AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE - NET
(DO NOT USE THIS FORM FOR MULTI-TENANT BUILDINGS)
1. Basic Provisions ("Basic Provisions")
1.1 Parties: This Lease ("Lease"), dated for reference purposes only, June
13, 1997, is made by and between LMC - Sorrento Investment Company, LLC, a
California limited liability company ("Lessor") and Agouron Pharmaceuticals,
Inc., a California corporation ("Lessee"), (collectively the "Parties," or
individually a "Party").
1.2 Premises: That certain real property, including all improvements
therein or to be provided by Lessor under the terms of this Lease, and commonly
known as 0000 Xxxxxxxx Xxxxxx Xxxx., Xxx Xxxxx, Xxxxxxxxxx, located in the
County of San Diego, State of California, and generally described as a Building
which (when the improvements have been completed) shall consist of approximately
54,000 square feet (approximately 33,000 sq. ft. on first floor and 21,000 sq.
ft. on second floor) on land having an area of approximately 150,718 sq. ft.
("Premises"). (See also Paragraph 2)
1.3 Term: See Addendum years and _____ months ("Original Term")
commencing See Addendum ("Commencement Date") and ending See Addendum
("Expiration Date"). (See also Paragraph 3)
1.4 Early Possession: N/A ("Early Possession Date").
(See also Paragraphs 3.2 and 3.3)
1.5 Base Rent: $ See Addendum per month ("Base Rent"), payable on the
first day of each month commencing Rent Commencement Date (See Addendum) (See
also Paragraph 4)
/X/ If this box is checked, there are provisions in this Lease for the Base
Rent to be adjusted.
1.6 Base Rent Paid Upon Execution: $ See Addendum as Base Rent for the
period See Addendum.
1.7 Security Deposit: $ See Addendum ("Security Deposit"). (See also
Paragraph 5)
1.8 Agreed Use: Any use consistent with zoning of the Premises. (See
also Paragraph 6)
1.9 Insuring Party. Lessor is the "Insuring Party" unless otherwise
stated herein. (See also Paragraph 8)
1.10 Real Estate Brokers: (See also Paragraph 15)
(a) Representation: The following real estate brokers (collectively,
the "Brokers") and brokerage relationships exist in this transaction (check
applicable boxes):
/X/ CB Commercial represents Lessor exclusively ("Lessor's Broker"); /X/
Colliers/Illif/Thorn represents Lessee exclusively ("Lessee's Broker"); or / /
N/A represents both Lessor and Lessee ("Dual Agency").
(b) [No text]
1.11 Guarantor. The obligations of the Lessee under this Lease are to
be guaranteed by N/A ("Guarantor"). (See also Paragraph 37)
1.12 Addenda and Exhibits. Attached hereto is an Addendum or Addenda
consisting of Paragraphs 1.3 through 54 and Exhibits 1 (SNDA) and 2 (Site Plan),
all of which constitute a part of this Lease.
2. Premises.
2.1 Letting. Lessor hereby leases to Lessee, and Lessee hereby leases
from Lessor, the Premises, for the term, at the rental, and upon all of the
terms, covenants and conditions set forth in this Lease and the Addendum.
See Addendum, Sec. 1.5.3.
2.2 Condition. See Addendum, Sec. 51.
2.3 Compliance. Subject to the Addendum, Sec. 50. Lessor warrants that the
improvements on the Premises comply with all applicable laws, covenants or
restrictions of record, building codes, regulations and ordinances ("Applicable
Requirements") in effect on the Start Date. Said warranty does not apply to the
use to which Lessee will put the Premises or to any Alterations or Utility
Installations (as defined in Paragraph 7.3(a)) made or to be made by Lessee.
NOTE: Lessee is responsible for determining whether or not the zoning is
appropriate for Lessee's intended use, and acknowledges that past uses of the
Premises may no longer be allowed. If the Premises do not comply with said
warranty, Lessor shall, except as otherwise provided, promptly after receipt of
written notice from Lessee setting forth with specificity the nature and extent
of such non-compliance, rectify the same at Lessor's expense. If Lessee does not
give Lessor written notice of a non-compliance with this warranty within six (6)
months following the Start Date, corrections of that non-compliance shall be the
obligation of Lessee at Lessee's sole cost and expense. If the Applicable
Requirements are hereafter changed (as opposed to being in existence at the
Start Date, which is addressed in Paragraph 6.2 (e) below) so as to require
during the term of this Lease the construction of an addition to or an
alteration of the Building, the remediation of any Hazardous Substance, or the
reinforcement or other physical modification of the Building ("Capital
Expenditure"), Lessor and Lessee shall allocate the cost of such work as
follows:
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(a) Subject to Paragraph 2.3(c) below, if such Capital Expenditures
are required as a result of the specific and unique use of the Premises by
Lessee as compared with uses by tenants in general, Lessee shall be fully
responsible for the cost thereof, provided, however that if such Capital
Expenditure is required during the last two (2) years of this Lease and the cost
thereof exceeds six (6) months' Base Rent, Lessee may instead terminate this
Lease unless Lessor notifies Lessee, in writing, within ten (10) days after
receipt of Lessee's termination notice that Lessor has elected to pay the
difference between the actual cost thereof and the amount equal to six (6)
months' Base Rent. If Lessee elects termination, Lessee shall immediately cease
the use of the Premises which requires such Capital Expenditure and deliver to
Lessor written notice specifying a termination date at least ninety (90) days
thereafter. Such termination date shall, however, in no event be earlier than
the last day that Lessee could legally utilize the Premises without commencing
such Capital Expenditure.
(b) If such Capital Expenditure is not the result of the specific and
unique use of the Premises by Lessee (such as, governmentally mandated seismic
modifications), then Lessor and Lessee shall allocate the obligation to pay for
such costs pursuant to the provisions of Paragraph 7.1(c); provided, however,
that if such Capital Expenditure is required during the last two years of the
Lease or if Lessor reasonably determines that it is not economically feasible to
pay its share thereof, Lessor shall have the option to terminate this Lease upon
ninety (90) days prior written notice to Lessee unless Lessee notifies Lessor,
in writing, within ten (10) days after receipt of Lessor's termination notice
that Lessee will pay for such Capital Expenditure. If Lessor does not elect to
terminate, and fails to tender its share of any such Capital Expenditure, Lessee
may advance such funds and deduct same, with Interest, from Rent until Lessor's
share of such costs have been fully paid. If Lessee is unable to finance
Lessor's share, or if the balance of the Rent due and payable for the remainder
of this Lease is not sufficient to fully reimburse Lessee on an offset bases,
Lessee shall have the right to terminate this Lease upon thirty (30) days
written notice to Lessor.
(c) Notwithstanding the above, the provisions concerning Capital
Expenditures are intended to apply only to non-voluntary, unexpected, and new
Applicable Requirements. If the Capital Expenditures are instead triggered by
Lessee as a result of an actual or proposed change in use, change in intensity
of use, or modification to the Premises then, and in that event, Lessee shall be
fully responsible for the cost thereof, and Lessee shall not have any right to
terminate this Lease.
2.4 Acknowledgments. Lessee acknowledges that: (a) it has been advised by
Lessor and/or Brokers to satisfy itself with respect to the condition of the
Premises (including but not limited to the electrical, HVAC and fire sprinkler
systems, security, environmental aspects, and compliance with Applicable
Requirements), and their suitability for Lessee's intended use, (b) Lessee has
made such investigation as it deems necessary with reference to such matters and
assumes all responsibility therefor as the same relate to its occupancy of the
Premises, and (c) neither Lessor, Lessor's agents, nor any Broker has made any
oral or written representations or warranties with respect to said matters other
than as set forth in this Lease. In addition, Lessor acknowledges that: (a)
Broker has made no representations, promises or warranties concerning Lessee's
ability to honor the Lease or suitability to occupy the Premises, and (b) it is
Lessor's responsibility to investigate the financial capability and/or
suitability of all proposed tenants.
2.5 Lessee as Prior Owner/Occupant. [No text.]
3. Term.
3.1 Term. The Commencement Date, Expiration Date and Original Term of
this Lease are as specified in Paragraph 1.3.
3.2 Early Possession. If Lessee totally or partially occupies the Premises
prior to the Commencement Date, the obligation to pay Rent shall be abated for
the period of such early possession. Any such early possession shall not affect
the Expiration Date.
3.3 Delay in Possession. See Addendum, Sec. 50, 51.
3.4 Lessee Compliance. Lessor shall not be required to tender possession of
the Premises to Lessee until Lessee complies with its obligation to provide
evidence of insurance (Paragraph 8.5). Pending delivery of such evidence, Lessee
shall be required to perform all of its obligations under this Lease from and
after the Start Date, including the payment of Rent, notwithstanding Lessor's
election to withhold possession pending receipt of such evidence of insurance.
Further, if Lessee is required to perform any other conditions prior to or
concurrent with the Start Date, the Start Date shall occur but Lessor may elect
to withhold possession until such conditions are satisfied. 4. Rent.
4.1 Rent Defined. All monetary obligations of Lessee to Lessor under
the terms of this Lease (except for the Security Deposit) are deemed to be rent
("Rent").
4.2 Payment. Lessee shall cause payment of Rent to be received by Lessor in
lawful money of the United States, without offset or deduction, on or before the
day on which it is due. Rent for any period during the term hereof which is for
less than one (1) full calendar month shall be prorated based upon the actual
number of days of said month. Payment of Rent shall be made to Lessor at its
address stated herein or to such other persons or place as Lessor may from time
to time designate in writing. Acceptance of a payment which is less than the
amount then due shall not be a waiver of Lessor's rights to the balance of such
Rent, regardless of Lessor's endorsement of any check so stating. 5. Security
Deposit. Lessee shall deposit with Lessor upon execution hereof the Security
Deposit as security for Lessee's faithful performance of its obligations under
this Lease. If Lessee fails to pay Rent, or otherwise Defaults under this Lease,
Lessor may use, apply or retain all or any portion of said Security Deposit for
the payment of any amount due Lessor or to reimburse or compensate Lessor for
any liability, expense, loss or damage which Lessor may suffer or incur by
reason thereof. If Lessor uses or applies all or any portion of said Security
Deposit, Lessee shall within ten (10) days after written request therefor
deposit monies with Lessor sufficient to restore said Security Deposit to the
full amount required by this Lease. Lessor shall not be required to keep the
Security Deposit separate from its general accounts. Within fourteen (14) days
after the expiration or termination of this Lease, if Lessor elects to apply the
Security Deposit only to unpaid Rent, and otherwise within thirty (30) days
after the Premises have been vacated pursuant to Paragraph 7.4(c) below, Lessor
shall return that portion of the Security Deposit not used or applied by Lessor.
No part of the Security Deposit shall be considered to be held in trust, to bear
interest or to be prepayment for any monies to be paid by Lessee under this
Lease. 6. Use.
6.1 Use. Lessee shall use and occupy the Premises only for the Agreed Use,
or any other legal use which is reasonably comparable thereto, and for no other
purpose. Lessee shall not use or permit the use of the Premises in a manner that
is unlawful, creates damage, waste or a nuisance, or that disturbs owners and/or
occupants of, or causes damage to neighboring properties. Lessor shall not
unreasonably withhold
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or delay its consent to any written request for a modification of the Agreed
Use, so long as the same will not impair the structural integrity of the
improvements on the Premises or the mechanical or electrical systems therein, is
not significantly more burdensome to the Premises. If Lessor elects to withhold
consent, Lessor shall within ten (10) business days after such request give
written notification of same, which notice shall include an explanation of
Lessor's objections to the change in use.
6.2 Hazardous Substances. See Addendum, Sec. 6.2.
(e) Lessor Indemnification. Lessor and its successors and assigns
shall indemnify, defend, reimburse and hold Lessee, its employees and lenders,
harmless from and against any and all environmental damages which existed as a
result of Hazardous Substances on the Premises prior to the Start Date or which
are caused by the gross negligence, or intentional acts of Lessor, its agents or
employees. Lessor's obligations, as and when required by the Applicable
Requirements, shall include, but not be limited to, the cost of investigation,
removal, remediation, restoration and/or abatement, and shall survive the
expiration or termination of this Lease.
(f) Investigations and Remediations. Lessor shall retain the
responsibility and pay for any investigations or remediation measures required
by governmental entities having jurisdiction with respect to the existence of
Hazardous Substances on the Premises prior to the Start Date. Lessee shall
cooperate fully in any such activities at the request of Lessor, including
allowing Lessor and Lessor's agents to have reasonable access to the Premises at
reasonable times in order to carry out Lessor's investigative and remedial
responsibilities.
(g) [No text.]
6.3 Lessee's Compliance with Applicable Requirements. Except as otherwise
provided in this Lease, Lessee, shall, at Lessee's sole expense, fully,
diligently and in a timely manner, materially comply with all Applicable
Requirements, the requirements of any applicable fire insurance underwriter or
rating bureau, and the recommendations of Lessor's engineers and/or consultants
which relate in any manner to the Premises, without regard to whether said
requirements are now in effect or become effective after the Start Date. Lessee
shall, within ten (10) days after receipt of Lessor's written request, provide
Lessor with copies of all permits and other documents, and other information
evidencing Lessee's compliance with any Applicable Requirements specified by
Lessor, and shall immediately upon receipt, notify Lessor in writing (with
copies of any documents involved) of any threatened or actual claim, notice,
citation, warning, complaint or report pertaining to or involving the failure of
Lessee or the Premises to comply with any Applicable Requirements.
6.4 Inspection; Compliance. See Addendum, Sec. 6.4.
7. Maintenance; Repairs, Utility Installations; Trade Fixtures and
Alterations.
7.1 Lessee's Obligations.
(a) In General. Subject to the provisions of Paragraph 6.2
(Hazardous Substances), 2.3 (Compliance), 6.3 (Lessee's Compliance with
Applicable Requirements), 7.2 (Lessor's Obligations), 9 (Damage or Destruction),
and 14 (Condemnation), Lessee shall, at Lessee's sole expense, keep
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the Premises, Utility Installations, and Alterations in good order, condition
and repair (whether or not the portion of the Premises requiring repairs, or the
means of repairing the same, are reasonably or readily accessible to Lessee, and
whether or not the need for such repairs occurs as a result of Lessee's use, any
prior use, the elements or the age of such portion of the Premises), including,
but not limited to, all equipment or facilities, such as plumbing, HVAC,
electrical, lighting facilities, boilers, pressure vessels, fire protection
system, fixtures, walls (interior and exterior), foundations, ceilings, roofs,
floors, windows, doors, plate glass, skylights, landscaping, driveways, parking
lots, fences, retaining walls, signs, sidewalks and parkways located in the
Premises. Lessee, in keeping the Premises in good order, condition and repair,
shall exercise and perform good maintenance practices, specifically including
the procurement and maintenance of the service contracts required by Paragraph
7.1(b) below. Lessee's obligations shall include restorations, replacements or
renewals when necessary to keep the Premises and all improvements thereon or a
part thereof in good order, condition and state of repair. Lessee shall, during
the term of this Lease, keep the exterior appearance of the Building in a
first-class condition consistent with the exterior appearance of other similar
facilities of comparable age and size in the vicinity, including, when
necessary, the exterior repainting of the Building.
(b) Service Contracts. Lessee shall, at Lessee's sole expense, procure
and maintain contracts, with copies to Lessor, in customary form and substance
for, and with contractors specializing and experienced in the maintenance of the
following equipment and improvements, ("Basic Elements"), if any, as and when
installed on the Premises: (i) HVAC equipment, (ii) boiler and pressure vessels,
(iii) fire protection systems, (iv) landscaping and irrigation systems, (v) roof
covering and drains, (vii) clarifiers and (viii) any other equipment, if
reasonably required by Lessor.
(c) Replacement. Subject to Lessee's indemnification of Lessor as set
forth in Paragraph 8.7 below, and without relieving Lessee of liability
resulting from Lessee's failure to exercise and perform good maintenance
practices, if the Basic Elements described in Paragraph 7.1(b) cannot be
repaired other than at a cost which is in excess of 50 % of the cost of
replacing such Basic Elements, then such Basic Elements shall be replaced by
Lessor, and the cost thereof shall be prorated between the Parties and Lessee
shall only be obligated to pay, each month during the remainder of the term of
this Lease, on the date on which Base Rent is due, an amount equal to the
product of multiplying the cost of such replacement by a fraction, the numerator
of which is one, and the denominator of which is the number of months of the
useful life of such replacement as such useful life is specified pursuant to
Federal income tax regulations or guidelines for depreciation thereof (including
interest on the unamortized balance as is then commercially reasonable in the
judgment of Lessor's accountants), with Lessee reserving the right to prepay its
obligation at any time.
7.2 Lessor's Obligations. Subject to the provisions of Paragraphs 7.1(c)
(Replacement), 6.2 (Hazardous Substances), 2.3 (Compliance), 9 (Damage or
Destruction) and 14 (Condemnation), it is intended by the Parties hereto that
Lessor have no obligation, in any manner whatsoever, to repair and maintain the
Premises, or the equipment therein, all of which obligations are intended to be
that of the Lessee. It is the intention of the Parties that the terms of this
Lease govern the respective obligations of the Parties as to maintenance and
repair of the Premises, and they expressly waive the benefit of any statute now
or hereafter in effect to the extent it is inconsistent with the terms of this
Lease.
7.3 Utility Installations; Trade Fixtures; Alterations.
(a) Definitions; Consent Required. The term "Utility Installations"
refers to all floor and window coverings, air lines, power panels, electrical
distribution, security and fire protection systems, communication systems,
lighting fixtures, HVAC equipment, plumbing, and fencing in or on the Premises.
The term "Trade Fixtures" shall mean Lessee's machinery and equipment that can
be removed without doing material damage to the Premises. The term "Alterations"
shall mean any modification of the improvements, other than Utility
Installations or Trade Fixtures, whether by addition or deletion. "Lessee Owned
Alterations and/or Utility Installations" are defined as Alterations and/or
Utility Installations made by Lessee that are not yet owned by Lessor pursuant
to Paragraph 7.4(a). Lessee shall not make any Alterations or Utility
Installations to the Premises without Lessor's prior written consent. Lessee
may, however, make non-structural Utility Installations to the interior of the
Premises (excluding the roof) without such consent but upon notice to Lessor, as
long as they are not visible from the outside, do not involve puncturing,
relocating or removing the roof or any existing exterior walls, and the
cumulative cost thereof during this Lease as extended does not exceed
$100,000.00 in any one year.
(b) Consent. Any Alterations or Utility Installations that Lessee
shall desire to make and which require the consent of the Lessor shall be
presented to Lessor in written form with detailed plans. Consent shall be deemed
conditioned upon Lessee's: (i) acquiring all applicable governmental permits,
(ii) furnishing Lessor with copies of both the permits and the plans and
specifications prior to commencement of the work, and (iii) compliance with all
conditions of said permits and other Applicable Requirements in a prompt and
expeditious manner. Any Alterations or Utility Installations shall be performed
in a workmanlike manner with good and sufficient materials. Lessee shall
promptly upon completion furnish Lessor with as-built plans and specifications.
For work which costs an amount equal to the greater of one month's Base Rent, or
$10,000, Lessor may condition its consent upon Lessee providing a lien and
completion bond in an amount equal to one and one-half times the estimated cost
of such Alteration or Utility Installation and/or upon Lessee's posting an
additional Security Deposit with Lessor.
(c) Indemnification. Lessee shall pay, when due, all claims for labor
or materials furnished or alleged to have been furnished to or for Lessee at or
for use on the Premises, which claims are or may be secured by any mechanic's or
materialmen's lien against the Premises or any interest therein. Lessee shall
give Lessor not less than ten (10) days' notice prior to the commencement of any
work in, on or about the Premises, and Lessor shall have the right to post
notices of non-responsibility. If Lessee shall contest the validity of any such
lien, claim or demand, then Lessee shall, at its sole expense defend and protect
itself, Lessor and the Premises against the same and shall pay and satisfy any
such adverse judgment that may be rendered thereon before the enforcement
thereof. If Lessor shall require, Lessee shall furnish a surety bond in an
amount equal to one and one-half times the amount of such contested lien, claim
or demand, indemnifying Lessor against liability for the same. If Lessor elects
to participate in any such action, Lessee shall pay Lessor's attorneys' fees and
costs.
7.4 Ownership; Removal; Surrender; and Restoration.
(a) Ownership. Alterations and Utility Installations made by Lessee
shall be the property of Lessee, but considered a part of the Premises. Lessee
Owned Alterations and Utility Installations shall, at the expiration or
termination of this Lease, become the property of Lessor and be surrendered by
Lessee with the Premises. See Addendum, Section 50.4.3.
(b) Removal. [No text.]
(c) Surrender/Restoration. Lessee shall surrender the Premises by the
Expiration Date or any earlier termination date, with all of the improvements,
parts and surfaces thereof broom clean and free of debris, and in good operating
order, condition and state of repair, ordinary wear and tear excepted. "Ordinary
wear and tear" shall not include any damage or deterioration that would gave
been prevented by good maintenance practice. Lessee shall repair any damage
occasioned by the installation, maintenance or removal of Trade Fixtures,
furnishings, and equipment installed by or for Lessee, and the removal,
replacement, or remediation of any soil, material or groundwater contaminated by
Lessee. Trade Fixtures shall remain the property of Lessee and may, at Lessor's
election, be removed by Lessee. See Addendum, Section 50.4.3. The failure by
Lessee to timely vacate the Premises pursuant to this Paragraph 7.4(c) without
the express written consent of Lessor shall constitute a holdover under the
provisions of Paragraph 26 below. 8. Insurance; Indemnity.
8.1 Payment For Insurance. Lessee shall pay for all insurance required
under Paragraph 8 except to the extent of the cost attributable to liability
insurance carried by Lessor under Paragraph 8.2(b) in excess of $2,000,000 per
occurrence. Premiums for policy periods commencing prior to or extending beyond
the Lease term shall be prorated to correspond to the Lease term. Payment shall
be made by Lessee to Lessor within thirty (30) days following receipt of an
invoice.
8.2 Liability Insurance.
(a) Carried by Lessee. Lessee shall obtain and keep in force a
Commercial General Liability Policy of Insurance protecting Lessee
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and Lessor against claims for bodily injury, personal injury and property damage
based upon or arising out of the ownership, use, occupancy or maintenance of the
Premises and all areas appurtenant thereto. Such insurance shall be on an
occurrence bases providing single limit coverage in an amount not less than
$2,000,000 per occurrence with an "Additional Insured-Managers or Lessors of
Premises Endorsement" and contain the "Amendment of the Pollution Exclusion
Endorsement" for damage caused by heat, smoke or fumes from a hostile fire. The
Policy shall not contain any intra-insured exclusions as between insured persons
or organizations, but shall include coverage for liability assumed under this
Lease as an "insured contract" for the performance of Lessee's indemnity
obligations under this Lease. The limits of said insurance shall not, however,
limit the liability of Lessee nor relieve Lessee of any obligation hereunder.
All insurance carried by Lessee shall be primary to and not contributory with
any similar insurance carried by Lessor, whose insurance shall be considered
excess insurance only.
(b) Carried by Lessor. Lessor shall maintain liability insurance as
described in Paragraph 8.2(a), in addition to, and not in lieu of, the insurance
required to be maintained by Lessee. Lessee shall not be named as an additional
insured therein.
8.3 Property Insurance - Building, Improvements and Rental Value.
(a) Building and Improvements. The Insuring Party shall obtain and
keep in force a policy or policies in the name of Lessor, with loss payable to
Lessor and to any Lender insuring loss or damage to the Premises. The amount of
such insurance shall be equal to the full replacement cost of the Premises, as
the same shall exist from time to time, or the amount required by any Lenders,
but in no event more than the commercially reasonable and available insurable
value thereof. If Lessor is the Insuring Party, however, Lessee Owned
Alterations and Utility Installations, Trade Fixtures, and Lessee's personal
property shall be insured by Lessee under Paragraph 8.4 rather than by Lessor.
If the coverage is available and commercially appropriate, such policy or
policies shall insure against all risks of direct physical loss or damage
(except the perils of flood and/or earthquake unless required by a Lender),
including coverage for debris removal and the enforcement of any Applicable
Requirements requiring the upgrading, demolition, reconstruction or replacement
of any portion of the Premises as the result of a covered loss. Said policy or
policies shall also contain an agreed valuation provision in lieu of any
coinsurance clause, waiver of subrogation, and inflation guard protection
causing an increase in the annual property insurance coverage amount by a factor
of not less than the adjusted U.S. Department of Labor Consumer Price Index for
All Urban Consumers for the city nearest to where the Premises are located. If
such insurance coverage has a deductible clause, the deductible amount shall not
exceed $10,000.00 per occurrence, and Lessee shall be liable for such deductible
amount in the event of an Insured Loss. See Addendum, Sec. 8.3.
(b) Rental Value. The Insuring Party shall obtain and keep in force a
policy or policies in the name of Lessor with loss payable to Lessor and any
Lender, insuring the loss of the full Rent for one (1) year. Said insurance
shall provide that in the event the Lease is terminated by reason of an insured
loss, the period of indemnity for such coverage shall be extended beyond the
date of the completion of repairs or replacement of the Premises, to provide for
one full year's loss of Rent from the date of any such loss. Said insurance
shall contain an agreed valuation provision in lieu of any coinsurance clause,
and the amount of coverage shall be adjusted annually to reflect the projected
Rent otherwise payable by Lessee, for the next twelve (12) month period. Lessee
shall be liable for any deductible amount in the event of such loss.
(c) Adjacent Premises. If the Premises are part of a larger building,
or of a group of buildings owned by Lessor which are adjacent to the Premises,
the Lessee shall pay for any increase in the premiums for the property insurance
of such building or buildings if said increase is caused by Lessee's acts,
omissions, use or occupancy of the Premises.
8.4 Lessee's Property/Business Interruption Insurance.
(a) Property Damage. Lessee shall obtain and maintain insurance
coverage on all of Lessee's personal property, Trade Fixtures, and Lessee Owned
Alterations and Utility Installations. Such Insurance shall be full replacement
cost coverage with a deductible of not to exceed $10,000.00 per occurrence. The
proceeds from any such insurance shall be used by Lessee for the replacement of
personal property, Trade Fixtures and Lessee Owned Alterations and Utility
Installations. Lessee shall provide Lessor with written evidence that such
insurance is in force.
(b) Business Interruption. [No text.]
(c) No Representation of Adequate Coverage. Lessor makes no
representation that the limits or forms of coverage of insurance specified
herein are adequate to cover Lessee's property, business operations or
obligations under this Lease.
8.5 Insurance Policies. Insurance required herein shall be by companies
duly licensed or admitted to transact business in the state where the Premises
are located, and maintaining during the policy term a "General Policyholders
Rating" of at least B+, V, as set forth in the most current issue of "Best's
Insurance Guide", or such other rating as may be required by a Lender. Lessee
shall not do or permit to be done anything which invalidates the required
insurance policies. Lessee shall, prior to the Start Date, deliver to Lessor
certified copies of policies of such insurance or certificates evidencing the
existence and amounts of the required insurance. No such policy shall be
cancelable or subject to modification except after thirty (30) days prior
written notice to Lessor. Lessee shall, at least thirty (30) days prior to the
expiration of such policies, furnish Lessor with evidence of renewals or
"insurance binders" evidencing renewal thereof, or Lessor may order such
insurance and charge the cost thereof to Lessee, which amount shall be payable
by Lessee to Lessor upon demand. Such policies shall be for a term of at least
one year, or the length of the remaining term of this Lease, whichever is less.
If either Party shall fail to procure and maintain the insurance required to be
carried by it, the other Party may, but shall not be required to, procure and
maintain the same. See Addendum Sec. 8.5.
8.6 Waiver of Subrogation. See Addendum.
8.7 Indemnity. Except for Lessor's negligence, Lessee shall indemnify,
protect, defend and hold harmless the Premises, Lessor and its agents, Lessor's
master or ground lessor, partners and Lenders, from and against any and all
claims, loss of rents and/or damages, liens, judgments, penalties, attorneys'
and consultants' fees, expenses and/or liabilities arising out of, involving, or
in connection with, the use and/or occupancy of the Premises by Lessee. If any
action or proceeding is brought against Lessor by reason of any of the foregoing
matters, Lessee shall upon notice defend the same at Lessee's expense by counsel
reasonably satisfactory to Lessor and Lessor shall cooperate with Lessee in such
defense. Lessor need not have first paid any such claim in order to be defended
or indemnified.
8.8 Exemption of Lessor from Liability. [No text.]
9. Damage or Destruction.
9.1 Definitions.
(a) "Premises Partial Damage" shall mean damage or destruction to the
improvements on the Premises, other than Lessee Owned Alterations and Utility
Installations, which can reasonably be repaired in six (6) months or less from
the date of the damage or destruction. Lessor shall notify Lessee in writing
within thirty (30) days from the date of the damage or destruction as to whether
or not the damage is Partial or Total.
(b) "Premises Total Destruction" shall mean damage or destruction to
the Premises, other than Lessee Owned Alterations and Utility Installations,
which cannot reasonably be repaired in six (6) months or less from the date of
the damage or destruction. Lessor shall notify Lessee in writing within thirty
(30) days from the date of the damage or destruction as to whether or not the
damage is Partial or Total.
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(c) "Insured Loss" shall mean damage or destruction to improvements on
the Premises, other than Lessee Owned Alterations and Utility Installations and
Trade Fixtures, which was caused by an event required to be covered by the
insurance described in Paragraph 8.3(a), irrespective of any deductible amounts
of coverage limits involved.
(d) "Replacement Cost" shall mean the cost to repair or rebuild the
improvements owned by Lessor at the time of the occurrence to their condition
existing immediately prior thereto, including demolition, debris removal and
upgrading required by the operation of Applicable Requirements, and without
deduction for depreciation.
(e) "Hazardous Substance Condition" shall mean the occurrence or
discovery of a condition involving the presence of, or a combination by,
Hazardous Substance as defined in Paragraph 6.2(a), in, on, or under the
Premises.
9.2 Partial Damage - Insured Loss. If a Premises Partial Damage that is an
Insured Loss occurs, then Lessor shall, at Lessor's expense, repair such damage
(but not Lessee's Trade Fixtures or Lessee Owned Alterations and Utility
Installations) as soon as reasonably possible and this Lease shall continue in
full force and effect; provided, however, that Lessee shall, at Lessor's
election, make the repair of any damage or destruction the total cost to repair
of which is $10,000 or less, and, in such event, Lessor shall make any
applicable insurance proceeds available to Lessee on a reasonable bases for that
purpose. Notwithstanding the foregoing, if the required insurance was not in
force or the insurance proceeds are not sufficient to effect such repair, the
Insuring Party shall promptly contribute the shortage in proceeds (except as to
the deductible which is Lessee's responsibility) as and when required to
complete said repairs. In the event, however, such shortage was due to the fact
that, by reason of the unique nature of the improvements, full replacement cost
insurance coverage was not commercially reasonable and available, Lessor shall
have no obligation to pay for the shortage in insurance proceeds or to fully
restore the unique aspects of the Premises unless Lessee provides Lessor with
the funds to cover same, or adequate assurance thereof, within ten (10) days
following receipt of written notice of such shortage and request therefor. If
Lessor receives said funds or adequate assurance thereof within said ten (10)
day period, the party responsible for making the repairs shall complete them as
soon as reasonably possible and this Lease shall remain in full force and
effect. If such funds or assurance are not received, Lessor may nevertheless
elect by written notice to Lessee within ten (10) days thereafter to: (i) make
such restoration and repair as is commercially reasonable with Lessor paying any
shortage in proceeds, in which case this Lease shall remain in full force and
effect, or have this Lease terminate thirty (30) days thereafter. Lessee shall
not be entitled to reimbursement of any funds contributed by Lessee to repair
any such damage or destruction. Premises Partial Damage due to flood or
earthquake shall be subject to Paragraph 9.3, notwithstanding that there may be
some insurance coverage, but the net proceeds of any such insurance shall be
made available for the repairs if made by either Party.
9.3 Partial Damage - Uninsured Loss. See Addendum, Section 9.3.
9.4 Total Destruction. Notwithstanding any other provision hereof, if a
Premises Total Destruction occurs, this Lease shall terminate on the date of
such Destruction. If the damage or destruction was caused by the gross
negligence or willful misconduct of Lessee, Lessor shall have the right to
recover Lessor's damages from Lessee except as provided in the Addendum, Sec.
8.6.
9.5 Damage Near End of Term. If at any time during the last six (6) months
of this Lease there is damage for which the cost to repair exceeds one (1)
month's Base Rent, whether or not an Insured Loss, Lessor may terminate this
Lease effective sixty (60) days following the date of occurrence of such damage
by giving a written termination notice to Lessee within thirty (30) days after
the date of occurrence of such damage. Notwithstanding the foregoing, if Lessee
at that time has an exercisable option to extend this Lease or to purchase the
Premises, then Lessee may preserve this Lease by, (a) exercising such option and
(b) providing Lessor with any shortage in insurance proceeds (or adequate
assurance thereof) needed to make the repairs on or before the earlier of (i)
the date which is ten days after Lessee's receipt of Lessor's written notice
purporting to terminate this Lease, or (ii) the day prior to the date upon with
such option expires. If Lessee duly exercised such option during such period and
provides Lessor with funds (or adequate assurance thereof) to cover any shortage
in insurance proceeds, Lessor shall, at Lessor's commercially reasonable
expense, repair such damage as soon as reasonably possible and this Lease shall
continue in full force and effect. If Lessee fails to exercise such option and
provide such funds or assurance during such period, then this Lease shall
terminate on the date specified in the termination notice and Lessee's option
shall be extinguished.
9.6 Abatement of Rent; Lessee's Remedies.
(a) Abatement. In the event of Premises Partial Damage or Premises
Total Destruction or a Hazardous Substance Condition for which Lessee is not
responsible under this Lease, the Rent payable by Lessee for the period required
for the repair, remediation or restoration of such damage shall be abated in
proportion to the degree to which Lessee's use of the Premises is impaired, but
not to exceed the proceeds received from the Rental Value insurance. All other
obligations of Lessee hereunder shall be performed by Lessee, and Lessor shall
have no liability for any such damage, destruction, remediation, repair or
restoration except as provided herein.
(b) Remedies. If Lessor shall be obligated to repair or restore the
Premises and does not commence, in a substantial and meaningful way, such repair
or restoration within ninety (90) days after such obligation shall accrue,
Lessee may, at any time prior to the commencement of such repair or restoration,
give written notice to Lessor and to any Lenders of which Lessee has actual
notice, of Lessee's election to terminate this Lease on a date not less than
sixty (60) days following the giving of such notice. If Lessee gives such notice
and such repair or restoration is not commenced within thirty (30) days
thereafter, this Lease shall terminate as of the date specified in said notice.
If the repair or restoration is commenced within said thirty (30) days, this
Lease shall continue in full force and effect. "Commence" shall mean either the
unconditional authorization of the preparation of the required plans, or the
beginning of the actual work on the Premises, whichever first occurs.
9.7 Termination-Advance Payments. Upon termination of this Lease pursuant
to Paragraph 6.2(g) or Paragraph 9, an equitable adjustment shall be made
concerning advance Base Rent and any other advance payments made by Lessee to
Lessor. Lessor shall, in addition, return to Lessee so much of Lessee's Security
Deposit as has not been, or is not then required to be, used by Lessor.
9.8 Waive Statutes. Lessor and Lessee agree that the terms of this Lease
shall govern the effect of any damage to or destruction of the Premises with
respect to the termination of this Lease and hereby waive the provisions of any
present or future statute to the extent inconsistent herewith.
10. Real Property Taxes.
10.1 Definition of "Real Property Taxes." As used herein, the term "Real
Property Taxes" shall include any form of assessment; real estate, general,
special, ordinary or extraordinary, or rental levy or tax (other than
inheritance, personal income or estate taxes); improvement bond; and/or license
fee imposed upon or levied against any legal or equitable interest of Lessor in
the Premises, Lessor's right to other income therefrom, and/or Lessor's business
of leasing, by any authority having the direct or indirect power to tax and
where the funds are generated with reference to the Building address and where
the proceeds so generated are to be applied by the city, county or other local
taxing authority of a jurisdiction within which the Premises are located. The
term "Real Property Taxes" shall also include any tax, fee, levy, assessment or
charge, or any increase therein, imposed by reason of events occurring during
the term of this Lease, including but not limited to, a change in the ownership
of the Premises.
10.2
(a) Payment of Taxes. Lessee shall pay the Real Property Taxes
applicable to the Premises commencing on the Rent Commencement Date and
continuing through the term of this Lease. Subject to Paragraph 10.2(b), all
such payments shall be made at least ten (10) days prior to any delinquency
date. Lessee shall promptly furnish Lessor with satisfactory evidence that such
taxes have been paid. If any such taxes shall cover any period of time prior to
or after the expiration or
PAGE 6 Initials /s/ GZ /s/ LMC
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termination of this Lease, Lessee's share of such taxes shall be prorated to
cover only that portion of the tax xxxx applicable to the period during which
rent is due and Lessor shall reimburse Lessee for any overpayment. If Lessee
shall fail to pay any required Real Property Taxes, Lessor shall have the right
to pay the same, and Lessee shall reimburse Lessor therefor upon demand.
(b) Advance Payment. In the event Lessee incurs a late charge on any
Rent payment, Lessor may, at Lessor's option, estimate the current Real Property
Taxes, and require that such taxes be paid in advance to Lessor by Lessee,
either: (I) in a lump sum amount equal to the installment due, at least twenty
(20) days prior to the applicable delinquency date, or (ii) monthly in advance
with the payment of the Base Rent. If Lessor elects to require payment monthly
in advance, the monthly payment shall be an amount equal to the amount of the
estimated installment of taxes divided by the number of months remaining before
the month in which said installment becomes delinquent. When the actual amount
of the applicable tax xxxx is known, the amount of such equal monthly advance
payments shall be adjusted as required to provide the funds needed to pay the
applicable taxes. If the amount collected by Lessor is insufficient to pay such
Real Property Taxes when due, Lessee shall pay Lessor, upon demand, such
additional sums as are necessary to pay such obligations. All moneys paid to
Lessor under this Paragraph may be intermingled with other moneys of Lessor and
shall not bear interest. In the event of a Breach by Lessee in the performance
of its obligations under this Lease, then any balance of funds paid to Lessor
under the provisions of this Paragraph may at the option of Lessor, be treated
as an additional Security Deposit. See Addendum.
10.3 Joint Assessment. If the Premises are not separately assessed,
Lessee's liability shall be an equitable proportion of the Real Property Taxes
for all of the land and improvements included within the tax parcel assessed,
such proportion to be conclusively determined by Lessor from the respective
valuations assigned in the assessor's work sheets or such other information as
may be reasonably available.
10.4 Personal Property Taxes. Lessee shall pay, prior to delinquency, all
taxes assessed against and levied upon Lessee Owned Alterations, Utility
Installations, Trade Fixtures, furnishings, equipment and all personal property
of Lessee. When possible, Lessee shall cause such property to be assessed and
billed separately from the real property of Lessor. If any of Lessee's said
personal property shall be assessed with Lessor's real property, Lessee shall
pay Lessor the taxes attributable to Lessee's property within ten (10) days
after receipt of a written statement. 11. Utilities. Commencing on the
Commencement Date, Lessee shall pay for all water, gas, heat, light, power,
telephone, trash disposal and other utilities and services supplied to the
Premises, together with any taxes thereon. If any such services are not
separately metered to Lessee, Lessee shall pay a reasonable proportion, to be
determined by Lessor, of all charges jointly metered. 12. Assignment and
Subletting.
12.1 Lessor's Consent Required.
(a) Lessee shall not voluntarily or by operation of law assign,
transfer, mortgage or encumber (collectively, "assign or assignment") or sublet
all or any part of Lessee's interest in this Lease or in the Premises without
Lessor's prior written consent which shall not be unreasonably withheld.
(b) A change in the control of Lessee shall constitute an assignment
requiring consent. The transfer, on a cumulative bases, of twenty-five percent
(25%) or more of the voting control of Lessee shall constitute a change in
control for this purpose.
(c) The involvement of Lessee or its assets in any transaction, or
series of transactions (by way of merger, sale, acquisition, financing,
transfer, leveraged buy-out or otherwise), whether or not a formal assignment or
hypothecation of this Lease or Lessee's assets occurs, which results or will
result in a reduction of the Net Worth of Lessee by an amount greater than
twenty-five percent (25%) of such Net Worth as it was represented at the time of
the execution of this Lease or at the time of the most recent assignment to
which Lessor has consented, or as it exists immediately prior to said
transaction or transactions constituting such reduction, whichever was or is
greater, shall be considered an assignment of this Lease to which Lessor may
withhold its consent. "Net Worth of Lessee" shall mean the net worth of Lessee
(excluding any guarantors) established under generally accepted accounting
principles.
(d) An assignment or subletting without consent shall, at Lessor's
option, be a Default curable after notice per Paragraph 13.1(c), or a noncurable
Breach without the necessity of any notice and grace period. If Lessor elects to
treat such unapproved assignment or subletting as a noncurable Breach, Lessor
may terminate this Lease.
(e) Lessee's remedy for any breach of Paragraph 12.1 by Lessor shall
be limited to compensatory damages and/or injunctive relief.
12.2 Terms and Conditions Applicable to Assignment and Subletting.
(a) Regardless of Lessor's consent, any assignment or subletting shall
not: (i) be effective without the express written assumption by such assignee or
sublessee of the obligations of Lessee under this Lease, (ii) release Lessee of
any obligations hereunder, or (iii) alter the primary liability of Lessee for
the payment of Rent or for the performance of any other obligations to be
performed by Lessee.
(b) Lessor may accept Rent or performance of Lessee's obligations from
any person other than Lessee pending approval or disapproval of an assignment.
Neither a delay in the approval or disapproval of such assignment nor the
acceptance of Rent or performance shall constitute a waiver or estoppel of
Lessor's right to exercise its remedies for Lessee's Default or Breach.
(c) Lessor's consent to any assignment or subletting shall not
constitute a consent to any subsequent assignment or subletting.
(d) In the event of any Default or Breach by Lessee, Lessor may
proceed directly against Lessee, any Guarantors or anyone else responsible for
the performance of Lessee's obligations under this Lease, including any assignee
or sublessee, without first exhausting Lessor's remedies against any other
person or entity responsible therefore to Lessor, or any security held by
Lessor.
(e) Each request for consent to an assignment or subletting shall be
in writing, accompanied by information relevant to Lessor's determination as to
the financial and operational responsibility and appropriateness of the proposed
assignee or sublessee, including but not limited to the intended use and/or
required modification of the Premises, if any, Lessee agrees to provide Lessor
with such other or additional information and/or documentation as may be
reasonably requested.
(f) Any assignee of, or sublessee under, this Lease shall, by reason
of accepting such assignment or entering into such sublease, be deemed to have
assumed and agreed to conform and comply with each and every term, covenant,
condition and obligation herein to be observed or performed by Lessee during the
term of said assignment or sublease, other than such obligations as are contrary
to or inconsistent with provisions of an assignment or sublease to which Lessor
has specifically consented to in writing.
12.3 Additional Terms and Conditions Applicable to Subletting. The
following terms and conditions shall apply to any subletting by Lessee of all or
any part of the Premises and shall be deemed included in all subleases under
this Lease whether or not expressly incorporated therein:
(a) Lessee hereby assigns and transfers to Lessor all of Lessee's
interest in all Rent payable on any sublease, and Lessor may collect such Rent
and apply same toward Lessee's obligations under this Lease; provided, however,
that until a Breach shall occur in the performance of Lessee's obligations,
Lessee may collect said Rent. Lessor shall not, by reason of the foregoing or
any assignment of such sublease, nor by reason of the collection of Rent, be
deemed liable to the sublessee for any failure of Lessee to perform and comply
with any of Lessee's obligations to such sublessee. Lessee hereby irrevocably
authorizes and directs any such sublessee, upon receipt of a written notice from
Lessor stating that a Breach exists in the performance of Lessee's obligations
under this Lease, to pay to Lessor all Rent due and to become due under the
sublease. Sublessee shall rely upon any such notice from Lessor and shall pay
all Rents to Lessor without any obligation or right to inquire as to whether
such Breach exists, notwithstanding any claim from Lessee to the contrary.
(b) In the event of a Breach by Lessee, Lessor may, at its option,
require sublessee to attorn to Lessor, in which event Lessor shall undertake the
obligations of the sublessor under such sublease from the time of the exercise
of said option to the expiration of such sublease; provided, however, Lessor
shall not be liable for any prepaid rents or security deposit paid by such
sublessee to such sublessor or for any prior Defaults or Breaches of such
sublessor.
PAGE 7 Initials /s/ GZ /s/ LMC
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(c) Any matter requiring the consent of the sublessor under a sublease
shall also require the consent of Lessor.
(d) No sublessee shall further assign or sublet all or any part of the
Premises without Lessor's prior written consent.
(e) Lessor shall deliver a copy of any notice of Default or Breach by
Lessee to the sublessee, who shall have the right to cure the Default of Lessee
within the grace period, if any, specified in such notice. The sublessee shall
have a right of reimbursement and offset from and against Lessee for any such
Defaults cured by the sublessee.
13. Default; Breach; Remedies.
13.1 Default; Breach. A "Default" is defined as a failure by the Lessee to
comply with or perform any of the terms, covenants, conditions or rules under
this Lease. A "Breach" is defined as the occurrence of one or more of the
following Defaults, and the failure of Lessee to cure such Default within any
applicable grace period:
(a) The abandonment of the Premises; or the vacating of the Premises
without providing a commercially reasonable level of security, or where the
coverage of the property insurance described in Paragraph 8.3 is jeopardized as
a result thereof, or without providing reasonable assurances to minimize
potential vandalism.
(b) The failure of Lessee to make any payment of Rent or any other
monetary payment required to be made by Lessee hereunder, whether to Lessor or
to a third party, when due, to provide reasonable evidence of insurance or
surety bond, or to fulfill any obligation under this Lease which endangers or
threatens life or property, where such failure continues for a period of three
(3) business days following written notice to Lessee.
(c) The failure by Lessee to provide (i) reasonable written evidence
of compliance with Applicable Requirements, (ii) the service contracts, (iii)
the rescission of an unauthorized assignment or subletting, (iv) a Tenancy
Statement, (v) a requested subordination, (vi) evidence concerning any guaranty
and/or Guarantor, (vii) any document requested under Paragraph 42 (easements),
or (viii) any other documentation or information which Lessor may reasonably
require of Lessee under the terms of this Lease, where any such failure
continues for a period of ten (10) days following written notice to Lessee.
(d) A Default by Lessee as to the terms, covenants, conditions or
provisions of this Lease, or of the rules adopted under Paragraph 40 hereof,
other than those described in subparagraphs 13.1(a), (b) or (c), above, where
such Default continues for a period of thirty (30) days after written notice;
provided, however, that if the nature of Lessee's Default is such that more than
thirty (30) days are reasonably required for its cure, then it shall not be
deemed to be a Breach if Lessee commences such cure within said thirty (30) day
period and thereafter diligently prosecutes such cure to completion.
(e) The occurrence of any of the following events: (i) the making of
any general arrangement or assignment for the benefit of creditors; (ii)
becoming a "debtor" as defined in 11 X.X.X.xx. 101 or any successor statute
thereto (unless, in the case of a petition filed against Lessee, the same is
dismissed within sixty (60) days); (iii) the appointment of a trustee or
receiver to take possession of substantially all of Lessee's assets located at
the Premises or of Lessee's interest in this Lease, where possession is not
restored to Lessee within thirty (30) days; or (iv) the attachment, execution or
other judicial seizure of substantially all of Lessee's assets located at the
Premises or of Lessee's interest in this Lease, where such seizure is not
discharged within thirty (30) days; provided, however, in the event that any
provision of this subparagraph (e) is contrary to any applicable law, such
provision shall be of no force or effect, and not affect the validity of the
remaining provisions.
(f) The discovery that any financial statement of Lessee or of any
Guarantor given to Lessor was materially false.
(g) [No text.]
13.2 Remedies. If Lessee fails to perform any of its affirmative duties or
obligations, within ten (10) days after written notice (or in case of an
emergency, without notice), Lessor may, at its option, perform such duty or
obligation on Lessee's behalf, including but not limited to the obtaining of
reasonably required bonds, insurance policies, or governmental licenses, permits
or approvals. The costs and expenses of any such performance by Lessor shall be
due and payable by Lessee upon receipt of invoice therefor. If any check given
to Lessor by Lessee shall not be honored by the bank upon which it is drawn,
Lessor, at its option, may require all future payments to be made by Lessee to
be by cashier's check. In the event of a Breach, Lessor may, with or without
further notice or demand, and without limiting Lessor in the exercise of any
right or remedy which Lessor may have by reason of such Breach:
(a) Terminate Lessee's right to possession of the Premises by any
lawful means, in which case this Lease shall terminate and Lessee shall
immediately surrender possession to Lessor. In such event Lessor shall be
entitled to recover from Lessee: (i) the unpaid Rent which had been earned at
the time of termination; (ii) the worth at the time of award of the amount by
which the unpaid rent which would have been earned after termination until the
time of award exceeds the amount of such rental loss that the Lessee proves
could have been reasonably avoided; (iii) the worth at the time of award of the
amount by which the unpaid rent for the balance of the term after the time of
award exceeds the amount of such rental loss that the Lessee proves could be
reasonably avoided; and (iv) any other amount necessary to compensate Lessor for
all the detriment proximately caused by the Lessee's failure to perform its
obligations under this Lease or which in the ordinary course of things would be
likely to result therefrom, including but not limited to the cost of recovering
possession of the Premises, expenses of reletting, including necessary
renovation and alteration of the Premises, reasonable attorneys' fees, and that
portion of any leasing commission paid by provision (iii) of the immediately
preceding sentence shall be computed by discounting such amount at the discount
rate of the Federal Reserve Bank of the District within which the Premises are
located at the time of award plus one percent (1%). Efforts by Lessor to
mitigate damages caused by Lessee's Breach of this Lease shall not waive
Lessor's right to recover damages under Paragraph 12. If termination of this
Lease is obtained through the provisional remedy of unlawful detainer, Lessor
shall have the right to recover in such proceeding any unpaid Rent and damages
as are recoverable therein, or Lessor may reserve the right to recover all or
any part thereof in a separate suit. If a notice and grace period required under
Paragraph 13.1 and the unlawful detainer statute shall run concurrently, and the
failure of Lessee to cure the Default within the greater of the two such grace
periods shall constitute both an unlawful detainer and a Breach of this Lease
entitling Lessor to the remedies provided for in this Lease and/or by said
statue.
(b) Continue the Lease and Lessee's right to possession and recover
the Rent as it becomes due, in which event Lessee may sublet or assign, subject
only to reasonable limitations. Acts of maintenance, efforts to relet, and/or
the appointment of a receiver to protect the Lessor's interest, shall not
constitute a termination of the Lessee's right to possession. See Addendum,
Section 13.2.
(c) Pursue any other remedy now or hereafter available under the laws
or judicial decisions of the state wherein the Premises are located. The
expiration or termination of this Lease and/or the termination of Lessee's right
to possession shall not relieve Lessee from liability under any indemnity
provisions of this Lease as to matters occurring or accruing during the term
hereof or by reason of Lessee's occupancy of the Premises.
13.3 Inducement Recapture. Any agreement for free or abated rent or other
charges, or for the giving or paying by Lessor to or for Lessee of any cash or
other bonus, inducement or consideration for Lessee's entering into this Lease,
all of which concessions are hereinafter referred to as "Inducement Provisions,"
shall be deemed conditioned upon Lessee's full and faithful performance of all
of the terms, covenants and conditions of this Lease. Upon Breach of this Lease
by Lessee, any such Inducement Provision shall automatically be deemed deleted
from this Lease and of no further force or effect, and any rent, other charge,
bonus, inducement or consideration theretofore abated, given or paid by Lessor
under such an Inducement Provision shall be immediately due and payable by
Lessee to Lessor, notwithstanding any subsequent cure of said Breach by Lessee.
The acceptance by Lessor of rent or the cure of the Breach which initiated the
operation of this paragraph shall not
PAGE 8 Initials /s/ GZ /s/ LMC
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be deemed a waiver by Lessor of the provisions of this paragraph unless
specifically so stated in writing by Lessor at the time of such acceptance.
13.4 Late Charges. See Addendum, Section 13.4.
13.5 Interest. Any monetary payment due Lessor hereunder, other than late
charges, not received by Lessor within thirty (30) days following the date on
which it was due, shall bear interest from the thirty-first (31st) day after it
was due. The interest ("interest") charged shall be equal to the prime rate
charged by the largest state chartered bank in the state in which the Premises
are located plus 4%, but shall not exceed the maximum rate allowed by law.
Interest is payable in addition to the potential late charge provided for in
Paragraph 13.4.
13.6 Breach by Lessor.
(a) Notice of Breach. Lessor shall not be deemed in breach of this
Lease unless Lessor fails within a reasonable time to perform an obligation
required to be performed by Lessor. For purposes of this Paragraph, a reasonable
time shall in no event be less than thirty (30) days after receipt by Lessor,
and any Lender whose name and address shall have been furnished Lessee in
writing for such purpose, of written notice specifying wherein such obligation
of Lessor has not been performed; provided, however, that if the nature of
Lessor's obligation is such that more than thirty (30) days are reasonably
required for its performance, then Lessor shall not be in breach if performance
is commenced within such thirty (30) day period and thereafter diligently
pursued to completion.
(b) Performance by Lessee on Behalf of Lessor. In the event that
neither Lessor nor Lender cures said breach within thirty (30) days after
receipt of said notice, or if having commenced said cure they do not diligently
pursue it to completion, then Lessee may elect to cure said breach at Lessee's
expense and offset from Rent an amount equal to the greater of one month's Base
Rent or the Security Deposit, and to pay an excess of such expense under
protest, reserving Lessee's right to reimbursement from Lessor. Lessee shall
document the cost of said cure and supply said documentation to Lessor. 14.
Condemnation. If the Premises or any portion thereof are taken under the power
of eminent domain or sold under the threat of the exercise of said power
(collectively "Condemnation"), this Lease shall terminate as to the part taken
as of the date the condemning authority takes title or possession, whichever
first occurs. If more than ten percent (10%) of any building, or more than
twenty-five percent (25%) of the land area not occupied by any building, is
taken by Condemnation, Lessee may, at Lessee's option, to be exercised in
writing within ten (10) days after Lessor shall have given Lessee written notice
of such taking (or in the absence of such notice, within ten (10) days after the
condemning authority shall have taken possession) terminate this Lease as of the
date the condemning authority takes such possession. If Lessee does not
terminate this Lease in accordance with the foregoing, this Lease shall remain
in full force and effect as to the portion of the Premises remaining, except
that the Base Rent shall be reduced in proportion to the reduction in utility of
the Premises caused by such Condemnation. Condemnation awards and/or payments
shall be the property of Lessor, whether such award shall be made as
compensation for diminution in value of the leasehold, the value of the part
taken, or for severance damages; provided, however, that Lessee shall be
entitled to any compensation for Lessee's relocation expenses, loss of business
goodwill and/or Trade Fixtures, without regard to whether or not this Lease is
terminated pursuant to the provisions of this Paragraph. All Alterations and
Utility Installations made to the Premises by Lessee, for purposes of
Condemnation only, shall be considered the property of the Lessee and Lessee
shall be entitled to any and all compensation which is payable therefor. In the
event that this Lease is not terminated by reason of the Condemnation, Lessor
shall repair any damage to the Premises caused by such Condemnation. 15.
Broker's Fee.
15.1 Additional Commission. [No text.]
15.2 Assumption of Obligations. [No text.]
15.3 Representations and Indemnities of Broker Relationships. Lessee
and Lessor each represent and warrant to the other that it has had no dealings
with any person, firm, broker or finder (other than the Brokers, if any) in
connection with this Lease, and that no one other than said named Brokers is
entitled to any commission or finder's fee in connection herewith. Lessee and
Lessor do each hereby agree to indemnify, protect, defend and hold the other
harmless from and against liability for compensation or charges which may be
claimed by any such unnamed broker, finder or other similar party by reason of
any dealings or actions of the indemnifying Party, including any costs,
expenses, attorneys' fees reasonably incurred with respect thereto. See
Addendum, Sec. 15.3.
16. Tenancy Statement/Estoppel Certificate.
16.1 Each Party (as "Responding Party") shall within ten (10) days after
written notice from the other Party (the "Requesting Party") execute,
acknowledge and deliver to the Requesting Party an estoppel certificate in
writing, in form similar to the then most current "Tenancy Statement" form
published by the American Industrial Real Estate Association, plus such
additional information, confirmation and/or statements as may be reasonably
requested by the Requesting Party.
16.2 If Lessor desires to finance, refinance, or sell the Premises, or any
part thereof, Lessee and all Guarantors shall deliver to any potential lender or
purchaser designated by Lessor such financial statements as may be reasonably
required by such lender or purchaser, including but not limited to Lessee's
financial statements for the past three (3) years. All such financial statements
shall be received by Lessor and such lender or purchaser in confidence and shall
be used only for the purposes herein set forth. 17. Definition of Lessor. The
term "Lessor" as used herein shall mean the owner or owners at the time in
question of the fee title to the Premises, or, if this is a sublease, of the
Lessee's interest in the prior lease. In the event of a transfer of Lessor's
title or interest in the Premises or this Lease, Lessor shall deliver to the
transferee or assignee (in cash or by credit) any unused Security Deposit held
by Lessor. Except as provided in Paragraph 15, upon such transfer or assignment
and delivery of the Security Deposit, as aforesaid, the prior Lessor shall be
relieved of all liability with respect to the obligations and/or covenants under
this Lease thereafter to be performed by the Lessor. Subject to the foregoing,
the obligations and/or covenants in this Lease to be performed by the Lessor
shall be binding only upon the Lessor as hereinabove defined. Notwithstanding
the above, the original Lessor under this Lease, and all subsequent holders of
the Lessor's interest in this Lease shall remain liable and responsible with
regard to the potential duties and liabilities of Lessor pertaining to Hazardous
Substances as outlined in Paragraph 6 above. 18. Severability. The invalidity of
any provision of this Lease, as determined by a court of competent jurisdiction,
shall in no way affect the validity of any other provision hereof.
PAGE 9 Initials /s/ GZ /s/ LMC
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19. Days. Unless otherwise specifically indicated to the contrary, the word
"days" as used in this Lease shall mean and refer to calendar days.
20. Limitation on Liability. Except with respect to Lessor's fraud, gross
negligence or willful misconduct, the obligations of Lessor under this lease
shall not constitute personal obligations of Lessor, the individual partners of
Lessor or its or their individual partners, directors, officers or shareholders,
and Lessee shall look to the Premises, and to no other assets of Lessor, for the
satisfaction of any liability of Lessor with respect to this Lease, and shall
not seek recourse against the individual partners of Lessor, or its or their
individual partners, directors, officers or shareholders, or any of their
personal assets for such satisfaction.
21. Time of Essence. Time is of the essence with respect to the performance
of all obligations to be performed or observed by the Parties under this Lease.
22. No Prior or Other Agreements; Broker Disclaimer. This Lease contains
all agreements between the Parties with respect to any matter mentioned herein,
and no other prior or contemporaneous agreement or understanding shall be
effective. Lessor and Lessee each represents and warrants to the Brokers that
it has made, and is relying solely upon, its own investigation as to the nature,
quality, character and financial responsibility of the other Party to this Lease
and as to the nature, quality and character of the Premises. Brokers have no
responsibility with respect to negotiation, execution, delivery or performance
by either Lessor or Lessee under this Lease or any amendment or modification
hereto shall be limited to an amount up to the fee received by such Broker
pursuant to this Lease; provided, however, that the foregoing limitation on each
Broker's liability shall not be applicable to any gross negligence or willful
misconduct of such Broker.
23. Notices.
23.1 Notice Requirements. All notices required or permitted by this Lease
shall be in writing and may be delivered in person (by hand or by courier) or
may be sent by certified or registered mail or U.S. Postal Service Express Mail,
with postage prepaid, and shall be deemed sufficiently given if served in a
manner specified in this Paragraph 23. The addresses noted adjacent to a Party's
signature on this Lease shall be that Party's address for delivery or mailing of
notices. Either Party may by written notice to the other specify a different
address for notice, except that upon Lessee's taking possession of the Premises,
the Premises shall constitute Lessee's address for notice. A copy of all notices
to Lessor shall be concurrently transmitted to such party or parties at such
addresses as Lessor may from time to time hereafter designate in writing. See
Addendum.
23.2 Date of Notice. Any notice sent by registered or certified mail,
return receipt requested, shall be deemed given on the date of delivery shown on
the receipt card, or if no delivery date is shown, the postmark thereon. Notices
delivered by United States Express Mail or overnight courier that guarantee next
day delivery shall be deemed given twenty-four (24) hours after delivery of the
same to the Postal Service or courier. If notice is received on a Saturday,
Sunday or legal holiday, it shall be deemed received on the next business day.
24. Waivers. No waiver by Lessor of the Default or Breach of any term, covenant
or condition hereof by Lessee, shall be deemed a waiver of any other term,
covenant or condition hereof, or of any subsequent Default or Breach by Lessee
of the same or of any other term, covenant or condition hereof. Lessor's consent
to, or approval of, any act shall not be deemed to render unnecessary the
obtaining of Lessor's consent to, or approval of, any subsequent or similar act
by Lessee, or be construed as the bases of an estoppel to enforce the provision
or provisions of this Lease requiring such consent. The acceptance of Rent by
Lessor shall not be a waiver of any Default or Breach by Lessee. Any payment by
Lessee may be accepted by Lessor on account of moneys or damages due Lessor,
notwithstanding any qualifying statements or conditions made by Lessee in
connection therewith, which such statements and/or conditions shall be of no
force or effect whatsoever unless specifically agreed to in writing by Lessor at
or before the time of deposit of such payment. 25. Recording. Either Lessor or
Lessee shall, upon request of the other, execute, acknowledge and deliver to the
other a short form memorandum of this Lease for recording purposes. The Party
requesting recordation shall be responsible for payment of any fees applicable
thereto. 26. No Right To Holdover. Lessee has no right to retain possession of
the Premises or any part thereof beyond the expiration or termination of this
Lease. In the event that Lessee holds over, then the Base Rent shall be
increased to one hundred fifteen percent (115%) of the Base Rent applicable
during the month immediately preceding the expiration or termination. Nothing
contained herein shall be construed as consent by Lessor to any holding over by
Lessee. 27. Cumulative Remedies. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies at
law or in equity. 28. Covenants and Conditions; Construction of Agreement. All
provisions of this Lease to be observed or performed by Lessee are both
covenants and conditions. In construing this Lease, all headings and titles are
for the convenience of the parties only and shall not be considered a part of
this Lease. Whenever required by the context, the singular shall include the
plural and vice versa. This Lease shall not be construed as if prepared by one
of the parties, but rather according to its fair meaning as a whole, as if both
parties had prepared it. 29. Binding Effect; Choice of Law. This Lease shall be
binding upon the parties, their personal representatives, successors and assigns
and be governed by the laws of the State in which the Premises are located. Any
litigation between the Parties hereto concerning this Lease shall be initiated
in the county in which the Premises are located. 30. Subordination; Attornment;
Non-Disturbance.
30.1 Subordination. This Lease and any Option granted hereby shall be
subject and subordinate to any ground lease, mortgage, deed of trust, or other
hypothecation or security device (collectively, "Security Device"), now or
hereafter placed upon the Premises, to any and all advances made on the security
thereof, and to all renewals, modifications, and extensions thereof. Lessee
agrees that the holders of any such Security Devices shall have no liability or
obligation to perform any of the obligations of Lessor under this Lease. Any
Lender may elect to have this Lease and/or any Option granted hereby superior to
the lien of its Security Device by giving written notice thereof to Lessee, this
Lease and such Options shall be deemed prior to such Security Device,
notwithstanding the relative dates of the documentation or recordation thereof.
30.2 Attornment. Subject to the non-disturbance provisions of Paragraph
30.3, Lessee agrees to attorn to a Lender or any other party who acquires
ownership of the Premises by reason of a foreclosure of a Security Device, and
that in the event of such foreclosure, such new owner shall not: (i) be liable
for any act or omission of any prior lessor or with respect to events occurring
prior to acquisition of ownership; (ii) be subject to any offsets or defenses
which Lessee might have against any prior lessor, or (iii) be bound by
prepayment of more than one (1) month's rent.
30.3 Non-Disturbance. With respect to Security Devices entered into by
Lessor after the execution of this Lease, Lessee's subordination of this Lease
shall be subject to receiving a commercially reasonable non-disturbance
agreement (a "Non-Disturbance Agreement") from the Lender which Non-Disturbance
Agreement provides that Lessee's possession of the Premises, and this Lease,
including any options to extend the term hereof, will not be disturbed so long
as Lessee is not in Breach hereof and attorns to the record owner of the
Premises. Further, within sixty (60) days after the execution of this Lease,
Lessor shall use its commercially reasonable efforts to obtain a Non-Disturbance
Agreement from the holder of any pre-existing Security Device which is secured
by the Premises. In the event that Lessor is unable to provide the
Non-Disturbance Agreement within said sixty (60) days, then Lessee may, at
Lessee's option, directly contact Lessor's lender and attempt to negotiate for
the execution and delivery of a Non-Disturbance Agreement. See Addendum.
30.4 Self-Executing. The agreements contained in this Paragraph 30 shall be
effective without the execution of any further documents; provided, however,
that, upon written request from Lessor or a Lender in connection with a sale,
financing or refinancing of the Premises, Lessee and Lessor shall execute such
further writings as may be reasonably required to separately document any
subordination, attornment and/or Non-Disturbance Agreement provided for herein.
31. Attorneys' Fees. If any Party brings an action or proceeding to enforce the
terms hereof or declare rights hereunder, the Prevailing Party in any such
proceeding, action, or appeal thereon, shall be entitled to reasonable
attorneys' fees.
PAGE 10 Initials /s/ GZ /s/ LMC
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The attorneys' fees award shall not be computed in accordance with any court fee
schedule, but shall be such as to fully reimburse all attorneys' fees reasonably
incurred. In addition, Lessor shall be entitled to attorneys' fees, costs and
expenses incurred in the preparation and service of notices of Default and
consultations in connection therewith, whether or not a legal action is
subsequently commenced in connection with such Default or resulting Breach. 32.
Lessor's Access; Showing Premises; Repairs. Lessor and Lessor's agents shall
have the right to enter the Premises at any time, in the case of an emergency,
and otherwise at reasonable times following notice for the purpose of showing
the same to prospective purchasers, lenders, or lessees, and making such
alterations, repairs, improvements or additions to the Premises as Lessor may
deem necessary. All such activities shall be without abatement of rent or
liability to Lessee. Lessor may at any time place on the Premises any ordinary
"For Sale" signs and Lessor may during the last six (6) months of the term
hereof place on the Premises any ordinary "For Lease" signs. Lessee may at any
time place on or about the Premises any ordinary "For Sublease" sign. 33.
Auctions. Lessee shall not conduct, nor permit to be conducted, any auction upon
the Premises without Lessor's prior written consent. Lessor shall not be
obligated to exercise any standard or reasonableness in determining whether to
permit an auction. 34. Signs. Except for ordinary "For Sublease" signs, Lessee
shall not place any sign upon the exterior of the Premises without Lessor's
prior written consent. All signs must comply with all Applicable Requirements.
35. Termination; Merger. Unless specifically stated otherwise in writing by
Lessor, the voluntary or other surrender of this Lease by Lessee, the mutual
termination or cancellation hereof, or a termination hereof by Lessor for Breach
by Lessee, shall automatically terminate any sublease or lesser estate in the
Premises; provided, however, that Lessor may elect to continue any one or all
existing subtenancies. Lessor's failure within ten (10) days following any such
event to elect to the contrary by written notice to the holder of any such
lesser interest, shall constitute Lessor's election to have such event
constitute the termination of such interest. 36. Consents. Except as otherwise
provided herein, wherever in this Lease the consent of a Party is required to an
act by or for the other Party, such consent shall not be unreasonably withheld
or delayed. Lessor's actual reasonable costs and expenses (including but not
limited to architects', attorneys', engineers' and other consultants' fees)
incurred in the consideration of, or response to, a request by Lessee for any
Lessor consent, including but not limited to consents to an assignment, a
subletting or the presence or use of a Hazardous Substance, shall be paid by
Lessee upon receipt of an invoice and supporting documentation therefor.
Lessor's consent to any act, assignment or subletting shall not constitute an
acknowledgment that no Default or Breach by Lessee of this Lease exists, nor
shall such consent be deemed a waiver of any then existing Default or Breach,
except as may be otherwise specifically stated in writing by Lessor at the time
of such consent. The failure to specify herein any particular condition to
Lessor's consent shall not preclude the imposition by Lessor at the time of
consent of such further or other conditions as are then reasonable with
reference to the particular matter for which consent is being given. In the
event that either Party disagrees with any determination made by the other
hereunder and reasonably requests the reasons for such determination, the
determining party shall furnish its reasons in writing and in reasonable detail
within ten (10) business days following such request. 37. Guarantor.
37.1 Execution. [No text.]
37.2 Default. [No text.]
38. Quiet Possession. Subject to payment by Lessee of the Rent and
performance of all of the covenants, conditions and provisions on Lessee's part
to be observed and performed under this Lease, Lessee shall have quiet
possession and quiet enjoyment of the Premises during the term hereof.
39. Options.
39.1 Definition. "Option" shall mean: (a) the right to extend the
term of or renew this Lease.
39.2 Options Personal To Original Lessee. [No text.]
39.3 Multiple Options. In the event that Lessee has any multiple
Options to extend or renew this Lease, a later Option cannot be exercised unless
the prior Options have been validly exercised.
39.4 Effect of Default on Options.
(a) Lessee shall have no right to exercise an Option: (i) during the
period commencing with the giving of any notice of Default and continuing until
said Default is cured, (ii) during the period of time any Rent is unpaid
(without regard to whether notice thereof is given Lessee), (iii) during the
time Lessee is in Breach of this Lease.
(b) The period of time within which an Option may be exercised shall
not be extended or enlarged by reason of Lessee's inability to exercise an
Option because of the provisions of Paragraph 39.4(a).
(c) An Option shall terminate and be of no further force or effect,
notwithstanding Lessee's due and timely exercise of the Options, if, after such
exercise and prior to the commencement of the extended term, (i) Lessee fails to
pay Rent for a period of thirty (30) days after such Rent becomes due (without
any necessity of Lessor to give notice thereof), (ii) Lessor gives to Lessee
three (3) or more notices of separate Default during any twelve (12) month
period, whether or not the Defaults are cured, or (iii) if Lessee commits a
Breach of this Lease. 40. Multiple Buildings. If the Premises are a part of a
group of buildings controlled by Lessor, Lessee agrees that it will observe all
reasonable rules and regulations which Lessor may make from time to time for the
management, safety, and care of said properties, including the care and
cleanliness of the grounds and including the parking, loading and unloading of
vehicles, and that Lessee will pay its fair share of common expenses incurred in
connection therewith. 41. Security Measures. Lessee hereby acknowledges that the
rental payable to Lessor hereunder does not include the cost of guard service or
other security measures, and that Lessor shall have no obligation whatsoever to
provide same. Lessee assumes all responsibility for the protection of the
Premises, Lessee, its agents and invitees and their property from the acts of
third parties. 42. Reservations. Lessor reserves to itself the right, from time
to time, to grant, without the consent or joinder of Lessee, such easements,
rights and dedications that Lessor deems necessary, and to cause the recordation
of parcel maps and restrictions, so long as such easements, rights, dedications,
maps and restrictions do not unreasonably interfere with the use of the Premises
by Lessee. Lessee agrees to sign any documents reasonably requested by Lessor to
effectuate any such easement rights, dedication, map or restrictions. 43.
Performance Under Protest. If at any time a dispute shall arise as to any amount
or sum of money to be paid by one Party to the other under the provisions
hereof, the Party against whom the obligation to pay the money is asserted shall
have the right to make payment "under protest" and such payment shall not be
regarded as a voluntary payment and there shall survive the right on the part of
said Party to pay such sum or any part thereof, said Party shall be entitled to
recover such sum or so much thereof as it was not legally required to pay. 44.
Authority. If either Party hereto is a corporation, trust, limited liability
company, partnership, or similar entity, each individual executing this Lease on
behalf of such entity represents and warrants that he or she is duly authorized
to execute and deliver this Lease on its behalf. Each party shall, within thirty
(30) days after request, deliver to the other party satisfactory evidence of
such authority.
PAGE 11 Initials /s/ GZ /s/ LMC
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45. Conflict. Any conflict between the printed provisions of this Lease and
the typewritten or handwritten provisions shall be controlled by the typewritten
or handwritten provisions.
46. Offer. Preparation of this Lease by either Party or their agent and
submission of same to the other Party shall not be deemed an offer to lease to
the other Party. This Lease is not intended to be binding until executed and
delivered by all Parties hereto.
47. Amendments. This Lease may be modified only in writing, signed by the
Parties in interest at the time of the modification. As long as they do not
materially change Lessee's obligations hereunder, Lessee agrees to make
such reasonable non-monetary modifications to this Lease as may be reasonably
required by a Lender in connection with the obtaining of normal financing or
refinancing of the Premises.
48. Multiple Parties. If more than one person or entity is named herein as
either Lessor or Lessee, such multiple Parties shall have joint and several
responsibility to comply with the terms of this Lease.
49. Mediation and Arbitration of Disputes. [No text.]
LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND
PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR
INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE
TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE
AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE
PREMISES.
ATTENTION: NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN
INDUSTRIAL REAL ESTATE ASSOCIATION OR BY ANY BROKER AS TO THE LEGAL SUFFICIENCY,
LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH IT
RELATES. THE PARTIES ARE URGED TO:
1. SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS
LEASE.
2. RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF
THE PREMISES. SAID INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED TO: THE
POSSIBLE PRESENCE OF HAZARDOUS SUBSTANCES, THE ZONING OF THE PREMISES, THE
STRUCTURAL INTEGRITY, THE CONDITION OF THE ROOF AND OPERATING SYSTEMS, AND THE
SUITABILITY OF THE PREMISES FOR LESSEE'S INTENDED USE.
WARNING: IF THE PREMISES IS LOCATED IN A STATE OTHER THAN CALIFORNIA, CERTAIN
PROVISIONS OF THE LEASE MAY NEED TO BE REVISED TO COMPLY WITH THE LAWS OF THE
STATE IN WHICH THE PREMISES IS LOCATED.
The parties hereto have executed this Lease at the place and on the dates
specified above their respective signatures.
Executed at: San Diego Executed at: San Diego
on: June 17, 1997 on: June 13, 1997
By LESSOR: By LESSEE:
LMC-Sorrento Investment Company, Agouron Pharmaceuticals, Inc.,
LLC, a California limited a California corporation
liability company
By: /s/ Xxx X. Xxxxxxx By: /s/ Xxxxx Xxxxxx
------------------------------ -------------------------------
Name Printed: Xxx X. Xxxxxxx Name Printed: Xxxxx Xxxxxx
Title: Manager Title: V.P., Operations
Address: 0000 Xxxxxxxxx Xxxxxx Xxxxx Address: 00000 Xxxxx Xxxxxx Xxxxx
Xx Xxxx, XX 00000 Road, Xx Xxxxx, XX 00000
Telephone: (000) 000-0000 Telephone: (000) 000-0000
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
NOTE: These forms are often modified to meet changing requirements of law and
industry needs. Always write or call to make sure you are utilizing the most
current form: AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION, 000 Xx. Xxxxxx
Xxxxxx, Xxxxx 000, Xxx Xxxxxxx, Xxxxxxxxxx 00000. (000) 000-0000. Fax No.
(000) 000-0000.
PAGE 12
Addendum to Office Lease
This Addendum, dated June 13, 1997, constitutes an addendum to that
certain Standard Commercial/Industrial Single-Tenant ("the Lease") dated June
13, 1997, by and between (1) LMC-Sorrento Investment Company, LLC, a California
limited liability company, ("Lessor") and (2) Agouron Pharmaceuticals, Inc., a
California corporation ("Lessee"). Lessor and Lessee hereby supplement and amend
the Lease, as follows:
1.3 Term.
1.3.1 Original Term. The Original Term of the Lease
shall commence and Lessee shall be entitled to possession of the Premises for
the purpose of accomplishing Lessee's Work (defined below) on the
Commencement Date. As used herein, the term "Commencement Date" shall
mean the date on which Lessor and Lessee have each approved, in writing, the
working plans and specifications for Lessee's Work as hereinbelow provided. As
soon as practicable following the written approval by Lessor and Lessee of the
working plans and specifications for Lessee's Work, Lessor and Lessee shall
execute and deliver to each other a written memorandum confirming the
Commencement Date. Subject to Lessee's option to extend and unless sooner
terminated as herein provided, the term of the Lease shall expire at 11:59 p.m.
on the last day of the sixth Lease Year (defined below) which date is the
expiration of the Original Term. References in the Lease to "Start Date" shall
mean the Commencement Date.
1.3.2 Option to Renew. Lessee shall have the right
and option to renew the term of the Lease for a further term of five years
commencing on the expiration of the Original Term. If Lessee exercises
the option provided in the preceding sentence, then Lessee shall have a
further option to extend the Lease for an additional period of five years
commencing on the expiration of the first option period. The options to extend
the term of the Lease may be exercised only by the delivery by Lessee to Lessor,
not less than six months prior to the expiration of the term, of written
notice of such exercise. Lessee's exercise of the option(s) shall be
irrevocable. Lessee's occupancy during the option period(s) shall be subject
to all terms and conditions of the Lease; provided, however, the Base Rent
payable during the option period(s) shall be subject to adjustment as provided
in Sections 1.5.4, 1.5.5 and 1.5.6, below.
1.5 Base Rent.
1.5.1 Rent Commencement and Adjustment. As used
herein, the term "Rent Commencement Date" shall mean the earlier of (1) the date
of the issuance of a certificate of occupancy following completion of Lessee's
Work ("Substantial Completion") or (2) April 1, 1998, which date shall be
extended to the extent Lessor's actions or inaction result in delaying the
issuance of the certificate of occupancy (e.g. if Lessor's failure timely
to respond to a request for approval of a change order on the critical path
of Lessee's Work resulted in a two-day delay in the issuance of the certificate
of occupancy, then the outside date for the Rent Commencement Date would be
extended to January 3, 1998). Commencing on the Rent Commencement Date, Lessee
shall pay to Lessor Base Rent, in advance without deduction, offset, notice or
demand. Subject to adjustment as provided, below, a schedule of the Base Rent to
be paid during the Original Term is as follows:
Amount/
Applicable Period Square Foot-Month Amount/Month*
---------------- ----------------- -------------
Lease Year 1 $1.67 $ 90,180.00
Lease Year 2 $1.73 $ 93,420.00
Lease Year 3 $1.79 $ 96,660.00
Lease Year 4 $1.85 $ 99,900.00
Lease Year 5 $1.92 $103,680.00
Lease Year 6 $1.98 $106,920.00
*Based upon the Building having estimated 54,000 rentable square feet of floor
area.
If the Rent Commencement Date occurs on other than the first day of a calendar
month, then the Base Rent for such partial month of the term of the Lease shall
be (1) prorated in the proportion that the number of days of the Lease is in
effect during such period bears to 30 and (2) be paid on the Rent Commencement
Date. Concurrently with the execution of the Lease, Lessee shall pay to Lessor
$90,180.00 which shall be credited against the Base Rent for the first full
calendar month following the Rent Commencement Date.
1.5.2 "Lease Year" Defined. As used herein, the
term "Lease Year" shall mean each 12-month period commencing on the Rent
Commencement Date if the Rent Commencement Date is the first day of a calendar
month, but otherwise on the first day of the calendar month immediately next
following the calendar month in which the Rent Commencement Date occurs, and
ending on the last day of the twelfth month thereafter. For example, (i) if the
Rent Commencement Date were September 15, 1997, (ii) the floor area of the
Building is determined to be 54,000 rentable square feet, then (1) on September
15, 1997, Lessee would owe and pay to Lessor $48,096.00 for prorated Base Rent
for September, 1997, (2) each Lease Year would begin on October 1 and would
expire on the following September 30 and (3) the Original Term of the Lease
would expire on September 30, 2003.
1.5.3 Adjustment to Base Rent During Original Term.
Promptly following Substantial Completion, Lessor and Lessee shall cause the
Building to be measured and the rentable floor area thereof to be determined
according to BOMA standards for a single-tenant free-standing building. If the
rentable floor are is determined to be more or less than 54,000 square feet,
then the Base Rent "Amount/Month" shown above in Section 1.5.1 shall be adjusted
based upon multiplying the rentable floor area of the Building as determined by
Lessor and Lessee by the "Amount/Square Foot-Month" for each Lease Year as shown
in Section 1.5.1 above (e.g. if the rentable floor area of the Building were
determined to be 54,300 square feet, then the monthly Base Rent for the first
Lease Year would be $90,681.00 and the Base Rent for each subsequent Lease Year
would be similarly adjusted). If, as of the Rent Commencement Date, Lessor and
Lessee have not agreed upon the rentable floor area of the Building, then,
pending determination of the rentable floor area of the Building, Lessee shall
pay Base Rent based upon an assumed rentable floor area of 54,000 square feet.
If the actual rentable floor area is subsequently determined to be more than
54,000 square feet, then, within 30 days following such determination, Lessee
shall pay to Lessor the difference between (1) the Base Rent which should have
been paid based upon the actual rentable floor area of the Building and (2) the
actual amount of Base Rent paid by Lessee prior to such determination. If it is
determined that the actual rentable floor area of the Building is less than
54,000 square feet, then Lessee shall be entitled to credit against the Base
Rent next coming due in an amount equal to the excess Base Rent paid by Lessee.
In the event of a dispute regarding determination of the rentable floor area of
the Building, then either Lessor or Lessee may submit the issue to determination
by arbitration under the auspices of the American Arbitration Association which
shall be conducted pursuant to the commercial rules. Except as otherwise
provided in this Lease, the venue for the arbitration shall be in the City of
San Diego. With respect to the conduct of the arbitration, the following shall
apply:
(a) Not less than three weeks in advance of the date for the
commencement of the arbitration hearing, Lessor and Lessee shall each exchange
(1) the name, address and qualifications of any engineer, architect or other
expert intended to be called at the time of the arbitration (each, an "Expert")
and reports, measurements and/or data relied upon by the Expert in connection
with forming an opinion as to the rentable floor area of the Building.
(b) Not less than five days prior to the date set for the hearing on
the arbitration, each party shall (i) make available for an oral deposition any
Expert whose testimony is expected to be
2
given at the time of the arbitration and (ii) deliver to the other party all
exhibits which are intended to be entered into evidence at the time of the
arbitration.
(c) Each party shall bear their own attorney's fees and Expert's fees
incurred in connection with the arbitration. Each party shall share equally in
the administrative fees owed to the American Arbitration Association and the
reasonable hourly fees owed to the arbitrator.
(d) Following rendition of the arbitrator's award, either party may
petition the Superior Court of the State of California for the County of San
Diego to have the award confirmed and entered as a judgment.
1.5.4 Determination of Base Rent for First Lease
Year of First Option Period. The Base Rent to be paid by Lessee to Lessor
during the first Lease Year of the first option period shall be the Market
Rental Rate (defined below), but, in no event shall the Base Rent for the first
Lease Year of the first option period be less than the Base Rent for the sixth
Lease Year of the Original Term. As used herein, the term "Market Rental
Rate" shall mean that rate which is prevailing as of the commencement of the
first Lease Year of the first option period for comparable space in a
comparable office building in the Sorrento Valley area of San Diego, California,
taking into consideration the size and age of, and improvements in, the
Premises, the five-year term of the option period, the contribution made by
Lessee to the improvements to the Premises and other relevant factors, and
which Market Rental Rate shall be determined as follows:
(a) By mutual agreement between Lessor and Lessee evidenced in a
writing signed by each and mutually delivered; or
(b) If Lessor and Lessee have not agreed upon the Market Rental Rate
prior to the commencement of the first Lease Year of the option period, then
either Lessor or Lessee may submit the issue of Market Rental Rate to
determination by arbitration under the auspices of the American Arbitration
Association which shall be conducted pursuant to the commercial rules except as
otherwise provided in this Lease. The venue for the arbitration shall be in the
City of San Diego. With respect to the conduct of the arbitration, the following
shall apply:
(i) Not less than three weeks in advance of the date for the
commencement of the arbitration hearing, Lessor and Lessee shall each exchange
(1) the name, address and qualifications of any appraiser, broker or other
expert intended to be called at the time of the arbitration (each, an "Expert"),
(2) any reports and/or data relied upon by the Expert in connection with forming
an opinion as to Market Rental Rate and (3) a statement as to each party's
determination of the Market Rental Rate ("MRR Statement") (i.e., Lessor shall
give to Lessee Lessor's determination of the Market Rental Rate and vice-versa).
(ii) For a period of ten days following the exchange of the MRR
Statements, either party may accept the Market Rental Rate stated in the other
party's MRR Statement and, in such event, the accepted amount will become the
Base Rent for the first Lease Year of the option period (e.g., if Lessor
delivered to Lessee timely written notice of acceptance of Lessee's
determination of Market Rental Rate as provided in Lessee's MRR Statement, then
the amount shown on Lessee's MRR Statement would become the Base Rent for the
first Lease Year of the option period).
(iii) If neither party accepts the other party's determination of
Market Rental Rate, then the arbitration shall be conducted before a single
arbitrator who shall be selected pursuant to the commercial rules. Not less than
five days prior to the date set for the hearing for the arbitration, each party
shall (1) make available for an oral deposition any Expert whose testimony is
expected to be given at the time of the arbitration and (2) deliver
3
to the other party all exhibits which are intended to be entered into evidence
at the time of the arbitration.
(iv) Except as provided below, each party shall bear their own
attorney's fees and Expert's fees. Except as provided below, each party shall
share equally any administrative fees owed to the American Arbitration
Association and the reasonable hourly fees owed to the arbitrator.
Notwithstanding the foregoing, if the amount of the Market Rental Rate stated in
Lessee's MRR Statement is less than 95 percent of the Market Rental Rate
determined by the arbitrator, then the arbitrator may, in the arbitrator's
discretion, assess against Lessee costs incurred by Lessor in connection with
the arbitration including, without limitation, reasonable attorney's fees,
Expert's fees, arbitrator's fees and administration fees. If the amount of the
Market Rental Rate stated in Lessor's MRR Statement is greater than 105 percent
of the Market Rental Rate determined by the arbitrator, then the arbitrator may,
in the arbitrator's discretion, assess against the Lessor costs incurred by
Lessee in connection with the arbitration including, without limitation,
reasonable attorney's fees, Expert's fees, arbitrator's fees and administration
fees.
(v) Following rendition of the arbitrator's award, either
party may petition the Superior Court of the State of California for the County
of San Diego to have the award confirmed and entered as a judgment.
Pending determination of the Market Rental Rate for the first option period,
Lessee shall pay to Lessor Base Rent in an amount equal to 105 percent of the
Base Rent in effect during the sixth Lease Year. If the Market Rental Rate is
greater than 105 percent of the Base Rent payable during the sixth Lease Year,
then, within 30 days following the arbitrator's decision determining the amount
of the Market Rental Rate, Lessee shall pay to Lessor the difference between (1)
the Base Rent which should have been paid during the first Lease Year of the
first option period based upon the Market Renal Rate and (2) the actual amount
of the Base Rent paid by Lessee during the first Lease Year of the first option
period. If it is determined that the Market Rental Rate is less than one hundred
five percent of the Base Rent payable during the sixth Lease Year, then Lessee
shall be entitled to credit against Base Rent next coming due in an amount equal
to the excess paid by Lessee.
1.5.5 Determination of Base Rent for First Lease
Year of Second Option Period. The Base Rent to be paid by Lessee to Lessor
during the first Lease Year of the second option period shall be the Market
Rental Rate which is prevailing as of the commencement of the first Lease
Year of the second option period and shall be determined in the same manner
as determining Market Rental Rate for the first Lease Year of the first
option period as provided above in Section 1.6.3; provided, however, in
no event shall the Base Rent for the first Lease Year of the second option
period be less than the Base Rent for the fifth Lease Year of the first option
period. Pending determination of the Market Rental Rate for the second option
period, Lessee shall pay to Lessor Base Rent in an amount equal to 105 percent
of the Base Rent in effect during the fifth Lease Year of the first
option period. If the Market Rental Rate is greater than 105 percent of the Base
Rent payable during the fifth Lease Year of the first option period, then,
within 30 days following the arbitrator's decision determining the amount of the
Market Rental Rate, Lessee shall pay to Lessor the difference between (1) the
Base Rent which should have been paid during the first Lease Year of the second
option period based upon the Market Rental Rate and (2) the actual amount of the
Base Rent paid by Lessee during the first Lease Year of the second option
period. If it is determined the Market Rental Rate is less than 105 percent of
the Base Rent payable during the fifth Lease Year of the first option period,
then Lessee shall be entitled to credit against the Base Rent next coming due in
an amount equal to the excess paid by Lessee.
4
1.5.6 Determination of Base Rent for Subsequent
Lease Years of Option Period(s). The Base Rent for each subsequent Lease Year
of the option periods will be equal to the amount derived by multiplying the
Base Rent for the first Lease Year of the option period by a fraction, the
numerator of which is the Index (defined below) amount for the last period
for which the Index is published and which ends before the commencement
of the Lease Year for which the calculation is being made and the denominator
of which is the Index amount for the same calendar period immediately
preceding the commencement of the option period. The "Index" is that which is
published by the United States Department of Labor, Bureau of Labor Statistics,
in the Consumer Price Index for all urban consumers for the Los Angeles area,
all items, 1982-84 base. By way of example, if the Base Rent for the second
Lease Year of the first option period were to be determined based upon the
assumptions that (1) the first option period commenced October 1, 2003,
(2) the Base Rent for the first Lease Year of the option period is $108,000.00,
(3) the Index is published monthly, (4) the Index amount for September 2003 is
225.0 and (5) the Index amount for September 2004 is 234.0, then the Base Rent
for the second Lease Year of the first option period would be $112,320.00. If
the Bureau of Labor Statistics discontinues the publication of the Index or
publishes the Index less frequently, or alters the Index in some other manner,
then Lessor and Lessee will adopt a substitute index or substitute procedure
which reasonably reflects and monitors changes in consumer prices. In no event
will the Base Rent during the subsequent Lease Years of an option period be
reduced below the Base Rent for the first Lease Year of the option period.
Lessor's failure, by reason of oversight, mistake or otherwise, to make the
calculation or advise Lessee thereof prior to the end of any Lease Year or to
collect any increased Base Rent determined as set forth in this paragraph, will
not release Lessee of Lessee's obligation to pay to Lessor, forthwith upon
discovery of such oversight or mistake, an amount equal to the difference
between the Base Rent actually paid and the increased Base Rent that should have
been paid during the period in which such mistake or oversight continued.
1.7 Security Deposit. Upon execution of the Lease, Lessee
shall pay to Lessor $90,180.00 which shall constitute the Security Deposit.
Commencing on the Commencement Date, the Security Deposit shall bear interest
for the benefit of Lessee at the rate of four percent per annum. Interest
accrued on the Security Deposit shall be paid by Lessor to Lessee on the first
day of each Lease Year commencing on the first day of the second Lease Year.
6.2 Hazardous Substances. Other than (1) two percent
crystalline asbestos found in floor tile mastic (which shall be removed by
Lessee's contractor at Lessor's expense during the course of completing Lessee's
Work) and (2) any matters which may be disclosed in the Phase I Environmental
Assessment prepared by Natec Environmental Reporting dated April 1, 1996 (a copy
of which has been delivered to Lessee), Lessor represents and warrants that
Lessor has no actual knowledge of the presence on the Premises of any Hazardous
Substances (defined below).
6.2.1 Definition of "Hazardous Material". As used
herein, the term "Hazardous Material" means any hazardous or toxic substance,
material or waste which is or becomes regulated by any local governmental
authority, the State of California or the United States government. The term
"Hazardous Material" includes, without limitation, any material or
substance which is (i) defined as a "hazardous waste," "extremely hazardous
waste" or "restricted hazardous waste" under Section 25515 or 25117, or
listed pursuant to Section 25140, of the California Health and Safety Code,
Division 20, Chapter 6.5 (Hazardous Waste Control Law), (ii) defined as a
"hazardous substance" under Section 25316 of the California Health and
Safety Code, Division 2, Chapter 6.8 (Xxxxxxxxx-Xxxxxx-Xxxxxx Hazardous
Substance Account Act), (iii) Defined as a "hazardous material,"
"hazardous substance" or "hazardous waste" under Section 25501 of the California
Health and
5
Safety Code, Division 20, Chapter 6.95 (Hazardous Substances), (iv)
petroleum, (v) asbestos, (vi) listed under Article 9 and defined as hazardous or
extremely hazardous pursuant to Article 11 of Title 22 of the California
Administrative Code, Division 4, Chapter 20, (vii) designated as a "hazardous
substance" pursuant to Section 311 of the Federal Water Pollution Control Act
(33 U.S.C. Section 1317), (viii) defined as a "hazardous waste" pursuant to
Section 1004 of the Federal Resource Conversation and Recovery Act, 42 U.S.C.
Section 6901, et. seq. (42 U.S.C Section 6903), or (ix) defined as "hazardous
substance" pursuant to Section 101 of the Comprehensive Environmental Response
Compensation and Liability Act, 42 U.S.C. Section 9601 et. seq. (42 U.S.C.
Section 9601).
6.2.2 Prohibition/Compliance. Lessee shall not
cause or permit any Hazardous Material (as defined above) to be brought upon,
kept or used in or about the Premiss or the Project in violation of applicable
law by Lessee, its agents, employees, contractors or invitees. If Lessee
breaches the obligation stated in the preceding sentence, or if the presence
of Hazardous Material results in unlawful contamination of the Premises, or any
adjacent property by Hazardous Material otherwise occurs during the term of
this Lease or any extension or renewal hereof or holding over hereunder, then
Lessee shall indemnify, defend and hold Lessor, its agents and contractors
harmless from any and all claims, judgment,s
damages, penalties, fines, costs, liabilities, or losses (including without
limitation diminution in value of the Premises, damages for the loss or
restriction on use of rentable or usable space or of any amenity of the
Premises, damages arising from any adverse impact on marketing of space in the
Premises and sums paid in settlement of claims, attorneys' fees, consultant fees
and expert fees) which arise during or after he Lease term as a result of such
contamination. For the purpose of this Section 6.2, unlawful contamination is
Hazardous Material which violates any applicable local, state or federal las or
any regulations or standards promulgated thereunder, including requirements or
standards imposed by any governmental agency or by governmental order or court
having jurisdiction over the Premises. This indemnification of Lessor by Lessee
includes, without limitation, costs incurred in connection with any
investigation of site conditions or any cleanup, remedial, removal, or
restoration work required by any federal, state or local governmental agency or
political subdivision because of Hazardous material present in the air, soil or
ground water above on or under the Premises. Without limiting the foregoing, if
the presence of any Hazardous Material on the Premises or any adjacent property,
caused or permitted by Lessee results in any unlawful contamination of the
Premises, or any adjacent property, Lessee shall promptly take all actions at
its sole expense as are necessary to ensure the Premises, or any adjacent
property meets all applicable local, state and federal laws and any regulations
or standards promulgated thereunder, in effect now or in the future, including
requirements by any governmental agency or impose by any governmental order or
court having jurisdiction over the Premises, provided that Lessor's approval of
such action shall first be obtained, which approval shall not unreasonably be
withheld so long as such actions would not potentially have any material adverse
long-term or short term effect on the Premises.
6.2.3 Business. Lessor acknowledges that it is not
the intent of this Section 6.2 to prohibit Lessee from operating its business
as described in Section 1.8 above. Lessee may operate its business according to
the custom of the industry so long as the use or presence of Hazardous Material
is strictly and properly monitored according to all applicable governmental
requirements. As a material inducement to Lessor to allow Lessee to use
Hazardous Material in connection with its business, Lessee agrees to deliver
to Lessor prior to the Rent Commencement Date a list identifying each type of
Hazardous Material to be present on the Premises and setting forth any and all
governmental approvals or permits required in connection with the presence
of such Hazardous Material on the Premises ("Hazardous Material List").
Lessee shall deliver to Lessor an updated Hazardous Material List at least once
a year. Lessee shall deliver to Lessor true and correct copies of the
6
following documents (hereinafter referred to as the "Documents") relating
to the handling, storage, disposal and emission of Hazardous Material
prior to the Rent Commencement Date, or if unavailable at that time,
concurrent with the receipt from or submission to a governmental agency:
permits, approvals, reports and correspondence, storage and management
plans, notice of violations of any laws, plans relating to the installation of
any storage tanks to be installed in or under the Project (provided, said
installation of tanks shall only be permitted after Lessor has given Lessee its
written consent to do so, which consent may be withheld in Lessor's sole and
absolute discretion); and all closure plans or any other documents required by
any and all federal, state and local governmental agencies and authorities for
any storage tanks installed in, on or under the Project for the closure of any
such tanks. Lessee is not required, however, to provide Lessor with any
portion(s) of the Documents containing information of a proprietary nature
which, in and of themselves, do not contain a reference to any Hazardous
Material or hazardous activities. It is not he intent of this Section to
provided Lessor with information which could be detrimental to Lessee's business
should such information become possessed by Lessee's competitors.
6.2.4 Termination of Lease. Notwithstanding the
provisions of Section 6.2.2 above, if Lessee or the proposed assignee or
sublessee is subject to an enforcement order issued by any governmental
authority in connection with the use, disposal or storage of a Hazardous
Material at the Project, Lessor shall have the right to terminate the Lease in
Lessor's sole and absolute discretion (with respect to any such matter
involving Lessee) and it shall not be unreasonable for Lessor to withhold its
consent to any proposed assignment or subletting (with respect to any such
matter involving a proposed assignee or sublessee).
6.2.5 Hazardous Substances. References in the Lease
to the term "Hazardous Substances" shall have the same meaning as Hazardous
materials as defined in this Addendum.
6.4 Inspection/Compliance. Lessor and Lessor's Lender and
consultants shall have the right to enter into the Premises at any time in the
case of an emergency and otherwise at reasonable times with reasonable notice
for the purpose of inspecting the condition of the Premises and for verifying
compliance by Lessee with the Lease. The cost of any such inspections shall be
paid by Lessor, unless a material violation by Lessee of Applicable
Requirements, or a contamination by Lessee is found to exist or be imminent, or
the inspection is requested or ordered by a governmental authority and Lessee
has failed to adequately respond. In such case, Lessee shall upon request
reimburse Lessor for the cost of such inspections, so long as such inspection is
directly related to the violation or contamination.
8.3 Earthquake Insurance. As part of the insurance pertaining
to the Building and improvements on the Premises, the Insuring Party shall
obtain and keep in force a policy in the name of Lessor with loss payable to
Lessor and any Lender insuring loss or damage to the Premises caused by
earthquake.
8.5 Insurance Policies. The requirement for 30 days notice to
Lessor of a modification to an insurance policy shall only apply to any
modification which results in the policy no longer being in compliance with the
requirements of the Lease.
8.6 Waiver of Subrogation. To the extent permitted by law and
without affecting the coverage provided by any policy of insurance required to
be maintained under the Lease, Lessor and Lessee each waive the right to recover
against the other (1) damage for injury to or death of persons, (2) damage to
property, (3) damage to the Premises or any part thereof and/or (4) claims
arising by reason of any of the foregoing, but only to the extent that any of
the foregoing damages and/or claims under subparts (1) through (4) hereof are
covered, and only to the extent of such coverage, by policies of insurance
actually carried or required to
7
be carried under the Lease by either Lessor and/or Lessee. This provision is
intended to waive fully, and for the benefit of each party, any rights and
claims which might give rise to a right of subrogation in any insurance
carrier. Each party shall procure a clause or endorsement on any policy
required under the Lease denying to the insurer rights of subrogation against
the other party to the extent rights have been waived by the insured prior to
the occurrence of injury or loss.
9.3 Partial Damage--Uninsured Loss. If a Premises Partial
Damage that is not an Insured Loss occurs, unless caused by the negligent or
willful act of Lessee (in which event, Lessee shall make the repairs at Lessee's
expense), Lessor shall repair such damage as soon as reasonably possible at
Lessor's expense and this Lease shall continue in full force and effect;
provided, however, if the reasonably estimated cost of repairing the Premises
Partial Damage that is not an Insured Loss exceeds $600,000.00, then the
following shall apply:
9.3.1 Lessor may deliver to Lessee written notice of
Lessor's intention to terminate the Lease. In order to be effective,
Lessor's notice of termination must be delivered to Lessee within 30-days
following receipt by Lessor of knowledge of the occurrence of the Premises
Partial Damage that is not an Insured Loss.
9.3.2 If, within 30 days following receipt by Lessee
of Lessor's notice of intention to terminate, Lessee delivers to Lessor
written notice of Lessee's commitment to pay the cost of the repair in excess
of $600,000.00, then the Lease shall remain in full force and effect and Lessor
shall cause the repair to be accomplished and Lessor shall pay the first
$600,000.00 of the cost of such repair and Lessee shall pay for all costs of
repair in excess of $600,000.00.
9.3.3 If, within the 30-day period following
delivery to Lessee of Lessor's notice of termination, Lessee fails to deliver
written notice of Lessee's commitment to pay for repair costs in excess of
$600,000.00, then, upon the expiration of the 30-day period, the Lease shall
terminate.
10.2 Impounding of Real Property Taxes. Notwithstanding
Section 10.2(b) of the Lease, if Lessor's lender which has a first mortgage or
deed of trust on the Premises requires impounding of Real Property Taxes, then
Lessee shall pay to Lessor (and Lessor shall pay to Lessor's lender) the amount
of such real property tax impounds.
12.3 Lessee's Affiliates/Rent Recapture. Notwithstanding
anything contained in Section 12 of the Lease to the contrary, Lessee shall have
the right to assign the Lease and/or sublet all or any portion of the Premises
to a Lessee's Affiliate. As used herein "Lessee's Affiliate" shall mean either
(1) any subsidiary corporation as to which Lessee owns 75 percent or more of the
outstanding shares and/or (2) a parent corporation which owns 75 percent or more
of the outstanding shares of Lessee. With the exception of any assignment or
subleasing to Lessee's Affiliate, Lessee shall pay to Lessor, as additional
rent, if and when received by Lessee, 50 percent of any excess rent or other
premium on the assignment, subleasing or other transfer (e.g., if the
assignment, sublease or other transfer document provides that the assignee,
subtenant or other transferee thereunder is to pay any amount in excess of the
rent and other charges due under this Lease, whether such premium be in the form
of an increased monthly or annual rental, lump sum payment in consideration of
the assignment, sublease or other transfer or consideration of any other form,
including a sale of goodwill and/or a covenant not to compete or payment for
furniture, fixtures or inventory in an amount in excess of the reasonable value
thereof) after first deducting the reasonable costs incurred by Lessee in
obtaining the assignment, sublease or transfer, including, without limitation,
reasonable brokerage commissions and reasonable costs of leasehold
8
improvements made by Lessee, which costs shall be amortized over the shorter
of the useful life of such improvements or the remaining term of this
Lease as of the installation of such leasehold improvements.
13.2 Lessor's Remedies. In the event of any Default or other
Breach by Lessee, Lessor may, at any time thereafter, with or without notice or
demand and without limiting Lessor in the exercise of any right or remedy which
Lessor may have by reason of such Default or Breach, maintain Lessee's right to
possession in which case the Lease shall continue in effect whether or not
Lessee shall have abandoned the Premises. In such event, Lessor shall be
entitled to enforce all of Lessor's rights and remedies under the Lease,
including the right to recover the rent as it becomes due hereunder. The parties
acknowledge and agree that Lessor shall have the remedy under Civil Code section
1951.4 which provides in part:
The lessor has the remedy described in California Civil Code
section 1951.4 (lessor may continue lease in effect after lessee's
breach and abandonment and recover rent as it becomes due, if lessee
has right to sublet or assign, subject only to reasonable limitations).
13.4 Late Charge. If any Rent shall not be received by Lessor
within five days after such amount shall be due, then, without any requirement
for notice to Lessee, Lessee shall pay to Lessor a one-time late charge equal to
the lesser of $500.00 or five percent of such overdue amount. If any Rent shall
not be received by Lessor within 10 days after such amount shall be due, then,
without any requirement for notice to Lessee, Lessee shall pay to Lessor a
one-time late charge equal to five percent of such overdue amount less the
amount of the late charge owed under the preceding sentence. By way of example,
assume that Lessee failed to pay Base Rent in the amount of $90,180.00 which was
due on February 1, 1997, then, under those assumed facts, (1) if Lessee had not
paid the Base Rent by February 6, 1997, a late charge in the amount of $500.00
would be due and (2) if the Base Rent remained unpaid as of February 11, 1997,
then the total amount of late charges owed by Lessee for the default would be
$4,509.00.
15.3 Brokers' Commissions. To the extent any real estate
commissions are owed by Lessor pursuant to separate written agreements, Lessor
shall be solely responsible for payment of such commissions. Lessor hereby
discloses Xxx X. Xxxxxxx (a principal of Lessor) is a licensed California real
estate broker.
23. Notices. The provisions of Section 23 of the Lease shall not apply
to any notices which are required to be served by Lessor as a condition
precedent to the initiation of a special proceeding for unlawful detainer. Any
notices required to be served as a condition precedent to the initiation of a
special proceeding for unlawful detainer (including any notices under Section
13.1 of the Lease) shall be served in accordance with Code of Civil Procedure
section 1162 as such section may be subsequently amended, repealed or replaced.
With respect to all other notices, the parties acknowledge and agree that, in
addition to the manner of delivery provided in Section 23 of the Lease, notices
may be delivered by Federal Express or other similar overnight delivery service
which provides evidence of receipt. If notice is delivered by Federal Express or
such other overnight delivery service, the notice shall be deemed delivered as
of the date shown by the evidence of receipt.
30. Attornment and Nondisturbance. Lessee acknowledges that the
Subordination, Non-Disturbance and Attornment Agreement attached hereto as
Exhibit 1 is in form and content acceptable to Lessee and constitutes a
"commercially reasonable Non-Disturbance Agreement" within the meaning of
Section 30.3 of the Lease.
9
31. Attorneys' Fees; Jury Trial Waiver. Lessor shall further be
entitled to recover reasonable attorney's fees incurred in connection with any
hearing or motion for assumption or rejection of the Lease under Title 11 of the
United States Code. Lessee shall be further entitled to recover reasonable
attorney's fees in connection with any hearing or adversary proceedings related
to this Lease in any bankruptcy case filed by or against Lessor. Lessor and
Lessee hereby waive their respective right to trial by jury of any cause of
action, claim, counter-claim or cross-complaint in any action, proceeding and/or
hearing brought by either Lessor against Lessee or Lessee against Lessor on any
matter whatsoever arising out of, or in any way connected with, this Lease, the
relationship of Lessor and Lessee, Lessee's use or occupancy of the Premises or
any claim of injury or damage or the enforcement of any remedy under law,
statute or regulation, emergency or otherwise, now or hereafter in effect.
34. Signage. Lessee shall be entitled to install a monument sign in the
location depicted in the site plan attached hereto as Exhibit 2. All other signs
placed in the exterior of the Premises and/or upon the Building shall be subject
to Lessor's prior written approval which shall not be unreasonably withheld or
delayed.
50. Lessee's Work.
50.1 Approval of Lessee's Plans, Specifications and
Contractor. Within 45 days following execution of the Lease, Lessee shall cause
to be prepared and delivered to Lessor (1) preliminary space plan drawings and
(2) preliminary specifications for the improvements, fixtures and equipment to
be installed into the Premises. Within two business days following Lessor's
receipt of the preliminary plans and specifications, Lessor shall provide to
Lessee approval of such preliminary plans and specifications unless Lessor has a
reasonable and material objection thereto. Within 45 days following Lessor's
approval of the preliminary plans and specifications, Lessee shall cause to be
prepared and delivered to Lessor (1) working plans which are sufficiently
detailed in order to apply for and obtain a building permit for the interior
improvements to the Premises which shall be based upon the preliminary plans
previously approved by Lessor and (2) final specifications for the improvements,
fixtures and equipment to be installed into the Premises which shall be based
upon the preliminary specifications previously approved by Lessor. Within two
business days following Lessor's receipt of the working plans and
specifications, Lessor shall approve such plans and specifications unless Lessor
has a reasonable and material objection thereto. Following Lessor's approval of
the working plans and specifications, Lessee shall submit the working plans and
specifications to the Building Inspection Department of the City of San Diego
for the purpose of obtaining a building permit for the construction of the work
described in the working plans and specifications (hereinafter "Lessee's Work").
If, during the course of construction of Lessee's Work, Lessee determines that
it is necessary or desirable to make a material change to the working plans and
specifications, then such proposed change shall be first submitted to Lessor for
Lessor's review and approval, which shall not be unreasonably withheld or
delayed. Prior to commencement of Lessee's Work, Lessee shall submit to Lessor
the name, telephone number, license number and contact representative for the
general contractor whom Lessee intends to use to accomplish Lessee's Work.
Within two business days following Lessor's receipt of such information
concerning the proposed general contractor, Lessor shall approve Lessee's
selection of the general contractor unless Lessor has a reasonable and material
objection thereto. If Lessor's lender who is furnishing all or a portion of the
funds for Lessor's Allowance requires similar rights of approval of the plans,
specifications and/or contractor, Lessee shall cooperate with Lessor to satisfy
such lender's reasonable requests for information and requirements for approval.
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50.2 Completion of Lessee's Work. Following Lessor's approval
of the working plans and specifications and the issuance by the City of San
Diego of a building permit for Lessee's Work, Lessee shall, thereafter,
diligently, competently and expeditiously complete Lessee's Work. With the
exception of Lessor's obligations with respect to payment of Lessor's Allowance
(defined below), Lessee shall indemnify and hold Lessor harmless from and
against any and all claims, liabilities, damages, penalties, fines and costs
arising out of or relating to the completion of Lessee's Work including, without
limitation, any claims of lien for payment by any general contractor,
subcontractor and/or material supplier and/or any claim for death or injury to
persons and/or damage to property.
50.3 Lessor's Allowance. Concurrently with the approval by
Lessor of the working plans and specifications and subject to adjustment as
provided below, Lessor shall deliver to Lessee evidence of availability of
$2,430,000.00 ("Lessor's Allowance") to be used to pay the cost of Lessee's
Work. Lessor's Allowance shall be used to pay the fees, costs and expenses owed
to the architects, engineers, general contractor, subcontractors and/or
materials suppliers furnishing labor and materials to accomplish Lessee's Work.
Lessor's Allowance shall also be used to pay for liability and course of
construction insurance maintained by Lessor and/or Lessee during the completion
of Lessee's Work and Lessor's Expansion Work. Lessor shall pay to Lessee
Lessor's Allowance within ten days following delivery by Lessee to Lessor of (1)
a copy of the certificate of occupancy and (2) lien releases upon final payment
showing "$0.00" as the disputed amount from Lessee's contractor and all other
subcontractors and material suppliers who furnished labor and materials to the
Premises for Lessee's Work; provided, however, if there exists a dispute with
respect to the amount owed to Lessee's contractor or a subcontractor or material
supplier, Lessor shall only withhold an amount equal to 150 percent of the
disputed amount and shall disburse to Lessee the balance of Lessor's Allowance.
Lessor and Lessee agree that the amount of Lessor's Allowance as provided above
has been calculated based upon an estimated completed rentable floor area for
the Premises of 54,000 rentable square feet. If the approved plans for Lessor's
Expansion Work (defined below) result in the estimated rentable floor area of
the Premises being more or less than 54,000 square feet, then the amount of
Lessor's Allowance shall be calculated by multiplying what Lessee and Lessor
estimate to be the final rentable floor area of the Building following
completion of Lessor's Expansion Work by $45.00 (e.g., if, based upon the
approved plans for Lessor's Expansion Work, the estimated rentable floor area of
the Building will be, upon completion, 54,300 square feet, then Lessor's
Allowance would be $2,443,500.00). In addition to the amount of Lessor's
Allowance, Lessor shall pay for Lessee's contractor to install in the Building
an elevator.
50.4 Special Provisions Re Lessee's Work. With respect
to Lessee's Work, Lessor and Lessee further agree:
50.4.1 Interior Accessibility Requirements. In the
context of performing Lessee's Work, Lessee shall be responsible for
installing into the interior of the Building all improvements which may be
required to comply with Americans with Disabilities Act and/or any other
similar laws concerning accessibility. Lessor shall, at Lessor's sole cost and
expense, be responsible for compliance with any such laws as they pertain to the
exterior parking areas, walkways and driveways of the Premises and entrances to
the Building.
50.4.2 Roof. In the course of performing Lessee's
Work, Lessee shall be responsible to replace the roof covering of the
Building such that, upon Substantial Completion, the roof shall be in new
condition. Without limiting the generality of the foregoing, Lessee shall
assure that all mechanical systems installed on the roof are properly
installed over sheet metal pad with proper flashing and sealing.
Notwithstanding Sections 2.3 and 7.1(c) of the Lease, Lessor shall not be
responsible for any
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maintenance, repair and/or replacement of the roof during the term of the
Lease. In addition to Lessor's Allowance, Lessor shall contribute
$25,000.00 to the cost of replacing the roof covering.
50.4.3 Improvements to be Surrendered Upon
Expiration/Termination of Lease. All of Lessee's Work shall, upon expiration or
termination of the Lease, be surrendered to Lessor and shall become Lessor's
property. Lessee acknowledges and agrees that the fume hoods, laboratory
benches, laboratory sinks and mechanical system shall not constitute Lessee's
fixtures which Lessee is entitled to remove upon the expiration or termination
of the Lease. In connection with preparation and approval of the plans and
specifications for Lessee's Work, Lessor and Lessee shall prepare and agree
upon a list of Trade Fixtures which Lessee is entitled to remove at the
expiration or termination of the Lease (collectively "the Removable
Fixtures"). If, prior to approval of the working drawings for Lessee's Work,
Lessor and Lessee are unable to agree upon the fixtures to be included
within the Removable Fixtures, then either party ("the Notifying Party") may
submit to the other party ("the Receiving Party") a list of the fixtures which
the Notifying Party is willing to agree to as constituting the Removable
Fixtures. Within five business days following receipt of the list of proposed
Removable Fixtures from the Notifying Party, the Receiving Party shall either
(1) accept the list of the Removable Fixtures (in which case, the list submitted
by the Notifying Party shall become the list of Removable Fixtures) or (2)
deliver to the Notifying Party a list of fixtures which the Receiving Party is
willing to agree to as constituting the Removable Fixtures. Within five business
days following receipt by the Notifying Party of the Receiving Party's list of
proposed Removable Fixtures, the Notifying Party shall either (1) accept the
Receiving Party's list of proposed Removable Fixtures (in which case, the list
prepared by the Receiving Party shall constitute the list of Removable Fixtures)
or (2) deliver notice to the Receiving Party that the Notifying Party elects to
terminate the Lease (in which case, the Lease shall terminate, Lessor shall
refund to Lessee the Security Deposit and any advance payment of Rent and the
parties shall have no further obligations to each other under the terms of the
Lease).
50.5 Payment of Excess Costs/Refund of Unused Lessor's
Allowance. As soon as practicable following Substantial Completion, Lessee and
Lessee's contractor shall perform an accounting of the total costs incurred to
accomplish Lessee's Work (including all costs for design, permitting, inspection
and utilities). If the total cost for Lessee's Work exceeds the amount of
Lessor's Allowance, then Lessee shall pay such excess. If the total cost of
Lessee's Work is less than the amount of Lessor's Allowance then the following
shall apply:
50.5.1 Subject to Lessor's prior approval, which
shall not be unreasonably withheld or delayed, Lessee may, during the first
Lease Year, utilize the remaining balance of Lessor's Allowance for the
installation into the Premises of additional permanent fixtures and
improvements (collectively "Additional Work").
50.5.2 If, by the expiration of the first Lease
Year, the total amount of Lessor's Allowance has not been expended for the
completion of Lessee's Work and/or Additional Work and improvements as
provided in the preceding sentence, then, within 30 days following the
expiration of the first Lease Year, Lessor shall refund to Lessee the amount of
the difference between Lessor's Allowance and the total amount expended for
Lessee's Work Additional Work.
51.1 Approval of Expansion Plans, Specifications and
Contractor. Within 45 days following execution of the Lease, Lessee shall cause
to be prepared and delivered to Lessor (1) preliminary drawings pertaining to
(i) the proposed expansion of the second floor mezzanine of the Building by the
addition of approximately 10,000 square feet and (ii) installation of windows
12
in the exterior walls and other improvements to cause the new second story space
to be similar in appearance to the existing second story space and (2)
preliminary specifications for the components of the expansion work. Within two
business days following Lessor's receipt of the preliminary drawings and
specifications, Lessor shall provide to Lessee approval of such preliminary
drawings and specifications unless Lessor has a reasonable and material
objection thereto. Within 45 days following Lessor's approval of the preliminary
drawings and specifications, Lessee shall cause to be prepared and delivered to
Lessor (1) working plans which are sufficiently detailed in order to apply for
and obtain a building permit for the expansion work which shall be based upon
the preliminary drawings previously approved by Lessor and (2) final
specifications for the components to be installed in connection with the
expansion work which shall be based upon the preliminary specifications
previously approved by Lessor. Within two business days following Lessor's
receipt of the working plans and specifications, Lessor shall approve such plans
and specifications unless Lessor has a material and reasonable objection
thereto. Following Lessor's approval of the working plans and specifications,
Lessee shall submit the working plans and specifications to the Building
Inspection Department of the City of San Diego for the purpose of obtaining a
building permit for the construction of the work described in the working plans
and specifications (hereinafter "Lessor's Expansion Work"). If, during the
course of construction of Lessor's Expansion Work, either party determines that
it is necessary or desirable to make a material change to the working plans and
specifications, then such change shall first be submitted to the other party for
other party's review and approval, which shall not be unreasonably withheld or
delayed. Lessor's Expansion Work shall be accomplished by the same general
contractor hired by Lessee to
accomplish Lessee's Work, subject to the approval of Lessor's lender. Lessor
shall be responsible for payment of all expenses incurred in connection with
performing Lessor's Expansion Work including, but not limited to, preparation of
working plans and specifications. In the event that, for any reason beyond
Lessor's reasonable control, Lessor shall not be able to obtain a building
permit to accomplish Lessor's Expansion Work and/or a building permit is issued
but for less than the full amount of the proposed expansion, Lessee shall not
have any right to terminate this Lease and the only consequence to the parties
shall be that the Base Rent shall be adjusted as provided in Section 1.5.3 above
based upon the actual rentable floor area of the Building at the time of
Substantial Completion. Lessor has agreed to hire Lessee's general contractor
for the purpose of having a single contractor coordinate the accomplishment of
Lessee's Work and Lessor's Expansion Work. Lessor shall not be responsible for
any delays attributable to Lessee's contractor's failure properly to schedule
and coordinate the work; provided, however, delays caused by Lessor, including,
but not limited to, Lessor's failure timely to cooperate with the application
for a building permit, shall extend the Rent Commencement Date.
53. Delivery of Financial Statements. Within 30 days following Lessor's
request therefor, Lessee shall deliver to Lessor a copy of Lessee's most
recently prepared audited financial statement. Within 20 days following Lessor's
written request therefor, Lessee shall deliver to Lessor Lessee's most recently
prepared unaudited financial statement as maintained by Lessee for the period
commencing at the beginning of the then-current fiscal year. As used herein, the
term "financial statement" shall mean a detailed balance sheet and detailed
statement of income and expenses prepared in accordance with generally accepted
accounting principals and otherwise in the manner Lessee customarily prepares
such documents.
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54. Interpretation. Except as the context may otherwise, require,
references to "the Lease" or "this Lease" shall mean collectively (1) the
Standard Commercial/Industrial Single-Tenant Lease - Net dated June 13, 1997, by
and between Lessee and Lessor and all Exhibits attached thereto and (2) this
Addendum.
Lessor: Lessee:
LMC-Sorrento Investment Company, Agouron Pharmaceuticals, Inc.,
LLC, a California Limited a California Corporation
Liability Company
By /s/ Xxx X. Xxxxxxx By /s/ Xxxxx Xxxxxx
----------------------------- ------------------------------
Xxx X. Xxxxxxx, Manager Print Name Xxxxx Xxxxxx
Title VP, Operations
Schedule of Exhibits
1 - Subordination, Non-Disturbance and Attornment Agreement
2 - Site Plan
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