Taxes. Except as specifically provided in this Section 10.1
below, Tenant agrees to pay all general and special real property taxes,
assessments (including, without limitation, change in ownership taxes or
assessments), liens, bond obligations, license fees or taxes and any similar
impositions in-lieu of other impositions now or previously within the definition
of real property taxes or assessments and any and all assessments under any
covenants, conditions and restrictions affecting the Premises (collectively
"REAL PROPERTY TAXES") which may be now or hereafter levied or assessed against
the Premises applicable to the period from the Commencement Date, until the
expiration or sooner termination of this Lease. Notwithstanding the foregoing
provisions, if the Real Property Taxes are not levied and assessed against the
Premises as separate tax parcels, then Tenant shall pay Tenant's pro rata share
of all Real Property Taxes which may be levied or assessed by any lawful
authority against the land and improvements of the separate tax parcel on which
the Premises are located. Tenant's pro rata share under such circumstances shall
be apportioned according to the value of the Premises as it relates to the total
value of all of the buildings (including the Premises) situated in the separate
tax parcel in which the Premises is located.
All Real Property Taxes for the tax year in which the Commencement Date occurs
and for the tax year in which this Lease terminates shall be apportioned and
adjusted so that Tenant shall not be responsible for any Real Property Taxes for
a period of time occurring prior to the Commencement Date or subsequent to the
expiration of the Lease term.
Tenant agrees to pay to the taxing authority entitled thereto the total Real
Property Taxes due. On or before the Commencement Date, Landlord shall make
arrangements with the applicable taxing authorities for the delivery of the
statements for such Real Property Taxes directly to Tenant. Any of said payments
to be made directly to the taxing authority shall be made prior to the
delinquency date established by the taxing authority, and Tenant shall, within
ten (10) business days after Tenant's receipt of written request from Landlord,
deliver evidence of such payment to Landlord. Failure of Tenant to pay said Real
Property Taxes as and when herein specified shall, in addition to all other
rights and remedies of Landlord hereunder, subject Tenant to any fine, penalty,
interest, or cost which Landlord may incur as a result thereof. Tenant shall,
within thirty (30) days after demand, reimburse Landlord for any such fine,
penalty, interest, or cost, together with interest thereon at the Interest Rate.
Landlord and Tenant hereby agree and acknowledge that Tenant shall be entitled
to contest and/or appeal the Real Property Taxes assessed by any applicable
taxing authority directly to such authority, provided that Tenant shall
indemnify, defend and hold Landlord harmless from any and all claims,
liabilities and damages incurred by Landlord in connection therewith.
If at any time during the Term under the laws of the United States, or the
state, county, municipality, or any political subdivision thereof in which the
Premises is located, a tax or excise on rent or any other tax however described
is levied or assessed by any such political body against Landlord on account of
rent payable to Landlord hereunder or any tax based on or measured by
expenditures made by Tenant on behalf of Landlord, such tax or excise shall be
considered "Real Property Taxes" for purposes of this Section 10.1, and shall be
payable in full by Tenant. Such taxes or excises shall be payable within thirty
(30) days after Tenant's receipt of the tax xxxx therefor from Landlord. Despite
the foregoing, under no circumstances shall Real Property Taxes include
Landlord's federal, state or local income, franchise, inheritance or estate
taxes.
Notwithstanding anything to the contrary contained herein, to the extent that
any of the following items are not of record, as of the date of this Lease. Real
Property Taxes and assessments shall not include: (i) any assessment districts
or landscape districts, or assessments associated with any other site
improvements; (ii) Xxxxx-Xxxx type infrastructure financing assessments of any
type; (iii) costs or fees payable to public authorities in connection with any
future construction, renovation and/or improvements to the Project; (iv)
reserves for future Real Property Taxes; and (v) any documentary transfer taxes
arising from a voluntary transfer of the Premises or any portion of the Project
by Landlord. If a reduction in Real Property Taxes is obtained for any year of
the Term during which Tenant paid such Real Property Taxes, then Tenant, at
Tenant's option, shall be entitled to such reduction by way of direct
reimbursement. If, by applicable law, any taxes or assessments may be paid in
installments at the option of the taxpayer, then Tenant may pay such taxes and
assessments in installments.
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10.2 PERSONAL PROPERTY TAXES. Except as provided in Section 10.1 above, Tenant
shall be liable for, and shall pay before delinquency, all taxes and assessments
(real and personal) levied against (a) any personal property or trade fixtures
placed by Tenant in or about the Premises (including any increase in the
assessed value of the Premises based upon the value of any such personal
property or trade fixtures); and (b) any Tenant Improvements or alterations in
the Premises (whether installed and/or paid for by Landlord or Tenant). If any
such taxes or assessments are levied against Landlord or Landlord's property,
Landlord may, after a minimum of ten (10) business days prior written notice to
Tenant (and under proper protest if requested by Tenant) pay such taxes and
assessments, and Tenant shall reimburse Landlord therefor within thirty (30)
days after demand by Landlord; provided, however, Tenant, at its sole cost and
expense, shall have the right, with Landlord's cooperation, to bring suit in any
court of competent jurisdiction to recover the amount of any such taxes and
assessments so paid under protest.
11. REPAIRS.
11.1 TENANT'S REPAIR OBLIGATIONS. Except for (i) Landlord's obligations to
maintain those Common Areas (other than Tenant's Site) as provided in Section
4.2; and (ii) Landlord's obligations under Section 11.2 and the Work Letter
Agreement attached to this Lease as Exhibit "B", Tenant shall at all times and
at Tenant's sole cost and expense, keep, maintain, clean, repair, renovate,
retrofit, replace and preserve the Premises, Tenant's Site and all parts
thereof, including, without limitation, (a) utility meters, plumbing, pipes and
conduits, all heating, ventilating and air conditioning systems located within
the Premises, all fixtures, furniture and equipment, Tenant's Signage (as
provided further in Section 6.2 above), locks, closing devices, security
devices, windows, window sashes, casements and frames, floors and floor
coverings, shelving, restrooms, ceilings, interior walls, roof membranes,
skylights, interior partition walls and demising walls, doors, electrical and
lighting equipment, sprinkler systems, loading dock areas and doors, and all
Base Improvements (other than those identified to be Landlord's responsibility
under Section 11.2), Tenant Improvements, Tenant Changes and other alterations,
additions and other property and/or fixtures located within the Premises and (b)
to the extent such items are included in Tenant's Site, parking facilities
(including slurry coating at such intervals during the initial Term and any
Option Periods(s) as reasonably determined by Tenant), driveways (including
regularly scheduled sweeping), walkways, rail spur areas (if any), fences, lawns
and landscaped areas, in a condition consistent with comparable first-class
buildings in the Sorrento Mesa area, reasonable wear and tear excepted. Tenant's
repair and maintenance obligations shall include, but not be limited to,
responsibility for painting the exterior of the Premises whenever necessary to
maintain the first-class appearance of the Premises. Except as provided in
Section 11.2, Tenant shall at all times during the Term make all changes,
repairs and improvements to the Premises of every kind and nature, whether
ordinary or extraordinary, foreseen or unforeseen, which may be required by any
Laws or for the safety of the Premises. Tenant agrees to procure and maintain
contracts for janitorial services and maintenance contracts for all heating,
ventilating and air conditioning systems. Such services, maintenance and repairs
shall be performed with due diligence, lien-free and in a good and workmanlike
manner, by reputable licensed contractor(s) which are selected by Tenant and
approved by Landlord, which approval Landlord shall not unreasonably withhold or
delay.
11.2 LANDLORD'S REPAIR RIGHTS AND OBLIGATIONS. Except as provided in this
Section 11.2, Section 11.3 below and in the Work Letter Agreement attached to
this Lease as Exhibit "B", Landlord has no obligation whatsoever to alter,
remodel, improve, repair, renovate, retrofit, replace, redecorate or paint all
or any part of the Premises. Except as specifically provided in Section 11.4
below, Tenant waives the right to make repairs at Landlord's expense under any
law, statute or ordinance now or hereafter in effect (including the provisions
of California Civil Code Section 1942 and any successive sections or statutes of
a similar nature). If Tenant fails to perform Tenant's obligations under Section
11.1 hereof, or under any other provision of this Lease, then Landlord shall
have the option (but not the obligation) to enter upon the Premises after ten
(10) days' prior written notice to Tenant, or in the case of an emergency
immediately without prior notice, to perform such obligations on Tenant's behalf
necessary to return the Premises to good order, condition and repair, whereupon
the actual and documented costs incurred by Landlord shall become due and
payable to Landlord, upon demand, together with a fee of five percent (5%) of
the costs of such work for Landlord's managing agent. Promptly following written
notice thereof from Tenant, Landlord shall perform, at its cost and expense, all
improvements to the Buildings to the extent and only to the extent such
improvements are necessary due to the failure of the Buildings, at Substantial
Completion, to comply with the requirements of all building codes and laws
(including the ADA) applicable as of Substantial Completion and in no way
arising from or in connection with any act, omission or construction carried out
by or for Tenant at the Premises. No later than forty-five (45) days following
the Commencement Date, Landlord shall provide Tenant with a complete list of all
major contractors and subcontractors and a complete list of the manufacturers
and suppliers of all major components of the Buildings and the major building
systems (such as the roof, elevators, HVAC and electrical systems) and Landlord
shall assign to Tenant all warranties received from, and all rights of
enforcement of such warranties against, all contractors and subcontractors,
manufacturers and suppliers involved in the construction of the Premises, except
for those warranties and rights pertaining to those components of the Premises
for which Landlord is responsible pursuant to this Section 11.2. Despite any
such assignment, in the event any contractor, subcontractor, manufacturer or
supplier fails or refuses to honor any such warranty or fails to recognize
Tenant's rights to enforce any such warranty, Landlord agrees to reasonably
cooperate with Tenant, at no cost to Landlord, to enforce such warranty.
11.3 CONDITION OF PREMISES. Landlord shall cause the Premises and all Common
Areas of the Project to be constructed in a first-class, lien-free manner in
accordance with all applicable building codes in effect as of the Commencement
Date and then being enforced against Landlord including, without limitation, any
requirements of the ADA (as defined in Section 6.1 above). If Tenant notifies
Landlord within one (1) year after the Commencement Date that the Premises or
any Common Areas are in violation of any such law which was in effect and
enforced against Landlord as of the Commencement Date, or that the Premises or
the Common Areas or any portion thereof is defective, Landlord, at Landlord's
sole cost and expense, shall promptly make those modifications necessary to
bring such item into compliance with such law(s) or to cure such defect, as
applicable. In addition, throughout the Term of this Lease and any Option
Period(s) (if applicable), Landlord shall be responsible for the repair of any
defects in design or construction of the foundation, slab structure, exterior
wall structure and roof structure (excluding the roof membrane) of the
Buildings. Tenant acknowledges and agrees that, except to the extent
specifically set forth in this Lease, Landlord has not made,
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does not make and specifically negates and disclaims any representations,
warranties, promises, covenants, agreements or guarantees of any kind or
character whatsoever concerning or with respect to (a) the value, nature,
quality or condition of the Premises; (b) the suitability of the Premises for
any and all activities and uses which Tenant may conduct thereon; (c) the
compliance of the Premises with any future laws, rules, ordinances or
regulations of any applicable governmental authority or body, including, without
limitation, environmental laws (collectively, "LAWS"); (d) the manner or quality
of the construction or materials incorporated into the Premises; (e) the manner,
quality, state of repair or lack of repair of the Premises; or (f) any other
matter with respect to the Premises.
11.4 TENANT'S RIGHT TO MAKE REPAIRS. If Tenant provides written notice to
Landlord of an event or circumstance which requires the action of Landlord with
respect to the Landlord's repair rights and obligations as described in Section
11.2 or 11.3 above, and Landlord fails to provide or commence (i.e. begin making
arrangements for such work (or fails thereafter to proceed to complete such work
with diligent efforts as required by the terms of this Lease) within ten (10)
days after receipt of such written notice (or such shorter period of time as may
be applicable in the event of an emergency), Tenant may proceed to take the
required action upon delivery of an additional five (5) business days notice to
Landlord (or within the applicable and appropriate time period based on an
emergency) specifying that Tenant is taking such required action, and if such
action was required under the terms of this Lease to be taken by Landlord, then
Tenant shall be entitled to prompt reimbursement by Landlord of Tenant's costs
and expenses in taking such action plus interest at the Interest Rate during the
period from the date Tenant incurs such costs and expenses until such time as
payment is made by Landlord. Tenant may utilize the services of any qualified
contractor which normally and regularly performs similar work in other
comparable buildings and building projects located in the Sorrento Mesa area of
San Diego, of similar age and quality of construction (hereinafter, "COMPARABLE
BUILDINGS"). Further, if Landlord does not deliver a detailed written objection
to Tenant, within thirty (30) days after receipt of an invoice by Tenant of its
costs of taking action which Tenant claims should have been taken by Landlord,
and if such invoice from Tenant sets forth a reasonably particularized breakdown
of its costs and expenses in connection with taking such action on behalf of
Landlord, then Tenant shall be entitled to deduct from the Monthly Rent payable
by Tenant under this Lease, the amount set forth in such invoice together with
interest at the Interest Rate. If, however, Landlord in good faith delivers to
Tenant, within thirty (30) days after receipt of Tenant's invoice, a written
objection to the payment of such invoice, setting forth with reasonable
particularity Landlord's reasons for its claim that such action did not have to
be taken by Landlord pursuant to the terms of this Lease or that the charges are
excessive (in which case Landlord shall pay the amount it contends would not
have been excessive), then Tenant shall not be entitled to such deduction from
Monthly Rent, but Tenant may commence arbitration proceedings against Landlord
(in the manner set forth in Section 31.20 below) to collect the amount set forth
in the subject invoice.
12. ALTERATIONS.
12.1 TENANT CHANGES; CONDITIONS.
12.1.1 Tenant shall not make any alterations, additions, improvements or
decorations to the Premises (collectively, "TENANT CHANGES," and individually, a
"TENANT CHANGE") unless Tenant first obtains Landlord's prior written approval
thereof, which approval Landlord shall not unreasonably withhold, condition or
delay. Notwithstanding the foregoing, Landlord's prior approval shall not be
required for any Tenant Change which satisfies all of the following conditions
(hereinafter a "PRE-APPROVED CHANGE"): (i) the costs of such Tenant Change does
not exceed One Hundred Thousand Dollars ($100,000) individually; (ii) Tenant
delivers to Landlord final plans, specifications and working drawings (if
necessary) or such Tenant Change at least ten (10) days prior to commencement of
the work thereof; (iii) Tenant and such Tenant Change otherwise satisfy all
other conditions set forth in this Section 12.1; and (iv) the Tenant Change does
not affect the structural, mechanical, life-safety or exterior elements of the
Premises and such Tenant Change is not visible from the exterior of the
Premises. The construction of the Buildings and the initial Tenant Improvements
therein shall be governed by the Work Letter Agreement and not this Article 12;
this Article 12 shall only apply to Tenant Changes subsequent to initial
construction.
12.1.2 All Tenant Changes shall be performed: (i) in accordance with the
approved plans, specifications and working drawings; (ii) lien-free and in a
good and workmanlike manner; (iii) in compliance with all laws, rules and
regulations of all governmental agencies and authorities including, without
limitation, applicable building permit requirements and/or the provisions of
Title III of the ADA; and (iv) at such times, in such manner and subject to such
non-discriminatory rules and regulations as Landlord may from time to time
reasonably designate.
12.1.3 Throughout the performance of the Tenant Changes, Tenant shall obtain, or
cause its contractors to obtain, workers compensation insurance in compliance
with the provisions of Section 20 of this Lease and "Builder's All Risk"
insurance in a commercially reasonable amount given the scope of the Tenant
Change, covering the construction of such Tenant Change, it being understood by
Tenant, that all such Tenant Changes shall be insured by Tenant pursuant to
Section 20 upon the completion thereof.
12.1.4 Landlord agrees that Landlord shall approve or disapprove for reasonable
reasons, the plans and specifications and/or working drawings for any proposed
Tenant Change within ten (10) business days after receipt of the same by
Landlord and, if disapproved, Landlord shall return the plans and specifications
and/or working drawings to Tenant together with a reasonably detailed statement
of the basis for Landlord's disapproval thereof and Tenant shall direct Tenant's
architect or space planner to make all necessary revisions to the same. If
Landlord thereafter disapproves the plans and specifications and/or working
drawings for the proposed Tenant Change as revised, Landlord, Tenant and
Tenant's architect or space planner shall, within three (3) business days
following receipt of notice of such disapproval, meet and revise the plans and
specifications and/or working drawings to the reasonable satisfaction of
Landlord and Tenant. This procedure shall be repeated until Landlord and Tenant
ultimately approve the plans and specifications and/or working drawings for the
proposed Tenant Change. Despite the foregoing, if Landlord fails to respond to
any request by Tenant for approval of a Tenant Change within ten (10) business
days after receipt of Tenant's request for
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such approval, Landlord's failure to respond within three (3) business days
after receipt of a second notice after the expiration of the initial ten (10)
business day period, shall be deemed to be Landlord's approval with respect to
the same.
12.1.5 Notwithstanding anything to the contrary contained herein, Landlord and
Tenant hereby agree and acknowledge that it is Tenant's intention to construct a
child care facility on the Premises for use by Tenant's employees (the "CHILD
CARE FACILITIES"). Tenant hereby agrees and acknowledges that, if permitted by
applicable Laws and subject to Tenant's receipt of all applicable governmental
approvals and permits, Tenant shall be entitled to construct the Child Care
Facilities in accordance with the terms of this Section 12.1 (and not the terms
of the Tenant Work Letter). Tenant acknowledges that Landlord's requirements for
the plans and specifications and working drawings for the Child Care Facilities
to be approved by Landlord pursuant to this Section 12.1 may include a
requirement for aesthetic screening. Tenant further acknowledges that any such
Child Care Facilities located on the Premises which are available to Tenant and
Tenant's employees will be provided by Tenant or a third party (the "CHILD CARE
PROVIDER") and not by Landlord. If Tenant's employees choose to use the Child
Care Facilities, Tenant acknowledges that Tenant and Tenant's employees are not
relying upon any investigation which Landlord may have conducted concerning the
Child Care Provider or any warranties or representation with respect thereto, it
being the sole responsibility of Tenant and the individual user of the Child
Care Facilities to conduct any and all investigations of the Child Care
Facilities prior to making use thereof. Accordingly, Landlord shall have no
responsibility with respect to the quality or care provided by the Child Care
Facilities, or for any acts or omissions of the Child Care Provider.
Furthermore, Tenant, for Tenant and for Tenant's employees, hereby agrees that
Landlord, its members, partners, subpartners and their respective officers,
agents, servants, employees, and independent contractors shall not be liable
for, and are hereby released from any responsibility for any loss, cost, damage,
expense or liability, either to person or property, arising from the use of the
Child Care Facilities by Tenant or Tenant's employees. Nothing contained herein
is intended to be a representation or warranty by Landlord that any Child Care
Facilities will be permitted by Law during the Lease Term and Landlord shall
have no obligation to provide, or to make available, any such Child Care
Facilities.
12.2 REMOVAL OF TENANT CHANGES AND TENANT IMPROVEMENTS. All Tenant Changes and
the initial Tenant Improvements in the Premises shall become the property of
Landlord and shall remain upon and be surrendered with the Premises at the end
of the Term of this Lease; provided, however, Landlord may, by written notice
delivered to Tenant at the time of Landlord's consent to such Tenant Change or
approval of the Final Plans (as applicable), identify those items of the initial
Tenant Improvements and Tenant Changes which are not typical office improvements
and which Landlord shall require Tenant to remove at the end of the Term of this
Lease. However, notwithstanding the foregoing, Landlord shall not be entitled to
require Tenant to remove any initial Tenant Improvements which are typical
office improvements and which are consistent with the plans and specifications
reviewed by Landlord as of the date of this Lease and, in any event, Landlord
shall not require Tenant to remove any of the improvements associated with the
Child Care Facilities or the cafeteria planned by Tenant as of the date of this
Lease. If Landlord requires, Tenant to remove any such items as described above,
Tenant shall, at its sole cost, remove the identified items on or before the
expiration or sooner termination of this Lease and repair any damage to the
Premises caused by such removal (or, at Landlord's option, and provided
Landlord has given Tenant at least ten (10) business days written notice prior
to taking any action, shall pay to Landlord all of Landlord's actual and
documented costs of such removal and repair).
12.3 REMOVAL OF PERSONAL PROPERTY. All articles of personal property owned by
Tenant or installed by Tenant at its expense in the Premises (including business
and trade fixtures, furniture and movable partitions, phone systems and security
systems) shall be, and remain, the property of Tenant, and shall be removed by
Tenant from the Premises. at Tenant's sole cost and expense, on or before the
expiration or sooner termination of this Lease. Tenant shall repair any damage
caused by such removal.
12.4 TENANT'S FAILURE TO REMOVE. If Tenant fails to remove by the expiration or
sooner termination of this Lease all of its personal property, or any items of
Tenant Improvements or Tenant Changes identified by Landlord for removal
pursuant to Section 12.2 above, Landlord may, following an additional ten (10)
business days' prior written notice to Tenant (without liability to Tenant for
loss thereof), at Tenant's sole cost and in addition to Landlord's other rights
and remedies under this Lease, at law or in equity: (a) remove and store such
items in accordance with applicable law; and/or (b) upon ten (10) business
days' prior notice to Tenant sell all or any such items at private or public
sale for such price as Landlord may obtain as permitted under applicable law.
Landlord shall apply the proceeds of any such sale to any amounts due to
Landlord under this Lease from Tenant (including Landlord's attorneys' fees and
other costs incurred in the removal, storage and/or sale of such items), with
any remainder to be paid to Tenant.
13. LIENS. Tenant shall not permit any mechanic's, materialmen's or other liens
to be filed against all or any part of the Premises, nor against Tenant's
leasehold interest in the Premises, by reason of or in connection with any
repairs, alterations, improvements or other work contracted for or undertaken by
Tenant or any other act or omission of Tenant or Tenant's agents, employees,
contractors, licensees or invitees. Tenant shall, at Landlord's request, provide
Landlord with enforceable, conditional and final lien releases (and other
reasonable evidence reasonably requested by Landlord to demonstrate protection
from liens) from all persons furnishing labor and/or materials with respect to
the Premises. Landlord shall have the right at all reasonable times to post on
the Premises and record any notices of non-responsibility which it deems
necessary for protection from such liens. If any such liens are filed, Tenant
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 Premises. If Tenant fails to
cause such lien to be so released or bonded within twenty (20) days after filing
thereof, Landlord may, following an additional ten (10) business days' prior
written notice to Tenant, without waiving its rights and remedies based on such
breach, and without releasing Tenant from any of its obligations, cause such
lien to be released by posting of an appropriate bond to cause the lien to be
released. Tenant shall pay to Landlord within fifteen (15) days after receipt
of invoice from Landlord, any sum paid by Landlord to obtain the bonds required
to remove such liens, together with interest at the Interest Rate from the date
of such payment by Landlord.
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14. ASSIGNMENT AND SUBLETTING
14.1 RESTRICTION ON TRANSFER. Tenant will not assign or encumber this Lease in
whole or in part, nor sublet all or any part of the Premises, without the prior
written consent of Landlord, which consent Landlord will not unreasonably
withhold, condition or delay, except as provided in this Section 14. The consent
by Landlord to any assignment, encumbrance or subletting shall not constitute a
waiver of the necessity for such consent to any subsequent assignment or
subletting. This prohibition against assigning or subletting shall be construed
to include a prohibition against any assignment or subletting by operation of
law. Except as provided in Section 14.6 below, irrespective of any assignment or
sublease, Tenant shall remain fully liable under this Lease and shall not be
released from performing any of the terms, covenants and conditions of this
Lease. Without limiting in any way Landlord's right to withhold its consent on
any reasonable grounds, it is agreed that Landlord will not be acting
unreasonably in refusing to consent to an assignment or sublease if, in
Landlord's reasonable opinion, (i) the proposed assignee does not have the
financial capability to fulfill the obligations imposed by the assignment, or
(ii) the proposed assignment or sublease involves a change of use of the
Premises from that specified herein. Any proposed assignee or subtenant which
Landlord does not disapprove shall be deemed a "PERMITTED BUSINESS."
14.2 TRANSFER NOTICE. If Tenant desires to effect an assignment, encumbrance or
subletting (a "TRANSFER") for which Landlord's consent is required, then at
least fifteen (15) business days prior to the date when Tenant desires the
Transfer to be effective (the "TRANSFER DATE"), Tenant agrees to give Landlord a
notice (the "TRANSFER NOTICE"), stating the name, address and business of the
proposed assignee, sublessee or other transferee (sometimes referred to
hereinafter as "TRANSFEREE"), reasonable information (including references)
concerning the ownership, and financial condition of the proposed Transferee,
the Transfer Date, any ownership or commercial relationship between Tenant and
the proposed Transferee, and the consideration and all other material terms and
conditions of the proposed Transfer, all in such detail as Landlord may
reasonably require.
14.3 LANDLORD'S OPTIONS. Within ten (10) business days of Landlord's receipt of
any Transfer Notice, and any additional information requested by Landlord
concerning the proposed Transferee's financial responsibility, Landlord will
notify Tenant of its election to do one of the following: (i) consent to the
proposed Transfer subject to such reasonable conditions as Landlord may impose
in providing such consent; (ii) refuse such consent, which refusal shall be on
reasonable grounds which shall be set forth in a detailed written statement to
Tenant; or (iii) in the event that the proposed Transfer is for a period that
will expire during the last twelve (12) months of the initial Term or the last
twelve (12) months of any Option Period(s) (if applicable), terminate this Lease
as to the portion of the Premises which is proposed to be sublet or assigned and
recapture all or such portion of the Premises for reletting by Landlord.
14.4 ADDITIONAL CONDITIONS. A condition to Landlord's consent to any Transfer of
this Lease will be the delivery to Landlord of a true copy of the fully executed
instrument of assignment, sublease, transfer or hypothecation, in form and
substance reasonably satisfactory to Landlord. With respect to a Transfer
pursuant to which Tenant subleases a portion of the Premises for a period that
expires prior to the last twelve (12) months of the initial Term or any Option
Period(s) (if applicable), Tenant agrees to pay to Landlord, as additional rent,
on a monthly basis, fifty percent (50%) of all sums and other consideration paid
to and for the benefit of Tenant by the sublessee in excess of the Rent payable
under this Lease for the same period and portion of the Premises. In calculating
excess rent or other consideration which may be payable to Landlord under this
Section, Tenant will be entitled to deduct commercially reasonable third party
brokerage commissions and attorneys' fees (including those fees and costs
required to be reimbursed to Landlord as provided below) and other amounts
reasonably and actually expended by Tenant in connection with such subletting
including, without limitation, (i) the costs of any changes, alterations and
improvements to the Premises in connection with the Transfer, (ii) any space
planning, architectural or design fees or expenses incurred in marketing such
space or in connection with such Transfer, (iii) any improvement allowance or
other monetary concessions provided to the Transferee, (iv) any lease takeover
cost incurred by Tenant in connection with the Transfer, and (v) out-of-pocket
costs of advertising the space which is the subject of the Transfer, if written
evidence of such expenditures is provided to Landlord. Except for an assignment
by Tenant of its entire interest in this Lease to a Permitted Non-Affiliate
Assignee (as defined in Section 14.6 below) who, by operation of law or express
agreement, assumes all of Tenant's obligations under this Lease, no Transfer
will release Tenant of Tenant's obligations under this Lease or alter the
primary liability of Tenant to pay the Rent and to perform all other obligations
to be performed by Tenant hereunder. Landlord may require that any Transferee
remit directly to Landlord on a monthly basis, all monies due Tenant by said
Transferee, and each sublease shall provide that if Landlord gives said
sublessee written notice that Tenant is in default under this Lease beyond any
applicable notice and cure period, said sublessee will thereafter make all
payments due under the sublease directly to or as directed by Landlord, which
payments will be credited against any payments due under this Lease. Tenant
hereby irrevocably and unconditionally assigns to Landlord all rents and other
sums payable under any sublease of the Premises; provided, however, that
Landlord hereby grants Tenant a license to collect all such rents and other sums
so long as Tenant is not in default under this Lease. Tenant shall, within ten
(10) days after the execution and delivery of any assignment or sublease,
deliver a copy thereof to Landlord. Consent by Landlord to one Transfer will not
be deemed consent to any subsequent Transfer. In the event of default by any
Transferee of Tenant or any successor of Tenant (except for a Permitted
Non-Affiliate Assignee (as defined in Section 14.6 below) who, by operation of
law or express agreement, assumes all of Tenant's obligations under this Lease)
in the performance of any of the terms hereof, Landlord may proceed directly
against Tenant without the necessity of exhausting remedies against such
Transferee or successor. If Tenant effects a Transfer or requests the consent of
Landlord to any Transfer (whether or not such Transfer is consummated), then,
within thirty (30) days after Tenant's receipt of written demand from Landlord,
Tenant agrees to pay Landlord a non-refundable administrative fee of Five
Hundred Dollars ($500.00), plus Landlord's reasonable attorneys' fees and costs
and other costs incurred by Landlord in reviewing such proposed assignment or
sublease (which fees and costs shall in no event exceed $1,500.00 per proposed
Transfer). Notwithstanding any contrary provision of this Lease, if Tenant or
any proposed Transferee claims that Landlord has unreasonably withheld or
delayed its consent to a proposed Transfer or otherwise has breached its
obligations under this Section 14, Tenant's and such Transferee's only remedy
shall be to seek a declaratory judgment, injunctive relief, and/or monetary
damages, and Tenant waives all other remedies against Landlord, including
without limitation, the right to terminate this Lease.
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14.5 PERMITTED TRANSFERS. Notwithstanding anything to the contrary contained in
this Article 14, Landlord consents to the Transfer of the Premises to any
holding company, corporation, association or entity which is or becomes a
parent, subsidiary or affiliate of Tenant or any entity which is controlled by,
controls, or is under common control with, Tenant, or to any entity resulting
from a merger, consolidation or reorganization of Tenant or any entity
succeeding to all (or substantially all) of the stock or business and assets of
Tenant (collectively, an "AFFILIATE"), provided that Tenant notifies Landlord of
any such Transfer prior to the effective date thereof and promptly supplies
Landlord with any documents or information reasonably requested by Landlord
regarding such Transfer or such Affiliate (including an assumption of Tenant's
obligations under this Lease), and further provided that such Transfer is not a
subterfuge by Tenant to avoid its obligations under this Lease. "CONTROL," as
used in this Section 14.5, shall mean the ownership, directly or indirectly, of
greater than fifty percent (50%) of the voting interest in an entity. Landlord
specifically acknowledges and agrees that as of the date of this Lease, Tenant
is a publicly-held company whose stock is traded on a nationally-recognized
exchange and that under no circumstances shall any transfer of such stock over
such exchange be deemed a Transfer for purposes of this Lease.
14.6 PERMITTED NON-AFFILIATE ASSIGNEE. Notwithstanding anything to the contrary
contained in this Article 14, but subject to Landlord's option to recapture
pursuant to Section 14.3(iii) above, if, pursuant to the foregoing provisions of
this Article 14, Tenant assigns Tenant's entire interest in this Lease to a
non-Affiliate entity ("PERMITTED NON-AFFILIATE ASSIGNEE") that (i) has, as of
the close of such entity's most recent fiscal year, a net worth equal to or
greater than Eighty Million Dollars ($80,000,000.00), (ii) has, as of the close
of such entity's most recent fiscal year, a debt to equity ratio of less than or
equal to twenty-five percent (25%), (iii) has generated an operating profit for
the four (4) fiscal years preceding the proposed Transfer, and (iv) has, if the
stock of the proposed assignee is publicly traded on a nationally recognized
exchange, a "market cap" (which for purposes of this Lease means the market
price per share of the common stock of such assignee multiplied by the number of
shares of such stock which are then outstanding) of at least Three Hundred Fifty
Million Dollars ($350,000,000.00) (as all such standards contained in (i)-(iv)
above shall be reasonably verified by Landlord's review of the most recent
audited financial statements (which may be satisfied by an annual report if such
entity is publicly traded) for such non-Affiliate entity, which statements shall
be dated no earlier than twelve (12) months prior to the effective date of the
proposed Transfer), Tenant shall, effective from and after the effective date of
such assignment, be relieved from all remaining obligations under this Lease.
14.7 TENANT'S LICENSING OF COMMUNICATION EQUIPMENT DEEMED A TRANSFER.
Notwithstanding anything to the contrary contained herein, in the event that
Tenant licenses any third party to utilize the Communication Equipment to which
Tenant is entitled to install and maintain pursuant to Section 5 above, such
license shall be deemed a Transfer for purposes of this Article 14 except that
Landlord's recapture right specified in Section 14.3 above shall not apply to
such Transfer and in calculating the consideration that may be payable by Tenant
to Landlord pursuant to Section 14.4 above, (i) such consideration shall be
payable by Tenant to Landlord whether or not such license expires prior to the
last twelve (12) months of the initial Term or any Option Period(s), and (ii) in
addition to any costs incurred by Tenant as described in Section 14.4 above,
Tenant shall also be entitled to deduct reasonable costs of installation and
maintenance incurred by Tenant in connection with the specific Communication
Equipment to be licensed if acceptable written evidence of such costs is
provided to Landlord.
15. ENTRY BY LANDLORD. Landlord and its employees and agents shall at all
reasonable times and with reasonable advance written notice (which shall be at
least 24 hours, except in the case of an "EMERGENCY", which for purposes of this
Lease means situations in which there is an imminent threat to persons and/or
property within the Buildings) to Tenant's designated representative who shall
initially be Tenant's Director of Corporate Facilities, Xxx X. Xxxxxxx, have the
right to enter the Premises to inspect the same, to exhibit the Premises to
prospective lenders or purchasers (or during the last six (6) months of the
initial Term or first Option Period (unless Tenant has exercised its upcoming
Option to Extend pursuant to Section 2.3 above) or during the last nine (9)
months of the second (2nd) Option Period, to prospective tenants), to post
notices of non-responsibility, and/or to alter, improve or repair the Premises
as contemplated by Section 11.2, all without being deemed guilty of or liable
for any breach of Landlord's covenant of quiet enjoyment or any eviction of
Tenant, and without abatement of rent. In exercising such entry rights, Landlord
shall endeavor to minimize, as reasonably practicable, the interference with
Tenant's business, and shall provide Tenant with reasonable advance written
notice of such entry (except in emergency situations). Landlord shall have the
means which Landlord may deem reasonably proper to open Tenant's doors in an
emergency in order to obtain entry to the Premises. Any entry to the Premises
obtained by Landlord by any of said means in an emergency or otherwise shall not
under any circumstances be construed or deemed to be a forcible or unlawful
entry into, or a detainer of, the Premises, or an eviction of Tenant from the
Premises or any portion thereof, or grounds for any abatement or reduction of
Rent and Landlord shall not have any liability to Tenant for any damages or
losses on account of any such entry by Landlord except, subject to the
provisions of Sections 21.1 and 23, to the extent of Landlord's negligence or
willful misconduct, in which case Landlord's liability (if any) shall be limited
to the extent such damages or losses are not covered by insurance carried by
Tenant or required to be carried by Tenant hereunder.
16. UTILITIES AND SERVICES.
16.1 PROVISIONS OF UTILITIES AND SERVICES. Except for Landlord's obligations set
forth in the Work Letter, Tenant shall be solely responsible for obtaining and
shall promptly pay all charges for heat, air conditioning, water, gas,
electricity or any other utility used, consumed or provided in, furnished to or
attributable to the Premises directly to the supplying utility companies. Except
as specifically provided below, in no event shall Rent xxxxx or shall Landlord
be liable for any interruption or failure in the supply of any such utility
services to Tenant. Landlord and Tenant hereby agree and acknowledge that
Landlord shall, as part of the Base Improvements constructed pursuant to the
Work Letter attached hereto as Exhibit "B," install one (1) electrical meter
(for use by the local utility company in separately metering Tenant's electrical
consumption) in each of the Buildings that comprise the Premises hereunder. In
addition, notwithstanding anything to the contrary contained in this Section 16,
Landlord will be solely responsible for the payment of all water capacity
charges, meter setting fees, tap in fees and all other similar charges which may
be imposed by any governmental authority or utility provider in connection with
the initial provision of such utilities to the Premises.
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16.2 ABATEMENT CONDITIONS. Notwithstanding anything to the contrary contained in
this Lease, if Tenant is prevented from using all or a portion of the Premises
for its normal business operations, and Tenant does not, in fact, use all or
such portion of the Premises, for a period of five (5) consecutive business days
or more after written notice of such condition is delivered to Landlord, due to
any service or utility not being provided to the Premises, or portion thereof,
as required by the terms of this Lease or due to Tenant not having access to the
Building, the Premises, or portion thereof, and where such prevention of
Tenant's use of the Premises is caused by the negligence or willful misconduct
of Landlord, its agent, contractors or employees, the following provisions of
this Section 16.2 shall apply (the conditions set forth above to be known as
"ABATEMENT CONDITIONS"). Notwithstanding the foregoing, this Section 16.2 shall
not apply to the damage or destruction of the Premises pursuant to Section 18
below, or to the condemnation of the Premises pursuant to Section 19 below. To
the extent an Abatement Condition affects only a portion of the Premises, and
such portion is a material portion of the Premises, and Tenant is not reasonably
able to conduct its business from the remaining portion of the Premises, the
Abatement Condition shall be deemed to affect the entire Premises. Tenant shall
promptly deliver to Landlord notice (the "CURE NOTICE") of such condition and if
Landlord fails to cure such condition within five (5) business days after
delivery to it of the Cure Notice, then the Rent applicable to the affected
portion of the Premises shall be abated from the expiration of said five (5) day
period until the date when such failure is cured; provided, however, that if
Tenant has previously paid Rent to Landlord for a period of time subsequent to
the commencement of Tenant's right to xxxxx Rent hereunder, then Landlord shall,
within ten (10) business days following the date of such abatement, credit to
Tenant an amount equivalent to such excess payments against the Monthly Rent
next due under this Lease, or, if after the expiration or termination of this
Lease, reimburse to Tenant the amount of such excess payments.
17. INDEMNIFICATION AND EXCULPATION.
17.1 TENANT'S ASSUMPTION OF RISK AND WAIVER. Except to the extent such matter is
not covered by the insurance required to be maintained or actually maintained by
Tenant under this Lease and such matter is attributable to the negligence or
willful misconduct of Landlord or Landlord's agent(s), Landlord shall not be
liable to Tenant, Tenant's employees, agents or invitees for: (i) any damage to
property of Tenant, or of others, located in, on or about the Premises, (ii) the
loss of or damage to any property of Tenant or of others by theft or otherwise,
(iii) any injury or damage to persons or property resulting from fire,
explosion, failing plaster, steam, gas, electricity, water, rain or leaks from
any part of the Premises or from the pipes, appliance of plumbing works or from
the roof, street or subsurface or from any other places or by dampness or by any
other cause of whatsoever nature, or (iv) any such damage caused by other
persons in the Premises, occupants of adjacent property, or the public, or
caused by operations in construction of any private, public or quasi-public
work. All property of Tenant kept or stored on the Premises shall be so kept or
stored at the sole risk of Tenant and Tenant shall hold Landlord harmless from
any claims arising out of damage to the same, unless such damage shall be caused
by the negligence or willful misconduct of Landlord or Landlord's agent(s) (in
which case Landlord's liability (if any) shall be limited to the extent such
matter is not covered by insurance maintained by Tenant or required to be
maintained by Tenant hereunder). Landlord or its agents shall not be liable for
interference with the light or other intangible rights. Nothing contained in
this Section 17.1 however, shall operate to relieve Landlord of the consequences
of its own negligence, willful misconduct or criminal acts, or the willful
misconduct or criminal acts of its authorized agents, employees or contractors;
subject, however, to the express limitations and restrictions on Landlord's
liability contained elsewhere in this Lease and provided that Landlord's
liability, if any, shall be limited to the extent such consequences are not
covered by insurance maintained by Tenant or required to be maintained by Tenant
hereunder.
17.2 INDEMNIFICATION. Tenant shall be liable for, and shall indemnify, defend,
protect and hold Landlord and Landlord's partners, officers, directors,
employees, agents, successors and assigns (collectively, "LANDLORD PARTIES")
harmless from and against, any and all claims, damages, judgments, suits, causes
of action, losses, liabilities and expenses, including attorneys' fees and court
costs (collectively, "INDEMNIFIED CLAIMS"), arising or resulting from (a) any
act or omission of Tenant or any of Tenant's agents, employees, contractors,
subtenants, assignees, licensees or Tenant's invitees (collectively, "TENANT
PARTIES"); (b) the use of the Premises (including, without limitation, the Child
Care Facilities) and conduct of Tenant's business by Tenant or any Tenant
Parties, or any other activity, work or thing done, permitted or suffered by
Tenant or any Tenant Parties, in or about the Premises; and/or (c) any default
by Tenant of any obligations on Tenant's part to be performed under the terms of
this Lease. In case any action or proceeding is brought against Landlord or any
Landlord Parties by reason of any such Indemnified Claims, Tenant, upon notice
from Landlord, shall defend the same at Tenant's expense by counsel approved in
writing by Landlord, which approval shall not be unreasonably withheld.
17.3 LANDLORD'S INDEMNIFICATION OF TENANT. Landlord shall indemnify, defend,
protect, and hold harmless Tenant and the Tenant Parties from any Indemnified
Claims incurred in connection with or arising from (a) any cause in or about the
Project (including those Common Areas other than Tenant's Site), during the Term
(to the extent covered by Landlord's insurance policies carried pursuant to the
terms of this Lease), or (b) any negligent acts or omissions or willful
misconduct of any of the Landlord Parties in, on, or about the Buildings (except
and to the extent the same is covered by insurance required to be carried by
Tenant pursuant to this Lease) or the Project, either prior to, during, or after
the expiration of the Term, provided that, except as set forth above, the terms
of the foregoing indemnity shall not apply to the extent such Claims arise from
the negligence or willful misconduct of the Tenant Parties in connection with
the Tenant's Parties activities in, on or about the Buildings or Project.
Notwithstanding the foregoing, because Landlord is required to maintain
insurance on the Common Areas of the Project as provided in Section 20 below,
and Tenant reimburses Landlord for such insurance as additional rent, Landlord
hereby agrees to protect, defend, indemnify and hold Tenant harmless from any
Claims with respect to the Common Areas other than Tenant's Site and Landlord's
equipment and property on the Common Areas to the extent such Claim is covered
by Landlord's insurance, even if resulting from the negligent acts or willful
misconduct of the Tenant Parties.
17.4 WAIVER OF CONSEQUENTIAL DAMAGES. Notwithstanding any contrary provision of
this Lease, neither Landlord nor Tenant shall be liable to the other party for
any consequential damages for a breach or default under this Lease, provided
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that this sentence shall not be applicable to any consequential damages which
may be incurred by the Landlord Parties relating to or in connection with any
holdover by Tenant following the expiration of the Term, subject to and in
accordance with the provisions of Section 9 of this Lease.
17.5 SURVIVAL; NO RELEASE OF INSURERS. The indemnification obligations of
Landlord and Tenant under this Section 17, shall survive the expiration or
earlier termination of this Lease. Landlord's and Tenant's covenants, agreements
and indemnification in this Section 17, are not intended to and shall not
relieve any insurance carrier of its obligations under policies required to be
carried by Landlord and Tenant, pursuant to the provisions of this Lease.
18. DAMAGE OR DESTRUCTION.
18.1 OBLIGATION TO RESTORE. Except as provided in Section 18.2 below, in case of
damage to or destruction of the Premises, whether or not by a risk required to
be covered by insurance as set forth in Section 20 of this Lease, this Lease
shall not terminate and Tenant shall promptly restore, rebuild, replace or
repair (hereinafter referred to as "RESTORE" or "RESTORATION") the Premises to
substantially the same condition as existed immediately prior to such damage or
destruction. Such Restoration shall be commenced promptly but in no event later
than the later of (i) ninety (90) days after the casualty in the event of an
uninsured casualty; or (ii) thirty (30) days following Tenant's receipt of
applicable insurance proceeds if the casualty is one which is required to be
covered by insurance pursuant to this Lease, and such Restoration shall be
prosecuted with due diligence, subject to Force Majeure. For purposes of this
Section 18, Tenant shall be deemed to have commenced Restoration upon the
commencement of preparation of plans and specifications for the Restoration to
be performed by Tenant.
18.2 TENANT'S TERMINATION OPTION. Notwithstanding the foregoing, however, in the
case of damage to or destruction of the Premises that will render the Premises
inaccessible or unusable for purposes of conducting Tenant's business for a
period of fifteen (15) months or more, Tenant may elect to terminate this
Lease by giving Landlord written notice of such election within ninety (90) days
following the casualty, in which event Tenant shall have no obligation to
Restore the Premises; provided, however, in the event the casualty is covered by
insurance required to be carried by Tenant under this Lease or by insurance
actually maintained by Tenant, Tenant shall, subject to Tenant's receipt of the
applicable insurance proceeds for such purpose, clear the Premises of debris and
return the same to a safe and clean condition, and deliver any remaining
insurance proceeds to Landlord in accordance with Section 18.7 below. If Tenant
elects to terminate this Lease in accordance with this paragraph, this Lease
shall as of the date for termination set forth in Tenant's notice (the
"TERMINATION DATE") which Termination Date shall in no event be earlier than the
date of such notice. Said termination shall not release Tenant from the
obligations and liabilities of Tenant under this Lease, actual or contingent,
which have accrued on or prior to the Termination Date.
18.3 DAMAGE NEAR END OF TERM. In addition to the termination rights set forth in
Sections 18.2 and 18.3 above, Landlord and Tenant shall each have the right to
terminate this Lease if any damage to the Premises occurs during the last twelve
(12) months of the Term (or during the last twelve (12) months of any Option
Period) and Tenant's architect or contractor reasonably estimates in a writing
delivered to the parties that the repair, reconstruction or restoration of such
damage cannot be completed within the earlier of (a) the scheduled expiration
date of the Term, or (b) sixty (60) days after the date of such casualty.
18.4 RECONSTRUCTION AND REPAIR REQUIREMENTS. Tenant shall obtain Landlord's
prior approval of all plans for Restoration work performed BY Tenant, which
approval shall not be unreasonably withheld, conditioned or delayed. If Landlord
fails to respond to any written request for such approval from Tenant within ten
(10) days after Tenant's second such request (Tenant's original request to be
deemed the first notice), Tenant's request for approval of the Restoration shall
be deemed approved.
18.5 NO RENT ABATEMENT DURING RECONSTRUCTION. There shall be no Rent abatement
during Restoration of the Premises or during that period after any casualty and
prior to commencement of Restoration.
18.6 ADJUSTMENT OF LOSS AND DISBURSEMENT OF INSURANCE PROCEEDS UPON RESTORATION.
Except for Restoration that is reasonably expected to cost less than One Hundred
Thousand Dollars ($100,000), Landlord shall have the right to participate with
Tenant in the adjustment of the loss with the insurance company(ies) and all
proceeds of the insurance policies maintained pursuant to Section 20.1 (a)
("PROCEEDS") shall be deposited with a depository acceptable to Landlord and
Tenant (the "DEPOSITORY"). If the Proceeds are insufficient to cover the
anticipated cost of Restoration, Tenant shall deposit with the Depository prior
to the commencement of Restoration funds in the amount of such deficiency. The
Depository shall disburse the Proceeds and Tenant's funds, if applicable, during
the course of Restoration in accordance with customary construction
disbursements, including a ten percent (10%) retention. If, after the
Restoration has been completed in accordance with the terms of this Lease, there
are remaining funds held by the Depository, then such funds (after first
deducting from such funds the fees and expenses of the Depository) shall be
delivered to Tenant. If there are not sufficient funds remaining to pay for the
Depository's fees and expenses, Landlord and Tenant shall be equally responsible
for the payment of same.
18.7 DISBURSEMENT OF INSURANCE PROCEEDS UPON TERMINATION. Upon any termination
of this Lease under the provisions of this Article 18, all proceeds from
insurance policies maintained under Section 20 (other than proceeds attributable
to Tenant's personal property and Tenant Changes paid for by Tenant that
Landlord previously informed Tenant would have to be removed upon the expiration
or earlier termination of this Lease) shall be disbursed and paid to Landlord,
less such amounts that are used by Tenant in clearing any debris from the
Premises and returning the Premises to a safe and clean condition as required by
Section 18.1 above.
18.8 WAIVER OF TERMINATION. The agreements contained in this Article 18 provide
a material part of the consideration for this Lease and in bargaining for and
obtaining its rights under this Article 18, Tenant waives any right to terminate
this
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Lease under Section 1932 and/or 1933 of the Civil Code of California, or any
similar statute or law now or hereafter in force.
19. EMINENT DOMAIN.
19.1 TOTAL OR PARTIAL TAKING. In case all of the Premises, or such part thereof
is taken which materially and adversely interferes with Tenant's ability to
conduct its normal business operations in a Building, shall be taken for any
public or quasi-public purpose by any lawful power or authority by exercise of
the right of appropriation, condemnation or eminent domain, or sold to prevent
such taking, Tenant shall have the right to terminate this Lease as to the
affected Building effective as of the date possession is required to be
surrendered to said authority. Tenant shall not assert any claim against
Landlord or the taking authority for any compensation because of such taking,
and Landlord shall be entitled to receive the entire amount of any award without
deduction for any estate or interest of Tenant; provided, however, in the event
of such a taking, Tenant shall be entitled to such portion of the award as shall
be attributable to goodwill and for damage to, or the cost of removal of,
Tenant's personal property, Tenant's relocation expenses and any other damage to
Tenant's business by reason of such taking and fifty percent (50%) of the
"bonus" or "excess value" of its leasehold interest hereunder. In the event a
dispute arises between Landlord and Tenant with respect to whether such taking
of a portion of the Premises materially and adversely interferes with Tenant's
ability to conduct its normal business operations in a Building, such dispute
shall be submitted to arbitration in accordance with the provisions of Section
31.20 below. In the event this Lease is not terminated following a taking,
Landlord shall be entitled to the entire amount of the award without deduction
for any estate or interest of Tenant, Landlord shall restore the Premises to
substantially their same condition prior to such partial taking to the extent of
any award proceeds received by Landlord, and a fair and equitable abatement
shall be made to Tenant for the Rent corresponding to the time during which, and
to the part of the Premises of which, Tenant shall be so deprived on account of
such taking and restoration. If the award proceeds from the taking are
insufficient to restore the Premises as required by the preceding sentence and
Landlord does not provide its own funds to so restore the Premises, and if as a
result thereof Tenant's ability to use the Premises as contemplated by this
Lease is materially and substantially impaired, then Tenant may elect to
terminate this Lease as to the affected Building by giving Landlord written
notice thereof; provided, however, Landlord may rescind such termination by
giving Tenant written notice within ten (10) business days following Landlord's
receipt of such termination notice from Tenant that Landlord will provide the
necessary funds to so restore the Premises.
19.2 TAKING OF COMMON AREA. In the event there shall be a taking of the Common
Area such that Landlord can no longer provide Tenant with parking sufficient to
comply with the provisions of this Lease, Tenant may, at its sole option, elect
to terminate this Lease by written notice to Landlord effective thirty (30) days
after the date of such notice; provided, however, Tenant shall not be entitled
to terminate this Lease as provided herein so long as, not later than thirty
(30) days after the date of the taking, suitable substitute parking is made
available for use by Tenant (at no additional charges to Tenant) within the
Project or in other substitute parking facilities within a reasonable walking
distance from the Buildings. Any such substitute parking to be provided by
Landlord shall be subject to Tenant's approval, in Tenant's sole and absolute
discretion.
19.3 TEMPORARY TAKING. In the event of taking of the Premises or any part
thereof for temporary use, (i) this Lease shall be and remain unaffected thereby
and Rent shall not xxxxx, and (ii) Tenant shall be entitled to receive for
itself such portion or portions of any award made for such use with respect to
the period of the taking which is within the Lease Term. For purposes of this
Section 19.2, a temporary taking shall be defined as a taking for a period of
six (6) months or less.
19.4 WAIVER OF TERMINATION. Tenant and Landlord waive any right to terminate
this Lease under Section 1265.130 of the California Code of Civil Procedure, or
any similar statute or law now or hereafter in force.
20. TENANT'S INSURANCE.
20.1 TYPES OF INSURANCE. On or before the earlier of the Early Occupancy Date or
the date Tenant commences or causes to be commenced any work of any type in or
on any portion of the Premises, and continuing during the entire Term, Tenant
shall obtain and keep in full force and effect respecting the Premises, the
following insurance:
(a) All Risk insurance (with commercially reasonable deductibles, taking
into consideration the financial capacity and credit rating of Tenant
and not, in any event, exceeding the amount specified in Section 20.2(d)
below), including fire and extended coverage, sprinkler leakage
(including earthquake sprinkler leakage), vandalism, malicious mischief,
and, (i) if required by Landlord's lender, flood coverage and (ii) at
Landlord's sole option in the event that at any time during the initial
Term or any Option Period(s), Tenant's net worth, as verified by
Landlord's review of Tenant's audited financial statements, is less than
Seventy Million Dollars ($70,000,000.00), earthquake insurance, upon
property of every description and kind located on the Premises,
including, without limitation, furniture, equipment and any other
personal property, any Tenant Changes, the Tenant Improvements, and the
Buildings in an amount not less then the full replacement cost thereof.
(b) Commercial general liability insurance coverage, on an occurrence basis,
including personal injury, bodily injury (including wrongful death),
broad form property damage, operations hazard, owner's protective
coverage, contractual liability (including Tenant's indemnification
obligations under this Lease, including Section 17 hereof), liquor
liability (if Tenant serves or stores alcohol on the Premises), products
and completed operations liability, and owned/non-owned auto liability,
with a general aggregate of not less than Three Million Dollars
($3,000,000) per occurrence with "umbrella" or excess liability coverage
of not less than Five Million Dollars ($5,000,000.00). The limits of
such commercial general liability insurance may be increased every five
(5) years during the Term of this Lease to an amount reasonably required
by Landlord, but in no event shall the limits of such insurance be
increased to an amount which is greater than that typically required of
tenants of Comparable Buildings in the
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Sorrento Mesa area of San Diego, taking into account the size of the
Premises and the financial strength of Tenant.
(c) Worker's compensation and employer's liability insurance, in statutory
amounts and limits, covering all persons employed in connection with any
work done in, on or about the Premises for which claims for death or
bodily injury could be asserted against Landlord, Tenant or the
Premises.
(d) Loss of income, extra expense and business interruption insurance
covering a minimum of twelve (12) months of Tenant's Rent and such
additional amounts as will reimburse Tenant for direct or indirect loss
of earnings attributable to all perils commonly insured against by
prudent tenants or attributable to prevention of access to the Premises
or Tenant's parking areas as a result of such perils.
(e) Any other form or forms of insurance as Tenant or Landlord or the
mortgagees of Landlord may reasonably require from time to time, in
form, amounts and for insurance risks against which a prudent tenant
would protect itself, but only to the extent such risks and amounts are
available in the insurance market at commercially reasonable costs but
only to the extent such risks and amounts are available in the insurance
market at commercially reasonable costs and are typically required of
tenants of Comparable Buildings in the Sorrento Mesa area of San Diego
taking into account the size of the Premises and the financial strength
of Tenant.
20.2 REQUIREMENTS. Each policy required to be obtained by Tenant hereunder
shall: (a) be issued by insurers authorized to do business in the state in which
the Premises is located and rated not less than financial class VII, and not
less than policyholder rating A in the most recent version of Best's Key Rating
Guide (provided that, in any event, the same insurance company shall provide the
coverages described in Sections 20.1 (a) and 20.1 (d) above); (b) be in form
reasonably satisfactory from time to time to Landlord; (c) name Tenant as named
insured thereunder and shall name Landlord and, at Landlord's request,
Landlord's mortgagees and ground lessors of which Tenant has been informed in
writing, as additional insureds (and with respect to the insurance described in
Sections 20.1 (a) and (d) above, as loss-payees) thereunder, all as their
respective interests may appear; (d) shall not have a deductible amount
exceeding Fifty Thousand Dollars ($50,000.00); (e) specifically provide that the
insurance afforded by such policy for the benefit of Landlord and Landlord's
mortgagees and ground lessors shall be primary, and any insurance carried by
Landlord or Landlord's mortgagees and ground lessors shall be excess and
non-contributing; (f) except for worker's compensation insurance, contain an
endorsement that the insurer waives its right to subrogation as described in
Section 21 below; and (g) require the insurer to notify Landlord (and the
mortgagees and ground lessors of Landlord who are named as additional insureds)
in writing not less than thirty (30) days prior to any change, reduction in
coverage, cancellation or other termination thereof. Tenant agrees to deliver to
Landlord, as soon as practicable after the placing of the required insurance,
but in no event later than sixty (60) days prior to the Commencement Date,
certificates from the insurance company evidencing the existence of such
insurance and Tenant's compliance with the foregoing provisions of this Section
20. Tenant shall cause replacement certificates to be delivered to Landlord not
less than thirty (30) days prior to the expiration of any such policy or
policies. If any such initial or replacement certificates are not furnished
within the time(s) specified herein, Landlord shall have the right, but not the
obligation, following at least an additional five (5) business days' notice to
Tenant, to procure such policies and certificates at Tenant's expense. Despite
any provision to the contrary in this Section 20, Tenant's obligation to carry
the specified insurance may be brought within the coverage of a so-called
blanket policy or policies of property insurance carried and maintained by
Tenant, provided, however, that the coverage afforded Landlord, and Landlord's
mortgagees (if any) will not be reduced or diminished by reason of the use of
such blanket policy of insurance.
20.3 SELF-INSURANCE. In fulfilling its obligations for the acquisition of
insurance coverage under Sections 20.11(b) through and including (e) of this
Lease above (but not Section 20.1 (a)), Tenant shall have the right to
self-insure subject to the following conditions: (a) the right to self-insure
shall extend only to the Original Tenant any Permitted Transferee (including a
Permitted Non-Affiliate Transferee); (b) Tenant (or such Permitted Transferee or
Permitted Non-Affiliate Transferee) shall only be entitled to self-insure if it
maintains a net worth of at least Two Hundred Million Dollars ($200,000,000.00)
calculated in accordance with generally accepted accounting principles and, if
requested by Landlord, on an annual basis, Tenant shall deliver audited
financial statements or the most recently published annual report and a written
verification executed by an authorized representative of Tenant confirming
Tenant's satisfaction of such standard; (c) Tenant shall maintain a reasonable
self-insurance program providing for loss reserves which are derived in
accordance with accepted standards of the insurance industry and accrued or
otherwise funded, and deliver reasonable evidence of such self-insurance program
concurrently with delivery of its verification of net worth as required above;
(d) prior to the institution of such self-insurance, Tenant shall notify
Landlord in writing of its election to so self-insure (which notice shall
specify the insurance coverage(s) which Tenant elects to so self-insure) and
shall deliver to Landlord the name, address and telephone number of the claims
administrator for such coverage; (e) Lessee's indemnity described in Section
17.2 above shall fully extend to all claims covered by any self-insured amount;
(f) proceeds payable pursuant to such self-insurance shall be treated as
insurance proceeds for all other purposes under this Lease; and (g) the waiver
of subrogation provided in Section 21 below shall fully extend to all claims
within such self-insured amount.
20.4 EFFECT ON INSURANCE. Tenant shall not do or permit to be done anything
which will violate or invalidate any insurance policy maintained by Tenant
hereunder. If Tenant's occupancy or conduct of its business in or on the
Premises results in any increase in premiums for any insurance carried by
Landlord and Landlord or its insurer can reasonably substantiate the nature of
Tenant's activities which are causing the increase in such premiums, then Tenant
shall pay such increase as additional rent within ten (10) business days after
being billed therefor by Landlord. If any insurance coverage carried by Landlord
shall be canceled or reduced (or cancellation or reduction thereof shall be
threatened) by reason of the use or occupancy of the Premises by Tenant or by
anyone permitted by Tenant to be upon the Premises, and if Tenant fails to
remedy such condition within thirty (30) days after notice thereof (or commence
such cure within such thirty (30) day period if such matter is not capable of
being fully cured within thirty (30) days, in which case Tenant shall diligently
prosecute such cure to completion), Landlord shall have all remedies provided in
this Lease, at law or in
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equity, including, without limitation, the right (but not the obligation) to
enter upon the Premises and attempt to remedy such condition at Tenant's cost.
20.5 LANDLORD'S INSURANCE. Landlord (or an owners association formed by Landlord
to operate the Common Areas of the Project) shall, at all times during the Term,
maintain public liability insurance covering the Common Areas of the Project in
such amounts and with such deductibles as are normally carried by sophisticated
prudent landlords of projects comparable to the Project. In addition, Landlord
shall maintain policies of insurance covering loss of or damage to the
improvements in the Common Areas in the full amount of their replacement cost.
Such policy shall provide protection (subject to reasonable deductibles which
shall be comparable to deductibles being carried by sophisticated prudent
landlords of comparable Projects) against all perils included within the
classification of fire, extended coverage, vandalism, malicious mischief, and,
at Landlord's (or the association's) option, special extended perils, and any
other perils (e.g., flood and earthquake), which policies shall have limits
protecting the Project and Landlord in such amounts that are normally and
customarily carried by sophisticated prudent landlords of projects comparable to
the Project. Landlord shall not obtain insurance for Tenant's trade fixtures or
equipment. The cost of all such insurance to be carried by Landlord shall be
included in Operating Expenses or in assessments of the owner's association, as
applicable.
21. WAIVER OF SUBROGATION.
21.1 WAIVER. Landlord and Tenant each hereby waive their rights against each
other with respect to any claims or damages or losses which are caused by or
result from (a) occurrences insured against under any insurance policy carried
by Landlord or Tenant pursuant to the provisions of this Lease, or (b)
occurrences which would have been covered under any insurance required to be
obtained and maintained by Landlord or Tenant under Section 20 of this Lease had
such insurance been obtained and maintained as required therein. The foregoing
waiver shall be in addition to, and not a limitation of, any other waivers or
releases contained in this Lease.
21.2 WAIVER OF INSURERS. Tenant shall cause each property damage and loss of
income, extra expense and business interruption insurance policy required to be
obtained by it pursuant to Section 20 to provide that the insurer waives all
rights of recovery by way of subrogation against Landlord in connection with any
claims, losses and damages covered by such policy. In addition, Landlord shall
cause its property damage insurance policy to provide that the insurer waives
all rights of recovery by way of subrogation against Tenant in connection with
any claims, losses and damages covered by such policy. If either Landlord or
Tenant fails to maintain property insurance required hereunder, or if Tenant
fails to maintain loss of income, extra expense and business interruption
insurance, such insurance shall be deemed to be self-insured with a deemed full
waiver of subrogation as set forth in the immediately preceding sentence.
22. TENANT'S DEFAULT AND LANDLORD'S REMEDIES.
22.1 TENANT'S DEFAULT. The occurrence of any one or more of the following events
shall constitute a default under this Lease by Tenant:
22.1.1 the abandonment of the Premises by Tenant as defined in
California Civil Code Section 1951.3;
22.1.2 the failure by Tenant to make any payment of Rent or any
other payment required to be made by Tenant hereunder, within ten (10) days
after Tenant's receipt of written notice from Landlord that such payment was not
received;
22.1.3 the failure by Tenant to observe or perform any of the
express or implied covenants or provisions of this Lease to be observed or
performed by Tenant, other than as specified in Sections 22.1 (a) or (b) above,
where such failure shall continue for a period of thirty (30) days after
Tenant's receipt of written notice thereof from Landlord to Tenant; provided,
however, that if the nature of Tenant's default is such that more than thirty
(30) days are reasonably required for its cure, then Tenant shall not be deemed
to be in default if Tenant shall commence such cure within said thirty (30) day
period and thereafter diligently prosecute such cure to completion; and
22.1.4 (i) the making by Tenant of any general assignment for the
benefit of creditors, (ii) the filing by or against Tenant of a petition to have
Tenant adjudged a bankrupt or a petition for reorganization or arrangement under
any law relating to bankruptcy (unless, in the case of a petition filed against
the Tenant, the same is dismissed within sixty (60) days), (iii) the appointment
of a trustee or receiver to take possession of substantially all of Tenant's
assets located at the Premises or of Tenant's interest in this Lease, where
possession is not restored to Tenant within sixty (60) days, or (iv) the
attachment, execution or other judicial seizure of substantially all of Tenant's
assets located at the Premises or of Tenant's interest in this Lease where such
seizure is not discharged within sixty (60) days.
22.2 LANDLORD'S REMEDIES; TERMINATION. In the event of any such default by
Tenant, in addition to any other remedies available to Landlord under this
Lease, at law or in equity, Landlord shall have the immediate option to
terminate this Lease and all rights of Tenant hereunder. In the event that
Landlord shall elect to so terminate this Lease, then Landlord may recover from
Tenant:
(a) the worth at the time of award of any unpaid rent which had been earned
at the time of such termination; plus
(b) the worth at the time of the 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 Tenant proves could
have been reasonably avoided; plus
(c) 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 Tenant proves could be reasonably avoided; plus
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(d) any other amount necessary to compensate Landlord for all the detriment
proximately caused by Tenant's failure to perform its obligations under
this Lease or which, in the ordinary course of things, would be likely
to result therefrom.
As used in Sections 22.2(a) and 22.2(b) above, the "worth at the time of award"
is computed by allowing interest at the Interest Rate set forth in Section 1.10
of the Summary. As used in Section 22.2(c) above, the "worth at the time of
award" is computed by discounting such amount at the discount rate of the
Federal Reserve Bank of San Francisco at the time of award plus one percent
(1%).
22.3 LANDLORD'S REMEDIES; RE-ENTRY RIGHTS. In the event of any such default by
Tenant, in addition to any other remedies available to Landlord under this
Lease, at law or in equity, Landlord shall also have the right as permitted by
applicable law, with or without terminating this Lease, to re-enter the Premises
and remove all persons and property from the Premises; such property may be
removed, stored and/or disposed of pursuant to Section 12.4 of this Lease or any
other procedures permitted by applicable law. No re-entry or taking possession
of the Premises by Landlord pursuant to this Section 22.3, and no acceptance of
surrender of the Premises or other action on Landlord's part, shall be construed
as an election to terminate this Lease unless a written notice of such intention
be given to Tenant or unless the termination thereof be decreed by a court of
competent jurisdiction.
22.4 LANDLORD'S REMEDIES; CONTINUATION OF LEASE. In the event of any such
default by Tenant, in addition to any other remedies available to Landlord under
this Lease, at law or in equity, Landlord shall have the right to continue this
Lease in full force and effect, whether or not Tenant shall have abandoned the
Premises. The foregoing remedy shall also be available to Landlord pursuant to
California Civil Code Section 1951.4 and any successor statute thereof in the
event Tenant has abandoned the Premises. In the event Landlord elects to
continue this Lease in full force and effect pursuant to this Section 22.4, then
Landlord shall be entitled to enforce all of its rights and remedies under this
Lease, including the right to recover rent as it becomes due. Landlord's
election not to terminate this Lease pursuant to this Section 22.4 or pursuant
to any other provision of this Lease, at law or in equity, shall not preclude
Landlord from subsequently electing to terminate this Lease or pursuing any of
its other remedies.
22.5 LANDLORD'S RIGHT TO PERFORM. Except as specifically provided otherwise in
this Lease, all covenants and agreements by Tenant under this Lease shall be
performed by Tenant at Tenant's sole cost and expense and without any abatement
or offset of rent. Except as specifically provided otherwise in this Lease, if
Tenant shall fail to pay any sum of money (other than Rent) or perform any other
act on its part to be paid or performed hereunder and such failure shall
continue for ten (10) days with respect to monetary obligations (or thirty (30)
days with respect to non-monetary obligations) after Tenant's receipt of written
notice thereof from Landlord, Landlord may, following an additional five (5)
days written notice to Tenant, without waiving or releasing Tenant from any of
Tenant's obligations, make such payment or perform such other act on behalf of
Tenant. All sums so paid by Landlord and all necessary incidental costs incurred
by Landlord in performing such other acts shall be payable by Tenant to Landlord
within ten (10) business days after demand therefor as additional rent.
22.6 INTEREST. If any other amount payable by Landlord or Tenant hereunder is
not received by the party entitled to such payment within ten (10) days after
the date when due, it shall bear interest at the Interest Rate set forth in
Section 1.10 of the Summary from the date due until paid. All interest, and any
late charges imposed on Tenant pursuant to Section 22.7 below, shall be
considered additional rent due from Tenant to Landlord under the terms of this
Lease.
22.7 LATE CHARGES. Tenant acknowledges that, in addition to interest costs, the
late payments by Tenant to Landlord of any Monthly Rent or other sums due under
this Lease will cause Landlord to incur costs not contemplated by this Lease,
the exact amount of such costs being extremely difficult and impractical to fix.
Such other costs include, without limitation, processing, administrative and
accounting charges and late charges that may be imposed on Landlord by the terms
of any mortgage, deed of trust or related loan documents encumbering the
Premises. Accordingly, if any monthly installment of Rent or any other amount
payable by Tenant hereunder is not received by Landlord within ten (10) days
following written notice that such amount is due, Tenant shall pay to Landlord
an additional sum of five percent (5%) of the overdue amount as a late charge
for the first late charge due and payable by Tenant pursuant to this Section
22.7 in any calendar year, or ten percent (10%) of the overdue amount as a late
charge for the second (2nd) and any subsequent late charge due and payable by
Tenant pursuant to this Section 22.7 in any calendar year. However, in no event
shall any late charge be more than the maximum late charge allowed by law. The
parties agree that such late charge represents a fair and reasonable estimate of
the costs that Landlord will incur by reason of any late payment as hereinabove
referred to by Tenant, and the payment of late charges and interest are distinct
and separate in that the payment of interest is to compensate Landlord for the
use of Landlord's money by Tenant, while the payment of late charges is to
compensate Landlord for Landlord's processing, administrative and other costs
incurred by Landlord as a result of Tenant's delinquent payments. Acceptance of
a late charge or interest shall not constitute a waiver of Tenant's default with
respect to the overdue amount or prevent Landlord from exercising any of the
other rights and remedies available to Landlord under this Lease or at law or in
equity now or hereafter in effect.
22.8 RIGHTS AND REMEDIES CUMULATIVE. All rights, options and remedies of
Landlord and Tenant contained in this Section 22 or in Section 23 below and
elsewhere in this Lease shall be construed and held to be cumulative, and no one
of them shall be exclusive of the other, and Landlord or Tenant, as applicable
shall have the right to pursue any one or all of such remedies or any other
remedy or relief which may be provided by law or in equity, whether or not
stated in this Lease. Nothing in this Section 22 or in Section 23 shall be
deemed to limit or otherwise affect the indemnification obligations of Landlord
and Tenant pursuant to any provision of this Lease.
23. LANDLORD'S DEFAULT. Landlord shall be in default in the performance of any
obligation required to be performed by Landlord under this Lease if (i) Landlord
is obligated to make a payment of money to Tenant and Landlord fails to make
such payment within ten (10) days of written notice from Tenant that the same
was not paid when due, or (ii) such obligation is other than the payment of
money and Landlord has failed to perform such obligation within thirty (30) days
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after the receipt of written notice from Tenant specifying in detail Landlord's
failure to perform; provided however, that if the nature of Landlord's
obligation is such that more than thirty (30) days are required for its
performance, then Landlord shall not be deemed in default if it commences such
performance within such thirty (30) day period and thereafter diligently pursues
the same to completion. Upon any such uncured default by Landlord, Tenant may
exercise any of its rights provided in law or at equity; provided, however: (a)
Tenant shall have no right to offset or xxxxx Rent in the event of any default
by Landlord under this Lease, except to the extent offset rights are
specifically provided to Tenant in this Lease; and (b) Tenant's rights and
remedies hereunder shall be limited to the extent (i) Tenant has expressly
waived in this Lease any of such rights or remedies, and/or (ii) this Lease
otherwise expressly limits Tenant's rights or remedies, including the limitation
on Landlord's liability contained in Section 30 hereof.
24. SUBORDINATION. At the request of Landlord or any mortgagee of a mortgage or
a beneficiary of a deed of trust now or hereafter encumbering all or any portion
of the Premises, or any lessor of any ground or master lease now or hereafter
affecting all or any portion of the Premises (each, a "SUPERIOR INTEREST"), this
Lease shall be subject and subordinate at all times to such ground or master
leases (and such extensions and modifications thereof), and to the lien of such
mortgages and deeds of trust (as well as to any advances made thereunder and to
all renewals, replacements, modifications and extensions thereof); provided,
however, no subordination of this Lease shall result in Tenant being disturbed
in its possession of the Premises or in the enjoyment of its rights under this
Lease so long as Tenant is not in default with respect to its obligations
hereunder, and any commercially reasonable subordination agreement which
Landlord, any mortgagee or ground lessor requests Tenant to execute to effect or
confirm such subordination shall so provide. Notwithstanding the foregoing,
Landlord shall have the right to subordinate or cause to be subordinated any or
all ground or master leases or the lien of any or all mortgages or deeds of
trust to this Lease. In the event that any ground or master lease terminates for
any reason or any mortgage or deed of trust is foreclosed or a conveyance in
lieu of foreclosure is made for any reason, at the election of Landlord's
successor in interest, Tenant shall attorn to and become the tenant of such
successor. Subject to Tenant's receipt of a commercially reasonable
non-disturbance agreement as provided in this Section 24 below, Tenant hereby
waives its rights under any current or future law which gives or purports to
give Tenant any right to terminate or otherwise adversely affect this Lease and
the obligations of Tenant hereunder in the event of any such foreclosure
proceeding or sale. Subject to the foregoing, Tenant covenants and agrees to
execute and deliver to Landlord within ten (10) business days after receipt of
written demand by Landlord and in the form reasonably required by Landlord, any
additional commercially reasonable documents evidencing the priority or
subordination of this Lease with respect to any such ground or master lease or
the lien of any Superior Interest or Tenant's agreement to attorn.
Notwithstanding anything set forth elsewhere in this Lease, Tenant agrees to
subordinate its leasehold interest in the Premises to the interest of (and to
attorn to) the holder of each existing or future Superior Interest encumbering
the Premises or the Project, if and only if Landlord furnishes to Tenant from
each such holder of an existing or future Superior Interest, a commercially
reasonable non-disturbance agreement. Such commercially reasonable
non-disturbance agreement shall (i) include the obligation of any current or
future holder of a Superior Interest to recognize Tenant's rights specifically
set forth in this Lease to offset certain amounts against Rent due hereunder, or
to otherwise receive certain credits against Rent as set forth expressly herein
and in the Work Letter Agreement, (ii) apply to any successors or assigns of
Tenant, and (iii) with respect to any future construction loan encumbering the
Premises (but not the existing infrastructure loan and not any future permanent
loan), require the recognition by the holder of any such Superior Interest to
any one (1) of the following alternatives (at the election of the holder): (a)
to pay for the construction of Base Improvements and the Allowance as provided
in the Work Letter Agreement (to the extent such Base Improvements have not than
been completed and/or such Allowance has not been funded), or (b) to allow
Tenant to assume responsibility for construction of the "Improvements" (as that
term is defined in Exhibit "B"), in which case Tenant shall be entitled to
offset (1) any reasonable, out-of-pocket costs incurred by Tenant in connection
with the completion of the Base Improvements and (2) any portion of the
Allowance funded by Tenant and not funded by Landlord, against Tenant's first
obligations to pay Monthly Rent which become due under this Lease, or (c) to
allow Tenant to acquire the holder's interest in Tenant's Site by payment to the
holder of the outstanding amounts then due under the note.
25. ESTOPPEL CERTIFICATE.
25.1 TENANT'S AND LANDLORD'S OBLIGATIONS. Within ten (10) business days
following Landlord's written request, Tenant shall execute and deliver to
Landlord an estoppel certificate, in a form substantially similar to the form of
Exhibit "E" attached hereto, certifying: (a) the Commencement Date of this
Lease; (b) that this Lease is unmodified and in full force and effect (or, if
modified, that this Lease is in full force and effect as modified, and stating
the date and nature of such modifications); (c) the date to which the Rent and
other sums payable under this Lease have been paid; (d) that there are not, to
the best of Tenant's knowledge, any defaults under this Lease by either Landlord
or Tenant, except as specified in such certificate; and (e) such other matters
as are set forth in Exhibit "E" or are reasonably requested by Landlord. Any
such estoppel certificate delivered pursuant to this Section 25.1 may be relied
upon by any mortgagee, beneficiary, purchaser or prospective purchaser of any
portion of the Premises, as well as their assignees. In connection with a
proposed assignment or sublease by Tenant, or in connection with a financing
transaction of Tenant where this Lease is not provided as security, Landlord
hereby agrees to provide to Tenant, within ten (10) business days after Tenant's
written request, an estoppel certificate signed by Landlord, containing the same
types of information as set forth above, with such changes as are reasonably
necessary to reflect that the estoppel certificate is being granted to Tenant or
to Tenant's proposed assignee or subtenant by Landlord, rather than being
granted by Tenant to Landlord or to a prospective lender or purchaser.
25.2 FAILURE TO DELIVER. Failure of Landlord or Tenant to deliver such estoppel
certificate within such time shall constitute a default hereunder without the
applicability of notice and cure periods specified in Section 22 above and shall
be conclusive upon the other party that: (a) this Lease is in full force and
effect without modification, except as may be represented by Landlord or Tenant,
as applicable, in good faith; (b) there are no uncured defaults in Landlord's or
Tenant's performance (other than the failure to deliver the estoppel
certificate); and (c) not more than one (1) month's Rent has been paid in
advance.
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26. PARKING. Subject to Sections 18, 19 and 31.16 of this Lease, Tenant shall be
entitled, commencing on the Early Occupancy Date, to use the number of parking
spaces set forth in Section 1.12 of the Summary, which parking spaces shall
pertain to the parking facilities designated for the Premises, as outlined on
Exhibit "A" attached hereto. Nothwithstanding anything to the contrary contained
herein, except in the case of casualty or condemnation, under no circumstances
may Landlord reduce the number of parking spaces available for the Premises
below the ratio set forth in Section 1.12 of the Summary. Landlord agrees that
during the initial Term, Landlord shall not charge Tenant any fees for Tenant's
use of the parking facilities; provided, however, that (a) Tenant shall be
responsible for the full amount of taxes (if any) imposed by any governmental
authority in connection with the use of such parking facilities by Tenant and
(b) parking charges (if any) applicable during the Option Period(s) shall be
determined as a component of Fair Market Rental (as defined in Section 2.3
above); however, (i) if it is determined as a component of Fair Market Rental
that Tenant shall be charged for parking during any Option Periods, Monthly Rent
payable for the Premises shall not also include such parking charges (i.e.,
Tenant shall not be charged more than once for such parking charges), and (ii)
Tenant will be obligated to pay parking charges as a component of Fair Market
Rental (or as a separate charge) if, and only if, landlords of comparable
buildings in the Sorrento Mesa area of San Diego are then charging tenants for
the use of uncovered surface parking facilities and in no event shall Landlord
charge Tenant (either as a component of Fair Market Rental for the Premises or
as a per parking space charge) more than the prevailing rates then being charged
for such parking by landlords of such projects comparable to the Project in the
Sorrento Mesa area of San Diego. Tenant's continued right to use the parking
facilities is conditioned upon Tenant abiding by all reasonable and
non-discriminatory rules and regulations which are prescribed from time to time
for the orderly operation and use of the parking lots, Tenant's cooperation in
seeing that Tenant's employees and visitors also comply with such rules and
regulations, and Tenant not being in default under this Lease. The parking
spaces to which Tenant is entitled pursuant to this Section 26 are solely for
use by Tenant's own personnel, Tenant's visitors, suppliers and invitees and
such passes may not be transferred, assigned, subleased or otherwise alienated
by Tenant without Landlord's prior approval.
27. MODIFICATION AND CURE RIGHTS OF LANDLORD'S MORTGAGEES AND LESSORS.
27.1 MODIFICATIONS. If, in connection with Landlord's obtaining or entering into
any financing or ground lease for any portion of the Premises, the lender or
ground lessor shall request modifications to this Lease, Tenant shall, within
ten (10) business days after request therefor, execute an amendment to this
Lease including such modifications, provided such modifications are reasonable,
do not (i) increase the obligations of Tenant hereunder; (ii) extend the Term;
or (iii) otherwise adversely affect the leasehold estate created hereby or
Tenant's rights hereunder.
27.2 CURE RIGHTS. In the event of any default on the part of Landlord, Tenant
will give notice by registered or certified mail to any beneficiary of a deed of
trust or mortgagee covering the Premises or ground lessor of Landlord whose
address shall have been furnished to Tenant.
28. QUIET ENJOYMENT. Landlord covenants and agrees with Tenant that, upon Tenant
performing all of the covenants and provisions on Tenant's part to be observed
and performed under this Lease (including payment of rent hereunder), Tenant
shall and may peaceably and quietly have, hold and enjoy the Premises in
accordance with and subject to the terms and conditions of this Lease as against
all persons claiming by, through or under Landlord.
29. TRANSFER OF LANDLORD'S INTEREST. The term "Landlord" as used in this Lease,
so far as covenants or obligations on the part of the Landlord are concerned,
shall be limited to mean and include only the owner or owners, at the time in
question, of the fee title to, or a lessee's interest in a ground lease of, the
Premises. In the event of any transfer or conveyance of any such title or
interest (other than a transfer for security purposes only), the transferor
shall be automatically relieved of all covenants and obligations on the part of
Landlord contained in this Lease accruing after the date of such transfer or
conveyance, provided that the transferee of Landlord's interest has expressly
agreed to assume, in writing or by operation of law, the performance of all the
covenants and obligation of Landlord under this Lease following the date of such
transfer. Landlord and Landlord's transferees and assignees shall have the
absolute right to transfer all or any portion of their respective title and
interest in the Premises and/or this Lease without the consent of Tenant, and
such transfer or subsequent transfer shall not be deemed a violation on
Landlord's part of any of the terms and conditions of this Lease.
30. LIMITATION ON LANDLORD'S LIABILITY. Notwithstanding anything contained in
this Lease to the contrary, the obligations of Landlord under this Lease
(including any actual or alleged breach or default by Landlord) do not
constitute personal obligations of the individual partners, directors, officers
or shareholders of Landlord or Landlord's partners, and Tenant shall not seek
recourse against the individual partners, directors, officers or shareholders of
Landlord or Landlord's partners, or any of their personal assets for
satisfaction of any liability with respect to this Lease. In addition, in
consideration of the benefits accruing hereunder to Tenant and notwithstanding
anything contained in this Lease to the contrary, Tenant hereby covenants and
agrees for itself and all of its successors and assigns that except as provided
in the last sentence of this Section 30, the liability of Landlord for its
obligations under this Lease (including any liability as a result of any actual
or alleged failure, breach or default hereunder by Landlord), shall be limited
solely to, and Tenant's and its successors' and assigns' sole and exclusive
remedy shall be against, Landlord's interest in the Project, including the
rents, issues and profits of Landlord therefrom and no other assets of Landlord.
However, Landlord agrees that the immediately preceding sentence shall not apply
to any liability Landlord may have to Tenant pursuant to Section 7.2 of Exhibit
"B" below in the event that Landlord's interest in the Project is acquired as a
result of a foreclosure or a deed in lieu of foreclosure.
31. MISCELLANEOUS.
31.1 GOVERNING LAW. This Lease shall be governed by, and construed pursuant to,
the laws of the state in which the Premises is located.
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31.2 SUCCESSORS AND ASSIGNS. Subject to the provisions of Section 29 above, and
except as otherwise provided in this Lease, all of the covenants, conditions and
provisions of this Lease shall be binding upon, and shall inure to the benefit
of, the parties hereto and their respective heirs, personal representatives and
permitted successors and assigns; provided, however, no rights shall inure to
the benefit of any Transferee of Tenant unless the Transfer to such Transferee
is made in compliance with the provisions of Section 14.
31.3 NO MERGER. The voluntary or other surrender of this Lease by Tenant or a
mutual termination thereof shall not work as a merger and shall, at the option
of Landlord, either (a) terminate all or any existing subleases, or (b) operate
as an assignment to Landlord of Tenant's interest under any or all such
subleases.
31.4 PROFESSIONAL FEES. If either Landlord or Tenant should bring suit or
commence arbitration against the other with respect to this Lease, including for
unlawful detainer or any other relief against the other hereunder, then all
costs and expenses incurred by the prevailing party therein (including, without
limitation, its actual appraisers', accountants', attorneys' and other
professional fees, expenses and court costs), shall be paid by the other party.
31.5 WAIVER. The waiver by either party of any breach by the other party of any
term, covenant or condition herein contained shall not be deemed to be a waiver
of any subsequent breach of the same or any other term, covenant and condition
herein contained, nor shall any custom or practice which may become established
between the parties in the administration of the terms hereof be deemed a waiver
of, or in any way affect, the right of any party to insist upon the performance
by the other in strict accordance with said terms. No waiver of any default of
either party hereunder shall be implied from any acceptance by Landlord or
delivery by Tenant (as the case may be) of any Rent or other payments due
hereunder or any omission by the non-defaulting party to take any action on
account of such default if such default persists or is repeated, and no express
waiver shall affect defaults other than as specified in said waiver. The
subsequent acceptance of Rent hereunder by Landlord shall not be deemed to be a
waiver of any preceding breach by Tenant of any term, covenant or condition of
this Lease other than the failure of Tenant to pay the particular Rent so
accepted, regardless of Landlord's knowledge of such preceding breach at the
time of acceptance of such Rent.
31.6 TERMS AND HEADINGS; INTERPRETATION. The words "Landlord" and "Tenant" as
used herein shall include the plural as well as the singular. Words used in any
gender include other genders. The Section headings of this Lease are not a part
of this Lease and shall have no effect upon the construction or interpretation
of any part hereof. Any deletion of language from this Lease prior to its
execution by Landlord and Tenant shall not be construed to raise any
presumption, canon of construction or implication, including, without
limitation, any implication that the parties intended thereby to state the
converse of the deleted language.
31.7 TIME. Time is of the essence with respect to performance of every provision
of this Lease in which time or performance is a factor. All references in this
Lease to "days" shall mean calendar days unless specifically modified herein to
be "business" days.
31.8 PRIOR AGREEMENTS; AMENDMENTS. This Lease, including the Summary and all
Exhibits and Riders attached hereto contains all of the covenants, provisions,
agreements, conditions and understandings between Landlord and Tenant concerning
the Premises and any other matter covered or mentioned in this Lease, and no
prior agreement or understanding, oral or written, express or implied,
pertaining to the Premises or any such other matter shall be effective for any
purpose. No provision of this Lease may be amended or added to except by an
agreement in writing signed by the parties hereto or their respective successors
in interest. The parties acknowledge that all prior agreements, representations
and negotiations are deemed superseded by the execution of this Lease to the
extent they are not expressly incorporated herein.
31.9 SEPARABILITY. The invalidity or unenforceability of any provision of this
Lease (except for Tenant's obligation to pay Rent) shall in no way affect,
impair or invalidate any other provision hereof, and such other provisions shall
remain valid and in full force and effect to the fullest extent permitted by
law.
31.10 RECORDING. Concurrently with the execution of this Lease, Landlord and
Tenant shall each execute a Memorandum of Lease ("MEMORANDUM") which shall be in
the form of Exhibit "G" attached hereto, provided that within ten (10) days
after written request from Landlord, Tenant also executes and delivers to
Landlord, in recordable form, a properly acknowledged quitclaim deed or other
instrument extinguishing all of the Tenant's rights and interest in and to the
Premises, and designating Landlord as the transferee, which deed or other
instrument shall be held by Landlord and may be recorded by Landlord only when
this Lease terminates or expires (but not prior thereto). The parties
acknowledge that the legal description attached as Exhibit "A" to the Memorandum
applies to both Tenant's Site and the Building 3 Site; accordingly, if Tenant
fails to exercise its Expansion Option and fails to exercise its Right of First
Refusal in accordance with Section 33 below, Tenant shall, within ten (10) days
after written request from Landlord, execute and deliver to Landlord, in
recordable form, a property acknowledged quitclaim deed or other instrument
extinguishing all of Tenant's rights and interest in and to the Building 3 Site,
and designating Landlord as the transferee, which deed or other instrument may
be recorded by Landlord. Tenant shall pay for all costs of or related to
recording the Memorandum, including, but not limited to, recording charges and
documentary transfer taxes.
31.11 EXHIBITS AND RIDERS. All Exhibits and Riders attached to this Lease are
hereby incorporated in this Lease for all purposes as though set forth at length
herein.
31.12 AUCTIONS. Tenant shall have no right to conduct any auction in, on or
about the Premises.
31.13 ACCORD AND SATISFACTION. No payment by Tenant or receipt by Landlord of a
lesser amount than the rent payment herein stipulated shall be deemed to be
other than on account of the rent, nor shall any endorsement or statement on any
check or any letter accompanying any check or payment as rent be deemed an
accord and satisfaction, and Landlord may accept such check or payment without
prejudice to Landlord's right to recover the balance of such rent
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or pursue any other remedy provided in this Lease. Tenant agrees that each of
the foregoing covenants and agreements shall be applicable to any covenant or
agreement either expressly contained in this Lease or imposed by any statute or
at common law.
31.14 FINANCIAL STATEMENTS. Upon ten (10) business days prior written request
from Landlord (which Landlord may make at any time during the Term but no more
often than once in any calendar year), Tenant shall deliver to Landlord a
current financial statement of Tenant. Such statements shall be prepared in
accordance with generally acceptable accounting principles and certified as true
in all material respects by Tenant (if Tenant is an individual) or by an
authorized officer or general partner of Tenant (if Tenant is a corporation or
partnership, respectively). If Tenant is a publicly traded company, Tenant may
fulfill the requirements of this Section 31.14 by delivering to Landlord a copy
of Tenant's most recent annual report or those statements submitted by Tenant to
the Securities and Exchange Commission.
31.15 NO PARTNERSHIP. Landlord does not, in any way or for any purpose, become a
partner of Tenant in the conduct of its business, or otherwise, or joint
venturer or a member of a joint enterprise with Tenant by reason of this Lease,
31.16 FORCE MAJEURE. In the event that either party hereto shall be delayed or
hindered in or prevented from the performance of any act required hereunder by
reason of strikes, lock-outs, labor troubles, inability to procure materials,
failure of power, governmental moratorium or other governmental action or
inaction (including failure, refusal or delay in issuing permits, approvals
and/or authorizations), injunction or court order, riots, insurrection, war,
fire, earthquake, flood or other natural disaster or other reason of a like
nature not the fault of the party delaying in performing work or doing acts
required under the terms of this Lease (but excluding delays due to financial
inability) (herein collectively, "FORCE MAJEURE"), then performance of such act
shall be excused for the period of the delay and the period for the performance
of any such act shall be extended for a period equivalent to the period of such
delay. The provisions of this Section 31.16 shall not apply to nor operate to
excuse Landlord or Tenant from the payment of Rent or other amounts strictly in
accordance with the terms of this Lease.
31.17 COUNTERPARTS. This Lease may be executed in one or more counterparts, each
of which shall constitute an original and all of which shall be one and the same
agreement.
31.18 DUTY TO ACT REASONABLY. Whenever this Lease grants Landlord or Tenant the
right to take action, exercise discretion, establish rules and regulations or
make allocations or other determinations, unless another standard is expressly
prescribed, Landlord and Tenant shall act reasonably and in good faith.
31.19 NON-DISCRIMINATION. Landlord and Tenant acknowledge and agree that there
shall be no discrimination against, or segregation of, any person, group of
persons, or entity on the basis of race, color, creed, religion, age, sex,
marital status, national origin, or ancestry in the leasing, subleasing,
transferring, assignment, occupancy, tenure, use, or enjoyment of the Premises,
or any portion thereof.
31.20 ARBITRATION.
31.20.1 GENERAL SUBMITTALS TO ARBITRATION. The submittal of all matters to
arbitration in accordance with the terms of this Section 31.20 shall be the sole
and exclusive method, means and procedure to resolve any and all claims,
disputes or disagreements arising under this Lease, except for (i) determination
of Fair Market Rental for the Option Period(s), which shall be determined in
accordance with Section 2.3 above, and (ii) claims relating to Landlord's
exercise of any unlawful detainer rights pursuant to California law or rights or
remedies used by Landlord to gain possession of the Premises or terminate
Tenant's right of possession to the Premises. The parties hereby irrevocably
waive any and all rights to the contrary and shall at all times conduct
themselves in strict, full, complete and timely accordance with the terms of
this Section 31.20 and all attempts to circumvent the terms of this Section
31.20 shall be absolutely null and void and of no force or effect whatsoever.
31.20.2 JAMS/ENDISPUTE. Any dispute to be arbitrated pursuant to the provisions
of this Section 31.20 shall be determined by binding arbitration before a
retired judge of the Superior Court of the State of California (the
"ARBITRATOR") under the auspices of JAMS/Endispute ("JAMS") in San Diego,
California. Such arbitration shall be initiated by the parties, or either of
them, within ten (10) business days after either party sends written notice (the
"ARBITRATION NOTICE") of a demand to arbitrate by registered or certified mail
to the other party and to JAMS. The Arbitration Notice shall contain a
description of the subject matter of the arbitration, the dispute with respect
thereto, the amount involved, if any, and the remedy or determination sought.
The parties may agree on a retired judge from the JAMS panel. If they are unable
to promptly agree, JAMS will provide a list of three (3) available judges and
each party may strike one. The remaining judge (or if there are two (2), the one
selected by JAMS) will serve as the Arbitrator. In the event that JAMS shall no
longer exist or if JAMS fails or refuses to accept submission of such dispute,
then the dispute shall be resolved by binding arbitration before the American
Arbitration Association ("AAA") in San Diego, California under the AAA's
commercial arbitration rules then in effect.
31.20.3 ARBITRATION PROCEDURE.
31.20.3.1 PRE-DECISION ACTIONS. The Arbitrator shall schedule a
pre-hearing conference to resolve procedural matters, arrange for the exchange
of information, obtain stipulations, and narrow the issues. The parties will
submit proposed discovery schedules to the Arbitrator at the preheating
conference. The scope and duration of discovery will be within the sole
discretion of the Arbitrator. The Arbitrator shall have the discretion to order
a pre-hearing exchange of information by the parties, including, without
limitation, production of requested documents, exchange of summaries of
testimony of proposed witnesses, and examination by deposition OF parties and
third-party witnesses. This discretion shall be exercised in favor of discovery
reasonable under the circumstances.
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31.20.3.2 THE DECISION. Any party may be represented by counsel or other
authorized representative. In rendering a decision(s), the Arbitrator shall
determine the rights and obligations of the parties according to the substantive
and procedural laws of California and the terms and provisions of this Lease.
The Arbitrator's decision shall be based on the evidence introduced at the
hearing, including all logical and reasonable inferences therefrom. The
Arbitrator may make any determination, and/or grant any remedy or relief that is
just and equitable. The decision must be based on, and accompanied by, a written
statement of decision explaining the factual and legal basis for the decision as
to each of the principal controverted issues. The decision shall be conclusive
and binding, and it may thereafter be confirmed as a judgment by the Superior
Court of the State of California, subject only to challenge on the grounds set
forth in California Code of Civil Procedure Section 1286.2. The validity and
enforceability of the Arbitrator's decision is to be determined exclusively by
the California courts pursuant to the provisions of this Lease. The Arbitrator
may award costs, including without limitation attorneys' fees, and expert and
witness costs, to the prevailing party, if any, as determined by the Arbitrator
in its discretion. The Arbitrator's fees and costs shall be paid by the
non-prevailing party as determined by the Arbitrator in its discretion. A party
shall be determined by the Arbitrator to be the prevailing party if its proposal
for the resolution of a dispute is the closer to that adopted by the Arbitrator.
32. LEASE EXECUTION.
32.1 AUTHORITY. If either Landlord or Tenant executes this Lease as a
partnership or corporation, then such party represents and warrants that: (a)
Landlord or Tenant, as applicable, is a duly authorized and existing partnership
or corporation, as the case may be, and is qualified to do business in the state
in which the Premises are located; (b) such persons and/or entities executing
this Lease are duly authorized to execute and deliver this Lease on behalf of
Landlord or Tenant, as applicable, in accordance with such party's partnership
agreement (if Landlord or Tenant is a partnership), or a duly adopted resolution
of such party's board of directors and such party's by-laws (if Landlord or
Tenant is a corporation); and (c) this Lease is binding upon Landlord and Tenant
in accordance with its terms.
32.2 NO OPTION. The submission of this Lease for examination or execution by
Tenant does not constitute a reservation of or option for the Premises and this
Lease shall not become effective as a Lease until it has been executed by
Landlord and delivered to Tenant.
33. BUILDING 3.
33.1 OPTION TO EXPAND. Landlord hereby grants to Tenant the option ("EXPANSION
OPTION") to expand the Premises to include an additional approximately 57,000
rentable square foot building ("BUILDING 3") to be constructed by Landlord at
the approximate location in the Project shown on Exhibit "A."
33.1.1 EXERCISE OF EXPANSION OPTION. The Expansion Option shall be exercised, if
at all, by written notice ("EXPANSION NOTICE") from Tenant to Landlord of such
exercise no later than the date which is two (2) years after the Commencement
Date. The Expansion Option shall be personal to the Original Tenant and any
assignee of Tenant's entire interest under this Lease (including, without
limitation, an assignment to a Permitted Non-Affiliate Assignee) where such
assignment is permitted under Article 14 above ("PERMITTED ASSIGNEE"), and may
not be assigned or transferred to any other person or entity. Tenant shall not
have the right to exercise the Expansion Option if, as of the date of the
Expansion Notice, Tenant is in default under this Lease after expiration of
applicable cure periods.
33.1.2 CONSTRUCTION OF BUILDING 3. If Tenant timely exercises its Expansion
Option, the Base Improvements for Building 3 shall be completed in accordance
with the specifications for the Base Improvements for the initial Buildings, and
the Tenant Improvements in Building 3 shall be completed by Landlord in
accordance with the Work Letter except that (i) the Allowance for Building 3
shall be an amount equal to the product of (a) Twenty-Nine and no/100 Dollars
($29.00) per rentable square foot of Building 3 multiplied by (b) a fraction,
the numerator of which is one hundred twenty (120) minus the number of months
between the Commencement Date and the Expansion Commencement Date (as that term
is defined in Section 33.1.3 below) and the denominator of which is one hundred
twenty (120), and (ii) the schedule specified in Section 6 of the Work Letter
shall be as reasonably determined by Landlord and Tenant in good faith given the
date of Landlord's receipt of the Expansion Notice. However, Landlord
acknowledges that Tenant shall be entitled to commence the preparation and
approval process for the Preliminary Plans and Final Plans for Building 3 prior
to the time that Tenant delivers the Expansion Notice to Landlord and to have
Landlord apply for plan check of the Final Plans, all at Tenant's sole cost and
expense; provided, however, that if Tenant subsequently exercises the Expansion
Option by delivery of the Expansion Notice, upon full execution and delivery of
the amendment to this Lease in order to document such expansion, Landlord shall
reimburse Tenant for any costs so incurred by Tenant and charge the Allowance
for Building 3 for such reimbursed amount; provided, however, only that portion
of such reimbursement attributable to the Tenant Improvements for Building 3 as
opposed to the Base Improvements, shall be charged against the Allowance for
Building 3.
33.1.3 TERMS OF TENANT'S LEASE OF BUILDING 3. IF Tenant exercises its Expansion
Option, Tenant's lease of Building 3 shall be upon all of the terms and
conditions specified in this Lease for Tenant's lease of the original Premises
including, without limitation, the same rate of Monthly Rent payable (per
rentable square foot) then in effect for the original Premises (and subject to
the same increases at the same times provided for the original Premises pursuant
to this Lease) and the Term for Tenant's lease of Building 3 shall be
co-terminous with the Term for Tenant's lease of the original Premises. The Term
for Building 3 and Tenant's obligation to pay Monthly Rent with respect to
Building 3 shall commence upon the date ("EXPANSION COMMENCEMENT DATE") of
Substantial Completion (as determined in accordance with the Work Letter) of
Improvements for Building 3 (subject to acceleration as provided in, and subject
to, Section 7.1 of the Work Letter). If Tenant timely exercises the Expansion
Option, Landlord and Tenant shall execute an amendment to this Lease adding
Building 3 to the Premises upon the terms and conditions set forth in this
Section 33.1. If Tenant timely exercises the Expansion Option, or if Tenant
exercises its Right of First Refusal pursuant to Section 33.2 below with respect
to all of Building 3, commencing as of the effective date of Tenant's lease of
Building 3, that certain site located adjacent to Building 3 as shown on Exhibit
"A" hereto (the "BUILDING 3 SITE") shall be added to Tenant's Site,
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in which case Tenant shall be responsible for repair and maintenance of the
Building 3 Site as provided in, and subject to, Article 11 above.
33.1.4 CONSIDERATION FOR EXPANSION OPTION. In consideration for Landlord's grant
of the Expansion Option to Tenant, Tenant shall pay to Landlord, as additional
rent, Fifty-One Thousand Two Hundred Eighty-Eight and no/100 Dollars
($51,288.00) on the Commencement Date and every three (3) months thereafter
until the earlier of (i) the date Tenant delivers the Expansion Notice, or (ii)
the expiration of the twenty-first (21st) full month of the Term. Such payments
may be referred to herein as the "EXPANSION PAYMENTS." If Tenant delivers the
Expansion Notice, then Tenant shall have no further obligation to make any
Expansion Payments. In addition, Tenant may elect to discontinue its Expansion
Payments; provided, that if Tenant fails to make any Expansion Payment on a
timely basis, the Expansion Option shall terminate if Tenant fails to reinstate
such payments within ten (10) business days of Tenant's receipt of written
notice from Landlord to that effect (in which case Tenant's Right of First
Refusal specified in Section 33.2 below shall apply). If Tenant elects not to
lease Building 3 pursuant to this Section 33.1 or Section 33.2 below, Landlord
may construct Building 3 for occupancy by a third party; provided, however, that
parking applicable to such building shall contain at least four (4) parking
spaces for each one thousand (1,000) rentable square feet of such building and
the restrictions set forth in Section 34 below shall apply. Landlord agrees to
use commercially reasonable efforts to cause the Base Improvements for Building
3 to be completed within eight (8) months after Landlord's receipt of the
Expansion Notice and Landlord's procurement of a building permit for Building 3
(and Landlord agrees to promptly apply for and thereafter diligently pursue a
building permit for Building 3 following receipt of the Expansion Notice).
33.2 RIGHT OF FIRST REFUSAL. If Tenant's Expansion Option specified in Section
33.1 expires or if Tenant otherwise discontinues making the Expansion Payments,
thereupon Tenant shall have a continuing right of first refusal ("RIGHT OF FIRST
REFUSAL") with respect to all or any portion of Building 3. Tenant's First of
First Refusal shall be on the terms and conditions set forth in this Section
33.2.
33.2.1 PROCEDURE. Landlord shall notify Tenant (the "FIRST REFUSAL NOTICE") from
time to time when Landlord has reached agreement with a third party on the basic
economic terms and conditions for said third party's lease of all or any portion
of Building 3 ("BUILDING 3 SPACE"). The First Refusal Notice shall set forth
such basic economic terms and conditions (collectively the "ECONOMIC TERMS")
including, without limitation, the term for such proposed lease, the tenant
improvement allowance applicable to such lease, the rental rate applicable to
such lease, the proposed commencement date and any other basic economic terms
and conditions. Notwithstanding the foregoing, Landlord shall have no obligation
to deliver the First Refusal Notice and Tenant's Right of First Refusal shall
expire upon expiration of the initial Lease Term.
33.2.2 PROCEDURE FOR ACCEPTANCE. If Tenant wishes to exercise Tenant's Right of
First Refusal, then within fifteen (15) business days after delivery of the
First Refusal Notice to Tenant (the "ELECTION DATE"), Tenant shall deliver
written notice to Landlord ("TENANT'S ELECTION NOTICE") pursuant to which Tenant
shall elect either to (i) lease the Building 3 Space upon the Economic Terms as
set forth in the First Refusal Notice and the same non-Economic Terms as set
forth in this Lease; (ii) refuse to lease the Building 3 Space, specifying that
such refusal is not based upon the Economic Terms set forth by Landlord in the
First Refusal Notice, but upon Tenant's lack of need for the Building 3 Space in
which event Landlord may lease the Building 3 Space to any entity on any terms
Landlord desires and Tenant's Right of First Refusal with respect to the
Building 3 Space specified in Landlord's First Refusal Notice shall thereupon
terminate and be of no further force or effect until such time as the next
tenant's lease of the Building 3 Space expires or terminates (including any
renewal or extension of such lease, whether or not such renewal or extension is
pursuant to an express written provision in such lease, and regardless of
whether any such renewal or extension is consummated pursuant to a lease
amendment or a new lease); or (iii) refuse to lease the Building 3 Space,
specifying that such refusal is based upon the Economic Terms set forth in the
First Refusal Notice, in which event Tenant shall also specify in Tenant's
Election Notice revised Economic Terms (which may include, without limitation, a
lease term which is co-terminus with Tenant's lease of the Premises if such is
not the case in the Economic Terms proposed by Landlord) upon which Tenant would
be willing to lease such Building 3 Space from Landlord. If Tenant does not so
respond in writing to Landlord's First Refusal Notice by the Election Date,
Tenant shall be deemed to have elected the option described in clause (ii)
above. If Tenant timely delivers to Landlord Tenant's Election Notice pursuant
to clause (iii) above, and if Tenant's Election Notice is received by Landlord
prior to the Election Date, then Landlord and Tenant shall negotiate, in good
faith, for a period of ten (10) business days after Landlord's receipt of
Tenant's Election Notice (the "EXPANSION NEGOTIATING PERIOD") to agree upon such
Economic Terms. If Tenant delivers Tenant's Election Notice pursuant to clause
(iii) above, but Landlord and Tenant do not agree upon such Economic Terms on or
before the expiration of the Expansion Negotiating Period, Landlord may elect
either to (a) lease the Building 3 Space to Tenant upon the revised Economic
Terms specified by Tenant in Tenant's Election Notice, and the same non-Economic
Terms as set forth in this Lease; or (b) within one hundred eighty (180) days
after the Election Date, lease the Building 3 Space to any person or entity upon
any terms Landlord desires; provided, however, if the Economic Terms of
Landlord's proposed lease to said third party are more favorable to the third
party than those Economic Terms proposed by Tenant in Tenant's Election Notice,
before entering into such third party lease, Landlord shall notify Tenant of
such more favorable Economic Terms and Tenant shall have the right to lease the
Building 3 Space upon such more favorable Economic Terms by delivering written
notice thereof to Landlord within ten (10) business days after Tenant's receipt
of Landlord's notice. If Tenant does not elect to lease such space from Landlord
within said ten (10) business day period, Tenant shall be deemed to have elected
the option described in clause (ii) above and Tenant's Right of First Refusal
shall thereupon terminate and be of no further force or effect until such time
as the next tenant's lease of the Building 3 Space expires or terminates
(including any renewal or extension of such lease, whether or not such renewal
or extension is pursuant to an express written provision in such lease, and
regardless of whether any such renewal or extension is consummated pursuant to a
lease amendment or a new lease). In determining whether the Economic Terms of
Landlord's proposed lease to a third party are more favorable to the third party
than those Economic Terms proposed by Tenant in Tenant's Election Notice, the
rent and all concessions shall be blended on a straight-line basis to an
effective rental rate throughout the term of the proposed lease with the third
party, and compared with the effective rental rate blending on a straight line
basis the rent and all concessions for the term proposed by Tenant in Tenant's
Election Notice. If Tenant timely delivers to Landlord Tenant's
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Election Notice pursuant to clause (ii) or (iii) above (or is deemed to have
elected the option in clause (ii) above), and if Landlord elects to proceed to
lease the Building 3 Space to a third party pursuant to this Section 33.2.2
above, but fails to execute a lease with such third party within one hundred
eighty (180) days after the Election Date, then before leasing the Building 3
Space to any third party, Landlord shall once again be required to deliver a
First Refusal Notice to Tenant pursuant to Section 33.2.1 above and the
foregoing procedures of this Section 33.2 shall once again apply.
33.2.3 LEASE OF BUILDING 3 SPACE. If Tenant timely exercises Tenant's right to
lease the Building 3 Space as set forth herein, Landlord and Tenant shall
execute an amendment to this Lease adding the Building 3 Space to this Lease
upon the same non-economic terms and conditions as applicable to the initial
Premises, and the Economic Terms and conditions as provided in this Section
33.2.
33.2.4 TERMINATION OF RIGHT OF FIRST REFUSAL. The rights set forth in this
Section 33.2, and Landlord's obligations with respect thereto, shall be personal
to the Original Tenant and any Permitted Assignee, including a Permitted
Non-Affiliate Assignee. Tenant shall not have the right to lease the Building 3
Space if, as of the date of the attempted exercise of any Right of First Refusal
by Tenant, Tenant is in default under this Lease after any applicable notice and
cure periods.
34. EXPANSION OF PROJECT.
If Landlord owns, as of the date of execution of this Lease or in the future,
any land which is adjacent to the Premises and is so designated on the Site Plan
attached to this Lease as Exhibit "A" ("ADJACENT LAND") and Landlord elects to
develop such Adjacent Land, Landlord shall only develop buildings that are of
substantially the same design as the Buildings leased to Tenant under this Lease
including, without limitation, substantially the same amount of parking and
substantially the same landscaping and building height, so that such Adjacent
Land together with the Premises looks and feels like an integrated campus. In no
event shall any building constructed on such Adjacent Land be greater than three
(3) floors unless Tenant otherwise consents, which consent may be withheld by
Tenant in its sole and absolute discretion. Landlord agrees that prior to
commencement of construction on, or SALE of, any lots in the Project (other than
Tenant's Site), covenants, conditions and restrictions shall be recorded against
such lot(s), or an individual covenant shall be recorded against such lot(s), in
each case specifying that any roof-top equipment on buildings erected on such
lot(s) shall be architecturally screened in such a manner as to provide an
aesthetically pleasing view over such buildings.
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IN WITNESS WHEREOF, the parties have executed this Lease as of the day and year
first above written.
"TENANT" DATAWORKS CORPORATION, a California
corporation
By: /s/ XXXXXX XXXXXXX
--------------------------------------
Name: XXXXXX XXXXXXX
------------------------------
Title: PRESIDENT & CEO
By: /s/ XXXXXX X. XXXXXXXX
--------------------------------------
Name: Xxxxxx X. Xxxxxxxx
------------------------------
Title: Executive Vice President & CFO
"LANDLORD" ADI RESEARCH PARTNERS, L.P.,
a California limited partnership
By: Xxxxx Development, Inc., a
California corporation general
partner
By /s/ XXXXXXX X. XXXXX
--------------------------------
Name: Xxxxxxx X. Xxxxx
---------------------------
Title: Chief Executive Officer
--------------------------
By /s/ XXXXX X. XXXX
--------------------------------
Name: XXXXX X. XXXX
---------------------------
Title: SECRETARY
--------------------------
----------
NOTE:
IF TENANT IS A CALIFORNIA CORPORATION, then one of the following alternative
requirements must be satisfied:
(A) This Lease must be signed by two (2) officers of such corporation: one
being the chairman of the board, the president or a vice president, and
the other being the secretary, an assistant secretary, the chief
financial officer or an assistant treasurer. If one (1) individual is
signing in two (2) of the foregoing capacities, that individual must
sign twice; once as one officer and again as the other officer.
(B) If there is only one (1) individual signing in two (2) capacities, or
if the two (2) signatories do not satisfy the requirements of (A)
above, then Tenant shall deliver to Landlord a certified copy of a
corporate resolution in the form reasonably acceptable to Landlord
authorizing the signatory(ies) to execute this Lease.
IF TENANT IS A CORPORATION INCORPORATED IN A STATE OTHER THAN CALIFORNIA, then
Tenant shall deliver to Landlord a certified copy of a corporate resolution in
the form reasonably acceptable to Landlord authorizing the signatory(ies) to
execute this Lease.
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EXHIBIT "A"
SITE PLAN PREMISES AND BUILDING 3
37
EXHIBIT "B"
WORK LETTER AGREEMENT
This Work Letter Agreement supplements the Single-Tenant
Industrial Lease (the "LEASE") to which this Work Letter Agreement is attached.
All terms not defined herein shall have the same meanings as set forth in the
Lease.
1. Construction of Base Improvements and Tenant Improvements.
Landlord shall construct, through Reno Construction or any other general
contractor reasonably approved by Tenant, the "BASE IMPROVEMENTS" described on
Schedule 1 attached hereto. Any changes to Schedule 1 shall be subject to
Tenant's approval, which approval shall not be unreasonably withheld or delayed.
In addition, Landlord shall construct, through the contractor selected pursuant
to Section 4 below, all other portions of the Buildings to be occupied by Tenant
pursuant to the Lease (collectively, the "TENANT IMPROVEMENTS") in accordance
with the Final Plans for the Tenant Improvements approved by Landlord and Tenant
pursuant to Paragraph 2 below. The Base Improvements and Tenant Improvements are
collectively referred to as the "IMPROVEMENTS." All Improvements shall be
constructed pursuant to this Work Letter Agreement.
2. Plans and Specifications for Improvements.
2.1 All plans and specifications, and approvals or disapprovals
thereof, for the Tenant Improvements shall be submitted in accordance with the
schedule set forth in Paragraph 6 below.
2.2 Tenant shall retain Xxxx & Xxxxxxx Architects, Inc. or any
other architect reasonably approved by Landlord (the "ARCHITECT") to prepare and
deliver to Landlord for Landlord's reasonable approval preliminary plans for the
Tenant Improvements (the "PRELIMINARY PLANS"). If Landlord shall reasonably
disapprove of any portion of the Preliminary Plans, Landlord shall advise Tenant
of such revisions, and reasons therefor. Tenant shall then submit to Landlord,
for Landlord's reasonable approval, a redesign of the Preliminary Plans,
incorporating the revisions reasonably required by Landlord.
2.3 Tenant shall then cause the Architect to prepare from the
approved Preliminary Plans complete architectural plans, drawings and
specifications for the Tenant Improvements. Such complete plans, drawings and
specifications are referred to herein as the "FINAL PLANS". All items shown on
the Final Plans other than the Base Improvements shall be considered to be
Tenant Improvements. Tenant shall submit the Final Plans for the approval of
Landlord in the same manner as provided in Paragraph 2.2 above for approval by
Landlord of the Preliminary Plans.
2.4 Tenant acknowledges that, unless specifically shown as
Landlord's responsibility on the Final Plans, the Improvements shall not
include, and Landlord shall not be responsible for, the design, construction or
installation of, various nonstructural items which Tenant may find desirable for
the Premises including, without limitation, furniture, trade fixtures, office
equipment, telephone, telecommunications and data equipment and systems,
plantscaping, artwork or cabling; Tenant may enter the Premises to install these
items as provided in, and subject to, Section 2.2 of the Lease and Paragraph 5
below.
3. Allowance for Work and Work Cost.
3.1 Landlord shall construct the Base Improvements at Landlord's
sole cost. Tenant shall receive from Landlord an allowance (the "ALLOWANCE") of
Twenty-Nine Dollars ($29.00) per rentable square foot of the Premises, which
Allowance shall be used solely for Work Costs for the Tenant Improvements. All
Tenant Improvements, whether or not the cost thereof is covered by the
Allowance, shall become the property of Landlord upon expiration or earlier
termination of the Lease and shall remain on the Premises at all times during
the Term of the Lease. Tenant shall be entitled to a credit of up to a maximum
of Two Dollars ($2.00) per rentable square foot of the Premises against Tenant's
first obligations to pay Monthly Rent under the Lease for any portion of the
Allowance not used BY Tenant; however, Tenant shall be entitled to no payment or
rent reduction for any part of the Allowance not used by Tenant to the extent
such unused portion exceeds said Two Dollars ($2.00) per rentable square foot
maximum.
3.2 As used herein, "WORK COSTS" mean (i) all out-of-pocket fees
and expenses incurred by Landlord or Tenant in connection with the design,
permitting and construction of the Tenant Improvements, including, without
limitation, architectural and engineering fees for the preparation of the
Preliminary Plans and Final Plans, (ii) the actual contractor costs and charges
for material and labor, contractor's profit, overhead and general conditions
incurred by Landlord in having the Tenant Improvements constructed in accordance
with the Final Plans, (iii) governmental agency plan check, permit and other
fees and sales and use taxes, (iv) testing and inspection costs, (v) any paint
touch-up or repair work necessary due to Tenant's move into the Premises, and
(vi) all other reasonable costs expended or to be expended by Landlord in the
construction of the Tenant Improvements.
3.3 As promptly as practicable following Tenant's approval of the
Final Plans, Landlord shall submit to Tenant a written estimate of the Work
Costs for the Tenant Improvements. Thereupon, Tenant shall either approve the
estimate or disapprove specific items and submit to Landlord proposed revisions
of Final Plans to reflect the deletion of and/or substitution for such
disapproved items. Any such deletions and/or substitutions to the Final Plans
will be processed in accordance with Subparagraphs 3.7 and 3.8 below. Upon
Tenant's final written approval of said estimate (such approved estimate to be
referred to herein as the "WORK COST STATEMENT"), Landlord shall have the right
to purchase special materials requiring extended delivery time as set forth on
the Final Plans and to commence the construction of the items included in said
Work Cost Statement pursuant to Paragraph 4 hereof.
EXHIBIT "B"
38
3.4 If the Final Plans or any amendment thereto requested by
Tenant shall require changes in the Base Improvements, the increased cost of the
Base Improvements caused by such changes shall be charged as a Work Cost. The
cost thereof shall include all architectural and/or engineering fees and
expenses in connection therewith. Alternatively, if any amendment to the Final
Plans is requested by Landlord and not requested by Tenant, and if such
amendment requires an increase in the cost of the Base Improvements, such
increased cost of the Base Improvements shall be at Landlord's sole expense.
However, notwithstanding the foregoing, if the Final Plans require a change in
the Base Improvements in order to cause the Final Plans to comply with
applicable codes, such increased cost of the Base Improvements shall be charged
as a Work Cost.
3.5 Landlord's written estimate of the Work Costs shall include a
reasonable contingency to allow for changes in the Tenant Improvements and/or
other unforeseen costs and expenses arising after Tenant's approval thereof.
3.6 In the event that the Work Cost Statement exceeds the
Allowance, Tenant shall pay the excess (the "TENANT'S CONTRIBUTION") directly to
the general contractor in accordance with the following procedure: upon
Landlord's receipt of a monthly draw request from the general contractor for the
Tenant Improvements and Landlord's approval of such draw request, Landlord shall
forward such draw request to Tenant together with Landlord's determination
(calculated in the manner set forth below) of that portion of Tenant's
Contribution applicable to such draw request. The applicable portion of Tenant's
Contribution for each draw request shall be calculated as the percentage which
Tenant's Contribution bears to the total amount set forth in the Work Cost
Statement. Such monthly payments by Tenant shall, however, be reduced to the
extent of any retention provided in Landlord's construction contract with the
general contractor for the Tenant Improvements (which final retention shall be
payable by Tenant together with Landlord's payment of such final retention).
Landlord will give Tenant periodic reports (not less than monthly) on estimated
and actual Work Costs incurred and Landlord will make Landlord's books and
records concerning the Work Costs reasonably available for Tenant's review.
3.7 In the event that changes to the Final Plans are requested by
Tenant and approved by Landlord or required by any governmental agency
subsequent to Landlord's approval thereof, the changes shall be incorporated
into the work by means of change order.
3.8 Any change orders to the approved Final Plans which are
requested by Tenant and approved by Landlord or required by any governmental
agency shall be forwarded to Landlord for approval and costing. Tenant shall be
given a written cost estimate for the completion of said change order and an
estimate of any delay in Substantial Completion (if any) which may result from
such change order. If the change order is requested by Tenant, Tenant may,
following receipt of the written cost estimate for the change order and the
estimate of any delay, rescind its request for the change order. To the extent
any change order requested by Tenant or required by any governmental agency
increases the total amount of Work Costs, and if the total amount of Work Costs
exceeds the Allowance, Tenant shall pay such increased cost (to the extent such
cost is not covered by any remaining portion of the Allowance) directly to the
general contractor for the Tenant Improvements as such increased costs are
invoiced on a monthly basis from the general contractor as a part of the general
contractor's draw request.
3.9 If Tenant fails to pay any amounts due from Tenant to the
general contractor pursuant to this Section 3 on a timely basis (unless Tenant,
in good faith, disputes the payment of any such amounts, in which event Tenant
shall pay the undisputed portion and any delays involved in resolving such
dispute shall be deemed to constitute a Tenant Delay), Landlord may, following
at least five (5) business days notice to Tenant, discontinue construction of
the Tenant Improvements until Tenant complies with its obligations, in which
case any delay in construction resulting therefrom shall be deemed to constitute
a Tenant Delay and any increase in costs of construction resulting from such
delay shall be born by Tenant.
4. Construction.
4.1 Tenant shall be entitled to select the general contractor for
construction of the Tenant Improvements. Tenant may make such selection based on
either a negotiated bid or competitive bidding basis. If Tenant makes such
selection based upon a negotiated bid basis, Tenant shall make such selection
within twenty-one (21) days after the Final Plans have been approved by
Landlord; provided, however, that any general contractor which Tenant elects to
negotiate with (and the general contractor ultimately selected by Tenant) shall
be experienced in comparable build-to-suit projects in the San Diego area and
shall be subject to Landlord's reasonable, prior written approval. If Tenant
elects to select such contractor pursuant to a competitive bidding procedure,
the Final Plans shall be submitted by Landlord to at least two (2), but not more
than four (4), general contractors experienced in comparable build-to-suit
projects in the San Diego area and reasonably preapproved in writing by
Landlord. Each such contractor shall submit a sealed, fixed price contract bid
(on such bid form as Landlord shall designate and Tenant shall reasonably
approve) to construct the Tenant Improvements. Each contractor shall be notified
in the bid package of the time schedule for construction of the Tenant
Improvements. The bids shall be submitted promptly to Landlord and a
reconciliation shall be performed by Landlord (in the presence of Tenant's
Construction Representative) to adjust inconsistent or incorrect assumptions so
that a like-kind comparison can be made and a low bidder determined. Tenant
shall be entitled to select any of such preapproved contractors submitting a
bid, provided that such contractor states that it will be able to meet
Landlord's construction schedule. Such selection by Tenant shall be made within
twenty-one (21) days after Landlord's approval of the Final Plans. In either
case (prenegotiated bid or competitive bidding), the general contractor shall
only be entitled to use subcontractors reasonably approved by Landlord. Landlord
shall have the right, but not the obligation, to choose the contractor selected
by Tenant for construction of the Tenant Improvements as the general contractor
for construction of the Base Improvements.
4.2 Following Tenant's approval of the Work Cost Statement,
Tenant's selection of the general contractor for the Tenant Improvements and
receipt of all relevant governmental agency approvals and permits, and
EXHIBIT "B"-Page 2
39
when the Base improvements have reached a stage suitable for construction of
the Tenant Improvements, Landlord shall cause the selected general contractor
to commence the construction of the Tenant Improvements. Landlord and/or such
general contractor shall have the right to cause all or any portion of such
work to be performed by one or more subcontractors. Tenant shall have the right
to reasonably approve all subcontractors for all major sub-trades such as the
electrical, mechanical, plumbing and HVAC subcontractors. Landlord shall
furnish Tenant with a critical path schedule setting forth the projected
completion dates therefor and showing the deadlines for any actions required to
be taken by Tenant during such construction; such critical path schedule shall
be updated by Landlord and provided to Tenant's Construction Representative
every thirty (30) days during the course of construction.
4.3 In connection with the construction of the Improvements, each
party shall be entitled to rely upon the other party's construction
representative who shall be as follows: Landlord's Construction Representative:
Xxxxxxx Xxxxx, Tenant's Construction Representative: Xxx X. Xxxxxxx. Each
respective construction representative shall have the authority to make binding
commitments relative to the improvements on behalf of the party appointing such
construction representative. All inquiries of Landlord or Tenant pertaining to
construction of the Improvements shall be directed in writing to Landlord's
Construction Representative or Tenant's Construction Representative, as
applicable. A party may designate a substitute construction representative by
giving written notice to the other party at any time. Any representatives of
Tenant (other than Tenant's Construction Representative) who desire to visit
the Premises during construction of the Improvements must first notify Landlord
and the general contractor.
5. Decorating by Tenant.
Landlord shall make the Premises reasonably available to Tenant prior
to Substantial Completion as provided in Section 2.2 of the Lease. Such early
entry by Tenant shall be subject to scheduling by Landlord and such rules and
regulations as Landlord may reasonably establish in order to minimize any
interference in Landlord's completion of the improvements. If at any time such
entry shall cause or threaten a delay in the construction of the improvements,
Landlord may terminate Tenant's right to such early entry. Prior to Tenant's
entry, Tenant shall deliver evidence to Landlord that Tenant has obtained the
insurance required under the Lease. Tenant shall be responsible for any damage
to the Improvements caused by Tenant's entry.
6. Schedule.
Preparation and approval of the Preliminary Plans, Final Plans and
the Work Cost Statement shall proceed as indicated below.
Action Responsibility Due Date
------ -------------- --------
Submission of the Preliminary Plans Tenant 30 days following
the Effective Date
Delivery of written notice Landlord 5 days after (i)
approving or disapproving
Preliminary Plans
Submission, if necessary, of Tenant 10 days after (ii)
redesign of Preliminary Plans
Delivery of written notice of Landlord 3 days after (iii)
final approval of Preliminary
Plans (if (iii) is necessary)
Submission of Final Plans Tenant 70 days after approval
to Landlord of Preliminary Plans
Delivery of written notice Landlord 5 days after (v)
approving or disapproving
Final Plans
Submission, if necessary, of Tenant 10 days after (vi)
redesign of Final Plans
Delivery of written notice of Landlord 3 days after (vii)
final approval of Final Plans
(if (vii) is necessary)
Submission of Work Cost estimate Landlord 20 days after approval
to Tenant of Final Plans
Delivery of written notice of Tenant 5 days after (ix)
final approval of Work Cost
Statement
Delays.
7.1 If Landlord shall be actually delayed in Substantial Completion of the
Improvement the following ("TENANT DELAYS"):
EXHIBIT "B" - Page 3
40
(i) Tenant's failure to complete any action item which is
the responsibility of Tenant on or before the due date specified in
Paragraph 6 above or any subsequently revised schedule as may be
approved by Landlord and Tenant, or
(ii) Tenant's changes to the Final Plans after Tenant's
approval thereof or the date required for Tenant's approval under
Paragraph 6 above, whichever is earlier, or
(iii) Any delay caused by Tenant's entry pursuant to
Paragraph 5, or
(iv) Any delay of Tenant in making payment of Tenant's
Contribution, or
(v) Any other delay caused by Tenant,
then, notwithstanding anything to the contrary set forth in the Lease, and
regardless of the actual date of Substantial Completion of the Improvements, the
date of Substantial Completion thereof shall be deemed to be the date that
Substantial Completion would have occurred if no Tenant Delays had occurred.
Nothwithstanding the foregoing, no Tenant Delays shall be deemed to have
occurred pursuant to Sections 7.1(ii), (iii), (iv), or (v) above (but not (i)
above) until and unless Landlord has given written notice to Tenant specifying
the action or inaction which Landlord contends constitutes a Tenant Delay.
Except as provided herein to the contrary, if such action or inaction is not
cured within one (1) business day after Tenant's receipt of such notice, then a
Tenant Delay shall be deemed to have occurred commencing as of the date Tenant
received such notice and continuing for the number of days the completion of the
Improvements was in fact delayed as a result of such action or inaction.
7.2 In the event that the Substantial Completion of the
Improvements has not occurred by the "OUTSIDE DATE," which shall be August 1,
1999, as such August 1, 1999 date may be extended by the number of days of
Tenant Delays and by the number of days of "Force Majeure Delays" (as defined
below), then as Tenant's sole remedy (except as provided in Section 2.5 of the
Lease), upon the Commencement Date, Landlord shall pay to Tenant an amount equal
to the product of Five Thousand Dollars ($5,000.00) multiplied by the number of
days from the Outside Date (as so extended) until the Commencement Date. By way
of example only, and not as a limitation upon the foregoing, if Landlord
experiences ten (10) days of Tenant Delays and five (5) days of Force Majeure
Delays and if Substantial Completion of the Improvements occurs on August 20,
1999, then the amount so payable by Landlord to Tenant shall be Twenty Thousand
Dollars ($20,000.00) (i.e., the Outside Date shall be extended by a total of
fifteen (15) days to August 16, 1999 which is four (4) days prior to the date of
Substantial Completion of the Improvements; 4 x $5,000.00 = $20,000.00). For
purposes of this Lease, "FORCE MAJEURE DELAYS" shall mean and refer to a period
of delay or delays encountered by Landlord affecting the work of construction of
the Improvements because of delays due to excess time in obtaining governmental
permits or approvals beyond the time period normally required to obtain such
permits or approvals for similar projects in San Diego, California; fire,
earthquake or other acts of God; acts of the public enemy; riot; public unrest;
governmental regulations of the sales of materials or supplies or the
transportation thereof; strikes or boycotts; shortages of material or labor or
any other cause beyond the reasonable control of Landlord. However, no Force
Majeure Delay shall be deemed to have occurred unless and until Landlord has
provided written notice to Tenant specifying the circumstance that Landlord
contends constitutes a Force Majeure Delay. If such circumstance is not
rectified within one (1) business day after Tenant's receipt of such notice,
then a Force Majeure Delay, as set forth in such notice, shall be deemed to have
occurred commencing as of the date such notice was received and continuing for
the number of days that Substantial Completion of the Improvements was in fact
delayed as a result of such circumstance.
8. Substantial Completion; Punch List.
8.1 "SUBSTANTIAL COMPLETION" of the Improvements shall be deemed
to have occurred when the Premises has been completed pursuant to the Final
Plans with the exception of any "PUNCH LIST ITEMS" as that term is defined in
Section 8.2 below such that Tenant can conduct normal business operations from
the Premises: all of the heating, ventilating, air-conditioning ("HVAC"), and
plumbing, life safety, mechanical and/or electrical systems for each of the
Buildings (collectively "BUILDING SYSTEMS") are operational to the extent
necessary to service the Premises; a certificate of occupancy (or a reasonably
substantial equivalent such as a sign off from a building inspector or a
temporary certificate of occupancy) is issued for the Premises; and all required
parking spaces and all exterior landscaping (including both hardscape and
softscapes) have been substantially completed; Landlord has tendered possession
of the Premises to Tenant and Tenant has continuous and commercially reasonable
uninterrupted ingress and egress to the Buildings and access to the Premises is
available to Tenant. The existence of Punch List Items referred to in Paragraph
8.2 below shall not impact the determination of Substantial Completion.
8.2 No earlier than ten (10) days prior to the estimated date of
Substantial Completion of the Improvements, Tenant's Construction
Representative, Landlord's Construction Representative and Architect shall
jointly conduct a walk-through of the Improvements and shall jointly prepare a
punch list ("PUNCH LIST") of items needing additional work ("PUNCH LIST ITEMS"),
none of which shall materially interfere with Tenant's use and occupancy of the
Premises for the Permitted Use and all of which shall be corrected within thirty
(30) days after compilation of the Punch List (except that if any item may be
reasonably expected to take more than thirty (30) days to correct, Landlord
shall commence to correct such item within said thirty (30) day period and shall
diligently proceed to correct such item thereafter); provided, however, the
Punch List shall be limited to items which are required by the Final Plans and
any other changes agreed to by the parties. In addition to the inspection
provided for above, no later than fifteen (15) days following the Commencement
Date, Tenant's Construction Representative and Landlord's Construction
Representative shall re-inspect the Premises and shall prepare a new Punch List
of items which were not discovered during the pre-Commencement Date inspection;
provided, however, that any items damaged during Tenant's move in or occupancy
shall not be included in such Punch List and shall be repaired or replaced by
Tenant at Tenant's sole cost and expense. Finally, in addition to the
inspections provided for above, approximately ten (10) months after the
Commencement Date,
EXHIBIT "B"-Page 4
41
Tenant's Construction Representative and Landlord's Construction Representative
shall conduct a walk through of the Premises for purposes of identifying any
issues covered by warranty, so that such issues may be identified prior to the
expiration of said warranties.
9. Miscellaneous.
9.1 Neither Tenant nor the general contractor shall be charged
directly or indirectly for the use of elevators, hoists, water, electricity,
heating, ventilation and air-conditioning, security or parking. The general
contractor and all subcontractors performing work on the Tenant Improvements
shall be allowed to utilize the temporary power and portable restroom facilities
of the contractor performing work on the Base Improvements free of charge until
permanent power and restrooms are completed and available. Landlord shall not
charge Tenant or the Allowance any fee of any kind to manage the design and
construction of the Premises.
9.2 At Tenant's option, Landlord agrees to assign to Tenant or to
otherwise use commercially reasonable efforts to enforce all warranties
(including any statutory obligations of the contractor) received from all
contractors and subcontractors involved in the construction of the Premises.
9.3 Prior to Substantial Completion of the Improvements, the
general contractor shall thoroughly clean the Premises. In addition, promptly
after completion, Landlord shall deliver to Tenant copies of "as-built" plans
for the Buildings and Tenant's Site.
EXHIBIT "B"-Page 5
42
SCHEDULE 1
DESCRIPTION OF BASE IMPROVEMENTS
The following is a description of Base Improvements for the Premises. Any items
not specifically identified are intended to be included with the Tenant
Improvements.
The Buildings shall be two (2) story painted concrete tilt-up shell style
buildings with a combination of "punched" window openings and glass curtain wall
to include the following items:
1) Completed men's and women's restrooms to include full height ceramic tile
on all walls and complete tile on the entire floor with a floor drain that
will coordinate with Tenant's finish plans. The restrooms shall contain
high quality fixtures and mirrors, adequately sized, the countertops shall
be of man-made "stone-like" material provided at Landlord's expense, or if
Tenant desires an upgrade, Tenant may upgrade as a charge to the
Allowance, in which case Tenant shall receive a credit for Landlord's
standard material.
2) Completed telephone/electrical closets on each floor, properly vented and
lighted.
3) Completed and painted stairwells to include any required lighting,
excluding exit lighting within the Premises.
4) Completed packaged variable volume mechanical system on the roof of the
Buildings, properly installed with all electrical and plumbing completed,
noise and vibration attenuated at a ratio of approximately three (3) tons
of capacity for every 1,000 rentable square feet in the Buildings which
will enable the inside temperature to be consistent with the mechanical
design as mutually approved by Landlord and Tenant. The roof shall be
penetrated for supply and return duct shafts (properly insulated with
sound boots or other methods where required to attenuate noise and
vibration) and the main loop shall be installed in the shell.
5) The core and stairwell vestibules and the elevator lobbies shall be
sheet-rocked throughout the Buildings. All sheet-rock shall be properly
taped, mudded, sanded to a smooth finish, paint ready. The perimeter of
the inside exterior walls shall have completed studs with insulation
installed prior to Tenant Improvements at Landlord's expense.
6) All floors shall be delivered finished smooth (wall to wall) and shall be
flat to a level of one-quarter (1/4) inch over ten (10) feet in any
direction (noncumulative), free of cracks of greater than one-eighth (1/8)
inch in width and with no height differential on either side of the crack,
except for expansion or control joints which shall be installed and
completed in conformance with industry standards. The floors shall be
ready to accept floor covering, with only minor floor-floating required.
The ground floor shall be sealed if necessary to prevent levels of
moisture penetration greater than four (4) pounds after a seventy-two (72)
hour calcium chloride test has been completed.
7) Fire and life safety system and fire sprinkler system shall be installed
per City of San Diego (or other local jurisdiction) current codes. Final
drops for fire sprinklers shall be deducted from the Allowance. The upper
floors shall be an approved "fire-rated" enclosure or separation between
floors upon shell completion.
8) An electrical system shall be properly installed in each Building using
high quality components of between 1600 and 2000 amps, 480/277 volt, 3
phase, 4 wire service located in properly completed electrical rooms.
Primary electrical service to the Buildings shall be installed and wired
with pad mounted transformer in an acceptable location. Adequate power
shall be transformed for house power (to include but not be limited to
exterior lighting, landscaping controls, parking lot lighting, etc).
9) The loading capacity of all "upper" floors shall be a minimum live load of
eighty (80) pounds per square foot and a minimum dead load of twenty (20)
pounds per square foot.
10) A minimum of two (2), four (4) inch empty conduits shall be installed
between all Buildings for voice and data communication connections.
SCHEDULE 1
43
EXHIBIT "C"
SAMPLE FORM OF NOTICE OF LEASE TERM DATES
To:______________________ Date:__________________________
______________________
Re: Lease dated___________, 19___ between________________, Landlord,
and_____________________, Tenant, concerning premises located
at_____________________("PREMISES").
Ladies and Gentlemen:
In accordance with the above-referenced Lease, we wish to advise and/or confirm
as follows:
1. That the Premises have been accepted by Tenant in accordance with the Lease.
2. That Tenant has accepted and is in possession of the Premises, and
acknowledges that under the provisions of the Lease, the Term of the Lease
expires on _____________ (subject to earlier termination as provided in the
Lease), with two (2) options to renew for five (5) years each, and commenced
upon _____________.
3. That in accordance with the Lease, rental payment has commenced.
4. If the Commencement Date of the Lease is other than the first day of the
month, the first billing will contain a pro rata adjustment. Each billing
thereafter, with the exception of the final billing, shall be for the full
amount of the monthly installment as provided for in the Lease.
5. Monthly Rent is due and payable in advance on the first day of each and every
month during the Term of the Lease. Your rent checks should be made payable
to__________________at______________________.
6. The rentable square footage of the Premises is__________________________.
AGREED AND ACCEPTED
TENANT: LANDLORD:
__________________________________ _________________________________________
By:_______________________________ By:______________________________________
By:_______________________________
SAMPLE ONLY [NOT FOR EXECUTION]
EXHIBIT "C"
44
EXHIBIT "D"
ENVIRONMENTAL QUESTIONNAIRE
The purpose of this form is to obtain information regarding the use or proposed
use of hazardous materials at the premises. Prospective tenants should answer
the questions in light of their proposed operations at the premises. Existing
tenants should answer the questions as they relate to ongoing operations at the
premises and should update any information previously submitted. If additional
space is needed to answer the questions, you may attach separate sheets of paper
to this form.
Your cooperation in this matter is appreciated.
1. GENERAL INFORMATION
Name of Responding Company:__________________________________________________
Check the Applicable Status: Prospective Tenant______ Existing Tenant______
Mailing Address:_____________________________________________________________
Contact Person and Title:____________________________________________________
Telephone Number: (___)_______________________
Address of Leased Premises:__________________________________________________
Length of Lease Term:________________________________________________________
Describe the proposed operations to take place on the premises, including
principal products manufactured or services to be conducted. Existing tenants
should describe any proposed changes to ongoing operations.
_____________________________________________________________________________
_____________________________________________________________________________
2. STORAGE OF HAZARDOUS MATERIALS
2.1 Will any hazardous materials be used or stored on-site?
Wastes Yes____ No_____
Chemical Products Yes____ No_____
2.2 Attach a list of any hazardous materials to be used or stored, the
quantities that will be on-site at any given time, and the location and
method of storage (e.g., 55-gallon drums on concrete pad).
3. STORAGE TANKS AND SUMPS
3.1 Is any above or below ground storage of gasoline, diesel or other
hazardous substances in tanks or sumps proposed or currently conducted at
the premises?
Yes____ No_____
If yes, describe the materials to be stored, and the type, size and
construction of the sump or tank. Attach copies of any permits obtained
for the storage of such substances.
_________________________________________________________________________
_________________________________________________________________________
3.2 Have any of the tanks or sumps been inspected or tested for leakage?
Yes____ No_____
If so, attach the results.
3.3 Have any spills or leaks occurred from such tanks or sumps?
Yes____ No_____
If so, describe.
_________________________________________________________________________
_________________________________________________________________________
3.4 Were any regulatory agencies notified of the spill or leak?
Yes____ No_____
If so, attach copies of any spill reports filed, any clearance letters or
other correspondence from regulatory agencies relating to the spill or
leak.
3.5 Have any underground storage tanks or sumps been taken out of service or
removed?
Yes____ No_____
If yes, attach copies of any closure permits and clearance obtained from
regulatory agencies relating to closure and removal of such tanks.
EXHIBIT "D"
45
4. SPILLS
4.1 During the past year, have any spills occurred at the premises?
Yes____ No_____
If yes, please describe the location of the spill.
______________________________________________________________________
______________________________________________________________________
4.2 Were any agencies notified in connection with such spills?
Yes____ No_____
If yes, attach copies of any spill reports or other correspondence with
regulatory agencies.
4.3 Were any clean-up actions undertaken in connection with the spills?
Yes____ No_____
Attach copies of any clearance letters obtained from any regulatory
agencies involved and the results of any final soil or groundwater
sampling done upon completion of the clean-up work.
5. WASTE MANAGEMENT
5.1 Has your company been issued an EPA Hazardous Waste Generator I.D.
Number?
Yes____ No_____
5.2 Has your company filed a biennial report as a hazardous waste generator?
Yes____ No_____
If so, attach a copy of the most recent report filed.
5.3 Attach a list of the hazardous wastes, if any, generated or to be
generated at the premises, its hazard class and the quantity generated on
a monthly basis.
5.4 Describe the method(s) of disposal for each waste. Indicate where and how
often disposal will take place.
____ On-site treatment or recovery ______________________________
____ Discharged to sewer ______________________________
____ Transported and disposed of off-site ______________________________
____ Incinerator ______________________________
5.5 Indicate the name of the person(s) responsible for maintaining copies of
hazardous waste manifests completed for off-site shipments of hazardous
waste.
_________________________________________________________________________
5.6 Is any treatment of processing of hazardous wastes currently conducted or
proposed to be conducted at the premises:
Yes____ No_____
If yes, please describe any existing or proposed treatment methods.______
_________________________________________________________________________
5.7 Attach copies of any hazardous waste permits or licenses issued to your
company with respect to its operations at the premises.
6. WASTEWATER TREATMENT/DISCHARGE
6.1 Do you discharge wastewater to:
____ storm drain? ____ sewer?
____ surface water? ____ no industrial discharge
6.2 Is your wastewater treated before discharge?
Yes____ No_____
If yes, describe the type of treatment conducted.
_________________________________________________________________________
_________________________________________________________________________
6.3 Attach copies of any wastewater discharge permits issued to your company
with respect to its operations at the premises.
7. AIR DISCHARGES
7.1 Do you have any filtration systems or stacks that discharge into the
air?
Yes____ No_____
EXHIBIT "D" - Page 2
46
7.2 Do you operate any of the following types of equipment or any other
equipment requiring an air emissions permit?
____ Spray booth
____ Dip tank
____ Drying oven
____ Incinerator
____ Other (please describe)____________________________________________
____ No equipment requiring air permits
7.3 Are air emissions from your operations monitored?
Yes____ No_____
If so, indicate the frequency of monitoring and a description of the
monitoring results.
_________________________________________________________________________
7.4 Attach copies of any air emissions permits pertaining to your operations
at the premises.
8. HAZARDOUS MATERIALS DISCLOSURES
8.1 Does your company handle hazardous materials in a quantity equal to or
exceeding an aggregate of 500 pounds, 55 gallons, or 200 cubic feet per
month?
Yes____ No_____
8.2 Has your company prepared a hazardous materials management plan pursuant
to any applicable requirements of a local fire department or governmental
agency?
Yes____ No_____
If so, attach a copy of the business plan.
8.3 Has your company adopted any voluntary environmental, health or safety
program?
Yes____ No_____
If so, attach a copy of the program. No formal program. We recycle paper,
aluminum cans, and scrap aluminum.
9. ENFORCEMENT ACTIONS, COMPLAINTS
9.1 Has your company ever been subject to any agency enforcement actions,
administrative orders, or consent decrees?
Yes____ No_____
If so, describe the actions and any continuing compliance obligations
imposed as a result of these actions.
_________________________________________________________________________
9.2 Has your company ever received requests for information, notice or demand
letters, or any other inquiries regarding its operations?
Yes____ No_____
9.3 Have there ever been, or are there now pending, any lawsuits against the
company regarding any environmental or health and safety concerns?
Yes____ No_____
9.4 Has an environmental audit ever been conducted at your company's current
facility?
Yes____ No_____
If so, identify who conducted the audit and when it was conducted.
_________________________________________________________________________
The undersigned represents to Landlord that the foregoing is accurate and
complete in all material respects.
DATAWORKS CORPORATION, a California corporation
By:_________________________
Name:_______________________
Title:______________________
Date:_______________________
EXHIBIT "D" - Page 3
47
EXHIBIT "E"
SAMPLE FORM OF TENANT ESTOPPEL CERTIFICATE
The undersigned ("TENANT") hereby certifies
to_______________________("LANDLORD"), and__________________, as follows:
1. Attached hereto is a true, correct and complete copy of that certain Lease
dated_____ 19__ between Landlord and Tenant (the "LEASE"), which demises
Premises which are located at_______________________. The Lease is now in full
force and effect and has not been amended, modified or supplemented, except as
set forth in Section 6 below.
2. The term of the Lease commenced on_____________, 19_ (Office
Building),______________, 19__ (Manufacturing Building, and____________________,
19_ (Parking Lot).
3. The term of the Lease is currently scheduled to expire on____________, 19__.
4. Tenant has no option to renew or extend the Term of the Lease except:________
______________________________________.
5. Tenant has no preferential right to purchase the Premises.
6. The Lease has: (Initial One).
( ) not been amended, modified, supplemented, extended, renewed or assigned.
( ) been amended, modified, supplemented, extended, renewed or assigned by the
following described agreements, copies of which are attached hereto:____________
_______________________________________.
7. Tenant has accepted and is now in possession of the Premises and has not
sublet, assigned or encumbered the Lease, the Premises or any portion thereof
except as follows:_____________________________________________________________.
8. The current Monthly Rent is $____________.
9. The amount of security deposit (if any) is $__________________________. No
other security deposits have been made.
10. All rental payments payable by Tenant have been paid in full as of the date
hereof. No rent under the Lease has been paid for more than thirty (30) days in
advance of its due date.
11. All work required to be performed by Landlord under the Lease has been
completed and has been accepted by Tenant, and all tenant improvement allowances
have been paid in full.
12. To the best of Tenant's knowledge, as of the date hereof, there are no
defaults on the part of Landlord or Tenant under the Lease.
13. Tenant has no defense as to its obligations under the Lease and claims no
set-off or counterclaim against Landlord, except as follows:____________________
_______________________________________.
14. Tenant has no right to any concession (rental or otherwise) or similar
compensation in connection with renting the space it occupies, except as
expressly provided in the Lease.
15. All insurance required of Tenant under the Lease has been provided by Tenant
and all premiums have been paid.
16. There has not been flied by or against Tenant a petition in bankruptcy,
voluntary or otherwise, any assignment for the benefit of creditors, any
petition seeking reorganization or arrangement under the bankruptcy laws of the
United States or any state thereof, or any other action brought pursuant to such
bankruptcy laws with respect to Tenant.
17. Tenant pays rent due Landlord under the Lease to Landlord and does not have
any knowledge of any other person who has any right to such rents by collateral
assignment or otherwise.
The foregoing certification is made with the knowledge
that_______________________is about to [FUND A LOAN TO LANDLORD OR PURCHASE THE
PREMISES FROM LANDLORD], and that______________________ is relying upon the
representations herein made in (FUNDING SUCH LOAN OR PURCHASING THE PREMISES].
Dated:__________, 19__.
"TENANT"
__________________________________
By:_______________________________
By:_______________________________
SAMPLE ONLY (NOT FOR EXECUTION)
EXHIBIT "E"
48
EXHIBIT "F"
RULES AND REGULATIONS
1 Except as provided in the Lease, no sign, placard, picture
advertisement, name or notice shall be installed or displayed on any
part of the outside or inside of the Building without the prior written
consent of Landlord. Landlord shall have the right to remove, at
Tenant's expense and without notice, any sign installed or displayed in
violation of this rule.
2. Except as explicitly permitted BY the terms of the Lease, no awning or
other projections shall be permitted on any part of the Premises. Tenant
shall not place anything against or near glass partitions or doors or
windows which may appear unsightly from outside the Premises.
3. If Tenant requires burglar alarm or similar services, it shall comply
with the provisions of the Lease with respect to its installation.
4. Tenant shall not place a load upon any floor of the Premises which
exceeds the load per square foot which such floor was designed to carry.
Landlord shall have the right to prescribe the position of all heavy
equipment, materials, furniture or other property brought into the
Building. Heavy objects, shall stand on such platforms as necessary to
properly distribute the weight.
5. Tenant shall not use or keep in the Premises any kerosene, gasoline or
inflammable or combustible fluid or material other than those limited
quantities necessary for the operation or maintenance of office
equipment. Tenant shall not use or permit to be used in the Premises any
foul or noxious gas or substance, or permit or allow the Premises, the
Building or Project, to be occupied or used in a manner offensive or
objectionable to Landlord by reason of noise, behavior, odors or
vibrations, nor shall Tenant bring into or keep in or about the
Premises any birds or animals (other than those assisting disabled
persons).
6. Tenant shall use its reasonable efforts to not waste electricity, water
or air-conditioning and agrees to comply with any governmental
energy-saving rules, laws or regulations of which Tenant has actual
notice.
7. Tenant shall not sell, or permit the sale at retail, of newspapers,
magazines, periodicals, theater tickets or any other goods or
merchandise to the general public in or on the Premises. Tenant shall
not make any room-to-room solicitation of business from other tenants in
the Project. Tenant shall not use the Premises for any business or
activity other than that specifically provided for in Tenant's Lease.
8. Except as expressly provided in the Lease, Tenant shall not install any
radio or television antenna, loudspeaker or other device on the roof or
exterior walls of the Building.
9. Canvassing, soliciting and distribution of handbills or any other
written material, and peddling in the Project are prohibited, and each
tenant shall cooperate to prevent same.
10. Landlord reserves the right to exclude or expel from the Project any
person who, in Landlord's judgment, is intoxicated or under the
influence of liquor or drugs or who is in violation of any the Rules and
Regulations.
11. Tenant shall store all its trash and garbage within its Premises. Tenant
shall not place in any trash box or receptacle any material which cannot
be disposed of in the ordinary and customary manner of trash and garbage
disposal. All garbage and refuse disposal shall be made in accordance
with directions issued from time to time by Landlord.
12. The Premises shall not be used for the storage of merchandise held for
sale to the general public, or for lodging or manufacturing of any kind,
nor shall the Premises be used for any improper, immoral or
objectionable purposes.
13. Tenant shall comply with all safety, fire protection and evacuation
procedures and regulations established by Landlord or any governmental
agency.
14. Tenant assumes any and all responsibility for protecting its Premises
from theft, robbery and pilferage, which includes keeping doors locked
and other means of entry to the Premises closed.
15. Landlord may waive any one or more of these Rules and Regulations for
the benefit of Tenant or any other tenant, but no such waiver by
Landlord shall be construed as a waiver of such Rules and Regulations in
favor of Tenant or any other tenant, nor prevent Landlord from
thereafter enforcing any such Rules and Regulations against any or all
of the tenants of the Project.
16. These Rules and Regulations are in addition to, and shall not be
construed to in any way modify or amend, in whole or in part, the terms,
covenants, agreements and conditions of the Lease.
17. Landlord reserves the right to make such other non-discriminatory and
reasonable Rules and Regulations as, in its judgment, may from time to
time be needed for safety and security, for care and cleanliness of the
Project and for the preservation of good order therein. Tenant agrees to
abide by all such Rules and Regulations hereinabove stated and any
additional rules and regulations which are so adopted.
EXHIBIT "F
49
18. Tenant shall be responsible for the observance of all the foregoing
rules by Tenant's employees, agents, clients, customers, invitees and
guests.
50
EXHIBIT "G"
FORM OF MEMORANDUM
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
Xxxxxxxx, Xxxx, Xxxxxxxxxx
& Savitch LLP
000 X Xxxxxx, Xxxxx 0000
Xxx Xxxxx, XX 00000-0000
Attention: Xxxx X. Xxxxxxxxx, Esq.
================================================================================
(Space Above For Recorder's Use)
MEMORANDUM OF LEASE
THIS MEMORANDUM OF LEASE ("Memorandum') is dated the 14th day of
August, 1998 by and between ADI RESEARCH PARTNERS, L.P., a California limited
partnership ("Landlord"), and DATAWORKS CORPORATION, a California corporation
("Tenant').
RECITALS:
A. Landlord and Tenant entered into that certain Single-Tenant
Lease (Triple-Net) dated as of August 14, 1998 (the "Lease"), with respect to
those certain premises to be constructed by Landlord to consist of a two (2)
story building containing approximately one hundred ten thousand (110,000)
rentable square feet and a two (2) story building containing approximately sixty
thousand (60,000) rentable square feet (collectively the "Premises") to be
located on a portion of the real property described in Exhibit A attached hereto
and made a part hereof (the "Property"), together with the right to use the
"Common Areas" located on the Property, as that term is defined in Section 4.1
of the Lease.
B. Landlord and Tenant wish to record a Memorandum of the Lease
confirming the existence of the Lease and certain matters pertaining thereto.
NOW, THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
1. Lease. In consideration of the covenants and agreements
contained in the Lease, Landlord does hereby lease to Tenant the Premises more
particularly described in the Lease. As of the date hereof, the Lease is
currently in full force and effect and has not been modified or amended in any
respect whatsoever.
2. Term. The term of the Lease shall expire, unless extended
pursuant to the options available to Tenant in accordance with the terms of the
Lease, ten (10) years after the "Commencement Date," as that term is defined in
Section 1.5 of the Summary of Basic Lease Information contained in the Lease.
3. Options. Tenant has two (2) separate consecutive options to
extend the term of the Lease for five (5) years each on the terms and conditions
set forth in Section 2.3 of the Lease.
4. Option to Expand. Pursuant to Section 33 of the Lease, Tenant
has an option to expand the Premises to include a third building to be
constructed by Landlord ("Building 3") containing approximately fifty thousand
(50,000) rentable square feet. Building 3 is to be constructed on a portion of
the Property located immediately adjacent to the Premises ("Building 3 Site").
5. Right of First Refusal to Lease Additional Space. Pursuant to
Section 33.2 of the Lease, Tenant has a continuing Right of First Refusal to
lease all or any portion of any Building 3.
6. Building 3 Site Restrictions. Pursuant to Section 34 of the
Lease, Landlord has agreed that Landlord shall develop a building on the
Building 3 Site that is substantially of the same design as the buildings that
constitute the initial Premises, including, without limitation, substantially
the same amount of parking and substantially the same landscaping. In no event
shall any building constructed on the Building 3 Site be greater than three (3)
floors unless Tenant consents, which consent may be withheld by Tenant at its
sole and absolute discretion.
7. Lease Incorporated. The purpose of this Memorandum is solely
to provide notice of the existence of the Lease. All of the terms, conditions
and covenants of the Lease are incorporated herein by this reference and are not
amended, modified or varied in any way by this Memorandum. The terms of the
Lease shall govern in the event of any conflict with this Memorandum.
EXHIBIT "G"
51
8. Termination of Lease. Upon the expiration or sooner termination of
the Lease, this Memorandum shall terminate and be of no further force or effect
and Tenant agrees to execute and deliver for recordation, a quitclaim deed in
favor of Landlord confirming that Tenant quitclaims all right, title and
interest in and to the Premises under the Lease.
9. Counterparts. This Memorandum may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which,
together, shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Memorandum of
Lease as of the date first above written.
LANDLORD: TENANT:
ADI RESEARCH PARTNERS, L.P., DATAWORKS CORPORATION,
a California limited partnership a California corporation
By: XXXXX DEVELOPMENT, INC., By:______________________________________
a California corporation, Name:____________________________________
general partner Title:___________________________________
By:_________________________
Name:_______________________ By:______________________________________
Title:______________________ Name:____________________________________
Title:___________________________________
By:_________________________
Name:_______________________
Title:______________________
52
EXHIBIT A TO MEMORANDUM OF LEASE
LEGAL DESCRIPTION OF THE PROPERTY
THE LAND REFERRED TO HEREIN IS SITUATED IN THE STATE OF CALIFORNIA, COUNTY OF
SAN DIEGO, AND IS DESCRIBED AS FOLLOWS:
XXXX 0, 0, 0 XXX 0 XX XXXXXXXXX RESEARCH PARK II, IN THE CITY OF SAN DIEGO,
COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 13604,
FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, JULY 27,1998.
EXHIBIT A TO MEMORANDUM OF LEASE
